NBTY INC, S-3, 1998-05-08

NBTY INC
S-3, 1998-05-08
PHARMACEUTICAL PREPARATIONS

Previous: NATIONAL RESEARCH CORP, S-8, 1998-05-08

Next: NEW BRUNSWICK SCIENTIFIC CO INC, 4, 1998-05-08

<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 8, 1998

REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

------------------------

FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

------------------------

NBTY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 90 ORVILLE DRIVE
(STATE OR OTHER JURISDICTION OF BOHEMIA, NEW YORK 11716
INCORPORATION OR ORGANIZATION) TELEPHONE: (516) 567-9500

DELAWARE 11-2228617
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
</TABLE>

(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

------------------------

SCOTT RUDOLPH, CHAIRMAN OF THE BOARD, CHIEF EXECUTIVE OFFICER AND PRESIDENT
NBTY, INC.
90 ORVILLE DRIVE
BOHEMIA, NEW YORK 11716
TELEPHONE: (516) 567-9500
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)

------------------------

Copies to:
<TABLE>
<S> <C>
MICHAEL C. DUBAN, ESQ. MICHAEL A. BECKER, ESQ.
MICHAEL C. DUBAN, P.C. CAHILL GORDON & REINDEL
81 MAIN STREET 80 PINE STREET
WHITE PLAINS, NEW YORK 10601 NEW YORK, NEW YORK 10005
TELEPHONE: 914-681-0606 TELEPHONE: 212-701-3412

TELECOPY: 914-948-0462 TELECOPY: 212-269-5420
</TABLE>
------------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date hereof.

If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /

If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. / /

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /

If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /

------------------------

CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED
MAXIMUM OFFERING PROPOSED
TITLE OF EACH CLASS AMOUNT TO BE PRICE PER MAXIMUM AGGREGATE
OF SECURITIES TO BE REGISTERED REGISTERED(1) SHARE(2) OFFERING PRICE(2)
<S> <C> <C> <C>
Common Stock, par value $0.008 per share....................... 13,553,948 shares $17.43 $236,245,314

<CAPTION>
TITLE OF EACH CLASS AMOUNT OF
OF SECURITIES TO BE REGISTERED REGISTRATION FEE
<S> <C>
Common Stock, par value $0.008 per share....................... $69,692.37
</TABLE>

(1) Includes 1,767,906 shares which the Underwriters have the option to purchase
from the Company and certain Selling Stockholders to cover over-allotments,
if any. See 'Underwriting.'

(2) Estimated solely for purposes of calculating the amount of the registration
fee pursuant to Rule 457(c) under the Securities Act of 1933, as amended,

and based on the average of high and low sale prices per share of Common
Stock reported on the Nasdaq National Market on May 6, 1998.

------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO
SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

<PAGE>
EXPLANATORY NOTE

This Registration Statement contains two forms of prospectus: (i) one to be
used in connection with an offering in the United States and Canada (the 'U.S.
Prospectus') and (ii) one to be used in connection with an offering outside of
the United States and Canada (the 'International Prospectus'). The U.S.
Prospectus and the International Prospectus are identical in all respects except
for the front and back cover pages, which are included herein after the final
page of the U.S. Prospectus and labeled 'Alternate Cover Pages for International
Prospectus.' Final forms of each of the Prospectuses will be filed with the
Securities and Exchange Commission under Rule 424(b).

<PAGE>

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED MAY 8, 1998
PROSPECTUS

11,786,042 SHARES

[LOGO]

COMMON STOCK

------------------------

Of the 11,786,042 shares of Common Stock, $.008 par value (the 'Common
Stock') offered hereby, 5,000,000 shares are being sold by NBTY, Inc. (the
'Company') and 6,786,042 shares are being sold by certain stockholders. See
'Principal and Selling Stockholders.' The Company will not receive any of the
proceeds from the sale of the shares being offered by the Selling Stockholders.
Of the 11,786,042 shares of Common Stock being offered, 9,428,834 shares (the
'U.S. Shares') are being offered for sale in the United States and Canada (the
'U.S. Offering') by the U.S. Underwriters (as defined herein) and 2,357,208
shares (the 'International Shares' and, together with the U.S. Shares, the
'Shares') are being offered in a concurrent international offering outside the
United States and Canada (the 'International Offering' and, together with the
U.S. Offering, the 'Offerings') by the International Managers (as defined
herein). The price to public and the aggregate underwriting discounts and
commissions per share will be identical for both the U.S. Offering and the
International Offering. See 'Underwriting.'

The Common Stock is traded on the Nasdaq National Market under the symbol
'NBTY.' The reported last sale price of the Company's Common Stock on the Nasdaq
National Market on May 7, 1998 was $17.75 per share. See 'Price Range of Common
Stock.'
------------------------

SEE 'RISK FACTORS' BEGINNING ON PAGE 9 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK.

------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

<TABLE>
<CAPTION>
UNDERWRITING PROCEEDS TO
DISCOUNTS AND PROCEEDS TO SELLING
PRICE TO PUBLIC COMMISSIONS(1) COMPANY(2) STOCKHOLDERS(2)
<S> <C> <C> <C> <C>
Per Share $ $ $ $
Total(3) $ $ $ $
</TABLE>

(1) For information regarding indemnification of the Underwriters, see
'Underwriting.'

(2) Before deducting expenses related to the Offerings estimated at $700,000
payable by the Company (including certain expenses payable on behalf of
the Selling Stockholders).

(3) The Company and the Selling Stockholders have granted the U.S.
Underwriters a 30-day option to purchase up to an additional 1,414,325
shares of Common Stock, solely to cover over-allotments, if any.
Additionally, the Company and the Selling Stockholders have granted the
International Managers a similar option with respect to an additional
353,581 shares as part of the concurrent International Offering. See
'Underwriting.' If such options are exercised in full, the total Price to
Public, Underwriting Discounts and Commissions, Proceeds to Company and
Proceeds to Selling Stockholders will be $ , $ , $
and $ , respectively.

------------------------

The shares of Common Stock are being offered by the several U.S.
Underwriters named herein, subject to prior sale, when, as and if accepted by
them subject to certain conditions. It is expected that certificates for the
shares of Common Stock
offered hereby will be available for delivery on or about , 1998, at
the offices of Smith Barney Inc., 333 West 34th Street, New York, New York
10001.

------------------------

SALOMON SMITH BARNEY
LEHMAN BROTHERS
ADAMS, HARKNESS & HILL, INC.
RAYMOND JAMES & ASSOCIATES, INC.
PIPER JAFFRAY INC.

, 1998

<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING OVER-ALLOTMENTS, STABILIZING AND SHORT-COVERING TRANSACTIONS AND THE
IMPOSITION OF PENALTY BIDS. SUCH TRANSACTIONS IF COMMENCED, MAY BE DISCONTINUED
AT ANY TIME. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE 'UNDERWRITING.'

THE UNDERWRITERS HAVE ADVISED THE COMPANY AND THE SELLING STOCKHOLDERS THAT
CERTAIN OF THE UNDERWRITERS CURRENTLY ACT AS MARKET MAKERS FOR THE COMMON STOCK
AND CURRENTLY INTEND TO CONTINUE TO ACT AS MARKET MAKERS FOLLOWING THE OFFERING.
SINCE THE AVERAGE DAILY TRADING VOLUME OF THE COMMON STOCK EXCEEDS $1 MILLION
AND THE COMPANY'S PUBLIC FLOAT EXCEEDS $150 MILLION, THE PROVISIONS OF
REGULATION M PERMIT SUCH UNDERWRITERS TO CONTINUE MARKET MAKING ACTIVITIES
DURING THE PERIOD OF THE OFFERING. HOWEVER, THE UNDERWRITERS ARE NOT OBLIGATED
TO DO SO AND MAY DISCONTINUE ANY MARKET MAKING AT THAT TIME.

<PAGE>
PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus or incorporated herein by
reference. Except as otherwise specified, all information in this Prospectus (i)
assumes no exercise of the Underwriters' over-allotment options and (ii) gives
effect to the recent three-for-one stock split of the Company's Common Stock on
April 3, 1998. Unless otherwise indicated, references herein to 'NBTY' or 'the
Company' refer to NBTY, Inc. and its subsidiaries. On August 7, 1997, NBTY
acquired Holland & Barrett Holdings Ltd. ('Holland & Barrett' or 'H&B') in a
transaction accounted for as a purchase and on April 20, 1998, NBTY merged
Nutrition Headquarters, Inc., Lee Nutrition, Inc. and Nutro Laboratories, Inc.
(collectively 'Nutrition Headquarters Group') into the Company in a transaction
accounted for as a pooling of interests. Unless otherwise indicated, the
financial information contained herein includes results of Holland & Barrett
from the date of acquisition and Nutrition Headquarters Group for all reported
periods. See 'Management's Discussion and Analysis of Financial Condition and
Results of Operations.' Fiscal year references are to the fiscal year ended
September 30. This Prospectus contains forward-looking statements which involve
risks and uncertainties. See 'Risk Factors--Forward Looking Statements' for a
discussion of certain risks and their potential impact on the forward-looking
statements contained herein.

THE COMPANY

NBTY 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 the United Kingdom. The Company offers approximately 900
products under a number of brands, including vitamins, minerals, herbs, amino
acids, sports nutrition products, diet aids and other nutritional supplements.
NBTY targets the growing value-conscious consumer segment by offering high
quality products at a value price point, direct to the consumer. NBTY markets
its multi-branded products through a four channel distribution system: (i) the
leading U.S. nutritional supplement mail order program under the Company-owned
Puritan's Pride and Nutrition Headquarters brands and catalogs; (ii)
Company-owned Vitamin World retail stores, of which there are currently 143,
located strategically throughout the United States; (iii) Company-owned Holland
& Barrett retail stores, of which there are currently 417, located strategically
throughout the United Kingdom; and (iv) wholesale distribution to drug store
chains, supermarkets, independent pharmacies and health food stores primarily
under the Nature's Bounty brand. NBTY currently manufactures approximately 70%
of the nutritional supplements it sells and upon completion of a new
state-of-the-art manufacturing facility in 1998, the Company expects to
manufacture approximately 90%.

The Company believes that it is well positioned to capitalize on the
continued growth in the vitamin, mineral and nutritional supplement ('VMS')
industry. The VMS market in the United States has grown at a compound annual
rate of approximately 15%, from $3.7 billion in 1992 to $6.5 billion in 1996,
according to the 1997 Packaged Facts ('Packaged Facts') survey. Increasing VMS
usage has been linked to a number of factors, including: (i) scientific and
popular reports on the positive benefits of VMS products; (ii) awareness of
healthier lifestyles; (iii) favorable regulatory environment; (iv) new VMS

product introductions and (v) wider distribution of VMS products. Vitamins,
minerals and nutritional supplements are sold through drug stores, supermarkets
and discount stores, health food stores, direct sales organizations and mail
order. According to Packaged Facts, drug stores, supermarkets and discount
stores, on a combined basis, accounted for approximately 46%, health food stores
for approximately 38% and direct and mail order sales for approximately 16% of
total industry sales in 1996.

Since its formation in 1971, the Company has increased sales and operating
performance as a result of its well-recognized, value-oriented products;
efficient, state-of-the-art production facilities; multiple distribution
channels; and strategic acquisitions, as well as from the continuing growth in
the VMS market. For the fiscal year ended September 1997, net sales and income
from operations increased 34% and 63%, respectively over the prior year, to $355
million and $53 million (excluding $6.4 million of legal settlement costs in
fiscal 1997), respectively. For the six months ended March 1998, net sales and
income from operations increased 80% and 70%, respectively over the prior year
period, to $287 million and $42 million, respectively. NBTY's net sales

3
<PAGE>
from mail order, retail-U.S., retail-U.K. and wholesale operations were
approximately 32%, 11%, 33% and 24%, respectively, for the six months ended
March 1998.

The Company's position as a leading vertically integrated manufacturer,
marketer and retailer of a broad line of high quality, value-priced nutritional
supplements enables it to successfully operate a four channel distribution
system:

Mail Order. Through its Puritan's Pride and Nutrition Headquarters brands,
NBTY is the leader in the U.S. mail order nutritional supplement industry with
over 4.0 million active customers and with response rates which management
believes to be in excess of the mail order industry average. Through its
catalogs, the Company offers a full line of vitamins and other nutritional
supplements at prices which are normally at a discount to retail stores. The
Company mails its catalogs approximately eight times a year. NBTY intends to
continue to add new customers to its mail order operation through aggressive
marketing techniques and selective acquisitions. In addition, in 1996 the
Company expanded its mail order operations into the United Kingdom.

Retail Stores, U.S. The Company presently operates 143 stores in 40 states
under the Vitamin World name, primarily in factory outlet malls, and more
recently in regional malls. Such stores carry a full line of value-priced
products under the Vitamin World brand as well as a limited selection of other
brands. The stores generally average 1,200 square feet and offer 1,200 SKUs of
vitamins, minerals and nutritional supplements. During calendar 1998, the
Company plans to open a total of 120 Vitamin World stores, of which 15 stores
have recently been opened and leases have been signed for 39 stores. Vitamin
World stores typically turn profitable within the first nine months of
operation. Through direct interaction with the retail customer, the Company is
better able to identify customer preferences, retail buying trends and pricing
than by analyzing sales reports from wholesalers and independent retailers. As a
result, the Company is better able to merchandise its products and more quickly

respond to changing customer trends.

Retail Stores, U.K. In August 1997, the Company acquired Holland &
Barrett, the largest chain of nutritional supplement and health food stores in
the United Kingdom. Holland & Barrett, which has been in business since 1920, is
a well known and respected retailer and brand, with 417 stores in prime shopping
areas in over 300 cities in the U.K. The stores have an average selling area of
1,200 square feet and offer a total of 2,800 SKUs, approximately 56% within the
VMS categories and 44% within the health food category. Since the acquisition,
NBTY has gradually replaced VMS products manufactured by outside suppliers with
lower priced NBTY manufactured products under the Holland & Barrett brand. As of
March 31, 1998, NBTY manufactured products comprised approximately 40% of H&B's
VMS sales (approximately 21% of total H&B sales) with the goal of reaching 75%
of such sales (approximately 40% of total H&B sales) by the end of calendar
1998.

Wholesale. The Company markets its products under multiple brands to drug
stores, supermarkets and discounters as well as independent pharmacies, health
food stores and wholesalers. The Company markets products under Nature's Bounty,
the Company's signature brand, to chain stores such as Albertsons, CVS, Eckerd
Drugs, Genovese, Osco and Target. The Company also sells a full line of products
under the Natural Wealth brand to supermarkets and wholesalers, such as Bergen
Brunswig Co., Cardinal Health Co. and McKesson Drug Co., a line of products
under the Good 'N Natural brand directly to independent health food stores and a
specialty line of vitamins under the American Health brand to health food
wholesalers.

BUSINESS STRATEGY

The Company's objective is to increase sales, improve profitability and
strengthen its leading position through the following key strategies:

Enhance Vertical Integration. Management believes that vertical
integration creates a significant competitive advantage by allowing the Company
to: (i) maintain higher quality standards while lowering product costs, a
portion of which are passed on to the customer as lower prices; (ii) more
quickly respond to scientific and popular reports and consumer buying trends;
(iii) assure delivery schedules; (iv) reduce dependence on outside suppliers;
(v) improve overall operating margins. The Company continually evaluates ways to
further enhance its vertical integration. For example, as NBTY becomes the
primary supplier of nutritional supplements to the H&B stores by replacing
outside suppliers, it will effectively lower the costs of products sold by H&B
stores.

4
<PAGE>
Management believes this should increase overall profit margins while creating
additional productivity for NBTY's manufacturing facilities.

Introduce New Products and Product Innovations. The Company has
consistently been among the first in the industry to introduce new products
which meet customer demands for newly identified nutritional supplement benefits
in response to recent scientific and popular reports. Given the changing nature
of consumer demands for new products and the growing publicity over the

importance of vitamins, minerals and nutritional supplements in the promotion of
general health, management believes that NBTY will continue to attract new
customers based upon its ability to rapidly respond to consumer demands with
high quality, value-oriented products. During 1997, NBTY introduced more than
100 new products. In addition to expanding the Company's product lines, many of
these popular new specialty products, such as St. John's Wort and glucosamine
sulfate, typically provide higher margins.

Expand Existing Channels of Distribution. In order to increase sales and
profitability, enhance overall market share, and leverage manufacturing,
distribution, purchasing and marketing capabilities, the Company will continue
to expand its existing channels of distribution.

o Increase mail order sales. NBTY expects to continue to strengthen its
mail order sales through a number of initiatives, including: (i)
automated picking and packing to fulfill mail order requests with greater
speed and accuracy; (ii) increased manufacturing capability to quickly
introduce and deliver new products in response to customer demand; and
(iii) more frequent promotions to further improve response rates. In
addition, the Company 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 and which the Company
believes it can integrate into its own operations without adding
substantial overhead expenses, such as the recent merger of Nutrition
Headquarters Group into the Company.

o Increase retail sales in the U.S. and U.K. In order to increase retail
sales, NBTY is actively expanding its base of Vitamin World stores in the
U.S. and selectively expanding its Holland & Barrett stores in the U.K.
During calendar 1998, the Company plans to open a total of 120 Vitamin
World stores to increase its penetration into factory outlet and regional
malls. The Company has recently opened 15 stores and signed leases for 39
stores.

Integrate Strategic Acquisitions. Since 1986, NBTY has successfully
acquired and integrated 12 VMS companies, including Holland & Barrett in August
1997. Most recently the Company completed the merger with Nutrition Headquarters
Group. NBTY is currently in the process of integrating Nutrition Headquarters
Group's mail order operations by: (i) merging customer lists into the Company's
computerized mailing list; (ii) expanding product lines; (iii) redesigning mail
order catalogs; (iv) repricing certain products; and (v) implementing proven
marketing techniques. NBTY will continue to manufacture select products out of
Nutrition Headquarters Group's manufacturing operations. The Company intends to
continue to pursue acquisition opportunities in the VMS sector, both in the U.S.
and internationally, that complement or extend its existing product lines,
expand its distribution channels or are compatible with its business philosophy
and strategic goals.

Build Infrastructure to Support Growth. NBTY has technologically advanced,
state-of-the-art manufacturing and production facilities, with total production
capacity of approximately five billion tablets and capsules per year. The
Company is currently completing construction of a 131,000 square foot
state-of-the-art soft gelatin encapsulation manufacturing facility, capable of
producing five billion soft gel capsules per year, to enhance its vertical

integration, reduce its dependence on outside suppliers and further improve
profit margins. Upon completion of the new facility, NBTY expects to increase
its manufacturing capacity to 90% from 70% of the VMS products it sells. The
Company regularly evaluates its operations and makes investments in building
infrastructure, as necessary to support its continuing growth.

Experienced Management Team with Significant Equity Stake. The Company's
management team has extensive experience in the VMS industry and has developed
long-standing relationships with its suppliers and its customers. The executive
officers and directors have an average of approximately 17 years with the
Company. After giving effect to the Offerings, executive officers and directors
will own approximately 18.1% of the Company's common stock and employees in the
aggregate will own approximately 4.5% through the Company's employee stock
ownership plan.

5
<PAGE>
RECENT ACQUISITION

On April 20, 1998, NBTY merged a group of affiliated, privately held
companies, referred to collectively as Nutrition Headquarters Group, into the
Company. In connection with such transaction, the Company issued approximately
8.8 million shares of Common Stock. Nutrition Headquarters Group includes a well
known value-oriented catalog offering private label and branded vitamins and
nutritional supplements primarily under the Nutrition Headquarters brand.
Nutrition Headquarters Group's catalog has been operating for over 20 years and
has a customer list including more than 1.5 million active names. Through its
manufacturing operations, Nutrition Headquarters Group produces national brand
equivalent vitamins and nutritional supplement tablets and capsules,
approximately 25% of which are sold under the Nutrition Headquarters brands and
the balance are contract manufactured for other nutritional supplement
suppliers. Management believes Nutrition Headquarters Group mail order and
manufacturing operations will supplement NBTY's operations. Nutrition
Headquarters Group reported aggregate sales of approximately $77 million
(including $3 million of sales to NBTY) for its fiscal year ended September
1997, of which approximately $50 million was attributable to mail order. The
merger was accounted for as a pooling of interests.

NBTY was incorporated under the laws of the State of Delaware in 1971 and
maintains its principal executive offices at 90 Orville Drive, Bohemia, New York
11716. Its telephone number is (516) 567-9500.

'American Health(Registered),' 'Good 'N Natural(Registered),' 'Holland &
Barrett(Registered),' 'Natural Wealth(Registered),' 'Nature's
Bounty(Registered),' 'Nutrition Headquarters(Registered),' 'Puritan's
Pride(Registered),' and 'Vitamin World(Registered),' are registered trademarks
and service marks of NBTY, Inc.

<PAGE>
THE OFFERINGS

<TABLE>
<S> <C>
Common Stock to be sold by the Company:

U.S. Offering...................................................... 4,000,000 shares

International Offering............................................. 1,000,000 shares

Total........................................................... 5,000,000 shares

Common Stock to be sold by the Selling Stockholders:

U.S. Offering...................................................... 5,428,834 shares

International Offering............................................. 1,357,208 shares

Total........................................................... 6,786,042 shares

Total shares of Common Stock to be sold in the Offerings............. 11,786,042 shares

Common Stock to be outstanding after the Offerings................... 69,810,221 shares(1)

Use of Proceeds...................................................... The net proceeds to the Company will be
used to reduce borrowings under the
Company's bank revolving credit facility
(the 'Revolving Credit Facility'), to fund
existing committed capital expenditures
and for general corporate purposes. The
Company will not receive any of the
proceeds from the sale of shares by the
Selling Stockholders. See 'Use of
Proceeds' and 'Principal and Selling
Stockholders.'

Nasdaq National Market symbol........................................ NBTY
</TABLE>

- ------------------
(1) Excludes 4,326,000 shares of Common Stock which are issuable by the Company
upon exercise of options, all of which are held by management, and 750,000
shares of Common Stock issuable by the Company, pursuant to the
Underwriters' over-allotment options.

<PAGE>
SUMMARY SUPPLEMENTAL CONSOLIDATED FINANCIAL DATA(1)(2)
(IN THOUSANDS, EXCEPT PER SHARE AND OTHER DATA)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED SEPTEMBER 30, MARCH 31,
---------------------------------------------------- -------------------
1993 1994 1995 1996 1997 1997 1998
-------- -------- -------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales.......................... $198,206 $220,821 $250,351 $265,670 $355,336 $159,105 $286,820
Costs & expenses(3)................ 175,868 200,671 232,593 233,295 308,862(4) 134,386 244,801
Income from operations............. 22,338 20,150 17,758 32,375 46,474 24,719 42,019
Interest expense, net.............. (2,177) (1,950) (2,284) (2,431) (7,471) (1,315) (9,221)
Income before income taxes......... 20,774 19,615 16,296 31,374 40,820 23,233 34,198
Income taxes....................... 6,072 4,872 3,374 9,168 11,694 7,391 10,565
Net income......................... 14,702 14,743 12,922 22,206 29,126 15,842 23,633

PRO FORMA RELATING TO INCOME
TAXES:(5)
Income taxes..................... 7,853 7,454 6,307 12,644 16,328 9,293 13,406
Net income....................... 12,921 12,161 9,989 18,730 24,492 13,940 20,792

PER SHARE DATA:
Net income per diluted share....... $ 0.23 $ 0.21 $ 0.19 $ 0.32 $ 0.42 $ 0.23 $ 0.34
Pro forma net income per diluted
share(5)......................... $ 0.20 $ 0.17 $ 0.15 $ 0.27 $ 0.36 $ 0.20 $ 0.30(6)
Weighted average diluted shares
outstanding (000)................ 63,935 69,544 68,695 68,699 68,935 68,919 68,967

OTHER DATA:
Vitamin World
Number of stores.............. 31 31 40 68 117 89 143
Same store sales growth(7).... 8.8% 7.5% 19.5% 18.4% 22.9% 19.4% 25.6%
Holland & Barrett
Number of stores(2)........... -- -- -- -- 410 -- 417
</TABLE>

<TABLE>
<CAPTION>
AS OF MARCH 31, 1998
--------------------------------
ACTUAL AS ADJUSTED(8)
-------------- --------------

<S> <C> <C>
BALANCE SHEET DATA:
Working capital................................................................... $ 77,902 $117,446
Total assets...................................................................... 460,557 500,101
Long-term debt and capital lease obligations, less current portion................ 215,561 170,561

Total stockholders' equity........................................................ 156,421 240,965
</TABLE>

(2) In August 1997, the Company acquired Holland & Barrett which was accounted
for under the purchase method of accounting and, accordingly, all financial
information of Holland & Barrett has been included since its acquisition
date. See Note 3 of Notes to the Company's Supplemental Consolidated
Financial Statements.

(3) The Company estimates that Nutrition Headquarters Group incurred expenses of
approximately $1.5 million per fiscal year (primarily relating to executive
compensation, consulting services and certain related items) that will not
be incurred in the future.

(4) In fiscal 1997, the Company agreed to settle a class action lawsuit for
approximately $5,600, net of insurance recoveries and also recorded a charge
to operations for related legal fees of $768.

(5) Pro forma net income and pro forma net income per Common Share reflect a
provision for taxes on the income of Nutrition Headquarters Group, which was
an S corporation prior to its merger into NBTY, as if Nutrition Headquarters
Group had been subject to corporate income taxes as a C corporation for all
periods presented.

(6) Pro forma net income per diluted share, as adjusted for the Offerings, is
$0.29 for the six months ended March 31, 1998.

(7) Same store sales data for the period reflect stores open throughout that
period and the corresponding period of the prior fiscal year.

(8) As adjusted to give effect to the sale by the Company of 5,000 shares of
Common Stock offered hereby at an assumed public offering price of $17.75
per share (the last reported sale price on May 7, 1998) and after deducting
the estimated underwriting discounts and commissions and offering expenses
and the application of the net proceeds therefrom. See 'Use of Proceeds' and
'Capitalization.'

<PAGE>
RISK FACTORS

Investment in the Common Stock offered hereby involves certain risks.
Investors should carefully consider the following risk factors in addition to
the other information contained, and incorporated by reference, in this
Prospectus before making any investment in the Common Stock.

EFFECT OF UNFAVORABLE PUBLICITY; ABSENCE OF CLINICAL STUDIES

The Company believes the VMS market is affected by national media attention
regarding the consumption of nutritional supplements. Future research reports or
publicity that are perceived as less favorable or that question such earlier
research or publicity could have a material adverse effect on the Company.
Because of the Company's dependence upon consumer perceptions, adverse
publicity, whether or not accurate, associated with illness or other adverse
effects resulting from the consumption of the Company's products or any similar
products distributed by other companies could have a material adverse effect on
the Company. Such adverse publicity could arise even if the adverse effects
associated with such products resulted from consumers' failure to consume such
products appropriately.

While the Company conducts extensive quality control testing on its
products, the Company generally does not conduct or sponsor clinical studies on
its products. Concerns or public reports about the quality of VMS products
generally, or of the Company's products in particular, could also have a
material adverse effect on the Company. In addition, the scientific research to
date is preliminary and there can be no assurance that future scientific
research or publicity will be favorable to the nutritional supplement market or
any particular product or consistent with earlier favorable research or
publicity.

GOVERNMENT REGULATION

United States. The manufacturing, packaging, labeling, advertising,
distribution and sale of the Company's products are subject to regulation by
Federal, state and local agencies, the most active of which is the U.S. Food and
Drug Administration ('FDA'). The FDA regulates the Company's dietary
supplements, principally under amendments to the Federal Food, Drug and Cosmetic
Act embodied in the Dietary Supplement Health and Education Act ('DSHEA'). Under
DSHEA, new dietary ingredients (those not used in dietary supplements marketed
before October 15, 1994) require premarket submission to the FDA of evidence of
a history of their safe use, or other evidence establishing that they are
reasonably expected to be safe. There can be no assurance that the FDA will
accept the evidence of safety for any new dietary ingredient that the Company
may decide to use, and the FDA's refusal to accept such evidence could result in
regulation of such dietary ingredients as food additives, requiring the FDA
pre-approval based on newly conducted, costly safety testing. Also, while DSHEA
authorizes the use of statements of nutritional support in the labeling of
dietary supplements, the FDA is required to be notified of such statements, and
there can be no assurance that the FDA will not consider particular labeling
statements used by the Company to be drug claims rather than acceptable
statements of nutritional support, necessitating approval of a costly new drug
application, or relabeling to delete such statements.

