10-K

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

ý	ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the fiscal year ended September 30, 2005.
or
o	TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from    to                        .

Commission file number 001-31788

NBTY, INC.
(Exact name of registrant as specified in charter)

DELAWARE (State or other jurisdiction of incorporation or organization)	11-2228617 (I.R.S. Employer Identification No.)
90 Orville Drive Bohemia, New York (Address of principal executive offices)	11716 (Zip Code)
(631) 567-9500 (Registrant's telephone number, including area code)

        Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on which Registered
Common Stock, par value $0.008 per share	New York Stock Exchange, Inc.

        Securities registered pursuant to Section 12(g) of the Act: None

        Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ý    No o

        Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.    ý

        Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ý    No o

        Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K    o

        Indicate by check mark whether the Registrant is an accelerated filer (as defined in Exchange Act rule 12b-2).

Yes ý    No o

        Indicate by check mark whether the Registrant is a shell company (as defined in Exchange Act rule 12b-2).

Yes o    No ý

        The aggregate market value of the voting stock held by non-affiliates of the Registrant on March 31, 2005, was approximately $1,314,570,528. For purposes of the foregoing calculation only, all directors and executive officers of the Registrant have been deemed affiliates. The number of shares of Common Stock of the Registrant outstanding at March 31, 2005 was approximately 67,185,000. The number of shares of Common Stock of the Registrant outstanding at December 19, 2005 was approximately 67,194,000.

DOCUMENTS INCORPORATED BY REFERENCE.

        Portions of the Registrant's definitive proxy statement for the Annual Meeting of Stockholders, which is expected to by filed within 120 days after the Registrant's fiscal year ended September 30, 2005, are incorporated by reference into Part III hereof.

NBTY, INC.
ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2005
TABLE OF CONTENTS

	Caption	Page
PART I
	Forward Looking Statements	1
ITEM 1	BUSINESS	2
	General	2
	Business Strategy	2
	Operating Segments	4
	Employees and Advertising	6
	Manufacturing, Distribution and Quality Control	7
	Research and Development	8
	Competition; Customers	8
	Government Regulation	9
	International Operations	15
	Trademarks	15
	Raw Materials	16
	Seasonality	16
ITEM 2	PROPERTIES	16
ITEM 3	LEGAL PROCEEDINGS	20
ITEM 4	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	22
PART II
ITEM 5	MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	23
	Dividend Policy	23
	Price Range of Common Stock	24
	Securities Authorized for Issuance under Equity Compensation Plans	25
	Purchases of Equity Securities by the Issuer and Affiliated Purchasers	25
ITEM 6	SELECTED FINANCIAL DATA	26
ITEM 7	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	27
	Background	27
	Critical Accounting Policies and Estimates	28
	Results of Operations	34
	Seasonality	45
	Off-Balance Sheet Arrangements	45
	Liquidity and Capital Resources	46
	Related Party Transactions	53
	Inflation	53
	Financial Covenants and Credit Rating	53

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	New Accounting Developments	54
ITEM 7A	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	56
ITEM 8	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	57
ITEM 9	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	58
ITEM 9A	CONTROLS AND PROCEDURES	58
	Management's Report on Internal Control Over Financial Reporting	58
	Report of Independent Registered Public Accounting Firm	59
ITEM 9B	OTHER INFORMATION	61
PART III
ITEM 10	DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT	61
ITEM 11	EXECUTIVE COMPENSATION	61
ITEM 12	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	61
ITEM 13	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS	61
ITEM 14	PRINCIPAL ACCOUNTANT FEES AND SERVICES	61
PART IV
ITEM 15	EXHIBITS AND FINANCIAL STATEMENTS SCHEDULES	62
	Index to Consolidated Financial Statements and Schedules	64
	Report of Independent Registered Public Accounting Firm	F-1
	Report of Independent Registered Public Accounting Firm	F-2
	Financial Statements	F-3
	Financial Statement Schedule	S-1
	Signatures
	Certifications
	Exhibits

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PART I

Forward Looking Statements

This Annual Report on Form 10-K (the "Report") contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations and business of NBTY, Inc. and its subsidiaries (collectively, the "Company"). Discussions containing such forward-looking statements may be found in Items 1, 2, 3, 7, 7A and 9A hereof, as well as within this Report generally. In addition, when used in this Report, the words "subject to," "believe," "expect," "plan," "project," "estimate," "intend," "may," "should," "can," or "anticipate," or the negative thereof, or variations thereon, or similar expressions are intended to identify forward-looking statements, which are inherently uncertain. Similarly, discussions of strategy, although believed to be reasonable, are also forward-looking statements and are inherently uncertain.

All forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from projected results. Factors which may materially affect such forward-looking statements include: (i) adverse studies and/or publicity regarding nutritional supplements generally or a particular supplement; (ii) slow or negative growth in the nutritional supplement industry; (iii) interruption of business or negative impact on sales and earnings due to hurricanes, earthquakes, other acts of God, acts of war, terrorism, bio-terrorism, civil unrest or disruption of mail service; (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/or 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 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/or retail customers anywhere in the world; (xii) unavailability of electricity in certain geographical areas; (xiii) the inability of the Company to obtain and/or renew insurance and/or the costs of same; (xiv) exposure to and expense of defending and resolving, product liability claims and other litigation, including administrative and criminal proceedings; (xv) the ability of the Company to successfully implement its business strategy; (xvi) the inability of 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 for 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 efficacy of the Company's Internet and on-line sales and marketing strategies; (xxiii) fluctuations in foreign currencies, including the British Pound, the Euro and the Canadian Dollar; (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 anywhere in the world (including the banning of products) and more particularly proposed Good Manufacturing Practices and Section 404 requirements of the Sarbanes-Oxley Act of 2002 in the United States and the Food Supplements Directive and 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; (xxx) adverse effects on the Company as a result of increased gasoline prices and potentially reduced traffic flow to the Company's retail locations; (xxxi) adverse tax determinations; (xxxii) the loss of a significant customer; and (xxxiii) other factors beyond the Company's control.

Consequently, such forward-looking statements should be regarded solely as the Company's current plans, estimates and beliefs. Readers are cautioned not to place undue reliance on forward-looking statements. The Company cannot guarantee future results, events, and 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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Industry data used throughout this Report was obtained from industry publications and internal Company estimates. While the Company believes such information to be reliable, its accuracy has not been independently verified and cannot be guaranteed.

Item 1.    BUSINESS

General

        NBTY, Inc. (together with its subsidiaries, the "Company", "NBTY", "we" or "us") is a leading vertically integrated manufacturer, marketer and retailer of a broad line of high quality, value-priced nutritional supplements in the United States and throughout the world. Under a number of the Company's and third-party brands, the Company offers over 22,000 products, including vitamins, minerals, herbs, sports nutrition products, diet aids and other nutritional supplements. The Company is vertically integrated in that it purchases raw materials, formulates and manufactures its products and then markets its products through its four channels of distribution:

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Wholesale distribution to mass merchandisers, drug store chains, supermarkets, independent pharmacies and health food stores under various brand names, including the Nature's Bounty®, Solgar®, SISU® and Sundown® portfolio of brands;



•

Direct Response/Puritan's Pride, a leading U.S. nutritional supplement e-commerce/direct response business segment, under the Puritan's Pride® brand in catalogs and through the Internet;



•

North American retail operations, including 542 Vitamin World® and Nutrition Warehouse® retail stores, as of September 30, 2005, operating throughout the U.S. in 45 states, Guam, Puerto Rico and the Virgin Islands, and 101 Le Naturiste® retail stores in Quebec, Canada; and



•

European retail operations, consisting of 545 Holland & Barrett®, GNC (UK)® and Nature's Way® retail stores, as of September 30, 2005, operating throughout the United Kingdom and Ireland, and 67 De Tuinen® retail stores, operating in the Netherlands. At September 30, 2005, the Company manufactured over 90% of the nutritional supplements it sold.

        The Company was incorporated in Delaware in 1979 under the name Nature's Bounty, Inc. On March 26, 1995, the Company changed its name to NBTY, Inc. The Company's principal executive offices are located at 90 Orville Drive, Bohemia, New York 11716, and its telephone number is (631) 567-9500. The Company's Internet address is www.nbty.com. The Company's United Kingdom subsidiary, Holland & Barrett Europe Limited, has its principal executive offices in Nuneaton, United Kingdom. The Company's Dutch subsidiary, De Tuinen, B.V., has its principal executive offices in Beverwijk, Netherlands.

        The Company makes available, free of charge, on its web site, its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Such reports are available as soon as is reasonably practicable after the Company electronically files such materials with the Securities and Exchange Commission (the "SEC").

Business Strategy

        The Company targets the growing value-conscious consumer segment by offering high-quality products at a value price. The Company's objectives are to increase sales, improve manufacturing efficiencies, increase profitability and strengthen its market position through the following key strategies:

        Expand Existing Channels of Distribution.    The Company plans to continue expanding and improving its existing channels of distribution through aggressive marketing and synergistic acquisitions in order to increase sales and profitability and enhance overall market share. Specific plans to expand channels of distribution include:

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•

Increase Wholesale Sales in the U.S. and in Foreign Markets.    The Company expects to strengthen its wholesale business by continuing to increase its sales in food, drug and mass merchandising channels by (i) increasing revenues derived from existing customers through strong promotional activities and the aggressive introduction of new and innovative products; (ii) increasing shelf space in major retailers; (iii) leveraging the advertising and promotion of its major specialty brands, such as Osteo-Bi-Flex®, Met-Rx®, Flex-A-Min® and Knox®; and (iv) continuing to grow its private label revenue with new customers and timely product introductions. In addition, the Company continues to form new distribution alliances throughout the world for its products.



•

Increase Direct Response/Puritan's Pride Sales.    The Company expects to continue to strengthen its leading position in the e-commerce/direct response business by: (i) improving automated picking and packing to fulfill sales order requests with greater speed and accuracy; (ii) increasing manufacturing capability to quickly introduce and deliver new products in response to customer demand; (iii) testing new and more frequent promotions to further improve response rates; and (iv) promoting its Internet web sites. The Company also intends to continue its strategy of acquiring the customer lists, brand names and inventory of other mail order companies which have similar or complementary products which the Company believes can be efficiently integrated into its own operations without adding substantial overhead expenses.



•

Increase Retail Sales in North America.    The Company intends to continue to focus on the development of a nationwide chain of retail stores in the United States and Canada. To that end, at September 30, 2005, the Company operated 542 Vitamin World® and Nutrition Warehouse® retail stores located in regional and outlet malls throughout the United States and 101 Le Naturiste retail stores throughout Quebec, Canada. The Company has added approximately 55 retail stores in the United States since October 1, 2003, or approximately 10% of the total number of stores in operation in the United States at September 30, 2005. In addition, on February 25, 2005, the Company acquired the Le Naturiste chain of retail stores in Quebec. New stores historically do not have the same high customer traffic as more mature stores. During the fiscal year ended September 30, 2005 ("fiscal 2005"), the Company operated 15 fewer Vitamin World stores than in the fiscal year ended September 30, 2004. Although the Company plans to open new stores during the 2006 fiscal year, the Company may close up to 10% of its existing Vitamin World stores during that time. More than 70 Vitamin World retail store leases expire during the 2006 fiscal year, and in an effort to improve Vitamin World's profitability, any store whose lease cannot be renegotiated for more favorable terms may be closed when its lease lapses. The Company maintains its Savings Passport Card, a customer loyalty program, which increases customer traffic and provides incentives to purchase at Vitamin World. It is an additional tool for the Company to track customer preferences and purchasing trends. At the end of fiscal 2005, there were approximately 5.9 million Savings Passport Card members.



•

Increase Retail Sales in the U.K., Ireland and Europe.    The Company continues its strategy of selectively expanding the number of its Holland & Barrett stores located throughout the U.K. At September 30, 2005, there were 494 Holland & Barrett® and 16 Nature's Way® stores operating in the U.K. and Ireland. In fiscal 2005, Nature's Way opened 3 new stores and Holland & Barrett opened 13 new stores and converted one GNC retail store to a Holland & Barrett store. The Company projects that, during the next fiscal year, it will open as many as 20 additional new retail stores in the U.K. and Ireland.



At September 30, 2005, the Company operated 35 GNC retail stores in the U.K. and 67 De Tuinen retail stores in the Netherlands. The Company continues to evaluate opportunities to open additional GNC (UK) stores in the U.K. and De Tuinen stores in Europe.

        Innovative New Product Introduction.    The Company has consistently been among the first in the industry to introduce innovative products in response to new studies, research and consumer preferences. Given the changing nature of consumer demand for new products and the continued

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publicity about the importance of vitamins, minerals and nutritional supplements in the promotion of general health, management believes that NBTY will continue to maintain its core customer base and attract new customers based upon its ability to rapidly respond to consumer demand with high quality, value-oriented products.

        Enhance Vertical Integration.    The Company believes that its vertical integration gives it a significant competitive advantage by allowing it to: (i) maintain higher quality standards while lowering product costs, which can be passed on to the customer as lower prices; (ii) more quickly respond to scientific and popular reports and consumer buying trends; (iii) more effectively meet customer delivery schedules; (iv) reduce dependence upon outside suppliers; and (v) improve overall operating margins. The Company continually evaluates ways to further enhance its vertical integration by leveraging manufacturing, distribution, purchasing and marketing capabilities, and otherwise improving the efficiency of its operations.

        Build Infrastructure to Support Growth.    NBTY has technologically advanced, state-of-the-art manufacturing and production facilities, with total production capacity of approximately 41 billion tablets, capsules and softgels per year. In July 2005, the Company completed the construction of a new distribution facility in Hazleton, Pennsylvania at a cost of approximately $20 million. In August 2005, the Company incurred a mortgage of approximately $13 million on the Hazleton facility. During the fiscal year ended September 30, 2004 ("fiscal 2004"), the Company began a $21 million expansion of its softgel facility in Bayport, New York, the completion of which is anticipated during the 2006 fiscal year. As a result of this expansion, the Bayport facility will be able to produce approximately 9 billion tablets, capsules and softgels per year. This facility will increase manufacturing capacity by approximately 60%. In addition, on July 1, 2005, the Company acquired a 400,000 square foot manufacturing facility in Augusta, Georgia for approximately $11 million. The Company regularly evaluates its manufacturing operations and makes investments in infrastructure, as necessary, to support its continuing growth.

        Strategic Acquisitions.    In the normal course of its business, the Company seeks acquisition opportunities, both in the U.S. and internationally, of companies which complement or extend the Company's existing product lines, increase its market presence, expand its distribution channels, and/or are compatible with its business philosophy. The Company has successfully acquired more than 30 companies and/or businesses since 1986, enabling it to significantly expand its product lines and scope of distribution. In fiscal 2005, the Company completed three such acquisitions: (i) on February 25, 2005, Le Naturiste Jean-Marc Brunet, a chain of 103 retail stores throughout Quebec, Canada in the business of developing, packaging, marketing and retailing a range of in-house private-label health and natural products; (ii) on June 8, 2005, SISU, Inc., a Canadian-based manufacturer and distributor of a premium line of vitamins and supplements; and (iii) on August 1, 2005, Solgar Vitamin and Herb, a division of Wyeth Consumer Healthcare and a manufacturer and distributor of premium-branded nutritional supplements, including multivitamins, minerals, botanicals and specialty formulas. For more information regarding the Company's acquisitions, see Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Notes to the Company's Consolidated Financial Statements contained in this Report. The Company continues to evaluate acquisition opportunities across the industry and around the world.

        Experienced Management Team.    The Company's management team has extensive experience in the nutritional supplement industry and has developed long-standing relationships with its suppliers and its customers. The executive officers of the Company have an average of over 20 years in the industry.

Operating Segments

        NBTY and its subsidiaries operate in the nutritional supplement industry, focusing their products and services on four segments of this industry: Wholesale/US Nutrition, North American Retail, European Retail and Direct Response/Puritan's Pride.

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        The following table sets forth the percentage of net sales for each of the Company's operating segments:

	Fiscal Year Ended September 30,
	2005		2004		2003
Wholesale/US Nutrition	43	%	44	%	35	%
North American Retail	13	%	13	%	18	%
European Retail/Holland & Barrett/GNC (UK)	33	%	30	%	30	%
Direct Response/Puritan's Pride	11	%	13	%	17	%
	100	%	100	%	100	%

        Further information about the financial results of each of these segments is found in Note 20 to the Consolidated Financial Statements in this Report.

        Wholesale/US Nutrition.    The Company markets its products under various brand names to many channels of distribution, including leading mass merchandisers, as well as leading drug store chains and supermarkets, independent pharmacies, health food stores, health food store wholesalers and other retailers. The Nature's Bounty® and Sundown® brands are sold to mass merchandisers, as well as to drug store chains, drug wholesalers, supermarket chains and wholesalers. The Company also sells directly to health food stores under the Solgar®, SISU® and Good 'N Natural® brand names and sells products, including a specialty line of vitamins, to health food wholesalers under the brand name American Health®. The Company has expanded sales of various products to many countries throughout Europe, Asia and Latin America.

        North American Retail.    At the end of fiscal 2005, the Company operated 542 Vitamin World® and Nutrition Warehouse® retail stores located in regional and outlet malls throughout the United States and 101 Le Naturiste retail stores throughout Quebec, Canada. Each location carries a full line of the Company's products under the Company's brand names as well as products manufactured by others. Through direct interaction between the Company's personnel and the public at these retail locations, the Company is able to identify buying trends, customer preferences or dislikes, acceptances of new products and price trends in various regions of the United States, as well as Quebec, Canada. This information is useful in initiating sales programs and new product introductions for all divisions of the Company.

        In addition to www.puritan.com and www.vitamins.com, the Company also maintains another web site, www.vitaminworld.com, to accommodate customers who wish to purchase nutritional supplements on the Internet, or to find a conveniently located store to make purchases in person. This web site provides the consumer with information concerning the products offered in the Company's retail stores and an easy and effective way to purchase Vitamin World products through our e-commerce portal.

        European Retail.    The Company's European Retail sales are generated by Holland & Barrett and GNC (UK) stores in the U.K., Nature's Way in Ireland and De Tuinen in the Netherlands. Holland & Barrett is one of the leading nutritional supplement retailers in the U.K., with 494 locations in the U.K. at September 30, 2005. Holland & Barrett markets a broad line of nutritional supplement products, including vitamins, minerals and other nutritional supplements, as well as food products, including fruits and nuts, confectionery and other items. GNC (UK) operated 35 locations in the U.K. at September 30, 2005, specializing in the sale of vitamins, minerals and sports nutrition products. At September 30, 2005 there were 16 Nature's Way locations in Ireland selling a range of products similar to those offered by Holland & Barrett. With 67 locations in the Netherlands at September 30, 2005, De Tuinen is a leading retailer of health food products, selected confectionery, and lifestyle giftware. Nutritional supplement products manufactured by NBTY accounted for approximately 32% of European Retail's total sales in fiscal 2005.

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        Direct Response.    The Company offers, through mail order and Internet e-commerce, a full line of vitamins and other nutritional supplement products as well as selected personal care items under its Puritan's Pride® brand names at prices which are generally at a discount from those of similar products sold in retail stores.

        Through its Puritan's Pride® brand, NBTY is a leader in the U.S. direct response nutritional supplement industry with more than 4 million customers on our customer list, with response rates which management believes to be above the industry average. NBTY intends to attract new customers in its direct response operation through aggressive marketing techniques both in the U.S. and around the world, as well as through selective acquisitions.

        In order to maximize sales per catalog and reduce mailing and printing costs, the Company regularly updates its mail order list to include new customers and to eliminate those who have not placed an order within a designated period of time. In addition, in order to add new customers to its mailing lists and web sites and to increase average order sizes, the Company places advertisements in newspaper supplements and conducts insert programs with other mail order companies. The Company's use of state-of-the-art equipment in its direct response operations, such as computerized mailing, bar-coded addresses and automated picking and packing systems enables the Company to fill each order typically within 24 hours of its receipt. This equipment and expertise allows the Company to lower its per customer distribution costs, thereby enhancing margins and enabling the Company to offer its products at lower prices than its competitors.

        The Company's www.puritan.com and www.vitamins.com web sites provide a practical and convenient method for consumers wishing to purchase products that promote healthy living. Through these web sites, consumers have access to the full line of more than 1,500 products which are offered through the Company's Puritan's Pride® mail order catalog. Consumer orders are processed with the speed, economy and efficiency of the Company's automated picking and packing system.

        For additional information regarding financial information about the geographic areas in which the Company and its subsidiaries conduct their business, see Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Notes to the Company's Consolidated Financial Statements contained in this Report.

Employees and Advertising

        As of September 30, 2005, the Company employed approximately 11,200 persons, including:

(i)

2,476 sales associates located throughout the U.S. in its Vitamin World® and Nutrition Warehouse® retail stores;



(ii)

2,121 manufacturing, shipping and packaging associates throughout the U.S.;



(iii)

1,033 associates in administration throughout the U.S.;



(iv)

592 associates who sell to wholesale distributors and customers;



(v)

73 in-house advertising associates;



(vi)

3,646 associates in its Holland & Barrett operations, including:



(A)

3,215 retail associates,



(B)

256 associates in distribution, and



(C)

175 associates in administration;

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(vii)

327 associates in De Tuinen operations, including:



(A)

289 retail associates, and



(B)

38 associates in administration and warehousing;



(viii)

212 associates in GNC (UK) retail stores;



(ix)

95 associates in Nature's Way retail stores; and



(x)

349 associates in Le Naturiste operations including



(A)

298 retail associates,



(B)

7 associates in distribution,



(C)

44 associates in administration; and



(xi)

279 associates in Direct Response operations.

In addition, NBTY sells its products through commissioned sales representative organizations. The Company believes it has satisfactory employee and labor relations.

        For the fiscal years ended September 30, 2005, 2004 and 2003, NBTY spent approximately $108 million, $85 million and $66 million, respectively, on advertising and promotions, including print, media and cooperative advertising. A significant portion of the increased advertising between fiscal 2003 and fiscal 2004 relates to additional promotions at the Rexall Sundown, Inc. ("Rexall") operations, acquired by the Company in July 2003. The increased advertising between fiscal 2004 and fiscal 2005 reflects, in large part, the Company's decision to aggressively promote some of the Company's leading brands in an effort to capture larger market share. NBTY creates its own advertising materials through its in-house staff of associates. In the U.K. and Ireland, both Holland & Barrett and Nature's Way have run advertisements on television and in national newspapers, and conducted sales promotions. GNC (UK) and De Tuinen also advertise in newspapers and conduct sales promotions. In addition, Holland & Barrett and De Tuinen each publish their own magazines with articles and promotional materials. SISU advertises in trade journals and magazines and conducts sales promotions.

Manufacturing, Distribution and Quality Control

        At September 30, 2005 the Company employed approximately 2,121 manufacturing, shipping and packaging associates throughout the United States. The Company's manufacturing activities are conducted in New York, California, Illinois, Florida and New Jersey. In addition, during fiscal 2005, the Company completed construction of a 420,000 square foot distribution facility in Hazleton, Pennsylvania at a cost of approximately $20 million. During fiscal 2004, the Company began a $21 million expansion of its softgel facility in Bayport, New York, the completion of which is anticipated during the 2006 fiscal year. As a result of this expansion, the Bayport facility will be able to produce approximately 9 billion tablets, capsules and softgels per year.

        All of the Company's manufacturing operations are subject to good manufacturing practice regulations ("GMPs") promulgated by the United States Food and Drug Administration ("FDA") and other applicable regulatory standards. The Company's manufacturing processes are compliant with current GMPs. The Company manufactures products for its four operating segments as well as for third parties. The Company believes that, generally, the capacity of its manufacturing and distribution facilities is adequate to meet the requirements of its current business and will be adequate to meet the requirements of anticipated increases in sales.

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        The Company places special emphasis on quality control. All raw materials used in production are assigned a unique lot number and are initially held in quarantine, during which time the Company's laboratory chemists assay the raw materials for compliance with established specifications. Once released, samples are retained and the material is processed according to approved formulas by mixing, granulating, compressing, encapsulating and sometimes coating operations. After the tablet or capsule is manufactured, laboratory chemists and technicians test its weight, purity, potency, disintegration and dissolution, if applicable. The product will be held in quarantine until this evaluation is completed and the product meets all applicable specifications. Generally, when products such as vitamin tablets are ready for bottling, the Company's automated equipment counts the tablets, inserts them into bottles, adds a tamper-resistant cap with an inner safety seal and affixes a label with lot number and bottling date. The Company uses computer-generated documentation for picking and packing for order fulfillment.

        The Company's manufacturing operations are designed to allow low cost production of a wide variety of products of different quantities, sizes and packaging while maintaining a high level of customer service and quality. Flexible production line changeover capabilities and reduced cycle times allow the Company to respond quickly to changes in manufacturing schedules.

        Inventory Control.    The Company has installed inventory control systems at its facilities that enable it to track each product as it is received from its supply sources through manufacturing and shipment to its customers. To facilitate this tracking, most products sold by the Company are bar coded. The Company's inventory control systems report shipping, sales and individual SKU level inventory information. The Company manages the retail sales process by monitoring customer sales and inventory levels by product category. The Company believes that its distribution capabilities enable it to increase flexibility in responding to the delivery requirements of its customers.

        Information from the Company's point-of-sale computer system is regularly reviewed and analyzed by the purchasing staff to assist in making merchandise allocation and markdown decisions. The Company uses an automated reorder system to maintain in-stock positions on key items. These systems provide management with the information needed to determine the proper timing and quantity of reorders.

        Financial Reporting.    The Company's financial reporting systems provide management with detailed financial reporting to support management's operating decisions and cost control efforts. These systems provide functions such as scheduling of payments, receiving of payments, general ledger interface, vendor tracking and flexible reporting options.

Research and Development

        In the last three fiscal years, the Company did not expend material amounts for research and development of new products.

Competition; Customers

        The market for nutritional supplement products is highly competitive. Competition is based primarily on price, quality and assortment of products, customer service, marketing support, and availability of new products. The Company believes it competes favorably in all of these areas.

        The Company's direct competition consists primarily of publicly and privately owned companies, which tend to be highly fragmented in terms of both geographical market coverage and product categories. The Company also competes with companies which may have broader product lines and/or larger sales volumes. The Company's products also compete with nationally advertised brand name products. Most of the national brand companies have resources greater than those of the Company.

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        There are numerous companies in the vitamin and nutritional supplement industry selling products to retailers, including mass merchandisers, drug store chains, independent drug stores, supermarkets and health food stores. Many companies within the industry are privately held. Therefore, the Company is unable to precisely assess the size of all of its competitors or where the Company ranks in comparison to such privately held competitors with respect to sales to retailers.

        During fiscal 2005, two individual customers accounted for the following percentages of the Wholesale/US Nutrition division's net sales:

Customer A	14	%
Customer B	15	%

        Customer A is primarily a supplier to Customer B. Therefore, the loss of Customer B would likely result in the loss of most of the net sales to Customer A. While no one customer represented, individually, more than 10% of the Company's consolidated net sales for fiscal 2005, the loss of either one of these customers would have a material adverse effect on the Wholesale/US Nutrition division if the Company was unable to replace such customer(s).

        During fiscal 2005, two individual customers accounted for 10% or more of the Wholesale/US Nutrition division's total gross accounts receivable:

Customer A	10	%
Customer C	10	%

        While no one customer represented, individually, more than 10% of the Company's total gross accounts receivable, the loss of any of these customers would have a material adverse effect on the Wholesale/US Nutrition division if the Company was unable to replace such customer(s).

Government Regulation

        United States.    The formulation, manufacturing, packaging, labeling, advertising, distribution and sale of our products are subject to regulation by federal agencies, including the FDA, the Federal Trade Commission, or FTC, the Postal Service, the Consumer Product Safety Commission, the Department of Agriculture, the Environmental Protection Agency, and also by various agencies of the states, localities and foreign countries in which our products are sold. In particular, the FDA, pursuant to the Federal Food, Drug, and Cosmetic Act, or FDCA, regulates the formulation, manufacturing, packaging, labeling, distribution and sale of dietary supplements, including vitamins, minerals and herbs, and of over-the-counter, or OTC, drugs, while the FTC regulates the advertising of these products, and the Postal Service regulates advertising claims with respect to such products sold by mail order.

        The FDCA has been amended several times with respect to dietary supplements, in particular by the Dietary Supplement Health and Education Act of 1994, or DSHEA. DSHEA established a new framework governing the composition and labeling of dietary supplements. With respect to composition, DSHEA defined "dietary supplements" as vitamins, minerals, herbs, other botanicals, amino acids and other dietary substances for human use to supplement the diet, as well as concentrates, constituents, extracts or combinations of such dietary ingredients. Generally, under DSHEA, dietary ingredients that were on the market before October 15, 1994 may be used in dietary supplements without notifying the FDA. However, a "new" dietary ingredient (i.e., a dietary ingredient that was "not marketed in the U.S. before October 15, 1994") must be the subject of a new dietary ingredient notification submitted to the FDA unless the ingredient has been "present in the food supply as an article used for food" without being "chemically altered." A new dietary ingredient notification must provide the FDA evidence of a "history of use or other evidence of safety"

9

establishing that use of the dietary ingredient "will reasonably be expected to be safe." A new dietary ingredient notification must be submitted to the FDA at least 75 days before the initial marketing of the new dietary ingredient. There can be no assurance that the FDA will accept the evidence of safety for any new dietary ingredients that we may want to market, and the FDA's refusal to accept such evidence could prevent the marketing of such dietary ingredients. The FDA is in the process of developing guidance for the industry to clarify the FDA's interpretation of the new dietary ingredient notification requirements, and this guidance may raise new and significant regulatory barriers for new dietary ingredients. In addition, increased FDA enforcement could lead the FDA to challenge dietary ingredients already on the market as "illegal" under the FDCA because of the failure to file a new dietary ingredient notification.

        DSHEA permits "statements of nutritional support" to be included in labeling for dietary supplements without FDA pre-approval. Such statements may describe how a particular dietary ingredient affects the structure, function or general well-being of the body, or the mechanism of action by which a dietary ingredient may affect body structure, function or well-being (but may not state that a dietary supplement will diagnose, cure, mitigate, treat, or prevent a disease unless such claim has been reviewed and approved by the FDA). A company that uses a statement of nutritional support in labeling must possess evidence substantiating that the statement is truthful and not misleading. In some circumstances, it is necessary to disclose on the label that the FDA has not "evaluated" the statement, to disclose the product is not intended for use for a disease, and to notify the FDA about our use of the statement within 30 days of marketing the product. However, there can be no assurance that the FDA will not determine that a particular statement of nutritional support that the Company wants to use is an unacceptable disease claim or an unauthorized version of a "health claim." Such a determination might prevent a company from using the claim.

        In addition, DSHEA provides that certain so-called "third-party literature," e.g., a reprint of a peer-reviewed scientific publication linking a particular dietary ingredient with health benefits, may be used "in connection with the sale of a dietary supplement to consumers" without the literature being subject to regulation as labeling. Such literature must not be false or misleading; the literature may not "promote" a particular manufacturer or brand of dietary supplement; and a balanced view of the available scientific information on the subject matter must be presented. There can be no assurance, however, that all third-party literature that we would like to disseminate in connection with our products will satisfy each of these requirements, and failure to satisfy all requirements could prevent use of the literature or subject the product involved to regulation as an unapproved drug.

        As authorized by DSHEA, the FDA has recently proposed GMPs specifically for dietary supplements. These new GMP regulations, if finalized (as predicted to occur in the near future), would be more detailed than the GMPs that currently apply to dietary supplements and may, among other things, require dietary supplements to be prepared, packaged and held in compliance with certain rules, and might require quality control provisions similar to those in the GMP regulations for drugs. There can be no assurance that, if the FDA adopts GMP regulations for dietary supplements, we will be able to comply with the new rules without incurring substantial expense.

        The FDA generally prohibits the use in labeling for a dietary supplement of any "health claim" (that is not authorized as a "statement of nutritional support" permitted by DSHEA) unless the claim is pre-approved by the FDA. There can be no assurance that some of the labeling statements that we would like to use will not be deemed by the FDA to be "unauthorized health or disease claims" that are not permitted to be used.

        Although the regulation of dietary supplements is in some respects less restrictive than the regulation of drugs, there can be no assurance that dietary supplements will continue to be subject to less restrictive regulation. Legislation has been periodically introduced in Congress, including in 2004 and 2005, to amend the FDCA to place more restrictions on the marketing of dietary supplements. In

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addition, Congress has been asked to consider various systems for pre-market and post-market review of dietary supplements to make the regulation of these products more like the regulation of drugs under the FDCA. The FDA regulates the formulation, manufacturing, packaging, labeling and distribution of OTC drug products pursuant to a "monograph" system that specifies active drug ingredients that are generally recognized as safe and effective for particular uses. If an OTC drug is not in compliance with the applicable FDA monograph, the product generally cannot be sold without first obtaining the FDA approval of a new drug application, a long and expensive procedure. There can be no assurance that, if more stringent statutes are enacted for dietary supplements, or if more stringent regulations are promulgated, we will be able to comply with such statutes or regulations without incurring substantial expense.

        The FDA has broad authority to enforce the provisions of the FDCA applicable to dietary supplements and OTC drugs, including powers to issue a public "warning letter" to a company, to publicize information about illegal products, to request a voluntary recall of illegal products from the market, and to request the Department of Justice to initiate a seizure action, an injunction action, or a criminal prosecution in the U.S. courts.

        The FTC exercises jurisdiction over the advertising of dietary supplements. In recent years, the FTC has instituted numerous enforcement actions against dietary supplement companies for failure to adequately substantiate claims made in advertising or for the use of false or misleading advertising claims. These enforcement actions have often resulted in consent decrees and the payment of civil penalties and/or restitution by the companies involved. We are currently subject to FTC consent decrees resulting from past advertising claims for certain of our products. Rexall Sundown is also currently subject to FTC consent decrees resulting from past advertising claims for certain of its products. As a result, we are required to maintain compliance with these decrees and are subject to an injunction and substantial civil monetary penalties if there should be any failure to comply. Further, the U.S. Postal Service has issued cease and desist orders against certain mail order advertising claims made by dietary supplement manufacturers, including us, and we are required to maintain compliance with the orders applicable to us, subject to civil monetary penalties for any noncompliance. Violations of these orders could result in substantial monetary penalties. Civil penalty actions could have a material adverse effect on our consolidated financial position or results of operations.

        In June 2003, we received a letter of inquiry from the FTC concerning our marketing of a certain weight loss program, as well as the marketing of the Royal Tongan Limu dietary supplement by our subsidiary, Dynamic Essentials, Inc., ("DEI"). Subsequent to the receipt of this letter, we voluntarily stopped all sales and promotions of the weight loss product in question and of Royal Tongan Limu. We also ceased all DEI operations and terminated all DEI employees. In October 2005, the United States District Court for the Eastern District of New York entered a Consent Decree that required us to pay a $2 million civil penalty, and imposes an injunction that requires us to comply with the terms of a 1995 consent order between the FTC and the Company. We have paid the civil penalty.

        In March 2003, we ceased selling products that contain ephedra. Though we continue to believe that the ephedra products we sold are safe to use as directed, the adverse publicity surrounding ephedra products and the regulatory environment in the U.S. led us to the decision to cease selling ephedra products, in our best interests and that of our shareholders. Overall, sales of ephedra products represented an insignificant portion of our business. Subsequent to the decision to cease selling ephedra products, we were named as a defendant or a third-party defendant in several actions, alleging liability (under various theories, including negligence, false advertising, strict liability in tort and failure to warn) as well as personal injury with respect to our sales, manufacturing and distribution of products containing ephedra. We have notified our insurance carriers and third-party vendors with regard to each suit and vigorously contest the allegations in these actions. We did not acquire any ephedra assets, liabilities or operations in connection with our purchase of Rexall Sundown. All such operations were

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retained by Royal Numico N.V., the prior owner of Rexall Sundown. The FDA issued a final regulation on February 11, 2004 prohibiting the sale of ephedra based on the FDA's safety concerns. This final regulation has been challenged in two separate third-party lawsuits, one of which is pending at this time. The court in the other lawsuit declared the FDA's rule banning ephedra invalid. The FDA has appealed and that appeal is pending. Legislation has also been introduced in Congress to effect a legislative reversal of this court decision, and thereby impose a risk/benefit standard on dietary supplement safety reviews.

        We are also subject to regulation under various state, local, and international laws that include provisions governing, among other things, the formulation, manufacturing, packaging, labeling, advertising and distribution of dietary supplements and OTC drugs. Government regulations in foreign countries may prevent or delay the introduction, or require the reformulation, of certain of our products. Compliance with such foreign governmental regulations is generally the responsibility of our distributors in those countries. These distributors are independent contractors whom we do not control.

        In addition, from time to time in the future, we may become subject to additional laws or regulations administered by the FDA or by other federal, state, local or foreign regulatory authorities, to the repeal of laws or regulations that we consider favorable, such as DSHEA, or to more stringent interpretations of current laws or regulations. We are not able to predict the nature of such future laws, regulations, repeals or interpretations, and we cannot predict what effect additional governmental regulation, when and if it occurs, would have on our business in the future. Such developments could, however, require reformulation of certain products to meet new standards, recalls or discontinuance of certain products not able to be reformulated, additional record-keeping requirements, increased documentation of the properties of certain products, additional or different labeling, additional scientific substantiation, additional personnel, or other new requirements. Any such developments could have a material adverse effect on us.

        Europe.    In Europe, the EU Commission is responsible for developing legislation to regulate foodstuffs and medicines. Although the government of each Member State may implement legislation governing these products, national legislation must be compatible with and cannot be more restrictive than European requirements. Each Member State is responsible for its enforcement of the provisions of European and national legislation.

        United Kingdom.    In the United Kingdom, the two main pieces of legislation that affect the operations of Holland & Barrett and GNC (UK) are the Medicines Act 1968, which regulates the licensing and sale of medicines, and the Food Safety Act 1990, which provides for the safety of food products. A large volume of secondary legislation in the form of Statutory Instruments adds detail to the main provisions of the above Acts governing composition, packaging, labeling and advertising of products.

        In the U.K. regulatory system a product intended to be taken orally will fall within either the category of food or the category of medicine. There is currently no special category of dietary supplement as provided for in the U.S. by DSHEA. Some products which are intended to be applied externally, for example creams and ointments, may be classified as medicines and others as cosmetics.

        The Medicines and Healthcare products Regulatory Agency, or MHRA, now has responsibility for the implementation and enforcement of the Medicines Act, and is the licensing authority for medicinal products. The MHRA directly employs enforcement officers from a wide range of backgrounds, including the police, and with a wide range of skills, including information technology. However, the MHRA still relies heavily on competitor complaints to identify non-compliant products. The MHRA is an Executive Agency of the Department of Health. The MHRA decides whether a product is a medicine or not and, if so, considers whether it can be licensed. It determines the status of a product by considering whether it is medicinal by "presentation" or by "function". Many, though not all, herbal remedies are considered "medicinal" by virtue of these two tests.

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        The Food Standards Agency, or FSA, deals with legislation, policy and oversight of food products, with enforcement action in most situations being handled by local authority Trading Standards Officers. The large number of local authorities in the U.K. can lead to an inconsistent approach to enforcement. Unlike the MHRA, local authorities regularly purchase products and analyze them to identify issues of non-compliance. The FSA answers primarily to Ministers at the Department of Health and the Department of Environment Food and Rural Affairs. Most vitamin and mineral supplements, and some products with herbal ingredients, are considered to be food supplements and fall under general food law which requires them to be safe. Despite the differences in approaches in identifying non-compliant products, both the MHRA and local authorities can, and do, prosecute where issues of non-compliance are identified.

        In July 2002, the European Union, or EU, published in its Official Journal the final text of a Food Supplements Directive which became effective in the European Community, or EU, on that date, and which sets out a process and timetable by which the Member States of Europe must bring their domestic legislation in line with its provisions. The Directive seeks to harmonize the regulation of the composition, labeling and marketing of food supplements (at this stage only vitamins and minerals) throughout the EU. It does this by specifying what nutrients and nutrient sources may be used (and by interpretation the rest which may not), and the labeling and other information which must be provided on packaging. In addition, this Directive is intended to regulate the levels at which these nutrients may be present in a supplement. These maximum permitted levels are due to be announced shortly.

        By harmonizing the legislation, the Food Supplements Directive should provide opportunities for businesses to market one product or a range of products to a larger number of potential customers without having to reformulate or repackage it. This development may lead to some liberalizing of the more restrictive regimes in France and Germany, providing new business opportunities. Conversely, however, it may substantially limit the range of nutrients and nutrient sources, and eventually the potencies at which some nutrients may be marketed by us in the more liberal countries, such as the U.K., which may lead to some reformulation costs and loss of some specialty products.

        Following the publication of the Food Supplements Directive, two challenges were brought in the U.K. Courts attacking its validity. The matters were subsequently referred to the European Court of Justice, or ECJ, for resolution. The ECJ upheld the validity of the Directive, ruling that its contents were legal under European Law. However, due to the ECJ's comments on procedure, the Commission has undertaken to look at ways to ensure the Directive is implemented in a transparent and timely manner.

        The provisions of the Food Supplements Directive have been incorporated into U.K. domestic law (which includes England & Wales, Scotland and Northern Ireland) by Statutory Instrument and applies from August 2005.

        On April 30, 2004 the EU published the Traditional Herbal Medicinal Products Directive, or THMPD, which requires traditional herbal medicine to be registered in each Member State in which they are intended to be marketed. A registration will require a product to be manufactured to pharmaceutical GMP standards; however there is no need to demonstrate efficacy, provided that the product is safe, is manufactured to high standards, and has been on the market for 30 years, 15 years of which must be in the EU. The THMPD is intended to provide a safe home in EU law for a number of categories of herbal remedies, which may otherwise be found to fall outside EU law. It does not, however, provide a mechanism for new product development, and would entail some compliance costs in registering the many herbal products already on the market. Member States have to put into place the provisions for national compliance by October 2005. This is the anticipated date on which Traditional Herbal Medicinal products can be registered. A transitional period of seven years has been granted in the UK to allow all relevant products to be registered. Full compliance is required by

13

April 2011. While we currently believe that we will comply with this Directive, there can be no assurances that we will be able to do so without incurring substantial expense.

        Additional European legislation is being developed to regulate sports nutrition products, including the composition of such products. In particular, such legislation could restrict the type of nutrients we may use in our products. Legislation introducing maximum permitted levels for nutrients in fortified foods is also under discussion together with legislation introducing a positive list for enzymes. These proposals, if implemented, could require us to reformulate our existing products. Also, proposals to amend medicine legislation will impact traditional herbal medicines and introduce new requirements, such as Braille labeling, which may lead to higher associated costs.

        The EU has established a European Food Safety Authority, which will have an important role to play in focusing attention on food standards in Europe. Its Executive Director is Mr. Geoffrey Podger, who until 2003 was the Chief Executive of the U.K.'s Food Standards Agency.

        Ireland.    The legislative and regulatory situation in the Republic of Ireland is similar, but not identical to that in the U.K.

        The Irish Medicines Board has a similar role to that of the U.K.'s MHRA and the Food Safety Authority of Ireland is analogous to the U.K.'s FSA.

        Like the U.K., Ireland will be required to bring its domestic legislation into line with the provisions of the Food Supplements Directive and the THMPD when the latter is finalized, and, indeed, with the other forthcoming EU legislation mentioned above. Thus the market prospects for Ireland are, in general, similar to those outlined in the U.K.

        Netherlands.    The regulatory environment in the Netherlands is similar to the U.K. in terms of availability of products. The Netherlands currently has the same liberal market, with no restrictions on potency of nutrients. Licensed herbal medicines are available. However, there are some herbal medicines which are sold freely as in the U.K. without the need to be licensed, depending on the claims made for them. The Netherlands is also more liberal regarding certain substances, for which unlicensed sales are allowed. The government department dealing with this sector is the Ministry for Health, Welfare and Sport.

        Responsibility for food safety falls to the Keuringsdienst van Waren (Inspectorate for Health Protection and Veterinary Public Health). This authority deals with all nutritional products. The Medicines Evaluation Board, which is the equivalent of the U.K.'s MHRA, is charged with responsibility for the safety of medicines which are regulated under the Supply of Medicines Act.

        The overall market prospects for the Netherlands are, in general, similar to those outlined for the U.K. above, with the exception of only a four year transitional period granted for the registration of Traditional Herbal Medicinal products which are currently on sale in the Netherlands and which fall within the scope of the THMPD.

        Canada.    The legislative and regulatory situation in Canada is similar, but not identical, to that in the U.S. The manufacturing, packaging, labeling, storage, importation, advertising, distribution and sale of natural health products, or NHP, and hybrid NHPs are subject to regulation by Health Canada including, specifically, the Therapeutic Products Directorate, the Natural Health Products Directorate and the Health Protection and Food Branch Inspectorate. Health Canada regulates NHPs (which include vitamins and minerals, herbal remedies, homeopathic medicines, traditional medicines, probiotics and products like amino acids and essential fatty acids) and hybrid NHPs pursuant to the Food and Drugs Act (Canada), the Food and Drug Regulations, the Natural Health Product Regulations and various Guidance Documents and Policies related to thereto.

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        Prior to January 1, 2004, NHPs for which therapeutic claims were made were regulated as drugs requiring a Drug Identification Number (DIN). Effective January 1, 2004, NHPs in Canada became subject to new requirements under the Natural Health Product Regulations. Under the NHP Regulations, manufacturers are required to make application for a product license, and the application must provide specific information including quality of medicinal ingredients, use and purpose of the NHPs, and the supporting safety and efficacy data. These regulations also set out a regime for site licensing of buildings in which NHPs are imported, distributed, manufactured, packaged, labeled or stored. The primary prerequisite of a site license is that good manufacturing practices be employed.

        As of January 1, 2004, all new products that are NHPs must comply with the NHP Regulations. For products already marketed in Canada as of that date, transition periods from January 1, 2004 for compliance with the requirements are provided for, including two years for GMP and site license requirements, four years for the product license requirement for NHPs without a DIN and five years for the product license requirement for NHPs with a DIN.

        NBTY has adopted a phased-in compliance strategy in accordance with the prescribed transition periods. The overall risk factors and market prospects for Canada are, in general, similar to those outlined in the U.S.

International Operations

        In addition to Canada, the U.K., Ireland and the Netherlands, the Company markets its nutritional supplement products through distributors, retailers and direct mail in more than 85 countries throughout Europe, Central America, South America, Asia, the Pacific Rim countries, Africa and the Caribbean Islands.

        The Company's international operations are conducted in a manner to conform to local variations, economic realities, market customs, consumer habits and regulatory environments. The Company's products (including labeling of such products) and the distribution and marketing programs of the Company are modified in response to local and foreign legal requirements and customer preferences.

        The Company's international operations are subject to many of the same risks faced by the Company's domestic operations. These include competition and the strength of the relevant economy. In addition, international operations are subject to certain risks inherent in conducting business abroad, including foreign regulatory restrictions, fluctuations in monetary exchange rates, import-export controls and the economic and political policies of foreign governments. The importance of these risks increases as the Company's international operations grow and expand. Virtually all of the Company's international operations are affected by foreign currency fluctuations, and, more particularly, changes in the value of the British Pound, the Euro and the Canadian Dollar as compared to the U.S. Dollar.

        For additional information regarding financial information about the geographic areas in which the Company and its subsidiaries conduct their business, see Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Notes to the Company's Consolidated Financial Statements contained in this Report.

Trademarks

        U.S.    The Company and its subsidiaries have applied for or registered more than 2,200 trademarks with the United States Patent and Trademark Office for its Nature's Bounty®, Vitamin World®, Puritan's Pride®, Holland & Barrett®, Rexall®, Sundown®, Solgar®, MET-Rx®, WORLDWIDE Sport Nutrition®, American Health®, and SISU® trademarks, among others, and has rights to use other names essential to its business. Federally registered trademarks have a perpetual life, as long as they are maintained and renewed on a timely basis and used properly as trademarks, subject to the rights of third parties to seek cancellation of the trademarks if they claim priority or confusion of

15

usage. The Company regards its trademarks and other proprietary rights as valuable assets and believes they have significant value in the marketing of its products. The Company vigorously protects its trademarks against infringement.

        Canada.    Each of Solgar, Le Naturiste and SISU owns the trademarks registered in Canada for their respective Solgar®, Le Naturiste® and SISU® names.

        U.K./Ireland.    Holland & Barrett owns trademarks registered in the United Kingdom and/or throughout the European Community for its Holland & Barrett, GNC (UK) and Nature's Way trademarks and has rights to use other names essential to its business. Holland & Barrett is the exclusive licensee of the trademarks essential to the GNC (UK) business in the U.K.

        Netherlands.    De Tuinen owns trademarks registered in the Netherlands and/or throughout the European Community for its DeTuinen trademarks and has rights to use other names essential to its business.

Raw Materials

        In fiscal 2005, the Company spent approximately $420 million on raw materials. The principal raw materials required in the Company's operations are vitamins, minerals, herbs, gelatin and packaging components. The Company purchases the majority of its vitamins, minerals and herbs from raw material manufacturers and distributors in the United States, Japan, China and Europe. The Company believes that there are adequate sources of supply for all of its principal raw materials. The Company also believes that its strong relationships with its suppliers yield improved quality, pricing and overall service to its customers. Although there can be no assurance that the Company's sources of supply for its principal raw materials will be adequate in all circumstances, in the event that such sources are not adequate, the Company believes that alternate sources can be developed in a timely and cost effective manner. During fiscal 2005, one supplier accounted for more than 10% of the Company's raw material purchases. Due to the availability of numerous alternative suppliers, the Company does not believe that the loss of any single supplier would have a material adverse effect on the Company's consolidated financial condition or results of operations.

Seasonality

        Although the Company believes that its business is not seasonal in nature, historically, the Company has experienced, and expects to continue to experience, a substantial variation in its net sales and operating results from quarter to quarter. The Company believes that the factors which influence this variability of quarterly results include general economic and industry conditions that affect consumer spending, changing consumer demands and current news on nutritional supplements, the timing of the Company's introduction of new products, the level of consumer acceptance of each new product, the seasonality of the markets in which the Company participates, and actions of competitors. Accordingly, a comparison of the Company's results of operations from consecutive periods is not necessarily meaningful, and the Company's results of operations for any period are not necessarily indicative of future performance. Additionally, the Company may experience higher net sales in a quarter depending upon when it has engaged in significant promotional activities.

Item 2.    PROPERTIES

        U.S.    At September 30, 2005, the Company owned a total of approximately 2.7 million square feet of plant and administrative facilities. The Company also leased approximately 1.5 million square feet of administrative, manufacturing, warehouse and distribution space in various locations at the end of fiscal 2005. At September 30, 2005 the Company leased and operated approximately 542 retail locations under the names Vitamin World® and Nutrition Warehouse® in 45 states in the U.S., Guam, Puerto

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Rico and the Virgin Islands. Generally, the Company leases the properties for three to ten years at varying annual base rents and percentage rents in the event sales exceed a specified amount. The Vitamin World and Nutrition Warehouse retail stores have an average selling area of approximately 945 square feet.

        U.K./Ireland.    Holland & Barrett owns a 281,000 square foot administrative, manufacturing and distribution facility (which includes a 65,000 square foot mezzanine) in Burton. Holland & Barrett leases all but three of its 545 Holland & Barrett, GNC (UK), and Nature's Way retail stores for terms varying between 5 and 35 years at varying annual base rents. Nine Holland & Barrett stores are subject to percentage rents in the event sales exceed a specified amount. Holland & Barrett stores each have an average selling area of approximately 945 square feet; Nature's Way Stores each have an average selling area of approximately 620 square feet; and the GNC (UK) stores have an average selling area of approximately 980 square feet.

        Netherlands.    De Tuinen leases a 71,400 square foot administrative and distribution facility in Beverwijk. De Tuinen leases locations for 67 retail stores on renewable 5 year terms at varying annual base rents. Of these, 46 are operated as company stores; 21 are sub-leased to, and operated by, franchisees, and two are operated by franchisees who lease directly from a third party landlord. None of De Tuinen's stores are subject to percentage rents.

        Canada.    SISU Inc. leases a 30,200 square foot facility in Burnaby, British Columbia. This facility is used for the purposes of packaging, storing, manufacturing and distributing vitamins, and also contains various administrative offices. The lease currently expires in 2009. At September 30, 2005, Le Naturiste leased 101 retail locations throughout Quebec, Canada. Le Naturiste stores each have an average selling area of approximately 760 square feet. At September 30, 2005, four Le Naturiste stores were operated by franchisees. Generally, the Le Naturiste stores are leased for three to ten years at varying annual base rents and percentage rents in the event sales exceed a specified amount.

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        The following is a listing, as of September 30, 2005, of all material properties (excluding retail locations and de minimis administrative or sales office locations) owned or leased by the Company, which are used in all four of the Company's business segments. The Company is required to pay real estate and maintenance costs relating to most of its leased properties:

Location	Type of Facility	Approx. Sq. Feet	Leased or Owned
UNITED STATES:
Bohemia, NY	Administration & Manufacturing	169,000	Owned
Bohemia, NY	Manufacturing	80,000	Owned
Bohemia, NY	Manufacturing	75,000	Owned
Bohemia, NY	Manufacturing & IT	62,000	Owned
Bohemia, NY	Administration & Warehousing (term–2009)	110,000	Leased
Bohemia, NY	Administration & Distribution (term–2009)	130,000	Leased
Holbrook, NY(1)	Administration & Distribution	230,000	Owned
Holbrook, NY	Warehousing	108,000	Owned
Ronkonkoma, NY	Administration	110,000	Owned
Ronkonkoma, NY	Warehousing (term–2014)	75,000	Leased
Bayport, NY	IT Services	12,000	Owned
Bayport, NY	Manufacturing	131,000	Owned
Murphysboro, IL	Warehousing	62,000	Owned
Murphysboro, IL	Warehousing (term–2008)	30,000	Leased
Carbondale, IL	Administration, Manufacturing & Distribution	77,000	Owned
Carbondale, IL	Administration	15,000	Owned
Leonia, NJ	Manufacturing (term–2008)	59,000	Leased
Lyndhurst, NJ	Administration, Manufacturing & Distribution (term–2008)	130,000	Leased
South Plainfield, NJ	Administration & Manufacturing	68,000	Owned
South Plainfield, NJ	Manufacturing & Distribution (term–May 2006)	40,000	Leased
North Glenn, CO	Administration (term–2007)	4,900	Leased
Anaheim, CA	Administration, Manufacturing & Distribution (term–2008)	286,140	Leased
Anaheim, CA	Manufacturing (term–2008)	64,000	Leased
Carson, CA	Distribution (term–2007)	10,600	Leased
Lake Mary, FL	Administration (term–2008)	12,250	Leased
Boca Raton, FL	Administration	58,000	Owned
Boca Raton, FL	Manufacturing	84,000	Owned
Deerfield Beach, FL	Manufacturing	157,000	Owned
Boca Raton, FL	Distribution	100,000	Owned
Boca Raton, FL	Warehousing (term–2010)	60,000	Leased
Piscataway, NJ	Warehousing (term–June 2006)	15,000	Leased
Sparks, NV	Distribution (term–2009)	202,000	Leased
Bentonville, AR	Sales Office (term–December 2006)	4,200	Leased
Duluth, GA	Distribution (term–2008)	32,000	Leased
Augusta, GA	Manufacturing	400,000	Owned
Hazleton, PA(1)	Distribution	420,000	Owned
Floral Park, NY	Meeting Facility	1,600	Cooperative/ Property Lease

18

CANADA:
Burnaby, British Columbia	Administration, Manufacturing, Warehousing & Distribution (term–2009)	30,200	Leased
Lougueuil, Quebec	Administration (term–2007)	9,900	Leased
Boucherville, Quebec	Warehousing (term–2007)	26,000	Leased
Mississuaga, Ontario	Administration & Warehousing (term–2008)	4,600	Leased
UNITED KINGDOM:
Nuneaton	Administration (term–2012)	8,300	Leased
Nuneaton	Administration & Distribution (term–2010)	8,000	Leased
Burton	Administration, Manufacturing and Distribution	281,000	Owned
Tring	Sales Office & Warehousing (term–June 2006)	26,000	Leased
NETHERLANDS:
Beverwijk	Administration & Distribution (term–2008)	71,400	Leased
SPAIN:
Madrid	Administration & Distribution (term–December, 2006)	6,500	Leased

(1)

The property is subject to a first mortgage. For additional information regarding the mortgage, see the Company's Consolidated Financial Statements contained in this Report.

Warehousing and Distribution

        Including recent acquisitions in Hazleton, PA and Augusta, GA, the Company has dedicated approximately 3.6 million square feet to warehousing and distribution. This figure also includes the Company's Long Island, NY; Carbondale and Murphysboro, IL; Anaheim and Gardenia, CA; Augusta and Duluth, GA; South Plainfield, Lyndhurst and Leonia, NJ; Boca Raton and Deerfield FL; Sparks, NV; Hazleton, PA; Boucherville and Mississauga, Canada; Burton and Tring, U.K.; Burnaby, BC and Mississauga, Ontario, Canada; Madrid, Spain; and Beverwijk, Netherlands facilities.

        The Company's warehouse and distribution centers are integrated with the Company's order entry systems to enable the Company to ship out mail orders typically within 24 hours of their receipt. Once a customer's telephone, mail or Internet order is completed, the Company's computer system forwards the order to its distribution center, where all necessary distribution and shipping documents are printed to facilitate processing. Thereafter, the orders are prepared, picked, packed and shipped continually throughout the day. The Company operates a proprietary, state-of-the-art, automated picking and packing system for frequently shipped items. The Company is capable of fulfilling 15,000 Direct Response/Puritan's Pride orders daily. A system of conveyors automatically routes boxes carrying merchandise throughout our primary Long Island distribution center for fulfillment of orders. Completed orders are bar-coded and scanned and the merchandise and ship date are verified and entered automatically into the customer order file for access by sales associates prior to being shipped. The Company currently ships its U.S. orders primarily through the United Parcel Service, Inc. (UPS), serving domestic and international markets. Holland & Barrett and GNC (UK) use Parcelforce and ANC for deliveries in the U.K., and Nature's Way uses the Irish postal service for deliveries in Ireland.

        The Company currently distributes its products from its distribution centers through Company-owned trucks, as well as contract and common carriers in the U.S. and the Netherlands and by Company-owned trucks in the U.K. Deliveries are made directly to the Vitamin World®, Nutrition

19

Warehouse® and Le Naturiste stores once per week. In addition, the Company ships products overseas by container loads. The Company also operates additional distribution centers in Burton, U.K. and Beverwijk, Netherlands. Deliveries are made directly to Company owned and operated Holland & Barrett, GNC (UK), Nature's Way, and De Tuinen stores once or twice per week, depending on each store's inventory requirements.

        All of the Company's properties are covered by all-risk and liability insurance, which the Company believes is customary for the industry.

        Management believes that these properties, taken as a whole, are generally well-maintained, and are adequate for current and reasonably foreseeable business needs. Management also believes that substantially all of the Company's properties are being utilized to a significant degree.

Item 3.    LEGAL PROCEEDINGS

Prohormone products

New York Action

        On July 25, 2002, a putative class-action lawsuit was filed against Vitamin World, Inc., alleging that Vitamin World engaged in deceptive trade practices and false advertising with respect to the sale of certain prohormone supplements and that plaintiffs were therefore entitled to equitable and monetary relief pursuant to the New York General Business Law. Similar complaints were filed against other companies in the vitamin and nutritional supplement industry. The Court has not yet certified a class. Vitamin World has filed a pending motion for summary judgment seeking the dismissal of all claims and an opposition to plaintiff's motion for class certification. We have defended vigorously this action. Until the Court rules on these pending motions, no determination can be made at this time as to its likely final outcome, nor can its materiality be accurately ascertained.

California Action

        On July 25, 2002, a putative consumer class-action was filed in California state court against Met-Rx Substrate Technology, Inc., a subsidiary of Rexall Sundown, claiming that the advertising and marketing of certain prohormone supplements were false and misleading, or alternatively, that the prohormone products contained ingredients that were controlled substances under California law. Plaintiffs seek equitable and monetary relief. On June 18, 2004, this case was consolidated with several other nationwide class-action cases brought against other companies relating to the sale of products containing androstenediol, one of the prohormones contained in the Met-Rx products. The consolidated proceedings have recently been assigned to a judge for further pretrial proceedings. No trial date has been set, the Court has not yet certified a class and the matter is currently in discovery. We have defended vigorously against the claims asserted. Because this action is still in the early stages, no determination can be made at this time as to its final outcome, nor can its materiality be accurately ascertained.

New Jersey Action

        In March 2004, a putative class-action lawsuit was filed in New Jersey against Met-Rx Substrate Technology, Inc., claiming that the advertising and marketing of certain prohormone supplements were false and misleading and that plaintiff and the putative class of New Jersey purchasers of these products were entitled to damages and injunctive relief. Because these allegations are virtually identical to allegations made in a putative nationwide class-action previously filed in California, we moved to dismiss or stay the New Jersey action pending the outcome of the California action. The motion was granted, and the New Jersey action is stayed at this time.

20

Florida Action

        In July 2002, a putative class-action lawsuit was filed in Florida against MET-Rx USA, Inc., a subsidiary of Rexall Sundown, claiming that the advertising and marketing of certain prohormone supplements were false and misleading, that the products were ineffective, and alternatively, that the products were anabolic steroids whose sale violated Florida law. Plaintiff seeks equitable and monetary relief. This case has been largely inactive since its filing. We recently have filed a motion to dismiss for failure to prosecute pursuant to Florida Rule of Civil Procedure 1.420. No determination can be made at this time as to its final outcome, nor can its materiality be accurately ascertained.

Nutrition Bars

        Rexall and certain of its subsidiaries are defendants in a class-action lawsuit brought in 2002 on behalf of all California consumers who bought various nutrition bars. Plaintiffs allege misbranding of nutrition bars and violations of California unfair competition statutes, misleading advertising and other similar causes of action. Plaintiffs seek restitution, legal fees and injunctive relief. We have defended vigorously this action. The Court vacated the July 6, 2005 status conference and set a further conference for January 6, 2006. Until that time, the case is stayed for all purposes. Based upon the information available at this time, we believe that our accrual is adequate for the exposure in the nutrition bar litigation. However, no determination can be made at this time as to the final outcome of this case, nor can its materiality be accurately ascertained.

Shareholder Litigation

        During the period from June 24, 2004 through September 3, 2004, six separate shareholder class-actions were filed against us and certain of our officers and directors in the U.S. District Court for the Eastern District of New York, on behalf of shareholders who purchased shares of our common stock between February 9, 2004 and July 22, 2004 (the potential "Class Period"). The actions allege that we failed to disclose material facts during the Class Period that resulted in a decline in the price of our stock after June 16, 2004 and July 22, 2004, respectively. The Court consolidated the six class-actions in March 2005 and appointed lead plaintiffs and counsel. The lead plaintiffs filed a consolidated amended complaint alleging an amended class period from November 10, 2003 to July 22, 2004. Along with the officers and directors, we have filed a motion to dismiss the action.

        In addition to the shareholder class-actions, two shareholder derivative actions were filed in the Eastern District of New York, on July 9, 2004 and August 26, 2004, respectively, against certain of our officers and directors, and we are named as a nominal defendant. The two derivative actions, which have been consolidated, are predicated upon the allegations set forth in the shareholder class-actions and allege improper sales of our shares by certain officers and directors. On December 27, 2004, the court granted our motion to dismiss this complaint. The plaintiffs have filed an appeal.

        An additional shareholder derivative action was filed on October 7, 2004 in the Supreme Court of the State of New York, Suffolk County, alleging breaches of fiduciary duties by our individual directors and officers, and we are named as a nominal defendant. The derivative claims are predicated upon the same allegations as in the Eastern District consolidated derivative action and upon claims arising from our acquisition of Rexall Sundown, Inc. in July 2003. The New York derivative action is currently stayed by agreement of the parties. We, our named officers and our directors intend to file a motion to dismiss or further stay the New York derivative action at the appropriate procedural time.

        Also, a purported shareholder of ours delivered a demand that our board of directors commence a civil action against certain of our officers and directors based on certain of the allegations described above. Our board of directors, based on the investigation and recommendation of a special committee of the Board, determined not to commence any such lawsuit. On or about April 28, 2005, a second state court derivative action was filed in the Supreme Court of the State of New York, Suffolk County,

21

by this purported shareholder alleging wrongful rejection of his demand and breaches of fiduciary duties by some of our individual directors and officers, and we are named as a nominal defendant. This derivative complaint is predicated upon the same allegations as the dismissed Eastern District consolidated derivative action. This derivative action is currently stayed by agreement of the parties. Along with the named officers and directors we intend to file a motion to dismiss or further stay this derivative action at the appropriate procedural time.

        We and the named officers and directors believe that these suits are without merit and intend to defend vigorously these actions. Given the early stages of the proceedings, however, no determination can be made at this time as to the final outcome of these actions, nor can their materiality be accurately ascertained. We maintain policies of directors' and officers' professional liability insurance.

Regulatory Matters

        In June 2003, we received a letter of inquiry from the FTC concerning our marketing of a certain weight loss product, as well as the marketing of Royal Tongan Limu dietary supplement by our subsidiary, Dynamic Essentials Inc, ("DEI"). We ceased all DEI operations and terminated all DEI employees in September 2003. In October 2005, the United States District Court for the Eastern District of New York entered a Consent Decree that required us to pay a $2 million civil penalty, and imposes an injunction that requires us to comply with the terms of a 1995 consent order between the FTC and the Company. We have paid the civil penalty.

        In addition to the foregoing, other regulatory inquiries, claims, suits and complaints (including product liability claims) arise in the ordinary course of the Company's business. See Item 1. "Government Regulation" for a discussion of these matters. The Company believes that such other inquiries, claims, suits and complaints would not have a material adverse effect on the Company's consolidated financial condition or results of operations, if adversely determined against the Company.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

        None.

22

PART II

Item 5.    MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

DIVIDEND POLICY

        Since its incorporation in 1979, the Company has not paid any cash dividends on its Common Stock. Future determination as to the payment of cash or stock dividends will depend upon the Company's results of operations, financial condition, capital requirements, restrictions contained in the Company's Credit Agreement and Guarantee and Collateral Agreement (collectively, the "CGA"), limitations contained in the indenture governing the 7¹/8% Senior Subordinated Notes due 2015 of the Company, and such other factors as the Company's Board of Directors considers appropriate.

        The CGA prohibits the Company from paying dividends or making any other distributions (other than dividends payable solely in shares of the Company's common stock) to its stockholders. The Company's Indenture governing its 7¹/8% Senior Subordinated Notes due 2015 (the "Indenture") similarly prohibits the Company from paying dividends or making any other distributions to its stockholders. In addition, except as specifically permitted in the CGA, the CGA does not allow the Company's subsidiaries to advance or loan money to, or make a capital contribution to or invest in, the Company. Furthermore, except as expressly permitted in the Indenture, the Company's subsidiaries are not permitted to invest in the Company. However, the CGA and the Indenture do permit the Company's subsidiaries to pay dividends to the Company.

        For additional information regarding these lending arrangements and securities, see Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources" and the Notes to the Consolidated Financial Statements in this Report.

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PRICE RANGE OF COMMON STOCK

        The Common Stock trades on the New York Stock Exchange (the "NYSE") under the trading symbol "NTY". The following table sets forth, for the periods indicated, the high and low sale prices for the Common Stock, as reported on the NYSE.

	Fiscal Year Ended September 30, 2005
	High		Low
First Quarter ended December 31, 2004	$	29.15	$	21.75
Second Quarter ended March 31, 2005	$	27.70	$	22.11
Third Quarter ended June 30, 2005	$	26.65	$	19.95
Fourth Quarter ended September 30, 2005	$	26.00	$	19.45

	Fiscal Year Ended September 30, 2004
	High		Low
First Quarter ended December 31, 2003	$	28.50	$	23.28
Second Quarter ended March 31, 2004	$	38.14	$	26.71
Third Quarter ended June 30, 2004	$	39.61	$	26.25
Fourth Quarter ended September 30, 2004	$	29.86	$	19.41

        On November 30, 2005, there were approximately 560 record holders of Common Stock. The Company believes that there were approximately 22,430 beneficial holders of Common Stock as of November 30, 2005.

        As required by applicable NYSE listing rules, on February 15, 2005, following the Company's 2005 Annual Meeting of Stockholders, the Company's Chairman and Chief Executive Officer submitted to the New York Stock Exchange a certification that he was not aware of any violation by the Company of NYSE corporate governance listing standards.

        For additional information regarding the Company's securities authorized for issuance under the Company's equity compensation plans, see Item 12. "Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters" in this Report.

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SECURITIES AUTHORIZED FOR ISSUANCE
UNDER EQUITY COMPENSATION PLANS

        The following table summarizes the Company's equity compensation plans as of September 30, 2005.

Plan Category		Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)	Weighted-average exercise price of outstanding options, warrants and rights (b)		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders		3,825	$	5.78	2,458
Equity compensation plans not approved by security holders		—		—	—
	Total:

PURCHASES OF EQUITY SECURITIES BY THE ISSUER
AND AFFILIATED PURCHASERS

        The Company purchased 8 of its shares surrendered in payment of stock option exercised during fiscal 2005.

25

Item 6.    SELECTED FINANCIAL DATA

        The following table sets forth the selected financial data derived from the audited financial statements of the Company. For additional information, see the consolidated financial statements of the Company and the notes thereto. The selected historical financial data of the Company should also be read in conjunction with Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this Report.

		Fiscal Years Ended September 30,
		2005			2004			2003			2002			2001
		(Dollars and shares in thousands, except per share amounts)
Selected Income Statement Data:
Net sales		$	1,737,187		$	1,652,031		$	1,192,548		$	964,083		$	806,898
Costs & expenses:
	Cost of sales		895,644			822,412			554,804			433,611			355,167
	Discontinued product charge		—			—			4,500			—			—
	Advertising, promotion and catalog		108,005			85,238			66,455			47,846			49,410
	Selling, general & administrative		588,166			554,838			435,748			348,334			315,228
	Goodwill impairment		7,686			—			—			—			—
	Litigation recovery of raw material costs		—			—			—			(21,354	)		—
Income from operations			137,686			189,543			131,041			155,646			87,093
Interest expense			(26,475	)		(24,663	)		(17,384	)		(18,499	)		(21,958	)
Bond investment write down			—			—			(4,084	)		—			—
Miscellaneous, net			8,051			4,125			5,424			1,560			2,748
Income before provision for income taxes			119,262			169,005			114,997			138,707			67,883
Income taxes			41,125			57,156			33,412			42,916			25,958
Net income		$	78,137		$	111,849		$	81,585		$	95,791		$	41,925
Per Share Data:
Net income per share:
	Basic	$	1.16		$	1.67		$	1.23		$	1.45		$	0.64
	Diluted	$	1.13		$	1.62		$	1.19		$	1.41		$	0.62
Weighted average common shares outstanding:
	Basic		67,162			66,793			66,452			65,952			65,774
	Diluted		69,137			69,069			68,538			67,829			67,125
Selected Balance Sheet Data:
	Working capital	$	475,728		$	359,847		$	311,865		$	185,710		$	131,108
	Total assets		1,482,302			1,232,653			1,195,782			730,140			708,462
Long-term debt, less current portion			428,204			306,531			413,989			163,874			237,236
	Total stockholders' equity		716,055			639,798			514,799			419,257			302,406

        Operating results in all periods presented reflect the impact of acquisitions. The timing of those acquisitions and the changing mix of businesses as acquired companies are integrated into the Company may affect the comparability of results from one period to another. (See Note 2 of the Notes to Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Report.)

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Item 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        Readers are cautioned that certain statements contained herein are forward-looking statements and should be read in conjunction with the Company's disclosures under the heading "Forward Looking Statements" on page 1. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. This discussion should also be read in conjunction with the Notes to the Company's Consolidated Financial Statements contained in this Report. Dollar amounts are in thousands, unless otherwise noted.

Background

        NBTY is a leading vertically integrated manufacturer, marketer, distributor and retailer of a broad line of high-quality, value-priced nutritional supplements in the United States and throughout the world. The Company markets approximately 2,000 products under several brands, including Nature's Bounty®, Vitamin World®, Puritan's Pride®, Holland & Barrett®, Rexall®, Sundown®, MET-Rx®, WORLDWIDE Sport Nutrition®, American Health®, GNC (UK)®, DeTuinen®, Le Naturiste™, SISU® and Solgar®. The Company has continued to grow through its marketing practices and through a series of strategic acquisitions. Since 1986, the Company has acquired and successfully integrated over 30 companies and/or businesses engaged in the manufacturing, retail and direct response sale of nutritional supplements, including:

•

Fiscal 1997: Holland & Barrett;



•

Fiscal 1998: Nutrition Headquarters Group;



•

Fiscal 2000: Nutrition Warehouse Group;



•

Fiscal 2001: Global Health Sciences (the "Global Group"), NatureSmart and Nature's Way;



•

Fiscal 2002: Healthcentral.com, Knox NutraJoint®, and Synergy Plus® product lines/operations;



•

Fiscal 2003: Rexall Sundown Inc., Health and Diet Group Ltd. ("GNC (UK)") and FSC Wholesale, and the DeTuinen chain of retail stores; and



•

Fiscal 2005: Le Naturiste Jean-Marc Brunet ("Le Naturiste"), SISU, Inc. ("SISU") and Solgar Vitamin and Herb, a division of Wyeth Consumer Healthcare ("Solgar").

        NBTY markets its products through four distribution channels: (i) Wholesale/US Nutrition: wholesale distribution to mass merchandisers, drug store chains, supermarkets, independent pharmacies, and health food stores, (ii) North American Retail: Vitamin World and Nutrition Warehouse retail stores in the U.S. and Le Naturiste retail stores in Canada, (iii) European Retail: Holland & Barrett, Nature's Way, GNC (UK), and DeTuinen retail stores in the U.K., Ireland, and the Netherlands, and (iv) Direct Response: Puritan's Pride sales via catalogs and Internet. During the fiscal year ended September 30, 2005, Vitamin World opened 21 new stores, closed 36 stores and at September 30, 2005 operated 542 stores. On February 25, 2005, the Company acquired the Canadian Le Naturiste chain of retail stores. At the time of the acquisition, the Le Naturiste chain operated 99 company-owned stores and 4 franchised stores located throughout Quebec. During the fiscal year ended September 30, 2005, Le Naturiste closed 2 stores and at September 30, 2005, 101 stores were in operation. During the fiscal year ended September 30, 2005, the Company's European Retail division opened 16 new stores, closed 6 stores and at September 30, 2005, 612 stores in the UK, Ireland and the Netherlands were in operation.

        The Company's net sales from Wholesale/US Nutrition, North American Retail, European Retail, and Direct Response, as a percentage of consolidated net sales, were approximately 43%, 13%, 33% and 11%, respectively, for the fiscal year ended September 30, 2005. Cost of sales includes the cost of raw materials and all labor and overhead associated with the manufacturing and packaging of the products. Gross margins are affected by, among other things, changes in the relative sales mix among

27

the Company's four distribution channels, the level of promotional programs offered, as well as gross margins of acquired entities. Historically, gross margins from the Company's direct response/e-commerce and retail sales have typically been higher than gross margins from wholesale sales.

Critical Accounting Policies and Estimates:

        Complete descriptions of significant accounting policies are outlined in Note 1 of the Notes to Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Report.

        The preparation of financial statements in conformity with generally accepted accounting principles ("GAAP") in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. The most significant policies and estimates include:

•

revenue recognition;



•

sales returns and allowances;



•

allowance for doubtful accounts;



•

inventory valuation and obsolescence;



•

valuation and recoverability of long-lived and indefinite-lived intangible assets including the values assigned to acquired intangible assets, goodwill and assets held for sale;



•

income taxes;



•

foreign currency; and



•

accruals for the outcome of current litigation.

        In general, estimates are based on historical experience, on information from third party professionals and on various other sources and assumptions that are believed to be reasonable under the facts and circumstances at the time such estimates are made. On a continual basis, management reviews its estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such reviews, and if deemed appropriate, those estimates are adjusted accordingly. Actual results may vary from these estimates and assumptions under different and/or future circumstances. Management considers an accounting estimate to be critical if:

•

it requires assumptions to be made that were uncertain at the time the estimate was made; and



•

changes in the estimate, or the use of different estimating methods that could have been selected, which could have a material impact on the Company's consolidated results of operations or financial condition.

        The following critical accounting policies have been identified that affect the more significant judgments and estimates used in the preparation of the consolidated financial statements. The following critical accounting policies are not intended to be a comprehensive list of all of the Company's accounting policies or estimates.

Revenue Recognition:

        The Company recognizes revenue in accordance with the Securities and Exchange Commission's Staff Accounting Bulletin 104. The Company recognizes product sales revenue when title and risk of loss have transferred to the customer, there is persuasive evidence of an arrangement, delivery has occurred, the sales price is fixed or determinable and collectibility is reasonably assured. Since the

28

terms for most sales within the wholesale and direct response segments are F.O.B. destination, generally title and risk of loss transfer to the customer at the time the product is received by the customer. With respect to its own retail store operations, the Company recognizes revenue upon the sale of its products to retail customers. The Company's net sales represent gross sales invoiced to customers, less certain related charges for discounts, returns, and other promotional program incentive allowances. Accruals provided for these items are presented in the consolidated financial statements as reductions to sales.

Sales Returns and Other Allowances:

        The Company simultaneously records estimates for various costs, which reduce product sales. These costs include estimates for product returns and for promotional program incentive activities for various types of incentives offered to customers as well as other sales allowances.

        Allowance for sales returns:    The Company analyzes sales returns in accordance with Statement of Financial Accounting Standard ("SFAS") No. 48 "Revenue Recognition When Right of Return Exists". The Company is able to make reasonable and reliable estimates of product returns based on the Company's past 25 year history in the business. The Company also monitors the buying patterns of the end-users of its products based on sales data received by its over 1,200 retail outlets in North America and Europe. Estimates for sales returns are based on a variety of factors including actual return experience of any specific product or similar product. The Company also reviews its estimates for product returns based on expected return data communicated to it by customers. The Company also monitors the levels of inventory at its largest customers to avoid excessive customer stocking of its merchandise. Accruals for returns for new products are estimated by reviewing data of any prior relevant new product introduction return information. Accordingly, the Company believes that its historical returns analysis is an accurate basis for its sales return accrual. The Company does not have the ability to track returns by fiscal period, however, the Company believes it is able to make reasonable estimates of expected sales returns, as contemplated by the requirements of SFAS 48, based upon historical data and the available monitoring processes. The Company believes it has sufficient information and knowledge of its customers and of industry trends and conditions, to adjust the accrual for returns when necessary. Actual results could differ from those estimates.

        Promotional program incentive accrual:    The Company uses objective procedures for estimating its accrual for promotional program incentives. The accrual for sales incentives offered to customers is based on contractual terms or other arrangements agreed to in advance with certain customers. Customers earn such incentives as specified sales volumes are achieved.

        A rollforward of the sales return accrual and the promotional program incentive accrual is as follows:

			Additions
	Balance at beginning of period		Charged to costs and expenses		Charged to Other Accounts			Deductions			Balance at end of period
Sales return accrual:
Fiscal year ended September 30, 2005	$	9,108	$	45,444	$	143	(b)	$	(39,079	)	$	15,616
Fiscal year ended September 30, 2004		7,313		42,041					(40,246	)		9,108
Fiscal year ended September 30, 2003		983		7,932		9,467	(a)		(11,069	)		7,313
Promotional program incentive accrual:
Fiscal year ended September 30, 2005	$	37,495	$	142,999	$	383	(b)	$	(137,040	)	$	43,837
Fiscal year ended September 30, 2004		23,185		72,666					(58,356	)		37,495
Fiscal year ended September 30, 2003		3,549		15,138		18,761	(a)		(14,263	)		23,185

(a)

Represents the opening balance sheet reserves from the Rexall acquisition.

(b)

Represents the opening balance sheet reserves from the Solgar acquisition.

29

        As with any set of assumptions and estimates, there is a range of reasonably likely amounts that may be calculated for each accrual above. However, the Company believes that there would be no significant difference in the amounts reported using any other reasonable assumptions than what was used to arrive at each accrual. The Company regularly reviews the factors that influence its estimates and, if necessary, makes adjustments when it believes that actual product returns, credits and other allowances may differ from established reserves. Actual experience associated with any of these items may be significantly different than the Company's estimates.

Accounts Receivable:

        Accounts receivable is presented net of certain allowances which include the above mentioned sales returns and allowance items, as well as an allowance for doubtful accounts. In order to estimate the allowance for doubtful accounts, the Company performs on-going credit evaluations of its customers and adjusts credit limits based upon payment history and the customer's current credit worthiness, as determined by the review of their current credit information. Collections and payments from customers are continuously monitored. The Company maintains an allowance for doubtful accounts, which is based upon historical experience as well as specific customer collection issues that have been identified. While such bad debt expenses have historically been within expectations and allowances established, the Company cannot guarantee that it will continue to experience the same credit loss rates that it has in the past. If the financial condition of customers were to deteriorate resulting in an impairment of their ability to make payments, additional allowances may be required.

Inventories:

        Inventories are stated at the lower of cost or market. The cost elements of inventory include materials, labor and overhead. The Company uses standard costs for labor and overhead and periodically adjusts those standards. The Company establishes reserves for its inventory to reflect situations in which the cost of the inventory is not expected to be recovered. The Company regularly reviews its inventory, including when product is close to expiration and is not expected to be sold, when product has reached its expiration date, or when product is not expected to be saleable based on the Company's quality assurance and quality control standards. The reserve for these products is equal to all or a portion of the cost of the related inventory based on specific facts and circumstances. In evaluating whether inventory is stated at the lower of cost or market, management considers such factors as the amount of inventory on hand, estimated time required to sell such inventory, remaining shelf life and current and expected market conditions, including levels of competition. The Company has evaluated the current level of inventories considering historical sales and other factors and, based on this evaluation, has recorded adjustments to cost of goods sold to adjust inventory to net realizable value. These adjustments are estimates, which could vary significantly, either favorably or unfavorably, from actual requirements if future economic conditions, customer demand or competition differ from expectations.

Long-Lived Assets:

        The Company periodically reviews the values assigned to long-lived assets, such as property, plant and equipment, intangibles, assets held for sale and goodwill. The associated depreciation and amortization periods are reviewed on an annual basis.

        The Company follows the provisions of Statement of Financial Accounting Standards ("SFAS") No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." This statement requires evaluation of the need for an impairment charge relating to long-lived assets whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. During fiscal 2005, 2004 and 2003, the Company recognized impairment charges of $3,518, $2,603 and $1,117, respectively, on assets to be held and used. The impairment charges related primarily to leasehold improvements and furniture and fixtures for the North American Retail operations and were recorded

30

in selling, general and administrative expense in fiscal 2005, 2004 and 2003. For a discussion of impairment charges as of and for the fiscal year ended September 30, 2005, see Note 7 of the Notes to Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Report.

        Goodwill and other indefinite-lived intangibles are tested for impairment annually or more frequently if impairment indicators arise in accordance with SFAS No. 142, "Goodwill and Other Intangible Assets". The SFAS No. 142 goodwill impairment model is a two-step process. The first step compares the fair value of a reporting unit that has goodwill assigned to its carrying value. The Company estimates the fair value of a reporting unit by using a discounted cash flow model with the assistance of an independent appraisal firm. If the fair value of the reporting unit is determined to be less than its carrying value, a second step is performed to compute the amount of goodwill impairment, if any. Step two allocates the fair value of the reporting unit to the reporting unit's net assets other than goodwill. The excess of the fair value of the reporting unit over the amounts assigned to its net assets other than goodwill is considered the implied fair value of the reporting unit's goodwill. The implied fair value of the reporting unit's goodwill is then compared to the carrying value of its goodwill. Any shortfall represents the amount of goodwill impairment. SFAS 142, requires that goodwill and other intangibles with indefinite lives be tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. Application of the goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. These evaluations require the use of judgment as to the effects of external factors and market conditions on the Company's conduct of its operations, and they require the use of estimates in projecting future operating results. If actual external conditions or future operating results differ from the Company's judgments, impairment charges may be necessary to reduce the carrying value of the subject assets. The fair value of an asset could vary, depending upon the different estimating methods employed, as well as assumptions made. This may result in a possible impairment of the intangible assets and/or goodwill, or alternatively an acceleration in amortization expense. An impairment charge would reduce operating income in the period it was determined that the charge was needed. The Company tests goodwill annually as of September 30, the last day of its fourth fiscal quarter, of each year unless an event occurs that would cause the Company to believe the value is impaired at an interim date. The Company recognized a $7,686 impairment charge of goodwill for the North American Retail reporting unit. For a discussion of impairment charges as of and for the fiscal year ended September 30, 2005, see Note 7 of the Notes to Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Report. As a result of the September 30, 2004 and 2003 impairment testing, no impairment adjustments were deemed necessary.

        The Company considers the following to be some examples of important indicators that may trigger an impairment review: (i) significant under-performance or loss of key contracts acquired in an acquisition relative to expected historical or projected future operating results; (ii) significant changes in the manner or use of the acquired assets or in the Company's overall strategy with respect to the manner or use of the acquired assets or changes in the Company's overall business strategy; (iii) significant negative industry or economic trends; (iv) increased competitive pressures; (v) a significant decline in the Company's stock price for a sustained period of time; and (vi) regulatory changes.

        The Company periodically evaluates acquired businesses for potential impairment indicators. Judgment regarding the existence of impairment indicators is based on market conditions and operational performance of the acquired businesses. Future events could cause the Company to conclude that impairment indicators exist, and therefore that goodwill and other intangible assets associated with its acquired businesses are impaired. Generally, in evaluating impairment, the Company

31

estimates the sum of the expected future cash flows derived from such goodwill. Such evaluations for impairment are significantly impacted by estimates of future revenues, costs and expenses and other factors. A significant change in cash flows in the future could result in an additional impairment of goodwill.

Purchase Price Allocation:

        On August 1, 2005, the Company acquired substantially all the assets of Solgar Vitamin and Herb, a division of Wyeth Consumer Healthcare (Wyeth NYSE: WYE) for $115,000 in cash. The cash used for this acquisition was financed by an amendment and restatement of the Company's existing Credit and Guarantee Agreement ("CGA") which included a new Term Loan A for $120,000 which matures on August 2010 and increasing its existing Revolving Credit Facility from $100,000 to $125,000 (see "Liquidity and Capital Resources" section contained in this Report). The Company also incurred approximately $3,409 of direct transaction costs for a total purchase price of approximately $118,409. Additionally, related financing costs of approximately $1,147 were paid to secure the financing for this acquisition which will be amortized until the maturity of Term Loan A. This acquisition contributed $17,464 in net sales and a pre-tax operating loss of $1,879 since its acquisition date to NBTY's wholesale segment for the fiscal year ended September 30, 2005.

        On June 8, 2005, the Company acquired SISU, Inc. ("SISU"), a Canadian-based manufacturer and distributor of premium quality vitamins and supplements sold to the independent health food stores. SISU is headquartered in Burnaby, British Columbia and had sales of approximately $14,000 for its fiscal year ended September 30, 2004. The purchase price for this business was approximately $8,224 in cash. This acquisition contributed $3,355 in net sales and a marginal pre-tax operating loss since its acquisition date to NBTY's wholesale segment for the fiscal year ended September 30, 2005.

        On February 25, 2005, the Company acquired Le Naturiste Jean-Marc Brunet ("Le Naturiste"), a chain of 103 retail stores located throughout Quebec. Le Naturiste is an Eastern Canadian-based company in the business of developing, packaging, marketing and retailing an in-house range of privately-labeled health and natural products. The purchase price for this business was approximately $5,048 in cash. At the time of the acquisition, the Le Naturiste chain operated 99 company-owned stores and 4 franchised stores. At September 30, 2005, 101 stores were in operation. This acquisition contributed $9,089 in net sales and a pre-tax operating loss of $1,556 since its acquisition date to NBTY's North American retail segment for the fiscal year ended September 30, 2005.

        On July 25, 2003, NBTY acquired all of the issued and outstanding capital stock of Rexall Sundown, Inc. ("Rexall") for $250,000 in cash from Numico USA, Inc., an indirect subsidiary of Royal Numico N.V., through the acquisition of certain partnership and limited liability company interests. The acquisition was financed by a new senior credit facility (see "Liquidity and Capital Resources" section contained in this Report). The Company also incurred approximately $7,000 of direct transaction costs for a total purchase price of approximately $257,000. Additionally, related financing costs of approximately $7,500 were paid to secure the financing for this acquisition which will be amortized until the maturity of the underlying debt.

        The Company accounted for these acquisitions under the purchase method of accounting in accordance with SFAS No. 141, "Business Combinations." Under the purchase method of accounting, the total purchase price has been allocated to the tangible and intangible assets acquired and the liabilities assumed based on their estimated fair values. The excess of the purchase price over the fair value was recorded as goodwill. The fair value assigned to the tangible and intangible assets acquired and liabilities assumed was based upon estimates and assumptions developed by us and other information compiled by us, including a valuation, prepared by an independent valuation specialist that utilized established valuation techniques appropriate for the industry.

        The Company is in the process of obtaining a third party valuation of certain assets and liabilities and has not yet finalized the final net asset and working capital adjustment (as defined in the

32

respective purchase agreements) relating to the Solgar and SISU acquisitions, respectively; therefore, the preliminary allocation of the purchase price noted above is subject to revision. The purchase agreement stipulates an adjustment to the purchase price between buyer and seller for the excess or shortfall of the final thresholds as set forth in each respective agreement. With respect to the SISU acquisition, the preliminary purchase price allocation is also subject to contingency payments based upon financial loss claims as specified in the purchase agreement. The purchase agreement stipulates the indemnification from the seller of any financial losses of SISU for the period from June 1, 2005 to May 31, 2006 up to the maximum amount of $500. The completion of these events could potentially result in an adjustment to the purchase price. Upon completion of these events, final allocations to the acquired assets and liabilities could result in future adjustments to goodwill and actual results may differ from those presented herein.

        Although management believes that the current allocation of the estimated purchase price is reasonable, the final allocation (resulting from the finalization of the valuation of the fair value of the net assets acquired and the finalization of net working capital and net assets acquired) may differ significantly from the amounts reflected in the accompanying consolidated financial statements.

Income Taxes:

        The Company records the estimated future tax effects of temporary differences between the tax bases of assets and liabilities and amounts reported in the accompanying consolidated balance sheets, as well as tax credit carrybacks and carryforwards. The Company periodically reviews the recoverability of tax assets recorded on the balance sheet and provides valuation allowances as management deems necessary. Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions. In management's opinion, adequate provisions for income taxes have been made for all years. If actual future taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary.

Foreign Currency:

        Approximately 34%, 31% and 31% of the Company's net sales for the fiscal years ended September 30, 2005, 2004 and 2003, respectively, were denominated in currencies other than U.S. dollars, principally British Pounds, Euros and Canadian Dollars (fiscal 2005). A significant weakening of such currencies versus the U.S. dollar could have a material adverse effect on the Company.

        Foreign subsidiaries accounted for the following percentages of assets and total liabilities as of September 30, 2005 and 2004:

	2005		2004
Assets	26	%	27	%
Total liabilities	10	%	15	%

        In preparing the consolidated financial statements, the financial statements of the foreign subsidiaries are translated from the currency in which they keep their accounting records, generally the local currency, into U.S. Dollars. This process results in exchange gains and losses, which, under the relevant accounting guidance, are either included within the statement of income or as a separate component of stockholders' equity under the caption "Accumulated other comprehensive income."

        Under the relevant accounting guidance, the treatment of these translation gains or losses is dependent upon management's determination of the functional currency of each subsidiary. The functional currency is determined based on management's judgment and involves consideration of all relevant economic facts and circumstances affecting the subsidiary. Generally, the currency in which the subsidiary transacts a majority of its transactions, including billings, financing, payroll and other

33

expenditures, would be considered the functional currency, but any dependency upon the parent and the nature of the subsidiary's operations must also be considered.

        If a subsidiary's functional currency is deemed to be the local currency, then any gain or loss associated with the translation of that subsidiary's financial statements is included in accumulated other comprehensive income. However, if the functional currency is deemed to be the U.S. Dollar, then any gain or loss associated with the translation of these financial statements would be included within the statement of operations. If the Company disposes of subsidiaries, then any cumulative translation gains or losses would be recorded into the statement of operations. If the Company determines that there has been a change in the functional currency of a subsidiary to the U.S. Dollar, any translation gains or losses arising after the date of change would be included within the statement of operations.

        Based on an assessment of the factors discussed above, the Company considers the relevant subsidiary's local currency to be the functional currency for each of its foreign subsidiaries. During the fiscal years of 2005, 2004 and 2003, translation (losses) gains of ($5,121), $7,547 and $9,980, respectively, were included in determining other comprehensive income. Accordingly, cumulative translation gains of approximately $17,031 and $22,152 were included as part of accumulated other comprehensive income within the consolidated balance sheet at September 30, 2005 and September 30, 2004, respectively. Had the Company determined that the functional currency of its subsidiaries was the U.S. Dollar, these gains would have increased net income for each of the periods presented.

        The magnitude of these gains or losses is dependent upon movements in the exchange rates of the foreign currencies against the U.S. Dollar. These currencies mainly include the British Pound Sterling, the Euro and the Canadian dollar. Any future translation gains or losses could be significantly different than those noted in each of these years. In addition, if a change in the functional currency of a foreign subsidiary has occurred at any point in time, then the Company would be required to include any translation gains or losses from the date of such change in the statement of operations.

Contingencies:

        NBTY is subject to proceedings, lawsuits and other claims related to various matters. The Company is required to assess the likelihood of any adverse judgments or outcomes to these matters as well as potential ranges of probable losses. Management determines the amount of reserves needed, if any, for each individual issue based on its knowledge and experience and discussions with legal counsel. The required reserves may change in the future due to new developments in each matter, the ultimate resolution of each matter or changes in approach, such as a change in settlement strategy, in dealing with these matters. As discussed in Note 19 of the Notes to the Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Report, NBTY is unable to make a reasonable estimate of the liabilities that may result from the final resolution of certain contingencies disclosed. Assessments of each potential liability will be made as additional information becomes available. NBTY currently does not believe that these matters will have a material adverse affect on its consolidated financial position or results of operations.

General

        Operating results in all periods presented reflect the impact of acquisitions. The timing of those acquisitions and the changing mix of businesses as acquired companies are integrated into the Company may affect the comparability of results from one period to another. (See Note 2 of the Notes to Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Report.)

Results of Operations

        The following table sets forth for the periods indicated, the Consolidated Statements of Income of the Company expressed as a percentage of total net sales. Percentages may not add due to rounding.

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			Fiscal year ended September 30,
			2005		2004		2003
Net sales			100	%	100	%	100	%
Costs and expenses:
	Cost of sales		51.6	%	49.7	%	46.5	%
	Discontinued product charge		—		—		0.4	%
	Advertising, promotion and catalog		6.2	%	5.2	%	5.6	%
	Selling, general and administrative		33.9	%	33.6	%	36.5	%
	Goodwill impairment		0.4	%	—		—
			92.1	%	88.5	%	89.0	%
Income from operations			7.9	%	11.5	%	11.0	%
Other income (expense):
	Interest		-1.5	%	-1.5	%	-1.5	%
	Bond investment write down		—		—		-0.3	%
	Miscellaneous, net		0.5	%	0.2	%	0.5	%
			-1.1	%	-1.3	%	-1.3	%
Income before provision for income taxes			6.9	%	10.2	%	9.7	%
Provision for income taxes			2.4	%	3.5	%	2.8	%
		Net income	4.5	%	6.7	%	6.9	%

Fiscal Year Ended September 30, 2005 Compared to Fiscal Year Ended September 30, 2004

        Net Sales.    Net sales by segment for fiscal 2005 as compared with the prior comparable period is comprised as follows:

			Fiscal year ended September 30,				Dollar Change			Percentage Change
			2005		2004		2005 vs. 2004			2005 vs. 2004
Wholesale/US Nutrition			$	747,234	$	734,293	$	12,941		1.8	%
North American Retail/Vitamin World				224,008		216,431		7,577		3.5	%
European Retail/
	Holland & Barrett/GNC (UK)			566,140		495,808		70,332		14.2	%
Direct Response/
	Puritan's Pride			199,805		205,499		(5,694	)	-2.8	%
		Total	$	1,737,187	$	1,652,031	$	85,156		5.2	%

        Net sales for the Wholesale/US Nutrition, which markets certain brands including Nature's Bounty, Met-Rx, Sundown and Solgar brands, increased primarily due to the acquisition of the Solgar brands on August 1, 2005. Net sales for the Solgar brand since the acquisition date was $17,464. The remaining US Nutrition brands maintained their marketshare in a declining market through aggressive advertising and promotions. The Company continues to adjust shelf space allocation between the US Nutrition brands to provide the best overall product mix and to respond to changing market conditions. These efforts have helped to maintain US Nutrition's position in the mass market. Product returns resulted in a reduction to net sales of $45,444 for the fiscal year ended September 30, 2005 as compared to $42,041 for the prior comparable period, a portion of which was associated with the decline for low carb related products, with the remaining due to reallocations of the US Nutrition brands, as well as other normal business operations. US Nutrition continues to leverage valuable consumer sales information obtained from the Company's Vitamin World retail stores and Puritan's Pride direct-response/e-commerce operations in order to provide its mass-market customers with data and analyses

35

to drive mass market sales. For the fiscal year ended September 30, 2005, two customers of the Wholesale/US Nutrition division represented, individually, more than 10% of the Wholesale/US Nutrition segment's net sales. One of these customers is primarily a supplier to the other customer; therefore, changes in the Company's business relationship with either customer would likely result in the loss of most of the net sales to both customers. For the fiscal year ended September 30, 2004, one customer of the Wholesale/US Nutrition division represented, individually, more than 10% of the Wholesale/US Nutrition segment's net sales. While no one customer represented individually more than 10% of the Company's consolidated net sales, the loss of either one of these customers would have a material adverse effect on the Wholesale/US Nutrition segment if the Company is unable to replace such customer(s).

        North American Retail net sales increased primarily due to the acquisition of Le Naturiste ($9,089) and 21 new Vitamin World retail store openings ($2,694). The number of customers in the Savings Passport Program, a customer loyalty program, increased approximately 1.0 million to 5.9 million customers, as compared to 4.9 million customers at the end of the comparable prior period. Same store sales for stores open more than one year decreased 2.7% (or $5,341) reflecting the continued difficult specialty retail environment. As US Nutrition introduces more new products directly to the mass market, the specialty retail channel's ability to capitalize on market trends and new products is restricted which has affected Vitamin World. The Company expects this trend to continue in the near future. During the fiscal year ended September 30, 2005, Vitamin World opened 21 new stores, closed 36 stores and at the end of the period operated 542 stores. The Company operated 557 Vitamin World stores in the U.S. as of September 30, 2004. On February 25, 2005, the Company acquired Le Naturiste Jean-Marc Brunet, a chain of 103 retail stores located throughout Quebec. Le Naturiste is an Eastern Canadian-based company in the business of developing, packaging, marketing and retailing an in-house range of privately-labeled health and natural products. At September 30, 2005, the Le Naturiste chain operated 97 company-owned stores and 4 franchised stores.

        European Retail net sales increases were directly attributable to an increase in same store sales for stores open more than one year of 10.9% (or $53,136). These European Retail net sales results include the positive effect of the exchange rate for the British Pound ($15,332 or 3.1%). Without foreign exchange, the increase in same store sales (for stores open more than one year) was 7.8%. The European Retail division continues to leverage its premier status, high street locations and brand awareness to achieve these results. During the fiscal year ended September 30, 2005, the Company's European Retail division opened 16 new stores and closed 6 stores and at the end of the period 612 stores in the U.K., Ireland and the Netherlands were in operation. At September 30, 2004, 602 stores in the U.K., Ireland and the Netherlands were in operation.

        Direct Response/Puritan's Pride net sales decreased as a result of the stagnant market for nutritional supplements, negative publicity surrounding Vitamin E and Puritan's Pride's substantial reduction in pricing. The Company adopted this aggressive pricing strategy to maintain its customer base and to put pressure on competition. Internet orders increased as compared to the prior like period. On-line net sales comprised 28% of this segment's net sales and increased 19.4% in the fiscal year ended September 30, 2005 as compared to the prior comparable period. The Company remains the leader in the direct response and e-commerce sector and continues to increase the number of products available via its catalog and websites.

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        Cost of Sales.    Cost of sales for fiscal 2005 as compared to the prior comparable period is as follows:

	Fiscal year ended September 30,				Fiscal year ended September 30,
	2005		% of net sales		2004		% of net sales
Net sales	$	1,737,187	100.0	%	$	1,652,031	100.0	%
Cost of sales		895,644	51.6	%		822,412	49.7	%
Gross profit	$	841,543	48.4	%	$	829,619	50.3	%

        Gross profit as a percentage of net sales by segment for fiscal 2005 as compared to the prior comparable period is as follows:

			GROSS PROFIT BY SEGMENT
							Percent Change
			Fiscal year ended September30,
							2005 vs. 2004
			2005		2004
Wholesale/US Nutrition			34	%	36	%	-2	%
North American Retail/Vitamin World			55	%	59	%	-4	%
European Retail/
	Holland & Barrett/GNC (UK)		62	%	62	%	0	%
Direct Response/
	Puritan's Pride		57	%	62	%	-5	%
		Total	48	%	50	%	-2	%

        The Wholesale/US Nutrition segment's gross profit as a percentage of net sales for fiscal 2005 decreased from the prior year comparable period. During fiscal 2005, there were $45,444 in product returns as compared to $42,041 in product returns during fiscal 2004. A portion of product returns were associated with the contraction in the low carb related product market, with the remaining due to reallocations of the US Nutrition brands, as well as other normal business operations. Certain non-performing Rexall brands were replaced with faster selling Nature's Bounty brand products. The gross profit was also affected by changes in product mix and an increase in sales incentives and promotion costs which are classified as reductions in gross sales. The North American Retail gross profit decreased primarily due to heavy discounts offered in order to maintain market share. The European Retail gross profit remained consistent with the prior comparable period. Direct Response/Puritan's Pride gross profit decreased primarily due to aggressive pricing strategy and promotions.

        Advertising, Promotion and Catalog.    Total advertising, promotion and catalog expenses for fiscal 2005 and 2004 were as follows:

								Dollar Change			Percentage Change
		Fiscal year ended September 30,
								2005 vs. 2004			2005 vs. 2004
		2005			2004
Advertising, promotions, catalogs		$	96,645		$	71,318		$	25,327		35.5	%
Catalog printing and mailing			11,360			13,920			(2,560	)	-18.4	%
	Total	$	108,005		$	85,238		$	22,767		26.7	%
Percentage of net sales			6.2	%		5.2	%

        Of the $22,767 increase, $25,327 was attributable to the increase in promotions for products, mainly via television, magazines, newspapers and mailing programs, partially offset by a decrease of $2,560 in catalog printing costs.

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        Total advertising, promotion and catalog expenses by segment for fiscal 2005 as compared with the prior comparable period is comprised as follows:

									Dollar Change			Percentage Change
			Fiscal year ended September 30,
									2005 vs. 2004			2005 vs. 2004
			2005			2004
Wholesale/US Nutrition			$	76,086		$	48,343		$	27,743		57.4	%
North American Retail/Vitamin World				7,920			8,580			(660	)	-7.7	%
European Retail/
	Holland & Barrett/GNC (UK)			7,148			8,806			(1,658	)	-18.8	%
Direct Response/
	Puritan's Pride			16,526			19,240			(2,714	)	-14.1	%
Corporate				325			269			56		20.8	%
		Total	$	108,005		$	85,238		$	22,767		26.7	%
Percentage of net sales				6.2	%		5.2	%

        The Wholesale/US Nutrition segment's advertising expenses increased primarily due to advertising expenses incurred related to the following brands: OSTEO Bi-Flex®, WORLDWIDE Sport Nutrition®, Sundown® and Flex-a-min®. The Company undertook this initiative to build brand awareness and to retain market share in a difficult environment. The Wholesale/US Nutrition segment's increase was partially offset by decreases in advertising expenses attributable to the Company's other segments. Investments in advertising and sales promotions are part of the Company's strategic effort to increase market share and long-term growth.

        Selling, General and Administrative.    Selling, general and administrative expenses for fiscal 2005 as compared with the prior comparable period by segment is as follows:

									Dollar Change			Percentage Change
			Fiscal year ended September 30,
									2005 vs. 2004			2005 vs. 2004
			2005			2004
Wholesale/US Nutrition			$	108,987		$	105,266		$	3,721		3.5	%
North American Retail/Vitamin World				133,526			119,790			13,736		11.5	%
European Retail/
	Holland & Barrett/GNC (UK)			194,242			179,065			15,177		8.5	%
Direct Response/
	Puritan's Pride			44,052			42,836			1,216		2.8	%
Corporate				107,359			107,881			(522	)	-0.5	%
		Total	$	588,166		$	554,838		$	33,328		6.0	%
Percentage of net sales				33.9	%		33.6	%

        The European Retail's selling, general and administrative expenses increase of $15,177 includes $5,640 attributable to foreign exchange.

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        Selling, general and administrative expense increases for fiscal 2005 as compared with the prior comparable period is as follows:

		Fiscal year ended September 30,					Dollar Change			Percentage Change
		2005			2004		2005 vs. 2004			2005 vs. 2004
Payroll		$	244,232		$	225,146	$	19,086		8.5	%
Rent			115,442			105,531		9,911		9.4	%
Real estate taxes			21,209			18,189		3,020		16.6	%
Insurance			26,156			24,199		1,957		8.1	%
Freight			47,696			45,199		2,497		5.5	%
Impairments of long-lived assets			3,518			2,603		915		35.2	%
Impairment charge on building held for sale			1,908			—		1,908		100.0	%
Gain on sale of business assets			(1,999	)		—		(1,999	)	100.0	%
Other			130,004			133,971		(3,967	)	-3.0	%
	Total	$	588,166		$	554,838	$	33,328		6.0	%

        The increase of $33,328 in selling, general and administrative expense is attributable to the following: Payroll costs increased mainly due to recent business acquisitions and general salary increases; rent and real estate taxes expense increased mainly associated with additional North American Retail and European Retail stores, as well as newly leased facilities; insurance costs increased mainly associated with an increase in general insurance rates; freight costs increased mainly resulting from the increased wholesale sales; impairment charges for the write-down of long lived assets held and used in its North American Retail locations (Vitamin World operations) impairment charge on building held for sale resulting from the sale of the Rexall corporate building; partially offset by a gain on sale of business assets as a result of the Company selling certain business assets of FSC, a Manchester, U.K. based wholesale operation which sold products to health food stores and pharmacies.

        Goodwill impairment.    During fiscal 2005, the Company recorded a goodwill impairment charge of $7,686 for the North American Retail operations (Vitamin World operations). Impairment indicators are discussed in Note 7 of the Notes to Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Report.

        Interest Expense.    The major components of interest expense are interest on Senior Subordinated Notes, and interest on the Credit and Guarantee Agreement ("CGA") used for acquisitions, capital expenditures and other working capital needs. Interest expense for fiscal 2005 as compared with the prior comparable period is as follows:

	Fiscal year ended September 30,						Dollar Change
	2005			2004			2005 vs. 2004
Interest expense	$	26,475		$	24,663		$	1,812
Percentage of net sales		1.5	%		1.5	%

        Interest expense increased due to an increase in the annual borrowing rate for the Term Loan C (5.875% at September 30, 2005 as compared to 3.75% at September 30, 2004), offset by principal repayments of borrowings under the CGA ($17,368 reduction to principal). Included in the interest expense for the fiscal year ended September 30, 2005 is a charge of $790 in connection with the early extinguishment of the 2007 Notes. The charge included a write-off of approximately $620 representing the unamortized portion of debt issuance costs and $170 representing the unamortized bond discount associated with the original issuance. In addition, interest expense for the current fiscal year increased due to an interest payment ($1,341) made as a result of the Company settling its working capital dispute in connection with the Rexall acquisition. On December 19, 2003, the Company refinanced

39

$224,000 of Term B loans outstanding under its July 2003 credit agreement with a new class of Term C loans on more favorable terms of LIBOR plus 2%. Costs of approximately $500 were paid on December 19, 2003, in connection with this debt refinancing, which will be amortized until Term C's maturity of approximately six years. On August 1, 2005, in connection with the Company's acquisition of Solgar®, the Company amended and restated its existing CGA by adding a new Term Loan A of $120,000 and increasing its existing Revolving Credit Facility from $100,000 to $125,000. Costs of $1,147 were paid in connection with this amendment and restatement of the Company's CGA. At September 30, 2005, the CGA consisted of a $125,000 Revolving Credit Facility, which had borrowings outstanding of $6,000, a Term Loan C, which had borrowings outstanding of $138,163 and a Term Loan A, which had borrowings outstanding of $75,419. Interest rates charged on borrowings can vary depending on the interest rate option utilized. Options for the rate can either be the Alternate Base Rate or LIBOR, plus applicable margin. At September 30, 2005 the annual borrowing rate for Term Loan C approximated 5.875%, the annual borrowing rate for Term Loan A approximated 5.25% and the annual borrowing rate for the Revolving Credit Facility approximated 7.75%.

        Miscellaneous, net.    Miscellaneous, net for fiscal 2005 as compared to the prior comparable period is as follows:

	Fiscal year ended September 30,						Dollar Change
	2005			2004			2005 vs. 2004
Miscellaneous, net	$	8,051		$	4,125		$	3,926
Percentage of net sales		0.5	%		0.2	%

        Miscellaneous, net increased for fiscal 2005 as compared to the prior comparable period primarily attributable to the following:

		Fiscal year ended September 30,				Dollar Change
		2005		2004		2005 vs. 2004
Foreign exchange transaction gain		$	4,286	$	1,253	$	3,033
Investment income			1,935		1,298		637
Rental income			991		1,248		(257	)
Other			839		326		513
	Total	$	8,051	$	4,125	$	3,926

        Income Taxes.    Income tax expense for fiscal 2005 as compared to the prior comparable period, and the respective effective income tax rates, is as follows:

	Fiscal year ended September 30,						Dollar Change
	2005			2004			2005 vs. 2004
Provision for income taxes	$	41,125		$	57,156		$	(16,031	)
Percentage of net sales		2.4	%		3.5	%
Effective income tax rate		34.5	%		33.8	%

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        The Company's income tax expense is impacted by a number of factors, including federal taxes, its international tax structure, state tax rates in the jurisdictions where the Company conducts business, and the Company's ability to utilize state tax credits that will begin to expire in 2013. Therefore, the Company's overall effective income tax rate could vary as a result of these factors. No income tax benefit was attributed to the goodwill impairment charge of $7,686. This charge impacted the effective income tax rate for fiscal 2005 by 2.09%. Excluding the effect of the goodwill impairment charge for fiscal 2005, the effective income tax rates are generally less than the U.S. federal statutory tax rate primarily due to the enhanced tax structure of foreign subsidiaries which could also continue to impact future fiscal years.