DSHEA also authorizes the FDA to promulgate good manufacturing practice
('GMP') regulations for dietary supplements, which would require special quality
controls for the manufacture, packaging, storage and distribution of
supplements. There can be no assurance, if such GMP rules are issued, that the
Company will be able to comply with them without incurring material expense to
do so. DSHEA further authorizes the FDA to promulgate regulations governing the
labeling of dietary supplements, including claims for supplements pursuant to
recommendations made by the Presidential Commission on Dietary Supplement
Labels. Such rules are expected to be issued, which will require relabeling of
the Company's dietary supplements, and may require additional record keeping and
claim substantiation testing, and even reformulation, recall or discontinuance
of certain of the Company's supplements, and there can be no assurance that such
requirements will not involve material expenses to the Company. Moreover, there
can be no assurance that new laws or regulations imposing more stringent
regulatory requirements on the dietary supplement industry will not be enacted
or issued.

NBTY is subject to a Federal Trade Commission ('FTC') consent decree and a
U.S. Postal Service consent order, prohibiting certain advertising claims for
certain of the Company's products. Violations of these orders could result in
substantial monetary penalties, which could have a material effect on the
Company's business.

9
<PAGE>
United Kingdom. In the U.K., the manufacture, advertising, sale and
marketing of food products is regulated by a number of government agencies
including the Ministry of Agriculture, Fisheries and Food ('MAFF') and the
Department of Health. In addition, there are various independent committees and
agencies that report to the government, such as the Food Advisory Committee,
which reports to MAFF and suggests appropriate courses of action by the relevant
government department where there are areas of concern relating to food, and the
Committee on Toxicity, which reports to the Department of Health. The relevant
legislation governing the sale of food includes the Food Safety Act of 1990,
which sets out general provisions relating to the sale of food; for example,
this law makes it unlawful to sell food that is harmful to human health. In
addition, there are various statutory instruments and European Commission
('E.C.') regulations governing specific areas such as the use of sweeteners,
coloring and additives in food. Trading standards officers under the control of
the U.K. Department of Trade and Industry also regulate matters such as the
cleanliness of the properties on which food is produced and sold. There can be
no assurance that more stringent regulations will not be promulgated or that, if
more stringent regulations are promulgated, the Company will be able to meet
such regulations without incurring material expense to do so.

Food that has medicinal properties may fall under the jurisdiction of the
Medicines Control Agency ('MCA'), a regulatory authority whose responsibility is
to ensure that all medicines sold or supplied for human use in the U.K. meet
acceptable standards of safety, quality and efficacy. These standards are
determined by the 1968 Medicines Act together with an increasing number of E.C.
regulations and directives laid down by the European Union ('E.U.'). The latter
take precedence over national law. The MCA has a 'borderline department' that
determines when food should be treated as a medicine and should therefore fall

under the relevant legislation relating to medicines. The MCA operates as the
agent of the licensing authority (the United Kingdom Health Ministers) and its
activities cover every facet of medicines controlled in the U.K., including
involvement in the development of common standards of medicines controlled in
Europe. The MCA is responsible, for example, for licensing, inspection and
enforcement to ensure that legal requirements concerning manufacture,
distribution, sale, labeling, advertising and promotion are upheld. Although the
general tendency has been to liberalize restrictions on nutritional products and
consider them food supplements rather than medicines, there can be no assurance
that all new U.K. or E.U. regulations will be favorable for the Company. Any
move by the U.K. or E.U. to restrict existing products or potencies, as well as
the development of new products or potencies, could have a material adverse
effect on the Company. Further, the Company is unable to predict what effect the
formation of the E.U. will have on the Company.

On April 2, 1998, the U.K. Government introduced proposals to limit the
free sale of Vitamin B6 products with a daily dose under 10mg. A Parliamentary
Select Committee will be carrying out an inquiry and submitting its report. This
is expected to involve a consultation period of up to three months, during which
time the proposals will also be considered by the European commission. The U.K.
Government is expected to review the position before any legislation is
introduced. See 'Business--Government Regulation.'

MANAGEMENT OF GROWTH

The Company has in the past, and intends to continue to actively pursue
acquisition opportunities that complement or extend its existing product lines,
expand its distribution channels or are compatible with its business philosophy
and strategic goals. Acquisitions involve a number of risks that could adversely
affect the Company's operating results, including the diversion of management's
attention, the assimilation of operations and personnel of the acquired
companies, the amortization of acquired intangible assets and the potential loss
of key employees of the acquired companies. There can be no assurance that the
Company will consummate acquisitions on satisfactory terms, if at all, that
adequate financing will be available on terms acceptable to the Company, if at
all, or be permitted under the Company's financing instruments, that any
acquired product lines or businesses, or newly built facilities will be
successfully integrated or operated (including the recent acquisition of
Nutrition Headquarters Group or the start-up of the Company's new soft gel
manufacturing facility) or that such product lines or businesses or newly built
facilities will ultimately have a positive impact on the Company, its financial
condition or results of operations. In addition, acquisitions could result in
substantial equity dilution to existing stockholders. In this regard, the
Company will seek approval to increase its authorized capital stock at its next
meeting of stockholders. The Company's growth is partially dependent upon its
ability to open new stores and to operate them profitably. The Company plans to
open additional stores in the United States, as well as

10
<PAGE>
selectively open stores in the United Kingdom. The Company's planned expansion
is dependent on a number of factors, including the availability of suitable
store locations, the negotiation of acceptable lease terms, the Company's
financial resources and its ability to control the operational aspects of its

growth. The Company competes with other national specialty retailers which seek
the same demographics and location characteristics as the Company. Although the
Company believes that it can obtain suitable sites for its projected expansion
and that its control systems and management are adequate to support this growth,
there can be no assurance that the Company's expansion plans will be achieved or
that such expansion will be profitable. See 'Business--Business Strategy.'

DEPENDENCE ON KEY PERSONNEL

The Company's continued success will largely depend on the efforts and
abilities of its executive officers including Messrs. Scott Rudolph, Chairman of
the Board, Chief Executive Officer and President, and Harvey Kamil, Executive
Vice President and Chief Financial Officer, respectively, and certain other key
employees. The Company's operations could be adversely affected if, for any
reason, such officers or employees did not remain with NBTY. See 'Management.'

COMPETITION

The market for vitamins and other nutritional supplements is highly
competitive in all of the Company's channels of distribution. Numerous companies
compete with the Company in the development, manufacture and marketing of
vitamins and nutritional supplements. See 'Business--Competition.'

United States. In the U.S., the Company's Nature's Bounty and Natural
Wealth brands compete for sales to drug store chains and supermarkets with
heavily advertised national brands manufactured by large pharmaceutical
companies, as well as Your Life, Nature Made and Sundown, sold by Leiner Health
Products, Inc., Pharmavite Corp. and Rexall Sundown, Inc., respectively. The
Vitamin World stores compete with specialty vitamin stores, such as General
Nutrition Centers ('GNC') stores, health food stores and other retail stores.
With respect to mail order sales, management believes the Company is the largest
mail order supplier of vitamins and other nutritional supplements in the U.S.
and competes with a large number of smaller, usually less geographically
diverse, mail order companies, some of which manufacture their own products and
some of which sell products manufactured by others. Increased competition from
companies that distribute through the wholesale channel could have a material
adverse effect on the Company as they may have greater financial and other
resources available to them and possess extensive manufacturing, distribution
and marketing capabilities far greater than those of the Company.

United Kingdom. The market for sales of vitamins, minerals and other
nutritional supplements in the U.K. is also highly competitive. H&B's principal
competitors are large pharmacy chains, including Boots, Lloyds and Superdrug,
and major supermarket chains such as ASDA, Sainsbury and Tesco. There are also
approximately 1,300 independent retailers of health foods and nutritional
supplements in the U.K. market. In addition, GNC has recently entered the U.K.
market and currently operates approximately 30 stores in the U.K. The Company
expects other large U.S.-based companies to enter the U.K. market as well. There
can be no assurance that H&B will be able to effectively compete with such other
companies, nor can there be any assurance that unfavorable market trends in the
U.K. will not develop.

AVAILABILITY OF RAW MATERIALS; RELIANCE ON CERTAIN SUPPLIERS

The principal raw materials used in the manufacturing process are natural
and synthetic vitamins purchased from bulk manufacturers in the United States,
Japan and Europe. One supplier currently supplies approximately 10% of the
Company's purchases of raw materials. An unexpected interruption of supply, such
as a harvest failure or the loss of a material supplier, could cause the
Company's results of operations derived from such products to be adversely
affected. Although the Company has generally been able to raise its prices in
response to significant increases in the cost of such ingredients, the Company
has not always in the past been, and may not in the future always be, able to
raise prices quickly enough to offset the effects of such increased raw material
costs. See 'Business--Manufacturing and Quality Control.'

11
<PAGE>
CONTROL BY PRINCIPAL STOCKHOLDERS

Upon completion of the Offerings, Messrs. Scott Rudolph and Arthur Rudolph
will own 16.9% of the Common Stock and will have significant influence over all
matters requiring approval by the Company's stockholders without the approval of
minority stockholders. Such influence could adversely affect the market price of
the Common Stock or delay or prevent a change in control of the Company. See
'Principal and Selling Stockholders.'

RISKS RELATING TO INTERNATIONAL OPERATIONS

The Company has substantial operations and assets located outside the
United States, primarily in the United Kingdom. With respect to international
operations, principally all of the Company's revenues and a substantial portion
of its costs (including borrowing costs) are incurred in the local currency. The
Company's financial performance on a U.S. dollar-denominated basis may be
affected by changes in currency exchange rates. The Company believes that the
matching of revenues and expenses in local currency mitigate the effect of
fluctuating currency exchange rates. Nonetheless, changes in certain exchange
rates could adversely affect the Company's business, financial condition and
results of operations. See 'Management's Discussion and Analysis of Financial
Condition and Results of Operations.'

LEVERAGE; RESTRICTIONS IMPOSED BY TERMS OF INDEBTEDNESS

As of March 31, 1998, the Company had outstanding long term debt (including
capitalized leases) of approximately $216 million and stockholders' equity of
approximately $156 million. The degree to which the Company is leveraged could
have important consequences to the holders of the Common Stock, including: (i)
the Company's ability to obtain additional financing for working capital,
capital expenditures or acquisitions may be limited; (ii) a portion of the
Company's cash flow from operations will be dedicated to the payment of the debt
service and interest on its indebtedness, thereby reducing funds available for
investments; (iii) certain of the Company's borrowings will be at variable rates
of interest, which exposes the Company to the risk of increased interest rates;
and (iv) the Company may be more vulnerable to economic downturns and be limited
in its ability to withstand competitive pressures. Certain of the Company's
competitors may currently operate on a less leveraged basis and therefore could
have significantly greater operating and financing flexibility than the Company.

The Company's debt instruments contain numerous restrictive covenants that
limit the discretion of the Company's management with respect to certain
business matters. These covenants place significant restrictions on, among other
things, the ability of the Company to incur additional indebtedness, to create
liens or other encumbrances, to pay dividends or make certain other payments,
investments, loans and guarantees, repay other indebtedness and amend debt
instruments and to sell or otherwise dispose of assets and merge or consolidate
with another entity. In addition, the Company's Revolving Credit Facility
contains a number of financial covenants that require the Company to meet
certain financial ratios and certain financial tests. See 'Description of
Certain Indebtedness.'

PROTECTION OF TRADEMARKS

The Company owns trademarks registered with the United States Patent and
Trademark Office and many foreign jurisdictions for its Nature's Bounty,
Puritan's Pride, Vitamin World, Good 'N Natural, Hudson, American Health, and
Natural Wealth brands, among others, and with the appropriate U.K. authorities
for its Holland & Barrett trademark, among others, and has rights to use other
names essential to its business. The Company's policy is to pursue registrations
for all trademarks associated with its key products. U.S. registered trademarks
have a perpetual life, as long as they are 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 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. There can be no
assurance that, to the extent the Company does not have patents or trademarks on
its products, another company will not replicate one or more of the Company's
products. Further, there can be no assurance that in those foreign jurisdictions
in which the Company conducts business the protection available to

12
<PAGE>
the Company will be as extensive as the protection available to the Company in
the U.S. See 'Business--Trademarks.'

LEGAL MATTERS

The Company, like other retailers, distributors and manufacturers of
products that are ingested, faces an inherent risk of exposure to product
liability claims in the event that the use of its products results in injury.
The Company may be subjected to various product liability claims, including
among others, that its products contain contaminants or include inadequate
instructions as to use or inadequate warnings concerning side effects and
interactions with other substances. While such claims to date have not been
material to the Company and the Company maintains product liability insurance,
there can be no assurance that product liability claims and the resulting
adverse publicity will not have a material adverse effect on the Company. The
Company carries insurance in the types and amounts that management considers
reasonably adequate to cover the risks associated with its business. There can
be no assurance that such insurance will continue to be available at a
reasonable cost, or if available will be adequate to cover liabilities.

The State of California and the National Resources Defense Council (the
'NRDC') filed lawsuits against a large number of manufacturers of dietary
supplements containing calcium, claiming that naturally-occurring lead levels in
these supplements exceed acceptable levels under California law ('Proposition
65'). Although the Company is not named in this lawsuit, there can be no
assurance that it will not be the subject of future Proposition 65 claims
asserted by the State of California or private parties or that any such claim or
the existing California lawsuit, if successful, might not have a material
adverse effect on the Company's operations.

The Company is presently engaged in various other legal actions, and,
although ultimate liability cannot be determined at the present time, the
Company believes that the amount of any such liability, if any, from these other
actions, after taking into consideration the Company's insurance coverage, will
not have a material adverse effect on its results of operations and financial
condition.

SHARES ELIGIBLE FOR FUTURE SALE

After the Offerings, approximately 69,810,221 shares of Common Stock will
be outstanding. The shares of Common Stock offered hereby will be freely
tradable by persons who are not affiliates of the Company without restriction or
further registration under the Securities Act. Substantially all of the other
outstanding shares of Common Stock, other than shares held by officers,
directors and other affiliates of the Company, are freely tradable. Pursuant to
Rule 144 of the Securities Act ('Rule 144'), shares of Common Stock held by
affiliates of the Company are subject to limitations on volume that may be sold
other than sales pursuant to a registration statement under the Securities Act
or another applicable exemption from registration thereunder.

Scott Rudolph, Harvey Kamil, and certain other officers are eligible to
sell their shares of Common Stock pursuant to Rule 144 under the Securities Act
at prescribed times and subject to the manner of sale, volume, notice and
information restrictions of Rule 144. The Company has granted Michael C. Slade
and former shareholders of the Nutrition Headquarters Group certain demand and
piggyback registration rights covering an aggregate of 8,772,084 shares of
Common Stock (4,386,042 shares after the consummation of the Offerings). The
executive officers, directors and the Selling Stockholders, who collectively are
the beneficial owners of an aggregate of 24,586,046 shares of Common Stock
(17,800,004 shares after the consummation of the Offerings), and the Company
have agreed with the Underwriters, subject to certain exceptions, not to
directly or indirectly, (and, except as may be disclosed herein, will not
announce or disclose any intention to) sell, contract to sell, grant any option
or warrant for the sale of, register, loan, pledge, grant any rights with
respect to or otherwise dispose of, without the prior written consent of Smith
Barney Inc., any Common Stock, or any securities convertible into or
exchangeable or exercisable for Common Stock (including without limitation any
of the economic attributes thereof) for a period of 270 days, in the case of the
Company and the Selling Stockholders, and for a period of 120 days, in the case
of the executive officers and directors who are not Selling Stockholders, after
the date of this Prospectus. Upon the expiration or termination of such
restrictive period, such holders will, in general, be entitled to dispose of
their shares of Common Stock, although the shares of Common Stock held by
affiliates of the Company will continue to be subject to the restrictions of

Rule 144 under the Securities Act. See 'Shares Eligible for Future Sale' and
'Underwriting.'

13
<PAGE>
ANTI-TAKEOVER PROVISIONS

The Company's Certificate of Incorporation (the 'Certificate of
Incorporation') and its By-laws (the 'By-laws'), as well as Delaware corporate
law, contain certain provisions that could have the effect of making it more
difficult for a third party to acquire, or discouraging a third party from
attempting to acquire, control of the Company. Certain of these provisions
impose various procedural and other requirements, including advance notice and
other provisions, that could make it more difficult for stockholders to effect
certain corporate actions. These provisions could limit the price that certain
investors might be willing to pay in the future for shares of Common Stock.
Furthermore, certain of the Company's debt instruments provide for the
acceleration of the indebtedness evidenced thereby upon the occurrence of
certain change in control events (as defined in such debt instruments), which
provisions could also tend to prevent or discourage the acquisition of the
Company by a third party. See 'Description of Capital Stock' and 'Description of
Certain Indebtedness.'

YEAR 2000

At the present time, the Company believes that its systems are
substantially Year 2000 compliant and does not expect Year 2000 issues to
materially affect its products, services, competitive position or financial
performance. However, there can be no assurance that this will be the case. The
ability of third parties with whom the Company transacts business to adequately
address their Year 2000 issues is outside the Company's control. There can be no
assurance that the failure of such third parties to adequately address their
respective Year 2000 issues will not have a material adverse effect on the
Company's business, financial condition, cash flows and results of operations.

FORWARD LOOKING STATEMENTS

This Prospectus contains certain 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 the Company,
including statements under the captions 'Summary,' 'Management's Discussion and
Analysis of Financial Condition and Results of Operations' and 'Business.' All
of these forward looking statements are based on estimates and assumptions made
by management of the Company which, although believed to be reasonable, are
inherently uncertain. Therefore, undue reliance should not be placed upon such
estimates and statements. Factors that may affect such differences include: (i)
adverse publicity regarding the consumption of nutritional supplements; (ii)
adverse federal, state or foreign legislation or regulation or adverse
determinations by regulators; (iii) slow or negative growth in the nutritional
supplement industry; (iv) inability of the Company to successfully implement its
business strategy; (v) increased competition; (vi) increased costs; (vii) loss
or retirement of key members of management; (viii) increases in the Company's
cost of borrowings or inability or unavailability of additional debt or equity
capital; and (ix) changes in general economic conditions in the markets in which

the Company may, from time to time, compete. Many of such factors will be beyond
the control of the Company and its management. For further information or other
factors which could affect the financial results of the Company and such forward
looking statements, see the preceding Risk Factors.

<PAGE>

USE OF PROCEEDS

The net proceeds to be received by the Company from the sale of the
5,000,000 shares of Common Stock offered hereby (assuming an offering price of
$17.75 per share) are estimated to be $85 million ($97 million if the
Underwriter's over-allotment option is exercised in full). The Company expects
to use: (i) approximately $50 million of such net proceeds to reduce borrowings
outstanding under the Company's Revolving Credit Facility; (ii) approximately
$20 million to fund existing committed capital expenditures; and (iii) the
balance for general corporate purposes.

The Company entered into the Revolving Credit Facility with a syndicate of
banks and other financial institutions. The Revolving Credit Facility has a
maximum availability of $60 million. As of the date of this Prospectus, the
Company had outstanding borrowings of $50 million under the Revolving Credit
Facility, at interest rates approximating 7.2%, which it intends to reduce with
a portion of the net proceeds. The Company may reborrow under its Revolving
Credit Facility from time to time. See 'Description of Certain Indebtedness.'

The Company will not receive any proceeds from the sale of the shares of
Common Stock offered by the Selling Stockholders. See 'Principal and Selling
Stockholders.'

PRICE RANGE OF COMMON STOCK

The Company's Common Stock is presently traded on the Nasdaq National
Market under the symbol 'NBTY.' The following table sets forth the high and low
closing sale prices for the Common Stock as quoted on the Nasdaq National Market
for the periods indicated. Such prices have been rounded to the nearest decimal
adjusted to reflect the three-for-one stock split of the Company's Common Stock:

<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
FISCAL YEAR ENDED SEPTEMBER 30, 1996
First Quarter.............................................................. $ 1.88 $ 1.48
Second Quarter............................................................. 2.54 1.54
Third Quarter.............................................................. 3.50 2.54
Fourth Quarter............................................................. 5.75 3.42
FISCAL YEAR ENDED SEPTEMBER 30, 1997
First Quarter.............................................................. 6.67 4.63
Second Quarter............................................................. 7.79 5.04
Third Quarter.............................................................. 9.33 5.00
Fourth Quarter............................................................. 11.50 6.29
FISCAL YEAR ENDED SEPTEMBER 30, 1998
First Quarter.............................................................. 11.13 6.88
Second Quarter............................................................. 20.25 10.83
Third Quarter (through May 7, 1998)........................................ 23.44 17.75
</TABLE>

As of May 7, 1998 there were approximately 684 record holders of Common
Stock. The Company believes that there were in excess of 10,000 beneficial
holders of Common Stock as of such date. On May 7, 1998, the last reported sale
price for the Company's Common Stock on the Nasdaq National Market was $17.75
per share.

15
<PAGE>
DIVIDEND POLICY

Since 1973, the Company has not paid cash dividends on its Common Stock.
The Company's outstanding Senior Subordinated Notes and its Revolving Credit
Facility restrict the payment of cash dividends. See 'Management's Discussion
and Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources' and 'Description of Certain Indebtedness.' On April 24, 1992,
the Company effected a two-for-one stock split in the form of a 100% stock
dividend to stockholders of record on May 8, 1992. In September 1992, the
Company effected a three-for-one stock split in the form of a 200% stock
dividend to stockholders of record on November 2, 1992. On April 3, 1998, the
Company effected a three-for-one stock split in the form of a 200% stock
dividend to stockholders of record on March 23, 1998. Any future determination
as to the payment of cash or stock dividends will depend upon the Company's
results of operations, financial condition and capital requirements and such
other factors as the Company's Board of Directors may consider.

CAPITALIZATION

The following table sets forth the Company's actual capitalization as of
March 31, 1998 and as adjusted to reflect the sale of the 5,000,000 shares of
Common Stock offered by the Company hereby and the application of the estimated
net proceeds to the Company therefrom as described in 'Use of Proceeds.' The
information below should be read in conjunction with Management's Discussion and
Analysis of Financial Condition and Results of Operations and the Company's
Consolidated Financial Statements and related notes included elsewhere in this
Prospectus or incorporated herein by reference.

<TABLE>
<CAPTION>
MARCH 31, 1998
--------------------------
(IN THOUSANDS)
ACTUAL AS ADJUSTED
----------- -----------
<S> <C> <C>
Current portion of long-term debt and capital lease obligations.................... $ 3,034 $ 3,034
----------- -----------
----------- -----------
Long-term debt:
Revolving Credit Facility........................................................ $ 45,000 $ --
Mortgages and other debt......................................................... 16,833 16,833
8 5/8% Senior Subordinated Notes due 2007........................................ 148,825 148,825
Promissory Note Payable.......................................................... 2,457 2,457
Capital lease obligations........................................................ 2,446 2,446
----------- -----------

Total long-term debt.......................................................... 215,561 170,561
----------- -----------
Stockholders' equity:(1)
Common Stock, $.008 par value, 75,000 shares authorized, 69,255 shares issued,
64,746 shares outstanding, 74,255 shares issued as adjusted, 69,746 shares
outstanding as adjusted....................................................... 554 594
Capital in excess of par......................................................... 56,789 141,293
Retained earnings................................................................ 92,884 92,884
Less 4,509 treasury shares, at cost.............................................. (3,206) (3,206)
Cumulative translation adjustment................................................ 9,400 9,400
----------- -----------
Total stockholders' equity.................................................... 156,421 240,965
----------- -----------
Total capitalization.......................................................... $ 371,982 $ 411,526
----------- -----------
----------- -----------
</TABLE>

- ------------------
(1) Excludes 4,326 shares of Common Stock which are issuable by the Company upon
exercise of options, all of which are held by management, and 750 shares of
Common Stock issuable by the Company pursuant to the Underwriters'
over-allotment options.

16
<PAGE>
SELECTED SUPPLEMENTAL CONSOLIDATED FINANCIAL DATA(1)(2)
(IN THOUSANDS, EXCEPT PER SHARE AND OTHER DATA)

The selected supplemental consolidated financial data in the table for the
three years in the period ended September 30, 1997 are derived from the
Company's Supplemental Consolidated Financial Statements which have been audited
by Coopers & Lybrand L.L.P., independent accountants, and are included elsewhere
in this Prospectus. The selected supplemental financial data in the table for
the two years in the period ended September 30, 1994 are derived from the
audited financial statements of NBTY and the separate entity audited financial
statements of Nutrition Headquarters Group. The selected supplemental
consolidated financial data in the table for the six months ended March 31, 1997
and 1998 are derived from the Company's interim unaudited supplemental
consolidated financial statements included elsewhere in this Prospectus and, in
the Company's opinion, contains all adjustments consisting of normal recurring
accruals necessary to present fairly its financial position as of March 31, 1998
and the results of its operations for the six month periods ended March 31, 1997
and 1998. The results of these interim periods are not necessarily indicative of
the results to be expected for the full year. The following information should
be read in conjunction with Management's Discussion and Analysis of Financial
Condition and Results of Operations and the Company's Supplemental Consolidated
Financial Statements and related notes and other supplemental consolidated
financial information included herein.