        In October 2004, the American Jobs Creation Act of 2004 (Act) became effective in the U.S. Two provisions of the Act may impact the Company's provision for income taxes in future periods, namely those related to the Qualified Production Activities Deduction (QPA) and Foreign Earnings Repatriation (FER). The QPA will be effective for the Company's U.S. federal tax return year beginning after September 30, 2005. Due to the interaction of the law's provisions as well as the particulars of the Company's tax position, the ultimate effect of the QPA on the Company's future provision for income taxes is not deemed to be significant. The FER provision of the Act provides generally for a one-time 85 percent dividends received deduction for qualifying repatriations of foreign earnings to the U.S. The Company has completed its evaluation of the application of the FER provision and determined that it will realize a benefit by repatriating funds in accordance with the FER provision. As such, the Company has developed a Domestic Reinvestment Plan to reinvest the repatriated funds in the U.S. in qualifying activities, pursuant to the terms of the FER provision and subsequent guidance issued by the IRS. This plan calls for the repatriation of up to $100 million during the fiscal year ending September 30, 2006. A portion of the repatriation includes foreign earnings related to the fiscal year ended September 30, 2005 and to earlier fiscal years. The Company has recorded a net benefit of $884 on the unremitted earnings from the fiscal year ended September 30, 2005 and earlier fiscal years as a result of the FER provision. The majority of the repatriation is expected to come from projected foreign earnings for the fiscal year ending September 30, 2006. It is impractical to calculate the exact amount of earnings and exact tax impact that the Company may realize from the repatriation of 2006 earnings. As such, no incremental tax impact has been recorded with respect to these earnings.

        Net Income.    After income taxes, the Company had net income for fiscal 2005 as compared to the prior comparable period (and the respective basic and diluted earnings per share) as follows:

			Fiscal year ended September 30,						Dollar Change
			2005			2004			2005 vs. 2004
	Net income		$	78,137		$	111,849		$	(33,712	)
	Percentage of net sales			4.5	%		6.8	%
Net income per share:
		Basic	$	1.16		$	1.67
		Diluted	$	1.13		$	1.62

        Included in the results for fiscal 2005 are asset impairment charges for the North American Retail goodwill write-down ($7,686 or basic and diluted earnings per share of $0.11) and the write-down of long lived assets held and used in its North American Retail locations (Vitamin World operations) ($2,304, after tax, or basic and diluted earnings per share of $0.03).

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Fiscal Year Ended September 30, 2004 Compared to Fiscal Year Ended September 30, 2003

        Net Sales.    Net sales for fiscal 2004 were $1,652,031, an increase of $459,483, or 38.5%, compared with net sales of $1,192,548 in fiscal 2003. The $459,483 increase is comprised of the following:

		Fiscal year ended September 30,				Dollar Change		Percentage Change
		2004		2003		2004 vs. 2003		2004 vs. 2003
Wholesale		$	734,293	$	416,627	$	317,666	76.2	%
U.S. Retail/Vitamin World			216,431		212,380		4,051	1.9	%
European Retail/Holland & Barrett/GNC (UK)			495,808		363,597		132,211	36.4	%
Direct Response/Puritan's Pride			205,499		199,944		5,555	2.8	%
	Total	$	1,652,031	$	1,192,548	$	459,483	38.5	%

        The US Nutrition Wholesale division, which operates Nature's Bounty and Rexall brands, increased its net sales primarily due to the acquisition of the Rexall product lines ($220,726). The Company continues to adjust shelf space allocation between the Nature's Bounty brand and Rexall brands to provide the best overall product mix. These efforts have strengthened US Nutrition's position in the mass market. Additionally, the remaining wholesale net sales increases primarily resulted from increased promotional programs offered to the mass market, drug chains and supermarkets. Through the Company's well-known brands, NBTY continues to strengthen its leading market position. Consumer sales information obtained from the Company's Vitamin World retail stores and Puritan's Pride direct-response/e-commerce operations are used to provide its mass-market customers with timely and vital data and analyses to drive mass market sales. The Company continues to respond to consumer preferences and to monitor the market for trends and ideas, and these efforts have translated into increased sales. Product returns resulted in a reduction to net sales of $42,041 for the fiscal year ended September 30, 2004 as compared to $7,932 for the prior comparable period. For the fiscal year ended September 30, 2004, one customer of the Wholesale/US Nutrition division represented, individually, more than 10% of the Wholesale/US Nutrition segment's net sales. For the fiscal year ended September 30, 2003, two customers of the Wholesale/US Nutrition division represented, individually, more than 10% of the Wholesale/US Nutrition segment's net sales. One of these customers is primarily a supplier to the other customer, therefore changes in the Company's business relationship with either customer(s) would likely result in the loss of most of the net sales to both customers. While no one customer represented, individually, more than 10% of the Company's consolidated net sales, the loss of either of these two customers could have a material adverse effect on the Wholesale segment if the Company is unable to replace such customer(s).

        U.S. Retail net sales increased due to the success of the Savings Passport Program, a customer loyalty program. The number of customers in the Savings Passport Program increased approximately 1.1 million to 4.9 million customers as compared to 3.8 million customers at the end of the comparable prior period. Same store sales for stores open more than one year increased 0.7% or $1,355. Additionally, increases in net sales were attributable to new Vitamin World stores opened during the fiscal year ended September 30, 2004 which contributed $4,242 to net sales, partially offset by store closures of $1,564. During the last few months, U.S. Retail net sales have been decreasing due to a general sales slow down across the entire specialty market. In addition, as the US Nutrition Wholesale operation introduces more new products directly to the mass market due to market trends, therefore, the specialty retail ability to capitalize on these market trends and new products is not as effective. The Company expects this trend to continue in the near future. During the fiscal year ended September 30, 2004, Vitamin World opened 34 new stores, closed 10 stores and at the end of the year operated 557 stores. The Company operated 533 stores in the U.S. as of September 30, 2003.

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        European Retail net sales increases were directly attributable to (1) the fiscal 2003 acquisitions of GNC (UK) (increase of $16,371) and De Tuinen (increase of $25,034); 38 GNC stores in the U.K. and 67 DeTuinen stores in the Netherlands were in operation at September 30, 2004; (2) an increase in same store sales for Holland & Barrett stores open more than one year of 25.1% (or $81,419); and (3) new Holland & Barrett stores opened during the fiscal year ended September 30, 2004 which contributed $6,357 to net sales. These European Retail net sales results include the positive effect of a strong British Pound ($43,284 or 11.9%). Without foreign exchange, the increase in same store sales (for sales open more than one year) was 13.0%. During the fiscal year ended September 30, 2004, the Company's European Retail division opened 19 new stores, closed 6 stores and at the end of the fiscal year 602 stores in the U.K., Ireland and the Netherlands were in operation. At September 30, 2003, 589 stores in the U.K., Ireland and the Netherlands were in operation.

        Direct Response/Puritan's Pride net sales increased as a result of the change in the timing of promotional catalog mailings, enhanced appearance of the Company's catalogs, and the Company's continued efforts to target market its customer base to maximize sales. Internet orders continue to increase as compared to prior like periods. Puritan's Pride on-line net sales increased 24.7% for the current fiscal year and comprised 20.5% of the Direct Response's segment net sales. The Company continues to increase the number of products available via its catalog and websites.

        Cost of Sales/Discontinued product charge.    Cost of sales for fiscal 2004 was $822,412, or 50% as a percentage of net sales, compared to $559,304 (including a discontinued product charge of $4,500) or 47% for fiscal 2003. Overall, gross profit, as a percentage of net sales, decreased 3% to 50% during the fiscal year ended September 30, 2004 as compared to 53% for the prior comparable period. Gross profit as a percentage of net sales by segment is as follows:

		Fiscal year ended September 30,				Percent Change
		2004		2003		2004 vs. 2003
Wholesale		36	%	40	%	-4	%
U.S. Retail/Vitamin World		59	%	60	%	-1	%
European Retail/Holland & Barrett/GNC (UK)		62	%	61	%	1	%
Direct Response/Puritan's Pride		62	%	62	%	0	%
Total (without discontinued product charge)		50	%	54	%	-4	%
Discontinued product charge		0	%	-1	%	1	%
	Total	50	%	53	%	-3	%

        The US Nutrition Wholesale segment's gross profit for fiscal 2004 decreased 4% to 36% from 40%, as a percentage of net sales, for fiscal 2003. This was primarily due to the effect of Rexall's sales returns ($34,215) resulting from current business decisions to accept returns for certain non-performing Rexall brands and replacing them with faster selling Nature's Bounty product as well as lower gross profit contributions from Rexall's product lines (35%). During fiscal 2004, total product returns were $42,041 as compared to $7,932 during fiscal 2003. The gross profit was also affected by changes in product mix and an increase in sales incentives and promotion costs which are classified as reductions in gross sales. The U.S. Retail gross profit for fiscal 2004 decreased 1% to 59% from 60%, as a percentage of net sales, for fiscal 2003 primarily due to product mix. The European Retail gross profit increased 1% to 62% from 61%, as a percentage of net sales, primarily due to different promotional programs in effect this period as compared to the prior comparable period and as a result of the recent acquisitions of GNC (UK) and De Tuinen, which had improved margins this period as compared to the prior comparable period. These operations reported gross profit of 48% compared to 41% during the prior comparable fiscal year. Without these newly acquired operations, gross profit would have increased 2% to 65% from 63%, as a percentage of net sales, for the prior comparable period. Direct

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Response/Puritan's Pride's gross profit was 62%, as a percentage of net sales, for fiscal 2004 and fiscal 2003. The Company's overall strategy is to improve margins by introducing new products which traditionally have a higher gross profit margin and by continuing to increase in-house manufacturing.

        Advertising, Promotion and Catalog.    Advertising, promotion and catalog expenses were $85,238 for fiscal 2004, compared with $66,455 for fiscal 2003, an increase of $18,783. Such advertising expenses as a percentage of net sales were 5.2% during fiscal 2004 and 5.6% for the prior comparable period. Of the $18,783 increase, $17,667 was attributable to the increase in promotions for products, mainly via television, magazines, newspapers and mailing programs, and $1,116 was attributable to the increase in catalog printing costs. The Wholesale segment advertising increased $18,097 primarily due to an increase in advertising expenses for Rexall related products ($17,032) and other increases in advertising of US Nutrition related products ($1,065). Other segments' advertising variances are as follows: European Retail promotion and media increased $2,734 offset by decreases in advertising expenses for U.S. Retail $1,011 and Puritan's Pride/Direct Response $1,037. Investments in additional advertising and sales promotions are part of the Company's strategic effort to increase long-term growth.

        Selling, General and Administrative.    Selling, general and administrative expenses were $554,838 during fiscal 2004, an increase of $119,090, as compared with $435,748 for the prior comparable period. As a percentage of net sales, selling, general and administrative expenses were 33.6% and 36.5% in fiscal 2004 and fiscal 2003, respectively. Of the $119,090 increase, $43,068 was attributable to increased payroll costs mainly associated with new business acquisitions and general salary increases, $18,783 to increased rent expense and additional U.S. Retail and European Retail stores, $12,338 to increased freight costs mainly resulting from the Company's efforts to generate faster product delivery to customers, $9,295 to increased insurance costs mainly associated with an increase in general insurance rates, $9,786 was attributable to increased depreciation and amortization expense as a result of acquisitions and an increase in capital expenditures, and $5,309 to increased professional and legal fees (including related accruals and settlements). The increase in the selling, general and administrative expenses by segment are as follows: Wholesale $44,795, European Retail $47,909 (of which $15,693 is attributed to foreign exchange translation), U.S. Retail $1,303, Puritan's Pride/Direct Response $2,275 and an increase in unallocated corporate expenses of $22,808.

        Interest Expense.    The major components of interest expense are interest on Senior Subordinated Notes, and interest on the Credit and Guarantee Agreement ("CGA") used for acquisitions, capital expenditures and other working capital needs. Interest expense was $24,663 in fiscal 2004, an increase of $7,279, compared with interest expense of $17,384 in fiscal 2003. Interest expense increased due to increased borrowings under a new credit agreement entered into by the Company in conjunction with the Rexall acquisition. On July 25, 2003, the Company entered into a new CGA comprised of $375,000 Senior Secured Credit Facilities. This CGA consisted of a $100,000 Revolving Credit Facility, a $50,000 Term Loan A and a $225,000 Term Loan B. Terms of the new CGA were in many instances similar to the previous credit agreement. On December 19, 2003, the Company refinanced $224,000 of Term B loans outstanding under its July 2003 credit agreement with a new class of Term C loans on more favorable terms of LIBOR plus 2%. Costs of approximately $500 were paid on December 19, 2003, in connection with this debt refinancing, which will be amortized until Term C's maturity of approximately six years. By March 31, 2004, the Company had fully repaid Term Loan A and at September 30, 2004, only borrowings of $155,531 under Term Loan C were outstanding. A stand-by letter of credit of $18 was outstanding under the revolving credit facility at September 30, 2004. Interest rates charged on borrowings can vary depending on the interest rate option utilized. Options for the rate can either be the Alternate Base Rate or LIBOR plus applicable margin. Interest rates charged on borrowings can vary depending on the interest rate option utilized. Options for the rate can either be the Alternate Base Rate or LIBOR plus applicable margin. At September 30, 2004 the annual borrowing rate for Term Loan C approximated 3.75%.

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        Bond Investment Write Down.    During fiscal 2003 other-than-temporary impairment write downs of $4,084 was charged against income and related to the Company's investment in high yield, less than investment grade corporate debt securities. On September 4, 2003, the bond issuer declared bankruptcy; as a result, the Company determined that the decline in fair value was permanent. The Company sold all of its investment in bonds during the 2004 fiscal first quarter at no further gain or loss.

        Miscellaneous, net.    Miscellaneous, net was $4,125 and $5,424 for fiscal 2004 and fiscal 2003, respectively. The $1,299 decrease was primarily attributable to increases in net losses on sale of property plant and equipment ($1,862) and a decrease in investment income ($1,301) offset by increases due to exchange rate fluctuations ($915) and other miscellaneous increases ($949).

        Income Taxes.    The Company's income tax expense is impacted by a number of factors, including federal taxes, its international tax structure, state tax rates in the jurisdictions where the Company conducts business, and the Company's ability to utilize state tax credits that will begin to expire in 2013. The effective income tax rate for fiscal 2004 was 33.8%, compared to 29.1% for fiscal 2003. The prior year effective income tax rate was lower than the current year principally due to the Company recording an $8,275 after-tax benefit to record foreign tax credits. The effective income tax rates were less than the U.S. federal statutory tax rate primarily due to the enhanced tax structure of foreign subsidiaries. This tax structure should also continue to impact future fiscal years. Therefore the Company's overall effective income tax rate should vary.

        Net Income.    After income taxes, the Company had net income for fiscal 2004 of $111,849 (or basic and diluted earnings per share of $1.67 and $1.62, respectively), compared with $81,585 (or basic and diluted earnings per share of $1.23 and $1.19, respectively), an increase of $30,264. Net income during the fiscal year ended September 30, 2003 included the discontinued product charge of $3,191 and the bond investment write down of $2,896, after tax, or $0.05 and $0.04 basic and diluted earnings per share, respectively.

Seasonality

        Although the Company believes that its business is not seasonal in nature, historically, the Company has experienced, and expects to continue to experience, a substantial variation in its net sales and operating results from quarter to quarter. The Company believes that the factors which influence this variability of quarterly results include general economic and industry conditions that affect consumer spending, changing consumer demands and current news on nutritional supplements, the timing of the Company's introduction of new products, promotional program incentives offered to customers, the timing of catalog promotions, the level of consumer acceptance of each new product, the seasonality of the markets in which the Company participates, and actions of competitors. Accordingly, a comparison of the Company's results of operations from consecutive periods is not necessarily meaningful, and the Company's results of operations for any period are not necessarily indicative of future performance. Additionally, the Company may experience higher net sales in a quarter depending upon when it has engaged in significant promotional activities.

Off-Balance Sheet Arrangements

        The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors, except for the financing commitments previously discussed.

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Liquidity and Capital Resources

        The Company's primary sources of liquidity and capital resources are cash generated from operations and a $125,000 Revolving Credit Facility maintained by the Company under its Credit & Guarantee Agreement ("CGA"). On August 1, 2005, in connection with the Company's acquisition of Solgar®, the Company amended and restated its existing CGA by adding a new Term Loan A of $120,000 and increasing its existing Revolving Credit Facility from $100,000 to $125,000. Please see below for further discussion regarding the Company's CGA. The Company's principal uses of cash have been to finance working capital, facility expansions, acquisitions, capital expenditures and debt service requirements. The Company anticipates these uses will continue to be its principal uses of cash in the future.

        The following table sets forth, for the years indicated, the Company's net cash flows provided by (used in) operating, investing and financing activities, its period-end cash and cash equivalents and other operating measures:

	Fiscal year ended September 30,
	2005			2004			2003
Cash flow provided by operating activities	$	85,848		$	119,936		$	111,532
Cash flow used in investing activities	$	(250,541	)	$	(37,477	)	$	(323,285	)
Cash flow provided by (used in) financing activities	$	210,333		$	(115,719	)	$	233,435
Cash and cash equivalents at year end	$	67,282		$	21,751		$	49,349
Days sales outstanding		56			65			59
Inventory turnover		2.22			2.39			2.25

        As of September 30, 2005, working capital was $475,728, compared with $359,847 as of September 30, 2004, an increase of $115,881. The increase in working capital was primarily due to acquisitions during the current fiscal year ($52,020) as well as increases in current assets including cash and inventories and decreases in accounts payable, offset partially by a decrease in accounts receivable, deferred income taxes, prepaid and other current assets and an increase in current portion of long-term debt and accrued expenses. Accounts receivable decreased due to increased collections. The number of average days' sales outstanding (on wholesale net sales) at September 30, 2005, was 56 days, compared with 65 days at September 30, 2004. Inventory levels increased as a result of acquisitions during the current fiscal year ($41,712) and to ensure supply of the Company's joint care products, including Osteo Bi-Flex®, Flex-a-Min® and Knox NutraJoint®, as well as to ensure adequate raw material supplies for other popular items in short supply. The inventory turnover rate was approximately 2.22 times during the fiscal year ended September 30, 2005 compared with 2.39 times during the prior comparable period primarily due to the increased inventory levels. Prepaid and other current assets decreased primarily due to the sale of the Rexall building previously held for sale at September 30, 2004 ($10,508).

        The Company monitors current and anticipated future levels of cash and cash equivalents in relation to anticipated operating, financing and investing requirements. Cash and cash equivalents totaled $67,282 and $21,751 at September 30, 2005 and 2004, respectively. At September 30, 2005, approximately $36,369 of the Company's cash and cash equivalents were held by its foreign subsidiaries. These funds are subject to U.S. income taxation on repatriation to the U.S. The Company currently repatriates all earnings from its foreign subsidiaries where permitted under local law. The Company generated cash from operating activities of $85,848, $119,936 and $111,532 in fiscal 2005, 2004 and 2003, respectively. The overall decrease in cash from operating activities during fiscal 2005 was mainly attributable to decreased net income and changes in other operating assets and liabilities, offset by non-cash charges.

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        Cash used in investing activities was $250,541, $37,477 and $323,285 in fiscal 2005, 2004 and 2003, respectively. Fiscal 2005 cash used in investing activities consisted primarily of the purchase of property, plant and equipment ($71,516, of which $19,624 was attributable to a new distribution facility in Hazleton, PA and $14,973 was attributable to a new manufacturing facility in Augusta, Georgia), cash paid for acquisitions (Le Naturiste, SISU and Solgar), net of cash acquired ($131,397), the purchase of auction rate securities ($39,900), the purchase of industrial revenue bonds ($14,973), cash paid in connection with the Rexall acquisition dispute settlement ($12,794) and the purchase of intangible assets ($563), offset by proceeds from the sale of property, plant and equipment held for sale ($9,950) mainly due to the sale of the Rexall building, proceeds from the sale of certain business assets of FSC, a Manchester, U.K. based wholesale operation which sold products to health food stores and pharmacies ($5,766), cash settlement received from the GNC (UK) purchase price dispute ($4,558), proceeds from the sale of property, plant and equipment ($298) and proceeds from the sale of a trademark ($30).

        Fiscal 2004 cash used in investing activities consisted primarily of purchases of property, plant and equipment ($42,700), partially offset by proceeds from the sale of property, plant and equipment ($1,065) and proceeds from the sale of investment in bonds ($4,158).

        Fiscal 2003 cash used in investing activities consisted primarily of net cash paid for the Rexall, De Tuinen, FSC and GNC (UK) businesses ($289,676), as well as the purchase of property, plant and equipment ($37,510), partially offset by proceeds from the sale of property, plant and equipment ($1,498), and cash received that was previously held in escrow from the fiscal 2001 acquisitions of Global Health Sciences ($1,850) and NatureSmart ($553).

        Net cash provided by (used in) financing activities was $210,333, ($115,719) and $233,435 in fiscal 2005, 2004 and 2003, respectively. Fiscal 2005 net cash flows provided by financing activities included proceeds from the Company's bond offering, net of discount ($198,234), proceeds from sale-leaseback ($14,973), proceeds from borrowings under long-term debt agreements ($132,950), net proceeds from borrowing under the Revolving Credit Facility ($6,000) and the exercise of stock options ($225), offset by principal payments under long-term debt agreements ($138,544), payments related to bond issuance costs ($3,329) and the purchase of treasury stock ($176).

        Fiscal 2004 net cash flows used in financing activities included principal payments under long-term debt agreements ($117,100) and payments related to financing fees ($500), partially offset by proceeds from the exercise of stock options ($1,881).

        Fiscal 2003 net cash flows provided by financing activities included proceeds from borrowing under long-term debt agreements ($275,000) and proceeds from the exercise of stock options ($1,146), partially offset by principal payments under long-term debt agreements ($35,211), and payments related to financing fees ($7,500).

        The Company believes its sources of cash will be sufficient to fund its operations and meet its cash requirements to satisfy its working capital needs, capital expenditure needs, outstanding commitments, and other liquidity requirements associated with its existing operations over the next 18 to 24 months. The Company's ability to fund these requirements and comply with financial covenants under its debt agreements will depend on its future operations, performance and cash flow and is subject to prevailing economic conditions and financial, business and other factors, some of which are beyond the Company's control. In addition, as part of the Company's strategy, it may pursue acquisitions and investments that are complementary to its business. Any material future acquisitions or investments will likely require additional capital and therefore, the Company cannot predict or assure that additional funds from existing sources will be sufficient for such future events.

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Debt Agreements:

        At September 30, 2005, the Company maintained Senior Secured Credit Facilities under its Credit and Guarantee Agreement ("CGA") consisting of a $125,000 Revolving Credit Facility, which had borrowings outstanding of $6,000, a Term Loan C, which had borrowings outstanding of $138,163 and a Term Loan A, which had borrowings outstanding of $75,419. The Revolving Credit Facility, Term Loan C and Term Loan A are scheduled to mature on July 24, 2008, July 24, 2009 and August 1, 2010, respectively. Virtually all of the Company's assets are collateralized under the CGA. Under the CGA, the Company is obligated to maintain various financial ratios and covenants that are typical for such facilities.

        In September 2005, the Company issued 10-year 7¹/8% Senior Subordinated Notes due 2015 (the "7¹/8% Notes"). The 7¹/8% Notes are unsecured and subordinated in right of payment for all existing and future indebtedness of the Company. The 7¹/8% Notes are subject to redemption, at the option of the Company, in whole or in part, at any time on or after October 1, 2010, and prior to maturity at certain fixed redemption prices plus accrued interest. In addition, on or prior to October 1, 2008, the Company may redeem in the aggregate up to 35% of the 7¹/8% Notes with the net cash proceeds received by the Company from certain types of equity offerings, at a redemption value equal to 107.125% of the principal amount plus accrued interest, provided that at least 65% of the aggregate principal amount of notes remain outstanding immediately after any such redemption. The notes do not have any sinking fund requirements. Interest is paid semi-annually on every April 1^st and October 1^st at the rate of 7¹/8% per annum. Interest payments relating to such debt approximates $14,250 per annum.

        On August 25, 2005, the Company initiated a cash tender offer (the "Offer") for any and all of its $150,000 aggregate principal amount of the 8⁵/8% Senior Subordinated Notes due 2007. The redemption price was equal to $1,000 per $1,000 principal amount of the 8⁵/8% Notes validly tendered, plus accrued and unpaid interest to the redemption date. On September 23, 2005, the Company announced the expiration of the Offer with a total of $74,458 aggregate principal amount of the 8⁵/8% Notes tendered, representing approximately 49.6% of the outstanding 8⁵/8% Notes. On September 23, 2005, the Company accepted and paid for the $74,458 aggregate principal amount of 8⁵/8% Notes tendered. On October 24, 2005, the Company redeemed the remaining $75,542 aggregate principal amount of the 8⁵/8% Notes outstanding. On such date, the Company paid $706 representing the remaining accrued interest due to the 8⁵/8% Note holders and recorded a charge of $802 to interest expense in the Consolidated Statements of Income representing the unamortized portion of debt issuance costs and bond discount associated with the original issuance. Also, on October 24, 2005, the Company liquidated and utilized all of its investment in auction rate securities of $39,900 to pay such redemption.

        On August 31, 2005, the Company entered into a variable rate mortgage with JP Morgan Chase Bank ("variable rate mortgage") for a loan in the amount of $12,950 which is payable in monthly principal installments of $72 plus interest at LIBOR plus 1.5%. The mortgage matures on August 31, 2015, with the final payment of the then unpaid principal balance of approximately $4,317. On August 31, 2005, the Company entered into an interest rate swap agreement ("SWAP") to receive-variable (LIBOR), pay-fixed (4.71%) interest which effectively converted the $12,950 mortgage to fixed rate debt. The Company entered into this SWAP as a cash flow hedge in order to fix its interest payments on the mortgage. The differential paid or received on the interest rate swap agreement is recognized as an adjustment to interest. The SWAP, which expires August 2015 is amortizing so that the notional amount of the SWAP will decrease in tandem with the scheduled principal payments on the mortgage. The Company does not use derivative financial instruments for trading purposes.

        In accordance with SFAS 133, as amended by SFAS No. 138, the Company has formally documented the relationship between the interest rate swap (noted above) and the variable rate borrowings, as well as its risk management objective and strategy for undertaking the hedge transaction. This process includes linking the derivative which was designated as a cash flow hedge to the specific

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liability on the balance sheet. The Company will record the fair value change in the value of the Interest Rate Swap through Other Comprehensive Income "OCI", net of tax, since management expects this hedging relationship to be highly effective, both at inception of the hedge and on an ongoing basis, the hedging relationship is expected to be highly effective in achieving offsetting changes in fair value attributable to the hedged risk during the period that the hedge is designated. The Company determined that there will be no ineffectiveness in this hedging relationship since the hedged forecasted interest payments are based on the same notional amount, have the same reset dates, and are based on the same benchmark interest rate designated under the variable rate mortgage. The Company also assesses, both at the hedge's inception and on an ongoing basis, whether the derivative used in the hedging transaction is highly effective in offsetting changes in the cash flows of the hedged item. At September 30, 2005, the SWAP liability was $65.

        On August 1, 2005, in connection with the Company's acquisition of Solgar®, the Company amended and restated its existing credit agreement by adding a new Term Loan A of $120,000 and increasing its existing Revolving Credit Facility from $100,000 to $125,000. Amendments were also made to certain covenants, such as eliminating the minimum fixed charge coverage ratio covenant and increasing the capital expenditures annual limitation from $50,000 to $75,000.

        Interest rates charged on borrowings under the CGA can vary depending on the interest rate option utilized. Options for the rate can either be the Alternate Base Rate or LIBOR plus applicable margin. At September 30, 2005 and 2004, the annual borrowing rate for Term Loan C approximated 5.875% and 3.75%, respectively. At September 30, 2005 the borrowing rate for the Revolving Credit Facility and Term Loan A approximated 7.75% and 5.25%, respectively. EBITDA, which is a factor utilized in calculating covenant ratios, is defined as net income, excluding the aggregate amount of all non-cash losses reducing net income, plus interest, taxes, depreciation and amortization. The Company is required to pay a commitment fee, which varies between .25% and .50% per annum, depending on the Company's ratio of consolidated indebtedness to consolidated EBITDA, on any unused portion of the revolving credit facility. Term Loan C requires the Company to make quarterly principal installments of approximately $352 thru June 30, 2008 and requires the last four quarterly principal installments to be balloon payments of approximately $33,572 beginning September 30, 2008. Term loan A requires the Company to make quarterly principal installments of approximately $2,828 beginning September 30, 2006 and requires the last four quarterly principal installments to be balloon payments of approximately $10,370 beginning September 30, 2009. The current portion of Term Loan C and Term Loan A at September 30, 2005 was $1,410 and $2,828, respectively.

        Utilizing the Company's current borrowing rate of 5.875% at September 30, 2005, the estimated interest to be paid over the remaining life of Term Loan C approximates $27,348. Of such amount, interest of approximately $8,198 is expected to be paid within the next twelve months. Utilizing the Company's current borrowing rate of 5.25% at September 30, 2005, the estimated interest to be paid over the remaining life of Term Loan A approximates $13,949. Of such amount, interest of approximately $4,014 is expected to be paid within the next twelve months. Since the interest rate on this debt is variable, the expected interest to be paid over the term of this loan is subject to revision as interest rates change. The interest rate charged for the Term Loan A and Term Loan C is reset quarterly and is equal to the 3-month LIBOR rate plus 1.5% for Term Loan A and the 3-month LIBOR rate plus 2% for Term Loan C.

        Under the Company's credit arrangements, a number of covenants must be met, including, but not limited to, a minimum consolidated interest coverage ratio and a maximum leverage ratio. EBITDA is a factor utilized in calculating all of the ratios mentioned. The specific covenants and related definitions can be found in the CGA, which has been previously filed with the Securities and Exchange Commission.

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        SINCE EBITDA IS NOT A MEASURE OF PERFORMANCE CALCULATED IN ACCORDANCE WITH U.S. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ("GAAP"), IT SHOULD NOT BE CONSIDERED IN ISOLATION OF, OR AS A SUBSTITUTE FOR OR SUPERIOR TO, OTHER MEASURES OF FINANCIAL PERFORMANCE PREPARED IN ACCORDANCE WITH GAAP, SUCH AS OPERATING INCOME, NET INCOME AND CASH FLOWS FROM OPERATING ACTIVITIES. IN ADDITION, THE COMPANY'S DEFINITION OF EBITDA IS NOT NECESSARILY COMPARABLE TO SIMILARLY TITLED MEASURES REPORTED BY OTHER COMPANIES.

        The Company's management uses EBITDA as a supplementary non-GAAP liquidity measure to allow the Company to evaluate each of its operating segments cash-generating ability to fund income tax payments, corporate overhead, capital expenditures and increases in working capital. EBITDA is also used by management to allocate resources for growth among its segments, to evaluate the Company's ability to service its debt and to raise capital for growth opportunities, including acquisitions. Covenants contained in the CGA are based on what the Company refers to herein as "EBITDA". In addition, the Company uses EBITDA as a supplemental non-GAAP liquidity measure in financial presentations to the Company's Board of Directors, shareholders, various banks participating in the Company's Credit Facility, note holders and Bond Rating agencies, among others, to assist them in their evaluation of the Company's cash flow. The Company uses EBITDA in conjunction with traditional GAAP liquidity measures as part of its overall assessment and therefore does not place undue reliance on EBITDA as its only measure of cash flow. The Company believes EBITDA is useful for both the Company and investors as it is a commonly used analytical measurement for assessing a company's cash flow ability to service and/or incur additional indebtedness, by excluding the impact of certain non-cash items such as depreciation and amortization. EBITDA has historically been used by the Company's lenders to measure compliance with certain financial debt covenants, and the Company believes that EBITDA provides a meaningful measure of liquidity and the Company's ability to service its long-term debt and other fixed obligations. The Company believes that EBITDA is specifically relevant to the Company due to the Company's leveraged position as well as the common use of EBITDA as a liquidity measure within the Company's industries by lenders, investors and others in the financial community. The Company has included EBITDA as a supplemental liquidity measure, which should be evaluated by investors in conjunction with the traditional GAAP liquidity measures discussed earlier in this Liquidity and Capital Resources section for a complete evaluation of the Company's cash flow.

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        The following table presents a reconciliation from net cash provided by operating activities, which is the most directly comparable GAAP liquidity measure, to EBITDA:

	Fiscal year ended September 30,
	2005			2004			2003
Net cash provided by operating activities	$	85,848		$	119,936		$	111,532
Interest expense		26,475			24,663			17,384
Income tax provision		41,125			57,156			33,412
Working capital and other liabilities		65,496			63,176			28,386
Other		(3,720	)(a)		(9,583	)		(11,449	)
EBITDA	$	215,224	(a)	$	255,348		$	179,265

(a)

The asset impairment charges of $11,204 are included as an increase to EBITDA.

        The Company's credit arrangements, generally the indenture governing the 7¹/8% Notes ("Indenture") and the CGA, impose certain restrictions on the Company regarding capital expenditures and limit the Company's ability to do any of the following: incur additional indebtedness, dispose of assets, make repayments of indebtedness or amendments of debt instruments, pay dividends or distributions, create liens on assets and enter into sale and leaseback transactions, investments, loans or advances and acquisitions. Such restrictions are subject to certain limitations and exclusions.

        In addition, a default under certain covenants in the Indenture and the CGA, respectively, could result in the acceleration of the Company's payment obligations under the CGA and the Indenture, as the case may be, and, under certain circumstances, in cross-defaults under other debt obligations. These defaults may have a negative effect on the Company's liquidity.

A summary of contractual cash obligations as of September 30, 2005 is as follows:

	Payments Due By Period
	Total		Less Than 1 Year		1-3 Years		4-5 Years		After 5 Years
Long-term debt, excluding interest	$	509,126	$	80,922	$	67,311	$	153,665	$	207,228
Interest		189,681		28,036		52,802		35,911		72,932
Operating leases		509,065		86,392		149,402		101,985		171,286
Purchase commitments		40,453		40,453		—		—		—
Capital commitments		8,070		8,070		—		—		—
Employment and consulting agreements		3,802		2,632		1,170		—		—
Total contractual cash obligations	$	1,260,197	$	246,505	$	270,685	$	291,561	$	451,446

        The Company conducts retail operations under operating leases, which expire at various dates through 2030. Some of the leases contain escalation clauses, as well as renewal options, and provide for contingent rent based upon sales plus certain tax and maintenance costs. Future minimum rental payments (excluding real estate tax and maintenance costs) for retail locations and other leases that have initial or noncancelable lease terms in excess of one year at September 30, 2005 are noted in the above table. In connection with a February 7, 2005 letter from the Office of the Chief Accountant of the Securities and Exchange Commission to the American Institute of Certified Public Accountants expressing its views of existing accounting literature related to lease accounting, the Company has completed a review of its lease accounting policies. As a result of this review, no adjustments were required to be recorded to the consolidated financial statements.

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        In August 2005, the Company entered into a sale-leaseback transaction pursuant to which it sold certain manufacturing assets and its manufacturing facility located in Augusta Georgia for a total purchase price of $14,973. The purchase price consisted of $14,973 in cash which was simultaneously invested and is subject to an Industrial Revenue Bonds (IRB's) financing agreement. This agreement is intended to permit counties to attract business investment by offering property tax incentives. In accordance with Georgia law, the Company entered into this sale-leaseback agreement with Richmond County (the "County") and acquired an Industrial Development Revenue Bond. The arrangement is structured so that the Company's lease payments to the County equal and offset the County's bond payments to the Company. The Bond is non-recourse to the County, the Company's lease payments are pledged to secure repayment of the Bond, and the lease and bond provide for the legal right of offset. Consequently, in accordance with Financial Interpretation No. 39, "Offsetting of Amounts Related to Certain Contracts," the investment and lease obligation related to this arrangement have been offset in the Company's Consolidated Balance Sheets. The agreement has a maximum expiration date of 2025. Under the terms of the agreement, the Company must annually submit information regarding the value of the machinery and equipment in service in the county. If the Company had not entered into this transaction, property tax payments would have been higher. The Company can reacquire such property and terminate the agreement at a nominal price of $1 and, accordingly, the subject property is included in property, plant, and equipment in the consolidated balance sheet. If the Company elects to reacquire the subject property prior to the expiration of the arrangement, it may also be required to make certain adjusting property tax payments.

        The Company was committed to make future purchases for inventory related items, such as raw materials and finished goods, under various purchase arrangements with fixed price provisions aggregating approximately $40,453 at September 30, 2005. During fiscal 2005, one supplier individually represented greater than 10% of the Company's raw material purchases. Due to numerous alternative suppliers available, the Company does not believe that the loss of this or any other single supplier would have a material adverse effect on the Company's consolidated financial condition or results of operations.

        The Company had approximately $4,314 in open capital commitments at September 30, 2005, primarily related to manufacturing equipment as well as to computer hardware and software. Also, the Company has a $3,756 commitment for an expansion of the softgel facility which is expected to be completed within one year.

        The Company has employment agreements with two of its executive officers. The agreements, initially entered into in October 2002, each have a term of 5 years and are automatically renewed each year thereafter unless either party notifies the other to the contrary. These agreements provide for minimum salary levels and contain provisions regarding severance and changes in control of the Company. The annual commitment for salaries to these two officers as of September 30, 2005 was approximately $1,170. In addition, five members of Holland & Barrett's senior executive staff have service contracts terminable by the Company upon twelve months notice. The annual aggregate commitment for such H&B executive staff as of September 30, 2005 was approximately $1,349.

        The Company maintains a consulting agreement with Rudolph Management Associates, Inc. for the services of Arthur Rudolph, a director of the Company. The consulting fee (which is paid monthly) is fixed by the Board of Directors of the Company, provided that in no event will the consulting fee be at a rate lower than $450 per year. In addition, Mr. Arthur Rudolph receives certain fringe benefits accorded to other executives of the Company.

        The Company has grown through acquisitions, and expects to continue seeking to acquire entities in similar or complementary businesses. Such acquisitions are likely to require the incurrence and/or assumption of indebtedness and/or obligations, the issuance of equity securities or some combination thereof. In addition, the Company may from time to time determine to sell or otherwise dispose of

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certain of its existing assets or businesses; the Company cannot predict if any such transactions will be consummated, nor the terms or forms of consideration which might be required in any such transactions.

Related Party Transactions

        The Company has had, and in the future may continue to have, business transactions with individuals and firms affiliated with certain of the Company's directors and officers. Each such transaction has been in the ordinary course of the Company's business.

        During the fiscal 2005, the following transactions occurred:

A.

Gail Radvin, Inc., a corporation wholly-owned by Gail Radvin, received sales commissions from the Company totaling $693. Gail Radvin is the sister of Arthur Rudolph (a director of the Company) and the aunt of Scott Rudolph (Chairman and Chief Executive Officer).



B.

The Company paid $450 to Rudolph Management Associates, Inc., pursuant to the Consulting Agreement between the Company and Rudolph Management Associates, Inc. Mr. Arthur Rudolph, a director of the Company and father of Scott Rudolph (Chairman and Chief Executive Officer), is the President of Rudolph Management Associates, Inc. In addition, Mr. Arthur Rudolph received certain fringe benefits accorded to other executives of the Company.



C.

Certain members of the immediate families (as defined in Rule 404 of Regulation S-K) of Arthur Rudolph, Scott Rudolph and Michael Slade (each a director of the Company) are employed by the Company. During fiscal 2005, these immediate family members received aggregate compensation and fringes from the Company totaling approximately $1,152 for services rendered by them as employees of the Company.

Inflation

        Inflation affects the cost of raw materials, goods and services used by the Company. In recent years, inflation has been modest. However, high oil costs can affect the cost of all raw materials and components. The competitive environment somewhat limits the ability of the Company to recover higher costs resulting from inflation by raising prices. Although the Company cannot precisely determine the effects of inflation on its business, it is management's belief that the effects on revenues and operating results have not been significant. The Company seeks to mitigate the adverse effects of inflation primarily through improved productivity and strategic buying initiatives. The Company does not believe that inflation has had a material impact on its results of operations for the periods presented, except with respect to payroll-related costs, insurance premiums, and other costs arising from or related to government imposed regulations.

Financial Covenants and Credit Rating

        The Company's credit arrangements impose certain restrictions on the Company regarding capital expenditures and limit the Company's ability to: incur additional indebtedness, dispose of assets, make repayments of indebtedness or amendments of debt instruments, pay distributions, create liens on assets and enter into sale and leaseback transactions, investments, loans or advances and acquisitions. Such restrictions could limit the Company's ability to respond to market conditions, to provide for unanticipated capital investments or to take advantage of business or acquisition opportunities.

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        At September 30, 2005, credit ratings were as follows:

Credit Rating Agency	71/8 Notes	CGA	Overall
Standard and Poors	B+	BB	BB
Moody's	B1	Ba2	—

New Accounting Developments

        In October 2005, the FASB issued Staff Position FAS 13-1, "Accounting for Rental Costs Incurred during a Construction Period," which requires rental costs associated with ground or building operating leases that are incurred during a construction period to be recognized as rental expense. This Staff Position is effective for reporting periods beginning after December 15, 2005, and retrospective application is permitted but not required. The adoption of this statement is not expected to have a significant effect on the Company's consolidated financial position or results of operations since the Company currently expenses such costs.

        In July 2005, the FASB issued an Exposure Draft of a proposed Interpretation "Accounting for Uncertain Tax Positions—an interpretation of FASB Statement No. 109." Under the proposed Interpretation, a company would recognize in its financial statements its best estimate of the benefit of a tax position, only if the tax position is considered more likely than not of being sustained on audit based solely on the technical merits of the tax position. In evaluating whether the more likely than not recognition threshold has been met, the proposed Interpretation would require the presumption that the tax position will be evaluated during an audit by taxing authorities. The proposed Interpretation would be effective as of the end of the first fiscal year ending after December 15, 2005, with a cumulative effect of a change in accounting principle to be recorded upon the initial adoption. The proposed Interpretation would apply to all tax positions and only benefits from tax positions that meet the more likely than not recognition threshold at or after the effective date would be recognized. The Company is currently analyzing the proposed Interpretation and has not determined its potential impact on its Consolidated Financial Statements. While the Company cannot predict with certainty the rules in the final Interpretation, there is risk that the final Interpretation could result in a cumulative effect charge to earnings upon adoption, increases in future effective tax rates, and/or increases in future interperiod effective tax rate volatility.

        In June 2005, the Emerging Issues Task Force modified its consensus on Issue No. 04-10, "Determining Whether to Aggregate Operating Segments That Do Not Meet the Quantitative Thresholds". This guidance creates stricter standards for aggregating operating segments that do not meet the quantitative thresholds provided within SFAS 131, "Disclosures About Segments of an Enterprise and Related Information". The guidance became effective for fiscal years ending after September 15, 2005. The adoption of this guidance did not impact the presentation of the Company's reportable segments.

        In June 2005, the FASB issued an exposure draft of a proposed standard entitled "Business Combinations—a replacement of FASB Statement No. 141". The proposed standard, if adopted, would provide new guidance for evaluating and recording business combinations and would be effective on a prospective basis for business combinations whose acquisition dates are on or after January 1, 2007. Upon issuance of a final standard, which is expected in 2006, the Company will evaluate the impact of this new standard and its effect on the process for recording business combinations.

        In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections" ("SFAS 154"), which replaces APB Opinion No. 20, Accounting Changes, and FASB Statement No. 3, Reporting Accounting Changes in Interim Financial Statements. APB Opinion No. 20 had required that changes in accounting principles be recognized by including the cumulative effect of the change in the

54

period in which the new accounting principle was adopted. SFAS 154 requires retrospective application of the change to prior periods' financial statements, unless it is impracticable to determine the period-specific effects of the change. The FASB identified the reason for the issuance of SFAS 154 to be part of a broader attempt to eliminate differences with the International Accounting Standards Board ("IASB"). The Statement is effective for fiscal years beginning after December 15, 2005. The Company is required to adopt this statement starting in its fiscal 2007 reporting period. The Company does not anticipate that the adoption of SFAS 154 will have a significant impact on the Company's consolidated financial position or results of operations.

        In March 2005, the FASB issued FASB Interpretation No. 47, "Accounting for Conditional Asset Retirement Obligations" ("FIN 47"). FIN 47 provides guidance relating to the identification of and financial reporting for legal obligations to perform an asset retirement activity. The Interpretation requires recognition of a liability for the fair value of a conditional asset retirement obligation when incurred if the liability's fair value can be reasonably estimated. FIN 47 also defines when an entity would have sufficient information to reasonably estimate the fair value of an asset retirement obligation. The provision is effective no later than the end of fiscal years ending after December 15, 2005. The Company will adopt FIN 47 beginning the first quarter of fiscal year 2006 and does not believe the adoption will have a material impact on its consolidated financial position or results of operations.

        In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary Assets, an amendment of APB Opinion No. 29, Accounting for Nonmonetary Transactions" ("SFAS 153"). The amendments made by SFAS 153 are based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. Further, the amendments eliminate the narrow exception for nonmonetary exchanges of similar productive assets and replace it with a broader exception for exchanges of nonmonetary assets that do not have commercial substance. SFAS 153 is effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. The adoption of SFAS 153 did not have a significant impact on the Company's consolidated financial position or results of operations.

        In November 2004, the FASB issued SFAS No. 151, "Inventory Costs" an amendment of Accounting Research Bulletin ("ARB") No. 43, to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). This Statement requires that those items be recognized as current-period charges regardless of whether they meet the criterion of "so abnormal". In addition, this Statement requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. Companies are required to adopt the provisions of this Statement for fiscal years beginning after June 15, 2005. The Company will adopt SFAS 151 beginning the first quarter of fiscal year 2006 and does not believe the adoption will have a material impact on its consolidated financial position or results of operations as such costs have historically been expensed as incurred.

        In October 2004, the American Jobs Creation Act of 2004 ("Act") became effective in the U.S. Two provisions of the Act may impact the Company's provision for income taxes in future periods, namely those related to the Qualified Production Activities Deduction ("QPA") and Foreign Earnings Repatriation ("FER"). As discussed further below, the Company has analyzed the Act and determined that it will repatriate funds in accordance with the FER provision during the fiscal year ending September 30, 2006.

•

The QPA will be effective for the Company's U.S. federal tax return year beginning after September 30, 2005. In summary, the Act provides for a percentage deduction of earnings from qualified production activities, as defined, commencing with an initial deduction of 3 percent for tax years beginning in 2005 and increasing to 9 percent for tax years beginning after 2009. However, the Act also provides for the phased elimination of the Extraterritorial Income

55

Exclusion provisions of the Internal Revenue Code, which have previously resulted in tax benefits to the Company. Due to the interaction of the provisions noted above as well as the particulars of the Company's tax position, the ultimate effect of the QPA on the Company's future provision for income taxes is not deemed to be significant. The FASB issued FASB Staff Position FAS 109-1, Application of FASB Statement No.109, Accounting for Income Taxes, to the Tax Deduction on Qualified Production Activities Provided by the American Jobs Creation Act of 2004, ("FSP 109-1") in December 2004. FSP 109-1 requires that tax benefits resulting from the QPA should be recognized no earlier than the year in which they are reported in the entity's tax return, and that there is to be no revaluation of recorded deferred tax assets and liabilities as would be the case had there been a change in an applicable statutory rate.

•

The FER provision of the Act provides generally for a one-time 85 percent dividends received deduction for qualifying repatriations of foreign earnings to the U.S. Qualified repatriated funds must be reinvested in the U.S. in certain qualifying activities and expenditures, as defined by the Act. In December 2004, the FASB issued FASB Staff Position FAS 109-2, Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004 ("FSP 109-2"). FSP 109-2 allows additional time for entities potentially impacted by the FER provision to determine whether any foreign earnings will be repatriated under said provisions. The Company has completed its evaluation of the application of the FER provision and determined that it will realize a benefit by repatriating funds in accordance with the FER provision. As such, the Company has developed a Domestic Reinvestment Plan to reinvest the repatriated funds in the U.S. in qualifying activities, pursuant to the terms of the FER provision and subsequent guidance issued by the IRS. This plan calls for the repatriation of up to $100 million during the fiscal year ending September 30, 2006. A portion of the repatriation includes foreign earnings related to the fiscal year ended September 30, 2005 and to earlier fiscal years. The Company has recorded a net benefit of $884 on the unremitted earnings from the fiscal year ended September 30, 2005 and earlier fiscal years as a result of the FER provision. The majority of the repatriation is expected to come from projected foreign earnings for the fiscal year ending September 30, 2006. It is impractical to calculate the exact amount of earnings and exact tax impact that the Company may realize from the repatriation of 2006 earnings. As such, no incremental tax impact has been recorded with respect to these earnings.

Item 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        The Company is subject to currency fluctuations, primarily with respect to the British Pound, the Euro and the Canadian dollar, and interest rate risks that arise from normal business operations. The Company regularly assesses these risks. As of September 30, 2005, the Company had not entered into any significant hedging transactions other than the cash flow hedge discussed below.

        The Company has subsidiaries whose operations are denominated in foreign currencies (primarily the British Pound, the Euro and the Canadian dollar). The Company consolidates the earnings of its international subsidiaries by translating them into U.S. dollars in accordance with Statement of Financial Accounting Standards No. 52 "Foreign Currency Translation" (SFAS 52). The statements of income of the Company's international operations are translated into U.S. dollars at the average exchange rates in each applicable period. To the extent the U.S. dollar weakens against foreign currencies, the remeasurement of these foreign currencies denominated transactions results in increased net sales, operating expenses and net income. Similarly, the Company's net sales, operating expenses and net income will decrease when the U.S. dollar strengthens against foreign currencies.

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        The U.S. dollar volume of net sales denominated in foreign currencies was approximately $596,691, or 34.3% of total net sales, for fiscal 2005. During fiscal 2005, the U.S. dollar weakened approximately 3% against the foreign currencies, as compared to the prior comparable period, resulting in an increase in net sales of approximately $16,003 and an increase in operating income of approximately $3,343 for fiscal 2005. The related impact on basic and diluted earnings per share was $0.03 for the same period. The Company estimates that a 10% change in the average foreign currencies exchange rates would have impacted the Company's operating income by approximately $10,618.

        To manage the potential loss arising from changing interest rates and its impact on long-term debt, the Company's policy is to manage interest rate risks by maintaining a combination of fixed and variable rate financial instruments. On August 31, 2005, the Company entered into an interest rate swap agreement ("SWAP") to receive variable rate interest (LIBOR), and pay fixed rate interest (4.71%) which effectively converted its $12,950 mortgage to fixed rate debt. The Company entered into this SWAP as a cash flow hedge in order to fix its interest payments on the mortgage. The SWAP, which expires August 2015 is amortizing so that the notional amount of the SWAP will decrease in tandem with the schedule principal payments on the mortgage. Management believes that a significant fluctuation in interest rates in the near future will not have a material impact on the Company's consolidated financial statements.

        The Company is exposed to changes in interest rates on its floating rate CGA and fixed rate Notes. At September 30, 2005, based on a hypothetical 10% decrease in interest rates related to the Company's fixed rate Notes, the Company estimates that the fair value of its fixed rate debt would have increased by approximately $6,930. Conversely, based on a hypothetical 10% increase in interest rates related to the Company's fixed rate Notes at September 30, 2005, the Company estimates that the fair value of its fixed rate debt would have decreased by approximately $6,450. At September 30, 2005 and September 30, 2004, the Company had borrowings outstanding under its CGA of $219,582 and $155,531, respectively. A hypothetical 10% change in interest rates would not have a material effect on the Company's consolidated pretax income or cash flow.

Item 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

        The following consolidated financial statements, notes thereto, supplementary schedule, and the related independent auditors' reports contained on page F-1 to NBTY's consolidated financial statements, are herein incorporated:

Reports of Independent Registered Accounting Firms.

Consolidated Balance Sheets—As of September 30, 2005 and 2004.

Consolidated Statements of Income—Fiscal years ended September 30, 2005, 2004 and 2003.

Consolidated Statements of Stockholders' Equity and Comprehensive Income—Fiscal years ended September 30, 2005, 2004 and 2003.

Consolidated Statements of Cash Flows—Fiscal years ended September 30, 2005, 2004 and 2003.

Notes to Consolidated Financial Statements.

Schedules II, Valuation and Qualifying Accounts.

        All other schedules have been omitted as not required or not applicable or because the information required to be presented are included in the consolidated financial statements and related notes.

        For more information, see Part IV, Item 15, Exhibits, below.

57

Item 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

        None.

Item 9A.    CONTROLS AND PROCEDURES

        The Company's chief executive officer and chief financial officer have concluded, based on their respective evaluations at the end of the period covered by this Report, that the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are effective for recording, processing, summarizing and reporting, within the time periods specified in the SEC's rules and forms, the information required to be disclosed in the reports filed by the Company under the Exchange Act.

        The Company's management, including the Chief Executive Officer and Chief Financial Officer, does not expect that the Company's disclosure controls or internal controls over financial reporting will prevent all errors or all instances of fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system's objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Because of the inherent limitation of a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

        The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the Company's principal executive and principal financial officers and effected by the Company's Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, and includes those policies and procedures that:

(i)

pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;



(ii)

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorization of management and directors of the Company; and



(iii)

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

58

        Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

        The Company's management assessed the effectiveness of the Company's internal control over financial reporting as of September 30, 2005. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control-Integrated Framework. Based on our assessment and those criteria, management concluded that the Company's internal control over financial reporting was effective as of September 30, 2005. Management's assessment of and conclusion on the effectiveness of internal controls over financial reporting did not include an assessment of certain elements of the internal control over financial reporting of Solgar, SISU, Inc. and Le Naturiste, all of which were acquired in fiscal 2005, and which are included in the consolidated financial statements of the Company for fiscal 2005. The excluded elements constituted, in the aggregate, approximately $139.6 million and $128.5 million of the Company's total and net assets, respectively, as of September 30, 2005 and approximately $29.9 million of the Company's revenues and $3.8 million loss before income taxes, respectively, for fiscal 2005. Based on this evaluation under this framework, management concluded that the internal control over financial reporting was effective as of September 30, 2005.

        The Company's independent registered public accounting firm, Deloitte & Touche LLP, has issued an attestation report on management's assessment of internal control over financial reporting. Their report is included in this Item 9A.

        There was no change in the Company's internal control over financial reporting that occurred during the fourth quarter of the fiscal year covered by this Annual Report on Form 10-K that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

NBTY, Inc.
December 22, 2005

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
NBTY, Inc.
Bohemia, New York

        We have audited management's assessment, included in the accompanying Management's Report on Internal Control over Financial Reporting, that NBTY, Inc. and subsidiaries (the "Company") maintained effective internal control over financial reporting as of September 30, 2005, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. As described in Management's Report on Internal Control over Financial Reporting, management excluded from their assessment the internal control over financial reporting at Solgar Vitamin and Herb ("Solgar"), acquired on August 1, 2005, Le Naturiste Jean-Marc Brunet ("Le Naturiste"), acquired on June 8, 2005, and SISU, Inc. ("SISU"), acquired on February 25, 2005, and whose financial statements reflect total assets and revenues constituting 9.4 and 1.7 percent, respectively, of the related consolidated financial statement amounts as of and for the year ended September 30, 2005. Accordingly, our audit did not include the internal control over financial reporting at Solgar, Le Naturiste and SISU. The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management's assessment and an opinion on the effectiveness of the Company's internal control over financial reporting based on our audit.

59

        We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management's assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.

        A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

        Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

        In our opinion, management's assessment that the Company maintained effective internal control over financial reporting as of September 30, 2005, is fairly stated, in all material respects, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, 2005, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

        We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedule as of and for the year ended September 30, 2005 of the Company and our report dated December 22, 2005 expressed an unqualified opinion on those financial statements and financial statement schedule.

/s/ DELOITTE & TOUCHE LLP

Jericho, New York
December 22, 2005

60

Item 9B. OTHER INFORMATION

        None

PART III

Item 10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

        Information about our Directors may be found under the caption "Proposal 1. Election of Directors" of our Proxy Statement for the Annual Meeting of Stockholders to be held February 10, 2006 (the "Proxy Statement"). That information is incorporated herein by reference.

        The information in the Proxy Statement set forth under the captions "Section 16(a) Beneficial Ownership Reporting Compliance", "Audit Committee Financial Expert" and "Code of Ethics for Senior Financial Officers" is incorporated herein by reference.

Item 11.    EXECUTIVE COMPENSATION

        The information in the Proxy Statement set forth under the captions "Executive Compensation", "Compensation Committee Interlocks and Insider Participation" and "Compensation of Directors" is incorporated herein by reference.

Item 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

        The information in the Proxy Statement set forth under the caption "Principal Stockholders and Security Ownership of Management" is incorporated herein by reference.

Item 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

        The information set forth under the captions "Certain Relationships and Related Transactions" of the Proxy Statement is incorporated herein by reference.

Item 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES

        Information concerning principal accountant fees and services appears in the Proxy Statement under the heading "Report of the Audit Committee—Audit Fees" and is incorporated herein by reference.

61

PART IV

Item 15.    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)(1)    Financial Statements.    Reference is made to the financial statements listed in Section 1 of the Index to Consolidated Financial Statements and Schedules in this Report.

(a)(2)    Financial Statement Schedule.    Reference is made to the financial statement schedule listed in Section 2 of the Index to Consolidated Financial Statements and Schedules in this Report. All other schedules have been omitted as not required, not applicable or because the information required to be presented is included in the financial statements and related notes.

(a)(3)    Exhibits.    The following exhibits are filed as a part of this Report or incorporated by reference and will be furnished to any security holder upon request for such exhibit and payment of any reasonable expenses incurred by the Company. A security holder should send requests for any of the exhibits set forth below to the Company, 90 Orville Drive, Bohemia, New York, 11716; Attention: General Counsel.

Exhibit No.	Description
3.1	Restated Certificate of Incorporation of NBTY, Inc.*
3.2	Amended and Restated By-Laws of NBTY, Inc.(1)
4.1	Indenture, dated as of September 23, 2005, among NBTY, Inc., the Guarantors (as defined therein), and The Bank of New York, as Trustee(2)
4.2	Registration Rights Agreement, dated as of September 23, 2005, among NBTY, Inc., the Guarantors (as defined therein) and J.P. Morgan Securities, Inc., Adams Harness, Inc., BNP Paribas Securities Corp., HSBC Securities (USA), Inc., and RBC Capital Markets Corporation(2)
10.1	Employment Agreement, effective October 1, 2002, by and between NBTY, Inc. and Scott Rudolph(3)
10.2	Employment Agreement, effective October 1, 2002, by and between NBTY, Inc. and Harvey Kamil(3)
10.3	Executive Consulting Agreement, effective January 1, 2002, by and between NBTY, Inc. and Rudolph Management Associates, Inc.(3)
10.4	First Amendment to Executive Consulting Agreement, effective January 1, 2003, by and between NBTY, Inc. and Rudolph Management Associates, Inc.(1)
10.5	Second Amendment to Executive Consulting Agreement, effective January 1, 2004, by and between NBTY, Inc. and Rudolph Management Associates, Inc.(4)
10.6	NBTY, Inc. Retirement Savings and Employees' Stock Ownership Plan*
10.7	NBTY, Inc. Year 2000 Incentive Stock Option Plan(5)
10.8	NBTY, Inc. Year 2002 Stock Option Plan(6)
10.9	Second Amended and Restated Credit Agreement, as further amended and restated as of August 1, 2005, among NBTY, Inc., as Borrower, The Several Lenders from Time to Time Parties Thereto, JPMorgan Chase Bank, N.A., as Administrative Agent and Collateral Agent, and Bank of America, N.A., as Syndication Agent(7)
10.10	Guarantee and Collateral Agreement made by NBTY, INC. and the other Grantors party hereto in favor of JPMorgan Chase Bank, as Administrative Agent dated as of July 24, 2003(1)
10.11	2005 Salary and Bonuses for Executive Officers of NBTY, Inc.(8)
10.12	Third Amendment to Executive Consulting Agreement, effective January 1, 2005, by and between NBTY, Inc. and Rudolph Management Associates, Inc.(9)

62

10.13	Purchase Agreement by and between Wyeth and NBTY, Inc. dated as of June 6, 2005 (the "Solgar Purchase Agreement").(7)
10.14	Amendment to the Solgar Purchase Agreement, dated August 1, 2005.(7)
14.1	Code of Business Conduct and Ethics*
21.1	Subsidiaries of NBTY, Inc.*
23.1	Consent of Deloitte & Touche LLP Independent Registered Public Accounting Firm*
23.2	Consent of PricewaterhouseCoopers LLP Independent Registered Public Accounting Firm*
31.1	Rule 13a-14(a) Certification of Chief Executive Officer*
31.2	Rule 13a-14(a) Certification of Chief Financial Officer*
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

*

Filed herewith

(1)

Incorporated by reference to NBTY, Inc.'s Form 10-K for the fiscal year ended September 30, 2003 filed on December 16, 2003 (File #0-10666).

(2)

Incorporated by reference to NBTY, Inc.'s Form 8-K filed on September 27, 2005 (File #001-31788).

(3)

Incorporated by reference to NBTY, Inc.'s Form 10-K for the fiscal year ended September 30, 2002 filed on December 20, 2002 (File #0-10666).

(4)

Incorporated by reference to NBTY, Inc.'s Form 10-K for the fiscal year ended September 30, 2004 filed on December 14, 2004 (File #001-31788).

(5)

Incorporated by reference to NBTY, Inc.'s Form S-8, filed on September 20, 2000 (File #333-46188).

(6)

Incorporated by reference to NBTY, Inc.'s Proxy Statement, dated March 25, 2002 (File #0-10666).

(7)

Incorporated by reference to NBTY, Inc.'s Form 10-Q, filed on August 9, 2005 (File #001-31788).

(8)

Incorporated by reference to NBTY, Inc.'s Form 8-K filed on February 11, 2005 (File #001-31788).

(9)

Incorporated by reference to NBTY, Inc.'s Form 10-Q, filed on May 9, 2005 (File #001-31788).

(b)

The exhibits required by Item 601 of Regulation S-K to be filed as part of this Report or incorporated herein by reference are listed in Item 15(a)(3) above.

(c)

See Item 15(a)(2) of this Report.

63

NBTY, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE

		Page Number
1. Financial Statements
	Report of Independent Registered Public Accounting Firm	F-1
	Report of Independent Registered Public Accounting Firm	F-2
Consolidated Financial Statements
	Balance Sheets	F-3
	Statements of Income	F-4
	Statements of Stockholders' Equity and Comprehensive Income	F-5
	Statements of Cash Flows	F-6
	Notes to Financial Statements	F-8
2. Financial Statement Schedule
	Schedule II	S-1

64

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
NBTY, Inc.
Bohemia, New York

        We have audited the accompanying consolidated balance sheets of NBTY, Inc. and subsidiaries (the "Company") as of September 30, 2005 and 2004, and the related consolidated statements of income, stockholders' equity, and cash flows for each of the two years in the period ended September 30, 2005. Our audits also included the financial statement schedule listed in the Index at Item 15. These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statements and financial statement schedule based on our audits.

        We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

        In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of NBTY, Inc. and subsidiaries as of September 30, 2005 and 2004, and the results of their operations and their cash flows for each of the two years in the period ended September 30, 2005, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

        We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of the Company's internal control over financial reporting as of September 30, 2005, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated December 22, 2005 expressed an unqualified opinion on management's assessment of the effectiveness of the Company's internal control over financial reporting and an unqualified opinion on the effectiveness of the Company's internal control over financial reporting.

/s/  DELOITTE & TOUCHE LLP

Jericho, New York
December 22, 2005

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of NBTY, Inc. and Subsidiaries:

        In our opinion, the consolidated statements of income, stockholders' equity and comprehensive income and of cash flows listed in the accompanying index present fairly, in all material respects, the results of operations and cash flows of NBTY, Inc. and its subsidiaries for the year ended September 30, 2003, in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the accompanying index presents fairly, in all material respects, the information set forth therein with respect to the year ended September 30, 2003 when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audit. We conducted our audit of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

New York, New York
November 11, 2003

F-2

NBTY, Inc. and Subsidiaries
Consolidated Balance Sheets
September 30, 2005 and 2004
(dollars and shares in thousands, except per share amounts)

			2005		2004
Assets
Current assets:
	Cash and cash equivalents		$	67,282	$	21,751
	Investments			39,900		—
	Accounts receivable, less allowance for doubtful accounts of $9,155 at September 30, 2005 and $9,389 at September 30, 2004			73,226		86,113
	Inventories			491,335		374,559
	Deferred income taxes			23,645		32,062
	Prepaid expenses and other current assets			54,469		62,835
		Total current assets		749,857		577,320
Property, plant and equipment, net				320,528		280,075
Goodwill				228,747		221,429
Other intangible assets, net				166,325		136,541
Other assets				16,845		17,288
		Total assets	$	1,482,302	$	1,232,653
Liabilities and Stockholders' Equity
Current liabilities:
	Current portion of long-term debt		$	80,922	$	3,205
	Accounts payable			72,720		97,635
	Accrued expenses and other current liabilities			120,487		116,633
		Total current liabilities		274,129		217,473
Long-term debt				428,204		306,531
Deferred income taxes				57,092		64,675
Other liabilities				6,822		4,176
		Total liabilities		766,247		592,855
Commitments and contingencies
Stockholders' equity:
	Common stock, $.008 par; authorized 175,000 shares; issued and outstanding 67,191 shares at September 30, 2005 and 67,060 shares at September 30, 2004			537		536
	Capital in excess of par			138,657		135,787
	Retained earnings			559,275		481,302
				698,469		617,625
Accumulated other comprehensive income				17,586		22,173
		Total stockholders' equity		716,055		639,798
		Total liabilities and stockholders' equity	$	1,482,302	$	1,232,653

The accompanying notes are an integral part of these consolidated financial statements.

F-3

NBTY, Inc. and Subsidiaries
Consolidated Statements of Income
Years Ended September 30, 2005, 2004 and 2003
(dollars and shares in thousands, except per share amounts)

		2005			2004			2003
Net sales		$	1,737,187		$	1,652,031		$	1,192,548
Costs and expenses:
	Cost of sales		895,644			822,412			554,804
	Discontinued product charge		—			—			4,500
	Advertising, promotion and catalog		108,005			85,238			66,455
	Selling, general and administrative		588,166			554,838			435,748
	Goodwill impairment		7,686			—			—
			1,599,501			1,462,488			1,061,507
Income from operations			137,686			189,543			131,041
Other income (expense):
	Interest		(26,475	)		(24,663	)		(17,384	)
	Bond investment write down		—			—			(4,084	)
	Miscellaneous, net		8,051			4,125			5,424
			(18,424	)		(20,538	)		(16,044	)
Income before provision for income taxes			119,262			169,005			114,997
Provision for income taxes			41,125			57,156			33,412
	Net income	$	78,137		$	111,849		$	81,585
Net income per share:
	Basic	$	1.16		$	1.67		$	1.23
	Diluted	$	1.13		$	1.62		$	1.19
Weighted average common shares outstanding:
	Basic		67,162			66,793			66,452
	Diluted		69,137			69,069			68,538

The accompanying notes are an integral part of these consolidated financial statements.

F-4

NBTY, Inc. and Subsidiaries
Consolidated Statements of Stockholders' Equity and Comprehensive Income
Years ended September 30, 2005, 2004 and 2003
(dollars and shares in thousands)

		Common Stock										Treasury Stock
																	Accumulated Other Comprehensive Income (Loss)
		Number of Shares		Amount		Capital in Excess of Par			Retained Earnings			Number of Shares		Amount						Total Stockholders' Equity			Total Comprehensive Income
Balance, September 30, 2002		66,322		$	529	$	126,283		$	287,868		—		$	—		$	4,577		$	419,257
Components of comprehensive income:
	Net income									81,585											81,585		$	81,585
	Foreign currency translation adjustment and other																	10,028			10,028			10,028
																							$	91,613
Shares issued and contributed to ESOP		100			1		1,710														1,711
Exercise of stock options		198			3		1,143														1,146
Tax benefit from exercise of stock options							1,072														1,072
Balance, September 30, 2003		66,620			533		130,208			369,453		—			—			14,605			514,799
Components of comprehensive income:
	Net income									111,849											111,849		$	111,849
	Foreign currency translation adjustment and other, net of taxes																	7,568			7,568			7,568
																							$	119,417
Shares issued and contributed to ESOP		100			1		2,472														2,473
Exercise of stock options		340			2		1,879														1,881
Tax benefit from exercise of stock options							1,228														1,228
Balance, September 30, 2004		67,060			536		135,787			481,302		—			—			22,173			639,798
Components of comprehensive income:
	Net income									78,137											78,137		$	78,137
	Foreign currency translation adjustment and other, net of taxes																	(4,587	)		(4,587	)		(4,587	)
																							$	73,550
Purchase of treasury shares, at cost												8			(176	)					(176	)
Treasury stock retired		(8	)		—		(12	)		(164	)	(8	)		176						—
Shares issued and contributed to ESOP		100			1		2,437														2,438
Exercise of stock options		39					225														225
Tax benefit from exercise of stock options							220														220
Balance, September 30, 2005		67,191		$	537	$	138,657		$	559,275		—		$	—		$	17,586		$	716,055

The accompanying notes are an integral part of these consolidated financial statements.

F-5

NBTY, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
Years ended September 30, 2005, 2004 and 2003
(dollars in thousands)

					2005			2004			2003
Cash flows from operating activities:
	Net income				$	78,137		$	111,849		$	81,585
	Adjustments to reconcile net income to net cash and cash equivalents provided by operating activities:
		Provision (gain) relating to impairments and disposals of property, plant and equipment				5,471			1,556			(711	)
		Depreciation and amortization				58,283			61,680			46,884
		Foreign currency transaction gain				(4,286	)		(1,253	)		(334	)
		Amortization of deferred financing costs				2,398			3,955			1,003
		Amortization of bond discount				152			7			124
		Loss on bond redemption				790			—			—
		Compensation expense for ESOP				2,583			4,090			1,711
		Impairment on asset held for sale				1,908			—			—
		Gain on sale of business assets				(1,999	)		—			—
		Goodwill impairment				7,686			—			—
		Bond investment write down				—			—			4,084
		Discontinued product charge				—			—			4,500
		Provision for doubtful accounts				182			3,074			2,970
		Inventory reserves				9,500			16,070			2,108
		Deferred income taxes				4,527			8,767			5,227
		Tax benefit from exercise of stock options				220			1,228			1,072
		Changes in operating assets and liabilities, net of acquisitions:
			Accounts receivable			29,354			(8,151	)		(222	)
			Inventories			(87,434	)		(72,888	)		(30,487	)
			Prepaid expenses and other current assets			(1,613	)		(4,095	)		(15,855	)
			Other assets			(139	)		(1,937	)		616
			Accounts payable			(28,519	)		7,193			(2,773	)
			Accrued expenses and other liabilities			8,647			(11,209	)		10,030
				Net cash provided by operating activities		85,848			119,936			111,532
Cash flows from investing activities:
	Purchase of property, plant and equipment					(71,516	)		(42,700	)		(37,510	)
	Proceeds from sale of property, plant and equipment					298			1,065			1,498
	Proceeds from sale of property, plant and equipment held for sale					9,950			—			—
	Proceeds from sale of trademark					30			—			—
	Proceeds from sale of business assets					5,766			—			—
	Purchase of available-for-sale marketable securities					(39,900	)		—			—
	Cash paid for acquisitions, net of cash acquired					(131,397	)		—			(289,676	)
	Purchase price dispute settlements, net					(8,236	)		—			—
	Purchase of intangible assets					(563	)		—			—
	Purchase of industrial revenue bonds					(14,973	)		—			—
	Proceeds from sale of bond investment					—			4,158			—
	Release of cash held in escrow					—			—			2,403
				Net cash used in investing activities		(250,541	)		(37,477	)		(323,285	)
Continued

The accompanying notes are an integral part of these consolidated financial statements.

F-6

NBTY, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Continued)
Years ended September 30, 2005, 2004 and 2003
(dollars and shares in thousands)

			2005			2004			2003
Cash flows from financing activities:
	Principal payments under long-term debt agreements		$	(138,544	)	$	(117,100	)	$	(35,211	)
	Proceeds from borrowings under long-term debt agreements			132,950			—			275,000
	Proceeds from sale-leaseback			14,973			—			—
	Net proceeds under the Revolving Credit Facility			6,000			—			—
	Payments for financing fees			—			(500	)		(7,500	)
	Bond issuance costs			(3,329	)		—			—
	Proceeds from stock options exercised			225			1,881			1,146
	Proceeds from bond offering, net of discount			198,234			—			—
	Purchase of treasury stock			(176	)		—			—
		Net cash provided by (used in) financing activities		210,333			(115,719	)		233,435
Effect of exchange rate changes on cash and cash equivalents				(109	)		5,662			1,438
Net increase (decrease) in cash and cash equivalents				45,531			(27,598	)		23,120
Cash and cash equivalents at beginning of year				21,751			49,349			26,229
Cash and cash equivalents at end of year			$	67,282		$	21,751		$	49,349
Supplemental disclosure of cash flow information:
	Cash paid during the year for interest, net of capitalized interest of $494 in 2005		$	20,616		$	21,156		$	17,709
	Cash paid during the year for income taxes		$	39,381		$	39,490		$	34,698
Non-cash investing and financing information:
	Acquisitions accounted for under the purchase method are summarized as follows:
			2005			2004			2003
		Fair value of assets acquired	$	140,174		$	—		$	411,981
		Liabilities assumed		(8,493	)		—			(119,479	)
		Less: Cash acquired		(284	)		—			(2,826	)
		Net cash paid	$	131,397		$	—		$	289,676

        During fiscal 2005, the Company completed its working capital dispute arbitration in connection with the Rexall acquisition resulting in the payment of $12,794 plus interest of $1,341 for a total payment of $14,135. In addition, the Company issued 100 shares of NBTY stock (having a then total market value of approximately $2,438) as a contribution to the ESOP.

        During fiscal 2004, the Company issued 100 shares of NBTY stock (having a then total market value of approximately $2,473) as a contribution to the ESOP.

        During fiscal 2003, the Company issued 100 shares of NBTY stock (having a then total market value of approximately $1,711) as a contribution to the ESOP.

        Property, plant and equipment additions included in Accounts payable were $4,093, $2,002 and $1,346 at September 30, 2005, 2004 and 2003, respectively.

The accompanying notes are an integral part of these consolidated financial statements.

F-7

NBTY, Inc. and Subsidiaries
Notes to Consolidated Financial Statements

Years ended September 30, 2005, 2004 and 2003
(in thousands, except per share amounts, number of locations and amortization periods)

1.    Business Operations and Summary of Significant Accounting Policies

Business Operations

        The Company (as defined below) manufactures and sells vitamins, food supplements, and health and beauty aids throughout the world, but primarily in the United States ("U.S."), the United Kingdom ("U.K."), Ireland, Holland, and Canada. In each of these countires, there are agencies that regulate the processing, formulation, packaging, labeling and advertising of the Company's products.

Principles of Consolidation and Basis of Presentation

        The consolidated financial statements of NBTY, Inc. and Subsidiaries (the "Company" or "NBTY") include the accounts of the Company and its wholly owned subsidiaries. The Company's fiscal year ends on September 30. All intercompany accounts and transactions have been eliminated.

Revenue Recognition

        The Company recognizes revenue in accordance with the Securities and Exchange Commission's Staff Accounting Bulletin 104. The Company recognizes product sales revenue when title and risk of loss have transferred to the customer, there is persuasive evidence of an arrangement, delivery has occurred, the sales price is fixed or determinable and collectibility is reasonably assured. Since the terms for most sales within the wholesale and direct response segments are F.O.B. destination, generally title and risk of loss transfer to the customer at the time the product is received by the customer. With respect to its own retail store operations, the Company recognizes revenue upon the sale of its products to retail customers. The Company's net sales represent gross sales invoiced to customers, less certain related charges for discounts, returns, and other promotional program incentive allowances. Accruals provided for these items are presented in the consolidated financial statements as reductions to sales (see "Sales Returns and Allowances" discussed below for further information).

Estimates

        The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. The most significant estimates include:

•

sales returns and allowances;



•

allowance for doubtful accounts;



•

inventory valuation and obsolescence;



•

valuation and recoverability of long-lived and indefinite-lived intangible assets including the values assigned to acquired intangible assets, goodwill and assets held for sale;



•

income taxes; and



•

accruals for the outcome of current litigation.

F-8

        On a continual basis, management reviews its estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such reviews, and if deemed appropriate, those estimates are adjusted accordingly. Actual results could differ from those estimates.

Significant Customers and Concentration of Credit Risk

        Financial instruments which potentially subject the Company to credit risk consist primarily of cash and cash equivalents, investments and trade accounts receivable. Cash balances may, at times, exceed FDIC limits on insurable amounts. The Company mitigates its risk by investing in or through major financial institutions. The Company's investments consist of auction rate securities ("ARS"), which are classified as available-for-sale marketable securities and are reported at fair value (which approximates cost). The Company believes no significant concentration of credit risk exists with respect to these securities.

        The Company performs on-going credit evaluations of its customers and adjusts credit limits based upon payment history and the customer's current credit worthiness, as determined by the review of their current credit information. Collections and payments from customers are continuously monitored. The Company maintains an allowance for doubtful accounts, which is based upon historical experience as well as specific customer collection issues that have been identified. While such bad debt expenses have historically been within expectations and allowances established, the Company cannot guarantee that it will continue to experience the same credit loss rates that it has in the past. If the financial condition of customers were to deteriorate resulting in an impairment of their ability to make payments, additional allowances may be required.

        The following individual customers accounted for the following percentages of the Wholesale/US Nutrition division's net sales and total net sales, respectively:

	Wholesale/US Nutrition division net sales						Total net sales
	2005		2004		2003		2005		2004		2003
Customer A	14	%	8	%	16	%	6	%	4	%	6	%
Customer B	15	%	20	%	13	%	6	%	9	%	5	%

        Customer A is primarily a supplier to Customer B. Therefore, the loss of Customer B would likely result in the loss of most of the net sales to Customer A. While no one customer represented, individually, more than 10 percent of the Company's consolidated net sales for the fiscal years ended September 30, 2005, 2004 and 2003, the loss of either one of these customers would have a material adverse effect on the Wholesale/US Nutrition division if the Company was unable to replace such customer(s).

F-9

        The following individual customers accounted for 10% or more of the Wholesale/US Nutrition division's total gross accounts receivable at fiscal years ended:

	2005		2004
Customer A	10	%	5	%
Customer B	7	%	12	%
Customer C	10	%	11	%

Sales Returns and Other Allowances

        The Company simultaneously records estimates for various costs, which reduce product sales. These costs include estimates for product returns and for promotional program incentive activities for various types of incentives offered to customers as well as other sales allowances.

        Allowance for sales returns:    The Company analyzes sales returns in accordance with Statement of Financial Accounting Standard ("SFAS") No. 48 "Revenue Recognition When Right of Return Exists". The Company is able to make reasonable and reliable estimates of product returns based on the Company's past 25 year history in the business. The Company also monitors the buying patterns of the end-users of its products based on sales data received by its over 1,200 retail outlets in North America and Europe. Estimates for sales returns are based on a variety of factors including actual return experience of any specific product or similar product. The Company also reviews its estimates for product returns based on expected return data communicated to it by customers. The Company also monitors the levels of inventory at its largest customers to avoid excessive customer stocking of merchandise. Accruals for returns for new products are estimated by reviewing data of any prior relevant new product introduction return information. Accordingly, the Company believes that its historical returns analysis is an accurate basis for its sales return accrual. The Company does not have the ability to track returns by fiscal period, however, the Company believes it is able to make reasonable estimates of expected sales returns, as contemplated by the requirements of SFAS 48, based upon historical data and the available monitoring processes. The Company believes it has sufficient information and knowledge of its customers and of industry trends and conditions, to adjust the accrual for returns when necessary. Actual results could differ from those estimates.

        Promotional program incentive accrual:    The Company uses objective procedures for estimating its accrual for promotional program incentives. The accrual for sales incentives offered to customers is based on contractual terms or other arrangements agreed to in advance with certain customers. Customers earn such incentives as specified sales volumes are achieved.

        As with any set of assumptions and estimates, there is a range of reasonably likely amounts that may be calculated for each accrual above. However, the Company believes that there would be no significant difference in the amounts reported using any other reasonable assumptions than what was used to arrive at each accrual. The Company regularly reviews the factors that influence its estimates and, if necessary, makes adjustments when it believes that actual product returns, credits and other allowances may differ from established reserves. Actual experience associated with any of these items may be significantly different than the Company's estimates.

F-10

        Accounts receivable are presented net of the following reserves at September 30:

	2005		2004
Allowance for sales returns:	$	15,616	$	9,108
Promotional program incentive accrual:		43,837		37,495
	$	59,453	$	46,603

Inventories

        Inventories are stated at the lower of cost or market. Cost is primarily determined on the first-in, first-out (FIFO) method. The cost elements of inventory include materials, labor and overhead. During fiscal 2005, one supplier individually represented greater than 10% of the Company's raw material purchases. Due to numerous alternative suppliers available, the Company does not believe that the loss of this or any other single supplier would have a material adverse effect on the Company's consolidated financial condition or results of operations. In fiscal 2004 and 2003, no one supplier provided more than 10% of the Company's raw material purchases. No one supplier provided more than 10% of the Company's overall consolidated total purchases in any of the fiscal years presented.

        The Company establishes reserves for its inventory to reflect situations in which the cost of the inventory is not expected to be recovered. The Company regularly reviews its inventory, including when product is close to expiration and is not expected to be sold, when product has reached its expiration date, or when product is not expected to be saleable based on the Company's quality assurance and quality control standards. The reserve for these products is equal to all or a portion of the cost of the related inventory based on the specific facts and circumstances. In evaluating whether inventory is stated at the lower of cost or market, management considers such factors as the amount of inventory on hand, estimated time required to sell such inventory, remaining shelf life and current and expected market conditions, including levels of competition. The Company records provisions for inventory reserves as part of cost of sales. Reserves for excess and slow moving inventories were $13,956 and $17,562 at September 30, 2005 and 2004, respectively.

Advertising, Promotion and Catalog

        The Company expenses the production costs of advertising the first time the advertising takes place, except for direct-response advertising, which is capitalized and amortized over its expected period of future benefit, which typically approximates two months. The Company had $964 and $1,062 capitalized for direct response advertising at September 30, 2005 and 2004, respectively. Total direct response advertising expenses were $11,281, $13,682 and $12,873 for the fiscal years ended September 30, 2005, 2004 and 2003, respectively. Total advertising expenses for the fiscal years ended September 30 were comprised of the following:

		2005		2004		2003
Advertising, promotions, catalogs		$	96,645	$	71,318	$	53,652
Catalog printing and mailing			11,360		13,920		12,803
	Total	$	108,005	$	85,238	$	66,455

F-11

Property, Plant and Equipment

        Property, plant and equipment are carried at cost. Depreciation is provided on a straight-line basis over the estimated useful lives of the related assets. The costs of normal maintenance and repairs are charged to expense in the year incurred. Expenditures which significantly improve or extend the life of an asset are capitalized and depreciated over the assets remaining useful life. Amortization of leasehold improvements is computed using the straight-line method over the shorter of the estimated useful lives of the related assets or lease term. Upon sale or disposition, the related cost and accumulated depreciation are removed from the accounts and the resulting gain or loss is reflected in earnings.

Goodwill and Other Intangible Assets

        Goodwill represents the excess of purchase price over the fair value of identifiable net assets of companies acquired. Goodwill and other intangible assets acquired in a business combination and determined to have an indefinite useful life are not amortized, but instead tested for impairment at least annually in accordance with the provisions of SFAS No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142"). The SFAS 142 goodwill impairment model is a two-step process. The first step compares the fair value of a reporting unit that has goodwill assigned to its carrying value. The Company estimates the fair value of a reporting unit by using a discounted cash flow model with the assistance of an independent appraisal firm. If the fair value of the reporting unit is determined to be less than its carrying value, a second step is performed to compute the amount of goodwill impairment, if any. Step two allocates the fair value of the reporting unit to the reporting unit's net assets other than goodwill. The excess of the fair value of the reporting unit over the amounts assigned to its net assets other than goodwill is considered the implied fair value of the reporting unit's goodwill. The implied fair value of the reporting unit's goodwill is then compared to the carrying value of its goodwill. Any shortfall represents the amount of goodwill impairment. SFAS 142, requires that goodwill and other intangibles with indefinite lives be tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. Application of the goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. The Company tests goodwill annually as of September 30, the last day of its fourth fiscal quarter, of each year unless an event occurs that would cause the Company to believe the value is impaired at an interim date.

        Using the SFAS 142 approach described in the previous paragraph, the Company recorded a goodwill impairment charge during the third quarter of fiscal 2005 of $7,686 for its North American Retail reporting unit. No impairment of goodwill was noted for the fiscal years ended September 30, 2004 and 2003. (See Note 7 for discussion of goodwill impairment charges recorded during the third quarter of fiscal 2005 for the North American Retail reporting unit and interim triggering events which required the Company to test its goodwill in the third quarter of fiscal 2005).

        Generally, in evaluating impairment, the Company estimates the sum of the expected future cash flows derived from such goodwill. Such evaluations for impairment are significantly impacted by

F-12

estimates of future revenues, costs and expenses and other factors. A significant change in cash flows in the future could result in an additional impairment of goodwill.

        Other definite lived intangibles are amortized on a straight-line basis over periods not exceeding 20 years.

Impairment of Long-Lived Assets

        The Company follows the provisions of SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS 144"). SFAS 144 requires evaluation of the need for an impairment charge relating to long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The estimated future undiscounted cash flows associated with the asset would be compared to the asset's carrying amount to determine if a write down to a new depreciable basis is required. If required, an impairment charge is recorded based on an estimate of future discounted cash flows. During fiscal 2005, 2004 and 2003, the Company recognized impairment charges of $3,518, $2,603 and $1,117, respectively, on assets to be held and used. The impairment charges related primarily to leasehold improvements and furniture and fixtures for U.S. retail operations and were included in the Consolidated Statements of Income under the caption "Selling, general and administrative" expenses in fiscal 2005, 2004 and 2003 (see Note 7).

Stock-Based Compensation

        There were no stock option grants during the fiscal years ended September 30, 2005, 2004 and 2003, and all previously issued options are fully vested; therefore, the pro forma and actual net income and related earnings per share for these periods are the same.

        The Company accounts for its stock-based compensation using the intrinsic value method prescribed in Accounting Principles Board ("APB") Opinion No. 25 "Accounting for Stock Issued to Employees" ("APB 25") and related interpretations and provides additional disclosures with respect to the pro-forma effects of adoption had the Company recorded compensation expense as provided in SFAS No. 123.

        In December 2004, the Financial Accounting Standards Board ("FASB") issued SFAS No. 123 (Revised 2004) "Share-Based Payment: an Amendment of FASB Statements No. 123 and 95" ("SFAS l23(R)"). SFAS 123(R) is effective for the Company beginning October 1, 2005. Since all previously granted options are fully vested and the Company has not issued any other share-based payments, the adoption of SFAS 123(R) is not expected to have a significant impact on the Company's historical consolidated financial position or results of operations. SFAS l23(R) sets accounting requirements for "share-based" compensation to employees, requires companies to recognize in the income statement the grant-date fair value of stock options and other equity-based compensation issued and disallows the use of the intrinsic value method of accounting for stock compensation. SFAS 123(R) also requires that the benefits associated with the tax deductions in excess of recognized compensation cost be reported as a financing cash flow, rather than as an operating cash flow as required under current literature. This requirement will reduce net operating cash flows and increase net financing cash flows in periods after adoption. These future amounts cannot be estimated because they depend on, among other things, when stock options are exercised. The amount of income tax benefit from exercise of stock

F-13

options recognized for the fiscal years ended September 30 2005, 2004 and 2003 was $220, $1,228 and $1,072, respectively.

Foreign Currency

        The financial statements of international subsidiaries are translated into U.S. Dollars using the exchange rate at each balance sheet date for assets and liabilities and an average exchange rate for each period for revenues, expenses, gains and losses. Foreign currency transaction gains and losses are charged or credited to income as incurred. Where the local currency is the functional currency, translation adjustments are recorded as a separate component of stockholders' equity. During fiscal 2005, 2004 and 2003, the Company recognized foreign currency transaction gains of $4,286, $1,253 and $334, respectively, and is included in "Miscellaneous, net" in the Consolidated Statements of Income.

Derivatives

        In accordance with SFAS No. 133, "Accounting for Derivative Instruments and Certain Hedging Activities" ("SFAS 133"), as amended by SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities, an amendment of SFAS 133" ("SFAS 138") and SFAS No. 149, "Amendment on Statement 133 on Derivative Instruments and Hedging Activities ("SFAS 149"), the Company recognizes derivatives as either an asset or liability measured at its fair value. For derivatives that have been formally designated as a cash flow hedge (interest rate swap agreements), the effective portion of changes in the fair value of the derivatives are recorded in "accumulated other comprehensive income". Amounts in "accumulated other comprehensive income" are reclassified into earnings in the "interest expense" caption when interest expense on the underlying borrowings are recognized. The Company does not enter into derivatives for speculative purposes. (See Note 9 for derivatives entered into during fiscal year 2005).

Comprehensive Income

        In accordance with SFAS No. 130, "Reporting Comprehensive Income", the Company is required to display comprehensive income and its components as part of its complete set of financial statements. Comprehensive income represents the change in stockholders' equity resulting from transactions other than stockholder investments and distributions. Included in accumulated other comprehensive income are changes in equity that are excluded from the Company's net income, specifically, unrealized gains and losses on foreign currency translation adjustments, unrealized holding gains (losses) on investments and changes in the fair value of the interest rate swap agreement treated as a cash flow hedging instrument.

Income Taxes

        The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax liabilities and assets are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The Company estimates the degree to which tax assets and credit carryforwards will result in a benefit based on expected profitability by tax jurisdiction. A valuation allowance for such

F-14

tax assets and loss carryforwards is provided when it is determined that such assets will more likely than not go unused. If it becomes more likely than not that a tax asset will be used, the related valuation allowance on such assets would be reversed. Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions. In management's opinion, adequate provisions for income taxes have been made for all years. If actual future taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary.

Cash and Cash Equivalents

        The Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents.

Investments

        The Company's investments consist of auction rate securities ("ARS"), which are classified as available-for-sale marketable securities and are reported at fair value (which approximates cost). These investments are recorded at fair value in the accompanying balance sheets; any unrealized gains/losses are included in other comprehensive income, unless a loss is determined to be other than temporary. As of September 30, 2005, there are no unrealized holding gains or losses. ARS are long-term variable rate bonds tied to short-term interest rates that are reset through a "dutch auction" process which occurs every 7 to 35 days. Holders of auction rate securities may liquidate their holdings to prospective buyers by participating in the auctions. At the beginning of each holding period, an auction takes place which determines the coupon rate or dividend. At the end of each holding period, a new auction is held to determine the rate or dividend for the next holding period. The Company can offer to sell or elect to continue to hold these securities at par at each auction. In order for the Company to sell ARS, the auction needs to be successful whereby demand in the marketplace exceeds the supply. The length of each holding period is determined at the original issuance of each ARS. On March 4, 2005, the SEC issued guidance regarding the classification of investments in auction rate securities. The SEC's guidance indicates that auction rate securities do not qualify as cash equivalents because they have long-term maturity dates and there is no guarantee that holders will be able to liquidate their holdings through the auction process. Accordingly, the Company classifies its investments in auction rate securities as current assets in the accompanying balance sheets because they are available-for-sale and are generally available to meet its current liquidity requirements. Purchases and sales of auction rate securities are presented as investing activities in the Consolidated Statements of Cash Flows.

Shipping and Handling Costs

        The Company incurs shipping and handling costs in all divisions of its operations. These costs are included in "Selling, general and administrative expenses" in the Consolidated Statements of Income and are $47,696, $45,199 and $32,860 for the fiscal years ended September 30, 2005, 2004 and 2003, respectively. Of these amounts, $10,790, $9,267 and $6,186 have been billed to customers and are included in net sales for the fiscal years ended September 30, 2005, 2004, and 2003, respectively.

F-15

New Accounting Developments

        In October 2005, the FASB issued Staff Position FAS 13-1, "Accounting for Rental Costs Incurred during a Construction Period," which requires rental costs associated with ground or building operating leases that are incurred during a construction period to be recognized as rental expense. This Staff Position is effective for reporting periods beginning after December 15, 2005, and retrospective application is permitted but not required. The adoption of this statement is not expected to have a significant effect on the Company's consolidated financial position or results of operations since the Company currently expenses such costs.

        In July 2005, the FASB issued an Exposure Draft of a proposed Interpretation "Accounting for Uncertain Tax Positions—an interpretation of FASB Statement No. 109." Under the proposed Interpretation, a company would recognize in its financial statements its best estimate of the benefit of a tax position, only if the tax position is considered more likely than not of being sustained on audit based solely on the technical merits of the tax position. In evaluating whether the more likely than not recognition threshold has been met, the proposed Interpretation would require the presumption that the tax position will be evaluated during an audit by taxing authorities. The proposed Interpretation would be effective as of the end of the first fiscal year ending after December 15, 2005, with a cumulative effect of a change in accounting principle to be recorded upon the initial adoption. The proposed Interpretation would apply to all tax positions and only benefits from tax positions that meet the more likely than not recognition threshold at or after the effective date would be recognized. The Company is currently analyzing the proposed Interpretation and has not determined its potential impact on its Consolidated Financial Statements. While the Company cannot predict with certainty the rules in the final Interpretation, there is risk that the final Interpretation could result in a cumulative effect charge to earnings upon adoption, increases in future effective tax rates, and/or increases in future interperiod effective tax rate volatility.

        In June 2005, the Emerging Issues Task Force modified its consensus on Issue No. 04-10, "Determining Whether to Aggregate Operating Segments That Do Not Meet the Quantitative Thresholds". This guidance creates stricter standards for aggregating operating segments that do not meet the quantitative thresholds provided within SFAS 131, "Disclosures About Segments of an Enterprise and Related Information". The guidance became effective for fiscal years ending after September 15, 2005. The adoption of this guidance did not impact the presentation of the Company's reportable segments.

F-16

        In June 2005, the FASB issued an exposure draft of a proposed standard entitled "Business Combinations—a replacement of FASB Statement No. 141". The proposed standard, if adopted, would provide new guidance for evaluating and recording business combinations and would be effective on a prospective basis for business combinations whose acquisition dates are on or after January 1, 2007. Upon issuance of a final standard, which is expected in 2006, the Company will evaluate the impact of this new standard and its effect on the process for recording business combinations.

        In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections" ("SFAS 154"), which replaces APB Opinion No. 20, Accounting Changes, and FASB Statement No. 3, Reporting Accounting Changes in Interim Financial Statements. APB Opinion No. 20 had required that changes in accounting principles be recognized by including the cumulative effect of the change in the period in which the new accounting principle was adopted. SFAS 154 requires retrospective application of the change to prior periods' financial statements, unless it is impracticable to determine the period-specific effects of the change. The FASB identified the reason for the issuance of SFAS 154 to be part of a broader attempt to eliminate differences with the International Accounting Standards Board ("IASB"). The Statement is effective for fiscal years beginning after December 15, 2005. The Company is required to adopt this statement starting in its fiscal 2007 reporting period. The Company does not anticipate that the adoption of SFAS 154 will have a significant impact on the Company's consolidated financial position or results of operations.

        In March 2005, the FASB issued FASB Interpretation No. 47, "Accounting for Conditional Asset Retirement Obligations" ("FIN 47"). FIN 47 provides guidance relating to the identification of and financial reporting for legal obligations to perform an asset retirement activity. The Interpretation requires recognition of a liability for the fair value of a conditional asset retirement obligation when incurred if the liability's fair value can be reasonably estimated. FIN 47 also defines when an entity would have sufficient information to reasonably estimate the fair value of an asset retirement obligation. The provision is effective no later than the end of fiscal years ending after December 15, 2005. The Company will adopt FIN 47 beginning the first quarter of fiscal year 2006 and does not believe the adoption will have a material impact on its consolidated financial position or results of operations.

        In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary Assets, an amendment of APB Opinion No. 29, Accounting for Nonmonetary Transactions" ("SFAS 153"). The amendments made by SFAS 153 are based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. Further, the amendments eliminate the narrow exception for nonmonetary exchanges of similar productive assets and replace it with a broader exception for exchanges of nonmonetary assets that do not have commercial substance. SFAS 153 is effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. The adoption of SFAS 153 did not have a significant impact on the Company's consolidated financial position or results of operations.

        In November 2004, the FASB issued SFAS No. 151, "Inventory Costs" an amendment of Accounting Research Bulletin ("ARB") No. 43, to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). This Statement requires that those items be recognized as current-period charges regardless of whether they meet the criterion of

F-17

"so abnormal". In addition, this Statement requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. Companies are required to adopt the provisions of this Statement for fiscal years beginning after June 15, 2005. The Company will adopt SFAS 151 beginning the first quarter of fiscal year 2006 and does not believe the adoption will have a material impact on its consolidated financial position or results of operations as such costs have historically been expensed as incurred.

        In October 2004, the American Jobs Creation Act of 2004 ("Act") became effective in the U.S. Two provisions of the Act may impact the Company's provision for income taxes in future periods, namely those related to the Qualified Production Activities Deduction ("QPA") and Foreign Earnings Repatriation ("FER"). As discussed further below, the Company has analyzed the Act and determined that it will repatriate funds in accordance with the FER provision during the fiscal year ending September 30, 2006.

•

The QPA will be effective for the Company's U.S. federal tax return year beginning after September 30, 2005. In summary, the Act provides for a percentage deduction of earnings from qualified production activities, as defined, commencing with an initial deduction of 3 percent for tax years beginning in 2005 and increasing to 9 percent for tax years beginning after 2009. However, the Act also provides for the phased elimination of the Extraterritorial Income Exclusion provisions of the Internal Revenue Code, which have previously resulted in tax benefits to the Company. Due to the interaction of the provisions noted above as well as the particulars of the Company's tax position, the ultimate effect of the QPA on the Company's future provision for income taxes is not deemed to be significant. The FASB issued FASB Staff Position FAS 109-1, Application of FASB Statement No.109, Accounting for Income Taxes, to the Tax Deduction on Qualified Production Activities Provided by the American Jobs Creation Act of 2004, ("FSP 109-1") in December 2004. FSP 109-1 requires that tax benefits resulting from the QPA should be recognized no earlier than the year in which they are reported in the entity's tax return, and that there is to be no revaluation of recorded deferred tax assets and liabilities as would be the case had there been a change in an applicable statutory rate.



•

The FER provision of the Act provides generally for a one-time 85 percent dividends received deduction for qualifying repatriations of foreign earnings to the U.S. Qualified repatriated funds must be reinvested in the U.S. in certain qualifying activities and expenditures, as defined by the Act. In December 2004, the FASB issued FASB Staff Position FAS 109-2, Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004 ("FSP 109-2"). FSP 109-2 allows additional time for entities potentially impacted by the FER provision to determine whether any foreign earnings will be repatriated under said provisions. The Company has completed its evaluation of the application of the FER provision and determined that it will realize a benefit by repatriating funds in accordance with the FER provision. As such, the Company has developed a Domestic Reinvestment Plan to reinvest the repatriated funds in the U.S. in qualifying activities, pursuant to the terms of the FER provision and subsequent guidance issued by the IRS. This plan calls for the repatriation of up to $100 million during the fiscal year ending September 30, 2006. A portion of the repatriation includes foreign earnings related to the fiscal year ended September 30, 2005 and to earlier fiscal years. The Company has recorded a net benefit of $884 on the unremitted earnings

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from the fiscal year ended September 30, 2005 and earlier fiscal years as a result of the FER provision. The majority of the repatriation is expected to come from projected foreign earnings for the fiscal year ending September 30, 2006. It is impractical to calculate the exact amount of earnings and exact tax impact that the Company may realize from the repatriation of 2006 earnings. As such, no incremental tax impact has been recorded with respect to these earnings.

2.    Acquisitions

        The Company accounts for the below mentioned acquisitions under the purchase method of accounting in accordance with SFAS No. 141, "Business Combinations." Under the purchase method of accounting, the total purchase price has been allocated to the tangible and intangible assets acquired and the liabilities assumed based on their estimated fair values. The excess of the purchase price over those fair values was recorded as goodwill (see Note 6). The fair value assigned to the tangible and intangible assets acquired and liabilities assumed was based upon estimates and assumptions developed by management and other information compiled by management, including a valuation, prepared by an independent valuation specialist that utilized established valuation techniques appropriate for the industry.

        Certain acquisitions also gave rise to the consolidation and elimination of certain personnel positions. The Company provided certain balance sheet adjustments for the same in accordance with EITF No. 95-3, "Recognition of Liabilities in Connection with a Purchase Business Combination." At the closing of the respective acquisitions, the Company anticipated headcount reductions and, as such, included an estimated accrual for workforce reductions comprised of severance and employee benefits in the purchase price allocation for each respective acquisition. A rollforward of the workforce reduction accrual in connection with the respective acquisitions is provided in the discussions below.

Fiscal 2005 Acquisitions

Solgar

        On August 1, 2005, the Company acquired substantially all the assets of Solgar Vitamin and Herb, a division of Wyeth Consumer Healthcare (Wyeth NYSE: WYE) for $115,000 in cash. The goodwill associated with this acquisition is deductible for tax purposes. The cash used for this acquisition was financed by an amendment and restatement of the Company's existing Credit and Guarantee Agreement ("CGA") which included a new Term Loan A for $120,000 which matures August 2010. The Company also incurred approximately $3,409 of direct transaction costs for a total purchase price of approximately $118,409. Additionally, related financing costs of approximately $1,147 were paid to secure the financing for this acquisition which will be amortized until the maturity of Term Loan A (see Note 9).

        Solgar manufactures and distributes premium-branded nutritional supplements including multivitamins, minerals, botanicals and specialty formulas designed to meet the specific needs of men, women, children and seniors. Solgar's headquarters and major manufacturing facility are located in Bergen County, New Jersey. Solgar's products are sold at nearly 5,000 health food stores, natural product stores, natural pharmacies and specialty stores across the United States. Solgar will strengthen NBTY's presence in the health food store market, as the Solgar brand will be focused on serving the

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needs of the independent health food store across the United States. In addition, Solgar's products are sold internationally in 40 countries, including countries in North and South America, Asia, the Middle East, Europe, as well as South Africa, Australia and New Zealand. Solgar, a prominent supplement company established in 1947, had sales for its 2004 fiscal year of approximately $105,000. This acquisition contributed $17,464 in net sales and a pre-tax operating loss of $1,879, since its acquisition date, to NBTY's wholesale segment for the fiscal year ended September 30, 2005.

        At the closing of the Solgar acquisition, the Company anticipated headcount reductions and, as such, included an estimated accrual for workforce reductions of approximately $1,008 comprised of severance and employee benefits in the preliminary purchase price allocation (see included herein). The rollforward of the workforce reduction accrual is as follows:

Accrual at acquistion date August 1, 2005	$	1,008
Payments through September 30, 2005		(891	)
Accrual at September 30, 2005	$	117

SISU

        On June 8, 2005, the Company acquired SISU, Inc. ("SISU"), a Canadian-based manufacturer and distributor of premium quality vitamins and supplements sold to the independent health food stores. SISU is headquartered in Burnaby, British Columbia and had sales of approximately $14,000 for its fiscal year ended September 30, 2004. The purchase price for this business was approximately $8,224 in cash. None of the goodwill associated with this acquisition is deductible for tax purposes. This acquisition contributed $3,355 in net sales and a marginal pre-tax operating loss since its acquisition date to NBTY's wholesale segment for the fiscal year ended September 30, 2005.

Le Naturiste

        On February 25, 2005, the Company acquired Le Naturiste Jean-Marc Brunet ("Le Naturiste"), a chain of 103 retail stores located throughout Quebec. Le Naturiste is an Eastern Canadian-based company in the business of developing, packaging, marketing and retailing an in-house range of privately-labeled health and natural products. At the time of the acquisition, the Le Naturiste chain operated 99 company-owned stores and 4 franchised stores. The purchase price for this business was approximately $5,048 in cash. None of the goodwill associated with this acquisition is deductible for tax purposes. This acquisition contributed $9,089 in net sales and a pre-tax operating loss of $1,556 since its acquisition date to NBTY's North American retail segment for the fiscal year ended September 30, 2005. As of September 30, 2005 the Le Naturiste chain operated 97 company-owned stores and 4 franchised stores.

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        The following provides an allocation of the purchase price in relation to the Le Naturiste, SISU and Solgar acquisitions. Certain purchase price allocations for these acquisitions are preliminary as noted in the table below:

		Final Le Naturiste		Preliminary SISU		Preliminary Solgar
Assets acquired
Cash		$	284	$	—	$	—
Accounts receivable, net			105		1,055		15,305
Inventories			2,392		1,915		37,405
Other current assets			599		272		336
Property, plant and equipment			2,466		890		19,239
Goodwill			98		1,541		16,481
Intangibles			960		3,791		35,010
Other assets			—		—		30
	Total assets acquired		6,904		9,464		123,806
Liabilities assumed
Accounts payable and accrued liabilities			1,230		1,021		5,397
Other liabilities			626		219		—
	Total liabilities assumed		1,856		1,240		5,397
Net assets acquired		$	5,048	$	8,224	$	118,409

        The fair value of property, plant and equipment acquired is as follows:

		Fair Values
								Depreciation and Amortization period (years)
		Final Le Naturiste		Preliminary SISU		Preliminary Solgar
Buildings and leasehold improvements		$	338	$	77	$	5,098	5–40
Machinery and equipment			201		504		12,225	3–10
Furniture and fixtures			1,685		102		669	5–10
Computer equipment			236		207		786	5
Transportation equipment			6		—		461	4
	Total property, plant and equipment	$	2,466	$	890	$	19,239

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        The fair value of identifiable intangible assets acquired is as follows:

		Fair Values
		Final Le Naturiste		Preliminary SISU		Preliminary Solgar		Amortization period (years)
Brands		$	—	$	1,371	$	15,010	20
Customer lists			61		—		—	3
Private label relationships			—		2,258		20,000	20
Trademarks			899		—		—	20
Covenants not to compete			—		162		—	3
	Total intangible assets	$	960	$	3,791	$	35,010

        The preliminary allocation of the purchase price noted above is subject to revision as follows:

Solgar

        The Company is in the process of obtaining a third party valuation of certain assets and liabilities and has not yet finalized the final net asset adjustment (as defined in the purchase agreement). The purchase agreement stipulates an adjustment to the purchase price between buyer and seller for the excess or shortfall of the final net asset value threshold as stated in such agreement. The completion of this process could potentially result in an adjustment to the purchase price. Upon completion of these events, final allocations to the acquired assets and liabilities could result in future adjustments to goodwill and actual results may differ from those presented herein.

SISU

        The Company is in the process of obtaining a third party valuation of certain assets and liabilities and has not yet finalized the final working capital adjustment (as defined in the purchase agreement). The purchase agreement stipulates an adjustment to the purchase price between buyer and seller for the excess or shortfall of the final working capital threshold as stated in such agreement. The preliminary purchase price allocation is also subject to contingency payments based upon financial loss claims as specified in the purchase agreement. The purchase agreement stipulates the indemnification from the seller of any financial losses of SISU for the period from June 1, 2005 to May 31, 2006 up to the maximum amount of $500. The completion of this process could potentially result in an adjustment to the purchase price. Upon completion of these events, final allocations to the acquired assets and liabilities could result in future adjustments to goodwill and actual results may differ from those presented herein.

        Pro forma financial information related to Solgar, SISU and Le Naturiste are not provided as their impact was not material individually or in the aggregate to the Company's consolidated financial statements.

        Although management believes that the current allocation of the estimated purchase price is reasonable, the final allocation (resulting from the finalization of the valuation of the fair value of the net assets acquired and the finalization of net working capital and net assets acquired) may differ significantly from the amounts reflected in the accompanying consolidated financial statements.

F-22

Fiscal 2004 Acquisitions

        In fiscal 2004, the Company did not acquire any businesses.

Fiscal 2003 Acquisitions

Rexall

        On July 25, 2003, the Company acquired all of the issued and outstanding capital stock of Rexall Sundown, Inc. ("Rexall") for $250,000 in cash from Numico USA, Inc., an indirect subsidiary of Royal Numico N.V. None of the goodwill associated with this acquisition is deductible for tax purposes. The acquisition was financed in fiscal 2003 by a new senior credit facility (see Note 9). The Company also incurred approximately $7,000 of direct transaction costs for a total purchase price of approximately $257,000. Additionally, related financing costs of approximately $7,500 were paid to secure the financing for this acquisition which will be amortized until the maturity of the underlying debt (see Note 9).

        The Company has retained essential Rexall employees consisting of product development, sales and service personnel. Management believes the transaction complemented NBTY's existing wholesale products and provides NBTY with an enhanced sales infrastructure and additional manufacturing capacity. Rexall's portfolio of nutritional supplement brands includes Rexall®, Sundown®, Osteo Bi-Flex®, Carb Solutions®, MET-Rx® and WORLDWIDE Sport Nutrition®. Rexall brands contributed $273,651, $293,542 and $72,815 in net sales to NBTY's Wholesale segment for the fiscal years ended September 30, 2005, 2004 and 2003, respectively.

        At the closing of the acquisition, the Company anticipated headcount reductions across all areas of Rexall and, as such, included an estimated accrual for workforce reductions of approximately $12,049 comprised of severance and employee benefits, in its purchase price allocation. The rollforward of the workforce reduction accrual is as follows:

Accrual at September 30, 2003	$	12,049
Payments through September 30, 2004		(10,451	)
Reserve adjustments charged to goodwill		(1,435	)
Accrual at September 30, 2004		163
Payments through September 30, 2005		(311	)
Reserve adjustments charged to operations		163
Accrual at September 30, 2005	$	15

        During the fiscal third quarter of 2004, the Company entered into a contract with a real estate broker to facilitate the sale of a Rexall building acquired in the 2003 acquisition. The building was classified as an asset held for sale and was included in "Prepaid expenses and other current assets" in the Consolidated Balance Sheet at September 30, 2004. During fiscal year 2005, the Company sold this building for $8,600, which was less than its carrying value at September 30, 2004 of $10,508 (see Note 12 for discussion of the impairment charge recorded during the fiscal year 2005).