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED SEPTEMBER 30, MARCH 31,

---------------------------------------------------- -------------------
1993 1994 1995 1996 1997 1997 1998
-------- -------- -------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED INCOME STATEMENT DATA:
Net sales............................. $198,206 $220,821 $250,351 $265,670 $355,336 $159,105 $286,820
Costs & expenses:
Cost of sales....................... 95,659 118,217 137,254 138,186 177,909 79,819 140,414
Catalog printing, postage &
promotion........................ 20,093 23,297 28,307 26,695 27,932 13,996 13,935
Selling, general &
administrative(3)................ 60,116 59,157 67,032 68,414 96,653 40,571 90,452
Litigation settlement costs(4)...... 6,368
-------- -------- -------- -------- -------- -------- --------
Income from operations................ 22,338 20,150 17,758 32,375 46,474 24,719 42,019
Interest expense, net................. (2,177) (1,950) (2,284) (2,431) (7,471) (1,315) (9,221)
Other, net............................ 613 1,415 822 1,430 1,817 (171) 1,400
-------- -------- -------- -------- -------- -------- --------
Income before income taxes............ 20,774 19,615 16,296 31,374 40,820 23,233 34,198
Income taxes(5)....................... 6,072 4,872 3,374 9,168 11,694 7,391 10,565
-------- -------- -------- -------- -------- -------- --------
Net income............................ $ 14,702 $ 14,743 $ 12,922 $ 22,206 $ 29,126 $ 15,842 $ 23,633
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------

PRO FORMA RELATING TO INCOME TAXES:(6)
Income taxes........................ 7,853 7,454 6,307 12,644 16,328 9,293 13,406
-------- -------- -------- -------- -------- -------- --------
Net income.......................... $ 12,921 $ 12,161 $ 9,989 $ 18,730 $ 24,492 $ 13,940 $ 20,792
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------

PER SHARE DATA:
Net income per common share:
Basic............................... $ 0.29 $ 0.24 $ 0.21 $ 0.35 $ 0.45 $ 0.25 $ 0.37
Diluted............................. $ 0.23 $ 0.21 $ 0.19 $ 0.32 $ 0.42 $ 0.23 $ 0.34
Pro forma net income per common share:
Basic............................... $ 0.25 $ 0.20 $ 0.16 $ 0.29 $ 0.38 $ 0.22 $ 0.32
Diluted............................. $ 0.20 $ 0.17 $ 0.15 $ 0.27 $ 0.36 $ 0.20 $ 0.30
Weighted average common shares
outstanding (000):
Basic............................... 51,273 61,428 62,159 64,197 64,611 64,578 64,662
Diluted............................. 63,935 69,544 68,695 68,699 68,935 68,919 68,967

OTHER DATA:
Vitamin World
Number of stores................. 31 31 40 68 117 89 143
Same store sales growth(7)....... 8.8% 7.5% 19.5% 18.4% 22.9% 19.4% 25.6%
Holland & Barrett
Number of stores(2).............. -- -- -- -- 410 -- 417
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
AS OF
MARCH
AS OF YEAR ENDED SEPTEMBER 30, 31,
---------------------------------------------------- --------
1993 1994 1995 1996 1997 1998
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
SELECTED BALANCE SHEET DATA:
Working capital................................... $ 47,973 $ 44,945 $ 45,556 $ 57,559 $ 70,850 $ 77,902
Total assets(8)................................... 125,485 140,097 148,187 171,948 426,915 460,557
Long-term debt, capital lease obligations and
promissory note payable, less current
portion(8)...................................... 15,658 13,865 15,683 23,570 171,250 215,561
Total stockholders' equity........................ 76,272 85,759 91,393 107,645 131,291 156,421
</TABLE>

- ------------------
(1) In April 1998, the Company merged Nutrition Headquarters Group into NBTY in
a transaction accounted for as a pooling of interests. All financial
information has been restated to include the financial position and results
of operations of Nutrition Headquarters Group for all periods presented. See
Note 1 of Notes to the Company's Supplemental Consolidated Financial
Statements.
(2) In August 1997, the Company acquired Holland & Barrett which was accounted
for under the purchase method of accounting and, accordingly, all financial
information of Holland & Barrett has been included since its acquisition
date. See Note 3 of Notes to the Company's Supplemental Consolidated
Financial Statements.
(3) The Company estimates that Nutrition Headquarters Group incurred expenses of
approximately $1.5 million per fiscal year (primarily relating to executive
compensation, consulting services and certain related items) that will not
be incurred in the future.
(4) In fiscal 1997, the Company agreed to settle a class action lawsuit for
approximately $5,600, net of insurance recoveries and also recorded a charge
to operations for related legal fees of $768.
(5) Prior to the merger, Nutrition Headquarters Group had been treated as an S
corporation for federal and state tax purposes. Accordingly, taxable income
has been reported to the individual stockholders for their inclusion in
their respective income tax returns with no provision for these taxes, other
than certain minimum taxes, included in the Company's Supplemental
Consolidated Financial Statements.
(6) Pro forma net income and pro forma net income per Common Share reflect a
provision for taxes on the income of Nutrition Headquarters Group, which was
an S corporation prior to its merger into NBTY, as if Nutrition Headquarters
Group had been subject to corporate income taxes as a C corporation for all
periods presented.
(7) Same store sales data for the period reflect stores open throughout that
period and the corresponding period of the prior fiscal year.
(8) On August 7, 1997, the Company acquired Holland & Barrett. Consideration for
such acquisition included the issuance of promissory notes of the Company,

due in October 1997, aggregating $170 million (the 'Promissory Notes'). On
September 23, 1997, the Company issued $150 million of Senior Subordinated
Notes, the cash proceeds of which were placed in escrow to secure the
payment of the Promissory Notes. In October 1997, the Promissory Notes were
paid with such escrowed cash plus borrowings under the Revolving Credit
Facility. Total assets and long-term debt at September 30, 1997, exclude the
escrowed cash and the Promissory Notes, respectively.

18
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA(1)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

The selected consolidated financial data in the table for the five years in
the period ended September 30, 1997 are derived from the Company's Consolidated
Financial Statements which have been audited by Coopers & Lybrand L.L.P.,
independent accountants. The Consolidated Financial Statements as of September
30, 1996 and 1997 and for the three years in the period ended September 30, 1997
and the reports thereon are included elsewhere in this Prospectus. The selected
consolidated financial data in the table for the six months ended March 31, 1997
and 1998 are derived from the Company's Interim Unaudited Consolidated Financial
Statements included elsewhere in this Prospectus and, in the Company's opinion,
contains all adjustments consisting only of normal recurring accruals necessary
to present fairly its financial position as of March 31, 1998 and the results of
its operations for the six month periods ended March 31, 1997 and 1998. The
results of these interim periods are not necessarily indicative of the results
to be expected for the full year. The following information should be read in
conjunction with the Company's Consolidated Financial Statements and related
notes and other consolidated financial information included or incorporated by
reference herein.

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED SEPTEMBER 30, MARCH 31,
---------------------------------------------------- -------------------
1993 1994 1995 1996 1997 1997 1998
-------- -------- -------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED INCOME STATEMENT DATA:
Net sales.............................. $138,430 $156,057 $178,760 $194,403 $281,407 $122,347 $244,404
Costs & expenses:
Cost of sales........................ 67,951 79,891 93,875 95,638 135,886 58,247 116,227
Catalog printing, postage &
promotion......................... 11,507 14,786 19,262 17,635 19,227 9,942 9,444
Selling, general & administrative.... 42,776 49,208 56,728 58,515 86,588 35,409 84,517
Litigation settlement costs(2)....... 6,368
-------- -------- -------- -------- -------- -------- --------
Income from operations................. 16,196 12,172 8,895 22,615 33,338 18,749 34,216
Interest expense, net.................. (1,227) (914) (1,084) (1,445) (6,655) (869) (8,850)
Other, net............................. 743 1,285 571 1,203 2,033 327 1,312
-------- -------- -------- -------- -------- -------- --------
Income before income taxes............. 15,712 12,543 8,382 22,373 28,716 18,207 26,678

Income taxes........................... 5,939 4,767 3,246 9,021 11,486 7,283 10,453
-------- -------- -------- -------- -------- -------- --------
Net income............................. $ 9,773 $ 7,776 $ 5,136 $ 13,352 $ 17,230 $ 10,924 $ 16,225
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------
PER SHARE DATA:
Net income per common share:
Basic................................ $ 0.23 $ 0.15 $ 0.10 $ 0.24 $ 0.31 $ 0.20 $ 0.29
Diluted.............................. $ 0.18 $ 0.13 $ 0.09 $ 0.22 $ 0.29 $ 0.18 $ 0.27
Weighted average common shares
outstanding (000):
Basic................................ 42,501 52,656 53,387 55,425 55,839 55,806 55,890
Diluted.............................. 55,163 60,772 59,923 59,927 60,163 60,147 60,195
</TABLE>

<TABLE>
<CAPTION>
AS OF YEAR ENDED SEPTEMBER 30,
---------------------------------------------------- AS OF MARCH 31,
1993 1994 1995 1996 1997 1998
-------- -------- -------- -------- -------- --------------------
<S> <C> <C> <C> <C> <C> <C>
SELECTED BALANCE SHEET DATA:
Working capital......................... $ 42,869 $ 39,462 $ 40,665 $ 52,268 $ 63,480 $ 69,747
Total assets(3)......................... 102,647 115,112 123,529 145,550 398,476 429,263
Long-term debt, capital lease
obligations and promissory note
payable, less current portion(3)...... 8,265 7,566 10,924 18,397 166,147 210,664
Total stockholders' equity.............. 70,002 78,017 82,615 96,950 117,060 140,731
</TABLE>

- ------------------
(1) In August 1997, the Company acquired Holland & Barrett which was accounted
for under the purchase method of accounting and, accordingly, all financial
information for Holland & Barrett has been included since its acquisition.
See Note 2 of Notes to the Company's Consolidated Financial Statements.

(2) In fiscal 1997 the Company agreed to settle a class action lawsuit for
approximately $5,600, net of insurance recoveries and also recorded a charge
to operations for related legal fees of $768.

(3) On August 7, 1997, the Company acquired Holland & Barrett. Consideration for
such acquisition included the issuance of Promissory Notes of the Company,
due in October 1997, aggregating $170 million. On September 23, 1997, the
Company issued $150 million of Senior Subordinated Notes, the cash proceeds
of which were placed in escrow to secure the payment of the Promissory
Notes. In October 1997, the Promissory Notes were paid with such escrowed
cash plus borrowings under the Revolving Credit Facility. Total assets and
long-term debt at September 30, 1997, exclude the escrowed cash and the
Promissory Notes, respectively.

<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with
'Summary Supplemental Consolidated Financial Data' and the audited Supplemental
Consolidated Financial Statements of the Company and the notes thereto included
elsewhere in this Prospectus. The Supplemental Consolidated Financial Statements
give retroactive effect (for all periods) to the merger of Nutrition
Headquarters Group into the Company which has been accounted for as a pooling of
interests.

NBTY, founded in 1971, is a leading vertically integrated manufacturer,
marketer and retailer of a broad line of high quality, value-priced nutritional
supplements. NBTY has continued to grow through its aggressive marketing
practices and through a series of strategic acquisitions. Since 1986, the
Company has successfully acquired and integrated 12 companies participating in
the mail order, retail and manufacturing segments of the VMS sector, including
Holland & Barrett in August 1997. In April 1998, NBTY merged Nutrition
Headquarters Group into the Company.

In August 1997, NBTY acquired Holland & Barrett, one of the leading
nutritional supplement retailers in the U.K., for an aggregate purchase price of
approximately $169 million. The acquisition of H&B has been accounted for under
the purchase method of accounting and accordingly, the results of its operations
are included in the financial statements of the Company from the date of
acquisition. The excess of the cost of the acquisition over the fair value of
H&B at the date of the acquisition resulted in goodwill of approximately $134
million which is being amortized over 25 years. The Company financed the
acquisition of Holland & Barrett through a $150 million offering of Senior
Subordinated Notes due in 2007 and borrowings under the Revolving Credit
Facility. Additional finance-related costs associated with the H&B acquisition
of approximately $6 million are being amortized over ten years. Since the
acquisition of H&B, NBTY has gradually replaced products manufactured by outside
suppliers, with lower priced NBTY manufactured products under the Holland &
Barrett brand. As NBTY becomes the primary supplier of nutritional supplements
to the H&B stores, it will effectively lower the cost of products sold by H&B
stores, thereby increasing gross profit margins (to the extent such cost savings
are not passed on to the consumer) while creating additional productivity for
the NBTY manufacturing facilities. As of March 31, 1998, NBTY manufactured
products comprised approximately 40% of H&B's VMS sales (approximately 21% of
total H&B sales), with a goal of reaching 75% of such sales (approximately 40%
of total H&B sales).

In April 1998, NBTY merged a group of affiliated, privately held companies,
referred to collectively as Nutrition Headquarters Group, into the Company. In
connection with such transaction, the Company issued approximately 8.8 million
shares of its Common Stock. Nutrition Headquarters Group includes Nutrition
Headquarters, Inc., a mail order vitamin and nutritional supplement company in
Carbondale, Illinois; Lee Nutrition, Inc., a mail order VMS company in
Cambridge, Massachusetts and Nutro Laboratories, Inc., a South Plainfield, New
Jersey-based vitamin manufacturer. The merger of Nutrition Headquarters Group
into the Company was accounted for as a pooling of interests and, accordingly,
no goodwill was recorded in this transaction. Financial information has been

restated to include the results of operations of Nutrition Headquarters Group
for all periods presented. Nutrition Headquarters Group reported aggregate sales
of approximately $77 million (including $3 million of sales from the Company)
for the fiscal year ended September 30, 1997, of which approximately $50 million
was attributable to mail order. The Company is in the process of integrating
Nutrition Headquarters Group's mail order operations by: (i) merging customer
lists into the Company's computerized mailing list; (ii) expanding product
lines; (iii) redesigning mail order catalogs; (iv) repricing certain products;
and (v) implementing proven marketing techniques. In addition, the Company, over
time, intends to replace Nutrition Headquarters Group's contract manufacturing
for outside customers with the manufacturing of products to be sold through the
Company's own distribution channels.

In April 1998, the Company agreed to sell certain assets of its cosmetic
pencil operation for approximately $6 million, of which $4.5 million was in cash
with additional payments of $1.5 million over the next three years. The cosmetic
pencil operation had sales of approximately $1.9 million and operating losses of
approximately $800,000 in fiscal 1997.

NBTY markets its multi-branded products through four distribution channels:
(i) mail order, (ii) Company-owned Vitamin World retail stores in the U.S.;
(iii) Company-owned Holland & Barrett retail stores in the U.K.;

20
<PAGE>
and (iv) wholesale distribution to drug store chains, supermarkets, discounters,
independent pharmacies and health food stores. Management believes that this
four channel distribution system enables NBTY to most effectively market its
products and lend stability when compared to certain of its competitors. NBTY's
net sales from mail order, retail-U.S., retail-U.K. and wholesale operations
were approximately 32%, 11%, 33% and 24%, respectively, for the six months ended
March 1998. As a result of the Company's efforts to expand its direct to
consumer business, wholesale sales as a percentage of total net sales went from
approximately 44% in fiscal 1995 to approximately 24% for the six months ended
March 31, 1998.

The Company recognizes revenue upon shipment or, with respect to its own
retail stores, upon the sale of products. Net sales are net of all discounts,
allowances, returns and credits. Cost of sales includes the cost of raw
materials and all labor and overhead associated with the manufacturing and
packaging of the products, other than the catalog printing, postage and other
costs. The majority of the Company's products are in tablet, soft gel and
two-piece capsule forms. The Company currently manufactures 70% of the VMS
products it sells. Management believes Company-owned manufacturing typically
results in lower product costs than contract manufacturing with outside
suppliers. Upon completion of a state-of-the-art soft gel manufacturing facility
in 1998, NBTY expects to increase its manufacturing capacity to 90% of the VMS
products it sells. Gross margins are affected by, among other things, changes in
the relative sales mix among the Company's four distribution channels.
Historically, gross margins from the Company's mail order and retail sales have
typically been higher than gross margins from wholesale sales. While the Company
believes it should be able to raise prices in response to significant increases
in the cost of its ingredients, the Company may not always be able to offset the
effects of increased raw material or other costs.

RESULTS OF OPERATIONS

The following table sets forth income statement data of the Company as a
percentage of net sales for the periods indicated:

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER SIX MONTHS
30, ENDED MARCH 31,
----------------------- ---------------
1995 1996 1997 1997 1998
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net sales......................................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost and expenses:
Cost of sales................................................... 54.8 52.0 50.0 50.2 49.0
Catalog printing, postage & promotion........................... 11.3 10.0 7.9 8.8 4.9
Selling, general & administrative............................... 26.8 25.8 27.2 25.5 31.5
Litigation...................................................... 0.0 0.0 1.8 0.0 0.0
----- ----- ----- ----- -----
92.9 87.8 86.9 84.5 85.4
----- ----- ----- ----- -----
Income from operations............................................ 7.1 12.2 13.1 15.5 14.6
Interest expense & other, net..................................... (0.6) (0.4) (1.6) (0.9) (2.7)
----- ----- ----- ----- -----
Income before income taxes........................................ 6.5 11.8 11.5 14.6 11.9
Income taxes...................................................... 1.3 3.4 3.3 4.6 3.7
----- ----- ----- ----- -----
Net income........................................................ 5.2% 8.4% 8.2% 10.0% 8.2%
----- ----- ----- ----- -----
----- ----- ----- ----- -----
</TABLE>

SIX MONTHS ENDED MARCH 31, 1998 COMPARED TO SIX MONTHS ENDED MARCH 31, 1997

Net Sales. Net sales for the six months ended March 31, 1998 were $287
million, an increase of $128 million or 81% compared with net sales of $159
million in the same period in 1997. Of the $128 million increase, $15 million
was attributable to mail order, $14 million to retail-U.S. sales, $95 million to
retail-U.K. sales and $4 million to wholesale sales. Over this period, the
Company's (i) mail order operations grew 20% as a result of a growing number of
names in the Company's mailing list and greater consumer recognition of
Puritan's Pride's quality and value; (ii) retail-U.S. operations grew 75% as a
result of 26% growth in same store sales, and continued new store openings;
(iii) retail-U.K. operations were presented for the six months ended March 31,
1998 as a result of the acquisition of H&B in August 1997; and (iv) wholesale
operations grew moderately at 4% as a result of the Company's objective to focus
its efforts on expanding its direct to consumer business. The

21
<PAGE>
acquisition of H&B has been accounted for under the purchase method of
accounting and accordingly, the results of operations are included in the

financial statements from August 1997, the date of the acquisition. Without H&B,
sales would have increased approximately 21%.

Cost of Sales. Cost of sales for the six months ended March 31, 1998 was
$140 million, an increase of $60 million or 75% compared with cost of sales of
$80 million for the same period in 1997. Gross profit for this period in 1998
was $146 million, an increase of $67 million or 85% compared with $79 million in
the same period in 1997. As a percentage of net sales, gross profit increased to
51% in the six months ended March 31, 1998 from 50% for the same period in 1997.
Such increase was due to various factors, including (i) generally higher margins
on products manufactured by NBTY and sold in H&B stores; (ii) lower
manufacturing costs resulting from increased productivity at the Company's
manufacturing facilities; (iii) higher percentage of sales direct to the
consumer; and (iv) increased sales of new products, which typically have higher
gross margins. The Company's strategy is to continue to increase in-house
manufacturing while decreasing the use of outside suppliers in both the U.S. and
the U.K.

Catalog Printing, Postage and Promotion. Catalog printing, postage and
promotion remained stable at $14 million for the six months ended March 31, in
1998 and 1997. Such costs as a percentage of net sales were 5% in the 1998
period and 9% in the 1997 period. The decrease as a percentage of net sales was
due to the increase in retail sales from H&B as well as more efficient printing
and mailing methods of the Company's catalog operations.

Selling, General and Administrative. Selling, general and administrative
expenses for the six months ended March 31, 1998 were $90 million, an increase
of $50 million compared with $40 million for the same period in 1997. As a
percentage of net sales, selling, general and administrative expenses were 32%
and 26% in the six months ended March 31, 1998 and 1997, respectively. Of the
$50 million increase, $20 million was attributable to rent expense associated
with H&B retail locations and additional Vitamin World retail stores, $16
million was attributable to payroll costs for H&B and $14 million was
attributable to an increase in depreciation and amortization, including $3
million in goodwill resulting from the acquisition of H&B.

Interest Expense, Net. Interest expense, net, was $9 million in the six
months ended March 31, 1998, an increase of $8 million compared with interest
expense, net, of $1 million in the same period in 1997. Such interest expense,
net, primarily resulted from the issuance of $150 million of 8 5/8% Senior
Subordinated Notes due 2007 to fund the acquisition of H&B.

Income Taxes. The Company's effective tax rate was 30.9% in the six months
ended March 31, 1998 and 31.8% in the same period in 1997. Nutrition
Headquarters Group was privately held and had subchapter S status and
accordingly, recorded no income tax provision except for certain minimum taxes.
It is anticipated that the Company's effective tax rate on an on-going basis
will be approximately 40%.

Net Income. Net income for the six months ended March 31, 1998 was $24
million, an increase of $8 million or 50% compared with $16 million in the same
period in 1997. Assuming Nutrition Headquarters Group was taxed at the Company's
effective rate, net income would have been $21 million for the six months ended
March 31, 1998, an increase of $7 million or 50% compared with $14 million in

the same period in 1997.

FISCAL YEAR ENDED SEPTEMBER 30, 1997 COMPARED TO FISCAL YEAR ENDED SEPTEMBER 30,
1996

Net Sales. Net sales for fiscal 1997 were $355 million, an increase of $89
million or 33% compared with net sales of $266 million in fiscal 1996. Of the
$89 million increase, $28 million was attributable to mail order, $44 million to
retail sales in the U.S. and the U.K. and $17 million to wholesale sales. Over
this period, the Company's (i) mail order operations grew 21% as a result of a
growing number of names in the Company's mailing list and greater consumer
recognition of Puritan's Pride quality and value; (ii) retail-U.S. operations
grew 93% as a result of 23% growth in same store sales and 49 net new store
openings; (iii) retail-U.K. operations recorded sales of $24 million as a result
of the acquisition of Holland & Barrett in August 1997; and (iv) wholesale
operations grew 16%. Without Holland & Barrett, sales would have increased 25%.

Cost of Sales. Cost of sales for fiscal 1997 was $178 million, an increase
of $40 million or 29% compared with $138 million for fiscal 1996. Gross profit
for fiscal 1997 was $177 million, an increase of $50 million or 39% compared
with $127 million in fiscal 1996. As a percentage of net sales, gross profit
increased to 50% in

22
<PAGE>
fiscal 1997 from 48% in fiscal 1996. Such increase was due to various factors,
including increased sales of new products and generally higher margins on
products as well as lower manufacturing costs resulting from increased
productivity. The Company's strategy is to continue to increase in-house
manufacturing while decreasing the use of outside suppliers in both the U.S. and
the U.K.

Catalog Printing, Postage and Promotion. Catalog printing, postage and
promotion for fiscal 1997 was $28 million, an increase of $1 million or 4%
compared with $27 million in fiscal 1996. Such costs as a percentage of net
sales were 8% in fiscal 1997 and 10% in fiscal 1996. The decrease as a
percentage of net sales was mainly due to more efficient printing and mailing
methods of the Company's catalog operations and increased Company-wide sales.

Selling, General and Administrative. Selling, general and administrative
expenses for fiscal 1997 were $97 million, an increase of $29 million or 43%
compared with $68 million in fiscal 1996. As a percentage of net sales, these
expenses were 27% and 26% for fiscal 1997 and 1996, respectively. This increase
was attributable to increased payroll costs and building costs including rent
expense resulted from the acquisition of Holland & Barrett.

Litigation. In fiscal 1997, the Company agreed to settle a class action
lawsuit for approximately $5.6 million, net of insurance recoveries and also
recorded a charge to operations for related fees of $768,000. See Note 15 of
Notes to Supplemental Consolidated Financial Statements.

Interest Expense, Net. Interest expense, net, was $7 million in fiscal
1997, an increase of $5 million compared with interest expense, net, of $2
million in fiscal 1996. Increased interest expense, net, associated with the

Holland & Barrett acquisition totaled $2 million in fiscal 1997. In addition,
the Company recorded a loss of approximately $2 million in connection with the
settlement of a treasury-lock instrument.

Income Taxes. The Company's effective tax rate was 28.7% in fiscal 1997
and 29.2% in fiscal 1996. Nutrition Headquarters Group was privately held and
had subchapter S status and accordingly, recorded no income tax provision,
except for certain minimum taxes. It is anticipated that the Company's effective
tax rate on an on-going basis will be approximately 40%.

Net Income. Net income for fiscal 1997 was $29 million, an increase of $7
million or 32% compared with $22 million in fiscal 1996. Assuming Nutrition
Headquarters Group was taxed at the Company's effective rate, net income would
have been $24 million for fiscal 1997, an increase of $5 million or 26% compared
with $19 million in fiscal 1996.

FISCAL YEAR ENDED SEPTEMBER 30, 1996 COMPARED TO FISCAL YEAR ENDED SEPTEMBER 30,
1995

Net Sales. Net sales for fiscal 1996 were $266 million, an increase of $16
million or 6% compared with net sales of $250 million in fiscal 1995. Of the $16
million increase, $11 million was attributable to increases in wholesale and
retail sales and $13 million was attributable to mail order sales, offset by a
decrease of $8 million from Beautiful Visions, a cosmetic mail order catalog
which was sold in 1995.

Cost of Sales. Cost of sales for fiscal 1996 was $138 million, an increase
of $1 million or 1% compared with $137 million in fiscal 1995. Gross profit for
fiscal 1996 was $127 million, an increase of $14 million or 12% compared with
$113 million in fiscal 1995. As a percentage of net sales, gross profit
increased to 48% in fiscal 1996 from 45% in fiscal 1995. Such increase was due
to various factors, including increased sales of higher margin products,
long-term purchase commitments of raw materials resulting in lower costs and
manufacturing efficiencies.

Catalog Printing, Postage and Promotion. Catalog printing, postage and
promotion for fiscal 1996 was $27 million, a decrease of $1 million compared
with $28 million in fiscal 1995. Such costs as a percentage of net sales were
10% in fiscal 1996 compared with 11% in fiscal 1995. This decrease was mainly
due to the discontinuation of the Beautiful Visions mail order catalog.

Selling, General and Administrative. Selling, general and administrative
expenses for fiscal 1996 were $68 million, an increase of $1 million or 1%
compared with $67 million in fiscal 1995. As a percentage of net sales, these
costs were 26% in fiscal 1996 and 27% in fiscal 1995. This decrease was
attributable to decreases in

23
<PAGE>
payroll fringe benefits and other miscellaneous costs which were offset by
increases in outlet store rentals and professional fees.

Interest Expense, Net. Interest expense, net, in fiscal 1996 and fiscal
1995 remained stable at $2 million.

Income Taxes. The Company's effective tax rate was 29.2% in fiscal 1996
and 20.7% in fiscal 1995. Nutrition Headquarters Group was privately held and
had sub-chapter S status and accordingly, recorded no income tax provision,
except for certain minimum taxes. It is anticipated that the Company's effective
tax rate on an on-going basis will be approximately 40%.

Net Income. Net income for fiscal 1996 was $22 million, an increase of $9
million or 69% compared with $13 million in fiscal 1995. Assuming Nutrition
Headquarters Group was taxed at the Company's effective rate, net income would
have been $19 million for fiscal 1996, an increase of $9 million or 90% compared
with $10 million in fiscal 1995.

SEASONALITY

The Company believes that its business is slightly seasonal. Historically,
the Company has slightly lower net sales in its first and third fiscal quarters,
slightly higher net sales in its second and fourth fiscal quarters. The Company
may have higher net sales in a quarter depending upon when it has engaged in
significant promotional activities.

LIQUIDITY AND CAPITAL RESOURCES

The Company will require liquidity for capital expenditures and working
capital needs, including debt service requirements. Total anticipated capital
expenditures for the Company are expected to be approximately $55 million for
fiscal year 1998, of which $39 million has been spent through March 31, 1998.
The Company is currently completing the construction of a soft gel manufacturing
facility for a total cost of $35 million, of which $5 million remains to be
expended. For information as to the Company's commitments and contingencies,
including future minimal rent payments and other commitments, see Note 12 to
Supplemental Consolidated Financial Statements.

The Company believes that the cash flow generated from its operations,
together with proceeds from the Offering and amounts available under the
Revolving Credit Facility, should be sufficient to fund its debt service
requirements, working capital needs, anticipated capital expenditures and other
operating expenses for the foreseeable future. The Revolving Credit Facility
provides the Company with available borrowings up to an aggregate principal
amount of $60 million. The Company's future operating performance will be
subject to future economic conditions and to financial, business and other
factors, many of which are beyond the Company's control. See 'Risk Factors.'

The Company's debt instruments impose certain restrictions on the Company's
ability to make capital expenditures, limit the Company's ability to incur
additional indebtedness, dispose of assets, repay indebtedness or amend other
debt instruments, pay distributions, create liens on assets, enter into sale and
leaseback transactions, make investments, loans or advances and make
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. See 'Description of Certain
Indebtedness.'

<PAGE>
BUSINESS

BACKGROUND

Arthur Rudolph, NBTY's former chairman, founded the Company in 1971, as a
direct marketer of nutritional supplements under the name Nature's Bounty, Inc.
NBTY completed its initial public offering of stock in that same year. NBTY
first developed its manufacturing capabilities in 1974, began its mail order
operation in 1974 and opened its first retail store in 1979. NBTY has continued
to grow through its aggressive marketing practices and through a series of
strategic acquisitions. Since 1986, the Company has successfully acquired and
integrated 12 VMS companies participating in the mail order, retail and
manufacturing segments, including Holland & Barrett in August 1997. See
'Prospectus Summary--Recent Acquisition.' The Company changed its name to NBTY,
Inc. in 1995.