F-23

De Tuinen

        On May 20, 2003, the Company acquired the De Tuinen chain of retail stores from Royal Ahold N.V. At the time of the acquisition, the De Tuinen chain consisted of 41 company owned stores and 24 franchised stores located throughout the Netherlands. The purchase price for this business was approximately $14,551 in cash. None of the goodwill associated with this acquisition is deductible for tax purposes. This acquisition contributed $41,513, $38,280 and $13,245 in net sales for the fiscal years ended September 30, 2005, 2004 and 2003, respectively. This acquisition also contributed pre-tax operating losses of $2,680, $1,980 and $607 for the fiscal years ended September 30, 2005, 2004 and 2003. At September 30, 2005, 67 DeTuinen stores in the Netherlands were in operation.

Health & Diet Group ("GNC (UK)") and FSC Wholesale ("FSC")

        On March 10, 2003, the Company acquired GNC (UK) and the FSC wholesale business from Royal Numico N.V. At the time of the acquisition, GNC (UK) owned and operated 49 GNC stores in the U.K. FSC is a Manchester, U.K.-based wholesale operation whose products are sold to health food stores and pharmacies. The purchase price for these businesses was approximately $16,759 in cash. None of the goodwill associated with this acquisition is deductible for tax purposes. This transaction stipulated adjustments to the purchase price for agreed upon working capital requirements and inventory valuation procedures performed. The Company settled its dispute over the working capital acquired with the former owners of GNC (UK) and FSC during the current fiscal year ended September 30, 2005 and received cash which was reflected as a purchase price adjustment to goodwill (see Note 6).

        This acquisition contributed $37,372, $46,583 and $27,468 in net sales for the fiscal years ended September 30, 2005, 2004 and 2003, respectively. GNC (UK) contributed pre-tax operating income of $5,554 and $2,162 for the fiscal years ended September 30, 2005 and 2004 and a marginal pre-tax operating loss for the fiscal year ended September 30, 2003. At September 30, 2005, 35 GNC stores in the U.K. were in operation. FSC contributed pre-tax operating income of $2,379 for the fiscal year ended September 30, 2005. FSC contributed a pre-tax operating loss of $759 and a marginal pre-tax operating loss for the fiscal years ended September 30, 2004 and 2003. During fiscal 2005, the Company sold certain business assets of FSC (see Note 12 for further discussion).

        Pro forma financial information related to De Tuinen, GNC (UK) and FSC are not provided as their operations were not significant individually or in the aggregate to NBTY as a whole. Such acquisitions were funded with internally generated cash.

3.    Investments

        Investments at September 30, 2005 consist of auction rate securities ("ARS") which are long-term variable rate bonds tied to short-term interest rates that are reset through a "dutch auction" process which occurs every 7 to 35 days. At September 30, 2005 the Company had investments in ARS of $39,900 which are classified as available-for-sale marketable securities with interest at rates that are reset every 7 days and have stated maturity dates ranging from 2014 to 2039. These investments are recorded at fair value in the accompanying balance sheets; any unrealized gains/losses are included in other comprehensive income, unless a loss is determined to be other than temporary. As of September 30, 2005, there are no unrealized holding gains or losses. Despite the long-term nature of

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their stated contractual maturities, there is a ready liquid market for these securities based on the interest reset mechanism. The Company classifies such securities as current assets in the accompanying balance sheets because the Company has the ability and intent to sell these securities as necessary to meet its current liquidity requirements. (See Note 23 for discussion of subsequent sales of such securities).

        Investments at September 30, 2005 consist of the following:

	2005
	Amortized Cost		Fair Value
Auction rate securities	$	39,900	$	39,900
	$	39,900	$	39,900

        The contractual maturities of the Company's investments are as follows:

	2005
within 1 year	$	—
after 1 year through 5 years		—
after 5 years through 10 years		10,000
after 10 years		29,900
	$	39,900

        In 2002, the Company purchased $8,242 high yield, less-than-investment-grade corporate debt securities. The Company did not intend to sell the shares in the near term and therefore classified them as available-for-sale securities, and reported them at fair market value (based on then current quoted market prices), with net unrealized gains or losses on the securities recorded as accumulated other comprehensive income in stockholders' equity. In fiscal 2003, the Company reviewed these marketable securities for impairment based on criteria that include the extent to which cost exceeds market value, the duration of the market decline, and the financial condition and near-term prospects for the issuer. As a result, in the Consolidated Statements of Income during the fiscal year ended September 30, 2003, the Company recorded an impairment charge against income of $4,084 ($2,896 or $0.04 basic and diluted earnings per share, after tax) included in "Other income (expense)". The Company sold all of its investment in bonds during the 2004 fiscal first quarter at no further gain or loss.

        Interest income included in "Miscellaneous, net" in the Consolidated Statements of Income was $1,935, $1,298 and $2,667 during the fiscal years ended September 30, 2005, 2004 and 2003, respectively.

4.    Inventories

        The components of inventories are as follows:

	2005		2004
Raw materials	$	146,134	$	89,140
Work-in-process		8,194		11,380
Finished goods		337,007		274,039
	$	491,335	$	374,559

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5.    Property, Plant and Equipment, net

        Property, plant and equipment is as follows:

		2005		2004		Depreciation and Amortization period (years)
Land		$	21,374	$	19,483
Buildings and leasehold improvements			243,816		178,540	5–40
Machinery and equipment			147,447		127,275	3–10
Furniture and fixtures			116,015		122,822	5–10
Computer equipment			60,380		63,066	5
Transportation equipment			11,379		10,711	4
			600,411		521,897
	Less: accumulated depreciation and amortization		279,883		241,822
		$	320,528	$	280,075

        Depreciation and amortization of property, plant and equipment for the fiscal years ended September 30, 2005, 2004 and 2003 was approximately $47,297, $50,180 and $41,406, respectively.

6.    Goodwill and Other Intangible Assets, net

        The changes in the carrying amount of goodwill by segment for the fiscal years ended September 30, 2005 and 2004 are as follows:

	Wholesale/ US Nutrition			North American Retail			European Retail			Direct Response/ Puritan's Pride		Consolidated
Balance at September 30, 2003	$	38,929		$	7,588		$	151,648		$	15,197	$	213,362
Adjustments to purchase price allocation		7,024			—			(11,735	)		—		(4,711	)
Foreign currency translation		—			—			12,778			—		12,778
Balance at September 30, 2004		45,953			7,588			152,691			15,197		221,429
Sale of business assets		(353	)		—			—			—		(353	)
Acquisition of Le Naturiste		—			98			—			—		98
Acquisition of SISU		1,541			—			—			—		1,541
Acquisition of Solgar		16,481			—			—			—		16,481
Tax effect of purchase price allocation		(1,221	)		—			—			—		(1,221	)
Purchase price dispute settlements and adjustments		11,078			—			(9,850	)		—		1,228
Impairment charge		—			(7,686	)		—			—		(7,686	)
Foreign currency translation		111			—			(2,881	)		—		(2,770	)
Balance at September 30, 2005	$	73,590		$	—		$	139,960		$	15,197	$	228,747

        The goodwill associated with the Solgar and SISU acquisitions are subject to revision as described in Note 2. Although management believes that the current allocation of the estimated purchase price is

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reasonable, the final allocation may differ significantly from the amounts reflected in the accompanying consolidated financial statements.

Changes in goodwill:

Fiscal 2005:

        The increase in the Wholesale / US Nutrition segment's goodwill for fiscal 2005 primarily related to the acquisition of Solgar ($16,481) and SISU, Inc. ($1,541) (see Note 2) and the effect of the Company's settlement of the working capital dispute in connection with the Rexall acquisition ($11,078) partially offset by a tax adjustment relating to the purchase price allocation of the Rexall acquisition ($1,221) and a reduction in the goodwill associated with the December 2004 sale of certain Food Supplement Corporation ("FSC") business assets ($353) (see Note 12).

        The decrease in the North American Retail segment's goodwill during fiscal 2005 is directly due to the Company recording an impairment charge of $7,686 (see Note 7).

        The decrease in the European Retail segment's goodwill during fiscal 2005 is related to the Company settling its dispute with the former owners of GNC (UK) and FSC during fiscal 2005 by receiving cash ($4,558) and settling the dispute over the net assets acquired ($5,292) reflected as an adjustment to the purchase price.

Fiscal 2004:

        The increase in the Wholesale/US Nutrition segment's goodwill for fiscal 2004 includes net adjustments for re-allocations of net excess purchase price to tangible assets acquired and liabilities assumed of approximately $6,946 (which includes a $1,435 severance accrual reduction), adjustments to the fair value of intangibles of $4,781, deferred taxes and other tax adjustments of $5,128 and additional direct costs paid of $469, offset by adjustments to the fair value of insurance costs of $5,200 and adjustments to the fair value of other liabilities of $5,100.

        The decrease in the European Retail segment's goodwill includes adjustments to the fair value of intangibles of $14,272, offset by re-allocations of net excess purchase price to tangible assets acquired and liabilities assumed of approximately $2,537.

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        The carrying amount of acquired other intangible assets is as follows:

		2005				2004
		Gross carrying amount		Accumulated amortization		Gross carrying amount		Accumulated amortization		Amortization period (years)
Definite lived intangible assets
Brands		$	94,565	$	8,608	$	79,105	$	4,724	20
Customer lists			61,963		28,299		61,911		24,265	2–15
Private label relationships			34,047		1,454		11,500		671	20
Trademarks and licenses			15,996		3,897		14,784		3,069	2–20
Covenants not to compete			2,777		2,565		2,605		2,435	3–5
			209,348		44,823		169,905		35,164
Indefinite lived intangible asset
Trademark			1,800		—		1,800		—
	Total intangible assets	$	211,148	$	44,823	$	171,705	$	35,164

        Aggregate amortization expense of other definite lived intangible assets included in the Consolidated Statements of Income under the caption "Selling, general and administrative" expenses in fiscal 2005, 2004 and 2003 was approximately $10,986, $11,500 and $5,478, respectively.

Estimated amortization expense

        Assuming no changes in the Company's other intangible assets, estimated amortization expense for each of the five succeeding fiscal years is as follows:

For the fiscal year ending September 30,
2006	$	12,471
2007	$	12,038
2008	$	11,893
2009	$	10,733
2010	$	10,673

7.    Asset Impairments

        Impairment Indicators:

        The Company has been monitoring the trends in the North American Retail segment's earnings before interest, taxes, depreciation and amortization ("EBITDA"), during the current fiscal year ("FY") due to the changes in the specialty retail market's business climate. This has directly influenced the

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Company's decision to participate in a significant level of promotional activity at several of its retail locations. These sales incentives have negatively impacted gross margins. The North American Retail segment had positive annual EBITDA for the five years preceeding the current fiscal year. The fiscal first quarter ended December 31, 2004 was the first time in the past five years that this reporting unit generated negative EBITDA. The Company continued to monitor this trend during the quarter ended March 31, 2005, in which the reporting unit generated a negative EBITDA for a second consecutive quarter. In addition to the negative EBITDA generated by the North American Retail segment during the first two quarters of FY 2005, the Company has also been monitoring its same-store sales trend. In May 2005, same-store sales turned positive; however, 8 out of the previous 12 months reflected negative same store sales trends. As a result of the two consecutive quarters of negative EBITDA and the continued adverse business climate of the specialty retail market during the April and May 2005 periods, the Company concluded that there were indicators of impairment of its North American Retail segment's goodwill and certain property, plant and equipment. These factors were determined to be interim triggering events that required an impairment review under the provisions of SFAS 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" and SFAS 142, "Goodwill and Other Intangible Assets".

        Long-lived asset impairment charge:

        The estimated future undiscounted cash flows associated with the North American Retail leasehold improvements and furniture and fixtures in stores that were incurring losses were compared to the respective carrying amount of such assets and it was determined that a write down to a new depreciable basis was required due to the fact that the carrying amount of the long-lived asset group for each store incurring losses exceeded its fair value. As a result of the Company's impairment test on these long-lived assets in accordance with SFAS 144, the Company recognized a $3,303 charge in May 2005 and a $215 charge in September 2005 for the impairment of assets to be held and used. The impairment charges were recorded based on an estimate of future discounted cash flows. The impairment charges related primarily to leasehold improvements and furniture and fixtures for certain North American Retail operations and were included in the Consolidated Statements of Income under the caption "Selling, general and administrative" expenses for the fiscal year ended September 30, 2005.

        In addition, during fiscal 2004 and 2003, the Company recognized impairment charges of $2,603 and $1,117, respectively, on assets to be held and used. The impairment charges related primarily to leasehold improvements and furniture and fixtures for the North American Retail operations and were included in the Consolidated Statements of Income under the caption "Selling, general and administrative" expenses for the fiscal years ended September 30, 2004 and 2003, respectively.

        Goodwill impairment charge:

        As a result of the Company's impairment test, it was determined that the North American Retail goodwill's carrying value exceeded its fair value, as calculated by an independent valuation specialist, and therefore, in accordance with SFAS 142, the Company recognized a $7,686 impairment charge of goodwill for the North American Retail reporting unit.

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8.    Accrued Expenses and Other Current Liabilities

        The components of accrued expenses and other current liabilities are as follows:

	2005		2004
Accrued compensation and related taxes	$	28,153	$	20,559
Income taxes payable		9,110		11,913
Accrued purchases		13,683		15,180
Litigation		11,337		11,406
Other		58,204		57,575
	$	120,487	$	116,633

9.    Long-Term Debt

        Long-term debt consisted of the following:

			2005		2004
Senior debt:
	85/8% Senior subordinated notes, ("85/8% Notes") net of unamortized discount of $173 in 2005 and $493 in 2004(a)		$	75,369	$	149,507
	71/8% Senior subordinated notes due 2015, ("71/8% Notes") net of unamortized discount of $1,763 in 2005(b)			198,237		—
Mortgages:
	First mortgage payable in monthly principal and interest (9.73%) installments of $25 (paid in full)			—		1,218
	First mortgage payable in monthly principal and interest (7.375%) installments of $55, maturing May 2011			3,060		3,480
	First mortgage; interest at LIBOR plus 1.5%; (approximating 5.19% at September 30, 2005); payable in monthly principal and interest installments of $384; maturing August 2015(c)			12,878		—
Credit and Guarantee Agreement ("CGA")(d):
	Revolving Credit Facility, maturing July 2008			6,000		—
	Term loan C; interest at LIBOR plus applicable margin; (approximating 5.875% at September 30, 2005); maturing July 2009			138,163		155,531
	Term loan A; interest at LIBOR plus applicable margin; (approximating 5.25% at September 30, 2005); maturing August 2010			75,419		—
				509,126		309,736
		Less: current portion		80,922		3,205
			$	428,204	$	306,531

(a)

The 8⁵/8% Senior Subordinated Notes (the "8⁵/8% Notes") are unsecured and subordinated in right of payment for all existing and future indebtedness of the Company. The 8⁵/8% Notes provide for the payment of interest semi-annually. On August 25, 2005, NBTY initiated a cash tender offer

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(the "Offer") for any and all of the 8⁵/8% Notes. On September 23, 2005, NBTY announced the expiration of the Offer with a total of $74,458 aggregate principal amount of the 8⁵/8% Notes tendered, representing approximately 49.6% of the outstanding 8⁵/8% Notes. On September 23, 2005, NBTY issued a Call for Redemption of these 8⁵/8% Notes Due 2007 and accepted and paid for the $74,458 aggregate principal amount of the 8⁵/8% Notes tendered. The redemption price was equal to $1,000 per $1,000 principal amount of the 8⁵/8% Notes validly tendered, plus accrued and unpaid interest to the redemption date. In connection with the early extinguishment of the 8⁵/8% Notes, the Company recorded a charge of $790 to interest expense in the Consolidated Statements of Income during the three months ended September 30, 2005. The charge included a write-off of approximately $620 representing the unamortized portion of debt issuance costs and $170 representing the unamortized bond discount associated with the original issuance. See Note 23 for discussion of the redemption for the remaining 8⁵/8% Notes on October 24, 2005.

(b)

In September 2005, the Company issued 10-year 7¹/8% Senior Subordinated Notes due 2015 (the "7¹/8% Notes"). The 7¹/8% Notes are unsecured and subordinated in right of payment for all existing and future indebtedness of the Company. The 7¹/8% Notes are subject to redemption, at the option of the Company, in whole or in part, at any time on or after October 1, 2010, and prior to maturity at certain fixed redemption prices plus accrued interest. In addition, on or prior to October 1, 2008, the Company may redeem in the aggregate up to 35% of the 7¹/8% Notes with the net cash proceeds received by the Company from certain types of equity offerings (as defined), at a redemption value equal to 107.125% of the principal amount plus accrued interest, provided that at least 65% of the aggregate principal amount of notes remain outstanding immediately after any such redemption. The notes do not have any sinking fund requirements. Interest is paid semi-annually on every April 1st and October 1st.

(c)

The Company entered into a variable rate mortgage with JP Morgan Chase Bank on August 31, 2005 for a loan in the amount of $12,950 which is payable in monthly principal installments of $72 plus interest at LIBOR plus 1.5%. The mortgage matures on August 31, 2015, with the final payment of the then unpaid principal balance of approximately $4,317. On August 31, 2005, the Company entered into an interest rate swap agreement ("SWAP") to receive variable rate interest (LIBOR), and pay fixed rate interest (4.71%) which effectively converted the $12,950 mortgage to fixed rate debt. The Company entered into this SWAP as a cash flow hedge in order to fix its interest payments on the mortgage. The SWAP, which expires August 2015 is amortizing so that the notional amount of the SWAP will decrease in tandem with the scheduled principal payments on the mortgage. See below for further discussion of such agreement.

(d)

On December 19, 2003, the Company refinanced approximately $224,000 of Term B loans outstanding under its July 2003 credit and guarantee agreement ("CGA") with a new class of Term C loans on more favorable terms of LIBOR plus 2%. Costs of approximately $500 were paid on December 19, 2003, in connection with this debt refinancing, which will be amortized until Term C's maturity of approximately six years. On August 1, 2005, in connection with the Company's acquisition of Solgar®, the Company amended and restated its existing credit agreement by adding a new Term Loan A of $120,000 and increasing its existing Revolving Credit Facility from $100,000 to $125,000. Costs of approximately $1,147 were paid in connection with this debt amendment and restatement. At September 30, 2005, the Company had borrowings

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outstanding of $6,000, $138,163 and $75,419 for the Revolving Credit Facility, Term Loan C and Term Loan A, respectively. Interest rates charged on borrowings can vary depending on the interest rate option utilized. Options for the rate can either be the Alternate Base Rate or LIBOR plus applicable margin. At September 30, 2005 and 2004, the borrowing rate for Term Loan C approximated 5.875% and 3.75%, respectively. At September 30, 2005 the borrowing rate for the Revolving Credit Facility and Term Loan A approximated 7.75% and 5.25%, respectively. The Company is required to pay a commitment fee, which varies between .25% and .50% per annum, depending on the Company's ratio of consolidated indebtedness to consolidated EBITDA, on any unused portion of the revolving credit facility. According to the CGA, EBITDA is defined as net income, excluding the aggregate amount of all non-cash losses reducing net income, plus interest, taxes, depreciation and amortization. Term Loan C requires the Company to make quarterly principal installments of approximately $352 thru June 30, 2008 and requires the last four quarterly principal installments to be balloon payments of approximately $33,572 beginning September 30, 2008. Term loan A requires the Company to make quarterly principal installments of approximately $2,828 beginning September 30, 2006 and requires the last four quarterly principal installments to be balloon payments of approximately $10,370 beginning September 30, 2009. The current portion of Term Loan C and Term Loan A at September 30, 2005 was $1,410 and $2,828, respectively. The scheduled maturities are as follows: Revolving Credit Facility—July 24, 2008, Term Loan C—July 24, 2009, and Term Loan A—August 1, 2010. Virtually all of the Company's assets are collateralized under the amended and restated CGA. Under the CGA, the Company is obligated to maintain various financial ratios and covenants that are typical for such facilities.

SWAP Agreement:

        The interest rate swap agreement is a contract to exchange a floating rate for a fixed rate interest payment over the life of the agreement without the exchange of the underlying notional amount. The notional amount of the interest rate swap agreement is used to measure interest to be paid or received and does not represent the amount of exposure to fluctuations in the fair value of debt. The differential paid or received on the interest rate swap agreement is recognized as an adjustment to interest. The Company does not use derivative financial instruments for trading purposes.

        In accordance with SFAS 133, as amended by SFAS No. 138, the Company has formally documented the relationship between the interest rate swap (noted in (c) above) and the variable rate borrowings, as well as its risk management objective and strategy for undertaking the hedge transaction. This process includes linking the derivative which was designated as a cash flow hedge to the specific liability on the balance sheet. The Company will record the fair value change in the value of the SWAP through Other Comprehensive Income ("OCI"), net of tax. Since management expects this hedging relationship to be highly effective, both at inception of the hedge and on an ongoing basis, it is expected to be highly effective in achieving offsetting changes in fair value attributable to the hedged risk during the period that the hedge is designated. The Company determined that there will be no ineffectiveness in this hedging relationship since the hedged forecasted interest payments are based on the same notional amount, have the same reset dates, and are based on the same benchmark interest rate designated under the variable rate mortgage. The Company also assesses, both at the hedge's inception and on an ongoing basis, whether the derivative used in the hedging transaction is highly

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effective in offsetting changes in the cash flows of the hedged item. At September 30, 2005, the SWAP liability was $65.

Other:

        On August 1, 2005, in connection with the Company's acquisition of Solgar®, the Company amended and restated its existing credit agreement by adding a new Term Loan A of $120,000 and increasing its existing Revolving Credit Facility from $100,000 to $125,000. Amendments were also made to certain covenants, such as eliminating the minimum fixed charge coverage ratio covenant and increasing the capital expenditures annual limitation from $50,000 to $75,000.

        The Company's credit arrangements, generally the indenture governing the 7¹/8% Notes ("Indenture") and the CGA, impose certain restrictions on the Company regarding capital expenditures and limit the Company's ability to do any of the following: incur additional indebtedness, dispose of assets, make repayments of indebtedness or amendments of debt instruments, pay dividends or distributions, create liens on assets and enter into sale and leaseback transactions, investments, loans or advances and acquisitions. Such restrictions are subject to certain limitations and exclusions (see Note 15).

        In addition, a default under certain covenants in the Indenture and the CGA, respectively, could result in the acceleration of the Company's payment obligations under the CGA and the Indenture, as the case may be, and, under certain circumstances, in cross-defaults under other debt obligations. These defaults may have a negative effect on the Company's liquidity.

        Required principal payments of long-term debt are as follows:

Fiscal year ending September 30,
2006	$	80,922
2007		14,072
2008		53,239
2009		121,085
2010		32,580
Thereafter		207,228
	$	509,126

        The fair value of the Company's long-term debt at September 30, 2005 and 2004, based upon current market rates, approximates the amounts disclosed above.

10.    Comprehensive Income

        Total comprehensive income for the Company includes net income, the effects of foreign currency translation, unrealized gains and losses on available-for-sale securities and changes in the fair value of the interest rate swap agreement treated as a cash flow hedging instrument, which are charged or

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credited to the accumulated other comprehensive income account within stockholders' equity. Total comprehensive income for the fiscal years ended September 30, 2005, 2004 and 2003 is as follows:

			2005			2004		2003
Net income, as reported			$	78,137		$	111,849	$	81,585
Changes in:
	Unrealized holding gains			8			21		48
	Interest rate swap valuation adjustments			(40	)		—		—
	Sale of business assets in a foreign entity			566			—		—
	Foreign currency translation adjustments			(5,121	)		7,547		9,980
		Total comprehensive income	$	73,550		$	119,417	$	91,613

        Accumulated other comprehensive income as of September 30, 2005 and 2004, net of taxes, was $17,586 and $22,173, respectively. The balance, consisting primarily of net gains on foreign currency translation adjustments of $17,031 and $22,152, at September 30, 2005 and 2004, respectively, has been recorded in the shareholders' equity section of the consolidated balance sheets.

        The change in cumulative foreign currency translation adjustment primarily relates to the Company's investment in its European subsidiaries and fluctuations in exchange rates between their local currencies and the U.S. Dollar.

        During the fiscal year ended September 30, 2005, the Company recorded a decrease in its deferred tax liability of $2,884 relating to other comprehensive losses incurred during the year. During the fiscal year ended September 30, 2004, the Company recorded a deferred income tax liability of $13,939, including $5,302 for prior periods, relating to accumulated other comprehensive income at September 30, 2004. Prior to October 1, 2003, the Company had not recorded a deferred income tax liability relating to accumulated other comprehensive income. Amounts relating to prior periods were not considered material.

11.    Income Taxes

        Income (loss) before income taxes consists of the following components:

	2005			2004		2003
United States	$	(2,105	)	$	84,789	$	59,529
Foreign		121,367			84,216		55,468
	$	119,262		$	169,005	$	114,997

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        Provision for income taxes consists of the following:

		2005			2004		2003
Federal
	Current	$	(5,089	)	$	19,610	$	9,358
	Deferred		2,882			8,202		5,864
State
	Current		273			2,258		1,334
	Deferred		473			470		170
Foreign
	Current		41,414			26,521		17,493
	Deferred		1,172			95		(807	)
Total provision		$	41,125		$	57,156	$	33,412

        The following is a reconciliation of the income tax expense computed using the statutory Federal income tax rate to the actual income tax expense and its effective income tax rate.

	2005					2004					2003
	Amount			Percent of pretax income		Amount			Percent of pretax income		Amount			Percent of pretax income
Income tax expense at statutory rate	$	41,742		35.0	%	$	59,152		35.0	%	$	40,249		35.0	%
State income taxes, net of federal income tax benefit		484		0.4	%		1,770		1.0	%		1,504		1.3	%
Change in valuation allowance		1,498		1.3	%		1,162		0.7	%		(8,275	)	(7.1	%)
Goodwill impairment		2,656		2.2	%		—		—			—		—
Effect of international operations, including foreign export benefit and earnings indefinitely reinvested under APB23		(4,565	)	(3.9	%)		(4,298	)	(2.5	%)		(560	)	(0.4	%)
Effect of FER provision		(884	)	(0.7	%)		—		—			—		—
Other, individually less than 5%		194		0.2	%		(630	)	(0.4	%)		494		0.3	%
	$	41,125		34.5	%	$	57,156		33.8	%	$	33,412		29.1	%

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        The components of deferred tax assets and liabilities are as follows as of September 30:

			2005			2004
Deferred tax assets:
	Inventory reserves		$	7,544		$	6,652
	Accrued expenses and reserves not currently deductible			18,151			27,406
	Tax credits			4,196			4,774
	Capital loss carryforward			1,575			1,576
	Foreign net operating losses			3,474			693
	Valuation allowance			(9,245	)		(6,614	)
		Total deferred income tax assets, net of valuation allowance		25,695			34,487
Deferred tax liabilities:
	Property, plant and equipment			(22,572	)		(26,612	)
	Intangibles			(24,680	)		(25,162	)
	Undistributed foreign earnings			(835	)		(1,187	)
	Other comprehensive income			(11,055	)		(13,939	)
	Other			—			(200	)
		Total deferred income tax liabilities		(59,142	)		(67,100	)
Total net deferred income tax liabilities				(33,447	)		(32,613	)
Less current deferred income tax assets				(23,645	)		(32,062	)
Long-term deferred income taxes			$	(57,092	)	$	(64,675	)

        Deferred tax assets have been recognized to the extent that it is more likely than not that they will be realized. At September 30, 2005, the Company has foreign net operating losses, New York State ("NYS") investment tax credit carryforwards and capital loss carryforwards of $9,880, $4,196 and $4,080, respectively.

        At September 30, 2005, the Company maintained a valuation allowance of $4,196 against the NYS investment tax credits that will begin to expire in 2013 and $5,049 against capital and foreign loss carryforwards which expire in accordance with applicable tax law. The Company provides a valuation allowance for these credit and loss carryforwards because it does not consider realization of such assets to be more likely than not.

        The Company's capital loss carryforward expires in 2008.

        At September 30, 2005, the Company had $5,145 of undistributed international earnings on which it has not provided any U.S. tax expense as the Company intends to permanently reinvest these earnings outside of the U.S. A determination of the amount of the unrecognized deferred tax liability related to the undistributed earnings is not practicable.

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        The change in the valuation allowance for the fiscal years ended September 30, 2005 and 2004 is as follows:

	2005			2004
Balance at October 1	$	(6,614	)	$	(5,452	)
Utilization of foreign tax credit carryforwards		—			—
Utilization of NYS investment tax credit carryforwards		149			1,107
Capital loss carryforward		1			(1,576	)
Foreign net operating losses generated		(1,648	)		(693	)
Foreign net operating losses acquired		(1,133	)		—
Balance at September 30	$	(9,245	)	$	(6,614	)

12. Assets Held for Sale and Gain on Sale of Food Supplement Corporation ("FSC") Business Assets

        In December 2004, the Company entered into a contract with a real estate broker to facilitate the sale of the corporate building acquired in the 2003 Rexall acquisition at less than its carrying value of $10,508. In accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," the Company recorded an impairment charge to reduce the carrying value of the asset by $1,908. Such amount was charged to operations and is included in selling, general and administrative expenses for the fiscal year ended September 30, 2005. In May 2005, the Company sold this building at no further gain or loss, and received cash proceeds of $8,600. At September 30, 2004, this Rexall corporate building was classified as held for sale which was reflected as a component of "Prepaid expenses and other current assets" in the accompanying Consolidated Balance Sheets.

        In May 2005, the Company also sold a corporate building for $1,350. Such amount approximated the building's carrying value; therefore, no gain or loss was recorded as a result of this sale.

        In December 2004, the Company sold certain business assets of FSC, a Manchester, U.K. based wholesale operation which included products sold to health food stores and pharmacies. In connection with the sale, proceeds of $5,766 were received and a $1,999 gain was realized and included in selling, general and administrative expenses for the fiscal year ended September 30, 2005.

13. Commitments

Operating Leases

        The Company conducts retail operations under operating leases, which expire at various dates through 2030. Some of the leases contain escalation clauses, as well as renewal options and provide for contingent rent based upon sales plus certain tax and maintenance costs.

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        Future minimum rental payments (excluding real estate tax and maintenance costs) for retail locations and other leases that have initial or noncancelable lease terms in excess of one year at September 30, 2005 are as follows:

Fiscal year ending September 30,
2006	$	86,392
2007		79,263
2008		70,139
2009		55,932
2010		46,053
Thereafter		171,286
	$	509,065

        In connection with a February 7, 2005 letter from the Office of the Chief Accountant of the Securities and Exchange Commission to the American Institute of Certified Public Accountants expressing its views of existing accounting literature related to lease accounting, the Company has completed a review of its lease accounting policies. As a result of this review, no adjustments were required to be recorded to the consolidated financial statements.

        Operating lease rental expense (including real estate taxes and maintenance costs) and leases on a month to month basis were approximately $112,550, $104,104 and $86,783 during fiscal 2005, 2004 and 2003, respectively.

Purchase Commitments

        The Company was committed to make future purchases under various purchase arrangements with fixed price provisions aggregating approximately $40,453 at September 30, 2005.

Capital Commitments

        The Company had approximately $4,314 in open capital commitments at September 30, 2005, primarily related to manufacturing equipment as well as to computer hardware and software. Also, the Company has an $3,756 commitment for an expansion of its softgel facility which is expected to be completed within one year.

Real Estate Tax Incentive Transaction

        In August 2005, the Company entered into a sale-leaseback transaction pursuant to which it sold certain manufacturing assets and its manufacturing facility located in Augusta Georgia for a total purchase price of $14,973. The purchase price consisted of $14,973 in cash which was simultaneously invested and is subject to an Industrial Revenue Bonds (IRB's) financing agreement. This agreement is intended to permit counties to attract business investment by offering property tax incentives. In accordance with Georgia law, the Company entered into this sale-leaseback agreement with Richmond County ("the County") and acquired an Industrial Development Revenue Bond. The arrangement is structured so that the Company's lease payments to the County equal and offset the County's bond

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payments to the Company. The Bond is non-recourse to the County, the Company's lease payments are pledged to secure repayment of the Bond, and the lease and bond provide for the legal right of offset. Consequently, in accordance with Financial Interpretation No. 39, "Offsetting of Amounts Related to Certain Contracts," the investment and lease obligation related to this arrangement have been offset in the Company's Consolidated Balance Sheets. The agreement has a maximum expiration date of 2025. Under the terms of the agreement, the Company must annually submit information regarding the value of the machinery and equipment in service in the county. If the Company had not entered into this transaction, property tax payments would have been higher. The Company can reacquire such property and terminate the agreement at a nominal price of $1 and, accordingly, the subject property is included in property, plant, and equipment in the consolidated balance sheet. If the Company elects to reacquire the subject property prior to the expiration of the arrangement, it may also be required to make certain adjusting property tax payments.

Off-Balance Sheet Arrangements

        The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors, except for the financing commitments previously discussed.

Employment and Consulting Agreements

        The Company has employment agreements with two of its executive officers. The agreements, effective October 1, 2002, each have a term of five years and are automatically renewed each year thereafter unless either party notifies the other to the contrary. These agreements provide for minimum salary levels and contain provisions regarding severance and changes in control of the Company. The annual commitment for salaries to these two officers as of September 30, 2005 was approximately $1,170.

        The Company maintains a consulting agreement with Rudolph Management Associates, Inc. for the services of Arthur Rudolph, a director of the Company. The agreement requires Mr. Rudolph to provide consulting services to the Company through December 31, 2005, in exchange for a consulting fee of $450 per year, payable monthly. In addition, Mr. Rudolph receives certain fringe benefits accorded to other executives of the Company.

        Five members of the Company's European senior executive staff have service contracts terminable by the Company upon twelve months notice. The annual aggregate commitment for such executive staff as of September 30, 2005 was approximately $1,349.

14. Earnings Per Share

        Basic earnings per share ("EPS") computations are calculated utilizing the weighted average number of common shares outstanding during the fiscal years. Diluted EPS includes the dilutive effect

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of outstanding stock options, as if exercised. The following is a reconciliation between basic and diluted EPS:

		2005		2004		2003
Numerator:
	Numerator for basic and diluted EPS—income available to common stockholders	$	78,137	$	111,849	$	81,585
Denominator:
	Denominator for basic EPS—weighted-average shares		67,162		66,793		66,452
	Effect of dilutive securities—stock options		1,975		2,276		2,086
	Denominator for diluted EPS—weighted-average shares		69,137		69,069		68,538
Net EPS:
	Basic EPS	$	1.16	$	1.67	$	1.23
	Diluted EPS	$	1.13	$	1.62	$	1.19

15. Dividend Restrictions

        The CGA prohibits the Company from paying dividends or making any other distributions (other than dividends payable solely in shares of the Company's common stock) to its stockholders. The Company's Indenture governing its 7¹/8% Notes due 2015 similarly prohibits the Company from paying dividends or making any other distributions (other than dividends payable solely in shares of the Company's stock). In addition, except as specifically permitted in the CGA, the CGA does not allow the Company's subsidiaries to advance or loan money to, or make a capital contribution to or invest in, the Company. Furthermore, except as expressly permitted in the Indenture, the Company's subsidiaries are not permitted to invest in the Company. However, the CGA and the Indenture do permit the Company's subsidiaries to pay dividends to the Company.

16. Stock Option Plans

        Stock options granted under the Company's plans generally become exercisable on grant date and have a maximum term of ten years. The Company did not grant any stock options during fiscal 2005, 2004 and 2003.

        During fiscal 2005, options for 39 shares of common stock were exercised, with an aggregate exercise price of $225. As a result of the exercise of those options, the Company received a compensation deduction for tax purposes of approximately $575. Accordingly, a tax benefit of approximately $213 was credited to capital in excess of par. Also during fiscal 2005, the Company received an additional compensation deduction of approximately $19 due to the early disposition of certain incentive stock options exercised by employees. Accordingly, a tax benefit of approximately $7 was credited to capital in excess of par.

        During fiscal 2004, options for 340 shares of common stock were exercised, with an aggregate exercise price of $1,881. As a result of the exercise of those options, the Company received a compensation deduction for tax purposes of approximately $1,927. Accordingly, a tax benefit of

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approximately $713 was credited to capital in excess of par. Also during fiscal 2004, the Company received an additional compensation deduction of approximately $1,394 due to the early disposition of certain incentive stock options exercised by employees. Accordingly, a tax benefit of approximately $515 was credited to capital in excess of par.

        During fiscal 2003, options for 198 shares of common stock were exercised, with an aggregate exercise price of $1,146. As a result of the exercise of those options, the Company received a compensation deduction for tax purposes of approximately $2,650. Accordingly, a tax benefit of approximately $928 was credited to capital in excess of par. Also during fiscal 2003, the Company received an additional compensation deduction of approximately $412 due to the early disposition of certain incentive stock options exercised by employees. Accordingly, a tax benefit of approximately $144 was credited to capital in excess of par.

        A summary of stock option activity is as follows:

	Fiscal Year Ended September 30,
	2005				2004				2003
	Number of shares		Weighted average exercise price		Number of shares		Weighted average exercise price		Number of shares		Weighted average exercise price
Outstanding at beginning of year	3,864		$	5.78	4,204		$	5.77	4,402		$	5.77
Exercised	(39	)	$	5.88	(340	)	$	5.52	(198	)	$	5.79
Outstanding at end of year	3,825		$	5.78	3,864		$	5.78	4,204		$	5.77
Exercisable at end of year	3,825		$	5.78	3,864		$	5.78	4,204		$	5.77
Number of shares available for future grant	2,458

        The following table summarizes information about stock options outstanding at September 30, 2005:

	Options Outstanding				Options Exercisable
Range of Exercise Prices	Shares Outstanding	Weighted Average Remaining Contractual Life	Weighted Average Exercise Price		Shares Exercisable	Weighted Average Exercise Price
$4.75–$6.19	3,825	4.3 years	$	5.78	3,825	$	5.78

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17.    Employee Benefit Plans

        The Company sponsors a Retirement Savings Plan consisting of a 401(k) plan covering substantially all employees with more than six months of service. As allowed under Section 401(k) of the Internal Revenue Code, the Plan provides tax-deferred salary deductions for eligible employees. Employees may contribute from one percent to 50 percent of their annual compensation to the Plan, limited to a maximum annual amount as set periodically by the Internal Revenue Service. Company match contributions are 100% of employee contributions, up to two percent of the employee's gross earnings to an annual maximum match contribution of $4 per employee. Employees become fully vested in employer contributions after three years of service.

        The Company also sponsors an Employee Stock Ownership Plan (ESOP) which covers substantially all employees who are employed at calendar year end and have completed one year of service (providing they worked at least the minimum number of hours as required by the terms of the plan during such plan year). As of September 30, 2005, all shares of the plan have been allocated to participants. The ESOP's assets are mainly Company common stock (the plan holds small amounts of cash). Total ESOP shares are considered to be shares outstanding for earnings per share calculation.

        The ESOP is designed to comply with Section 4975(e)(7) and the regulations thereunder of the Internal Revenue Code of 1986, as amended (Code) and is subject to the applicable provisions of the Employee Retirement Income Security Act of 1974 (ERISA). Contributions to the ESOP are made on a voluntary basis by the Company in the form of the Company's stock or cash, which is invested by the plan's trustee in the Company's stock. There is no minimum contribution required in any one year. There are no contributions required or permitted to be made by an employee. All contributions are allocated to participant accounts as defined. Employees become vested in their respective accounts after five years of service, as defined in plan document, provided the ESOP is not considered top-heavy. If the ESOP is considered top-heavy, employees will become vested in the plan beginning in year 2 in increments of 20% per year over the subsequent four years of service.

        The ESOP held approximately 4.0 percent of the outstanding common stock of the Company for the benefit of all participants as of September 30, 2005 and 2004.

        The accompanying financial statements reflect contributions to these plans in the approximate amount of $4,386, $6,142 and $3,111 during fiscal 2005, 2004 and 2003, respectively.

        Certain international subsidiaries of the Company (mainly in the U.K.) have company sponsored defined contribution plans to comply with local statutes and practices. The accompanying financial statements reflect contributions to these plans by such subsidiaries in the approximate amount of $1,146, $922 and $464 during fiscal 2005, 2004 and 2003, respectively.

18.    Discontinued Product Charge

        Effective March 15, 2003, the Company voluntarily discontinued sales of products that contain ephedra. Income from operations for the fiscal year ended September 30, 2003 includes a charge of approximately $4,500 ($3,191 or $0.05 basic and diluted earnings per share, after tax) associated with such discontinued product sales.

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19.    Litigation

Prohormone products

New York Action

        On July 25, 2002, a putative class-action lawsuit was filed against Vitamin World, Inc., alleging that Vitamin World engaged in deceptive trade practices and false advertising with respect to the sale of certain prohormone supplements and that plaintiffs were therefore entitled to equitable and monetary relief pursuant to the New York General Business Law. Similar complaints were filed against other companies in the vitamin and nutritional supplement industry. The Court has not yet certified a class. Vitamin World has filed a pending motion for summary judgment seeking the dismissal of all claims and an opposition to plaintiff's motion for class certification. The Company has defended vigorously this action. Until the Court rules on these pending motions, no determination can be made at this time as to its likely final outcome, nor can its materiality be accurately ascertained.

California Action

        On July 25, 2002, a putative consumer class-action lawsuit was filed in California state court against Met-Rx Substrate Technology, Inc., a subsidiary of Rexall Sundown, claiming that the advertising and marketing of certain prohormone supplements were false and misleading, or alternatively, that the prohormone products contained ingredients that were controlled substances under California law. Plaintiffs seek equitable and monetary relief. On June 18, 2004, this case was consolidated with several other class-action cases brought against other companies relating to the sale of products containing androstenediol, one of the prohormones contained in the Met-Rx products. The consolidated proceedings have recently been assigned to a judge for further pretrial proceedings. No trial date has been set. The Court has not yet certified a class and the matter is currently in discovery. The Company has defended vigorously against the claims asserted. Because this action is still in the early stages, no determination can be made at this time as to its final outcome, nor can its materiality be accurately ascertained.

New Jersey Action

        In March 2004, a putative class-action lawsuit was filed in New Jersey against Met-Rx Substrate Technology, Inc., claiming that the advertising and marketing of certain prohormone supplements were false and misleading and that plaintiff and the putative class of New Jersey purchasers of these products were entitled to damages and injunctive relief. Because these allegations are virtually identical to allegations made in a putative nationwide class-action previously filed in California, the Company moved to dismiss or stay the New Jersey action pending the outcome of the California action. The motion was granted, and the New Jersey action is stayed at this time.

Florida Action

        In July 2002, a putative class-action lawsuit was filed in Florida against MET-Rx USA, Inc., a subsidiary of Rexall Sundown, claiming that the advertising and marketing of certain prohormone supplements were false and misleading, that the products were ineffective, and alternatively, that the products were anabolic steroids whose sale violated Florida law. Plaintiff seeks equitable and monetary relief. This case has been largely inactive since its filing. The Company recently filed a motion to

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dismiss for failure to prosecute pursuant to Florida Rule of Civil Procedure 1.420. No determination can be made at this time as to its final outcome, nor can its materiality be accurately ascertained.

Nutrition Bars

        Rexall and certain of its subsidiaries are defendants in a class-action lawsuit brought in 2002 on behalf of all California consumers who bought various nutrition bars. Plaintiffs allege misbranding of nutrition bars and violations of California unfair competition statutes, misleading advertising and other similar causes of action. Plaintiffs seek restitution, legal fees and injunctive relief. The Company has defended vigorously this action. The Court vacated the July 6, 2005 status conference and set a further conference for January 6, 2006. Until that time, the case is stayed for all purposes. Based upon the information available at this time, the Company believes that its accrual is adequate for the exposure in the nutrition bar litigation. However, no determination can be made at this time as to the final outcome of this case, nor can its materiality be accurately ascertained.

Shareholder Litigation

        During the period from June 24, 2004 through September 3, 2004, six separate shareholder class-actions were filed against the Company and certain of its officers and directors in the U.S. District Court for the Eastern District of New York, on behalf of shareholders who purchased shares of the Company's common stock between February 9, 2004 and July 22, 2004 (the potential "Class Period"). The actions allege that the Company failed to disclose material facts during the Class Period that resulted in a decline in the price of its stock after June 16, 2004 and July 22, 2004, respectively. The Court consolidated the six class-actions in March 2005 and appointed lead plaintiffs and counsel. The lead plaintiffs filed a consolidated amended complaint alleging an amended class period from November 10, 2003 to July 22, 2004. Along with the officers and directors, the Company has filed a motion to dismiss the action.

        In addition to the shareholder class-actions, two shareholder derivative actions were filed in the Eastern District of New York, on July 9, 2004 and August 26, 2004, respectively, against certain of the Company's officers and directors, and the Company is named as a nominal defendant. The two derivative actions, which have been consolidated, are predicated upon the allegations set forth in the shareholder class-actions and allege improper sales of the Company's shares by certain officers and directors. On December 27, 2004, the court granted the Company's motion to dismiss this complaint. The plaintiffs have filed an appeal.

        An additional shareholder derivative action was filed on October 7, 2004 in the Supreme Court of the State of New York, Suffolk County, alleging breaches of fiduciary duties by the Company's individual directors and officers, and the Company is named as a nominal defendant. The derivative claims are predicated upon the same allegations as in the Eastern District consolidated derivative action and upon claims arising from the Company's acquisition of Rexall Sundown, Inc. in July 2003. The New York derivative action is currently stayed by agreement of the parties. The Company, its named officers and its directors intend to file a motion to dismiss or further stay the New York derivative action at the appropriate procedural time.

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        Also, a purported shareholder of the Company delivered a demand that the Company's board of directors commence a civil action against certain of the Company's officers and directors based on certain of the allegations described above. The Company's board of directors, based on the investigation and recommendation of a special committee of the Board, determined not to commence any such lawsuit. On or about April 28, 2005, a second state court derivative action was filed in the Supreme Court of the State of New York, Suffolk County, by this purported shareholder alleging wrongful rejection of his demand and breaches of fiduciary duties by some of the Company's individual directors and officers, and the Company is named as a nominal defendant. This derivative complaint is predicated upon the same allegations as the dismissed Eastern District consolidated derivative action. This derivative action is currently stayed by agreement of the parties. Along with the named officers and directors, the Company intends to file a motion to dismiss or further stay this derivative action at the appropriate procedural time.

        The Company and its named officers and directors believe that these suits are without merit and intend to defend vigorously these actions. Given the early stages of the proceedings, however, no determination can be made at this time as to the final outcome of these actions, nor can their materiality be accurately ascertained. The Company maintains policies of directors' and officers' professional liability insurance.

Regulatory Matters

        In June 2003, the Company received a letter of inquiry from the FTC concerning its marketing of a certain weight loss product, as well as the marketing of Royal Tongan Limu dietary supplement by its subsidiary, Dynamic Essentials, Inc, ("DEI"). The Company ceased all DEI operations and terminated all DEI employees in September 2003. In October 2005, the United States District Court for the Eastern District of New York entered a Consent Decree that requires the Company to pay a $2 million civil penalty, and imposes an injunction that requires the Company to comply with its existing FTC consent decree entered into in 1995. The Company has already paid this civil penalty.

        In addition to the foregoing, other regulatory inquiries, claims, suits and complaints (including product liability claims) arise in the ordinary course of the Company's business. See Item 1. "Government Regulation" for a discussion of these matters. The Company believes that such other inquiries, claims, suits and complaints would not have a material adverse effect on the Company's consolidated financial condition or results of operations, if adversely determined against the Company.

20.    Segment Information

        The Company is organized by sales segments on a worldwide basis. The Company's management reporting system evaluates performance based on a number of factors; however, the primary measures of performance are the net sales and income or loss from operations (prior to corporate allocations) of each segment, as this is the key performance indicator reviewed by management. Operating income or loss for each segment does not include corporate general and administrative expenses, interest expense and other miscellaneous income/expense items. Corporate general and administrative expenses include, but are not limited to: human resources, legal, finance, IT, and various other corporate level activity related expenses. Such unallocated expenses remain within corporate. Corporate also includes the

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manufacturing assets of the Company and, accordingly, items associated with these activities, such as the discontinued product charge (recorded during the fiscal year ended September 30, 2003), remain unallocated in the corporate segment. The European Retail operation does not include the impact of any intercompany transfer pricing. The accounting policies of all of the operating segments are the same as those described in the summary of significant accounting policies in Note 1.

        The Company reports four segments: Wholesale/US Nutrition; North American Retail; European Retail; and Direct Response/Puritan's Pride. All of the Company's products fall into one of these four segments. The Wholesale/ US Nutrition segment is comprised of several divisions, each targeting specific market groups which include wholesalers, distributors, chains, pharmacies, health food stores, bulk and international customers. The North American Retail segment generates revenue through its 542 owned and operated Vitamin World stores selling proprietary brand and third-party products and through its recently acquired Canadian operation of 97 Company-operated Le Naturiste stores and 4 franchised Le Naturiste stores. The European Retail segment generates revenue through its 590 Company-operated stores and 22 franchise stores. Such revenue consists of sales of proprietary brand and third-party products as well as franchise fees. The Direct Response/Puritan's Pride segment generates revenue through the sale of proprietary brand and third-party products primarily through mail order catalog and the Internet. Catalogs are strategically mailed to customers who order by mail, internet, or by phoning customer service representatives in New York, Illinois or the United Kingdom.

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        The following table represents key financial information of the Company's business segments:

		2005			2004			2003
Wholesale/US Nutrition:
	Net sales	$	747,234		$	734,293		$	416,627
	Income from operations	$	67,873		$	112,224		$	76,933
	Depreciation and amortization	$	9,923		$	10,474		$	2,184
	Capital expenditures	$	1,090		$	1,929		$	288
Retail:
	North America
	Net sales	$	224,008		$	216,431		$	212,380
	Loss from operations	$	(26,216	)(a)	$	(120	)	$	(1,643	)
	Depreciation and amortization	$	6,756		$	10,848		$	12,733
	Capital expenditures	$	4,082		$	7,682		$	3,335
	Locations open at end of period		643			557			533
	Europe
	Net sales	$	566,140		$	495,808		$	363,597
	Income from operations	$	151,459		$	120,323		$	83,345
	Depreciation and amortization	$	13,175		$	12,370		$	9,872
	Capital expenditures	$	11,455		$	15,794		$	13,009
	Locations open at end of period		612			602			589
Direct Response/Puritan's Pride:
	Net sales	$	199,805		$	205,499		$	199,944
	Income from operations	$	52,254		$	65,265		$	62,184
	Depreciation and amortization	$	5,079		$	5,403		$	5,779
	Capital expenditures	$	385		$	260		$	1,050

(a)

Includes asset impairment charges of $11,204 for fiscal year ended September 30, 2005 (see Note 7).

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		2005			2004			2003
Corporate:
	Corporate expenses	$	(107,684	)	$	(108,149	)	$	(85,278	)
	Discontinued product charge	$	—		$	—		$	(4,500	)
	Depreciation and amortization—manufacturing	$	16,216		$	16,005		$	10,966
	Depreciation and amortization—other	$	7,134		$	6,580		$	5,350
	Capital expenditures—manufacturing	$	34,675		$	6,288		$	3,693
	Capital expenditures—other	$	19,829		$	10,747		$	16,135
Consolidated totals:
	Net sales	$	1,737,187		$	1,652,031		$	1,192,548
	Income from operations	$	137,686	(a)	$	189,543		$	131,041
	Depreciation and amortization	$	58,283		$	61,680		$	46,884
	Capital expenditures	$	71,516		$	42,700		$	37,510

(a)

Includes asset impairment charges of $11,204 for fiscal year ended September 30, 2005 (see Note 7).

			2005		2004		2003
Net sales by location of customer
	United States		$	1,086,126	$	1,091,192	$	788,645
	United Kingdom			525,093		457,564		348,761
	Holland			42,168		39,007		13,458
	Ireland			15,950		12,816		9,958
	Canada			14,419		1,948		311
	Other foreign countries			53,431		49,504		31,415
		Consolidated totals	$	1,737,187	$	1,652,031	$	1,192,548

			2005		2004
Long-lived assets (which includes property, plant and equipment, goodwill and other intangible assets.)
	United States		$	484,100	$	416,510
	United Kingdom			196,471		201,657
	Holland			13,412		13,512
	Ireland			7,155		6,366
	Canada			10,094		—
	Other foreign countries			4,368		—
		Consolidated totals	$	715,600	$	638,045

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        The Company's identifiable assets by segment as of September 30, 2005 and 2004 are as follows:

		2005		2004
Wholesale/US Nutrition		$	549,631	$	484,941
North American Retail/Vitamin World(a)			55,304		76,799
European Retail/
	Holland & Barrett/GNC (UK)		335,640		361,754
Direct Response/
	Puritan's Pride		69,269		93,844
Corporate/Manufacturing			472,458		215,315
	Consolidated totals	$	1,482,302	$	1,232,653

(a)

In fiscal 2005, identifiable assets were reduced for asset impairment charges of $11,204 (see Note 7).

        Approximately 34%, 31% and 31% of the Company's net sales for the fiscal years ended September 30, 2005, 2004 and 2003, respectively, were denominated in currencies other than U.S. dollars, principally British Pounds, Euros and Canadian Dollars (fiscal 2005). A significant weakening of such currencies versus the U.S. dollar could have a material adverse effect on the Company.

        Foreign subsidiaries accounted for the following percentages of assets and total liabilities as of September 30, 2005 and 2004:

	2005		2004
Assets	26	%	27	%
Total liabilities	10	%	15	%

21.    Related Party Transactions

        An entity owned by a relative of a director and the Chief Executive Officer received sales commissions from the Company of $693, $732 and $643 in fiscal 2005, 2004 and 2003, respectively. The Company had trade receivable balances due from this entity approximating $0 and $3,772 at September 30, 2005 and 2004, respectively.

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22.    Quarterly Results of Operations (Unaudited)

        The following is a summary of the unaudited quarterly results of operations for fiscal 2005 and 2004 (amounts may not equal fiscal year totals due to rounding):

	Quarter ended
Fiscal 2005:	December 31, 2004		March 31, 2005		June 30, 2005			September 30, 2005
Net sales	$	420,269	$	442,714	$	438,986		$	435,218
Gross profit		208,315		216,633		218,026			198,568
Income before income taxes		45,429		31,713		27,443	(a)		14,677	(b)
Net income		29,893		20,867		15,966	(a)		11,412	(b)
Net income per diluted share	$	.43	$	.30	$	.23		$	.17

	Quarter ended
Fiscal 2004:	December 31, 2003		March 31, 2004		June 30, 2004		September 30, 2004
Net sales	$	385,053	$	439,594	$	399,913	$	427,471
Gross profit		192,168		226,346		202,685		208,420
Income before income taxes		36,362		62,511		36,656		33,476
Net income		23,645		41,257		25,902		21,045
Net income per diluted share	$	.34	$	.60	$	.37	$	.30

(a)

Includes asset impairment charges of $10,989 recorded during the quarter (see Note 7).



(b)

Includes asset impairment charges of $215 recorded during the quarter (see Note 7).

23.    Subsequent Events

        On August 25, 2005, the Company initiated a cash tender offer (the "Offer") for any and all of its $150,000 aggregate principal amount of the 8⁵/8% Notes due 2007. The redemption price was equal to $1,000 per $1,000 principal amount of the 8⁵/8% Notes validly tendered, plus accrued and unpaid interest to the redemption date. On September 23, 2005, the Company announced the expiration of the Offer with a total of $74,458 aggregate principal amount of the 8⁵/8% Notes tendered, representing approximately 49.6% of the outstanding 8⁵/8% Notes. On October 24, 2005, the Company redeemed the remaining $75,542 aggregate principal amount of the 8⁵/8% Notes outstanding. On such date, the Company paid $706 representing the remaining accrued interest due to the 8⁵/8% Note holders and recorded a charge of $802 to interest expense in the Consolidated Statements of Income representing the unamortized portion of debt issuance costs and bond discount associated with the original issuance. Also, on October 24, 2005, the Company liquidated and utilized all of its investment in auction rate securities of $39,900 to pay such redemption.