In 1986, as part of its acquisition strategy, the Company acquired U.S.
Nutrition Co. Inc., ('U.S. Nutrition') a nutritional supplement mail order
company which was founded in 1976 by Scott Rudolph, son of Arthur Rudolph. After
the acquisition of U.S. Nutrition, Scott Rudolph joined the Company and later
was elected Chairman, Chief Executive Officer and President of NBTY. The
Company, under the leadership of Scott Rudolph, has achieved record sales and
earnings, developed state-of-the-art manufacturing facilities, diversified its
operations into four distribution channels and completed a number of strategic
acquisitions. For the fiscal year ended September 1997, net sales and income
from operations increased 34% and 63%, respectively over the prior year, to $355
million and $53 million (excluding $6.4 million of legal settlement costs in
fiscal 1997), respectively. For the six months ended March 1998, net sales and
income from operations increased 80% and 70% respectively over the prior year
period, to $287 million and $42 million, respectively. NBTY's net sales from
mail order, retail-U.S., retail-U.K. and wholesale operations were approximately
32%, 11%, 33% and 24%, respectively, for the six months ended March 1998.

INDUSTRY OVERVIEW

The vitamin, mineral and nutritional supplement market in the United States
has grown at a compound annual rate of approximately 15%, from $3.7 billion in
1992 to $6.5 billion in 1996, according to 1997 Packaged Facts. Increasing VMS
usage has been linked to a number of factors, including: (i) scientific and
popular reports on the positive benefits of VMS products; (ii) awareness of
healthier lifestyles; (iii) favorable regulatory environment; (iv) new VMS
product introductions and (v) wider distribution of VMS products. A primary
driver in the continuing increase in demand for nutritional supplement products
is the aging of the U.S. population, together with an increased focus by this
segment on preventative health measures. According to the Simmons Market
Research Bureau, only 54% of this U.S. adult population regularly uses vitamins,
minerals or supplements. Further, based on the U.S. Bureau of the Census data,
the 45-and-older age group, which accounted for approximately 32% of the U.S.
population in 1990, is expected to grow to 40% of the U.S. population by 2010.
Vitamins, minerals and nutritional supplements are sold through drug stores,
supermarkets and discount stores, health food stores, direct sales organizations
and mail order. According to the Packaged Facts, drug stores,

25
<PAGE>
supermarkets and discount stores, on a combined basis, accounted for
approximately 46%, health food stores for approximately 38% and direct and mail
order sales for approximately 16% of total industry sales in 1996.

Drug stores, supermarkets and discount stores traditionally offer more
mainstream products, such as multivitamins, individual vitamins (such as
Vitamins A, C and E), and minerals (such as calcium, potassium and magnesium).
This market has traditionally grown in line with industry sector growth. Health
food stores, as well as direct sales and mail order retailers traditionally
offer greater product breadth, including more sophisticated supplement products.
The health food market is highly fragmented with approximately 11,000 health
food and vitamin chain stores in the U.S., of which approximately 70% are
independently owned and operated and approximately 30% are associated with one
of several regional or national chains. This market has continued to grow as
industry participants continue to add stores in new and existing markets.

DISTRIBUTION CHANNELS

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

<TABLE>
<CAPTION>
SIX MONTHS
FISCAL YEARS ENDED ENDED
SEPTEMBER 30, MARCH 31,
-------------------- ------------
1995 1996 1997 1997 1998
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Mail order........................................................ 51 % 51 % 46 % 49 % 32 %
Retail--U.S....................................................... 5 8 11 11 11

Retail--U.K.(1)................................................... -- -- 7 -- 33
Wholesale......................................................... 44 41 36 40 24
---- ---- ---- ---- ----
100 % 100 % 100 % 100 % 100 %
---- ---- ---- ---- ----
---- ---- ---- ---- ----
</TABLE>

- ------------------
(1) Holland & Barrett was acquired in August 1997.

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 increase average order sizes, the Company places
advertisements in Sunday newspaper supplements, conducts insert programs with
other mail order companies and has special promotions on a quarterly basis which
offer customers combinations of products and quantities at promotional prices.
NBTY's use of state-of-the-art equipment in its catalog operations, such as
computerized co-mailing, address bar coding and automated picking and packing
systems, enables the Company to fill mail orders within 48 hours of their
receipt. The Company's position as a leading mail order nutritional supplement
distributor and its utilization of state-of-the-art systems 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.

26
<PAGE>

recently been opened and leases have been signed for 39 stores. Vitamin World
stores typically turn profitable within the first nine months of operation.
Through direct interaction with the retail customer, the Company is better able
to identify customer preferences, retail buying trends and pricing than by
analyzing sales reports from wholesalers and independent retailers. As a result,
the Company is better able to merchandise its products and more quickly respond
to changing customer trends.

BUSINESS STRATEGY

The Company's objective is to increase sales, improve profitability and
strengthen its leading position through the following key strategies:

Enhance Vertical Integration. Management believes that vertical
integration creates a significant competitive advantage by allowing the Company
to: (i) maintain higher quality standards while lowering product costs, a
portion of which are passed on to the customer as lower prices; (ii) more
quickly respond to scientific and popular reports and consumer buying trends;
(iii) assure delivery schedules; (iv) reduce dependence on outside suppliers;
and (v) improve overall operating margins. The Company continually evaluates
ways to further enhance its vertical integration. For example, as NBTY becomes
the primary supplier of nutritional supplements to the H&B stores by replacing
outside suppliers, it will effectively lower the costs of products sold by H&B
stores. Management believes this should increase overall profit margins while
creating additional productivity for NBTY's manufacturing facilities.

of consumer demands for new products and the growing publicity over the
importance of vitamins, minerals and nutritional supplements in the promotion of
general health, management believes that NBTY will continue to attract new
customers based upon its ability to rapidly respond to consumer demands with
high quality, value-oriented products. During 1997, NBTY introduced more than
100 new products. In addition to expanding the Company's product lines, many of
these popular new specialty products, such as St. John's Wort and glucosamine
sulfate, typically provide higher margins.

27
<PAGE>
improve response rates. In addition, the Company 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 and which the Company believes it can
integrate into its own operations without adding substantial
overhead expenses, such as the recent merger of Nutrition
Headquarters Group into the Company.

o Increase retail sales in the U.S. and U.K. In order to increase
retail sales, NBTY is actively expanding its base of Vitamin World
stores in the U.S. and selectively expanding its Holland & Barrett
stores in the U.K. During calendar 1998, the Company plans to open a
total of 120 Vitamin World stores to increase its penetration into
factory outlet and regional malls. The Company has recently opened
15 stores and signed leases for 39 stores.

Integrate Strategic Acquisitions. Since 1986, NBTY has successfully
acquired and integrated 12 VMS companies, including Holland & Barrett in August
1997. Most recently NBTY merged Nutrition Headquarters Group into the Company.
NBTY is currently in the process of integrating Nutrition Headquarters Group's
mail order operations by: (i) merging customer lists into the Company's
computerized mailing list; (ii) expanding product lines; (iii) redesigning mail
order catalogs; (iv) repricing certain products; and (v) implementing proven
marketing techniques. NBTY will continue to manufacture select products out of
Nutrition Headquarters Group's manufacturing operations. The Company intends to
continue to pursue acquisition opportunities in the VMS sector, both in the U.S.
and internationally, that complement or extend its existing product lines,
expand its distribution channels or are compatible with its business philosophy
and strategic goals.

Build Infrastructure to Support Growth. NBTY has technologically advanced,

state-of-the-art manufacturing and production facilities, with total production
capacity of approximately five billion tablets and capsules per year. The
Company is currently completing construction of a 131,000 square foot
state-of-the-art soft gelatin encapsulation manufacturing facility, capable of
producing five billion soft gel capsules per year, to enhance its vertical
integration, reduce its dependence on outside suppliers and further improve
profit margins. Upon completion of the new facility, NBTY expects to increase
its manufacturing capacity to 90% from 70% of the VMS products it sells. The
Company regularly evaluates its operations and makes investments in building
infrastructure, as necessary to support its continuing growth.

PRODUCTS

The Company manufactures and markets over 900 products including vitamins
and other nutritional supplements such as minerals, amino acids and herbs. The
Company's products are available in single vitamins and multi-vitamin
combinations, and in varying potency levels, sizes, formulations and delivery
forms, including tablets, soft gel and hard shell capsules, chewables, powders
and liquids. The Company also offers a selection of personal care products by
direct mail and in its retail stores including creams, shampoos and lotions. The
Company offers its products under its brands through each of its four
distribution channels.

Mail Order. The Company offers a full line of vitamins and nutritional
supplements through its mail order channel in the U.S. under the Puritan's Pride
and Nutrition Headquarters brands. The Company began manufacturing and selling
VMS products under its Puritan's Pride brand in 1974, originally focusing on
single vitamin and multi-vitamin combinations. Puritan's Pride has become the
leading domestic mail order brand and has developed a reputation for quality,
consistency, innovation and value to the consumer. Through its mail order
channel in the U.K. the Company offers similar products under the Vitamin World
brand. In April 1998, Nutrition Headquarters Group was merged into the Company.
Nutrition Headquarters Group's mail order brands were introduced in 1975 and
have reputations for high quality products.

28
<PAGE>
Retail Stores, U.S. NBTY's Company-owned retail stores in the U.S. offer a
full line of VMS products under the Vitamin World brand. The Company began
selling vitamins and other nutritional supplements such as minerals, amino acids
and herbs under its Vitamin World brand in 1979. In addition, the Company offers
a selection of personal care products including creams, lotions and shampoos
under the Vitamin World brand. Vitamin World has become a well known retail
brand for vitamins and nutritional supplements and has developed a reputation
for a broad selection of high quality products at discount prices.

Retail Stores, U.K. NBTY's Company-owned retail stores in the U.K. offer a
full line of VMS products under the Holland & Barrett brand. Holland & Barrett,
which has been in business since 1920, is a well known and respected retailer
and brand. NBTY acquired Holland & Barrett in August 1997. Since the
acquisition, NBTY has gradually replaced VMS products manufactured by outside
suppliers with lower priced NBTY manufactured products under the Holland &
Barrett brand. Such products constitute approximately 56% of aggregate sales.
The remaining 44% of sales are made up of health food products including dried
fruit and nuts. As of March 31, 1998, NBTY manufactured products comprised
approximately 40% of H&B's VMS sales (approximately 21% of total H&B sales) with
a goal of reaching 75% of such sales (approximately 40% of total H&B sales) by
the end of calendar 1998. Since its introduction of NBTY manufactured product
under the Holland & Barrett brand the Company has continued to post increasing
sales of VMS products in its Holland & Barrett stores.

Wholesale. The Company markets a selection of VMS products under Nature's
Bounty, the Company's signature brand, to drug stores, supermarkets and
discounters such as Albertsons, CVS, Eckerd Drugs, Genovese, Osco and Target.
The Company began manufacturing and selling select VMS products under its
Nature's Bounty brand in 1971 and over time, has expanded its product offerings
to include a full line of VMS products. Nature's Bounty has become a leading
brand and has developed a reputation for quality, consistency, innovation and
value to the consumer. The Company also sells select products under the Natural
Wealth brand to supermarkets and wholesalers, such as Bergen Brunswig Co.,
Cardinal Health Co. and McKesson Drug Co. The Company also sells products under
the Good 'N Natural and American Health brands to health food wholesalers.

Product Development. The Company introduces new and innovative products on
a consistent and timely basis. New product ideas are generated in response to
consumer trends and scientific and popular reports. The Company works with both
its retail and wholesale customers as well as its vendors to more quickly
respond to such changes in consumer buying trends. New products are developed by
members of the Company's sales and marketing and purchasing departments working
in conjunction with senior management. After a product has been approved for
manufacture, the Company produces a sample and conducts quality control studies
to ensure that the product meets the Company's standards of quality assurance.
Based upon the outcome of these tests, the product becomes available for
production. During fiscal 1997, the Company introduced more than 100 new
products.

MANUFACTURING AND QUALITY CONTROL

By manufacturing the majority of its own products, the Company believes it
maintains better control over product quality and availability while also
reducing production costs. The Company's manufacturing process consists of a
number of steps, as follows: (i) purchase high quality bulk raw materials; (ii)
mix, blend and granulate the measured ingredients into a mixture with a
homogenous consistency; (iii) encapsulate or tablet the blended mixture
according to the appropriate dosage; and (iv) coat the completed tablet. When a
product is ready for bottling, the automated equipment counts the tablets,
inserts them into recyclable plastic bottles, adds a tamper-evident hinged cap
with an inner safety seal and affixes a label. Management believes NBTY's
products appeal to the needs of today's environmentally and safety conscious
consumer. In addition, NBTY assures customer satisfaction by employing rigorous

quality assurance programs in its state-of-the-art laboratories.

During the past five years NBTY has invested approximately $100 million in
building state-of-the-art manufacturing facilities. NBTY currently manufactures
approximately 70% of the nutritional supplement products it sells and upon
completion of a new state-of-the-art manufacturing facility in 1998, the Company
expects to manufacture approximately 90%. As a result of its ongoing
manufacturing expansion, NBTY operates technologically advanced manufacturing
and production facilities, located on Long Island, New York, consisting of
approximately 830,000 square feet in eight modern buildings, of which 290,000
square feet is devoted to

29
<PAGE>
manufacturing, 340,000 square feet to warehousing and distribution, and the
remaining 200,000 square feet to office space, production, quality assurance and
a testing laboratory. NBTY has manufacturing capacity of 350 million tablets, 60
million capsules and 6 million bottles per month. Upon completion of its new
soft gel manufacturing plant, the Company will be able to manufacture 420
million capsules per month. The Company's current capacity levels can be
expanded by 50%, as necessary, at a small incremental cost. The Company
regularly evaluates its operations and makes strategic investments in building
manufacturing capacity, as necessary, to support its continuing growth. NBTY
believes that the capacity of its manufacturing and distribution facilities is
adequate to meet the requirements of its current business.

Soft Gelatin Manufacturing Facility. The Company is currently completing
construction of a $35 million, state-of-the-art, 131,000 square foot soft
gelatin encapsulation manufacturing facility which is expected to be completed
by July 1998. The soft gelatin process is the only widely accepted process which
facilitates the encapsulation of oils, other liquids and solids in a suspended
state, in an oral dose form. With the Company's current mix of products, the
facility will be capable of producing approximately five billion soft gel
capsules per year. This proprietary equipment is designed to allow flexibility
in producing different shape and size capsules. The plant can be expanded to
double the current capacity, at a small incremental cost, if demand requires.
The Company's soft gel equipment is currently being run on a test basis in its
engineering plant and is producing limited product runs.

Raw Materials. The principal raw materials used in the manufacturing
process are natural and synthetic vitamins, purchased from bulk manufacturers in
the United States, Japan and Europe. NBTY purchases its raw materials from
multiple sources including some of the largest pharmaceutical and chemical
companies in the world. Although the Company's raw materials and packaging
supplies are readily available from multiple suppliers, one supplier currently
provides approximately 10% of NBTY's purchases. NBTY believes that the loss of
its largest supplier could have a temporary adverse effect upon its operations
but that, over time, NBTY would be able to replace such source of supply. No
other supplier accounts for 10% or more of NBTY's raw material purchases.

Quality Control. NBTY's manufacturing process places significant emphasis
on quality control. All raw materials used in production are initially held in
quarantine during which time NBTY's laboratory employees assay the product
against the manufacturer's certificate of analysis. Once cleared, a lot number

is assigned, samples are retained and the material is processed by formulating,
mixing and granulating, compression and sometimes coating operations. Such
manufacturing operations are conducted in accordance with the good manufacturing
practices of the FDA and other applicable regulatory standards. After the tablet
is manufactured, laboratory employees test its weight, purity, potency,
dissolution and stability.

SALES AND CUSTOMER SERVICE

The Company's established customer relationships at the mail order, retail
and wholesale levels are based upon the Company's long-standing commitment to a
high level of customer service. NBTY has approximately 400 employees in its mail
order operations, 700 sales employees located throughout the U.S. in its Vitamin
World stores, 2,000 sales employees located throughout the U.K. in its Holland &
Barrett stores, and 60 commissioned sales associates and brokers who sell to
NBTY's wholesale distributors.

Mail Order. The Company maintains a highly efficient, state-of-the-art
call center at the Company's headquarters in Long Island, New York. The Company
offers prompt order entry services through the use of toll-free telephone
numbers, which may be called six days a week to place orders, request a catalog
or make product inquiries. The Company has 100 customer service stations
installed in its call center. Once a call is received by the Company, it is
automatically routed to the next available customer service representative. The
Company closely tracks forecasted demand and hires and trains new customer
service representatives to maintain its service standards. The Company's call
center can efficiently handle up to 10,000 calls per day.

The Company uses an integrated management information system that allows
telephone orders to be captured on-line and mail orders to be efficiently
entered. As the Company's sales representative processes the order, the
Company's on-line data processing system provides, among other things, customer
history information, product availability information, expected shipping date
and order number. Customers can pay with major credit

30
<PAGE>
cards, checks or money orders. All credit charges are pre-authorized prior to
shipping the order and credit authorization occurs concurrently with order
processing.

Retail Stores, U.S. The Company's store management structure at its
Vitamin World stores consists of one regional manager for approximately every 11
district managers, one district manager for approximately every 11 stores, and
at the store level, on average, one store manager, one assistant store manager
and two sales personnel. Store managers are expected to customize stores to the
demographics of particular markets and to have responsibility for merchandise
assortment, promotion and certain advertising and product pricing. Store
managers are also responsible for the operations of individual stores including
recruiting and hiring store personnel. The Company offers continuing sales and
product training for its store personnel. Store personnel are compensated on a
salary plus commission basis.

Retail Stores, U.K. The Company's store management structure, training

program and compensation program at its Holland & Barrett stores is very similar
to that of its Vitamin World stores. Store management at Holland & Barrett
consists of one regional manager for approximately every 20 district managers,
one district manager for approximately every 20 stores, and at the store level,
on average, one store manager, one assistant store manager and two sales
personnel.

Wholesale. The Company's sales force currently consists of 60 dedicated
professionals responsible for accounts located throughout the United States, who
are paid on a salary plus commission basis. These personnel work with direct
accounts, distributors and individual retailers to enhance knowledge of the
Company's products and brands.

Customer Service. The Company operates an in-house customer service and
information department to respond to inquiries requesting information concerning
product applications, background data, ingredient compositions and the efficacy
of products. The Company maintains a toll-free customer service phone line to
answer product questions.

MARKETING

The Company's marketing strategies are supported by extensive advertising
and promotional programs ranging from national television advertising to
in-store sales promotions. At the heart of every effort is the Company's mission
statement which remains 'to deliver the highest quality nutritional supplements
with the best value to the customer.' These advertising and promotional programs
are also designed to achieve the specific objectives of each brand that the
Company markets.

The advertising objective of the Company's mail order brands in the U.S.
and the U.K. is to increase the mailing list by attracting new customers through
special offers on television, radio and in magazines, newspapers and through
in-home mailings. National advertising in Sunday newspaper supplements, for
example, introduce vitamin users to a smart way to save on their purchases by
buying direct from the manufacturer. Television advertising on national cable
networks invite viewers to call a toll free number to obtain a free copy of the
Puritan's Pride vitamin catalog. Another objective for the mail order division
is to increase the average order size through merchandising within the catalog
itself. The Company has also introduced a Puritan's Pride web site
(www.puritanspride.com) to provide yet another source of lead generation and
sales.

The Company-owned retail outlets in the U.S. and U.K. are supported
primarily through consumer print advertising, radio advertising and in-store
promotions. The objective for these retail advertising campaigns is to build
store traffic and sales. In the U.S., regional advertising in local newspapers
and on the radio position Vitamin World as the low price leader on a variety of
top quality nutritional supplements. An extensive print campaign in the U.K. is
designed to re-position the Company's chain of Holland & Barrett stores as the
source for 'everyday low prices' for a broad range of quality supplements.
In-store point-of-purchase merchandising materials in the U.S. and the U.K.
promote specific products and product groups at special 'direct from the
manufacturer prices.' These materials also help to educate the consumer as to
the benefits of the Company's products.

Within the wholesale brands of Nature's Bounty, Natural Wealth, Good 'N
Natural and American Health the objectives are to increase brand awareness among
the trade and consumers and to introduce and promote the use of new products
within the brand. With the rise in demand for high quality nutritional
supplements, the Company

31
<PAGE>
uses print and broadcast advertising to position its wholesale brands as the
leaders in the category. Trade advertising in industry magazines support the
'sell-in' of the Company's products to the drug stores, supermarkets,
discounters and health food stores. Print advertising in consumer magazines and
newspapers support the 'sell-through' of the new products to the consumer.

The advertising materials for each brand including point-of-purchase
materials, catalogs, nutrition information brochures, in-store signs, product
displays and price lists are all produced by the Company's wholly owned in-house
advertising agency. With the help of the latest computer design equipment, the
25 graphic art professionals which make up this in-house agency, also design the
packaging for the Company's over 900 products. NBTY's in-house graphics
capability allows the Company to react quickly to the changing demands of the
marketplace with promotional pieces and new products designed to increase sales
and profits.

WAREHOUSING AND DISTRIBUTION

The Company dedicates 440,000 square feet to warehousing and distribution
in its Long Island, NY; Carbondale, IL; South Plainfield, NJ; Reno, NV; and
Southampton and Hinckley, U.K. facilities.

The Company's warehouse and distribution centers are efficiently integrated
with the Company's order entry systems to enable the Company to ship out most
mail orders within 48 hours of their receipt. Once a customer's telephone order
is completed, the Company's computer system forwards the order to the Company's
distribution center, where all necessary distribution and shipping documents are
printed to facilitate processing. Thereafter, the orders are prepared, picked,
packed and shipped continually through 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 25,000 orders
daily. A system of conveyors automatically routes boxes carrying merchandise
throughout the 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 ships its orders primarily
through the U.S. Postal Service, serving domestic and international markets.

The Company currently distributes its products from its distribution
centers through contract and common carriers in the U.S. and by Company-owned
trucks in the U.K. Deliveries are made directly to Company-owned Vitamin World
stores once per week. In addition, the Company ships products overseas by
container loads. The Company also operates additional distribution centers in
Southampton and Hinckley, U.K. Deliveries are made directly to Company-owned
Holland & Barrett stores twice per week. The Company is currently in the process

of expanding its distribution capacity in the U.K. The Company delivers products
to distribution points in the U.S. through contract and common carriers as
directed by its retail customers.

32
<PAGE>
PROPERTIES

The following is a listing of all properties owned or leased by the
Company:

<TABLE>
<CAPTION>
APPROXIMATE LEASED OR EXPIRATION OF
LOCATION TYPE OF FACILITY SQUARE FEET OWNED LEASE
- ------------------------------------ --------------------------- ----------- --------- ---------------
<S> <C> <C> <C> <C>
UNITED STATES
Bohemia, New York................... Administration & production 169,000 owned
Bohemia, New York................... Manufacturing 80,000 owned
Bohemia, New York................... Manufacturing 75,000 owned
Holbrook, New York.................. Warehouse & distribution 230,000 owned
Holbrook, New York.................. Engineering 17,000 leased December 1998
Ronkonkoma, New York................ Warehouse & distribution 110,000 owned
Bayport, New York................... Production 17,500 owned
Bayport, New York................... Manufacturing 131,000 owned
Reno, Nevada........................ Warehouse 25,000 leased June 2001
Carbondale, Illinois................ Administration & production 80,000 owned
Carbondale, Illinois................ Warehousing 15,000 owned
South Plainfield, New Jersey........ Manufacturing 66,000 owned
Murphysboro, Illinois............... Manufacturing 65,000 owned
Cambridge, Massachusetts............ Administration 900 leased August 2020
UNITED KINGDOM
Southampton......................... Warehouse 9,000 leased September 2011
Hinckley............................ Warehouse & administration 50,000 leased October 2016
Nuneaton............................ Administration 9,000 leased June 2012
</TABLE>

NBTY operates 143 retail stores under the Vitamin World name. The stores
have an average selling area of 1,200 square feet. Generally, NBTY leases the
stores for three to five years at annual base rents ranging from $12,000 to
$94,000 and percentage rents in the event sales exceed a specified amount.
Holland & Barrett leases all of the locations of its 417 retail stores for terms
varying between 10 and 25 years at varying rents. The stores have an average
selling area of 1,200 square feet. No percentage rents are payable.

COMPETITION

United States. The market for vitamins and other nutritional supplements
is highly competitive in all of NBTY's channels of distribution. With respect to
mail order sales, management believes that Puritan's Pride is the largest mail
order supplier of vitamins and other nutritional supplements and competes with a
large number of smaller, usually less geographically diverse, mail order
companies, some of which manufacture their own products and some of which sell

products manufactured by other companies. In its retail Vitamin World stores,
the Company competes regionally with specialty vitamin stores such as GNC and
local drug stores, health food stores, supermarkets, department stores and mass
merchandisers. NBTY's Nature's Bounty and Natural Wealth brands compete with
numerous vitamin marketers and manufacturers for sales to drug store chains and
supermarkets with heavily advertised national brands manufactured by large
pharmaceutical companies, as well as Your Life, Nature Made and Sundown,
marketed by Leiner Health Products, Inc., Pharmavite Corp. and Rexall Sundown,
Inc., respectively. It is not possible to accurately estimate the number of
competitors since the nutritional supplement industry is highly fragmented.

Management believes that NBTY competes favorably with other mail order
sellers of similar products on the basis of price and customer service,
including speed of delivery and new product offerings. Management believes that
NBTY competes favorably with the large pharmaceutical companies and other
companies that sell to wholesalers, on the basis of price, breadth of product
line, reputation and customer service, including innovative packaging and
displays and other services. Management believes that NBTY derives a competitive
advantage from its ability to manufacture and package its own vitamin and
nutritional supplement products, which affords it the flexibility to respond to
the shifting demands of each channel of distribution and, consequently, the
ability to achieve the manufacturing and operating efficiencies resulting from
larger production runs of products that can be packaged for sale in one or more
such channels.

33
<PAGE>
United Kingdom. As in the U.S., the market for sales of vitamins, minerals
and other nutritional supplements is highly competitive. H&B's principal
competitors are large pharmacy chains, including Boots, Lloyds and Superdrug and
major supermarket chains such as ASDA, Sainsbury and Tesco. There are also
approximately 1,300 independent retailers of health foods and nutritional
supplements in the U.K. market. In addition, GNC has recently entered the U.K.
market where it currently operates approximately 30 stores. As a result of the
acquisition, H&B tends to compete more effectively through improved store
formats, greater product offerings and value pricing.

MANAGEMENT INFORMATION SYSTEMS

Inventory Control. The Company has installed inventory and 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, a significant number of 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.

The Company's inventory control systems report purchasing, receiving,
shipping, sales and individual SKU level inventory stocking information.
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 automatic reorder system
to maintain in-stock positions on key items. This system provides management
with the information needed to determine the proper timing and quantity of
reorders.

Year 2000. At the present time, the Company believes that its systems are
substantially Year 2000 compliant and does not expect Year 2000 issues to
materially affect its products, services, competitive position or financial
performance. However, there can be no assurance that this will be the case.
Since the ability of third parties with whom the Company transacts business to
adequately address their Year 2000 issues is outside the Company's control,
there can be no assurance that the failure of such third parties to adequately
address their respective Year 2000 issues will not have a material adverse
effect on the Company's business, financial condition, cash flows and results of
operations.

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

GOVERNMENT REGULATION

United States. The manufacturing, packaging, labeling, advertising,
distribution and sale of NBTY's products are subject to regulation by one or
more federal agencies, the most active of which is the FDA. The Company's
products are also subject to regulation by the FTC, the Consumer Product Safety
Commission, the U.S. Department of Agriculture and the Environmental Protection
Agency, and by various agencies of the states and localities and foreign
countries in which NBTY's products are sold. In particular, the FDA, pursuant to
the Federal Food, Drug, and Cosmetic Act ('FDCA'), regulates production,
packaging, labeling and distribution of dietary supplements, including vitamins,
minerals and herbs, and over-the-counter ('OTC') drugs. In addition, the FTC has
jurisdiction to regulate advertising of dietary supplements and OTC drugs, while
the U.S. 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, most recently by the DSHEA and the Nutrition Labeling and Education
Act of 1990 ('NLEA'). DSHEA, enacted on October 15, 1994, introduced a new
statutory framework governing the composition and labeling of dietary
supplements. With respect to composition, DSHEA creates a new class of 'dietary
supplements,' dietary ingredients consisting of vitamins, minerals, herbs, amino
acids and other dietary substances for human use to supplement the diet, as well
as concentrates, metabolites, extracts or combinations of such dietary
ingredients. Generally, under DSHEA, dietary ingredients that were on the market
before October 15, 1994 may be sold without FDA

34
<PAGE>
preapproval and without notifying the FDA. On the other hand, a new dietary
ingredient (one not on the market before October 15, 1994) requires proof that
it has been used as an article of food without being chemically altered or

evidence of a history of use or other evidence of safely establishing that it is
reasonably expected to be safe. The FDA must be supplied with such evidence at
least 75 days before the initial use of a new dietary ingredient. There can be
no assurance that the FDA will accept the evidence of safety for any new dietary
ingredients that the Company may decide to use, and the FDA's refusal to accept
such evidence could result in regulation of such dietary ingredients as food
additives requiring FDA pre-approval prior to marketing.

As for labeling, DSHEA permits 'statements of nutritional support' for
dietary supplements without FDA pre-approval. Such statements may describe how
particular dietary ingredients affect the structure, function or general
well-being of the body, or the mechanism of action by which dietary ingredient
may affect body structure, function or well-being (but may not state that a
dietary supplement will diagnose, mitigate, treat, cure or prevent a disease). A
company making a statement of nutritional support must possess substantiating
evidence for the statement, disclose on the label that the FDA has not reviewed
that statement and indicate that the product is not intended for use for a
disease, and notify the FDA of the statement within 30 days after its initial
use. However, there can be no assurance that the FDA will not determine that a
given statement of nutritional support that the Company makes is not adequately
substantiated as required by DSHEA, or is a drug claim rather than a nutritional
support statement requiring the Company's submission, and the FDA's approval, of
a new drug application ('NDA'). Either determination could entail costly and
time-consuming clinical studies and in either situation, the Company may have to
delete or modify the statement or claim involved. In addition, DSHEA allows the
dissemination of 'third party literature' publications such as reprints of
scientific articles linking particular dietary ingredients with health benefits.
Third party literature may be used in connection with the sale of dietary
supplements to consumers at retail or by mail order. Such a publication may be
so distributed if, among other things, it is not false or misleading, no
particular manufacturer or brand of dietary supplement is mentioned, and a
balanced view of available scientific information on the subject matter is
presented. There can be no assurance, however, that all pieces of third party
literature that may be disseminated in connection with the Company's products
will be determined by the FDA to satisfy each of these requirements, and any
such failure could subject the product involved to regulation as a new drug.

Management anticipates that the FDA may promulgate GMP regulations
authorized by DSHEA, which are specific to dietary supplements. GMP regulations
would require supplements to be prepared, packaged and held in compliance with
such rules, and may require similar quality control provisions contained in the
GMP regulations for drugs. There can be no assurance that, if the FDA adopts GMP
regulations specific to dietary supplements, NBTY will be able to comply with
such GMP rules upon promulgation or without incurring material expense to do so.

The FDA has finalized regulations to implement certain labeling provisions
of DSHEA. In addition, further DSHEA labeling regulations are expected to be
proposed by the FDA once the agency receives the final report of the expert
Commission on Dietary Supplement Labels, established by DSHEA to provide
recommendations on labeling claims for supplements. The Commission on Dietary
Supplements issued its draft report in June 1997. It is uncertain when the final
report will be issued or when the FDA will propose further regulations. NBTY
cannot determine what effect such regulations, when promulgated, will have on
its business in the future. There can be no assurance that such regulations will

not require expanded or different labeling for NBTY's vitamins and nutritional
products or, among other things, require the recall, reformation or
discontinuance of certain products, additional record keeping, warnings,
notification procedures and expanded documentation of the properties of certain
products and scientific substantiation regarding ingredients, product claims,
safety or efficacy.

NLEA prohibits the use of any health claim (as distinguished from
'statements of nutritional support' permitted by DSHEA) for foods, including
dietary supplements, unless the health claim is supported by significant
scientific agreement and is pre-approved by the FDA. To date, the FDA has
approved the use of health claims for dietary supplements only in connection
with the use of calcium for osteoporosis and the use of folic acid for neural
tube defects.

The FDA has broad authority to enforce the provisions of the FDCA
applicable to dietary supplements, including the power to seize adulterated or
misbranded products or unapproved new drugs, to request their recall from the
market, to enjoin their further manufacture or sale, to publicize information
about a hazardous product,

35
<PAGE>
to issue warning letters and to institute criminal proceedings. Although the
regulation of dietary supplements is less restrictive than that imposed upon
drugs and food additives, there can be no assurance that dietary supplements
will continue to be subject to the less restrictive statutory scheme and
regulations currently in effect. Further, there can be no assurance that, if
more stringent statutes are enacted or regulations are promulgated, the Company
will be able to comply with such statutes and regulations without incurring
material expense to do so.

The OTC pharmaceutical products distributed by the Company are subject to
regulation by a number of Federal and State governmental agencies. In
particular, the FDA regulates the formulation, manufacture, packaging and
labeling of all OTC pharmaceutical products pursuant to a monograph system
specifying OTC active drug ingredients that are generally recognized as safe and
effective for particular therapeutic conditions. Compliance with applicable FDA
monographs is required for the lawful interstate sale of OTC drugs. The FDA has
the same above-noted enforcement powers for violations of the FDCA by drug
manufactures as it does for such violations by dietary supplement producers.

The FTC, which exercises jurisdiction over the advertising of dietary
supplements, has, in the past several years instituted enforcement action
against several dietary supplement companies for false and misleading
advertising of certain products. These enforcement actions have resulted in
consent decrees and the payment of fines by the companies involved. In addition,
the FTC has increased its scrutiny of infomercials. The Company is currently
subject to an FTC consent decree for past advertising claims for certain of its
products, and the Company is required to maintain compliance with this decree
under pain of civil monetary penalties. Further, the U.S. Postal Service has
issued cease and desist orders against certain mail order advertising claims
made by dietary supplement manufacturers, including NBTY, and NBTY is required
to maintain compliance with this order, also under pain of civil monetary

penalties.

The Company is also subject to regulation under various international,
state and local laws that include provisions regulating, among other things, the
marketing of dietary supplements and the operations of direct sales programs.
The Company may be subject to additional laws or regulations administered by the
FDA or other federal, state, or foreign regulatory authorities, the repeal of
laws or regulations that it considers favorable, such as DSHEA, or more
stringent interpretations of current laws or regulations, from time to time in
the future. The Company is unable to predict the nature of such future laws,
regulations, interpretations or applications, nor can it predict what effect
additional governmental regulations or administrative orders, when and if
promulgated, would have on its business in the future. These regulations could,
however, require the reformation of certain products to meet new standards, the
recall or discontinuance of certain products not able to be reformulated,
imposition of additional record keeping requirements, expanded documentation of
the properties of certain products, expanded or different labeling, and/or
scientific substantiation. Any or all such requirements could have a material
adverse effect on the Company's results of operations and financial condition.
See 'Risk Factors--Government Regulation.'

United Kingdom. In the U.K., the manufacture, advertising, sale and
marketing of food products is regulated by a number of government agencies
including the MAFF and the Department of Health. In addition, there are various
independent committees and agencies that report to the government, such as the
Food Advisory Committee, which reports to MAFF and suggests appropriate courses
of action by the relevant government department where there are areas of concern
relating to food, and the Committee on Toxicity, which reports to the Department
of Health. The relevant legislation governing the sale of food includes the Food
Safety Act of 1990, which sets out general provisions relating to the sale of
food; for example, this law makes it unlawful to sell food that is harmful to
human health. In addition, there are various statutory instruments and E.C.
regulations governing specific areas such as the use of sweeteners, coloring and
additives in food. Trading standards officers under the control of the
Department of Trade and Industry also regulate matters such as the cleanliness
of the properties on which food is produced and sold.

Food that has medicinal properties may fall under the jurisdiction of the
MCA, a regulatory authority whose responsibility is to ensure that all medicines
sold or supplied for human use in the U.K. meet acceptable standards of safety,
quality and efficacy. These standards are determined by the 1968 Medicines Act
together with an increasing number of E.C. regulations and directives laid down
by the European Union. The latter take precedence over national law. The MCA has
a 'borderline department' which determines when food should be treated as a
medicine and should therefore fall under the relevant legislation relating to
medicines. The MCA

36
<PAGE>
operates as the agent of the licensing authority (the United Kingdom Health
Ministers) and its activities cover every facet of medicines controlled in the
U.K. including involvement in the development of common standards or medicines
controlled in Europe. The MCA is responsible, for example, for licensing,
inspection and enforcement to ensure that legal requirements concerning

manufacture, distribution, sale, labeling, advertising and promotion are upheld.

On April 2, 1998, the U.K. Government introduced proposals to limit the
free sale of Vitamin B6 products with a daily dose under 10 mg. A Parliamentary
Select Committee will be carrying out an inquiry and submitting its report. This
will involve a consultation period of up to three months, during which time the
proposals will also be considered by the European commission. The U.K.
Government will then review the position before any legislation is introduced.

TRADEMARKS

NBTY owns more than 300 trademarks registered or pending with the United
States Patent and Trademark Office and many foreign jurisdictions for its
Nature's Bounty, Puritan's Pride, Vitamin World, Holland & Barrett, Good 'N
Natural, Hudson, American Health and Natural Wealth brands and has rights to use
other names essential to its business. U.S. registered trademarks have a
perpetual life, as long as they are renewed on a timely basis and used properly
as trademarks, subject to the rights of third parties to seek cancellation of
the marks. NBTY regards its trademarks and other proprietary rights as valuable
assets and believes they have significant value in the marketing of its
products. NBTY vigorously protects its trademarks against infringement.

EMPLOYEES

As of March 31, 1998, NBTY employed approximately 4,200 persons worldwide,
with approximately 2,000 in the U.S. and 2,200 in the U.K. None of NBTY's
employees are represented by a labor union. NBTY believes that its relationship
with its employees is excellent. For information regarding employment agreements
with certain executive officers and other key employees, see
'Management--Employment Agreements.'

LITIGATION

From time to time, the Company is engaged in various legal actions and
proceedings in the ordinary course of its business. These matters relate, among
other things, to product liability. The Company does not believe that it is
currently a party to any litigation that will have a material adverse effect on
its business, results of operations or financial condition. See 'Risk
Factors--Legal Matters.'

<PAGE>
MANAGEMENT

Set forth below are the names and other relevant information regarding
executive officers and directors of the Company.

<TABLE>
<CAPTION>
YEARS
WITH THE
NAME AGE POSITION COMPANY
- ----------------------------------------------- --- ----------------------------------------------- ---------
<S> <C> <C> <C>
Scott Rudolph.................................. 40 Chairman of the Board, Chief Executive Officer 12
and President
Harvey Kamil................................... 54 Executive Vice President, Chief Financial 16
Officer and Secretary
Barry Drucker.................................. 49 Senior Vice President--Sales 22
James P. Flaherty.............................. 41 Vice President--Advertising 19
James A. Taylor................................ 57 Vice President--Production 17
Arthur Rudolph................................. 70 Director 27
Aram Garabedian................................ 62 Director 27
Bernard G. Owen................................ 69 Director 27
Alfred Sacks................................... 70 Director 27
Murray Daly.................................... 71 Director 27
Glenn Cohen.................................... 38 Director 10
Bud Solk....................................... 64 Director 4
Nathan Rosenblatt.............................. 41 Director 4
Michael L. Ashner.............................. 45 Director 1
</TABLE>

The Directors of the Company are divided into three classes and are elected
to serve a three year term or until their respective successors are elected and
qualified. Officers of the Company hold office until the meeting of the Board of
Directors immediately following the next annual stockholders' meeting or until
removal by the Board, with or without cause.

Scott Rudolph is the Chairman of the Board of Directors, Chief Executive
Officer and President. Mr. Rudolph founded U.S. Nutrition Corp., a mail order
vitamin company in 1976, which was purchased by the Company in 1986. He is the
Chairman of Dowling College, Long Island, New York. He joined the Company in
1986. He is the son of Arthur Rudolph.

Harvey Kamil is Executive Vice President, Chief Financial Officer and
Secretary. He is on the Board of Directors of the Council for Responsible
Nutrition. He joined the Company in 1982. He is a Certified Public Accountant
and a Certified Management Accountant.

Barry Drucker is Senior Vice President of Sales. He joined the Company in
1976.

James P. Flaherty is Vice President of Advertising. He joined the Company
in 1979.

James E. Taylor is Vice President of Production. He joined the Company in
1981.

Arthur Rudolph founded Arco Pharmaceuticals, Inc., the Company's
predecessor, in 1960 and served as the Company's Chief Executive Officer and
Chairman of the Board of Directors since that date until his resignation in
September 1993. He remains a member of the Board of Directors and was
responsible for the formation of the Company in 1971. He is the father of Scott
Rudolph.

Aram Garabedian has been, since 1988, a real estate developer in Rhode
Island. He was associated with the Company and its predecessor, Arco
Pharmaceuticals, Inc., for 20 years in a sales capacity and as an officer. He
has served as a director since 1971.

Bernard G. Owen has been associated with Cafiero, Cuchel and Owen Insurance
Agency, Pitkin, Owen Insurance Agency and Wood-HEW Travel Agency. He currently
serves as Chairman of these firms.

Alfred Sacks has been engaged as President of Al Sacks, Inc., an insurance
agency for the past thirty years.

Murray Daly, formerly a Vice President of J. P. Egan Office Equipment Co.,
is currently a consultant to the office equipment industry.

38
<PAGE>
Glenn Cohen has been the President of Glenn-Scott Landscaping and Design
for more than five years.

Bud Solk has been President of Chase/Ehrenberg & Rosene, Inc., an
advertising and marketing agency located in Chicago, Illinois since 1995.
Previously, Mr. Solk had been President of Bud Solk Associates, Inc., which he
founded in 1958.

Nathan Rosenblatt is the President and Chief Executive Officer of Ashland
Maintenance Corp., a commercial maintenance organization located in Long Island,
New York.

Michael L. Ashner is the President and Chief Executive Officer of Winthrop
Financial Associates, a firm engaged in the organization and administration of
real estate limited partnerships.

EMPLOYMENT AGREEMENTS

Scott Rudolph, Chairman of the Board, President and Chief Executive Officer
of the Company, entered into an employment agreement effective February 1, 1994,
as amended, to terminate January 31, 2004. During the period of the employment
agreement, the salary payable to Scott Rudolph shall be fixed by the Board of
Directors of the Company, provided that in no event will the executive salary be
at a rate lower than $600,000 per year, with bonuses, certain fringe benefits
accorded other executives of NBTY, and with annual cost of living index
increases.

Harvey Kamil, Executive Vice President, Chief Financial Officer and
Secretary of the Company, entered into an employment agreement effective
February 1, 1994, as amended, to terminate January 31, 2004. During the period
of the employment agreement, the salary payable to Harvey Kamil shall be fixed
by the Board of Directors of the Company, provided that in no event will the
executive salary be at a rate lower than $300,000 per year, with bonuses,
certain fringe benefits accorded other executives of NBTY, and with annual cost
of living index increases.

Each of the above agreements also provides for the immediate acceleration
of the payment of all compensation for the term of the contract and the
registration and sale of all issued stock, stock options and shares underlying
options in the event of certain changes of control, or involuntary (i)
termination of employment, (ii) reduction of compensation, or (iii) diminution
of responsibilities or authority.

Effective January 1, 1997, the Company entered into a consulting agreement
with Rudolph Management Associates, Inc. for the services of Arthur Rudolph, a
director of the Company. The agreement has been renewed to provide services from
January 1, 1998 through December 31, 2000 with the consulting fee fixed by the
Board of Directors of the Company, provided that in no event will the consulting
fee be at a rate lower than $400,000 per year, payable monthly, with certain
fringe benefits accorded to other executives of NBTY.

On April 20, 1998, the Company entered into a one year consulting agreement
with Michael C. Slade, one of the former shareholders of the Nutrition
Headquarters Group. Under the terms of the agreement, Mr. Slade will be the
President of the Nutrition Headquarters subsidiary and will receive an annual
compensation of $275,000, renewable at Mr. Slade's option, for up to two
additional one-year periods. The agreement also provides for fringe benefits
accorded other executives of NBTY.

Four members of Holland & Barrett's senior executive staff have service
contracts, terminable by the Company upon twelve months notice, at salaries
ranging between approximately $75,000 per year and $200,000 per year.

<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS

The information in the following table sets forth certain information with
respect to the beneficial ownership of the Common Stock of the Company as of the
date of this Prospectus, by (i) each executive officer of the Company, (ii) each
director of the Company, (iii) each person who beneficially owns more than 5% of
the outstanding shares of the Company's Common Stock, (iv) all directors and
executive officers of the Company as a group, and (v) the Selling Stockholders,
and as adjusted at that date to reflect the sale by the Company and the Selling
Stockholders of the shares of Common Stock offered hereby and assuming the
Underwriters' over-allotment options are not exercised. Except as noted below,
each person or entity has sole voting and investment power with respect to the
shares shown.

<TABLE>
<CAPTION>
COMMON STOCK OWNED COMMON STOCK OWNED
BEFORE THE NUMBER OF AFTER THE
OFFERINGS(1) SHARES OFFERINGS(1)
--------------------- BEING ---------------------
NAME(a) NUMBER PERCENT OFFERED NUMBER PERCENT
- ------------------------------------------------------ ---------- ------- --------- ---------- -------
<S> <C> <C> <C> <C> <C>
Scott Rudolph(2)(3) .................................. 11,901,663 17.6% 1,800,000 10,101,663 13.9%
c/o NBTY, Inc.
90 Orville Drive
Bohemia, NY 11716
Harvey Kamil ......................................... 1,611,906 2.5% 600,000 1,011,906 1.4%
c/o NBTY, Inc.
90 Orville Drive
Bohemia, NY 11716
Michael C. Slade ..................................... 4,093,639 6.3% 2,046,820 2,046,819 2.9%
114 Piping Rock Road
Matinecock, NY 11560
Abraham Feldman Trust F/B/O .......................... 2,339,222 3.6% 1,169,611 1,169,611 1.7%
Ruth Slade
c/o Ruth Slade
114 Piping Rock Road
Matinecock, NY 11560
Abraham Feldman Trust F/B/O .......................... 2,339,223 3.6% 1,169,611 1,169,612 1.7%
Steven Lenger
c/o Dr. E. Steven Lenger
62 Independence Drive
East Brunswick, NJ 08816
NBTY Employee Stock Ownership Plan.................... 3,117,204 4.8% -- 3,117,204 4.5%
Nicholas-Applegate Capital Mgmt.(4) .................. 3,872,400 6.0% -- 3,872,400 5.6%
600 West Broadway, 29th Floor
San Diego, California 92101
Pilgrim Baxter & Associates, Ltd.(5) ................. 4,713,900 7.3% -- 4,713,900 6.8%
825 Duportail Road
Wayne, Pennsylvania 19087
Directors:
Arthur Rudolph...................................... 2,056,893 3.2% -- 2,056,893 3.0%

Aram Garabedian..................................... 42,000 * -- 42,000 *
Bernard G. Owen..................................... 82,500 * -- 82,500 *
Alfred Sacks........................................ 0 * -- 0 *
Murray Daly......................................... 32,000 * -- 32,000 *
Glenn Cohen......................................... 87,000 * -- 87,000 *
Bud Solk............................................ 0 * -- 0 *
Nathan Rosenblatt................................... 0 * -- 0 *
Michael Ashner...................................... 0 * -- 0 *
All Directors and Executive Officers as a group (11 15,813,962 22.9% 2,400,000 13,413,962 18.1%
persons)............................................
</TABLE>

(Footnotes on next page)

40
<PAGE>
(Footnotes from previous page)
- ------------------
(1) Each named person or group is deemed to be the beneficial owner of
securities which may be acquired within 60 days through the exercise or
conversion of options, if any, and such securities are deemed to be
outstanding for the purpose of computing the percentage beneficially owned
by such person or group. Such securities are not deemed to be outstanding
for the purposes of computing the percentage of class beneficially owned by
any other person or group. Accordingly, the indicated number of shares
includes shares issuable upon exercise of options (including employees stock
options) and any other beneficial ownership of securities held by such
person or group.
(2) Includes shares held in a Trust created by Arthur Rudolph for the benefit of
Scott Rudolph and other family members.
(3) Included in the shares beneficially owned by Messrs. Scott Rudolph, Kamil
and certain other executive officers and directors, are presently
exercisable options with respect to 3,000,000, 840,000 and 486,000 shares,
respectively.
(4) As reported in a Schedule 13G dated February 3, 1998.
(5) As reported in a Schedule 13G dated February 12, 1998.
* Denotes less than one percent.

DESCRIPTION OF CAPITAL STOCK

The Company's authorized capital stock consists of 75,000,000 shares of
Common Stock, $.008 par value per share. As of April 30, 1998, there were
approximately 64,810,221 shares of Common Stock issued and outstanding, held of
record by approximately 684 stockholders. After giving effect to the Offerings,
there will be 69,810,221 shares of Common Stock issued and outstanding (which
excludes 4,326,000 shares of Common Stock which are issuable by the Company upon
exercise of options, all of which are held by Management, and 750,000 shares of
Common Stock pursuant to the Underwriters' over-allotment options). The Company
will seek approval to increase its authorized capital stock at its next meeting
of stockholders.

COMMON STOCK

Holders of Common Stock are entitled to one vote per share on all matters

submitted to a vote of stockholders, including the election of directors. The
Common Stock does not permit cumulative voting in the election of directors,
which means that the holders of a majority of the shares voting for election of
directors can elect all members of the Board of Directors. A plurality voice is
sufficient for the election of directors, and a majority vote is required for
other actions that require the vote or concurrence of stockholders. Dividends
may be paid to holders of Common Stock when and if declared by the Board of
Directors out of funds legally available therefor. In the event of dissolution
or liquidation of the Company, holders of Common Stock would be entitled to
share ratably in the assets of the Company remaining after payment to all
creditors.

The holders of Common Stock have no preemptive or conversion rights, and
there are no redemption or sinking fund provisions applicable to the Common
Stock. All of the outstanding shares of Common Stock are, and the shares being
offered by the Company hereunder will be, upon issuance and sale, fully paid and
nonassessable.

REGISTRAR AND TRANSFER AGENT

The transfer agent of the Common Stock is American Stock Transfer and Trust
Company, New York, New York.

CERTAIN PROVISIONS OF THE DELAWARE GENERAL CORPORATION LAW ('DGCL')

Section 228 of the DGCL allows any action which is required to be or may be
taken at a special or annual meeting of the stockholders of a corporation to be
taken without a meeting with the written consent of holders of outstanding stock
having not less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all shares entitled to vote
thereon were present and voted, provided that the certificate of incorporation
of such corporation does not contain a provision to the contrary. The
Certificate of Incorporation of the Company contains no such provision, and
therefore, pursuant to Section 228 and the By-

41
<PAGE>
laws, stockholders holding a majority of the voting power of the Common Stock
will be able to effect most corporate matters requiring stockholder approval by
written consent, without the need for a duly-noticed and duly-held meeting of
stockholders. See 'Risk Factors--Control by Principal Stockholders.'

ANTI-TAKEOVER CONSIDERATIONS

The Company's Certificate of Incorporation and By-Laws include certain
provisions which could be described as anti-takeover provisions.

The Certificate of Incorporation and By-Laws provide that the Company's
Board of Directors, currently compromised of ten members, be divided into three
classes, with staggered terms. Each director serves a three year term and holds
office until his successor is elected and qualified. Classification of the Board
of Directors may have the effect of making the removal of incumbent directors
more time-consuming and difficult, and, therefore, may have the effect of
discouraging an unsolicited takeover attempt to gain control of the Board

through a proxy solicitation.

The Certificate of Incorporation provides that, unless certain conditions
are satisfied, the affirmative vote of not less than 75% of the outstanding
shares of stock of the Company entitled to vote, as a class, in elections of
directors is required for the adoption or authorization of certain extraordinary
corporation actions with Related Persons (as defined in the Certificate of
Incorporation). Such extraordinary corporate actions include, but are not
limited to, any merger or consolidation of the Company with or into any Related
Person or the adoption of any proposal or plan for the liquidation or
dissolution of the Company proposed by or on behalf of any Related Person.

The Certificate of Incorporation provides that no amendment may be made
which amends, alters, changes or repeals the provisions mentioned in the above
paragraph without the affirmative vote of not less than 75% of the shares of
stock of the Company entitled to vote, considered as a class, in elections of
directors; provided, however, that such 75% vote is not required for any
amendment, alteration, change or repeal recommended to the stockholders by a
majority of the Continuing Directors (as defined in the Certificate of
Incorporation).

The above provisions, among others, may have the effect of delaying,
deferring or preventing a change in control of the Company, may discourage bids
for the Common Stock at a premium over the market price of the Common Stock and
may adversely affect the market price of the Common Stock and the voting and
other rights of the holders of the Common Stock.

The Company expects that the Board of Directors may in the future review
the advisability of adopting other measures which may affect takeovers in the
context of applicable law and judicial decisions.

DESCRIPTION OF CERTAIN INDEBTEDNESS

SENIOR SUBORDINATED NOTES DUE 2007

On September 23, 1997, the Company issued an aggregate of $150,000,000
principal amount of 8 5/8% Senior Subordinated Notes due 2007 (the 'Notes').

The Notes are not redeemable, in whole or in part, prior to September 15,
2002. Notwithstanding the foregoing, at any time on or before September 15,
2000, the Company may redeem up to 33 1/3% of the aggregate principal amount of
the Notes, in whole or in part, with the net cash proceeds of one or more public
equity offerings at a redemption price equal to 108.625% of the principal amount
thereof, plus accrued and unpaid interest, if any, to the date of redemption.
Upon the occurrence of a change of control, the Company will be required to make
an offer to repurchase all outstanding Notes at 101% of the aggregate principal
amount thereof, plus accrued and unpaid interest, if any, to the date of
repurchase.

The indenture governing the Notes contains certain covenants with respect
to the Company that limit the ability of the Company to, among other things, (i)
incur additional indebtedness, (ii) pay dividends on, or redeem capital stock of
the Company, or make certain other distributions, (iii) make certain
investments, (iv) create certain liens, (v) sell certain assets, (vi) enter into

certain transactions with affiliates, or (vii) enter into certain mergers or
consolidations involving the Company.

42
<PAGE>
DESCRIPTION OF THE REVOLVING CREDIT FACILITY

The Revolving Credit Facility is provided by a syndicate of banks and other
financial institutions led by The Chase Manhattan Bank, as administrative agent
(the 'Agent'), and provides for borrowings in an aggregate principal amount of
up to $60.0 million. The following summary of the Revolving Credit Facility does
not purport to be complete and is subject to, and qualified in its entirety by
reference to, the Revolving Credit Facility.

Security Guarantees. The obligations of the Company under the Revolving
Credit Facility are unconditionally and irrevocably guaranteed, jointly and
severally, by each direct and indirect domestic subsidiary of the Company and
each subsequently acquired or organized subsidiary of the Company. In addition,
the obligations of the Company under the Revolving Credit Facility and the
guarantees thereunder are secured by substantially all of the non-real estate
assets of the Company and the guarantors.

Interest. The Revolving Credit Facility is a six-year facility and bears
interest at a rate per annum equal (at the Company's option) to: (i) the Agent's
Eurodollar rate plus an applicable margin, (ii) an alternate base rate plus an
applicable margin or (iii) the Agent's Eurocurrency rate plus an applicable
margin. Principal amounts under the revolving Credit Facility not paid when due
shall bear interest at a default rate equal to 2.00% per annum above the
otherwise applicable rate. Other amounts not paid when due under the Revolving
Credit Facility shall bear interest at the rate then applicable to alternate
base rate loans under the Revolving Credit Facility plus 2.00% per annum.