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SCHEDULE II
NBTY, INC. AND SUBSIDIARIES
Valuation and Qualifying Accounts
For the years ended September 30, 2005, 2004 and 2003

Column A		Column B		Column C					Column D			Column E
				Additions
Description		Balance at beginning of period		Charged to costs and expenses		Charged to other accounts			Deductions			Balance at end of period
		(Dollars in thousands)
Fiscal year ended September 30, 2005:
	Inventory reserves	$	17,562	$	9,500	$	—		$	(13,106	)	$	13,956
	Allowance for doubtful accounts	$	9,389	$	182	$	—		$	(416	)(a)	$	9,155
	Promotional program incentive accrual	$	37,495	$	142,999	$	383	(e)	$	(137,040	)	$	43,837
	Sales Returns and Allowances	$	9,108	$	45,444	$	143	(e)	$	(39,079	)(d)	$	15,616
	Valuation allowance for deferred tax assets	$	6,614	$	1,648	$	1,133	(e)	$	(150	)	$	9,245
Fiscal year ended September 30, 2004:
	Inventory reserves	$	4,648	$	16,070	$	—		$	(3,156	)	$	17,562
	Allowance for doubtful accounts	$	7,100	$	3,074	$	—		$	(785	)(a)	$	9,389
	Promotional program incentive accrual	$	23,185	$	72,666	$	—		$	(58,356	)	$	37,495
	Sales Returns and Allowances	$	7,313	$	42,041	$	—		$	(40,246	)(d)	$	9,108
	Valuation allowance for deferred tax assets	$	5,452	$	2,269	$	—		$	(1,107	)	$	6,614
Fiscal year ended September 30, 2003:
	Inventory reserves	$	2,540	$	2,108	$	—		$	—		$	4,648
	Allowance for doubtful accounts	$	4,194	$	2,970	$	—		$	(64	)(a)	$	7,100
	Promotional program incentive accrual	$	3,549	$	15,138	$	18,761	(c)	$	(14,263	)	$	23,185
	Sales Returns and Allowances	$	983	$	7,932	$	9,467	(c)	$	(11,069	)(d)	$	7,313
	Valuation allowance for deferred tax assets	$	13,727	$	—	$	—		$	(8,275	)(b)	$	5,452

(a)

Uncollectibe accounts written off.

(b)

Utilization of foreign tax credits.

(c)

Represents the opening balance sheet reserves for sales returns and promotional program incentives from the Rexall acquisition.

(d)

Represents actual product returns.

(e)

Represents the opening balance sheet reserves and allowances from the Le Naturiste, SISU and Solgar acquisitions.

S-1

SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

NBTY, INC. (Registrant)
By:	/s/  SCOTT RUDOLPH Scott Rudolph Chairman and Chief Executive Officer

Dated: December 22, 2005

        Pursuant to the requirements of the Exchange Act, this Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/  SCOTT RUDOLPH Scott Rudolph	Chairman and Chief Executive Officer (Principal Executive Officer)	December 22, 2005
/s/  HARVEY KAMIL Harvey Kamil	President and Chief Financial Officer (Principal Operating Officer, Principal Financial and Accounting Officer)	December 22, 2005
/s/  ARTHUR RUDOLPH Arthur Rudolph	Director	December 22, 2005
/s/  ARAM G. GARABEDIAN Aram G. Garabedian	Director	December 22, 2005
/s/  BERNARD G. OWEN Bernard G. Owen	Director	December 22, 2005
/s/  ALFRED SACKS Alfred Sacks	Director	December 22, 2005

/s/  MURRAY DALY Murray Daly	Director	December 22, 2005
/s/  GLENN COHEN Glenn Cohen	Director	December 22, 2005
/s/  MICHAEL L. ASHNER Michael L. Ashner	Director	December 22, 2005
/s/  MICHAEL C. SLADE Michael C. Slade	Director	December 22, 2005
/s/  PETER WHITE Peter White	Director	December 22, 2005
/s/  NEIL KOENIG Neil Koenig	Director	December 22, 2005

QuickLinks

DOCUMENTS INCORPORATED BY REFERENCE.
NBTY, INC. ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2005 TABLE OF CONTENTS
PART I
PART II
DIVIDEND POLICY
PRICE RANGE OF COMMON STOCK
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
PART III
PART IV
NBTY, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
NBTY, Inc. and Subsidiaries Consolidated Balance Sheets September 30, 2005 and 2004 (dollars and shares in thousands, except per share amounts)
NBTY, Inc. and Subsidiaries Consolidated Statements of Income Years Ended September 30, 2005, 2004 and 2003 (dollars and shares in thousands, except per share amounts)
NBTY, Inc. and Subsidiaries Consolidated Statements of Cash Flows Years ended September 30, 2005, 2004 and 2003 (dollars in thousands)
NBTY, Inc. and Subsidiaries Consolidated Statements of Cash Flows (Continued) Years ended September 30, 2005, 2004 and 2003 (dollars and shares in thousands)
NBTY, Inc. and Subsidiaries Notes to Consolidated Financial Statements Years ended September 30, 2005, 2004 and 2003 (in thousands, except per share amounts, number of locations and amortization periods)
SCHEDULE II NBTY, INC. AND SUBSIDIARIES Valuation and Qualifying Accounts For the years ended September 30, 2005, 2004 and 2003
SIGNATURES

EX-3.1

Exhibit 3.1

RESTATED

CERTIFICATE OF INCORPORATION

OF

NBTY, INC.

NBTY, INC., a corporation organized and existing under and by virtue of the Delaware General Corporation Law (the “Corporations”), DOES HEREBY CERTIFY:

That at a meeting of the Board of Directors of NBTY, Inc., a resolution was adopted in accordance with Section 245 of the Delaware General Corporation Law, restating and integrating all previously filed Certificates of Incorporation and Amendments thereto and restatements thereto.  This Restated Certificate of Incorporation only restates and integrates and does not further amend the provisions of the Certificate of Incorporation as heretofore amended or supplemented, and there is no discrepancy between those provisions and the provisions of this Restated Certificate of Incorporation.  The date of filing of the original Certificate of Incorporation with the Secretary of State is July 24, 1979, under the name Nature’s Bounty, Inc.

The Restated Certificate of Incorporation reads as follows:

FIRST:  The name of the corporation is NBTY, INC.

SECOND:  Its registered office and place of business in the State of Delaware is to be located at 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808. The Registered Agent in charge thereof is Corporation Service Company.

THIRD:  The purpose of the Corporation is to engage in any lawful act or activity for which a corporation may be organized under the Delaware General Corporation Law of Delaware.

FOURTH:  The total number of shares of stock which this Corporation is authorized to issue is ONE HUNDRED SEVENTY-FIVE MILLION (175,000,000) shares of common stock of the par value of $.008 per share.

No stockholder as such shall be entitled as a matter of right to subscribe for, purchase or receive any shares of the stock of any class or any rights or options of the Corporation which, it may issue or sell, whether out of the number of shares authorized by this Certificate of Incorporation or by amendment thereof or out of the shares of the stock of the Corporation acquired by it after the issuance thereof, nor shall any stockholder be entitled as a matter of right to subscribe for, purchase or receive any bonds, debentures or other securities, which the Corporation may issue or sell that shall be convertible into or exchangeable for stock of any class or to which shall be attached or appertain any warrant or warrants or other instrument or instruments that shall confer upon the holder or owner of such obligation the right to subscribe for, purchase or receive from the Corporation any shares of its cap ital stock; but all such additional issues of stock, rights and options, or of bonds, debentures or other securities convertible into or exchangeable for stock or to which warrants shall be attached or appertain or which shall confer upon the holder the right to subscribe for, purchase or receive any shares or stock, may be issued and disposed of by the Board of Directors to such person, firms or corporations and upon such terms as in their absolute discretion they may deem advisable.

FIFTH:  The Directors shall have the power (i) to make and to alter or amend the By-Laws, (ii) to fix the amount to be reserved as working capital, and (iii) to authorize and cause to be executed mortgages and liens, without limit as to the amount, upon t he property and franchise of this Corporation.

With the consent, in writing, and pursuant to a vote of the holders of a majority of the capital stock, issued and outstanding, the Directors shall have authority to dispose, in any manner, of the whole property of this Corporation.

The By-Laws shall determine whether and to what extent the account and books of this Corporation, or any of them, shall be open to the inspection of the stockholders; no stockholder shall have any right of inspecting any account, or book, or docume nt of this Corporation, except as conferred by the law or by the By-Laws, or by resolution of the stockholders.

The stockholders and Directors shall have power to hold their meetings and keep the books, documents and papers of the Corporation outside of the State of Delaware, at such places as may be, from time to time, designated by the By-Laws or by resolution of the stockholders or directors, except as otherwise required by the laws of the State of Delaware.

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It is the intention that all objects, purposes and powers specified in the THIRD paragraph hereof, shall, except where otherwise specified in said paragraph, be nowise limited or restricted by reference to or interference from the terms of any other clause or paragraph in this Certification of Incorporation, but that the objects, purposes and powers specified in the THIRD paragraph and in each of the clauses or paragraphs of this charter shall be regarded as independent objects, purposes and powers.

SIXTH:  ; The Corporation shall, to the full extent permitted by Section 145 of the Delaware General Corporation Law, as amended from time to time, indemnify all persons whom it may indemnify pursuant thereto.

A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omission not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit.< /font>

SEVENTH:

(1)“Affiliate” and “Associate” shall be determined pursuant to Rule 12b-2 (or any successor rule) of the General Rules and Regulations under the Securities Exchange Ac t of 1934.

(2)“Beneficial Ownership” shall be determined pursuant to Rule 13d-3 (or any successor rule) of the General Rules and Regulations under the Securities Exchange Act of 1934 and shall include:

(i)shares of stock which a Person has the right to acquire, hold or vote pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants, options or otherwise; and

(ii)                 &# 160;                shares of stock which are beneficially owned, directly or indirectly (including shares deemed owned through application of the foregoing clause (i), by any Person (a) with which it or its Affiliate or Associate has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of shares of stock of the Corporation or (b) which is its Affiliate or Associate;

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(3)“Business Combination” shall include:

(i)       ;                          any merger or consolidation of the Corporation with or into any other Related Person;

(ii)the sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions) to or with any Related Person of any assets of the Corporation or any subs idiary thereof having an aggregate fair market value of $15,000,000 or more;

(iii)the issuance or transfer by the Corporation or any subsidiary thereof (in one transaction or a series of transactions) of any securities of the Corporation or any subsidiary thereof to any Related Person in exchange for cash, securities or other property (or a combination thereof) having an aggregate fair market value of $15,000,000 or more;

(iv)the adoption of any plan or proposal for the liquidation or dissolution of the Corporation proposed by or on behalf of any Related Person; or

(v)              ;               any reclassification or recapitalization of securities of the Corporation if the effect, directly, or indirectly, of such transaction is to increase the relative voting power of any Related Person;

(4)“Continuing Director” shall mean a member of the Board of Directors of the Corporation who was not affiliated with the Related Person and was a member of the Board of Directors prior to the time that the Related Person acquired the last shares of stock of the Corporation entitling such Related Person to exercise, in the aggregate, in excess of ten (10%) percent of the total voting power of all classes of stock of the Corporation entitled to vote in elections of directors, or a Person recommended to succeed a Continuing Director by a majority of Continuing Directors.

(5)“Person” shall include any individual, Corporation, partnership, person or other entity; and

(6)“Related Person” shall mean any Person, together with any Affiliate or Associate of such Person, which has Beneficial Ownership, directly or indirectly, of shares of stock of the Corporation entitling such Person to exercise more than ten (10%) percent of the total voting power of all classes of stock of the Corpor ation entitled to vote in elections of directors, considered for the purposes of this Article SEVENTH as one class, together with the successors and assigns of any such Person in any

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transaction or series of transactions not involving a public offering of the Corporation’s stock within the meaning of the Securities Act of 1933.

(A)Unless the conditions set forth in subpara graphs (1) or (2) of this paragraph (A) are satisfied, the affirmative vote of not less than seventy-five (75%) percent of the outstanding shares of stock of the Corporation entitled to vote in elections of directors, considered for the purposes of this Article SEVENTH as one class, shall be required for the adoption or authorization of a Business Combination with any Related Person. Such affirmative vote shall be required notwithstanding the fact that no vote, or a lesser percentage, may be required by law or in any agreement with any national securities exchange or otherwise, but such vote shall not be applicable if:

(1)     & #160;                                 The definitive agreement or other arrangements to effectuate a Business Combination with a Related Person are approved by a majority of the Continuing Directors; such determination shall be made by a majority of the Continuing Directors even if such majority does not constitute a quorum of the members of the Board of Directors then in office; or

(2)All of the following conditions are satisfied:

(i)the cash and fair market value of the property, securities or other consideration (including, without limitation, stock of the Corporation retained by its existing public stockholders in the event of a Business Combination in which the Corporation is the surviving Corporation) to be received per share by the holders of each class or series of stock of the Corporation in a Business Combination with a Related Person is not less than the highest per share price (including brokerage commissions and/or soliciting dealers fees) paid by such Related Person in acquiring any shares of such class or series, respectively;

(ii)The consideration to be received by holders of a particular class of securities shall be in cash or in the same form as the Related Person has previously paid for shares of such class of stock.  If the Related Person has paid for shares of any class of stock with varying forms of consideration, the form of consideration, for such class of stock shall be either in cash or the form used to acquire the largest number of shares of such class of stock previously acquired by it;

(iii)After a Person has become a Related Person and prior to the consummation of a Business Combination, except as approved by a majority of the Continuing Directors, there shall have been no reduction in the annual rate of dividends paid on shares of stock of the

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Corporation (except as necessary to reflect any subdivision of such shares);

(iv)The Related Person shall not have (a) received the benefit, directly or indirectly, (except proportionately as a stockhold er), or any loans, advances, guarantees, pledges or other financial assistance or tax credits provided by the Corporation, or (b) made any major change in the Corporation’s business or equity capital structures without the approval of a majority of the Continuing Directors, in either case prior to the consummation of the Business Combination; and

(v)A proxy statement complying with the requirements of the Securities Exchange Act of 19 34 shall be mailed to public stockholders of the Corporation for the purpose of soliciting stockholder approval of the Business Combination and shall contain at the front thereof, in a prominent place, any recommendations as to the advisability (or inadvisability) of the Business Combination which the Continuing Directors, or any of them, may choose to state and, if deemed advisable by a majority of the Continuing Directors, an opinion of a reputable investment banking firm as to the fairness (or not) of the terms of such Business Combination, from the point of view of the remaining public stockholders of the Corporation (such investment banking firm to be selected by a majority of the Continuing Directors and to be paid a reasonable fee for their services by the Corporation upon receipt of such opinion).

The provisions of this Article SEVENTH shall also apply to a Business Combination with any Person which at any time has been a Related Person, notwithstanding the fact that such Person is no longer a Related Person, if, at any time the definitive agreement or other arrangements relating to a Business Combination with such Person was entered into, it was a Related Person or it, as of the record date for the determination of stockholders entitled to notice of and to vote on the Business Combination, such Person is an Affiliate of the Corporation.

(B)A majority of the Continuing Directors shall have the power and duty, consistent with the fiduciary obligations, to determine for the purpose of this Article SEVENTH, on the basis of information known to them,

(1)whether any Person is a Related Person;

(2)whether any Person is an Affiliate or Associate of  another;

(3)          &# 160;                       whether any Person has an agreement, arrangement or understanding with another; or

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(4)the fair market value of property, securities or other consideration (other than cash) to be received by the holders of shares of stock of the Corporation.

The good faith det ermination of a majority of the Continuing Directors on such matters shall be binding and conclusive for purposes of this Article SEVENTH.

(C)Any corporate action which may be taken by the written consent of stockholders entitled to vote upon such action pursuant to this Restated Certificate of Incorporation or pursuant to Delaware General Corporation Law shall be only by written consent of holders of not less than seventy-five (75%) percent of the shares of stock of the Corporation entitled to vote thereon, notwithstanding the fact that a lesser percentage may be required by law or otherwise.

(D)Any corporate action which may be taken at a special meeting of stockholders called by the Board of Directors, a majority of which Board are not Continuing Directors, shall be only by the affirmative vote of the holders of not less than seventy-five (75%) percent of the outstanding shares of stock of the Corporation entitled to vote in elections of directors, considered for purposes of this Article SEVENTH as one class, notwithstanding the fact that a lesser percentage may be required by law or otherwise.

(E)Notwithstanding any other provision contained in this Restated Certificate of Incorporation, any action by stockholders to amend this Restated Certificate of Incorporation or the By-Laws of the Corporation shall be made at a meeting o f the stockholders called for that purpose and not by written consent.

(F)No amendment to the Certificate of Incorporation shall amend, alter, change or repeal any of the provisions of this Article SEVENTH, unless the amendment effecting such amendment, alteration, change or repeal shall receive the affirmative vote of not less than seventy-five (75%) percent of the shares of stock of the Corporation entitled to vote in elections of direct ors, considered for the purposes of this Article SEVENTH as one class; provided that this paragraph (F) shall not apply to, and such seventy-five (75%) percent vote shall not be required for, any amendment, alteration, change or repeal recommended to the stockholders by a majority of the Continuing Directors.

(G)Nothing contained in this Article SEVENTH shall be construed to relieve the Board of Directors or any Related Person from a f iduciary obligation imposed by law.

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EIGHTH:  That said amendment was duly adopted in accordance with the provisions of Section 245 of the Delaware General Corporation Law.

IN WITNESS WHEREOF, said NBTY, INC., has caused its corporate seal to be hereunto affixed and this Certificate to be signed by Harvey Kamil, its President, and Michael C. Slade, its Secretary, this     day of October, 2005.

/s/ Harvey Kamil

Harvey Kamil, President

/s/ Michael C. Slade

Michael C. Slade, Secretary

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EX-10.6

Exhibit 10.6

NBTY, INC. RETIREMENT SAVINGS AND

EMPLOYEES’ STOCK OWNERSHIP PLAN

(Amended and Restated Effective January 3, 2005)

NBTY, Inc. Retirement Savings and Employees’ Stock Ownership Plan
(amended and restated effective January 3, 2005)

Table of Contents

	Page
ARTICLE 1 TITLE AND CERTAIN OTHER GOVERNING PROVISIONS	1
ARTICLE 2 DEFINITIONS	2
ARTICLE 3 PARTICIPATION	10
Section 3.1. Eligibility	10
Section 3.2. Election of Pre-Tax Contributions	10
Section 3.3. Transfers to Affiliates	11
ARTICLE 4 CONTRIBUTIONS	12
Section 4.1. Pre-Tax Contributions	12
Section 4.2. Matching Contributions	13
Section 4.3. Special Contributions	14
Section 4.4. Form and Deposit of Contributions	15
Section 4.5. Requirements for Rollover Contributions	16
Section 4.6. Delivery of Rollover Contributions	17
ARTICLE 5 ESOP CONTRIBUTIONS	17
Section 5.1. ESOP Contributions	17
Section 5.2. Payment	18
Section 5.3. Contributions by Participants	18
Section 5.4. Maximum Contributions	18
Section 5.5. Limitation on Annual Additions	19
ARTICLE 6 LIMITATIONS ON CONTRIBUTIONS	19
Section 6.1. Annual Limit on Pre-Tax Contributions	19
Section 6.2. Limits on Contributions for Highly Compensated Employees.	20
Section 6.3. Maximum Annual Additions under Section 415 of the Code	26
Section 6.4. Other Limitations on Employer Contributions	28
ARTICLE 7 TRUST AND INVESTMENT FUNDS	29
Section 7.1. Trust	29
Section 7.2. Designation of Investment Funds	29
Section 7.3. Trust Fund to Be Applied Exclusively for Participants and their Beneficiaries, Etc	29
ARTICLE 8 PARTICIPANT ACCOUNTS, INVESTMENT ELECTIONS, ETC.	30
Section 8.1. Participant Accounts	30
Section 8.2. ESOP Account	31
Section 8.3. Investment Elections	31
Section 8.4. Valuation of Funds and Plan Accounts	34
Section 8.5. Allocation of Contributions	34

	Page
Section 8.6. ESOP Allocations.	35
Section 8.7. Voting and Exercising Other Securities Rights With Respect to NBTY Stock.	36
Section 8.8. Allocation of Forfeitures.	37
Section 8.9. Correction of Error	37
Section 8.10. ERISA Section 404(c) Plan	38
Section 8.11. Transfers from Other Plans	38
ARTICLE 9 WITHDRAWALS AND DISTRIBUTIONS	39
Section 9.1. Withdrawals From Account Prior to Termination of Employment	39
Section 9.2. Distribution of Account Upon Termination of Employment	42
Section 9.3. Time and Form of Distribution of Account upon Termination of Employment	44
Section 9.4. Distribution of ESOP Account	46
Section 9.5. Payment of Small Account Balances	48
Section 9.6. Order of Distribution	48
Section 9.7. Direct Rollover Option	48
Section 9.8. Designation of Beneficiary	49
Section 9.9. Missing Persons	51
Section 9.10. Distributions to Minor and Disabled Distributees	52
ARTICLE 10 LOANS	52
Section 10.1. Making of Loans	52
Section 10.2. Restrictions	53
Section 10.3. Default	53
Section 10.4. Applicability	54
ARTICLE 11 ESOP LOANS	54
ARTICLE 12 SPECIAL PARTICIPATION AND DISTRIBUTION RULES	56
Section 12.1. Change of Employment Status	56
Section 12.2. Reemployment	56
Section 12.3. Employment by Affiliates	59
Section 12.4. Reemployment of Veterans	59
ARTICLE 13 ADMINISTRATION	61
Section 13.1. The Administrator	61
Section 13.2. Named Fiduciary	63
Section 13.3. Allocation and Delegation of Responsibilities	63
Section 13.4. Professional and Other Services	63
Section 13.5. Claims Procedure	63
Section 13.6. Notices to Participants, Etc	66
Section 13.7. Notices to Administrator or Employers	66
Section 13.8. Records	66
Section 13.9. Reports of Trustee and Accounting to Participants	67

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	Page
ARTICLE 14 PARTICIPATION BY EMPLOYERS	67
Section 14.1. Adoption of Plan	67
Section 14.2. Withdrawal from Participation	67
Section 14.3. Company, Administrator and Recordkeeper as Agents for Employers	68
Section 14.4. Continuance by a Successor	68
ARTICLE 15 MISCELLANEOUS	69
Section 15.1. Expenses	69
Section 15.2. Non-Assignability.	69
Section 15.3. Employment Non-Contractual	71
Section 15.4. Merger or Consolidation with Another Plan	71
Section 15.5. Gender and Plurals	71
Section 15.6. Applicable Law	71
Section 15.7. Severability	71
Section 15.8. No Guarantee	72
Section 15.9. Plan Voluntary	72
ARTICLE 16 TOP-HEAVY PLAN REQUIREMENTS	72
Section 16.1. Top-Heavy Plan Determination	72
Section 16.2. Definitions and Special Rules.	72
Section 16.3. Minimum Contribution for Top-Heavy Years	73
Section 16.4. Minimum Vesting for Top-Heavy Years	74
ARTICLE 17 AMENDMENT, ESTABLISHMENT OF SEPARATE PLAN, AND PLAN TERMINATION	75
Section 17.1. Amendment	75
Section 17.2. Establishment of Separate Plan	75
Section 17.3. Termination	75

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ARTICLE 1

TITLE AND CERTAIN OTHER GOVERNING PROVISIONS

This document shall be entitled the “NBTY, Inc. Retirement Savings and Employees’ Stock Ownership Plan” (the “Plan”).  This document is an amendment and restatement of the following three plans:  the NBTY, Inc. 401(k) Savings Plan, the Rexall Sundown, Inc. 401(k) Employee Savings Plan and the NBTY, Inc. Employees’ Stock Ownership Plan, which were merged to form this Plan effective January 3, 2005.  The provisions of this amendment and restatement shall be effective January 3, 2005, except that any provision that specifies a different effective date shall be effective as of the date specified.

The rights and benefits of any participant whose employment with all Employers and Affiliates terminates on or after January 3, 2005, and the rights and benefits of any Beneficiary of any such participant, shall be determined solely by reference to the terms of the Plan as amended and restated herein, as such Plan may be amended from time to time.  The rights and benefits of any participant whose employment with all Employers and Affiliates terminated before January 3, 2005, and who is not reemployed by an Employer or any Affiliate after such date, and the rights and benefits of any Beneficiary of any such participant, shall be determined solely by reference to the terms of the relevant predecessor plan named in the first paragraph hereof as in effect on the date of such participant’s termination of employment, except as otherwise required by law.  The word “participant” as used in Articles 1 through 17 refers to either a Participant, as defined in Section 2.32, or a Rexall Participant, as defined in Section 2.42, and does not refer to an ESOP Participant, as defined in Section 2.21.

The Plan, other than provisions of the Plan addressing the employees’ stock ownership plan portion of the Plan, is designated as a “profit sharing plan” within the meaning of U.S. Treasury Regulation § 1.401-1(a)(2)(ii).  The employees’ stock ownership portion of the

Plan is designed to invest primarily in qualifying employer securities, and the provisions of the Plan related to the employees’ stock ownership plan are intended to meet the requirements of a qualified employee stock ownership plan under sections 401(a), 501(a) and 4975(e)(7) of the Code.

ARTICLE 2

DEFINITIONS

As used herein, the following words and phrases shall have the following respective meanings when capitalized:

2.1Account.  A Participant’s or a Rexall Participant’s subaccounts described in Section 8.1 and such other subaccounts that may be established from time to time on behalf of such a participant that are to be credited with contributions made by the participant or on his or her behalf, adjusted for earnings and losses, and debited by expenses and distributions to, and withdrawals of, the participant; the term “Account” shall not include an ESOP Participant’s ESOP Account.

2.2Administrator.  The Company, as the administrator of the Plan.

2.3Affiliate.  (a) A corporation that is a member of the same controlled group of corporations (within the meaning of section 414(b) of the Code) as an Employer, (b) a trade or business (whether or not incorporated) under common control (within the meaning of section 414(c) of the Code) with an Employer, (c) any organization (whether or not incorporated) that is a member of an affiliated service group (within the meaning of section 414(m) of the Code) that includes an Employer, a corporation described in clause (a) of this Section 2.3 or a trade or business described in clause (b) of this Section 2.3, or (d) any other entity that is required to be aggregated with an Employer pursuant to U.S. Treasury regulations promulgated under section 414(o) of the Code.

2.4Associate.  An individual whose relationship with an Employer is, under common law, that of an employee.

2.5Beneficiary.  A person entitled under Section 9.8 to receive benefits in the event of the death of a Participant, a Rexall Participant or an ESOP Participant.

2.6Board.  The board of directors of the Company.

2.7Catch-Up Contribution.  The contribution described in Section 4.1(b).

2.8Code.  The Internal Revenue Code of 1986, as amended.

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2.9Committee.  The Compensation and Stock Option Committee of the Board.

2.10Company.  NBTY, Inc., a Delaware corporation, and any successor thereto.

2.11Compensation.  Remuneration paid for services performed by a Participant or a Rexall Participant for an Employer for a Plan Year while such participant is an Eligible Associate or Eligible Rexall Associate that is wages, tips and other compensation reported on his or her Form W-2 for such Plan Year in the box that indicates compensation that is taxable for federal income tax purposes (but determined without regard to any rules that limit remuneration included in wages based upon the nature or location of the employment), and compensation which is not currently includible in such participant’s gross income by reason of the application of sections 125 (cafeteria plan), 132(f)(4) (qualified transportation fringe), and 402(e)(3) (salary reduction deferrals to a 401(k) plan) of the Code, reduced by the aggregate of all amounts included on such Form W-2:

(i)as a result of the grant of stock awards, stock bonuses, restricted stock, stock appreciation rights, phantom stock, stock options, stock units, stock equivalences or similar arrangements;

(ii)because such amounts are imputed as income as a result of, or are paid in the nature of or in relation to, benefits of the following types:  life insurance, short-term disability (other than salary continuation payments), long-term disability, medical and other welfare benefits;

(iii)which are separation, severance or supplemental unemployment benefits;

(iv)which are reimbursements or expense allowances (including moving expenses, housing allowances but excluding car expenses and allowances); and

(v)that are payments that are nonreoccurring in nature.

Notwithstanding any provision herein to the contrary, remuneration in excess of $210,000 (or such other amount provided pursuant to section 401(a)(17) of the Code) shall be disregarded.  If a determination period consists of fewer than twelve (12) months, such annual Compensation limit will be multiplied by a fraction, the numerator of which is the number of months in the determination period, and the denominator of which is twelve (12).

2.12Disability.  A Participant’s, Rexall Participant’s or an ESOP Participant’s total and permanent physical or mental disability, as determined by the Vice President of Human Resources or, if such Vice President does not make a determination, the Director of Human Resources in accordance with the Company’s normal personnel practice applied in a uniform and nondiscriminatory manner.

2.13Effective Date.  The effective date of this amendment and restatement of the Plan, with respect to any Employer as of January 2, 2005, shall be January 3, 2005, and, with

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respect to an entity that becomes an Employer on or after January 3, 2005, shall be the date as of which the Plan is adopted by such entity with the approval of the Company.

2.14Eligible Associate.  An Associate, other than an Eligible Rexall Associate who was employed by Rexall Sundown, Inc. or any of its subsidiaries before January 3, 2005, who (a) has attained age 20½ and (b) has been employed by an Employer for at least six continuous months and either (i) is scheduled to work at least 1,000 Hours of Service during the first twelve months of his or her employment with an Employer or (ii) beginning with the first calendar year beginning in the Associate’s first twelve months of employment with an Employer, has completed at least 1,000 Hours of Service during any calendar year, except that an Associate who performs services for the Vitamin World division shall not be an Eligible Associate unless he or she is classified by his or her Employer as a manager.  Notwithstanding the age and service requirements described in this Section 2.14, an Associate who is employed by Solgar, Inc. before January 1, 2006 shall be an Eligible Associate.  Individuals who were employees of Wyeth performing services solely in its Solgar Vitamin and Herb operating unit at the Effective Time as defined in the Purchase Agreement by and between Wyeth and NBTY, Inc. dated as of June 6, 2005 shall be credited with Hours of Service under the Plan for their hours of service with Wyeth and its affiliates, and individuals who were employees of Wyeth at such Effective Time but who were on an approved leave of absence from the Solgar Vitamin and Herb operating unit and who return to work for an Employer on or before July 31, 2006 shall be credited with Hours of Service under the Plan for their hours of service with Wyeth and its affiliates.Notwithstanding the previous sentences of this Section 2.14, no Ineligible Individual shall be an Eligible Associate.

2.15Eligible Rexall Associate.  An Associate who (i) is employed by Rexall Sundown, Inc. or any of its subsidiaries, (ii) was employed by Rexall Sundown, Inc. or any of its subsidiaries before the Effective Date, (iii) has attained age 18 but who has not yet attained age 20 ½ as of the Effective Date and (iv) has completed at least 250 Hours of Service, other than an Ineligible Individual.

2.16Employer.  The Company or any Affiliate that, with the consent of the Company, elects to participate in the Plan in the manner described in Section 14.1.  If an Employer withdraws from participation in the Plan pursuant to Section 14.2 or terminates its participation in the Plan pursuant to Section 17.3, it shall thereupon cease to be an Employer.  An entity shall cease being an Employer as of the date it ceases to be an Affiliate, unless the Company consents to such entity’s continued participation in the Plan.

2.17ERISA.  The Employee Retirement Income Security Act of 1974, as amended.

2.18ESOP Account.  An ESOP Participant’s account described in Section 8.2, adjusted for earnings and losses, and debited by expenses and distributions to the ESOP Participant or his or her Beneficiary.

2.19ESOP Allocation Date.  December 31st of each Plan Year.

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2.20ESOP Compensation.   Remuneration paid for services performed by an ESOP Participant for an Employer for a Plan Year while the ESOP Participant is an Associate that is wages, tips and other compensation reported on such ESOP Participant’s Form W-2 for such Plan Year in the box that indicates compensation that is taxable for federal income tax purposes (but determined without regard to any rules that limit remuneration included in wages based upon the nature or location of the employment), and compensation which is not currently includible in such ESOP Participant’s gross income by reason of the application of sections 125 (cafeteria plan), 132(f)(4) (qualified transportation fringe), and 402(e)(3) (salary reduction deferrals to a 401(k) plan) of the Code, reduced by the aggregate of all amounts included on such Form W-2:

(i)as a result of the grant of stock awards, stock bonuses, restricted stock, stock appreciation rights, phantom stock, stock options, stock units, stock equivalences or similar arrangements;

(ii)because such amounts are imputed as income as a result of, or are paid in the nature of or in relation to, benefits of the following types:  short-term disability (other than salary continuation payments), long-term disability, medical and other welfare benefits;

(iii)which are separation, severance or supplemental unemployment benefits;

(iv)which are reimbursements or expense allowances (including moving expenses, housing allowances), and

(v)that are payments that are nonreoccurring in nature.

Notwithstanding any provision herein to the contrary, remuneration in excess of $210,000 (or such other amount provided pursuant to section 401(a)(17) of the Code) shall be disregarded.  If a determination period consists of fewer than twelve (12) months, such annual Compensation limit will be multiplied by a fraction, the numerator of which is the number of months in the determination period, and the denominator of which is twelve (12).

2.21ESOP Participant.  An Associate who has satisfied the requirements of Section 3.1(b).

2.22ESOP Suspense Account.  The account to which shares of NBTY Stock pledged as collateral for a loan to the Trust are allocated pursuant to Section 8.6(e).

2.23Fiscal Year.  The twelve-month period ending September 30.

2.24Highly Compensated Employee.  For any Plan Year, any Associate who (i) is a 5%-owner (as determined under section 416(i)(1) of the Code) at any time during such Plan Year or the immediately preceding Plan Year or (ii) for the immediately preceding Plan Year, was paid compensation in excess of $95,000 (as adjusted in accordance with section 414(q)(1)(B) of the Code) from an Employer or Affiliate and was a member of the “top-paid group” (as defined in section 414(q)(3) of the Code).

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2.25Hour of Service.  (1)  Each hour for which an Associate is directly or indirectly compensated or entitled to compensation by an Employer for the performance of duties during the applicable computation period; (2) each hour for which an Associate is directly or indirectly compensated or entitled to compensation by an Employer (irrespective of whether the employment relationship has terminated) for reasons other than performance of duties (such as vacation, holidays, sickness, incapacity (including disability), jury duty, lay-off, military duty or leave of absence) during the applicable computation period (calculated and credited pursuant to Department of Labor regulation § 2530.200b-2(b) and (c) which is incorporated herein by reference); (3) each hour for which back pay is awarded or agreed to by an Employer without regard to mitigation of damages (credited to the Associate for the computation period or periods to which the award or agreement pertains rather than the computation period in which the award, agreement or payment is made).  The same Hours of Service shall not be credited both under (1) or (2), as the case may be, and under (3).

Notwithstanding (2) above, (i) no more than 501 Hours of Service are required to be credited to an Associate on account of any single continuous period during which the Associate performs no duties (whether or not such period occurs in a single computation period); (ii) an hour for which an Associate is directly or indirectly paid, or entitled to payment, on account of a period during which no duties are performed is not required to be credited to the Associate if such payment is made or due under a plan maintained solely for the purpose of complying with applicable workers’ compensation, or unemployment compensation or disability insurance laws; and (iii) Hours of Service are not required to be credited for a payment which solely reimburses an Associate for medical or medically related expenses incurred by the Associate.

2.26Ineligible Individual.  Notwithstanding any provision of the Plan to the contrary, an individual who renders services for an Employer shall not be an Eligible Associate, an Eligible Rexall Associate or an ESOP Participant if (i) the terms of his or her employment are subject to a collective bargaining agreement which does not provide for the participation of such individual in the Plan; (ii) the individual renders services pursuant to an agreement or arrangement (written or oral) (a) that such services are to be rendered as an independent contractor; (b) with an entity, including a leasing organization within the meaning of section 414(n)(2) of the Code, that is not an Employer or Affiliate; or (c) that contains a waiver of participation in the Plan; or (iii) he or she is not treated as an employee of an Employer on an Employer’s payroll records (notwithstanding any determination by a court or administrative agency that such individual is an employee).

2.27Matching Account.  The subaccount established pursuant to Section 8.1 to which any Matching Contributions made for the benefit of a Participant or Rexall Participant pursuant to Section 4.2 or 4.3(b), and earnings and losses thereon, are credited.

2.28Matching Contribution.  The contribution made by an Employer pursuant to Section 4.2 or 4.3(b) or pursuant to a Prior Plan.

2.29Maximum Deferral Percentage.  The maximum percentage of a Participant’s or a Rexall Participant’s Compensation for a payroll period that may be contributed to the Plan pursuant to Section 4.1 or 4.3(a), as determined from time to time by the

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Administrator.  The Administrator in its sole discretion may, for any Plan Year, establish a Maximum Deferral Percentage for participants who are not Highly Compensated Employees that is different from the Maximum Deferral Percentage for participants who are Highly Compensated Employees for such Plan Year, and further, may establish different Maximum Deferral Percentages for various classes of Highly Compensated Employees for a given Plan Year, provided that any such Maximum Deferral Percentages will not discriminate, within the meaning of section 401(a)(4) of the Code, in favor of Highly Compensated Employees.

2.30NBTY Stock.  Shares of common capital stock of NBTY, Inc. which constitute “employer securities” within the meaning of section 4975(e)(8) of the Code.

2.311-Year Break in Service.  The applicable computation period during which an Associate or former Associate has not completed more than 500 Hours of Service.  Solely for the purpose of determining whether an Associate or former Associate has incurred a 1-Year Break in Service, Hours of Service shall be recognized for any “authorized leave of absence” and any “maternity or paternity leave of absence.”  For this purpose, Hours of Service shall be credited for the computation period in which the absence from work begins, only if credit therefore is necessary to prevent the Associate from incurring a 1-Year Break in Service, and, in any other case, in the immediately following computation period.  The Hours of Service credited for a “maternity or paternity leave of absence” shall be those which would normally have been credited but for such absence, or, in any case in which the Administrator is unable to determine such hours normally credited, eight (8) Hours of Service per day.  The total Hours of Service required to be credited for a “maternity or paternity leave of absence” shall not exceed the number of Hours of Service needed to prevent the Associate from incurring a 1-Year Break in Service.

“Authorized leave of absence” means an unpaid, temporary cessation from active employment with the Employer pursuant to an established nondiscriminatory policy, whether occasioned by illness, military service, or any other reason.

A “maternity or paternity leave of absence” means an absence from work for any period by reason of the Associate’s pregnancy, birth of the Associate’s child, placement of a child with the Associate in connection with the adoption of such child, or any absence for the purpose of caring for such child for a period immediately following such birth or placement.

2.32Participant.  An Eligible Associate who (i) is not a Rexall Participant and (ii) has satisfied the requirements set forth in Section 3.1.  An individual shall cease to be a Participant upon the complete distribution of his or her vested Account.  Notwithstanding the foregoing, an individual who ceases to be a Participant may nonetheless continue to be an ESOP Participant.

2.33Plan.  The NBTY, Inc. Retirement Savings and Employees’ Stock Ownership Plan herein set forth, as the same may from time to time be amended.

2.34Plan Year.  The calendar year.

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2.35Pre-Tax Account.  The subaccount established pursuant to Section 8.1 to which any Pre-Tax Contributions made for the benefit of a Participant or Rexall Participant pursuant to Section 4.1 or 4.3(a), and earnings and losses thereon, are credited.

2.36Pre-Tax Contribution.  The contribution to the Plan made by an Employer on behalf of a Participant pursuant to Section 4.1 or 4.3(a) or pursuant to a Prior Plan.

2.37Prior Plan.  Any of the NBTY, Inc. 401(k) Savings Plan, the Rexall Sundown, Inc. 401(k) Employee Savings Plan, or the NBTY, Inc. Employee Stock Ownership Plan, as the context requires.

2.38Profit Sharing Account.  The account established pursuant to Section 8.1 to which Profit Sharing Contributions that had been made for the benefit of a Rexall Participant under a Prior Plan, and earnings and losses thereon, were credited.

2.39Profit Sharing Contribution.  The contribution made pursuant to a Prior Plan on behalf of a Rexall Participant pursuant to such Prior Plan.

2.40Qualified Military Service.  An individual’s service in the uniformed services (as defined in 38 U.S.C. § 4303) if such individual is entitled to reemployment rights under USERRA with respect to such service.

2.41Recordkeeper.  Fidelity Investments Investment Institutional Operations Company, Inc.

2.42Rexall Participant.  An Eligible Rexall Associate who has satisfied the requirements set forth in Section 3.1(a).  An individual shall cease to be an Rexall Participant upon the earlier of (i) the complete distribution of his or her vested Account and (ii) the date such individual becomes employed by an Employer other than Rexall Sundown, Inc. or any of its subsidiaries.  Notwithstanding the foregoing, an individual who ceases to be a Rexall Participant may nonetheless continue to be an ESOP Participant.

2.43Rollover Account.  The subaccount established pursuant to Section 8.1 to which any Rollover Contributions, and earnings and losses thereon, are credited.

2.44Rollover Contribution.  A contribution to the Plan made pursuant to Section 4.5 of the Plan.

2.45Special Bonus Account.  The account established pursuant to Section 8.1 to which a Special Bonus Contribution made for the benefit of a Participant pursuant to Section 4.3(c), and earnings and losses thereon, are credited.

2.46Special Bonus Contribution.  The contribution made to the Plan pursuant to Section 4.3(c) on behalf of Participants described in such Section.

2.47Taxable Wage Base.  The maximum amount of earnings that may be considered wages under section 3121(a)(1) of the Code for purposes of old-age, survivors and

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disability insurance tax under section 3101 of the Code as in effect on the first day of a Plan Year.

2.48Top-Heavy Plan Account.  The subaccount established pursuant to Section 8.1 to which any contributions made for the benefit of a Participant, Rexall Participant or ESOP Participant pursuant to Section 16.3, and earnings and losses thereon, are credited.

2.49Trust.  The trust described in Section 7.1 and established pursuant to an agreement between the Company and the Trustee.

2.50Trust Fund.  All money and property of every kind of the Trust held by the Trustee pursuant to the terms of the agreement governing the Trust.

2.51Trustee.  The person or entity appointed by the Company and serving as trustee of the Trust or, if there is more than one such trustee acting at a particular time, all of such trustees collectively.

2.52USERRA.  The Uniformed Services Employment and Reemployment Rights Act of 1994, as amended.

2.53Valuation Date.  Each day on which the New York Stock Exchange is open for trading.

2.54Year of Service.  The computation period of twelve (12) consecutive months, herein set forth, and during which an Associate has completed at least 1,000 Hours of Service.

For purposes of eligibility for participation in the Plan, the initial computation period shall begin with the date on which an Associate first performs an Hour of Service.  The initial computation period beginning after a 1-Year Break in Service shall be measured from the date on which an Associate again performs an Hour of Service.  The computation period after the initial computation period shall shift to the current Plan Year which includes the six-month anniversary of the date on which an Associate first performed an Hour of Service, and subsequent computation periods for vesting purposes shall be the Plan Year.

For vesting purposes, and all other purposes not specifically addressed in the above paragraph, the computation period shall be the Plan Year.

For an Eligible Rexall Associate, periods of twelve (12) consecutive months during which the Eligible Rexall Associate completed at least 1,000 hours of service within the meaning of Department of Labor regulation § 2530.200b-2 with Richardson Labs, Inc. and MET-Rx USA, Inc. will be recognized for eligibility and vesting purposes.

For an Eligible Associate, years of service with Wyeth as reflected on the records of the Wyeth Savings Plan – United States on the Effective Time of the Purchase Agreement by and between Wyeth and NBTY, Inc. dated as of June 6, 2005 will be recognized as Years of Service hereunder for eligibility and vesting purposes.

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ARTICLE 3

PARTICIPATION

Section 3.1.Eligibility.  (a)   In General.  (i) Each Eligible Associate and Eligible Rexall Associate who was a participant in the NBTY, Inc. 401(k) Savings Plan or the Rexall Sundown, Inc. 401(k) Employee Savings Plan immediately before the Effective Date shall be a Participant or a Rexall Participant, as the case may be, on the Effective Date, (ii) each Eligible Associate who is employed by Solgar, Inc. prior to January 1, 2006 shall become eligible to become a Participant immediately upon becoming an Eligible Associate and (iii) each other Eligible Associate shall become eligible to become a Participant on the first day of the month coinciding with or next following the date on which such Associate became an Eligible Associate.

(b)Eligibility for ESOP Participation.  Each Associate who was a participant in the NBTY, Inc. Employees’ Stock Ownership Plan immediately before the Effective Date shall be an ESOP Participant on the Effective Date.  Each other Associate shall become an ESOP Participant as of the January 1^st or July 1^st coincident with or next following the date he or she has completed a Year of Service, provided that the Associate has attained age 20 ½ and further provided that the Associate is not an Ineligible Individual.  An Associate shall be credited for service with Nutrition Headquarters, Inc. and Nutro Laboratories, Inc. for all purposes with respect to the employee stock ownership provisions of the Plan.  With respect to the employees’ stock ownership provisions of the Plan, an Associate shall be credited for service with Rexall Sundown, Inc. or any subsidiary thereof, but only for purposes of determining eligibility to participate in the employees’ stock ownership plan portion of the Plan.

Section 3.2.Election of Pre-Tax Contributions.  An Associate who satisfies the requirements of Section 3.1(a) and who desires to make Pre-Tax Contributions to the Plan shall

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make an election, in accordance with procedures prescribed by the Administrator, specifying the Associate’s chosen rate of such contributions.  Such election (x) shall authorize such Associate’s Employer to reduce such Associate’s Compensation by the amount of any such Pre-Tax Contributions, (y) shall specify such Associate’s investment election as described in Section 8.3 and (z) shall evidence such Associate’s acceptance and agreement to all provisions of the Plan.  Any election made pursuant to this Section 3.2 shall be effective only with respect to Compensation not immediately available to the Associate as of the effective date of such election and shall be effective as of the first payroll period commencing after the date on which the election is received, or such later date as may be administratively practicable.

Section 3.3.Transfers to Affiliates.  If the employment of a Participant, Rexall Participant or ESOP Participant is transferred from an Employer to an Affiliate that is not an Employer, the employment transfer shall not cause such participant’s or ESOP Participant’s (as the case may be) participation in the Plan to terminate, and he or she shall continue to participate in the Plan until an event occurs which would entitle such participant to a complete distribution of his or her vested Account balance and such ESOP Participant to a complete distribution of his or her vested ESOP Account balance had he or she continued to be employed by an Employer until the occurrence of such event.  Notwithstanding the foregoing, a Participant or Rexall Participant shall not be entitled to make Pre-Tax Contributions or Rollover Contributions or to receive allocations of Matching Contributions under the Plan, and an ESOP Participant shall not receive allocations of any employee stock ownership plan contributions during any period of employment by an Affiliate that is not an Employer, and periods of employment by an Affiliate that is not an Employer shall be taken into account only to the extent set forth in Section 12.4.

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ARTICLE 4

CONTRIBUTIONS

Section 4.1.Pre-Tax Contributions.  (a)    Elections.  Subject to the limitations set forth in Article 6 and except as provided in Section 4.3(a), each Employer shall make a Pre-Tax Contribution for each payroll period on behalf of each Participant and each Rexall Participantof such Employer in an amount equal to a percentage of such participant’s Compensation for such payroll period as elected by such participant pursuant to Section 3.2.  The percentage of Compensation so designated by a Participant for a payroll period may not be more than 50%, and the percentage of Compensation so designated by a Rexall Participant may not be more than the limits of sections 401(k), 402(g), 404, and 415 of the Code.   Notwithstanding the foregoing, a participant’s Pre-Tax Contributions for a payroll period pursuant to this Section 4.1(a) may not exceed an amount equal to the Maximum Deferral Percentage for such payroll period with respect to such participant.  Before January 1, 2006, a Participant’s elections shall be made at such time and in such manner as may be prescribed by the Administrator or the Recordkeeper and shall be effective as of the first day of the next month, and a Rexall Participant’s elections shall be made at such time and in such manner as may be prescribed by the Administrator or the Recordkeeper and shall be effective as of the first day of the next payroll period.  On or after January 1, 2006, a participant’s elections shall be made at such time and in such manner as may be prescribed by the Administrator or the Recordkeeper and shall be effective as of the first day of any payroll period or, if later, as soon as administratively practicable.  A participant’s Pre-Tax Contributions shall continue in effect at the rate elected by such a participant pursuant to Section 3.2 until the participant changes or suspends such election.  A participant who has suspended Pre-Tax Contributions pursuant to

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this subsection may resume Pre-Tax Contributions by making an election at such time and in such manner as may be prescribed by the Administrator or the Recordkeeper.

(b)Catch-Up Contributions.  Each Participant and Rexall Participant who (i) is eligible to have Pre-Tax Contributions made on his or her behalf under the Plan and (ii) will attain age 50 before the end of a calendar year ending with or within a Plan Year shall be eligible to have Pre-Tax Contributions made on his or her behalf in addition to those described in Section 4.1(a) or 4.3(a) (“Catch-Up Contributions”) so long as plan deferral limits and the requirements of section 402(g) of the Code have been met.  Catch-up Contributions shall be elected, made, suspended, resumed and credited in accordance with and subject to the rules and limitations of section 414(v) of the Code and such other rules and limitations prescribed by the Administrator or the Recordkeeper from time to time; provided, however, that (i) the amount of Catch-up Contributions made on behalf of a participant during a calendar year shall not exceed the maximum amount permitted under section 414(v)(2) of the Code for the calendar year ($4,000 for 2005); (ii) the amount of Catch-up Contributions made on behalf of a participant for a payroll period shall not exceed the percentage of such participant’s Compensation that is established from time to time by the Administrator; and (iii) no Matching Contributions shall be made pursuant to Section 4.2 or 4.3(b) in connection with Catch-up Contributions.  Catch-up Contributions shall not be taken into account for purposes of Sections 6.1 and 6.3, and the Plan shall not be treated as failing to satisfy its provisions implementing the requirements of sections 401(k)(3), 401(k)(11), 401(k)(12), 410(b) or 416 of the Code, as applicable, by reason of such Catch-up Contributions.

Section 4.2.Matching Contributions.  Subject to the limitations set forth in Article 6, an Employer may make a Matching Contribution for each payroll period on behalf of

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each Participant or Rexall Participant who is an employee of such Employer.  Except as provided in Section 4.3(b), the Matching Contribution shall equal a discretionary percentage, to be determined by the Company, of such a participant’s Pre-Tax Contribution.  The Company may decide that the Matching Contribution will be made only with respect to a certain percentage or dollar amount of a participant’s Compensation and the Company’s decision will be applied (a) uniformly with respect to all Rexall Participants and (b) uniformly with respect to all Participants; provided, however, that with respect to Matching Contributions attributable to Compensation earned prior to January 1, 2006, the Company may decide that the basis for the Matching Contribution for Participants who are performing services for Solgar, Inc. made pursuant to Section 4.3(b) will be different from the basis for the Matching Contribution for other Participants or Rexall Participants.  The Matching Contribution made on behalf of a Rexall Participant for any Plan Year shall not exceed $3,000.

Section 4.3.Special Contributions.  Notwithstanding anything herein to the contrary and in lieu of the contributions described in Sections 4.1(a) and 4.2 for the period beginning on the Effective Time as defined in the Purchase Agreement by and between Wyeth and NBTY, Inc. dated as of June 6, 2005 (the “Wyeth Purchase Agreement”) and ending December 31, 2005 (such period, the “Solgar Period”), the Company shall make or cause Solgar, Inc. to make the contributions described in Section 4.3(a), (b) and (c) on behalf of certain Participants described in such subsections.

(a)Special Pre-Tax Contribution.  Subject to the limitations set forth in Article 6, a Pre-Tax Contribution shall be made for each payroll period beginning in the Solgar Period on behalf of each Participant who is an Associate performing services for Solgar, Inc. during any such payroll period in an amount equal to a percentage of such Participant’s Compensation for

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such payroll period as elected by the Participant pursuant to Section 3.2.  The percentage of Compensation so designated by such a Participant for a payroll period may not be less than 1% and may not be more than 16% and may be changed or suspended in accordance with procedures established by the Recordkeeper.   Notwithstanding the foregoing, a Participant’s Pre-Tax Contributions for a payroll period pursuant to this Section 4.3(a) may not exceed an amount equal to the Maximum Deferral Percentage for such payroll period with respect to such Participant.

(b)Special Matching Contribution.  Subject to the limitations set forth in Article 6, a Matching Contribution shall be made for each payroll period in the Solgar Period on behalf of each Participant who is an Associate performing services for Solgar, Inc. during any such payroll period.  The Matching Contribution shall equal 50% of the Compensation which the Participant elects to defer as a Pre-Tax Contribution for such payroll period, provided that such Matching Contribution shall be made only with respect to the first 6% of such Compensation.

(c)Special Bonus Contribution.  The Company shall make a Special Bonus Contribution on behalf of each Participant who (i) was an employee of Wyeth performing services in its Solgar Vitamin and Herb operating unit at the Effective Time as defined in the Wyeth Purchase Agreement and (ii) is an Associate of an Employer on December 31, 2005.  The amount of the Special Bonus Contribution made on behalf of such a Participant shall equal $325 multiplied by the number of whole years of service such Participant had with Wyeth as of such Effective Time, as reflected on Wyeth’s records immediately prior to the Effective Time.

Section 4.4.Form and Deposit of Contributions.  The contributions described in Sections 4.1, 4.2 and 4.3 shall be made in cash.  The Company shall deliver or cause to be delivered to the Trustee Pre-Tax Contributions for each payroll period as soon as

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administratively practicable after the date such contributions otherwise would have been paid to participants as cash compensation, but in no event later than the 15^th business day of the month following the month during which such contributions otherwise would have been paid to the participants.  The Company shall deliver or cause to be delivered to the Trustee any Matching Contributions for a payroll period concurrently with the delivery of the Pre-Tax Contributions to which such Matching Contributions relate.  The Company shall deliver or cause to be delivered to the Trustee the contribution described in Section 4.3(c) on or before March 15, 2006.

Section 4.5.Requirements for Rollover Contributions.  If an Associate who (i) is an Eligible Associate or Eligible Rexall Associate or (ii) will become an Eligible Associate upon satisfying the age and service requirements described in Section 2.13,receives, or is entitled to, an “eligible rollover distribution” (within the meaning of section 402(c)(4) of the Code) from an employees’ trust described in section 401(a) of the Code that is exempt from tax under section 501(a) of the Code, from a qualified annuity plan described in section 403(a) of the Code, from a 403(b) plan, from a governmental 457(b) plan, or from an individual retirement account or annuity described in section 408(a) or (b) of the Code (provided that such amount is eligible to be rolled over from such individual retirement account or annuity and no amount in such individual retirement account or annuity is attributable to any source other than an eligible rollover distribution from an employees’ trust described in section 401(a) of the Code that is exempt from tax under section 501(a) of the Code or from a qualified annuity plan described in section 403(a) of the Code, and any earnings thereon), then he or she may contribute, or direct the Trustee of such trust, plan, account or annuity to transfer to the Plan an amount that does not exceed the amount of such eligible rollover distribution (including the

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proceeds from the sale of any property received as part of such eligible rollover distribution), provided that such eligible rollover distribution will not jeopardize the tax-exempt status of the Plan or create adverse tax consequences for an Employer.  Notwithstanding the foregoing, such a contribution (a “Rollover Contribution”) to the Plan may not include any portion of an eligible rollover distribution that consists of after-tax employee contributions.  A Rollover Contribution may be in the form of cash or, with the consent of the Administrator or the Recordkeeper, a promissory note evidencing an outstanding loan balance.