Prepayments. Voluntary prepayments of borrowings under the Revolving
Credit Facility and voluntary reductions of the unutilized portions of the
Revolving Credit Facility are permitted at any time in minimum principal amounts
to be agreed upon.

Covenants. The Revolving Credit Facility contains a number of covenants,
that, among other things, restrict the ability of the Company and its
subsidiaries, subject to certain exceptions, to dispose of assets, incur
additional indebtedness, incur guarantee obligations, repay other indebtedness
or amend other debt instruments, make distributions or pay dividends on
partnership interest or capital stock, redeem and repurchase partnership
interests or capital stock, create liens on assets, enter into sale and
leaseback transactions, make investments, loans or advances, make acquisitions,
engage in mergers or consolidations, change the business conducted by the
Company or its subsidiaries, make capital expenditures or engage in certain
transactions with affiliates and otherwise restrict certain business activities.
In addition, the Company is required to comply with specified financial ratios
and tests, including minimum fixed charge coverage ratios, maximum leverage
ratios and minimum net worth tests.

The Revolving Credit Facility also contains provisions that prohibit any
modification of the indenture in any manner adverse to the lenders and that

limit the Company's ability to refinance or otherwise prepay the Exchange Notes
without the consent of such lenders.

Events of Default. The Revolving Credit Facility contains customary events
of default, including payment defaults, breach of representations and
warranties, covenant defaults, cross-defaults and cross-acceleration to certain
other indebtedness, certain events of bankruptcy and insolvency, Employee
Retirement Income Security Act of 1974 events, judgment defaults, actual or
asserted invalidity of any security documents or guarantees, change of control,
the voluntary creation of security interest relating to partnership interests in
the Company or the voluntary creation of any prohibition on the creation of such
security interests.

SHARES ELIGIBLE FOR FUTURE SALE

After the Offerings, approximately 69,810,221 shares of Common Stock will
be issued and outstanding (which excludes 4,326,000 shares of Common Stock which
are issuable by the Company upon exercise of options, all of which are held by
management, and 750,000 shares of Common Stock, pursuant to the Underwriters'
over-allotment options). The shares of Common Stock offered hereby will be
freely tradable by persons who are not affiliates of the Company without
restriction or further registration under the Securities Act. Substantially all
of the other outstanding shares of Common Stock, other than shares held by
officers, directors and other affiliates of the Company, are freely tradable.
Pursuant to Rule 144 of the Securities Act ('Rule 144'), shares of Common Stock
held by affiliates of the Company are subject to limitations on volume that may
be sold

43
<PAGE>
other than sales pursuant to a registration statement under the Securities Act
or another applicable exemption from registration thereunder.

Scott Rudolph, Harvey Kamil, and certain other officers are eligible to
sell their shares of Common Stock pursuant to Rule 144 under the Securities Act
at prescribed times and subject to the manner of sale, volume, notice and
information restrictions of Rule 144. The Company has granted Michael C. Slade
and former shareholders of the Nutrition Headquarters Group certain demand and
piggyback registration rights covering an aggregate of 8,772,084 shares of
Common Stock (4,386,042 shares after the consummation of the Offerings). The
executive officers, directors and the Selling Stockholders, who collectively are
the beneficial owners of an aggregate of 24,586,046 shares of Common Stock
(17,800,004 shares after the consummation of the Offerings), and the Company
have agreed with the Underwriters, subject to certain exceptions, not to
directly or indirectly, (and, except as may be disclosed herein, will not
announce or disclose any intention to) sell, contract to sell, grant any option
or warrant for the sale of, register, loan, pledge, grant any rights with
respect to or otherwise dispose of, without the prior written consent of Smith
Barney Inc., any Common Stock, or any securities convertible into or
exchangeable or exercisable for Common Stock (including, without limitation, any
of the economic attributes thereof) for a period of 270 days, in the case of the
Company and the Selling Stockholders, and for a period of 120 days, in the case
of the executive officers and directors who are not Selling Stockholders, after
the date of this Prospectus. Upon the expiration or termination of such

restrictive period, such holders, will, in general be entitled to dispose of
their shares of Common Stock, although the shares of Common Stock held by
affiliates of the Company will continue to be subject to the restrictions of
Rule 144 under the Securities Act. See 'Shares Eligible for Future Sale' and
'Underwriting.'

CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES TO
NON-UNITED STATES HOLDERS

The following is a general discussion of certain United States federal
income and estate tax consequences of the acquisition, ownership and disposition
of the Common Stock by a 'Non-United States Holder.' For the purpose of this
summary, a 'Non-United States Holder' is any person or entity that is not (a) a
citizen or resident of the United States, (b) a corporation or partnership
created or organized in or under the laws of the United States or of any
political subdivision thereof, (c) an estate that is subject to United States
federal taxation on its income regardless of its source or (d) a trust if a
court within the United States is able to exercise primary supervision over its
administration and one or more United States persons have the authority to
control all substantial decisions of the trust. An individual may be deemed to
be a resident of the United States for federal income tax purposes in several
circumstances, including being present in the United States on at least 31 days
in the calendar year and for an aggregate of 183 days during the three-year
period ending with the current calendar year. For purposes of this
determination, all of the days present in the United States during the current
year, one-third of the days present during the immediately preceding year and
one-sixth of the days present during the second preceding year are taken into
account. Resident aliens are subject to U.S. federal income tax as if they were
U.S. citizens and residents.

This summary does not deal with all aspects of United States federal income
and estate taxation that may be relevant to Non-United States Holders in light
of their personal circumstances and does not address tax consequences under the
laws of any state, municipality, or other taxing jurisdiction or under the laws
of any country other than the United States. Furthermore, this summary is based
on current provisions of the Internal Revenue Code of 1986, as amended (the
'Code'), existing, temporary and proposed regulations promulgated thereunder and
administrative and judicial interpretations, all of which are subject to change,
possibly with retroactive effect. Prospective Non-United States Holders are
urged to consult their tax advisors regarding the United States federal, state,
local and foreign income and other tax consequences of acquiring, owning and
disposing of the Common Stock.

DIVIDENDS

The Company does not expect to pay dividends on its Common Stock in the
foreseeable future. See 'Dividend Policy.' Generally, any dividends paid with
respect to the Common Stock to a Non-United States Holder will be subject to
withholding of United States federal income tax at a 30% tax rate (or such lower
tax rate as may be specified by an applicable income tax treaty). Dividends
received by a Non-United States Holder that

44
<PAGE>

are effectively connected with a United States trade or business conducted by
such Non-United States Holder (and attributable to a U.S. permanent
establishment of the Non-United States Holder, if any income tax treaty applies)
are exempt from such withholding tax. However, such effectively connected
dividends, net of certain deductions and credits, are taxed at the same
graduated rates applicable to United States persons. Effectively connected
dividends received by a corporate Non-United States Holder may be subject to an
additional 'branch profits tax' at a 30% tax rate (or such lower rate as may be
specified by an applicable income tax treaty). A Non-United States Holder may
claim (i) an exemption from withholding under the effectively connected income
exception by filing IRS Form 4224 or (ii) a reduced rate of withholding under an
applicable income tax treaty by filing IRS Form 1001 with the Company or its
paying agent.

Under current United States Treasury regulations, dividends paid to an
address in a foreign country are presumed to be paid to a resident of such
country for purposes of the withholding discussed above (unless the payor has
knowledge to the contrary) and, under the current interpretation of United
States Treasury regulations, for purposes of determining the applicability of a
tax treaty rate. Recently finalized Treasury regulations generally effective for
payments made after December 31, 1999 (the 'Withholding Regulations'), however,
will require Non-United States Holders to file certain new forms to obtain the
benefit of any applicable tax treaty providing for a lower rate of withholding
tax on dividends. Such forms will be required to contain the holder's name,
address and certain other information.

DISPOSITION OF COMMON STOCK

A Non-United States Holder generally will not be subject to United States
federal income tax on any gain recognized upon the sale or other disposition of
Common Stock unless (i) such gain is effectively connected with a United States
trade or business of the Non-United States Holder (and, if the applicable treaty
so provides, is attributable to such holder's office or other fixed place of
business within the United States), (ii) in the case of a Non-United States
Holder who is a non-resident alien individual and holds the Common Stock as a
capital asset, such holder is present in the United States for 183 or more days
in the taxable year of disposition and either (a) has a 'tax home' in the United
States for United States federal income tax purposes or (b) has an office or
other fixed place of business in the United States to which the gain is
attributable and no treaty exemption applies, (iii) the Non-United States Holder
is subject to tax pursuant to the provisions of United States federal income tax
laws applicable to certain expatriates or (iv) the Company is or has been a
'United States real property holding corporation' ('USRPHC') at any time within
the shorter of the five-year period preceding such disposition or such
Non-United States Holder's holding period and, provided that the Common Stock
continues to be 'regularly traded on an established securities market' for tax
purposes, the Non-United States Holder held, directly or indirectly, at any time
during the five-year period ending on the date of disposition, more than 5% of
the outstanding Common Stock. The Company has determined that it has not been
and is not currently and does not believe that it will become a USRPHC for
federal income tax purposes. If a Non-United States Holder falls under clause
(i) above, the holder will be subject to United States federal income tax on the
same basis as United States persons generally (and, with respect to corporate
Non-United States Holders, may also be subject to the branch profits tax

described above). If an individual Non-United States Holder falls under clause
(ii)above, the holder generally will be subject to a 30% tax on the gain derived
from the sale, which gain may be offset by U.S. capital losses recognized within
the same taxable year of such sale or disposition.

BACKUP WITHHOLDING AND INFORMATION REPORTING

In the event the Company decides, contrary to its present intention, to pay
dividends with respect to its Common Stock, the Company must report to the IRS
the amount of dividends paid, the name and address of the recipient and the
amount, if any, of tax withheld. A similar report will be sent to the Non-United
States Holder. See 'Dividend Policy.' Pursuant to tax treaties or other
agreements, the IRS may make such reports available to tax authorities in the
recipient's country of residence.

Dividends paid to a Non-United States Holder at an address within the
United States may be subject to backup withholding at a rate of 31% if the
Non-United States Holder fails to establish that it is entitled to an exemption
or to provide a correct taxpayer identification number and other information to
the payor.

The payment of the proceeds of the disposition of Common Stock by or
through the United States office of a broker is subject to information reporting
and backup withholding at a rate of 31% unless the holder certifies its

45
<PAGE>
name, address and non-United States status under penalties of perjury or
otherwise establishes an exemption. Information reporting requirements (but not
backup withholding) will apply to a payment of disposition proceeds by or
through a foreign office of (a) a United States broker, (b) a foreign broker
that is a 'controlled foreign corporation' for United States federal income tax
purposes or (c) a foreign broker 50% or more of whose gross income for certain
periods is effectively connected with the conduct of a United States trade or
business, unless, in each case, such broker has documentary evidence in its
files of the owner's foreign status and has no actual knowledge to the contrary.
Generally, United States information reporting and backup withholding will not
apply to a payment of disposition proceeds if the payment is made outside the
United States by or through a foreign office of a non-U.S. broker.

The Withholding Regulations will affect the procedures to be followed by a
Non-United States Holder in establishing such holder's status as a Non-United
States Holder for purposes of the withholding, backup withholding and
information reporting rules discussed herein. Among other things, the
Withholding Regulations will provide certain presumptions under which a
Non-United States Holder would be subject to backup withholding in the absence
of certification from the holder as to non-U.S. status. Prospective investors
should consult their tax advisors concerning the effect of the Withholding
Regulations on an investment in Common Stock.

Backup withholding is not an additional tax. Rather, the United tax
liability of persons subject to backup withholding will be reduced by the amount
of tax withheld. If withholding results in an overpayment of taxes, a refund may
be obtained, provided that the required information is furnished to the IRS.

FEDERAL ESTATE TAXES

Common Stock owned or treated as owned by an individual who is not a
citizen or resident of the United States (as specially defined for United States
federal estate tax purposes) at the time of death will be subject to United
States federal estate tax unless an applicable estate tax treaty provides
otherwise. Estates of non-resident aliens are generally allowed a statutory
credit which is the equivalent of an exclusion of $60,000 of assets from the
U.S. estate tax. Tax treaties may permit a larger credit.

<PAGE>
UNDERWRITING

Subject to the terms and conditions set forth in an underwriting agreement
among the Company, the Selling Stockholders and the U.S. Underwriters (the 'U.S.
Underwriting Agreement'), the Company and the Selling Stockholders have agreed
to sell to each of the U.S. Underwriters named below, and each of the U.S.
Underwriters, for whom Smith Barney Inc., Lehman Brothers Inc., Adams, Harkness
& Hill, Inc., Raymond James & Associates, Inc. and Piper Jaffray Inc. are acting
as the representatives (the 'US Representatives'), has severally agreed to
purchase the number of Shares set forth opposite its name below:

<TABLE>
<CAPTION>
UNDERWRITING
U.S. UNDERWRITER COMMITMENT
- ------------------------------------------------------------------------------------------ ------------
<S> <C>
Smith Barney Inc..........................................................................
Lehman Brothers Inc.......................................................................
Adams, Harkness & Hill, Inc...............................................................
Raymond James & Associates, Inc...........................................................
Piper Jaffray Inc.........................................................................
------------
Subtotal............................................................................. 9,428,834
------------
</TABLE>

Subject to the terms and conditions set forth in an underwriting agreement
among the Company, the Selling Stockholders and the International Managers (the
'International Underwriting Agreement' and, together with the U.S. Underwriting
Agreement, the 'Underwriting Agreements'), the Company and the Selling
Stockholders have agreed to sell to each of the International Managers named
below, and each of the International Managers, for whom Smith Barney Inc.,
Lehman Brothers International (Europe), Adams, Harkness & Hill, Inc., Raymond
James & Associates, Inc. and Piper Jaffray Inc. are acting as representatives
(the 'International Representatives' and, together with the US Representatives,
the 'Representatives'), has severally agreed to purchase the number of shares
set forth opposite its name below:

<TABLE>
<CAPTION>
UNDERWRITING
INTERNATIONAL UNDERWRITER COMMITMENT
- ------------------------------------------------------------------------------------------ ------------
<S> <C>
Smith Barney Inc..........................................................................
Lehman Brothers International (Europe)....................................................
Adams, Harkness & Hill, Inc...............................................................
Raymond James & Associates, Inc...........................................................
Piper Jaffray Inc.........................................................................
------------
Subtotal............................................................................. 2,357,208
------------

Total........................................................................... 11,786,042
------------
------------
</TABLE>

The Underwriting Agreements provide that the obligations of the several
U.S. Underwriters and the several International Managers (collectively, the
'Underwriters') to pay for and accept delivery of the shares are subject to
approval of certain legal matters by counsel and to certain other conditions.
The Underwriting Agreements provide that the obligations of the U.S.
Underwriters and the International Managers are such that if any of the Shares
are purchased by the U.S. Underwriters, or by the International Managers, in
each case pursuant to the Underwriting Agreements, all the Shares (not including
the Shares subject to the Underwriters' over-allotment options) agreed to be
purchased by either the U.S. Underwriters or the International Managers, as the
case may be, must be so purchased. The price to public and underwriting discount
per Share for the U.S. Offering and the International Offering will be
identical. The closing of the International Offering is a condition to the
closing of the U.S. Offering and the closing of the U.S. Offering is a condition
to the closing of the International Offering.

The Company has been advised by the Representatives that the several
Underwriters initially propose to offer such shares to the public at the price
to public set forth on the cover page of this Prospectus and to certain dealers
at a price that represents a concession not in excess of $ per share below
the price to public. The Underwriters may allow, and such dealers may re-allow,
a concession not in excess of $ per share to the other Underwriters or to
certain other dealers. After the Offerings, the price to public and such
concessions may be changed by the Underwriters.

The Company and the Selling Stockholders have granted to the U.S.
Underwriters and the International Managers options, excercisable during the
30-day period after the date of this Prospectus, to purchase up to an

47
<PAGE>
aggregate 1,767,906 additional shares of Common Stock at the price to public set
forth on the cover page of this Prospectus less the underwriting discount,
solely to cover over-allotments, if any, in connection with the sale of the
shares offered hereby. To the extent that the U.S. Underwriters and the
International Managers exercise such options, each of the U.S. Underwriters and
the International Managers, as the case may be, will be committed, subject to
certain conditions, to purchase a number of option shares proportionate to such
U.S. Underwriter's or International Manager's initial commitment. The U.S.
Underwriting Agreement provides that, in the event of a default by a U.S.
Underwriter, in certain circumstances the purchase commitments of non-defaulting
U.S. Underwriters may be increased or the U.S. Underwriting Agreement may be
terminated. The International Underwriting Agreement provides that, in the event
of a default by an International Manager, in certain circumstances the purchase
commitments of non-defaulting International Managers may be increased or the
International Underwriting Agreement may be terminated.

Each U.S. Underwriter has severally agreed that, as part of the
distribution of the Shares offered by the U.S. Underwriters, (i) it is not

purchasing any Shares for the account of anyone other than a United States or
Canadian Person, (ii) it has not offered or sold, and will not offer or sell,
directly or indirectly, any Shares or distribute this Prospectus to any person
outside of the United States or Canada, or to anyone other than a United States
or Canadian Person and (iii) any dealer to whom it may sell any Shares will
represent that it is not purchasing for the account of anyone other than a
United States or Canadian Person and agree that it will not offer or resell,
directly or indirectly, any Shares outside of the United States or Canada, or to
anyone other than a United States or Canadian Person or to any other dealer who
does not so represent and agree. Each International Manager has severally agreed
that, as part of the distribution of the Shares offered by the International
Managers, (i) it is not purchasing any Shares for the account of any United
States or Canadian Person, (ii) it has not offered or sold, and will not offer
or sell, directly or indirectly, any Shares or distribute any Prospectus
relating to the International Offering to any person in the United States or
Canada, or to any United States or Canadian Person and (iii) any dealer to whom
it may sell any Shares will represent that it is not purchasing for the account
of any United States or Canadian Person and agree that it will not offer or
resell, directly or indirectly, any Shares in the United States or Canada, or to
any United States or Canadian Person or to any other dealer who does not so
represent and agree.

The foregoing limitations do not apply to stabilization transactions or to
certain other transactions specified in the U.S. Underwriting Agreement, the
International Underwriting Agreement or the Agreement Between U.S. Underwriters
and International Managers, including: (i) certain purchases and sales between
the U.S. Underwriters and the International Managers, (ii) certain offers,
sales, resales, deliveries or distributions to or through investment advisors or
other persons exercising investment discretion, (iii) purchases, offers or sales
by a U.S. Underwriter who is also acting as an International Manager or by an
International Manager who is also acting as a U.S. Underwriter and (iv) other
transactions specifically approved by the Representatives. 'United States or
Canadian Person' means any person who is a national or resident of the United
States or Canada, any corporation, partnership or other entity created or
organized in or under the laws of the United States or Canada or of any
political subdivision thereof, and any estate or trust the income of which is
subject to United States or Canadian federal income taxation, regardless of its
source (other than any non-United States or non-Canadian branch of any United
States or Canadian Person), and includes any United States or Canadian branch of
a person other than a United States or Canadian Person.

Pursuant to the Agreement between U.S. Underwriters and International
Managers, sales may be made between the U.S. Underwriters and the International
Managers of such number of Shares as may be mutually agreed. The price of any
Shares so sold shall be the price to public, less an amount not greater than the
concession to securities dealers. To the extent that there are sales between the
U.S. Underwriters and the International Managers pursuant to the Agreement
Between U.S. Underwriters and International Managers, the number of Shares
initially available for sale by the U.S. Underwriters or by the International
Managers may be more or less than the amount specified on the cover page of this
Prospectus. Neither the U.S. Underwriters nor the International Managers are
obligated to purchase from the other any unsold shares of Common Stock.

Any offer of the Shares in Canada will be made only pursuant to an

exemption from the prospectus filing requirement and an exemption from the
dealer registration requirement (where such an exemption is not available,
offers shall be made only by a registered dealer) in the relevant Canadian
jurisdiction where such offer is made. Purchasers of the Shares offered hereby
may be required to pay stamp taxes and other charges in

48
<PAGE>
accordance with the laws and practices of the country of purchase, in addition
to the offering price set forth on the cover page hereof.

The Underwriting Agreements provide that the Company and the Selling
Stockholders will jointly and severally indemnify the Underwriters against
certain liabilities and expenses, including liabilities under the Securities
Act, or contribute to payments the Underwriters may be required to make in
respect thereof.

Each International Manager agrees that (i) it will not offer or sell any
shares to persons in the United Kingdom except to persons whose ordinary
activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their businesses or
otherwise in circumstances which will not involve an offer to the public in the
United Kingdom within the meaning of the Public Offers of Securities Regulations
1995 ('the Regulations'); (ii) it will comply with all applicable provisions of
the Financial Services Act of 1986 and the Regulations with respect to anything
done by it in relation to the shares in, from or otherwise involving the United
Kingdom; and (iii) it will only issue or pass on to any person in the United
Kingdom any document received by it in connection with the offer of the shares
if that person is of a kind described in Article 11(3) of the Financial Services
Act of 1986 (Investment Advertisements) (Exemptions) Order 1996 or is a person
to whom such document may otherwise lawfully be issued or passed on.

No action has been or will be taken in any jurisdiction by the Company, the
Selling Stockholders or the Underwriters that would permit an offering to the
general public of the shares offered hereby in any jurisdiction other than the
United States.

The executive officers, directors and the Selling Stockholders, who
collectively are the beneficial owners of an aggregate of 24,586,086 shares of
Common Stock (17,800,004 shares after the consummation of the Offerings), and
the Company have agreed with the Underwriters, subject to certain exceptions,
not to directly or indirectly, (and, except as may be disclosed herein, will not
announce or disclose any intention to) sell, contract to sell, grant any option
or warrant for the sale of, register, loan, pledge, grant any rights with
respect to or otherwise dispose of, without the prior written consent of Smith
Barney Inc., any Common Stock, or any securities convertible into or
exchangeable or exercisable for Common Stock (including, without limitation, any
of the economic attributes thereof) for a period of 270 days, in the case of the
Company and the Selling Stockholders, and for a period of 120 days, in the case
of the executive officers and directors who are not Selling Stockholders, after
the date of this Prospectus. Upon the expiration of such restrictive period,
such holders, will, in general be entitled to dispose of their shares of Common
Stock, although the shares of Common Stock held by affiliates of the Company
will continue to be subject to the restrictions of Rule 144 under the Securities

Act. See 'Shares Eligible for Future Sale.'

During and after the Offerings, the Underwriters may purchase and sell the
Common Stock in the open market. These transactions may include overallotment
and stabilizing transactions and purchases to cover syndicate short positions
created in connection with the Offerings. The Underwriters also may impose a
penalty bid, whereby selling concessions allowed to syndicate members of other
broker-dealers in respect of the Shares of Common Stock said in the Offerings
for their account may be reclaimed by the syndicate if such Shares are
repurchased by the syndicate in stabilizing or covering transactions. These
activities may stabilize, maintain or otherwise affect the market price of the
Common Stock which may be higher than the price that might otherwise prevail in
the open market. The Underwriters are not required to engage in any of these
activities and any such activities, if commenced, may be discontinued at any
time.

Smith Barney Inc. and certain of the other Representatives and their
affiliates have provided and may continue to provide investment banking or other
services to the Company and its affiliates.

LEGAL MATTERS

The validity of the Common Stock offered hereby will be passed upon for the
Company by Michael C. Duban, Esq., White Plains, New York, a shareholder of the
Company's Common Stock. Certain legal matters relating to this Offering will be
passed upon for the Underwriters by Cahill Gordon & Reindel (a partnership
including a professional corporation), New York, New York.

49
<PAGE>
EXPERTS

The supplemental consolidated balance sheets of NBTY, Inc. and Subsidiaries
(the 'Company') as of September 30, 1997 and 1996 and the supplemental
consolidated statements of income, stockholders' equity and cash flows for each
of the three years in the period ended September 30, 1997, and the consolidated
balance sheets of the Company as of September 30, 1997 and 1996 and the
consolidated statements of income, stockholders' equity and cash flows for each
of the three years in the period ended September 30, 1997 included in this
Registration Statement and the combined balance sheets of Nutrition
Headquarters, Inc. and Lee Nutrition, Inc. as of September 30, 1997 and 1996 and
the combined statements of operations, stockholders equity and cash flows for
each of the three years in the period ended September 30, 1997 included in the
Company's Current Report on Form 8-K/A incorporated by reference in this
Registration Statement have been included or incorporated herein in reliance on
the reports of Coopers & Lybrand L.L.P., independent accountants, given on the
authority of that firm as experts in auditing and accounting.

The balance sheets of Nutro Laboratories, Inc. as of September 30, 1997 and
1996 and the statements of operations, stockholders' equity and cash flows for
each of the three years in the period ended September 30, 1997 included in the
Company's Current Report on Form 8-K/A incorporated by reference in this
Registration Statement have been incorporated herein in reliance on the report
of Amper, Politziner & Mattia P.A., independent accountants, given on the

authority of that firm as experts in auditing and accounting.

AVAILABLE INFORMATION

The Company has filed with the Securities and Exchange Commission (the
'Commission') in Washington, D.C. a Registration Statement on Form S-3 (the
'Registration Statement') under the Securities Act with respect to the Common
Stock offered hereby. As used herein, the term 'Registration Statement' means
the initial Registration Statement and any and all amendments thereto. This
Prospectus omits certain information contained in the Registration Statement as
permitted by the rules and regulations of the Commission. For further
information with respect to the Company and the Common Stock offered hereby,
reference is made to the Registration Statement, including the exhibits thereto.
Statements herein concerning the contents of any contract or other document are
not necessarily complete and in each instance reference is made to such contract
or other document filed with the Commission as an exhibit to the Registration
Statement, each such statement being qualified by and subject to such reference
in all respects.

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the '1934 Act'), and in accordance therewith
files reports and other information with the Commission. Reports, registration
statements, proxy statements and other information filed by the Company with the
Commission can be inspected and copied at the public reference facilities
maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Room
1024, Washington, D.C. 20549, and at the Commission's Regional Offices: 500 West
Madison Avenue, Suite 1400, Chicago, Illinois 60661 and 7 World Trade Center,
Suite 1300, New York, New York 10048. Copies of such materials can be obtained
at prescribed rates from the Public Reference Section of the Commission, 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549. The Commission also
maintains a site on the World Wide Web, the address of which is
http://www.sec.gov, that contains reports, proxy and information statements and
other information regarding issuers, such as the Company, that file
electronically with the Commission. The Company has been an electronic filer
since September 1996.

The Common Stock is quoted for trading on the Nasdaq National Market, and
the Registration Statement and such reports and other information concerning the
Company may also be inspected at the offices of the Nasdaq National Market
located at 1735 K Street, N.W., Washington, D.C. 20006.

The Company will furnish holders of the Common Stock with annual reports
containing among other information, audited financial statements certified by an
independent public accounting firm and quarterly reports containing unaudited
condensed financial information for the first three quarters of each fiscal
year. The Company also intends to furnish such other reports as it may determine
or as may be required by law.

50
<PAGE>
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

The following documents heretofore filed by the Company with the Commission
pursuant to the 1934 Act, are hereby incorporated and made a part of this

Prospectus by reference, except as superseded or modified herein:

1. The Company's Annual Report on Form 10-K and Form 10-K/A for the fiscal
year ended September 30, 1997.

2. The Company's Quarterly Reports on Form 10-Q for the quarters ended
December 31, 1997 and March 31, 1998.

3. The Company's Proxy Statement on Schedule 14A, dated February 10, 1998.

4. The Company's Current Reports on Form 8-K dated August 20, 1997, April
7, 1998, April 28, 1998 and Form 8-K/A May 7, 1998.
5. Pages F-24 through F-37 of the Company's Registration Statement on Form
S-4 (Reg. No. 333-39527).

All documents subsequently filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the 1934 Act prior to the termination of the Offerings to
which this Prospectus relates shall be deemed to be incorporated by reference
into this Prospectus and to be part of this Prospectus from the date of filing
thereof. Any statement incorporated herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.

The Company will furnish without charge to each person to whom this
Prospectus is delivered, upon written or oral request, a copy of any or all of
the documents which have been incorporated by reference in this Prospectus,
other than exhibits to such documents (unless the exhibits are specifically
incorporated by reference into such documents). Requests should be directed to:
NBTY, Inc., 90 Orville Drive, Bohemia, New York 11716, Attn: Harvey Kamil,
Executive Vice President and Secretary, telephone (516) 567-9500.

<PAGE>
NBTY, INC. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
------------
<S> <C>
NBTY, Inc. Supplemental Consolidated Financial Statements: (a)
Unaudited Supplemental Condensed Consolidated Balance Sheets--September 30, 1997 and March 31,
1998............................................................................................ F-2
Unaudited Supplemental Condensed Consolidated Statements of Income--Six Months Ended March 31, 1997
and 1998........................................................................................ F-3
Unaudited Supplemental Condensed Consolidated Statements of Cash Flows--Six Months Ended March 31,
1997 and 1998................................................................................... F-4
Notes to Unaudited Supplemental Condensed Consolidated Financial Statements........................ F-5 to F-8

Report of Independent Accountants.................................................................. F-9
Supplemental Consolidated Balance Sheets--September 30, 1996 and 1997.............................. F-10
Supplemental Consolidated Statements of Income--Years Ended
September 30, 1995, 1996 and 1997............................................................... F-11
Supplemental Consolidated Statements of Stockholders' Equity--Years Ended
September 30, 1995, 1996 and 1997............................................................... F-12
Supplemental Consolidated Statements of Cash Flows--Years Ended
September 30, 1995, 1996 and 1997............................................................... F-13 to F-14
Notes to Supplemental Consolidated Financial Statements............................................ F-15 to F-27

NBTY, Inc. Consolidated Financial Statements: (b)
Unaudited Condensed Consolidated Balance Sheets--September 30, 1997
and March 31, 1998.............................................................................. F-28
Unaudited Condensed Consolidated Statements of Income--Six Months Ended March 31, 1997 and 1998.... F-29
Unaudited Condensed Consolidated Statements of Cash Flows--Six Months Ended March 31, 1997 and
1998............................................................................................ F-30
Notes to Unaudited Condensed Consolidated Financial Statements..................................... F-31 to F-35

Report of Independent Accountants.................................................................. F-36
Consolidated Balance Sheets--September 30, 1996 and 1997........................................... F-37
Consolidated Statements of Income--Years Ended September 30, 1995, 1996 and 1997................... F-38
Consolidated Statements of Stockholders Equity--Years Ended September 30, 1995,
1996 and 1997................................................................................... F-39
Consolidated Statements of Cash Flows--Years Ended September 30, 1995, 1996 and 1997............... F-40 to F-41
Notes to Consolidated Financial Statements......................................................... F-42 to F-53
</TABLE>

- ------------------
(a) The supplemental consolidated financial statements give effect to the merger
of Nutrition Headquarters Group into NBTY, Inc. through a business
combination accounted for by the pooling of interest method.

(b) The consolidated financial statements represent the historical financial
statements of NBTY, Inc. prior to the merger with Nutrition Headquarters
Group.

F-1

<PAGE>
NBTY, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS AND SHARES IN THOUSANDS)
ASSETS

<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31,
1997 1998
------------- -----------
(UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents........................................................... $ 20,262 $ 19,097
Short-term investments.............................................................. 8,362
Accounts receivable, less allowance for doubtful accounts of $1,116 in 1997 and
$1,110 in 1998................................................................... 19,603 20,275
Inventories......................................................................... 86,440 98,852
Deferred income taxes............................................................... 6,032 6,032
Prepaid catalog costs and other current assets...................................... 19,111 12,286
------------- -----------
Total current assets........................................................... 159,810 156,542
Cash held in escrow................................................................... 144,262
Property, plant and equipment......................................................... 118,184 150,712
Intangible assets, net................................................................ 141,303 143,753
Other assets.......................................................................... 7,618 9,550
------------- -----------
Total assets................................................................... $ 571,177 $ 460,557
------------- -----------
------------- -----------
</TABLE>

LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>
<S> <C> <C>
Current liabilities:
Current portion of long-term debt and capital lease obligations..................... $ 1,519 $ 3,034
Demand note payable................................................................. 1,873
Accounts payable.................................................................... 49,857 47,429
Accrued expenses.................................................................... 35,711 28,177
------------- -----------
Total current liabilities...................................................... 88,960 78,640

Long-term debt........................................................................ 168,550 210,658
Obligations under capital leases...................................................... 2,700 2,446
Promissory note payable............................................................... 169,909 2,457
Deferred income taxes................................................................. 7,474 7,642
Other liabilities..................................................................... 2,293 2,293
------------- -----------
Total liabilities.............................................................. 439,886 304,136
------------- -----------

Commitments and contingencies

Stockholders' equity:
Common stock, $.008 par; authorized 75,000 shares in 1997 and 1998, respectively;
issued 69,123 shares in 1997 and 69,255 shares in 1998 and outstanding 64,614
shares in 1997 and 64,746 shares in 1998......................................... 553 554
Capital in excess of par............................................................ 56,182 56,789
Retained earnings................................................................... 75,199 92,884
------------- -----------
131,934 150,227
Less 4,509 treasury shares at cost, in 1997 and 1998, respectively.................. (3,206) (3,206)
Cumulative translation adjustment................................................... 2,563 9,400
------------- -----------
Total stockholders' equity..................................................... 131,291 156,421
------------- -----------
Total liabilities and stockholders' equity..................................... $ 571,177 $ 460,557
------------- -----------
------------- -----------
</TABLE>

See notes to supplemental condensed consolidated financial statements.
F-2

<PAGE>
NBTY, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(DOLLARS AND SHARES IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED MARCH 31,
--------------------
1997 1998
-------- --------
<S> <C> <C>
Net sales $159,105 $286,820
-------- --------
Costs and expenses:
Cost of sales........................................................................... 79,819 140,414
Catalog printing, postage and promotion................................................. 13,996 13,935
Selling, general and administrative..................................................... 40,571 90,452
-------- --------
134,386 244,801
-------- --------
Income from operations.................................................................... 24,719 42,019
-------- --------

Other income (expenses):
Interest, net........................................................................... (1,315) (9,221)
Miscellaneous, net...................................................................... (171) 1,400
-------- --------
(1,486) (7,821)
-------- --------
Income before income taxes................................................................ 23,233 34,198
Income taxes.............................................................................. 7,391 10,565
-------- --------
Net income.............................................................................. $ 15,842 $ 23,633
-------- --------
-------- --------

Net income per share:
Basic................................................................................... $ 0.25 $ 0.37
Diluted................................................................................. $ 0.23 $ 0.34

Weighted average common shares outstanding:
Basic................................................................................... 64,578 64,662
Diluted................................................................................. 68,919 68,967
</TABLE>

See notes to supplemental condensed consolidated financial statements.

F-3

<PAGE>
NBTY, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED MARCH 31,
--------------------
1997 1998
------- ---------
<S> <C> <C>
Net income................................................................................ $15,842 $ 23,633
Adjustments to reconcile net income to cash provided by operating activities:
Loss on sale of property, plant and equipment........................................... 26
Depreciation and amortization........................................................... 3,664 10,032
Provision (recovery) for allowance for doubtful accounts................................ 206 (5)
Increase in deferred taxes.............................................................. 7
Changes in assets and liabilities, net of acquistions:
Accounts receivable.................................................................. (5,170) (199)
Inventories.......................................................................... (8,262) (11,698)
Prepaid catalog costs and other current assets....................................... (1,295) 8,683
Other assets......................................................................... 288 535
Accounts payable..................................................................... 10,381 (3,201)
Accrued expenses..................................................................... 5,112 (12,428)
------- ---------
Net cash provided by operating activities.......................................... 20,792 15,359
------- ---------
Cash flow from investing activities:
Purchase of property, plant and equipment............................................... (9,488) (38,942)
Proceeds from sale of property, plant and equipment..................................... 20
Proceeds from sale of short-term investments............................................ 8,362
Purchase of short-term investments...................................................... (4,651)
Receipt of payments from direct-mail cosmetics business................................. 322
------- ---------
Net cash used in investing activities.............................................. (13,797) (30,580)
------- ---------
Cash flows from financing activities:
Dividends paid.......................................................................... (2,610) (5,950)
Borrowings under long-term debt agreements.............................................. 45,000
Cash held in escrow..................................................................... 144,730
Principal payments under long-term debt agreements and capital leases................... (2,079) (1,153)
Purchase of treasury stock.............................................................. (15)
Proceeds from stock options exercised................................................... 23 40
Repayment of promissory note............................................................ (168,770)
------- ---------
Net cash provided by (used in) financing activities................................ (4,681) 13,897
------- ---------
Effect of Exchange Rate Changes on Cash and Cash Equivalents.............................. 159
------- ---------
Net (decrease) increase in cash and cash equivalents...................................... 2,314 (1,165)
Cash and cash equivalents at beginning of quarter......................................... 12,814 20,262

------- ---------
Cash and cash equivalents at end of quarter............................................... $15,128 $ 19,097
------- ---------
------- ---------
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest................................................ $ 1,295 $ 12,129
Cash paid during the period for taxes................................................... $ 4,817 $ 10,243
</TABLE>

See notes to supplemental condensed consolidated financial statements.

F-4

Page>
NBTY, INC. AND SUBSIDIARIES
NOTES TO SUPPLEMENTAL CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

1. BASIS OF PRESENTATION

The supplemental consolidated financial statements of NBTY, Inc. and
Subsidiaries, formerly Nature's Bounty, Inc. ('NBTY'), have been prepared to
give retroactive effect to the merger with Nutrition Headquarters Group, Inc.,
Lee Nutrition, Inc. and Nutro Laboratories, Inc. (collectively, the 'Nutrition
Headquarters Group' and with NBTY collectively, the 'Company') on April 20,
1998, which has been accounted for as a pooling of interests. Generally accepted
accounting principles proscribe giving effect to a consummated business
combination accounted for by the pooling- of-interest methods in financial
statements that do not include the date of consummation. These financial
statements do not extend through the date of consummation; however, they well
become the historical consolidated financial statements of the Company after
financial statements covering the date of consummation of the business
combination are issued.

During 1998, NBTY entered into a definitive agreement to merge with
Nutrition Headquarters Group. On April 20, 1998, Nutrition Headquarters Group
was merged with and into NBTY. Under terms of the merger agreement, each share
of Nutrition Headquarters Group common stock was exchanged for one share of
NBTY's common stock with approximately 8,722 shares of NBTY's common stock
exchanged for all the outstanding stock of Nutrition Headquarters Group.

2. In the opinion of the Company, the accompanying unaudited condensed
consolidated financial statements contain all adjustments necessary to present
fairly its financial position as of March 31, 1998 and results of operations for
the six months ended March 31, 1998 and 1997 and statements of cash flows for
the six months ended March 31, 1998 and 1997. The consolidated condensed balance
sheet as of September 30, 1997 has been derived from the audited balance sheet
as of that date. This report should be read in conjunction with the Company's
supplemental consolidated financial statements for the fiscal years end
September 30, 1995, 1996 and 1997 included elsewhere in this Prospectus and Form
S-3.

Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles 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. Actual results could differ from those estimates.

Foreign currency translation

and gains and losses. Where the local currency is the functional currency,
translation adjustments are recorded as a separate component of stockholder's
equity.

Common shares and earnings per share

On March 9, 1998, the Company's Board of Directors declared a three-for-one
stock split in the form of a 200% stock dividend effective March 23, 1998. In
addition, the Company's Certificate of Incorporation was amended to authorize
the issuance of up to 75,000 shares of common stock, par value $.008 per share.

All per common share amounts have been retroactively restated to account
for the above stock split. In addition, stock options and respective exercise
prices have been amended to reflect these transactions (see Note 8).

Accounting changes

F-5
<PAGE>
NBTY, INC. AND SUBSIDIARIES
NOTES TO SUPPLEMENTAL CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS--(CONTINUED)

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Board Opinion ('APB') No. 25, 'Accounting for Stock Issued to Employees.' As the
Company has not granted any options during the six months ended March 31, 1998,
nor fiscal 1997 or 1996, there would not have been any impact on the Company's
financial position or results of operations on a pro forma basis.

Effective October 1, 1996, the Company adopted SFAS No. 121,'Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of.' This statement requires that certain assets be reviewed for impairment and,
if impaired, be measured at fair value, whenever events or changes in
circumstances indicate that the carrying amount of the asset may not be
recoverable. The adoption of SFAS No. 121 at October 1, 1996 and its application
during fiscal 1997 and the six months ended March 31, 1998 had no material
impact on the Company's financial position or results of operations.

New accounting standards

In February 1997, the Financial Accounting Standards Board ('FASB') issued
SFAS No. 128, 'Earnings Per Share.' The statement simplifies the standards for
computing earnings per share ('EPS') and makes them comparable to international
EPS standards. The statement requires the presentation of both 'basic' and
'diluted' EPS on the face of the income statement with a supplementary
reconciliation of the amounts used in the calculations (see note 8).

In June 1997, the FASB issued SFAS No. 130, 'Reporting Comprehensive

Income,' which establishes standards for reporting and display of comprehensive
income, its components and accumulated balances. Comprehensive income is defined
to include all changes in equity except those resulting from investments by
owners and distribution to owners. Among other disclosures, SFAS No. 130
requires that all items that are required to be recognized under current
accounting standards as components of comprehensive income be reported in a
financial statement that is displayed with the same prominence as other
financial statements.

In addition, in June 1997, the FASB issued SFAS No. 131, 'Disclosures About
Segments of an Enterprise and Related Information,' which establishes standards
for reporting information about operating segments. It also establishes
standards for disclosures regarding products and services, geographic areas and
major customers.

Both of these new standards are effective for fiscal years beginning after
December 15, 1997 and require comparative information for earlier years to be
restated. The implementation of these new standards will not affect the
Company's results of operations and financial position, but may have an impact
on future financial statement disclosures.

Year 2000 Software Compatibility

The Company is continually updating its information systems, and has
evaluated significant computer software applications for compatibility with the
year 2000. With the system changes implemented to date and other planned
changes, the Company anticipates that its computer software applications will be
compatible with the year 2000. Expenditures specifically related to software
modifications for year 2000 compatibility are not expected to be material.

3. The results of operations and statements of cash flows for the six
months ended March 31, 1998 are not necessarily indicative of the results to be
expected for the full year.

4. ACQUISITION OF HOLLAND & BARRETT HOLDINGS LTD.

On August 7, 1997, the Company acquired all of the issued and outstanding
capital stock of Holland & Barrett Holdings Ltd. ('H&B') from Lloyds Chemist's
plc ('Lloyds') for an aggregate purchase price of approximately $169,000 plus
acquisition costs of approximately $811. The acquisition has been accounted for
under the purchase method and, accordingly, the results of operations are
included in the financial statements from the date of acquisition. H&B markets a
broad line of nutritional supplement products, including vitamins,

F-6
<PAGE>
NBTY, INC. AND SUBSIDIARIES
NOTES TO SUPPLEMENTAL CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS--(CONTINUED)

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
minerals and other nutritional supplements and food products. At the date of
acquisition, H&B operated approximately 410 retail stores in the United Kingdom.

The Company issued to Lloyds two promissory notes (the 'Promissory Notes')
totaling approximately $170,000 as consideration for the purchase of capital
stock of H&B. The Promissory Notes, which are collateralized by two letters of
credit issued by a lending institution, were paid in full in October 1997.

In connection with the Acquisition, the Company (i) entered into a $50,000
credit and guarantee agreement (the 'Credit and Guarantee Agreement'), which
provides borrowings for working capital and general corporate purposes, and (ii)
issued $150,000 in Senior Subordinated Notes due 2007.

Assets acquired and liabilities assumed included cash ($5,580), inventory
($18,045), other current assets ($11,078), property, plant and equipment
($31,554), and current and long-term liabilities ($27,154 and $4,058,
respectively). The excess cost of investment over the net book value of H&B at
the date of acquisition resulted in an increase in goodwill of $133,725 which
will be amortized over 25 years. Additionally, finance related costs of
approximately $5,600 will be amortized over 10 years.

5. Inventories have been estimated by using the gross profit method for the
interim periods. The components of the inventories are as follows:

<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31,
1997 1998
------------- -----------
(UNAUDITED)
<S> <C> <C>
Raw materials and Work-in-process................................. $ 37,347 $ 42,714
Finished goods.................................................... 49,093 56,138
------------- -----------
$ 86,440 $ 98,852
------------- -----------
------------- -----------
</TABLE>

6. Intangible assets, at cost, acquired at various dates are as follows:

<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31,
1997 1998
------------- -----------
(UNAUDITED)
<S> <C> <C>
Goodwill.......................................................... $ 136,972 $ 142,510
Customer lists.................................................... 12,732 12,731
Trademark and licenses............................................ 1,201 1,201
Covenants not to compete.......................................... 1,305 1,305
------------- -----------
152,210 157,747
Less, accumulated Amortization.................................... 10,907 13,994
------------- -----------
$ 141,303 $ 143,753

------------- -----------
------------- -----------
</TABLE>

7. ACCRUED EXPENSES

<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31,
1997 1998
------------- -----------
(UNAUDITED)
<S> <C> <C>
Litigation settlement costs....................................... $ 5,600
Payroll and related payroll taxes................................. 4,622 $ 4,285
Customer deposits................................................. 2,568 885
Accrued purchases................................................. 2,800 5,639
Income taxes payable.............................................. 7,597 7,476
Other............................................................. 12,524 9,892
------------- -----------
$35,711 $28,177
------------- -----------
------------- -----------
</TABLE>

F-7

Page>
NBTY, INC. AND SUBSIDIARIES
NOTES TO SUPPLEMENTAL CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS--(CONTINUED)

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

8. Basic earnings per share are based on the weighted average number of
common shares outstanding during the six month periods ended March 31, 1998 and
1997. Diluted earnings per share include the effect of outstanding stock
options, if exercised. The following is a reconciliation between the basic and
diluted earnings per share:

<TABLE>
<CAPTION>
FOR THE SIX MONTHS
MARCH 31,
------------------
1997 1998
------- -------
(UNAUDITED)
<S> <C> <C>
Numerator:
Numerator for basic earnings per share--income available to common
stockholders....................................................... $15,842 $23,633
------- -------
------- -------
Numerator for dilutive earnings per share--income available to common
stockholders....................................................... $15,842 $23,633
------- -------
------- -------
Denominator:
Denominator for basic earnings per share--weighted-average Shares..... 64,578 64,662
Effective of dilutive securities:
Stock options...................................................... 4,341 4,305
------- -------
Denominator for diluted earnings per share--weighted-average Shares... 68,919 68,967
------- -------
------- -------

Basic earnings per share................................................ $ 0.25 $ 0.37
------- -------
------- -------

Diluted earnings per share.............................................. $ 0.23 $ 0.34
------- -------
------- -------
</TABLE>

9. SHAREHOLDER LITIGATION

Company and the attorneys representing the Plaintiff class agreeing to an $8,000
($4,400 cash, $3,600 stock) settlement of the lawsuit. Subsequently, the Company
entered into a Capital Stipulation of Settlement calling for, among other
things, a total cash payment of $8,000. Cash payments aggregating $8,000 were
made in November and December 1997. The Company had been notified by its
insurance carrier that it was willing to reimburse the Company to the extent of
$2,400. The Company recorded a $5,600 provision for its portion of the
settlement in fiscal 1997, which, along with related legal fees of approximately
$768, has been reflected separately in the fiscal 1997 statements of income
(refer to the Company's 10-K). In January 1998, an insurance carrier paid the
Company $2,650.

F-8

<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

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

We have audited the accompanying supplemental consolidated balance sheets of
NBTY, Inc. and Subsidiaries as of September 30, 1996 and 1997 and the related
supplemental consolidated statements of income, stockholders' equity and cash
flows for each of the three years in the period ended September 30, 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. 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.

The supplemental consolidated financial statements give retroactive effect to
the merger of NBTY, Inc. and Subsidiaries and Nutrition Headquarters, Inc., Lee
Nutrition, Inc. and Nutro Laboratories, Inc. on April 20, 1998, which has been
accounted for as a pooling of interests as described in Note 1 to the
supplemental consolidated financial statements. Generally accepted accounting
principles proscribe giving effect to a consummated business combination
accounted for by the pooling of interests methods in financial statements that
do not include the date of consummation. These financial statements do not
extend through the date of consummation; however, they will become the
historical consolidated financial statements of NBTY, Inc. and Subsidiaries
after financial statements covering the date of consummation of the business
combination are issued.

In our opinion, the supplemental consolidated financial statements referred to
above present fairly, in all material respects, the consolidated financial
position of NBTY, Inc. and Subsidiaries at September 30, 1996 and 1997, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended September 30, 1997, in conformity with generally
accepted accounting principles applicable after financial statements are issued
for a period which includes the date of consummation of the business
combination.

COOPERS & LYBRAND L.L.P.

Melville, New York
April 24, 1998

F-9

<PAGE>
NBTY, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1996 AND 1997
(DOLLARS AND SHARES IN THOUSANDS)

<TABLE>
<CAPTION>
1996 1997
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................................................... $ 12,814 $ 20,262
Short-term investments.................................................................. 11,024 8,362
Accounts receivable, less allowance for doubtful accounts of $919 in 1996 and
$1,116 in 1997....................................................................... 14,580 19,603
Inventories............................................................................... 47,241 86,440
Deferred income taxes..................................................................... 3,155 6,032
Prepaid catalog costs and other current assets............................................ 5,857 19,111
-------- --------
Total current assets............................................................... 94,671 159,810
Cash held in escrow....................................................................... 144,262
Property, plant and equipment, net........................................................ 70,423 118,184
Intangible assets, net.................................................................... 5,376 141,303
Other assets.............................................................................. 1,478 7,618
-------- --------
Total assets....................................................................... $171,948 $571,177
-------- --------
-------- --------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt and capital lease obligations......................... $ 2,767 $ 1,519
Demand note payable..................................................................... 2,633 1,873
Accounts payable........................................................................ 15,584 49,857
Accrued expenses........................................................................ 16,128 35,711
-------- --------
Total current liabilities.......................................................... 37,112 88,960
Long-term debt............................................................................ 20,298 168,550
Obligations under capital leases.......................................................... 3,272 2,700
Promissory note payable................................................................... 169,909
Deferred income taxes..................................................................... 2,827 7,474
Other liabilities......................................................................... 794 2,293
-------- --------
Total liabilities.................................................................. 64,303 439,886
-------- --------
Commitments and contingencies

Stockholders' equity:
Common stock, $.008 par; authorized 25,000 shares in 1996 and 75,000 shares in 1997;
issued 23,004 shares in 1996 and 69,123 shares in 1997 and outstanding 21,517 shares
in 1996 and 64,614 shares in 1997.................................................... 184 553
Capital in excess of par................................................................ 56,260 56,182

Retained earnings....................................................................... 54,433 75,199
-------- --------
110,877 131,934
Less 1,487 and 4,509 treasury shares at cost, in 1996 and 1997, respectively............ (2,648) (3,206)
Stock subscriptions receivable.......................................................... (584)
Cumulative translation adjustment....................................................... 2,563
-------- --------
Total stockholders' equity......................................................... 107,645 131,291
-------- --------
Total liabilities and stockholders' equity......................................... $171,948 $571,177
-------- --------
-------- --------
</TABLE>

See notes to supplemental consolidated financial statements.
F-10

<PAGE>
NBTY INC. AND SUBSIDIARIES
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED SEPTEMBER 30, 1995, 1996 AND 1997
(DOLLARS AND SHARES IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
1995 1996 1997
-------- -------- --------
<S> <C> <C> <C>
Net sales.................................................................... $250,351 $265,670 $355,336
-------- -------- --------
Costs and expenses:
Cost of sales.............................................................. 137,254 138,186 177,909
Catalog printing, postage and promotion.................................... 28,307 26,695 27,932
Selling, general and administrative........................................ 67,032 68,414 96,653
Litigation settlement costs................................................ 6,368
-------- -------- --------
232,593 233,295 308,862
-------- -------- --------
Income from operations....................................................... 17,758 32,375 46,474
-------- -------- --------

Other income (expense):
Interest, net.............................................................. (2,284) (2,431) (7,471)
Miscellaneous, net......................................................... 822 1,430 1,817
-------- -------- --------
(1,462) (1,001) (5,654)
-------- -------- --------
Income before income taxes................................................... 16,296 31,374 40,820
Income taxes................................................................. 3,374 9,168 11,694
-------- -------- --------
Net income.............................................................. $ 12,922 $ 22,206 $ 29,126
-------- -------- --------
-------- -------- --------

Net income per share:
Basic...................................................................... $ 0.21 $ 0.35 $ 0.45
Diluted.................................................................... $ 0.19 $ 0.32 $ 0.42

Weighted average common shares outstanding:
Basic...................................................................... 62,159 64,197 64,611
Diluted.................................................................... 68,695 68,699 68,935
</TABLE>

See notes to supplemental consolidated financial statements.
F-11

<PAGE>
NBTY, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED SEPTEMBER 30, 1995, 1996 AND 1997
(DOLLARS AND SHARES IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK TREASURY STOCK
----------------- ------------------ STOCK CUMULATIVE
NUMBER OF CAPITAL IN RETAINED NUMBER OF SUBSCRIPTIONS TRANSLATION
SHARES AMOUNT EXCESS OF PAR EARNINGS SHARES AMOUNT RECEIVABLE ADJUSTMENT
--------- ------ ------------- -------- --------- ------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, September 30, 1994...... 21,702 $174 $53,455 $32,990 1,213 $ (863 )
Net income for year ended
September 30, 1995........... 12,922
S corporation distributions.... (6,750 )
Exercise of stock options...... 430 3 212
Tax benefit from exercise of
stock options................ 731
Purchase of treasury stock,
at cost...................... 228 (1,483 )
--------- ------ ------------- -------- --------- ------- ------ ----------
Balance, September 30, 1995...... 22,132 177 54,398 39,162 1,441 (2,346 )
Net income for year ended
September 30, 1996........... 22,206
S corporation distributions.... (6,935 )
Exercise of stock options...... 872 7 588 $(584)
Tax benefit from exercise of
stock options................ 1,274
Purchase of treasury stock,
at cost...................... 46 (302 )
--------- ------ ------------- -------- --------- ------- ------ ----------
Balance, September 30, 1996...... 23,004 184 56,260 54,433 1,487 (2,648 ) (584)
Net income for year ended
September 30, 1997........... 29,126
S corporation distributions.... (8,360 )
Gain on foreign currency
translation.................. $2,563
Exercise of stock options...... 37 1 33
Tax benefit from exercise of
stock options................ 257
Repayment of stock
subscriptions receivable for
options exercised............ 96
Stock tendered as payment for
options exercised............ 16 (558 ) 488
April 3, 1998 three-for-one
stock split effected in the
form of a 200% stock
dividend..................... 46,082 368 (368) 3,006
--------- ------ ------------- -------- --------- ------- ------ ----------
Balance, September 30, 1997...... 69,123 $553 $56,182 $75,199 4,509 $(3,206) $ -- $2,563
--------- ------ ------------- -------- --------- ------- ------ ----------
--------- ------ ------------- -------- --------- ------- ------ ----------

TOTAL
--------
<S> <C>
Balance, September 30, 1994...... $ 85,756
Net income for year ended
September 30, 1995........... 12,922
S corporation distributions.... (6,750)
Exercise of stock options...... 215
Tax benefit from exercise of
stock options................ 731
Purchase of treasury stock,
at cost...................... (1,483)
--------
Balance, September 30, 1995...... 91,391
Net income for year ended
September 30, 1996........... 22,206
S corporation distributions.... (6,935)
Exercise of stock options...... 11
Tax benefit from exercise of
stock options................ 1,274
Purchase of treasury stock,
at cost...................... (302)
--------
Balance, September 30, 1996...... 107,645
Net income for year ended
September 30, 1997........... 29,126
S corporation distributions.... (8,360)
Gain on foreign currency
translation.................. 2,563
Exercise of stock options...... 34
Tax benefit from exercise of
stock options................ 257
Repayment of stock
subscriptions receivable for
options exercised............ 96
Stock tendered as payment for
options exercised............ (70)
April 3, 1998 three-for-one
stock split effected in the
form of a 200% stock
dividend.....................
--------
Balance, September 30, 1997...... $131,291
--------
--------
</TABLE>

See notes to supplemental consolidated financial statements.