Section 4.6.Delivery of Rollover Contributions.  Any Rollover Contribution to the Plan shall be delivered to the Trustee by an Eligible Associate or Eligible Rexall Associate on or before the 60th day after the day on which such an Associate receives the Rollover Contribution (or on or before such later date as may be prescribed by law) or shall be transferred to the Trustee on behalf of such Associate directly from the trust from which the eligible rollover distribution referred to in Section 4.5 is made.  Any such Rollover Contribution must be accompanied by any information or documentation in connection therewith requested by the Administrator, the Recordkeeper or the Trustee.  Notwithstanding the foregoing, the Administrator or the Recordkeeper shall not permit a Rollover Contribution if in the judgment of either accepting such Rollover Contribution would cause the Plan to violate any provision of the Code or U.S. Treasury regulations or create adverse tax consequences for an Employer.

ARTICLE 5

ESOP CONTRIBUTIONS

Section 5.1.ESOP Contributions.  For each Plan Year, the Company will contribute (an “ESOP Contribution”) on behalf of the Employers in cash or NBTY Stock the amounts, if any, that the Committee, in its sole discretion, may authorize and direct to be contributed.  ESOP Contributions will be allocated to ESOP Participants’ ESOP Accounts. 

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ESOP Contributions will be allocated to ESOP Participants who have completed at least 1,000 Hours of Service during the Plan Year for which such ESOP Contribution is made and who are employed on the last day of such Plan Year.  For each ESOP Contribution, an allocation will be made to each ESOP Participant’s ESOP Account in the ratio that the ESOP Participant’s ESOP Compensation for such Plan Year bears to the ESOP Compensation for such Plan Year of all ESOP Participants.

Section 5.2.Payment.  The total contributions made pursuant to Article 5 for a Plan Year shall be made in one or more installments, not later than the due date (including extensions thereof) for filing the federal income tax return of the Company for its Fiscal Year ending immediately after the end of such Plan Year for which the ESOP Contributions are made.  Any ESOP Contribution made in cash shall, in the sole discretion of the Company, be (i) used to purchase available NBTY Stock or (ii) allocated to Participant’s ESOP Accounts; provided, however, that to the extent required, any cash contributions shall be used to repay any portion of a loan incurred as permitted under Article 11.

If an ESOP Contribution is made in shares of NBTY Stock, NBTY Stock shall be valued at the closing price of NBTY Stock on the day of the contribution of NBTY Stock.  If at any time NBTY Stock is not readily tradable on an established securities market, then any valuation required under this Section 5.2 will be conducted by an independent appraiser (as defined in section 401(a)(28) of the Code).

Section 5.3.Contributions by Participants.  ESOP Participants shall not be permitted to make any contributions to their ESOP Accounts.

Section 5.4.Maximum Contributions.  The aggregate amount of ESOP contributions for any Plan Year shall not exceed twenty-five percent (25%) of the aggregate

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compensation (as defined in section 415(c)(3) of the Code) of all ESOP Participants during such Plan Year, except as provided in this Section 5.4.  For any Plan Year with respect to which ESOP Contributions are applied to repay any portion of a loan incurred pursuant to Article 11, the total amount of ESOP Contributions used to repay principal on all such loans shall not exceed twenty-five percent (25%) of such aggregate ESOP Participant compensation for such Plan Year.  The Company may contribute any amount in excess of this maximum amount for the Plan Year, without limitation, for the purpose of paying interest on such loans.  Furthermore, the contributions made pursuant to this Article, when combined with all tax-qualified plans of the Employers, shall not exceed the maximum allowable deductions permitted under section 404 of the Code.

Section 5.5.Limitation on Annual Additions.  Notwithstanding anything contained herein to the contrary, allocation of ESOP Contributions for any Plan Year shall be subject to the limitations set forth in Section 6.3.

ARTICLE 6

LIMITATIONS ON CONTRIBUTIONS

Section 6.1.Annual Limit on Pre-Tax Contributions.  (a)    General Rule.  Notwithstanding the provisions of Section 4.1 or 4.3(a), Pre-Tax Contributions made on behalf of a Participant or Rexall Participant pursuant to such Section for any calendar year shall not exceed the dollar limitation in effect for such calendar year under section 402(g) of the Code, except to the extent permitted under Section 4.1(b) of the Plan and section 414(v) of the Code.

(b)Excess Pre-Tax Contributions.  Except to the extent set forth in Section 4.1(b) of the Plan and section 414(v) of the Code with respect to “catch-up contributions,” if for any calendar year the Pre-Tax Contributions to the Plan or the aggregate of the Pre-Tax Contributions to the Plan plus amounts contributed under other plans or arrangements described

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in section 401(k), 403(b), 408(k) or 408(p) of the Code for a participant exceed the limit imposed by subsection (a) of this Section for such calendar year (“excess deferrals”), such participant shall, pursuant to rules and at a time following such calendar year as determined by the Administrator, be allowed to submit a written request, accompanied by documentation evidencing that such excess deferrals exist, that the excess deferrals, plus any income and minus any loss allocable thereto, be distributed to the participant.  The amount of any income or loss allocable to such excess deferrals shall be determined pursuant to regulations promulgated by the U.S. Department of Treasury or U.S. Department of Labor.  Such amount of excess deferrals, as adjusted for income or loss, shall be distributed to the participant no later than April 15 following the calendar year for which such contributions were made.  Notwithstanding the provisions of this subsection (b), any such excess deferrals shall be treated as “annual additions” for purposes of Section 6.3 for the limitation year in which such contributions were made.  The amount of excess deferrals that may be distributed under this subsection (b) with respect to a participant for a calendar year shall be reduced by any amounts previously distributed pursuant to Section 6.2(e)(1) with respect to such participant for such year.

Section 6.2.Limits on Contributions for Highly Compensated Employees.

(a)Actual Deferral Percentage Test Imposed by Section 401(k)(3) of the Code.  Notwithstanding the provisions of Section 4.1 and 4.3(a), if the Pre-Tax Contributions made pursuant to Section 4.1 and 4.3(a) for a Plan Year fail, or in the judgment of the Administrator or the Recordkeeper are likely to fail, to satisfy both of the tests set forth in paragraphs (1) and (2) of this subsection, the adjustments prescribed in Section 6.2(e)(1) shall be made.  Any Pre-Tax Contributions which are “Catch-up Contributions” shall not be considered to be Pre-Tax Contributions for purposes of determining whether the tests set forth in paragraphs (1) and (2) of

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this subsection are satisfied or for purposes of making any adjustments prescribed by Section 6.2(e)(1).

(1)  The HCE average deferral percentage (as defined below) for such year does not exceed the product of the NHCE average deferral percentage (as defined below) for such year and 1.25.

(2)  The HCE average deferral percentage for such year (i) does not exceed the NHCE average deferral percentage for such year by more than two percentage points and (ii) does not exceed the product of the NHCE average deferral percentage for such year and 2.0.

(b)Actual Contribution Percentage Test Imposed by Section 401(m) of the Code.  Notwithstanding the provisions of Section 4.2 and 4.3(b), if the aggregate of the Matching Contributions made pursuant to Section 4.2 and 4.3(b) for a Plan Year fail, or in the judgment of the Administrator or the Recordkeeper are likely to fail, to satisfy both of the tests set forth in paragraphs (1) and (2) of this subsection, the adjustments prescribed in Section 6.2(e)(2) shall be made.

(1)  The HCE average contribution percentage (as defined below) for such year does not exceed the product of the NHCE average contribution percentage (as defined below) for such year and 1.25.

(2)  The HCE average contribution percentage for such year (i) does not exceed the NHCE average contribution percentage for such year by more than two percentage points and (ii) does not exceed the product of the NHCE average contribution percentage for such year and 2.0.

(c)Definitions and Special Rules.  For purposes of this Section, the following definitions and special rules shall apply:

(1)  The “actual deferral percentage test” refers collectively to the tests set forth in paragraphs (1) and (2) of subsection (a) of this Section relating to Pre-Tax Contributions.  The actual deferral percentage test shall be satisfied if either of such tests are satisfied.

(2)  The “HCE average deferral percentage” for a Plan Year is a percentage determined for the group of Eligible Associates and Eligible Rexall Associates who are eligible to make Pre-Tax Contributions for the current Plan Year and who are Highly Compensated Employees for the current Plan Year and the prior Plan Year.  Such percentage shall be equal to the average of the ratios, calculated separately for each such

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Eligible Associate and Eligible Rexall Associate to the nearest one-hundredth of one percent, of the Pre-Tax Contributions for the benefit of such individual for the current Plan Year (if any) to the total compensation for the current Plan Year paid to such individual.

(3)  The “NHCE average deferral percentage” for a Plan Year is a percentage determined for the group of Eligible Associates and Eligible Rexall Associates who are eligible to make Pre-Tax Contributions for the current Plan Year and who are not Highly Compensated Employees for the current Plan Year.  Such percentage shall be equal to the average of the ratios, calculated separately for each such Eligible Associate and Eligible Rexall Associate to the nearest one-hundredth of one percent, of the Pre-Tax Contributions for the benefit of such individual for the immediately preceding Plan Year (if any) to the total compensation for the immediately preceding Plan Year paid to such individual.

(4)  The “actual contribution percentage test” refers collectively to the tests set forth in paragraphs (1) and (2) of subsection (b) of this Section relating to Matching Contributions.  The actual contribution percentage test shall be satisfied if either of such tests are satisfied.

(5)  The “HCE average contribution percentage” for a Plan Year is a percentage determined for the group of Eligible Associates and Eligible Rexall Associates who are eligible to have Matching Contributions, or in the discretion of the Company and to the extent permitted under rules prescribed by the Secretary of the Treasury or otherwise under the law, Pre-Tax Contributions, made for their benefit for the current Plan Year and who are Highly Compensated Employees for the current Plan Year.  Such percentage shall be equal to the average of the ratios, calculated separately for each such Eligible Associate and Eligible Rexall Associate to the nearest one-hundredth of one percent, of the Matching Contributions and, in the discretion of the Administrator or the Recordkeeper and to the extent permitted under rules prescribed by the Secretary of the Treasury or otherwise under the law, Pre-Tax Contributions, made for the benefit of such individual for the current Plan Year (if any) to the total compensation for the current Plan Year paid to such individual.

(6)  The “NHCE average contribution percentage” for a Plan Year is a percentage determined for the group of Eligible Associates and Eligible Rexall Associates who are eligible to have Matching Contributions, or in the discretion of the Company and to the extent permitted under rules prescribed by the Secretary of the Treasury or otherwise under the law, Pre-Tax Contributions, made for their benefit for the current Plan Year and who are not Highly Compensated Employees for the current Plan Year.  Such percentage shall be equal to the average of the ratios, calculated separately for each such Eligible Associate and Eligible Rexall Associate to the nearest one-hundredth of one percent, of the Matching Contributions and, in the discretion of the Administrator or the Recordkeeper and to the extent permitted under rules prescribed by the Secretary of the Treasury or otherwise under the law, Pre-Tax Contributions, made for the benefit of such individual for the current Plan Year (if any) to the total compensation for the immediately preceding Plan Year paid to such individual.

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(7)  The term “compensation” shall have the meaning set forth in section 414(s) of the Code or, in the discretion of the Administrator, any other meaning in accordance with the Code for these purposes.

(8)  If the Plan and one or more other plans of an Employer to which Pre-Tax Contributions, Matching Contributions or employee contributions (as such terms are defined for purposes of section 401(m) of the Code) are made are treated as one plan for purposes of section 410(b) of the Code, such plans shall be treated as one plan for purposes of this Section.  If a Highly Compensated Employee participates in the Plan and one or more other plans of an Employer to which any such contributions are made, all such contributions shall be aggregated for purposes of this Section.

(d)Safe Harbor Election.  Notwithstanding anything in this Section 6.2 to the contrary, if the Company elects the Matching Contribution safe harbors set forth in section 401(k)(12) and 401(m)(11) of the Code for any Plan Year by providing to each Participant and Rexall Participant a comprehensive notice of such participant’s rights and obligations under the Plan, written in a manner calculated to be understood by an average participant, at least 30 days, but not more than 90 days, before the beginning of such Plan Year (or, in the case of an Associate who becomes a participant during the Plan Year, by the day on which such Associate becomes a participant, but not more than 90 days prior) and allows participants to make or modify their elections to make Pre-Tax Contributions as described in Section 4.1 or 4.3(a) during the 30-day period immediately following receipt of such notice, then the Plan shall be deemed to have satisfied the actual deferral percentage test of Section 6.2(a) and the actual contribution percentage test of Section 6.2(b) for the Plan Year.

(e)Adjustments to Comply with Limits.

(1)  Adjustments to Comply with Actual Deferral Percentage Test.  The Administrator shall cause to be made such periodic computations as it shall deem necessary or appropriate to determine whether the actual deferral percentage test will be satisfied during a Plan Year, and, if it appears to the Administrator that such test will not be satisfied, the Administrator shall take such steps as it deems necessary or appropriate to adjust the Pre-Tax Contributions made pursuant to Section 4.1 and 4.3(a) for all or a portion of the remainder of such Plan Year for the benefit of some or all of the Highly Compensated Employees to the extent necessary in order for the actual deferral percentage test to be satisfied.  If, after the end of the Plan Year, the Administrator

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determines that, notwithstanding any adjustments made pursuant to the preceding sentence, the actual deferral percentage test was not satisfied, the Administrator shall calculate a total amount by which Pre-Tax Contributions must be reduced in order to satisfy such test in the manner prescribed by section 401(k)(8)(B) of the Code (the “excess contributions amount”).  The amount of Pre-Tax Contributions to be reduced for each Participant and Rexall Participant who is a Highly Compensated Employee shall be determined by first reducing the Pre-Tax Contributions of each such participant whose actual dollar amount of Pre-Tax Contributions for such Plan Year is highest until such reduced dollar amount equals the next highest actual dollar amount of Pre-Tax Contributions made for such Plan Year on behalf of any Highly Compensated Employee or until the total reduction equals the excess contributions amount.  If further reductions are necessary, then the Pre-Tax Contributions on behalf of each participant who is a Highly Compensated Employee and whose actual dollar amount of Pre-Tax Contributions for such Plan Year is the highest (determined after the reduction described in the preceding sentence) shall be reduced in accordance with the preceding sentence.  Such reductions shall continue to be made to the extent necessary so that the total reduction equals the excess contributions amount.  The portion of a participant’s Pre-Tax Contributions to be reduced in accordance with this Section 6.2(e)(1) shall be distributed to such participant and recharacterized as a corrective distribution of excess contributions, and the participant shall be notified of such recharacterization and the tax consequences thereof no later than 2½ months after the end of the Plan Year (or if notification by such date is administratively impracticable, no later than the last day of the subsequent Plan Year).  The amount of a participant’s Pre-Tax Contributions to be reduced in accordance with this Section shall be reduced by any excess deferrals previously distributed to such participant pursuant to Section 6.1 in order to comply with the limitations of section 402(g) of the Code.  The amount of any income or loss allocable to any such reductions shall be determined pursuant to the applicable regulations promulgated by the U.S. Treasury Department.

(2)  Adjustments to Comply with Actual Contribution Percentage Test.  The Administrator shall cause to be made such periodic computations as it shall deem necessary or appropriate to determine whether the average contribution percentage test will be satisfied during a Plan Year, and, if it appears to the Administrator that such test will not be satisfied, the Administrator shall take such steps as it deems necessary or appropriate to adjust the Matching Contributions made pursuant to Section 4.2 and 4.3(b) for all or a portion of the remainder of such Plan Year on behalf of some or all of the Highly Compensated Employees to the extent necessary in order for the average contribution percentage test to be satisfied.  If, after the end of the Plan Year, the Administrator determines that, notwithstanding any adjustments made pursuant to the preceding sentence, the average contribution percentage test was not satisfied, the Administrator shall, in its discretion, (1) allocate a qualified nonelective contribution pursuant to Section 6.2(f) or (2) reduce the Matching Contributions made on behalf of each Participant and Rexall Participant who is a Highly Compensated Employee and whose actual dollar amount of Matching Contributions for such Plan Year is the highest in the same manner described in subparagraph (1) of this paragraph to the extent necessary to comply with the average contribution percentage test.  The reduction described in the preceding sentence shall be made with respect to Matching

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Contributions.  With respect to contributions to be so reduced, no later than 2½ months after the end of the Plan Year (or if correction by such date is administratively impracticable, no later than the last day of the subsequent Plan Year), the Administrator shall cause to be distributed to each such participant the amount of such reductions made with respect to vested Matching Contributions to which such participant would be entitled under the Plan if such participant had terminated service on the last day of the Plan Year for which such contributions are made (or on the date of the participant’s actual termination of employment, if earlier), and any remaining amount of such reductions (plus any income and minus any loss allocable thereto) shall be forfeited.  Any amounts forfeited pursuant to this paragraph shall be treated in the same manner as forfeitures described in Section 9.2.  The amount of any such income or loss allocable to any such reduction to be so distributed or forfeited shall be determined pursuant to applicable regulations promulgated by the U.S. Treasury Department.

(f)Qualified Nonelective Contributions.  Subject to the limitations set forth in Sections 6.3 and 6.4, and to the extent permitted by U.S. Treasury regulations or other pronouncements of the Internal Revenue Service, for purposes of satisfying the actual contribution percentage test set forth in Section 6.2(b), the Employers may contribute for a Plan Year such amount, if any, as may be designated as a “qualified nonelective contribution” within the meaning of section 401(m)(4)(C) of the Code.  Any qualified nonelective contribution to the Plan shall be allocated to the Accounts of those Participants and Rexall Participants who are not Highly Compensated Employees for the Plan Year with respect to which such qualified nonelective contribution is made and who are actively employed by the contributing Employer on the date such contribution is made, beginning with the participant with the lowest Compensation for such Plan Year and allocating the maximum amount permissible under Section 6.3 before allocating any portion of such qualified nonelective contribution to the participant with the next lowest Compensation for the Plan Year.  Such allocation shall continue until the Plan satisfies the requirements in Section 6.2(b) or until the amount of such qualified nonelective contribution has been completely allocated.  Any such qualified nonelective contributions and earnings and losses thereon shall be accounted for separately by the Trustee and shall be distributable in accordance with the provisions of Article 9.  Notwithstanding any

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provision of the Plan to the contrary, the portion of a participant’s account derived from qualified nonelective contributions at all times shall be nonforfeitable.

Section 6.3.Maximum Annual Additions under Section 415 of the Code.  Notwithstanding any other provision of the Plan, and except to the extent permitted under Sections 4.1(b) of the Plan and section 414(v) of the Code, the amounts allocated to the Account and ESOP Account of each Participant, Rexall Participant and ESOP Participant for any Plan Year shall be limited so that the aggregate annual additions for such year to such a participant’s Account and his or her ESOP Account and to the participant’s accounts in all other defined contribution plans maintained by any Employer or Affiliate shall not exceed the lesser of:

(a)  $42,000 (as adjusted pursuant to section 415(d) of the Code), and

(b)  100% of his or her compensation for such Plan Year (or such other percentage of compensation set forth in section 415(c) of the Code).

If the annual additions to a participant’s Account and his or her ESOP Account exceed the limitations set forth above for any Plan Year (i) as a result of a reasonable error in estimating his or her annual compensation, (ii) as a result of a reasonable error in determining the amount of Pre-Tax Contributions that may be made by a participant under section 415 of the Code or (iii) under other facts and circumstances as determined by the Commissioner of Internal Revenue, the amounts to be allocated to such participant’s Account and his or her ESOP Account for such year shall be reduced to the extent of the excess first with respect to any Pre-Tax Contributions as to which no Matching Contribution was made and then to remaining Pre-Tax Contributions and any Matching Contributions attributable thereto and finally with respect to contributions to the ESOP Account on a pro rata basis.  Any Pre-Tax Contributions so reduced,

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plus earnings thereon, shall be distributed to the participant.  Any Matching Contributions so reduced, plus earnings thereon, shall be held in a segregated suspense account and shall be treated in the next Plan Year as Matching Contributions thereby reducing amounts actually contributed by the Employers for such year.  Upon termination of the Plan, any balance in such suspense account shall be returned to each Employer in the amount determined by the Administrator, but only if the allocation upon Plan termination of such amount to participants would cause all participants to receive annual additions in excess of the limitations of section 415 of the Code.

The “annual additions” for a Plan Year to a participant’s Account and his or her ESOP Account and to his or her accounts in any other defined contribution plan of an Employer or Affiliate is the sum for such Plan Year of:

(a)the amount of employer contributions (including Pre-Tax Contributions) allocated to his or her accounts, excluding, however, any Pre-Tax Contributions that are Catch-up Contributions or that are made under section 414(v) of the Code,

(b)the amount of forfeitures allocated to his or her accounts,

(c)the amount allocated to any individual medical benefit account (as defined in section 415(l) of the Code) maintained on his or her behalf, and

(d)the amount of any of his or her contributions, excluding any Rollover Contributions, to any such plan.

For purposes of this Section, the term “compensation” shall have the meaning set forth in U.S. Treasury Regulation § 1.415-2(d)(10) except that in the case of an Associate whose employment is transferred from an Employer to an Affiliate that is not an Employer, such term

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shall exclude any compensation received by such Associate from such Affiliate, and the term “defined contribution plan” shall have the meaning set forth in section 415(k)(1) of the Code.

Section 6.4.Other Limitations on Employer Contributions.  The contributions of the Employers for a Plan Year shall not exceed the maximum amount for which a deduction is allowable to such Employers for federal income tax purposes for the fiscal year of such Employers that ends with such Plan Year.

Any contribution made by an Employer by reason of a good faith mistake of fact, or the portion of any contribution made by an Employer that exceeds the maximum amount for which a deduction is allowable to such Employer for federal income tax purposes by reason of a good faith mistake in determining the maximum allowable deduction, shall upon the request of such Employer be returned by the Trustee to an Employer.  An Employer’s request and the return of any such contribution must be made within one year after such contribution was mistakenly made or after the deduction of such excess portion of such contribution was disallowed, as the case may be.  The amount to be returned to an Employer pursuant to this paragraph shall be the excess of (i) the amount contributed over (ii) the amount that would have been contributed had there not been a mistake of fact or a mistake in determining the maximum allowable deduction.  Earnings attributable to the mistaken contribution shall not be returned to an Employer, but losses attributable thereto shall reduce the amount to be so returned.  If the return to an Employer of the amount attributable to the mistaken contribution would cause the balance of any participant’s Account as of the date such amount is to be returned (determined as if such date coincided with the close of a Plan Year) to be reduced to less than what would have been the balance of such Account as of such date had the mistaken amount not been contributed, the amount to be returned to an Employer shall be limited so as to avoid such reduction.

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ARTICLE 7

TRUST AND INVESTMENT FUNDS

Section 7.1.Trust.  A Trust shall be established by the execution of a trust agreement between the Company (acting on behalf of the Employers) and the Trustee.  All contributions under the Plan shall be paid to the Trustee.  The Trustee shall hold all monies and other property received by it and invest and reinvest the same, together with the income therefrom, on behalf of the Participants, Rexall Participants and ESOP Participants collectively in accordance with the provisions of the trust agreement; to the extent applicable, the investment elections of the participants; and with respect to ESOP Contributions, primarily in qualifying employer securities.  The Trustee shall make distributions from the Trust Fund at such time or times to such person or persons and in such amounts as the Administrator or the Recordkeeper directs in accordance with the Plan.

Section 7.2.Designation of Investment Funds.  The Company shall cause the Trustee to establish, operate and maintain three or more separate investment funds exclusively for the collective investment and reinvestment of moneys directed by the Participants and Rexall Participants to be invested in such funds on their behalf.  Additional investment funds may be established as determined by the Company from time to time in its sole discretion.  The Administrator and the Recordkeeper will establish procedures setting forth how often changes between investments may be made and any other limitations and provisions that they may impose on a participant’s right to direct investments.

Section 7.3.Trust Fund to Be Applied Exclusively for Participants and their Beneficiaries, Etc.  Subject only to the provisions of Article 6 and Sections 15.1 and 15.2(b) and (c), and any other provision of the Plan to the contrary notwithstanding, no part of the Trust

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Fund shall be used for or diverted to any purpose other than for the exclusive benefit of the Participants, Rexall Participants, ESOP Participants and their Beneficiaries.

ARTICLE 8

PARTICIPANT ACCOUNTS,
INVESTMENT ELECTIONS, ETC.

Section 8.1.Participant Accounts.  The Administrator shall establish and maintain, or cause to be established and maintained, a separate Account for each Participant and Rexall Participant.  Each Account shall consist of the following subaccounts:

(i)if Pre-Tax Contributions have been made for the benefit of a participant pursuant to Section 4.1 or 4.3(a) or under the Prior Plan, a Pre-Tax Account to which shall be credited such Pre-Tax Contributions and earnings and losses thereon;

(ii)if Matching Contributions have been made for the benefit of a participant pursuant to Section 4.2 or 4.3(b) or under the Prior Plan, a Matching Account to which shall be credited such Matching Contributions and earnings and losses thereon;

(iii)if Profit Sharing Contributions have been made for the benefit of a Rexall Participant pursuant to a Prior Plan, a Profit Sharing Account to which shall be credited such Profit Sharing Contributions and earnings and losses thereon;

(iv)if a Special Bonus Contribution has been made for the benefit of a Participant pursuant to Section 4.3(c), a Special Bonus Account to which shall be credited such Special Bonus Contribution and earnings and losses thereon;

(v)if contributions have been made for the benefit of a participant when the Plan was a top-heavy plan within the meaning of Section 16.1, a Top-Heavy Plan Account to which shall be credited such contributions and earnings and losses thereon; and

(vi)if a Rollover Contribution has been made by a participant, a Rollover Account to which shall be credited such Rollover Contribution and earnings and losses thereon.

Unless the context otherwise requires, a participant’s “Account” or “Account balance” shall mean the aggregate value of all separate accounts, excluding ESOP Accounts, and subaccounts maintained on his or her behalf pursuant to the Plan and Trust agreement.  The books of account, forms and accounting methods used in the administration of participants’

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Accounts shall be the responsibility of, and shall be subject to the supervision and control of, the Company.

Section 8.2.ESOP Account.  An ESOP Participant’s ESOP Account shall be comprised of NBTY Stock and other assets attributable to ESOP Contributions or forfeited by other ESOP Participants.

(a)Assets other than NBTY Stock.  The Trustee shall determine the market value of the non-NBTY Stock assets of an ESOP Participant’s ESOP Account as of each ESOP Allocation Date, adjusting such value to reflect income, realized and unrealized profits, and losses and expenses attributable to such accounts.  The adjustments so made shall be allocated to each ESOP Account based upon its balance as of the beginning of the relevant Plan Year in relationship to the aggregate balances of all ESOP Accounts as of the beginning of such Plan Year.

(b)NBTY Stock.  Each ESOP Participant’s ESOP Account shall be credited as of each ESOP Allocation Date with a number of shares of NBTY Stock determined solely by the Company.  As soon as practicable after such crediting to the ESOP Accounts occurs, each ESOP Participant shall be notified of the new balance of his or her ESOP Account.

Section 8.3.Investment Elections.  (a)    Initial Election.  Each Participant and Rexall Participant may make, in the manner prescribed by the Administrator or Recordkeeper, an investment election that shall apply to the investment of contributions made for such participant’s benefit and any earnings on such contributions, other than contributions made pursuant to Section 5.1 and any earnings thereon, subject to such limitations set forth herein or imposed by the Administrator or Recordkeeper from time to time.  Such election shall specify that such contributions be invested either (i) wholly in one of the investment funds maintained

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by the Trustee pursuant to Section 7.2, or (ii) divided among two or more of such investment funds in increments of 1% (or such larger percentage established by the Administrator or Recordkeeper from time to time).  During any period in which no direction as to the investment of a participant’s Account is on file with the Recordkeeper, contributions made for a participant’s benefit shall be invested in a fund selected by the Administrator from time to time.

(b)Change of Election.  A Participant or Rexall Participant may change his or her investment election as of any Valuation Date, subject to such limitations as the Administrator or Recordkeeper from time to time may impose (including restrictions on investment election changes that apply solely to a particular investment fund).  A participant’s investment election change shall be limited to the investment funds then maintained by the Trustee pursuant to Section 7.2.  A change in investment election made pursuant to this Section shall apply to a participant’s existing Account or contributions allocated to such Account after such change, or both.  Any such change shall specify that such Account or contributions be invested either (i) wholly in one of the funds maintained by the Trustee pursuant to Section 7.2 or (ii) divided among two or more of such funds in increments of 1% (or such larger percentage established by the Administrator from time to time) or, solely with respect to a participant’s existing Account, in fixed dollar amounts.  A participant’s change of investment election must be made in the manner prescribed by the Administrator or Recordkeeper.  The Administrator or Recordkeeper shall prescribe rules regarding the time by which such an election must be made in order to be effective for a particular Valuation Date.

(c)Facilitation.  Notwithstanding any election of any Participant or Rexall Participant, the Trustee shall have the right to hold invested in a short-term investment fund any

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amounts intended for investment or reinvestment until such time as investment or reinvestment may be made in accordance with the Plan and Trust.

(d)ESOP Diversification.

(i)For Plan Years ending on or before December 31, 2002, and for diversification elections effectuated prior to January 1, 2004, each ESOP Participant who has attained age fifty-five (55) and completed ten (10) years of participation as an ESOP Participant shall have the right to make an election to direct the Trustee as to investment of his or her ESOP Account.  In each of the first five (5) Plan Years following the Plan Year in which an ESOP Participant attained age fifty-five (55) and completed ten (10) years of participation as an ESOP Participant, such an ESOP Participant may elect within ninety (90) days after the close of each such Plan Year in the qualified election period (as defined in section 401(a)(28) of the Code) to diversify twenty-five percent (25%) of his or her ESOP Account less any amount to which a prior election applies.  In the sixth (6^th) year, such an ESOP Participant may elect within ninety (90) days after the close of each Plan Year in the qualified election period (as defined in section 401(a)(28) of the Code) to diversify fifty percent (25%) of his or her ESOP Account less any amount to which a prior election applies.

(ii)For Plan years beginning on or after January 1, 2003, and for diversification elections effectuated on or after January 1, 2004, any ESOP Participant who has attained age fifty-five (55) and has completed ten (10) years of participation as an ESOP Participant shall have the right to make an election to direct the Trustee as to the investment of his or her ESOP Account as follows.  In each of the first five (5) Plan Years following the Plan Year in which an ESOP Participant attained age fifty-five (55) and completed ten (10) years of participation as an ESOP Participant, such an ESOP Participant may elect within ninety (90) days after the close of each Plan Year in the qualified election period (as defined in section 401(a)(28) of the Code) to diversify twenty-five percent (25%) of his or her ESOP Account less any amount to which a prior election applies.  In the sixth (6^th) year, such an ESOP Participant may elect within ninety (90) days after the close of each Plan Year in the qualified election period (as defined in section 401(a)(28) of the Code) to diversify fifty percent (50%) of his or her ESOP Account less any amount to which a prior election applies.

(iii)For Plan Years beginning on or after January 1, 2005 and for diversification elections effectuated on or after January 1, 2005, any ESOP Participant who has attained age fifty-five (55) and completed ten (10) years of participation as an ESOP Participant (a “Qualified ESOP Participant”) shall have the right to make an election to direct the Plan as to investment of his or her ESOP Account as follows.  In each of the first five (5) Plan Years following the Plan Year in which an ESOP Participant  became a Qualified ESOP Participant, such Qualified ESOP Participant may elect to direct the investment of twenty-five percent (25%) of the value of his or her ESOP Account (any amount transferred to his or her Account pursuant to Section 8.3(d)(iv) shall be taken into account in determining whether the ESOP Participant has directed the investment of twenty-five percent (25%) of the value of his or her ESOP

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Account) within ninety (90) days after the last day of each Plan Year during a Qualified ESOP Participant’s qualified election period (as defined in section 401(a)(28) of the Code).  Within 90 days after the close of the last Plan Year in a Qualified ESOP Participant’s qualified election period, he or she may direct the investment in fifty percent (50%) of the value of his or her ESOP Account (any amount transferred to his or her Account pursuant to Section 8.3(d)(iv) shall be taken into account in determining whether the ESOP Participant has directed the investment of fifty percent (50%) of the value of his or her ESOP Account).  A Qualified ESOP Participant’s direction shall be provided to the Recordkeeper in a manner determined by the Recordkeeper and shall become effective within 180 days after the close of the Plan Year to which the direction applies.

(iv)Any election under Section 8.3(d) shall result in a transfer of the applicable portion of the ESOP Participant’s ESOP Account to subaccounts of the ESOP Participant’s Account established under Section 8.1.

Section 8.4.Valuation of Funds and Plan Accounts.  The value of an investment fund as of any Valuation Date shall be the market value of all assets (including any uninvested cash) held by the fund on such Valuation Date as determined by the Trustee, reduced by the amount of any accrued liabilities of the fund on such Valuation Date.  The Trustee’s determination of market value shall be binding and conclusive upon all parties.  The value of a participant’s Account as of any Valuation Date shall be the sum of the values of his or her investment subaccounts in each of the accounts listed in Section 8.1.

Section 8.5.Allocation of Contributions.  Any Pre-Tax Contribution, Matching Contribution, Special Bonus Contribution, Rollover Contribution or any contribution made when the Plan is a top-heavy plan within the meaning of Section 16.1 shall be allocated to the Pre-Tax Account, Matching Account, Special Bonus Account, Rollover Account or Top-Heavy Account, as applicable, of the participant for whom such contribution is made as soon as practicable after the Valuation Date coinciding with or next following the date on which such contribution is delivered to the Trustee and shall be credited to such participant’s Account as of such Valuation Date.

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Section 8.6.ESOP Allocations.

(a)Allocation of Employer Contributions and Forfeitures.  As of each ESOP Allocation Date, the total number of shares and fractional shares of NBTY Stock contributed to the Trust Fund, purchased by the Trustee with cash contributions made by the Company on behalf of the Employers, or released from the ESOP Suspense Account during the Plan Year shall be computed and allocated along with any applicable forfeitures.  The allocation of NBTY Stock shall be made according to Section 5.1.

(b)Allocation of Cash Dividends.  Cash dividends on NBTY Stock allocated to an ESOP Participant’s ESOP Account shall be paid to such ESOP Participant’s ESOP Account and reinvested in NBTY Stock.  Cash dividends on unallocated shares of NBTY Stock shall be allocated in accordance with the provisions of Section 8.6(c).

(c)Allocation of Earnings and Losses.  As of each ESOP Allocation Date, the Trustee shall determine the fair market value of the assets relating to ESOP Accounts.  The Trustee shall allocate to the accounts of the ESOP Participants the net earnings and gains or losses related to ESOP Accounts since the immediately preceding ESOP Allocation Date.  Dividends shall be allocated based on relative beginning ESOP Account balances less any distributions actually paid.  Interest and other earnings shall be allocated based upon the ratio of each ESOP Participant’s ESOP Account balance as of the time immediately preceding the ESOP Allocation Date less distributions actually paid to the aggregate balance of all ESOP Participant’s ESOP Accounts.  Other adjustments may be made to ESOP Accounts as may be necessary and appropriate in order to achieve an equitable allocation of the net earnings and gains or losses as long as such allocation is performed in a uniform and non-discriminatory manner.

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(d)Allocation of NBTY Stock.  Any provision hereof to the contrary  notwithstanding, at any time NBTY Stock and assets other than NBTY Stock are to be allocated to the ESOP Accounts of ESOP Participants and former ESOP Participants, then, to the greatest extent possible without resulting in discrimination in favor of Highly Compensated Employees, NBTY Stock shall be allocated to the accounts of ESOP Participants and assets other than NBTY Stock shall be allocated to the Accounts of former ESOP Participants.

(e)Interim Allocations.  NBTY Stock acquired by the Trustee with the proceeds of a loan shall be credited to the ESOP Suspense Account.  As of each ESOP Allocation Date, the balance in the ESOP Suspense Account shall be allocated to the ESOP Accounts in the manner described in Section 8.6(a).

Section 8.7.Voting and Exercising Other Securities Rights With Respect to NBTY Stock.

(a)Each ESOP Participant and each former ESOP Participant who has an ESOP Account shall be entitled to direct the Trustee as to the manner in which NBTY Stock credited to such ESOP Account is to be voted and as to the manner in which other shareholder rights with respect to such NBTY Stock are to be exercised.  The following guidelines shall apply with regard to the voting rights of ESOP Participants and former ESOP Participants with respect to the NBTY Stock credit to their ESOP Accounts:

(i)The Trustee shall notify ESOP Participants and former ESOP Participants of each occasion for the exercise of voting rights within a reasonable period (not less than thirty (30) days, unless such period is impossible or impractical) before such rights are to be exercised.

(ii)The Trustee shall take whatever steps are reasonably necessary to allow each ESOP Participant to exercise rights other than voting rights of NBTY Stock represented by the ESOP Participant’s or former ESOP Participant’s ESOP Account.

(iii)The number of shares to which each ESOP Participant and former ESOP Participant is entitled to vote shall have the right to direct the exercise of the rights

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thereof shall be determined for any record date by the number of shares allocated to his or her  ESOP Account on the last ESOP Allocation Date.

(iv)The Trustee shall vote fractional shares by combining directions on voting of such fractional shares to the extent possible.

(v)The Trustee shall vote any shares in the ESOP Suspense Account in the same proportion and in the same manner as the shares in ESOP Participants’ and former ESOP Participant’s ESOP Accounts are voted by the ESOP Participants.

(b)The Trustee shall make no recommendation regarding the manner of exercising any rights under this Section 8.7, including whether such rights should be exercised

Section 8.8.Allocation of Forfeitures.

(a)In General.  The total amount forfeited during any Plan Year pursuant to Sections 9.2(b) and 9.9 from the Accounts of participants employed by an Employer, reduced by the amount of such forfeitures credited to the accounts of former participants who have been reemployed pursuant to Section 12.2 or 12.4 shall be applied first to reduce expenses related to the administration of the Plan and then to reduce any Employer contributions.

(b)ESOP Forfeitures.  With respect to any ESOP Participant who terminates employment and who is not vested in his or her ESOP Account pursuant to Section 9.4(c), a distribution shall be deemed to have occurred as of such termination of employment.  The resulting ESOP Participants’ forfeitures that are pending as of December 31, 2005 shall be allocated to the ESOP Accounts of the ESOP Participants employed by an Employer on such date.  After December 31, 2005, the forfeitures of ESOP Participants who terminate employment during a calendar year shall be allocated to the ESOP Accounts of the ESOP Participants employed by an Employer on the last day of such year.  Forfeitures shall be added to the contribution made pursuant to Article 5 for purposes of allocation to ESOP Accounts.

Section 8.9.Correction of Error.  If it comes to the attention of the Administrator that an error has been made in any of the allocations prescribed by this Article 8,

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appropriate adjustment shall be made to the accounts of all Participants, Rexall Participants, ESOP Participants and Beneficiaries that are affected by such error, except that no adjustment need be made with respect to any participant or Beneficiary whose account has been distributed in full prior to the discovery of such error.

Section 8.10.ERISA Section 404(c) Plan.  The Plan, other than provisions of the Plan addressing the employees’ stock ownership plan portion of the Plan, is intended to meet the requirements of section 404(c) of ERISA and the U.S. Department of Labor regulations promulgated thereunder, and the applicable provisions of the Plan shall be construed and interpreted to meet such requirements.

Section 8.11.Transfers from Other Plans.  With the consent of the Administrator, amounts may be transferred (within the meaning of section 414(l) of the Code) to the Trustee of the Plan from another tax-qualified plan under section 401(a) of the Code (the “Other Plan”), provided that the Other Plan from which such funds are transferred permits the transfer to be made and the transfer will not jeopardize the tax-exempt status of the Plan or create adverse tax consequences for an Employer.  The amounts transferred from the Other Plan shall be credited to administrative subaccounts to be held, invested, reinvested and distributed pursuant to the terms of the Plan and the Trust, and, as of the date of the transfer of any such participant’s interest in the Other Plan,

(1)  there shall be credited to the Pre-tax Account of such participant that portion of his or her interest in the Other Plan which is transferred to the Trustee and which represents the participant’s Pre-Tax Contributions, if any, made to the Other Plan on behalf of the participant,

(2)  there shall be credited to the Matching Account of such participant that portion of his or her interest in the Other Plan which is transferred to the Trustee and which represents the Matching Contributions, if any, made to the Other Plan on behalf of the participant,

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(3)  there shall be credited to the Rollover Account of such Participant that portion of his or her interest in the Other Plan which is transferred to the Trustee and which represents the participant’s rollover contributions, if any, to the Other Plan, and

(4)  there shall be credited to a special subaccount(s) of such participant that portion of his or her interest in the Other Plan which is transferred to the Trustee and which represents any other type of contribution to the Other Plan.

Any amounts credited to a participant’s Pre-Tax Account, Matching Account, Rollover Account or other subaccount shall be credited to the administrative subaccounts in accordance with such participant’s investment direction in effect as of the date of such transfer.

ARTICLE 9

WITHDRAWALS AND DISTRIBUTIONS

Section 9.1.Withdrawals From Account Prior to Termination of Employment.  (a)    Hardship Withdrawals.  Subject to the provisions of this subsection, a Participant or Rexall Participant who has taken all loans available to him or her under Article 10, and all withdrawals available under Section 9.1(b) and (c) and has incurred a financial hardship may withdraw as of any Valuation Date all or any portion of the combined balance of (i) such participant’s Pre-Tax Account; (ii) pre-1989 earnings on such participant’s Pre-Tax Account; (iii) the vested portion of such participant’s Matching Account; (iv) the vested portion of such participant’s Special Bonus Account; and (v) in the case of a Rexall Participant, such participant’s Profit Sharing Account.  The amount of such withdrawal shall not exceed the amount needed to satisfy the financial hardship, including amounts necessary to pay any federal, state or local taxes or any penalties reasonably anticipated to result from the hardship withdrawal.  The determination of the existence of a financial hardship and the amount required to be distributed to satisfy such hardship shall be made by the Administrator in a uniform and non-discriminatory manner according to the following rules:

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(1)  A financial hardship shall be deemed to exist if and only if the participant certifies that the financial need is on account of:

(A)  expenses for medical care described in section 213(d) of the Code previously incurred by the participant, the participant’s spouse, or any dependents (as defined in section 152 of the Code) of the participant or necessary for such persons to obtain medical care described in section 213(d) of the Code;

(B)  costs directly related to the purchase of a principal residence for the participant (excluding mortgage payments);

(C)  payment of tuition, room and board and related educational fees for the next 12 months of post-secondary education for the participant, the participant’s spouse or any dependents (as defined in section 152 of the Code) of the participant;

(D)  payments necessary to prevent the eviction of the participant from the participant’s principal residence or foreclosure of the mortgage on that residence; or

(E)  the occurrence of any other event determined by the Commissioner of Internal Revenue pursuant to Treasury Regulation § 1.401(k)-1(d)(2)(iv).

(2)  A distribution shall be treated as necessary to satisfy a financial need if and only if the participant certifies (and if the Administrator has no reason to believe that such certification is inaccurate) that such hardship cannot be relieved by or through:

(A)  reimbursement or compensation by insurance or otherwise;

(B)  cessation of Pre-Tax Contributions under the Plan;

(C)  reasonable liquidation of the participant’s assets (including assets of the participant’s spouse and minor children that are reasonably available to the participant), to the extent such liquidation would not itself cause an immediate and heavy financial need; or

(D)  other distributions or nontaxable (at the time of the loan) loans from this Plan or other plans maintained by an Employer or by another employer, or by borrowing from commercial sources on reasonable commercial terms.

(3)  The participant shall be required to submit any additional supporting documentation as may be requested by the Administrator or Recordkeeper.

(4)  Any hardship withdrawal pursuant to this Section 9.1(a) shall be in the form of a lump sum payment.

(5)  A participant may receive a hardship withdrawal pursuant to this Section 9.1(a) no more than once during any six-month period.

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(6)  Amounts distributed to a participant pursuant to this Section 9.1(a) shall be withdrawn first from the participant’s Pre-Tax Account, next from the vested portion of the participant’s Matching Account, next from the vested portion of the participant’s Special Bonus Account and then from the participant’s Profit Sharing Account, if any, and shall not be taken from the next source until the previous source has been depleted.

(7)  Notwithstanding any provision of the Plan to the contrary, a participant who receives a hardship withdrawal hereunder shall be prohibited from making any Pre-Tax Contributions under Section 4.1 and 4.3(a) and under all other plans of the Employers and Affiliates until the first payroll period commencing coincident with or next following the date which is six months after the date the hardship withdrawal was made (or such earlier date as may be permitted by applicable regulations promulgated by the U.S. Treasury Department).  Such a participant may elect to resume making Pre-Tax Contributions in accordance with the procedures set forth in Section 4.1.  For purposes of this paragraph, “all other plans of the Employers and Affiliates” shall include stock option plans, stock purchase plans, qualified and nonqualified deferred compensation plans, other than plans subject to section 409A of the Code (unless contributions to such plans are permitted to cease under U.S. Treasury regulations promulgated thereunder), and such other plans as may be designated under regulations promulgated by the U.S. Treasury Department, but shall not include health and welfare plans and the mandatory employee contribution portion of a defined benefit plan.

(b)Withdrawals From Account On or After Age 59½.  As of any Valuation Date, a Participant or Rexall Participant who has attained age 59½ may withdraw all or any portion of his or her Pre-Tax Account, and, in addition, fora Rexall Participant, all or any portion of his or her vested Matching Account and Profit Sharing Account.  A withdrawal made pursuant to this Section 9.1(b) shall be made at the participant’s election in any form of payment provided under Section 9.3(c).

(c)Withdrawals from Rollover Account.  As of any Valuation Date, a Participant or Rexall Participant may withdraw all or any portion of his or her Rollover Account.  Any withdrawal pursuant to this Section 9.1(c) shall be in the form of a lump sum payment.

(d)Conditions Applicable to All Withdrawals.  A Participant’s or Rexall Participant’s request for a withdrawal pursuant to this Section 9.1 shall be made at such time and in such manner as may be prescribed by the Administrator or Recordkeeper.  The amount available for withdrawal pursuant to this Section 9.1 shall be reduced by the amount of any loan

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made pursuant to Article 10 that is outstanding at the time of withdrawal.  The amount available for withdrawal under this Section 9.1 is subject to reduction in the sole discretion of the Administrator to take into account the investment experience of the Trust Fund between the date of the withdrawal election and the date of the withdrawal.

Section 9.2.Distribution of Account Upon Termination of Employment.  (a)    Termination of Employment under Circumstances Entitling Participant to Full Distribution of Account.  If a Participant’s or Rexall Participant’s employment with all Employers and Affiliates terminates under any of the following circumstances, then the participant or his or her designated Beneficiary, as the case may be, shall be entitled to receive the participant’s entire Account:

(1)  the participant’s death;

(2)  the participant’s Disability;

(3)  on or after the date the participant attains age 65; or

(4)  in the case of a Participant, on or after the date the Participant has completed at least three Years of Service; provided, however, that in the case ofa Participant employed by Solgar Inc. before January 1, 2006 who terminates employment on or before December 31, 2005, the word “three” shall be replaced with the word “five”; and

(5)  in the case of a Rexall Participant, on or after the date the Rexall Participant has completed at least three Years of Service.

(b)Termination of Employment under Circumstances Resulting in Partial Forfeiture of the Participant’s Account.  If a Participant’s or Rexall Participant’s employment with all Employers and Affiliates terminates under circumstances other than those set forth in Section 9.2(a), then the participant shall be entitled to receive the entire balance of the participant’s Pre-Tax Account and Rollover Account and:

(1)  In the case of a Participant who has completed less than three Years of Service as of the date of his or her termination of employment, such Participant shall forfeit the entire balances of his or her Matching Account and Special Bonus Account, if

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any.  Notwithstanding anything to the contrary contained herein, the following provisions shall apply on and before December 31, 2005 with respect to each Participant who is employed by Solgar, Inc.:  (i) if such an individual has completed less than two Years of Service, then such individual shall forfeit the entire balance of his or her Matching Account; (ii) if such an individual has completed two Years of Service but has not completed three Years of Service, then such individual shall be entitled to 25% of the balance of his or her Matching Account; (iii) if such an individual has completed three Years of Service but has not completed four Years of Service, then such individual shall be entitled to 50% of the balance of his or her Matching Account; (iv) if such an individual has completed four Years of Service but has not completed five Years of Service, then such individual shall be entitled to 75% of the balance of his or her Matching Account; and (v) if such an individual has completed five Years of Service as of the date of his or her termination of employment, then such individual shall be entitled to receive the entire balance of his or her Matching Account.  In addition, a Participant who is employed by Solgar, Inc. on December 31, 2005 and who has at least two Years of Service but less than three Years of Service shall never be entitled to less than 25% of his or her Matching Account.

(2)  In the case of a Rexall Participant who has a Profit Sharing Account, such Rexall Participant shall be entitled to receive all or a portion of his or her Profit Sharing Account.  If a Rexall Participant has completed one Year of Service but less than two Years of Service as of the date of his or her termination of employment, then such Rexall Participant shall be entitled to receive 33 % of his or her Matching Account.  If such Rexall Participant has completed two Years of Service but less than three Years of Service as of the date of his or her termination of employment, then such Rexall Participant shall be entitled to receive 66 % of his or her Matching Account.  If such Rexall Participant has completed three Years of Service as of the date of his or her termination of employment, then such Rexall Participant shall be entitled to receive the entire balance of his or her Matching Account.

In the event of the sale or disposition of a business or a sale of substantially all of the assets of a trade or business, a participant affected by such sale may be entitled to the entire balance of the participant’s Account, irrespective of the participant’s Years of Service, if expressly provided in the documents effecting the transaction or otherwise authorized by the Company.

Any portion of a participant’s Matching Account and Special Bonus Account that the participant is not entitled to receive pursuant to this Section 9.2(b) shall be charged to such accounts and forfeited as of the earlier of (i) the date the participant receives a distribution of his or her vested Account and (ii) the date the participant incurs five consecutive 1-Year Breaks in

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Service.  If a participant who receives a distribution of his or her vested Account, or is deemed to have received a distribution of his or her Account because he or she is not vested in any portion of his or her Account (including his or her Pre-Tax Account), is reemployed prior to incurring five consecutive 1-Year Breaks in Service, then any forfeiture shall be reinstated as prescribed in Section 12.2(b).

Section 9.3.Time and Form of Distribution of Account upon Termination of Employment.  (a)    In General.  A Participant or Rexall Participant shall be entitled to a distribution of his or her vested Account upon the participant’s termination of employment with all Employers and Affiliates.

(b)Time of Distribution.  A Participant or Rexall Participant shall be entitled to a distribution of his or her vested Account as soon as administratively practicable after the date of the participant’s termination of employment with the Employers and Affiliates, or may defer distribution to a later date; provided, however, that:

(i)a participant’s Account shall not be distributed prior to the participant’s 65^th birthday unless the participant has consented in writing to such distribution;

(ii)if a participant dies before the commencement of distribution of his or her Account, distributions paid or commencing after the participant’s death shall be completed no later than December 31 of the calendar year which contains the fifth anniversary of the participant’s death, except that (i) if the participant’s Beneficiary is the participant’s spouse, distribution may be deferred until December 31 of the calendar year in which the participant would have attained age 70½ and (ii) if the participant’s Beneficiary is a person other than the participant’s spouse and distributions commence on or before December 31 of the calendar year immediately following the calendar year in which the participant died, such distributions may be made over a period not longer than the life expectancy of such Beneficiary;

(iii)if at the time of a participant’s death, distribution of his or her Account has commenced, the remaining portion of the participant’s Account shall be paid at least as rapidly as under the method of distribution being used prior to the participant’s death, as determined pursuant to U.S. Treasury Regulation § 1.401(a)(9)-2;

(iv)unless a participant files a written election to defer distribution, distribution shall be made to a participant by payment in a single lump sum payment no

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later than 60 days after the end of the Plan Year which contains the latest of (i) the date of the participant’s termination of employment, (ii) the tenth anniversary of the date the participant commenced participation in the Plan and (iii) the participant’s 65th birthday; provided, however, that if the participant does not elect a distribution prior to the latest to occur of the events listed above, the participant shall be deemed to have elected to defer such distribution until a date no later than April 1 of the calendar year following the calendar year in which the participant attains age 70½; and

(v)with respect to a participant who continues in employment after attaining age 70½, distribution of the participant’s vested Account shall commence no later than the participant’s required beginning date.  For purposes of this paragraph, the term “required beginning date” shall mean (A) with respect to a participant who is a 5%-owner (within the meaning of section 416(i) of the Code), April 1 of the calendar year following the calendar year in which the participant attains age 70½ and (B) with respect to any other participant, April 1 of the calendar year following the calendar year in which the participant terminates employment with all Employers and Affiliates.  Distributions made under this paragraph shall be made in accordance with Section 9.3(c).  A participant is treated as a 5%-owner for purposes of this Section if such participant is a 5%-owner as defined in section 416(i) of the Code (determined in accordance with section 416 of the Code but without regard to whether the Plan is a top-heavy plan) at any time during the Plan Year in which such owner attains age 66½ or any subsequent year.  Once distributions have begun to a 5%-owner under this Section, they must continue to be distributed, even if he or she ceases to be a 5%-owner.

(c)Form and Method of Distribution.  Any distribution from an Account to which a Participant (or in the event of the participant’s death, his or her Beneficiary) becomes entitled upon the Participant’s termination of employment shall be distributed in cash, and any to which a Rexall Participant (or in the event of the participant’s death, his or her Beneficiary) becomes entitled upon the Rexall Participant’s termination of employment shall be distributed in cash or in kind, by whichever of the following methods the participant (or Beneficiary) elects:

(i)a lump sum;

(ii)substantially equal periodic installment payments, payable not less frequently than annually and not more frequently than monthly, over a period to be elected by the Participant (or Beneficiary); provided, however, that such period shall not exceed the life expectancy of the Participant or, to the extent permitted by Treasury Regulation § 1.401(a)(9)-5, the joint and last survivor expectancy of the Participant and the Participant’s Beneficiary;

(iii)a joint and 50% survivor annuity; or

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(iv)a joint and 100% survivor annuity.

A participant (or Beneficiary) may change his or her election with respect to the form of

distribution at any time before benefits commence.

Section 9.4.Distribution of ESOP Account.  (a)    No Withdrawals or Loans.  An ESOP Participant shall not be permitted to withdraw any portion of his or her ESOP Account while he or she remains in employment with an Employer or Affiliate or to take a loan on his or her ESOP Account at any time.

(b)Termination of Employment Under Circumstances Entitling ESOP Participant to Full Distribution of ESOP Account.  If an ESOP Participant’s employment with all Employers and Affiliates terminates under any of the following circumstances, then the ESOP Participant or his or her designated Beneficiary, as the case may be, shall be vested in and entitled to receive one hundred percent (100%) of the entire amount then in the ESOP Participant’s ESOP Account:

(i)the ESOP Participant’s death;

(ii)the ESOP Participant’s Disability; or

(iii)the ESOP Participant’s termination of employment after such ESOP Participant attained age 65, completed four Years of Service and completed 1000 Hours of Service after such four Years of Service.

In the event of the sale or disposition of a business or a sale of substantially all of the assets of a trade or business, an ESOP Participant affected by such sale may be entitled to the entire balance of his or her ESOP Account, irrespective of the ESOP Participant’s Years of Service, if expressly provided in the documents effecting the transaction or otherwise authorized by the Company.

(c)Other Termination of Employment.  If an ESOP Participant terminates employment with his or her Employer and is not vested in his or her ESOP Account, then such

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ESOP Participant shall be deemed to have received a distribution of his or her ESOP Account and the balance of the ESOP Account shall be forfeited.  If such former ESOP Participant is reemployed prior to incurring five consecutive 1-Year Breaks in Service, then any forfeiture shall be reinstated.

(d)Time of Distribution.  Unless an ESOP Participant elects otherwise (in accordance with the provisions set forth in Section 9.3(b)(ii)-(v), but as applied to an ESOP Account), the distribution of an ESOP Account shall commence no later than one year after the close of the Plan Year in which the ESOP Participant terminates employment with his or her Employer due to death, Disability or after the attainment of age 65 and completion of five Years of Service and no later than five years after the close of the Plan Year in which an ESOP Participant terminates employment for any other reason.

(e)Form and Method of Distribution.  Any distribution from an ESOP Account to which an ESOP Participant (or in the event of the participant’s death, his or her Beneficiary) becomes entitled shall be distributed in shares of NBTY Stock (or, with respect to assets other than NBTY Stock, in cash) in the form of a lump sum or in annual installments over a period not to exceed 15 years.  An ESOP Participant (or Beneficiary) may change his or her election with respect to the form of distribution at any time before benefits commence.  NBTY Stock shall be valued for distribution purposes at the closing price of NBTY Stock on an established securities market on the immediately preceding day on which NBTY Stock was traded.

(f)Put Option.  If, and only if, NBTY Stock is not readily tradable on an established market, then any ESOP Participant who is otherwise entitled to a distribution of NBTY Stock under the Plan shall have the right (hereinafter referred to as “Put Option”) to require that his or her Employer or the Company repurchase any NBTY Stock under a fair

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valuation formula established by the independent appraiser appointed.  The Put Option shall only be exercisable during the sixty (60) day period immediately following the date of distribution and if the Put Option is not exercised within such sixty (60) days period, then it can be exercised for an additional period of sixty (60) days in the following Plan Year.  This Put Option shall be non-terminable within the meaning of U.S. Treasury regulation § 54.4975-11(a)(ii).

The amount paid for NBTY Stock under the Put Option shall be paid in substantially equal period payments (not less frequently than annually) over a period beginning not later than thirty (30) days after the exercise of the Put Option and not exceeding five (5) years.  There shall be adequate security provided and reasonable interest paid on any unpaid balance.

Section 9.5.Payment of Small Account Balances.  Notwithstanding any provision of Section 9.3 or 9.4 to the contrary and subject to Section 9.7, if the aggregate value of an individual’s Account and his or her ESOP Account at any time following his or her termination of employment does not exceed $1,000, then such amount shall be distributed in a lump sum payment to the participant, the ESOP Participant or his or her Beneficiary, as the case may be.  The distributions of such amounts shall be made at the time determined by the Administrator and the Recordkeeper.

Section 9.6.Order of Distribution.  Any distribution pursuant to Section 9.2 shall be charged against a participant’s contribution and investment subaccounts in the order determined by the Administrator or Recordkeeper.

Section 9.7.Direct Rollover Option.  In the case of a distribution that is an “eligible rollover distribution” within the meaning of section 402(c)(4) of the Code, a Participant, Rexall Participant, ESOP Participant, a Beneficiary who is a surviving spouse of a

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participant or an ESOP Participant, or a spouse or former spouse of a participant or an ESOP Participant who is an alternate payee under a qualified domestic relations order, as defined in section 414(p) of the Code, may elect that all or any portion of such distribution to which he or she is entitled shall be directly transferred from the Plan to (i) an individual retirement account or annuity described in section 408(a) or (b) of the Code, or (ii) if the terms of which permit the acceptance of eligible rollover distributions, to another retirement plan qualified under section 401(a) of the Code, to a qualified annuity plan described in section 403(a) of the Code, to an annuity contract described in section 403(b) of the Code or to an eligible plan under section 457(b) of the Code which is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state and which agrees to account separately for amounts transferred into such plan from this Plan.

Section 9.8.Designation of Beneficiary.  (a)    In General.  Each Participant, Rexall Participant and ESOP Participant shall have the right to designate a Beneficiary or Beneficiaries (who may be designated contingently or successively and that may be an entity other than a natural person) to receive any distribution to be made under this Article upon the death of such participant or ESOP Participant or, in the case of a participant or ESOP Participant who dies after his or her termination of employment but prior to the distribution of the entire amount to which he or she is entitled under the Plan, any undistributed balance to which he or she would have been entitled.  No such designation of a Beneficiary other than a participant’s or ESOP Participant’s

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spouse shall be effective if the participant was married through the one-year period ending on the date of his or her death unless such designation was consented to in writing (or by such other method permitted by the Internal Revenue Service) at the time of such designation by the person who was the participant’s or ESOP Participant’s spouse during such period, acknowledging the effect of such consent and witnessed by a notary public or a Plan representative, or it is established to the satisfaction of the Administrator or Recordkeeper that such consent could not be obtained because such spouse could not be located or because of the existence of other circumstances as the Secretary of the Treasury may prescribe as excusing the requirement of such consent.  Subject to the immediately preceding sentence, a participant or ESOP Participant may from time to time, without the consent of any Beneficiary, change or cancel any such designation.  Such designation and each change thereof shall be made in the manner prescribed by the Administrator and shall be filed with the Administrator or Recordkeeper.  If (i) no Beneficiary has been named by a deceased participant or ESOP Participant or (ii) a Beneficiary designation is not effective pursuant to the second sentence of this section, any undistributed Account of the deceased shall be distributed by the Trustee (a) to the surviving spouse of the deceased, if any, (b) if there is no surviving spouse, to the then living descendants, if any, of the deceased, per stirpes, or (c) if there is no surviving spouse and there are no living descendants, to the executor or administrator of the estate of the deceased.  Unless otherwise set forth in the applicable beneficiary designation form or the instructions thereto, if a Beneficiary predeceases the participant or ESOP Participant, then any undistributed Account of the deceased shall be distributed by the Trustee in the order prescribed by the immediately preceding sentence.

(b)Successor Beneficiaries.  A Beneficiary who has been designated in accordance with Section 9.8(a) may name a successor beneficiary or beneficiaries in the manner prescribed by the Administrator or Recordkeeper.  Unless otherwise set forth in the applicable form pursuant to which a participant or ESOP Participant designates a Beneficiary or the instructions thereto, if such Beneficiary dies after the participant or ESOP Participant and before

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distribution of the entire amount of the benefit under the Plan in which the Beneficiary has an interest, then any remaining amount shall be distributed, as soon as practicable after the death of such Beneficiary, in the form of a lump sum payment to the successor beneficiary or beneficiaries or, if there is no such successor beneficiary, to the executor or administrator of the estate of such deceased Beneficiary.

Section 9.9.Missing Persons.  If following the date on which Participant’s or Rexall Participant’s Account may be distributed without the participant’s consent pursuant to Section 9.3(b) or 9.5 or an ESOP Participant’s ESOP Account may be distributed without his or her consent pursuant to Section 9.4(c) or 9.5, the Administrator or Recordkeeper in the exercise of reasonable diligence has been unable to locate the person or persons entitled to the participant’s Account or his or her ESOP Account (after sending a registered letter, return receipt requested, to the last know and address, and after utilizing certified mail, checking records of related employee benefit plans maintained by the Company, contacting such designated Beneficiaries, and using a letter forwarding service (of the Internal Revenue Service or Social Security Administration) and any further effort deemed prudent by the Administratoror Recordkeeperto ascertain the whereabouts of such participant, ESOP Participant or Beneficiary), then the participant’s Account or his or her ESOP Account, as the case may be, shall be forfeited; provided, however, that to the extent required by law the Plan shall reinstate and pay to such person or persons the amount so forfeited upon a claim for such amount made by such person or persons.  The amount to be so reinstated shall be obtained from the total amount that shall have been forfeited pursuant to this Section and Sections 9.3(b) and 9.4(c) during the Plan Year that the claim for such forfeited benefit is made, and shall not include any earnings or losses from the date of the forfeiture under this Section.  If the amount to be

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reinstated exceeds the amount of such forfeitures, an Employer shall make a contribution in an amount equal to such Employer’s pro-rata share of such excess.  An Employer’s pro rata share shall be determined by multiplying the amount of such forfeitures by a fraction, the numerator of which is equal to the number of Associates employed by such Employer who made a claim for such forfeited benefits and the denominator of which is the number of all Associates who made a claim for such forfeited benefits.  To the extent the forfeitures under this Section exceed any claims for forfeited benefits made pursuant to this Section, such excess shall be applied in accordance with Section 8.8.

Section 9.10.Distributions to Minor and Disabled Distributees.  Any distribution that is payable to a distributee who is a minor or to a distributee who has been legally determined to be unable to manage his or her affairs by reason of illness or mental incompetency may be made to, or for the benefit of, any such distributee at such time consistent with the provisions of this Plan and in such of the following ways as the legal representative of such distributee shall direct:  (a) directly to any such minor distributee if, in the opinion of such legal representative, such minor is able to manage his or her affairs, (b) to such legal representative, (c) to a custodian under a Uniform Gifts to Minors Act for any such minor distributee, or (d) as otherwise directed by such legal representative.  Neither the Administrator nor the Trustee shall be required to oversee the application by any third party other than the legal representative of a distributee of any distribution made to or for the benefit of such distributee pursuant to this Section.

ARTICLE 10

LOANS

Section 10.1.Making of Loans.  Subject to the provisions of this Article 10, the Recordkeeper shall establish a loan program whereby any Participant or Rexall Participant who

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is an Associate and who has no outstanding loans may request, by such method prescribed by the Recordkeeper, to borrow funds from the participant’s Account.  The principal balance of such loan, shall not exceed the lesser of:

(a)$50,000 less the highest outstanding principal during the previous 12 months; and

(b)fifty percent (50%) of the vested portion of the participant’s Account, excluding his or her ESOP Account, as of the Valuation Date coinciding with or immediately preceding the date on which the loan is made.

Section 10.2.Restrictions.  An application for a loan shall be made at the time and in the manner prescribed by the Recordkeeper.  The action of the Recordkeeper in approving or disapproving a request for a loan shall be final.  Any loan under the Plan shall be subject to the terms, conditions and restrictions set forth in the loan program established by the Recordkeeper.  The minimum loan amount is $1,000.  A Participant or Rexall Participant may have only one loan outstanding at any given time.  Notwithstanding anything herein to the contrary, a Participant who was performing services for Solgar, Inc. before January 1, 2006 may request to have a maximum of four regular loans and one home loan outstanding at any given time; provided, however, that each such loan must have been requested before January 1, 2006.

Section 10.3.Default.  If any loan or portion of a loan made to a Participant or a Rexall Participant under the Plan, together with the accrued interest thereon, is in default, the Trustee, upon direction from the Administrator, shall take appropriate steps to collect the outstanding balance of the loan and to foreclose on the security; provided, however, that the Trustee shall not levy against any portion of such a participant’s Account until such time as a

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distribution from such Account otherwise could be made under the Plan.  Default shall occur (i) if the participant fails to make any scheduled loan payment when due or within 90 days thereafter (or within such other grace period as permitted under applicable law and by the Administrator) or (ii) upon the occurrence of any other event that is considered a default event under the loan program established by the Recordkeeper.  On the date a participant is entitled to receive a distribution of his or her Account pursuant to Article 9, any defaulted loan or portion thereof, together with the accrued interest thereon, shall be charged to the participant’s Account after all other adjustments required under the Plan, but before any distribution pursuant to Article 9.

Section 10.4.Applicability.  Notwithstanding the foregoing, for purposes of this Article 10, any participant or Beneficiary who is a “party in interest” as defined in section 3(14) of ERISA may apply for a loan from his or her Account under the Plan, regardless of such participant’s or Beneficiary’s employment status.  As a condition of receiving such a loan, such a participant or Beneficiary who is not an Associate shall consent to have such loan repaid in substantially equal installments at the times and in the manner determined by the Administrator, but not less frequently than quarterly.

ARTICLE 11

ESOP LOANS

The Administrator may direct the Trustee to incur a loan on behalf of the Trust in a manner and under conditions which will cause the loan to be an “exempt loan” within the meaning of section 4975(d)(2) of the Code and Treasury regulations promulgated thereunder.  A loan shall be used primarily for the benefit of ESOP Participants and their Beneficiaries.  The proceeds of such loan shall be used, within a reasonable time after the loan is obtained, only to purchase NBTY Stock, to repay the loan or to repay any prior loan.  Any such loan shall provide

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for a reasonable rate of interest, an ascertainable period of maturity and shall be without recourse against the Plan.  Any such loan shall be secured solely by shares of NBTY Stock acquired with the proceeds of the loan and shares of such stock that were used as collateral on a prior loan which was repaid with the proceeds of the current loan.  Such stock pledged as collateral shall be placed in an ESOP Suspense Account and released pursuant to the next paragraph as the loan is repaid.  NBTY Stock released from the ESOP Suspense Account shall be allocated in the manner described in Section 8.6.  No person entitled to payment under a loan made pursuant to this Section shall have recourse against any Trust fund assets other than the stock used as collateral for the loan, Company contributions of cash that are available to meet obligations under the loan and earnings attributable to such collateral and the investment of such contributions.  Contributions made under Article 5 with respect to any Plan Year during which the loan remains unpaid, and earnings on such contributions, shall be deemed available to meet obligations under the loan, unless otherwise provided by the Company at the time such contribution is made.

Any pledge of NBTY Stock as collateral under this Section shall provide for the release of shares so pledged upon the payment of any portion of the loan.  Shares so pledged shall be released in the proportion that the principal and interest paid on the loan for the Plan Year bears to the aggregate principal and interest paid for the current Plan Year and each Plan Year thereafter, as provided in U.S. Treasury Regulation § 54.4975-7(b)(8).

Payments of principal and interest on any loan under this Section shall be made by the Trustee at the direction of the Administrator solely from:  (i) contributions under Article 5 available to meet obligations under the loan, (ii) earnings form the investment of such contributions, (iii) earning attributable to stock pledged as collateral for the loan, (iv) the proceeds of a subsequent loan made to repay the loan, and (v) the proceeds of the sale of any

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stock pledged as collateral for the loan.  The contributions and earnings available to pay the loan must be accounted for separately by the Administrator until the loan is repaid.

Subject to the limitations of Section 6.3 on annual additions to an ESOP Participant’s Account, assets released from an ESOP Suspense Account by reason of payment made on a loan shall be allocated immediately upon such payment to the accounts of all ESOP Participants who then would be entitled to an allocation of contributions if such payment had been made on the last day of the Plan Year.

ARTICLE 12

SPECIAL PARTICIPATION AND DISTRIBUTION RULES

Section 12.1.Change of Employment Status.  If an Associate who is not an Eligible Associate or Eligible Rexall Associate becomes an Eligible Associate, then the Associate shall become a Participant (i) as of the date such Associate becomes an Eligible Associate, if the Associate then has satisfied the service requirement set forth in Section 3.1, or (ii) as of the date the Associate satisfies the service requirement set forth in Section 3.1.  If an Eligible Rexall Associate becomes an Associate of an Employer other than Rexall Sundown, Inc. or any subsidiary thereof, then such Associate shall become Participant (i) as of the date the Associate becomes an Eligible Associate, if the Associate then has satisfied the service requirement set forth in Section 3.1, or (ii) as of the date the Associate satisfies the service requirement set forth in Section 3.1.

Section 12.2.Reemployment.  (a)    Participation.  If an Associate whose employment with all Employers terminates before the Associate satisfied the service requirement set forth in Section 3.1(a) is reemployed by an Employer, the Associate’s prior service shall be disregarded.  If an Associate whose employment with all Employers terminated before the Associate satisfied the service requirement set forth in Section 3.1(b) is reemployed

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by an Employer, the Associate’s prior service shall be disregarded for purposes of the employees’ stock ownership provisions of the Plan.  If an individual who satisfied the service requirement set forth in Section 3.1(a) or (b) but who terminated employment before the first day of the month following the month in which such service requirement was satisfied is reemployed as an Eligible Associate before a 1-Year Break in Service has occurred, then such individual again shall become a participant or an ESOP Participant (or both) pursuant to Section 3.1(a) or (b), as applicable, as of the date of his or her reemployment or, if later, the date he or she would otherwise have been eligible to participate in the Plan pursuant to Section 3.1(a) or (b), as applicable, had he or she not terminated employment.  If an individual who was a participant terminated employment with an Employer and is reemployed by an Employer, the individual shall be eligible to participate as a Participant as of the first day of the month coinciding with or next following on or after his or her reemployment date.  If an individual who was an ESOP Participant terminated employment with his or her Employer and is reemployed by an Employer, then the individual shall again become an ESOP Participant as of the January 1^st or July 1^st coincident with or next followinghis or her reemployment date.  If a participant or ESOP Participant whose employment with the Employers is terminated is receiving installment payments pursuant to Section 9.3(c) or Section 9.4, such payments shall be suspended upon such participant’s or ESOP Participant’s reemployment unless he or she has attained age 59½ on or before the date of such reemployment.

(b)Restoration of Forfeitures.  If a Participant, Rexall Participant or ESOP Participant whose employment with the Employers is terminated is reemployed prior to incurring five consecutive 1-Year Breaks in Service, and, at or after his or her termination of employment, any portion of his or her accounts was forfeited pursuant to Section 9.2(b) or Section 9.4(c), then

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an amount equal to the portion of his or her accounts that was forfeited shall be credited to his or her accounts as soon as administratively practicable after he or she is reemployed.  Any amount to be restored pursuant to this subsection shall be obtained from the total amounts that have been forfeited pursuant to Sections 9.2(b), 9.4(c) and 9.9, as applicable, during the Plan Year in which such participant or ESOP Participant is reemployed from the Accounts and ESOP Accounts, as applicable, of participants and ESOP Participants employed by the same Employer as the reemployed participant or ESOP Participant, as the case may be.  If the aggregate amount to be so restored to the Accounts and ESOP Accounts of participants and ESOP Participants who are Associates of a particular Employer exceeds the amount of such applicable forfeitures, such Employer shall make a contribution in an amount equal to the excess.  Any such contribution shall be made regardless of whether the limitations set forth in Article 6 will be exceeded by such contribution.

(c)Service.  In the case of a participant or ESOP Participant who was vested when his or her employment with the Employers and Affiliates terminated, any service attributable to the his or her prior period of employment shall be reinstated as of the date of his or her reparticipation. In the case of an Associate who was not a participant or ESOP Participant during his or her prior period of employment or in the case of a participant or ESOP Participant who was not fully vested when his or her prior period of employment terminated, any service attributable to his or her prior period of employment with the Employers and Affiliates shall not be cancelled unless one of the following is applicable:  (A) the number of his or her consecutive years of 1-Year Breaks in Service was less than the aggregate number of Years of Service earned before his or her first 1-Year Break in Service (determined without regard to whether participation in the Plan had commenced); (B) the Associate’s 1-Year Break(s) in Service

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commenced on or after May 1, 1986 and the number of his or her consecutive years of 1-Year Breaks in Service was less than five (5); (C) the Associate’s 1-Year Breaks in Services commenced on or after May 1, l986 due to a “maternity or paternity leave of absence” and the number of his or her consecutive years of 1-Year Breaks in Service was less than the aggregate number of years in his or her pre-break Service plus one year (considering Service determined without regard to whether participation in the Plan had commenced); or (D) the Associate’s 1-Year Breaks in Service commenced on or after May 1, l986 due to a “maternity or a paternity leave of absence” and the number of his or her consecutive years of 1-Year Breaks in Service was less than six (6).

Section 12.3.Employment by Affiliates.  If an individual is employed by an Affiliate that is not an Employer, then any period of employment with such Affiliate shall be taken into account under the Plan solely for the purposes of (i) measuring such individual’s Hours of Service and Years of Service and (ii) determining when such individual has terminated his or her employment for purposes of the Plan, to the same extent it would have been had such period of employment been as an Associate.

Section 12.4.Reemployment of Veterans.  (a)  In General.  The provisions of this Section shall apply in the case of the reemployment by an Employer of an Associate, within the period prescribed by USERRA, after the Associate’s completion of a period of Qualified Military Service.  The provisions of the Plan are intended to provide such an individual with the rights required by USERRA and section 414(u) of the Code, and shall be interpreted in accordance with such intent.

(b)Make-Up of Pre-Tax Contributions.  Such an Eligible Associate or Eligible Rexall Associate described in Section 12.4(a) shall be entitled to make contributions under the

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Plan (“make-up participant contributions”), in addition to any Pre-Tax Contribution which he or she elects to have made under the Plan pursuant to Section 4.1 or 4.3(a).  From time to time while employed by an Employer, such Eligible Associate or Eligible Rexall Associate may elect to contribute such make-up participant contributions during the period beginning on the date of his or her reemployment and ending on the earlier of:

(i)the end of the period equal to the product of three and such period of Qualified Military Service, and

(ii)the fifth anniversary of the date of such reemployment.  Such Eligible Associate or Eligible Rexall Associate shall not be permitted to contribute make-up participant contributions to the Plan in excess of the amount which such individual could have elected to have made under the Plan in the form of Pre-Tax Contributions if he or she had continued in active employment with his or her Employer during such period of Qualified Military Service.  The manner in which an Eligible Associate or Eligible Rexall Associate may elect to contribute make-up participant contributions pursuant to this subsection (b) shall be prescribed by the Administrator or Recordkeeper.

(c)Make-Up of Matching Contributions.  An Eligible Associate or Eligible Rexall Associate who contributes make-up participant contributions as described in subsection (b) of this Section shall be entitled to an allocation of Matching Contributions to his or her Account in an amount equal to the amount of Matching Contributions that would have been allocated to his or her Account during the period of Qualified Military Service if such make-up participant contributions had been made in the form of Pre-Tax Contributions during such period.  The amount necessary to make such allocation of Matching Contributions shall be derived from forfeitures during the Plan Year in which such Matching Contributions are made,

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and if such forfeitures are not sufficient for this purpose, then the Eligible Associate’s or Eligible Rexall Associate’s Employer shall make a special contribution to the Plan which shall be utilized solely for purposes of such allocation.

(d)Miscellaneous Rules Regarding Make-Up Contributions.  For purposes of determining the amount of contributions to be made under this Section, an individual’s “Compensation” during any period of Qualified Military Service shall be determined in accordance with section 414(u) of the Code.  Any contributions made by an Eligible Associate, an Eligible Rexall Associate or an Employer pursuant to this Section on account of a period of Qualified Military Service in a prior Plan Year shall not be subject to the limitations prescribed by Sections 6.1, 6.3 and 6.4 of the Plan (relating to sections 402(g), 415, and 404 of the Code) for the Plan Year in which such contributions are made.  The Plan shall not be treated as failing to satisfy the nondiscrimination rules of Section 6.2 of the Plan (relating to sections 401(k)(3) and 401(m) of the Code) for any Plan Year solely on account of any make-up contributions made by an Eligible Associate, an Eligible Rexall Associate or an Employer pursuant to this Section.

(e)Suspension of Loan Repayments.  Loan repayments may be suspended under the Plan as permitted under section 414(u) of the Code.

ARTICLE 13

ADMINISTRATION

Section 13.1.The Administrator.  (a)    The Administrator shall be the “administrator” of the Plan within the meaning of such term as used in ERISA and shall be responsible for the administration of the Plan.

(b)No individual employed by the Administrator who is a Participant, Rexall Participant or ESOP Participant shall take part in any action of the Administrator or any matter involving solely his or her rights under the Plan.

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(c)The Administrator shall have the duty and authority to interpret and construe, in its sole discretion, the terms of the Plan in all respects, including, but not limited to, all questions of eligibility, the status and rights of Participants, Rexall Participants and ESOP Participants, distributees and other persons under the Plan, and the manner, time and amount of payment of any distribution under the Plan. All determinations and actions of the Administrator shall be conclusive and binding upon all affected parties, except that the Administrator may revoke or modify a determination or action that it determines to have been in error.  Benefits will be paid under the Plan only if the Administrator decides in its sole discretion that the applicant is entitled to the benefits.

(d)The Administrator shall direct the Trustee to make payments of amounts to be distributed from the Trust under Article 9.

(e)The Administrator may adopt such rules, regulations, and procedures as it deems necessary for the conduct of its affairs and the administration of the Plan, provided that any such rules, regulations, and procedures shall be consistent with the provisions of the Plan and ERISA, and such rules, regulations, and procedures shall be binding upon all participants and Beneficiaries.

(f)The Administrator shall discharge its duties as administrator with respect to the Plan (i) solely in the interest of the participants and Beneficiaries, (ii) for the exclusive purpose of providing benefits to the participants and Beneficiaries and of defraying reasonable expenses of administering the Plan and (iii) with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims.  The Employers hereby jointly and severally indemnifies and holds harmless the Trustee from the

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effects and consequences of its acts, omissions and conduct in its official capacity, except to the extent that such effects and consequences result from its own willful or gross misconduct or criminal acts.

Section 13.2.Named Fiduciary.  The Company shall be a “named fiduciary” of the Plan within the meaning of such term as used in ERISA solely with respect to its powers specifically set forth herein.

Section 13.3.Allocation and Delegation of Responsibilities.  The Administrator, the Company, and any Employer may allocate their responsibilities and may delegate to any person, partnership, corporation or a committee to carry out any of their responsibilities with respect to the Plan.  Any such allocation or designation shall be in writing and shall be kept with the records of the Plan.

Section 13.4.Professional and Other Services.  Each of the Administrator, the Company, and the Employers may employ counsel (who may be counsel for an Employer), specialists, advisers, and agents (including non-fiduciaries) to advise it and its agents or delegates and may arrange for clerical and other services as the Administrator, the Company or the Employer and its agents may require in carrying out its duties hereunder.  The Trustee may compensate such agents or advisers from the assets of the Plan as fiduciary expenses (but not including any business (settlor) expenses of an Employer) to the extent not paid by any Employer.

Section 13.5.Claims Procedure.  Any Participant, Rexall Participant, ESOP Participant or distributee (or his or her duly authorized representative) who believes he or she is entitled to benefits in an amount greater than those which he or she has been notified he or she is entitled to receive, is receiving or has received may file a claim with the Administrator.  Such

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a claim shall be in writing and state the nature of the claim, the facts supporting the claim, the amount claimed and the address of the claimant.  The Administrator shall review the claim and, within 90 days after receipt of the claim, give written notice to the claimant of its decision with respect to the claim.  If special circumstances require an extension of time, the claimant shall be so advised in writing or by electronic means within the initial 90-day period and in no event shall such an extension exceed 90 days.  The notice of the decision of the Administrator with respect to the claim shall be written in a manner calculated to be understood by the claimant and, if the claim is wholly or partially denied, shall set forth the specific reasons for the denial, specific references to the pertinent Plan provisions on which the denial is based, a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary, and an explanation of the claim review procedure under the Plan and the time limits applicable to such procedure (including a statement of the claimant’s right to bring a civil action under section 502(a) of ERISA following the final denial of a claim).

The claimant (or his or her duly authorized representative) may request a hearing of the denial by filing with the Administrator a written request for such hearing within 60 days after notice of the denial has been received by the claimant.  Within the same 60-day period, the claimant may submit to the Administrator written comments, documents, records and other information relating to the claim.  Upon request and free of charge, the claimant also may have reasonable access to, and copies of, documents, records and other information relevant to the claim.  If a request for review is so filed, then the Administrator shall then conduct a hearing within the same 60-day period, at which the claimant may be represented by an attorney or any other representative of such claimant’s choosing and expense and at which the claimant shall

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have an opportunity to submit written and oral evidence and arguments in support of the claim.  At the hearing (or prior thereto upon five (5) business days’ written notice to the Administrator) the claimant or the claimant’s representative shall have an opportunity to review all documents in the possession of the Administrator which are pertinent to the claim at issue and its disallowance.  Either the claimant or the Administrator may cause a court reporter to attend the hearing and record the proceedings.  In such event, a complete written transcript of the proceedings shall be furnished to both parties by the court reporter.  The full expense of any such court reporter and such transcripts shall be borne by the party who requests or requested the court reporter to attend the hearing.  A final, written decision as to the allowance of the claim shall be made by the Administrator within sixty (60) days of receipt of the appeal request unless special circumstances require an extension of time provided that the delay and the special circumstances are communicated in writing to the claimant within the 60-day period.  If the appeal of the claim is wholly or partially denied, the notice of the Administrator’s final decision shall include specific reasons for the denial, specific references to the pertinent Plan provisions on which the denial is based and a statement that the claimant is entitled, upon request and free of charge, to reasonable access to, and copies of, all relevant documents, records and information.  The notice shall be written in a manner calculated to be understood by the claimant and shall notify the claimant of his or her right to bring a civil action under section 502(a) of ERISA.  The claimant must file a civil action with respect to the denied claim not later than one hundred eighty (180) days following the date of the Administrator’s final determination.

In making determinations regarding claims for benefits, the Administrator shall consider all of the relevant facts and circumstances, including, without limitation, governing plan documents, consistent application of Plan provisions with respect to similarly situated claimants

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and any comments, documents, records and other information with respect to the claim submitted by the claimant (the “Claimant’s Submissions”).  The Claimant’s Submissions shall be considered by the Administrator without regard to whether the Claimant’s Submissions were submitted or considered by the Administrator in the initial benefit determination.

Section 13.6.Notices to Participants, Etc.  All notices, reports and statements given, made, delivered or transmitted to a participant, ESOP Participant or distributee or any other person entitled to or claiming benefits under the Plan shall be deemed to have been duly given, made, delivered or transmitted when provided via such written or other means as may be permitted by applicable regulations promulgated by the U.S. Treasury Department.  A participant, ESOP Participant, distributee or other person may record any change of his or her address by written notice filed with his or her Employer.

Section 13.7.Notices to Administrator or Employers.  Written directions and notices and other written or electronic communications from participants, ESOP Participants, distributees or other persons entitled to or claiming benefits under the Plan to the Administrator or the Employers shall be deemed to have been duly given, made, delivered or transmitted when given, made, delivered or transmitted in the manner and to the location prescribed by the Administrator or the Employers for the giving of such directions, notices and other communications.

Section 13.8.Records.  The Administrator shall keep a record of all of its proceedings with respect to the Plan and shall keep or cause to be kept all books of account, records and other data as may be necessary or advisable in its judgment for the administration of the Plan.

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Section 13.9.Reports of Trustee and Accounting to Participants.  The Administrator shall keep on file, in such form as it shall deem convenient and proper, all reports concerning the Trust Fund received by it from the Trustee, and, as soon as practicable after the close of each Plan Year, each participant, ESOP Participant and Beneficiary shall be provided a written benefit statement indicating the balance credited to any Account for such individual as of the close of such Plan Year.  Any participant, ESOP Participant or Beneficiary claiming that an error has been made with respect to such balance shall notify the Administrator in writing within ninety (90) days following the delivery of such benefit statement.  If no notice of error timely is provided, the benefit statement shall be presumed to be correct.

ARTICLE 14

PARTICIPATION BY EMPLOYERS

Section 14.1.Adoption of Plan.  With the consent of the Company, any entity may become an Employer under the Plan by (a) taking such action as shall be necessary to adopt the Plan and (b) executing and delivering such instruments and taking such other action as may be necessary or desirable to put the Plan and Trust into effect with respect to such entity, as prescribed by the Administrator.  The powers and control of the Company, as provided in the Plan and the trust agreement, shall not be diminished by reason of participation of any such adopting entity in the Plan.

Section 14.2.Withdrawal from Participation.  An Employer may withdraw from participation in the Plan at any time by filing with the Company a duly certified copy of a written instrument duly adopted by an Employer to that effect and giving notice of its intended withdrawal to the Company, the Employers and the Trustee prior to the effective date of withdrawal.

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Section 14.3.Company, Administrator and Recordkeeper as Agents for Employers.  Each entity which becomes an Employer pursuant to Section 14.1 or Section 14.4 by so doing shall be deemed to have appointed the Company, the Administrator and the Recordkeeper as its agents to exercise on its behalf all of the powers and authorities conferred upon the Company, the Administrator and the Recordkeeper by the terms of the Plan.  The authority of the Company, the Administrator and the Recordkeeper to act as such agent shall continue unless and until the portion of the Trust Fund held for the benefit of Associates of the particular Employer and their Beneficiaries is set aside in a separate Trust Fund as provided in Section 17.2.

Section 14.4.Continuance by a Successor.  In the event that an Employer other than the Company is reorganized by way of merger, consolidation, transfer of assets or otherwise, so that another entity other than an Employer succeeds to all or substantially all of such Employer’s business, such successor entity may, with the consent of the Company, be substituted for such Employer under the Plan by adopting the Plan.  Contributions by such Employer automatically shall be suspended from the effective date of any such reorganization until the date upon which the substitution of such successor entity for an Employer under the Plan becomes effective.  If, within 90 days following the effective date of any such reorganization, such successor entity shall not have elected to adopt the Plan, the Company fails to consent to such adoption, or an Employer adopts a plan of complete liquidation other than in connection with a reorganization, the Plan automatically shall be terminated with respect to employees of such Employer as of the close of business on the 90th day following the effective date of such reorganization or as of the close of business on the date of adoption of such plan of complete liquidation, as the case may be, and the Administrator shall direct the Trustee to

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distribute the portion of the Trust Fund applicable to such Employer in the manner provided in Section 17.3.

If such successor entity is substituted for an Employer as described above, then, for all purposes of the Plan, employment of each Associate with such Employer, including service with and compensation paid by such Employer, shall be considered to be employment with such successor entity.

ARTICLE 15

MISCELLANEOUS

Section 15.1.Expenses.  All costs and expenses of administering the Plan and the Trust, including the expenses of Employer and the Administrator, the fees of counsel and of any agents for an Employer, investment advisory and record keeping fees, the fees and expenses of the Trustee, the fees of counsel for the Trustee and other administrative expenses, shall be paid out of the Trust Fund unless paid by an Employer.  The Administrator, in its sole discretion, having regard to the nature of a particular expense, shall determine the portion of such expense that is to be borne by each Employer.  An Employer may seek reimbursement of any expense paid by such Employer that the Administrator determines is properly payable from the Trust Fund.  Until paid, expenses shall constitute a liability of the Plan.

Section 15.2.Non-Assignability.

(a)In General.  No right or interest of any participant, ESOP Participant or Beneficiary in the Plan shall be assignable or transferable in whole or in part, either directly or by operation of law or otherwise, including, but not by way of limitation, execution, levy, garnishment, attachment, pledge or bankruptcy, but excluding devolution by death or mental incompetency, and any attempt to do so shall be void, and no right or interest of any participant, ESOP Participant or Beneficiary in the Plan shall be liable for, or subject to, any obligation or

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liability of such participant, ESOP Participant or Beneficiary, including claims for alimony or the support of any spouse, except as provided below.

(b)Exception for Qualified Domestic Relations Orders.  Notwithstanding any provision of the Plan to the contrary, if a participant’s Account or an ESOP Participant’s ESOP Account under the Plan, or any portion thereof, is the subject of one or more qualified domestic relations orders (as defined in section 414(p) of the Code), such Account or ESOP Account or portion of either shall be paid to the individual, at the time and in the manner specified in any such order.  The Administrator shall adopt rules and procedures, in accordance with section 414(p) of the Code, relating to its (i) review of any domestic relations order for purposes of determining whether the order is a qualified domestic relations order and (ii) administration of a qualified domestic relations order.  A domestic relations order shall not fail to constitute a qualified domestic relations order solely because such order provides for distribution to an alternate payee of the benefit assigned to the alternate payee under the Plan prior to the applicable participant’s or ESOP Participant’s earliest retirement age (as defined in section 414(p) of the Code) under the Plan.

(c)Other Exception.  Notwithstanding any provision of the Plan to the contrary, if a participant or ESOP Participant is ordered or required to pay an amount to the Plan pursuant to (i) a judgment in a criminal action, (ii) a civil judgment in connection with a violation (or alleged violation) of Part 4 of Subtitle B of Title I of ERISA or (iii) a settlement agreement between the Secretary of Labor and the participant or ESOP Participant or the Pension Benefit Guaranty Corporation and the participant or ESOP Participant in connection with a violation (or alleged violation) of Part 4 of Subtitle B of Title I of ERISA, the participant’s Account or his or

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her ESOP Account, as the case may be, may, to the extent permitted by law, be offset by such amount.

Section 15.3.Employment Non-Contractual.  The Plan confers no right upon an Associate to continue in employment.

Section 15.4.Merger or Consolidation with Another Plan.  A merger or consolidation with, or transfer of assets or liabilities to, any other plan shall not be effected unless the terms of such merger, consolidation or transfer are such that each participant, ESOP Participant, distributee, Beneficiary or other person entitled to receive benefits from the Plan would, if the Plan were to terminate immediately after the merger, consolidation or transfer, receive a benefit equal to or greater than the benefit such person would be entitled to receive if the Plan were to terminate immediately before the merger, consolidation, or transfer.

Section 15.5.Gender and Plurals.  Wherever used in the Plan, words in the masculine gender shall include the masculine or feminine gender, and, unless the context otherwise requires, words in the singular shall include the plural, and words in the plural shall include the singular.

Section 15.6.Applicable Law.  The Plan and all rights hereunder shall be governed by and construed in accordance with the laws of New York to the extent such laws have not been preempted by applicable federal law.

Section 15.7.Severability.  If any provision of the Plan is held illegal or invalid, the illegality or invalidity shall not affect the remaining provisions of the Plan and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included in the Plan.

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Section 15.8.No Guarantee.  None of the Company, the Employers, the Administrator or the Trustee in any way guarantees the Trust from loss or depreciation nor the payment of any benefit that may be or become due to any person from the Trust Fund.  Nothing in the Plan shall be deemed to give any participant, distributee or Beneficiary an interest in any specific part of the Trust Fund or any other interest except the right to receive benefits from the Trust Fund in accordance with the provisions of the Plan and the trust agreement.

Section 15.9.Plan Voluntary.  Although it is intended that the Plan shall be continued and that contributions shall be made as herein provided, the Plan is entirely voluntary on the part of the Employers and the continuance of the Plan and the contributions hereunder are not and shall not be regarded as contractual obligations of the Employers.

ARTICLE 16

TOP-HEAVY PLAN REQUIREMENTS

Section 16.1.Top-Heavy Plan Determination.  If as of the determination date (as defined in Section 16.2(a)(1)) for any Plan Year the account balances under the Plan, of all participants and ESOP Participants who are key employees (as defined in Section 16.2(a)(2)) for such Plan Year exceeds 60% of the aggregate of the account balances and the present value of accrued benefits of all participants and ESOP Participants in the Plan as of the determination date, then the Plan shall be a “top-heavy plan” with respect to such participants and ESOP Participants for such Plan Year, and the requirements of Sections 16.3 and 16.4 shall be applicable for such Plan Year as of the first day thereof.

Section 16.2.Definitions and Special Rules.

(a)Definitions.  For purposes of this Article 16, the following definitions shall apply:

72

(1)  Determination Date.  The determination date for all plans in the aggregation group shall be the last day of the preceding Plan Year, and the valuation date applicable to a determination date shall be (i) in the case of a defined contribution plan, the date as of which account balances are determined that coincides with or immediately precedes the determination date, and (ii) in the case of a defined benefit plan, the date as of which the most recent actuarial valuation for the Plan Year that includes the determination date is prepared, except that if any such plan specifies a different determination or valuation date, such different date shall be used with respect to such plan.

(2)  Key Employee.  Any Associate or former Associate (or any Beneficiary of such Associate) who, at any time during the Plan Year containing the determination date, was (i) an officer of an Employer having annual compensation greater than $140,000 (as adjusted under section 416(i)(1) of the Code for Plan Years beginning after December 31, 2002), (ii) a 5-percent owner of an Employer, or (iii) a 1-percent owner of an Employer having annual compensation of more than $150,000.  The determination of who is a Key Employee will be made in accordance with section 416(i)(1) of the Code.

(3)  Compensation.  Compensation shall have the meaning set forth in U.S. Treasury Regulation § 1.415-2(d).

(b)Special Rules.  For the purpose of determining the accrued benefit or account balance of a participant, (i) the accrued benefit or account balance of any person who has not performed services for an Employer at any time during the one-year period ending on the determination date shall not be taken into account pursuant to this Section, and (ii) any person who received a distribution from a plan (including a plan that has terminated) in the aggregation group during the one-year period ending on the determination date shall be treated as a participant in such plan, and any such distribution shall be included in such participant’s account balance or accrued benefit, as the case may be; provided, however, that in the case of a distribution made for a reason other than a person’s severance from employment, death or disability, clause (ii) of this Section 16.2(b) shall be applied by substituting “five-year period” for “one-year period.”

Section 16.3.Minimum Contribution for Top-Heavy Years.  Notwithstanding any provision of the Plan to the contrary, for any Plan Year for which the Plan is a top-heavy plan, a minimum contribution shall be made on behalf of each participant (other than a key

73

employee) who is an Associate on the last day of the Plan Year in an amount equal to the lesser of (i) 3% of such participant’s compensation during such Plan Year and (ii) the highest percentage at which Employer contributions (including Pre-Tax Contributions) are made on behalf of any key employee for such Plan Year.  If during any Plan Year for which this Section 16.3 is applicable a defined benefit plan is included in the aggregation group and such defined benefit plan is a top-heavy plan for such Plan Year, the percentage set forth in clause (i) of the first sentence of this Section 16.3 shall be 5%.  The percentage referred to in clause (ii) of the first sentence of this Section 16.3 shall be obtained by dividing the aggregate of Employer contributions made pursuant to Article 4, Article 5 and pursuant to any other defined contribution plan that is required to be included in the aggregation group (other than a defined contribution plan that enables a defined benefit plan that is required to be included in such group to be qualified under section 401(a) of the Code) during the Plan Year on behalf of such key employee by such key employee’s compensation for the Plan Year.  Notwithstanding the foregoing, the minimum contribution described in this Section 16.3 for any Plan Year for which the Plan is a top-heavy plan shall not be made under this Plan with respect to any Participant who receives a minimum contribution or minimum benefit for purposes of section 416(c) of the Code under another plan maintained by an Affiliate.

Section 16.4.Minimum Vesting for Top-Heavy Years.  Notwithstanding any provision of the Plan to the contrary, for any Plan Year for which the Plan is a top-heavy plan, a Participant or Rexall Participant with at least two Years of Service but not more than three Years of Service shall become 20% vested in his or her accounts under the Plan; a participant with at least three Years of Service but not more than four Years of Service shall become 40% vested in his or her Plan accounts; a participant with at least four Years of Service but no more

74

than five Years of Service shall become 60% vested in his or her Plan accounts; a participant with at least five Years of Service but no more than six Years of Service shall become 80% vested in his or her Plan accounts; and a participant with six or more Years of Service shall become 100% vested in his or her Plan accounts.  Any portion of an ESOP Account or Account that a participant is not entitled to receive pursuant to this Section shall be charged to the relevant account and forfeited as of the earlier of (i) the date the participant receives a distribution of his or her vested account and (ii) the date the participant incurs five consecutive 1-Year Breaks in Service.

ARTICLE 17

AMENDMENT, ESTABLISHMENT OF
SEPARATE PLAN, AND PLAN TERMINATION

Section 17.1.Amendment.  The Committee may, at any time and from time to time, amend or modify the Plan.  Any such amendment or modification shall become effective as of such date provided therein upon its execution, including retroactively to the extent permitted by law, and may apply to participants in the Plan at the time thereof as well as to future participants.

Section 17.2.Establishment of Separate Plan.  If an Employer terminates its participation in the Plan pursuant to Section 17.3, then the Administrator shall determine the portion of each of the funds of the Trust Fund that is applicable to the Participants, Rexall Participants and ESOP Participants employed by such Employer and their Beneficiaries and direct the Trustee to segregate such portion in a separate trust.  Such separate trust thereafter shall be held and administered as a part of the separate plan of such Employer.

Section 17.3.Termination.  The Company at any time may terminate the Plan or any portion of the Plan by delivery to the Administrator of written notice of such termination. 

75

An Employer at any time may terminate its participation in the Plan by resolution of its board of directors.  In the event of any such termination, or in the event of the partial termination of the Plan with respect to a group of Participants, Rexall Participants or ESOP Participants (or any combination thereof), the Accounts and ESOP Accounts of the group with respect to whom the Plan is terminated shall become fully vested and thereafter shall not be subject to forfeiture.  Unallocated amounts, including Forfeitures, shall be allocated to the applicable Accounts and ESOP Accounts.  The Administrator shall direct the Trustee to distribute the vested Accounts and ESOP Accounts to such group.

A complete discontinuance of contributions by an Employer to the Plan shall be deemed a termination of such Employer’s participation in the Plan for purposes of this Section 17.3.

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IN WITNESS WHEREOF, the Company has caused this instrument to be executed by its duly authorized officer this 1st day of December, 2005.

NBTY, INC.
By:	/s/ Harvey Kamil
Title:	President

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EX-14.1

Exhibit 14.1

NBTY Code of Business Conduct and Ethics

I.  INTRODUCTION AND STATEMENT OF PURPOSE

This Code of Business Conduct and Ethics (the “Code”) contains the policy guidelines and procedures adopted by the Board of Directors (the “Board”) of the Company that relate to the legal and ethical standards of the conduct of Company business by the directors, officers and associates of the Company (the “Covered Persons”).  All Covered Persons are expected to be familiar with the Code and to apply its principles in the daily performance of their responsibilities.  Correct ethical and legal conduct is essential to the continued faith and confidence of our investors and customers.  The honesty, integrity and sound judgment of the Covered Persons is a vital strength and essential to our reputation and success.  If any Covered Person fails to comply with the standards and requirements set out in this Code, he or she may be disciplined or terminated.

The Code cannot and is not intended to cover every applicable law or to anticipate every issue that may arise.  If you are unclear about a particular situation, consult with your supervisor or the General Counsel of the Company (631.218.7327) before taking action.

On behalf of the Company:

/s/ Harvey Kamil Date: March 22, 2004

Harvey Kamil

President

II.  ADMINISTRATION/APPLICABILITY/VIOLATIONS

The Board is responsible for setting the standards of business conduct contained in this Code and updating these standards as appropriate to reflect legal and regulatory developments.

The Code applies to all of the Company’s Covered Persons.  It is the obligation of each and every Covered Person to become familiar with the Code, to adhere to the standards and restrictions set forth herein and to conduct himself or herself accordingly.

While the Company’s Legal Department will oversee the procedures designed to implement this Code, it is the individual responsibility of each Covered Person to comply with this Code.  Those who violate this Code will be subject to disciplinary action, which may include (but not be limited to) termination.

III.  POLICY GUIDELINES

A.Corporate Opportunities

The Covered Persons owe a duty to the Company to advance its legitimate interests when the opportunity to do so arises.  The Covered Persons are therefore prohibited from (i) using Company property, information, or position for improper personal gain, or (ii) competing with the Company, directly, indirectly, or in any manner.

B.Accurate and Timely Periodic Reports

The Company is committed to providing full, fair, accurate, timely and understandable disclosure in periodic reports and documents that the Company files or submits to the Securities and Exchange Commission and in other public communications made by the Company. To ensure that the Company is able to fulfill these commitments, the Covered Persons must:

(i)maintain accurate books and records that fully, fairly and accurately reflect the Company’s financial information and reporting of transactions;

(ii)ensure that the financial statements and other financial information included in periodic reports is prepared in accordance with generally accepted accounting principles and fairly presents in all material respects the financial condition, results of operations and cash flows of the Company;

(iii)maintain such disclosure controls and procedures to ensure that material information relating to the Company is made known to management, particularly during the periods in which the Company’s periodic reports are being prepared;

2

(iv)maintain such internal controls and procedures for financial reporting to provide reasonable assurances that the Company’s financial statements are fairly presented in conformity with generally accepted accounting principles;

(v)prohibit the establishment of any undisclosed or unrecorded funds, assets or liabilities, and disclose material off-balance sheet transactions; and

(vi)otherwise present information in a clear and orderly manner.

C.Guidance and Leadership

In addition to complying with the applicable provisions of the NBTY Associate Handbook and other applicable Company policies, the Covered Persons must:

(i)provide colleagues with information that is accurate, complete, objective, relevant, timely and understandable;

(ii)act in good faith, with due care, competence and diligence, without misrepresenting material facts or allowing independent judgment to be subordinated;

(iii)share knowledge and maintain skills necessary and relevant to the Company’s needs;

(iv)proactively promote ethical and honest behavior within the Company’s environment;

(v)assure responsible use and control of assets, resources and information of the Company;

(vi)not engage in a material transaction involving the Company for personal profit or gain;

(vii)comply with all applicable state and federal securities laws;

(viii)not take for themselves personally opportunities that are discovered through the use of the Company property, information or position; and

(ix)protect the confidentiality of the Company’s proprietary, non-public or otherwise confidential information.

3

IV.  REPORTING ANY ILLEGAL OR UNETHICAL BEHAVIOR

The Covered Persons have a duty to adhere to this Code and to all existing Company policies and to report to the General Counsel any known or suspected violations in accordance with applicable procedures.  Covered Persons who violate this Code or other Company policies are subject to disciplinary action, including (but not limited to) termination of employment.  Violations may also result in legal prosecution.  The Covered Persons are encouraged to talk to senior management or the General Counsel about observed violations of the Code or any other illegal or unethical behavior, when in doubt about the best course of action in a particular situation.

Fraud is an element of business that can significantly affect the reputation and success of the Company.  The Company requires all Covered Persons to talk to supervisors, managers or other appropriate personnel to report and discuss any known or suspected criminal activity involving the Company or its officers, directors, associates, agents or representatives.  If you become aware of any suspicious activity or behavior (including concerns regarding questionable accounting or auditing matters), you must report them to your supervisor, the Company’s General Counsel or to the Company’s Compliance Hotline at: 1-877-778-5463 or on the Internet at www.reportit.net.  The Company shall evaluate reported violations on a case-by-case basis.  Reporting the activity will not subject the Covered Person to discipline unless the person knowingly files a false report.  All reports to the Compliance Hotline are anonymous and confidential.

It is the policy of the Company not to allow retaliation for reports of misconduct by associates made in good faith.  Associates are expected to cooperate in internal investigations of misconduct.

V.  DISCLOSURE/WAIVERS OF THE CODE OF BUSINESS

CONDUCT AND ETHICS

This Code will be made available on the Company’s web site.  The Company must include a statement in its Annual Report on Form 10-K indicating that it has adopted this Code, that a copy of this Code is available on the Company’s web site or upon request to the General Counsel, and that the Company will disclose any amendment or waivers of this Code relating to the Company’s officers or directors on the Company’s website.

Any waiver of this Code for officers or directors may be made only by the Board.  The provisions of this Code may be waived for associates who are not officers or directors only by the General Counsel or the Board.

Any amendments to or waivers of this Code relating to officers or directors will be disclosed on a Form 8-K or on the Company’s web site, promptly and in any event within two business days following such amendment or waiver, as required by the Securities Exchange

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Commission and the appropriate New York Stock Exchange listing requirements.  The Company will maintain any such disclosure on its web site for at least 12 months after the Company initially posts such disclosure.  Following such 12-month period, the Company shall retain such disclosure for at least five years.

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EX-21.1

Exhibit 21.1

Subsidiaries of

NBTY, Inc. (Delaware)

De Tuinen, B.V. (Netherlands)
Health & Diet Centres Limited (United Kingdom)
Health & Diet Food Company Limited (United Kingdom)
Holland & Barrett Retail Limited (United Kingdom)
Le Naturiste J.M.B. Inc. (Canada)
Knox (a fictitious name of NBTY, Inc.)
Met-Rx Nutrition, Inc. (Delaware)
Met-Rx USA, Inc. (Nevada)
Nature Bounty de Mexico S. de R.L. de C.V. (Mexico)
Nature’s Bounty, Inc. (New York), d/b/a:
	Arco Pharmaceuticals
	Hudson Co.
Nature’s Way Limited (Republic of Ireland)
NBTY Manufacturing, LLC (Delaware), d/b/a:
	D&F Industries
	NBTY Manufacturing Colorado
	NBTY Manufacturing Florida
	NBTY Manufacturing Illinois
	NBTY Manufacturing New Jersey
	NBTY Manufacturing New York
	NBTY Manufacturing West
	Nutro Laboratories
	Omni-Pak Industries
	Raven Industries
NBTY Europe Limited (United Kingdom)
Puritan’s Pride, Inc. (New York)
Rexall Sundown, Inc. (Florida)
SISU Inc. (Canada)
Solgar Australia Pty Limited (Australia)
Solgar, Inc. (Delaware)
Solgar New Zealand Limited (New Zealand)
Solgar South Africa (Pty) Limited (South Africa)
Solgar UK Limited (United Kingdom)
Solgar Vitamin & Herb Inc. (Canada)
Sundown, Inc. (Florida)
Suplementos Solgar, S.L. (Spain)
United States Nutrition, Inc. (Delaware), d/b/a:
	Carb Wise (USA)
	US Nutrition
Vitamin World Limited (United Kingdom)
Vitamin World, Inc. (Delaware)
Worldwide Sport Nutritional Supplements, Inc. (New York)

EX-23.1

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Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

        We consent to the incorporation by reference in Registration Statement Nos. 333-46188, 333-71691 and 333-108038 of NBTY, Inc. on Form S-8 of our reports dated December 22, 2005, relating to the consolidated financial statements and financial statement schedules of NBTY, Inc., and management's report on the effectiveness of internal control over financial reporting, appearing in this Annual Report on Form 10-K of NBTY, Inc. for the year ended September 30, 2005.

/s/ DELOITTE & TOUCHE LLP
Jericho, New York
December 22, 2005

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CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

EX-23.2

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Exhibit 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

        We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 333-46188, 333-71691 and 333-108038) of NBTY, Inc. of our report dated November 11, 2003, relating to the financial statements and financial statement schedule, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP

New York, New York
December 22, 2005

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CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

EX-31.1

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Exhibit 31.1

CERTIFICATIONS

I, Scott Rudolph, certify that:

1.

I have reviewed this annual report on Form 10-K of NBTY, Inc.;

2.

Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

(d)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.

Dated: December 22, 2005

Signature:

/s/  SCOTT RUDOLPH

Scott Rudolph
Principal Executive Officer

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CERTIFICATIONS

EX-31.2

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Exhibit 31.2

CERTIFICATIONS

I, Harvey Kamil, certify that:

1.

I have reviewed this annual report on Form 10-K of NBTY, Inc.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

(d)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.

Dated: December 22, 2005

Signature:

/s/  HARVEY KAMIL

Harvey Kamil
Principal Financial Officer

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CERTIFICATIONS

EX-32.1

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Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

        In connection with the Annual Report of NBTY, Inc. (the "Company") on Form 10-K for the period ended September 30, 2005 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Scott Rudolph, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge and belief:

        (1)   The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

        (2)   The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/  SCOTT RUDOLPH Scott Rudolph
Chief Executive Officer
December 22, 2005

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CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

EX-32.2

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Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

        In connection with the Annual Report of NBTY, Inc. (the "Company") on Form 10-K for the period ended September 30, 2005 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Harvey Kamil, President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge and belief:

        (1)   The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

        (2)   The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/  HARVEY KAMIL Harvey Kamil
President and Chief Financial Officer
December 22, 2005

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CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002