F-12

Page>
NBTY, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 1995, 1996 AND 1997
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
1995 1996 1997
-------- -------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income................................................................... $ 12,922 $ 22,206 $ 29,126
Adjustments to reconcile net income to cash provided by operating activities:
(Gain) loss on disposal/sale of property, plant and equipment.............. 374 (43) (194)
Depreciation and amortization.............................................. 6,171 7,091 9,627
Provision (recovery) for allowance for doubtful accounts................... (18) 283 197
Deferred income taxes...................................................... 685 (642) (2,750)
Changes in assets and liabilities, net of acquisitions:
Accounts receivable..................................................... (2,207) 1,441 (4,841)
Inventories............................................................. 4,657 (1,054) (20,877)
Prepaid catalog costs and other current assets.......................... (527) 665 (4,461)
Other assets............................................................ 1,175 603 36
Accounts payable........................................................ 2,857 (6,399) 14,586
Accrued expenses........................................................ 3,063 5,565 14,553
Other liabilities....................................................... 275 24 1,500
Income tax receivable................................................... 1,300
-------- -------- ---------
Net cash provided by operating activities............................. 30,727 29,740 36,502
-------- -------- ---------
Cash flows from investment activities:
Increase in intangible assets................................................ (1,064) (67) (1,843)
Purchase of property, plant and equipment.................................... (12,707) (16,809) (23,712)
Proceeds from sale of property, plant and equipment.......................... 155 293
Proceeds from sale of short-term investments................................. 2,662
Purchase of short-term investments........................................... (11,024)
Receipt of payments on notes from sale of direct mail cosmetics business..... 741 1,047
Proceeds from sale of direct mail cosmetics business......................... 350
Other........................................................................ (85) 181 (263)
Cash from acquisition........................................................ 5,580
-------- -------- ---------
Net cash used in investing activities................................. (13,856) (26,473) (16,236)
-------- -------- ---------
Cash flows from financing activities:
Net payments under line of credit agreement.................................. (5,000)
Proceeds from bond offering, net of discount................................. 148,763
Cash held in escrow.......................................................... (144,262)
Bond issue costs............................................................. (5,575)
Borrowings under long-term debt agreements................................... 3,197 6,000 99
Principal payments under long-term debt agreements and capital leases........ (2,768) (2,802) (3,628)
Purchase of treasury stock................................................... (1,292) (302) (70)
Proceeds from stock options exercised........................................ 24 11 34
Distributions to stockholders................................................ (6,750) (6,935) (8,360)
Repayment of stock subscription receivable................................... 96

-------- -------- ---------
Net cash used in financing activities................................. (12,589) (4,028) (12,903)
-------- -------- ---------
Effect of exchange rate changes on cash and cash equivalents................... 85
-------- -------- ---------
Net increase (decrease) in cash and cash equivalents........................... 4,282 (761) 7,448
Cash and cash equivalents at beginning of year................................. 9,293 13,575 12,814
-------- -------- ---------
Cash and cash equivalents at end of year....................................... $ 13,575 $ 12,814 $ 20,262
-------- -------- ---------
-------- -------- ---------
Supplemental disclosure of cash flow information:
Cash paid during the period for interest..................................... $ 2,211 $ 2,493 $ 3,568
Cash paid during the period for income taxes................................. $ 1,763 $ 5,496 $ 14,206
</TABLE>

See notes to supplemental consolidated financial statements.
F-13

Page>
NBTY, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF CASH FLOWS--(CONTINUED)

YEARS ENDED SEPTEMBER 30, 1995, 1996 AND 1997
(DOLLARS IN THOUSANDS)

Non-cash investing and financing information

On October 9, 1995, NBTY sold certain assets of its direct-mail cosmetics
business for $2,495. The Company received $350 in cash and non-interest bearing
notes aggregating $2,145 for inventory, a customer list and other intangible
assets. The inventory note was repaid in full in October 1996. In April 1997,
the Company received the final payment of the customer list note. (See Note 4)

During fiscal 1996, the Company entered into capital leases for machinery
and equipment aggregating $2,635.

During fiscal 1995, 1996 and 1997, options were exercised with shares of
common stock issued to certain officers and directors. Accordingly, the tax
benefit of approximately $731, $1,274 and $257 for the years ended September 30,
1995, 1996 and 1997, respectively, was recorded as an increase in capital in
excess of par and a reduction in taxes currently payable. In addition, during
fiscal 1997, common stock was surrendered to the Company in satisfaction of $488
of the stock subscription outstanding at September 30, 1996. (See Note 13)

In connection with the acquisition of Holland & Barrett Holdings Ltd. on
August 7, 1997, NBTY issued two promissory notes aggregating $170,000 as
consideration for the purchase of capital stock. Such notes were paid in October
1997 from the cash held in escrow at September 30, 1997. (See Note 3)

See notes to supplemental consolidated financial statements.
F-14

<PAGE>
NBTY, INC. AND SUBSIDIARIES
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

1. BASIS OF PRESENTATION

The supplemental consolidated financial statements of NBTY, Inc. and
Subsidiaries, formerly Nature's Bounty, Inc. ('NBTY'), have been prepared to
give retroactive effect to the merger with Nutrition Headquarters, Inc., Lee
Nutrition, Inc. and Nutro Laboratories, Inc. (collectively, the 'Nutrition
Headquarters Group' and with NBTY collectively, the 'Company') on April 20,
1998, which has been accounted for as a pooling of interests. Generally accepted
accounting principles proscribe giving effect to a consummated business
combination accounted for by the pooling-of-interests methods in financial
statements that do not include the date of consummation. These financial
statements do not extend through the date of consummation; however, they will
become the historical consolidated financial statements of the Company after
financial statements covering the date of consummation of the business
combination are issued.

During 1998, NBTY entered into a definitive agreement to merge with
Nutrition Headquarters Group. On April 20, 1998, Nutrition Headquarters Group
was merged with and into NBTY. Under terms of the merger agreement, each share
of Nutrition Headquarters Group common stock was exchanged for approximately
30,000 shares of NBTY's common stock with approximately 8,772 shares of NBTY's
common stock exchanged for all the outstanding stock of Nutrition Headquarters
Group.

The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries. All intercompany accounts and transactions
have been eliminated.

In March 1998, the Company's board of directors declared a three-for-one
stock split payable in the form of a 200% stock dividend. This distribution has
been reflected in the fiscal 1997 supplemental consolidated financial statements
and all per common share amounts have been retroactively restated to account for
the stock split. In addition, stock options and the related exercise prices have
been amended to reflect this transaction. Also, in March 1998, the Company's
certificate of incorporation was amended to authorize the issuance of up to
75,000 shares of common stock, par value $.008 per share.

2. BUSINESS OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business operations

The Company manufactures and distributes vitamins, food supplements and
health and beauty aids primarily in the United States and the United Kingdom.
The processing, formulation, packaging, labeling and advertising of the
Company's products are subject to regulation by one or more federal agencies,
including the Food and Drug Administration, the Federal Trade Commission, the
Consumer Product Safety Commission, the United States Department of Agriculture,
the United States Environmental Protection Agency and the United States Postal
Service.

Within the United Kingdom, the manufacturing, advertising, sales and
marketing of food products is regulated by a number of governmental agencies
including the Ministry of Agriculture, Fisheries and Food, the Department of
Health, the Food Advisory Committee and the Committee on Toxicity, among others.

Revenue recognition

The Company recognizes revenue upon shipment or, with respect to its own
retail store operations, upon the sale of products. The Company has no single
customer that represents more than 10% of annual net sales or accounts
receivable as of and for the years ended September 30, 1995, 1996 and 1997.

F-15
<PAGE>
NBTY, INC. AND SUBSIDIARIES
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

2. BUSINESS OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES--(CONTINUED)
Estimates

Inventories

Inventories are stated at the lower of cost or market. Cost is determined
on the weighted average method which approximates first-in, first-out basis. The
cost elements of inventory include materials, labor and overhead. In fiscal
1995, no one supplier provided more than 10% of purchases. One supplier provided
approximately 12% of the Company's purchases in 1996 and 1997.

Prepaid catalog costs

Mail order production and mailing costs are capitalized as prepaid catalog
costs and charged to expense over the catalog period, which typically
approximates three months.

Advertising expense

All media (television, radio, magazine) and cooperative advertising costs
are generally expensed as incurred. Total expenses relating to advertising and
promotion for fiscal 1995, 1996 and 1997 were $17,409, $17,885 and $19,782,
respectively.

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.
Expenditures which significantly improve or extend the life of an asset are
capitalized.

Maintenance and repairs are charged to expense in the year incurred. Cost
and related accumulated depreciation for property, plant and equipment are
removed from the accounts upon sale or disposition and the resulting gain or
loss is reflected in earnings.

Intangible assets

Goodwill represents the excess of purchase price over the fair value of
identifiable net assets of companies acquired. Goodwill and other intangibles
are amortized on a straight-line basis over periods not exceeding 40 years.

Foreign currency translation

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,
and gains and losses. Where the local currency is the functional currency,
translation adjustments are recorded as a separate component of stockholder's
equity.

F-16
<PAGE>
NBTY, INC. AND SUBSIDIARIES
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

2. BUSINESS OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES--(CONTINUED)
Income taxes

NBTY 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 bases of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse. Prior to the merger, Nutrition Headquarters
Group had been treated as an S corporation for federal and state tax purposes.
Accordingly, taxable income has been reported to the individual stockholders for
inclusion in their respective income tax returns with no provision for these
taxes, other than certain minimum taxes, included in the supplemental
consolidated financial statements.

Cash and cash equivalents

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

Short-term investments

Short-term interest bearing investments are those with maturities of less
than one year but greater than three months when purchased. These investments
are readily convertible to cash and are stated at market value, which
approximates cost. Realized gains and losses are included in other income on a
specific identification basis in the period they are realized.

Common shares and earnings per share

In February 1997, the Financial Accounting Standards Board ('FASB') issued
Statement of Financial Accounting Standards ('SFAS') No. 128, 'Earnings Per
Share.' The statement requires the presentation of both 'basic' and 'diluted'
earnings per share ('EPS') on the face of the income statement. Basic EPS is
based on the weighted average number of shares of common stock outstanding
during each period while diluted EPS is based on the weighted average number of
shares of common stock and common stock equivalents outstanding during each
period. Common stock equivalents included in diluted EPS, which consisted of
common shares issuable upon the exercise of outstanding stock options, were
6,536, 4,502 and 4,324 for the years ended September 30, 1995, 1996 and 1997,
respectively.

Reclassifications

Certain reclassifications have been made to conform prior year amounts to
the current year presentation.

Accounting changes

Effective October 1, 1996, the Company adopted the disclosure-only
provisions of SFAS No. 123, 'Accounting for Stock-Based Compensation.' As
permitted by SFAS No. 123, the Company continues to measure compensation cost in
accordance with Accounting Principles Board Opinion No. 25, 'Accounting for
Stock Issued to Employees.' As the Company has not granted any options during
fiscal 1996 or 1997, there would not have been any impact on the Company's
financial position or results of operations on a pro forma basis.

F-17
<PAGE>
NBTY, INC. AND SUBSIDIARIES
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

2. BUSINESS OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES--(CONTINUED)
No. 121 at October 1, 1996 and its application during fiscal 1997 had no
material impact on the Company's financial position or results of operations.

New accounting standards

In June 1997, the FASB issued SFAS No. 130, 'Reporting Comprehensive
Income,' which establishes standards for reporting and display of comprehensive
income, its components and accumulated balances. Comprehensive income is defined
to include all changes in equity except those resulting from investments by
owners and distribution to owners. Among other disclosures, SFAS No. 130
requires that all items that are required to be recognized under current
accounting standards as components of comprehensive income be reported in a
financial statement that is displayed with the same prominence as other
financial statements.

Both of these new standards are effective for periods beginning after
December 15, 1997 and require comparative information for earlier years to be
restated. The implementation of these new standards will not affect the
Company's results of operations and financial position, but may have an impact
on future financial statement disclosures.

3. ACQUISITION OF HOLLAND & BARRETT HOLDINGS LTD.

On August 7, 1997, NBTY acquired all of the issued and outstanding capital
stock of Holland & Barrett Holdings Ltd. ('H&B') from Lloyds Chemist's plc
('Lloyds') for an aggregate purchase price of approximately $169,000 plus
acquisition costs of approximately $811. The acquisition has been accounted for
under the purchase method and, accordingly, the results of operations are
included in the financial statements from the date of acquisition. H&B markets a
broad line of nutritional supplement products, including vitamins, minerals and
other nutritional supplements and food product. At the date of acquisition, H&B
operated approximately 410 retail stores in the United Kingdom.

NBTY issued to Lloyds two promissory notes (the 'Promissory Notes')
totaling approximately $170,000 as consideration for the purchase of capital
stock of H&B. The Promissory Notes, which are collateralized by two letters of
credit issued by a lending institution, were paid in full in October 1997.

In connection with the Acquisition, NBTY (i) entered into a $50,000
revolving credit facility (the 'Revolving Credit Facility'), which provides
borrowings for working capital and general corporate purposes, and (ii) issued
$150,000 in Senior Subordinated Notes due 2007.

Assets acquired and liabilities assumed include cash ($5,580), inventory
($18,045), other current assets ($11,078), property, plant and equipment
($31,554), and current and long-term liabilities ($27,154 and $4,058,
respectively). The excess cost of investment over the net book value of H&B at
the date of acquisition resulted in an increase in goodwill of $133,725 which
will be amortized over 25 years. Additionally, finance related costs of
approximately $5,600 will be amortized over 10 years.

The following unaudited condensed pro forma information presents a summary
of consolidated results of operations of the Company and H&B as if the
acquisition had occurred at the beginning of fiscal 1996, with pro forma
adjustments to give effect to the amortization of goodwill, interest expense on
acquisition debt and certain other adjustments, together with related income tax
effects. The pro forma information, which does not give

F-18
<PAGE>
NBTY, INC. AND SUBSIDIARIES
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

3. ACQUISITION OF HOLLAND & BARRETT HOLDINGS LTD.--(CONTINUED)
effect to anticipated intercompany product sales, is not necessarily indicative
of the results of operations had H&B been acquired as of the earliest period
presented below.

<TABLE>
<CAPTION>
SEPTEMBER 30, SEPTEMBER 30,
1996 1997
---------------- ----------------
<S> <C> <C>
Net sales....................................................... $421,049 $506,326
Net income...................................................... $ 14,964 $ 24,354
Net income per diluted share.................................... $ 0.22 $ 0.35
</TABLE>

4. SALE OF DIRECT-MAIL COSMETICS BUSINESS

On October 9, 1995, NBTY sold certain assets of its direct-mail cosmetics
business for $2,495. NBTY received $350 in cash and non interest bearing notes
aggregating $2,145 for inventory, a customer list and other intangible assets.
Revenues applicable to this marginally unprofitable business were $8,284 and
$137 for fiscal 1995 and 1996, respectively. The inventory note was repaid in
full in October 1996 and, in April 1997, NBTY received the final payment of the
customer list note.

5. INVENTORIES

<TABLE>
<CAPTION>
SEPTEMBER 30,
------------------
1996 1997
------- -------
<S> <C> <C>
Raw materials........................................................... $19,482 $32,712
Work-in-process......................................................... 2,484 4,635
Finished goods.......................................................... 25,275 49,093
------- -------

$47,241 $86,440
------- -------
------- -------
</TABLE>

6. PROPERTY, PLANT AND EQUIPMENT

<TABLE>
<CAPTION>
SEPTEMBER 30,
--------------------
1996 1997
-------- --------
<S> <C> <C>
Land.................................................................. $ 5,641 $ 5,836
Buildings and leasehold improvements.................................. 42,527 51,423
Machinery and equipment............................................... 36,938 43,858
Furniture and fixtures................................................ 9,241 54,385
Transportation equipment.............................................. 737 2,511
Computer equipment.................................................... 9,320 15,434
-------- --------
104,404 173,447
Less accumulated depreciation and amortization...................... 33,981 55,263
-------- --------
$ 70,423 $118,184
-------- --------
-------- --------
</TABLE>

Depreciation and amortization of property, plant and equipment for the
years ended September 30, 1995, 1996 and 1997 was approximately $4,216, $6,205
and $8,363, respectively.

Property, plant and equipment includes approximately $4,293 and $4,392 for
assets recorded under capital leases for fiscal 1996 and 1997, respectively.

F-19
<PAGE>
NBTY, INC. AND SUBSIDIARIES
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

7. INTANGIBLE ASSETS

Intangible assets, at cost, acquired at various dates are as follows:

<TABLE>
<CAPTION>
SEPTEMBER 30,
------------------- AMORTIZATION
1996 1997 PERIOD
------- -------- ------------
<S> <C> <C> <C>

Goodwill........................................................... $ 469 $136,972 20-40
Customer lists..................................................... 12,044 12,732 6-15
Trademark and licenses............................................. 1,201 1,201 2-3
Covenants not to compete........................................... 1,305 1,305 5-7
------- --------
15,019 152,210
Less accumulated amortization.................................... 9,643 10,907
------- --------
$ 5,376 $141,303
------- --------
------- --------
</TABLE>

Amortization included in the supplemental consolidated statements of income
under the caption 'selling, general and administrative expenses' in 1995, 1996
and 1997 was approximately $1,056, $886 and $1,264, respectively.

8. ACCRUED EXPENSES

<TABLE>
<CAPTION>
SEPTEMBER 30,
--------------------
1996 1997
-------- --------
<S> <C> <C>
Litigation settlement costs........................................... $ 5,600
Payroll and related payroll taxes..................................... $ 3,090 4,622
Customer deposits..................................................... 2,199 2,568
Accrued purchases and interest........................................ 2,800
Income taxes payable.................................................. 2,801 7,597
Other................................................................. 8,038 12,524
-------- --------
$ 16,128 $ 35,711
-------- --------
-------- --------
</TABLE>

F-20
<PAGE>
NBTY, INC. AND SUBSIDIARIES
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

9. DEBT

<TABLE>
<CAPTION>
SEPTEMBER 30,
-------------------
1996 1997
------- --------
<S> <C> <C>

Senior debt:
8-5/8% Senior subordinated notes due 2007, net of unamortized
discount of $1,237 (a)............................................ $148,763
Senior bank debt (b)................................................... $ 576 44
First subordinated promissory notes; payable in 8 monthly installments
of $108 (c).......................................................... 867
Second subordinated promissory notes, principal payable on April 1,
2011 (d)............................................................. 2,245 2,245
Note payable to a bank due in monthly payments of $16, including
interest, maturing April 2016 (e).................................... 1,852 1,814
Note payable due in monthly payments of $9, including interest at 8%,
maturing March 2001.................................................. 422 341
Mortgages:
First mortgage, payable in monthly principal and interest (10.375%)
installments (f).................................................. 7,447 7,317
First mortgage payable in monthly principal and interest (9.73%)
installments of $25 (g)........................................... 2,258 2,169
First mortgage, payable in monthly principal and interest (7.375%)
installments of $55 (h)........................................... 5,926 5,693
Other (i).............................................................. 928 1,107
Revolving credit agreement (j).........................................
------- --------
22,521 169,493
Less current portion................................................. 2,223 943
------- --------
$20,298 $168,550
------- --------
------- --------
</TABLE>

- ------------------

(a) In September 1997, the Company issued 10-year Senior Subordinated Notes due
2007. The Notes are unsecured and subordinated in right of payment for all
existing and future indebtedness of the Company. The Company has registered
these Notes under the Securities Act of 1933 through an exchange offer with
terms substantially identical to the original Notes.

(b) Interest on the senior bank debt was payable monthly at the prime rate which
was 8.5% at September 30, 1997. The balance of $44 was paid on October 1,
1997. On April 30, 1997, an agreement for an additional term loan for $1,100
was executed. The terms of the loan agreement provide for repayment in sixty
monthly installments with interest at 8.5% per annum. As of September 30,
1997, no funds were advanced under this agreement.

(c) The promissory notes were entered into on October 31, 1996 and ended on May
31, 1997. Interest is payable per annum at the lower of 10% or the prime
rate plus 2% (prime at September 30, 1997 was 8.5% per annum). These
promissory notes are collateralized by a first subordinated pledge of the
capital stock of the Company and are guaranteed by certain stockholders.

(d) Interest on the second promissory notes is payable per annum at the lower of
10% or the prime rate plus 2%. These promissory notes, payable to a relative
of a stockholder, are collateralized by a second subordinated pledge of

capital stock of the Company and are guaranteed by certain stockholders.

F-21
<PAGE>
NBTY, INC. AND SUBSIDIARIES
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

9. DEBT--(CONTINUED)
(e) Interest on this note payable to a bank is fixed at 8.15% per annum through
April 2001. Thereafter, interest will be adjusted every five years. The note
is collateralized by a building and land.

(f) In September 1990, the Company obtained an $8,000 first mortgage,
collateralized by the underlying building, issued through the Town of Islip,
New York Industrial Development Agency. The taxable bond, held by an
insurance company, has monthly principal and interest payments of $75 for
ten years through 2000, with a final payment of $6,891 in September 2000.

(g) In November 1994, the Company purchased a building which it previously
occupied under a long-term lease. The purchase price of approximately $3,090
was funded with $690 in cash and the balance through a 15-year mortgage note
payable. This agreement contains various restrictive covenants which require
the maintenance of certain financial ratios and limits capital expenditures.

(h) In April 1996, the Company obtained a $6,000 first mortgage with a fixed
interest rate of 7.375%, collateralized by the underlying real estate. The
mortgage has monthly principal and interest payments of $55 for fifteen
years through 2011.

(i) Included in other is approximately $301 and $617 as of September 30, 1996
and 1997, respectively, relating to loans made to a stockholder. These notes
are at fixed interest rates ranging from 8.0% to 10.0% and mature at various
dates through June 2017.

(j) In September 1997, the Company entered into a Revolving Credit Agreement
(the 'Agreement') with five banks that provides for borrowings up to
$50,000, which expires September 23, 2003. Virtually all of the Company's
assets serve as collateral under the Agreement, which is subject to normal
banking terms and conditions. The Agreement provides that loans may be made
under a selection of rate formulas, including Prime or Euro currency rates.
The Agreement provides for the maintenance of various financial ratios and
covenants. As of September 30, 1997, there were no outstanding borrowings
under the Agreement.

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

<TABLE>
<CAPTION>
YEARS ENDED
SEPTEMBER 30,
- --------------------------------------------------------------
<S> <C>

1998....................................................... $ 943
1999....................................................... 1,196
2000....................................................... 7,687
2001....................................................... 602
2002....................................................... 567
Thereafter................................................. 158,498
--------
$169,493
--------
--------
</TABLE>

The Company also has outstanding a demand note payable, bearing interest at
prime plus 0.75%, in the amount of $2,633 and $1,873 at September 30, 1996 and
1997, respectively. The loan agreement has a maximum borrowing limit of 85% of
qualified accounts receivable and 35% of qualified inventory, with an overall
borrowing limit of $5,000.

In August 1997, in connection with the promissory notes issued as
consideration for the purchase of H&B, NBTY was issued two standby letters of
credit aggregating $170,000. At September 30, 1997, there were no borrowings
outstanding under the letters of credit. As of October 17, 1997, upon payment of
the promissory notes, the letters of credit were cancelled.

In 1997, the Company recorded a loss of $2,265 in connection with an
interest rate lock which was settled on October 28, 1997.

F-22
<PAGE>
NBTY, INC. AND SUBSIDIARIES
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

10. CAPITAL LEASE OBLIGATIONS

The Company enters into various capital leases for machinery and equipment
which provide the Company with bargain purchase options at the end of such lease
terms. Future minimum payments under capital lease obligations as of September
30, 1997 are as follows:

<TABLE>
<S> <C>
1998............................................................. $ 814
1999............................................................. 759
2000............................................................. 759
2001............................................................. 759
2002............................................................. 692
Thereafter....................................................... 174
------
3,957
Less, amount representing interest............................... 681
------
Present value of minimum lease payments (including $576 due

within one year)............................................... $3,276
------
------
</TABLE>

11. INCOME TAXES

Provision (benefit) for income taxes consists of the following:

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
---------------------------
1995 1996 1997
------ ------ -------
<S> <C> <C> <C>
Federal
Current................................................................. $2,225 $7,551 $14,207
Deferred................................................................ 637 (501) (2,530)
State
Current................................................................. 464 2,259 1,426
Deferred................................................................ 48 (141) (220)
Foreign benefit........................................................... (1,189)
------ ------ -------
Total provision........................................................... $3,374 $9,168 $11,694
------ ------ -------
------ ------ -------
</TABLE>

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.

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
----------------------------------------------------------------------
1995 1996 1997
-------------------- --------------------- ---------------------
PERCENT OF PERCENT OF PERCENT OF
PRETAX PRETAX PRETAX
AMOUNT INCOME AMOUNT INCOME AMOUNT INCOME
------ ---------- ------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Income tax expense at statutory
rate............................... $5,541 34.0% $10,981 35.0% $14,287 35.0%
State income taxes, net of federal
income tax benefit................. 382 2.3% 1,428 4.6% 857 2.1%
S corporation earnings not subject to
income taxes (a)................... (2,691) (16.5)% (3,150) (10.0)% (4,236) (10.4)%
Other, individually less than 5%..... 142 0.9% (91) (0.2)% 786 1.9%
------ ---------- ------- ---------- ------- ----------
Actual income tax provision.......... $3,374 20.7% $ 9,168 29.2% $11,694 28.6%
------ ---------- ------- ---------- ------- ----------

------ ---------- ------- ---------- ------- ----------
</TABLE>

- ------------------
(a) Prior to the merger, Nutrition Headquarters Group had been treated as an S
corporation for federal and state tax purposes. Accordingly, taxable income
has been reported to the individual stockholders for inclusion in their
respective income tax returns with no provision for these taxes, other than
certain minimum taxes, included in the supplemental consolidated financial
statements.

F-23
<PAGE>
NBTY, INC. AND SUBSIDIARIES
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

11. INCOME TAXES--(CONTINUED)
The components of deferred tax assets and liabilities are as follows:

<TABLE>
<CAPTION>
1996 1997
------- -------
<S> <C> <C>
Deferred tax assets:
Current:
Inventory capitalization............................................ $ 243 $ 351
Accrued expenses and reserves not currently deductible.............. 2,591 5,350
Tax credits......................................................... 321 331
------- -------
Current deferred tax assets.................................... 3,155 6,032
------- -------
Noncurrent:
Intangibles......................................................... 335 333
Reserves not currently deductible................................... 200 188
------- -------
Total noncurrent............................................... 535 521
------- -------
Deferred tax liabilities:
Property, plant and equipment.......................................... (3,362) (7,995)
------- -------
Net deferred tax (liability) asset............................. $ 328 $(1,442)
------- -------
------- -------
</TABLE>

Available state tax credits of $321 and $331 in 1996 and 1997,
respectively, are scheduled to expire through fiscal 2002. Federal net operating
loss carryforwards of $177 will expire in 2004 and available investment tax
credits of $58 are scheduled to expire in 2001.

12. COMMITMENTS

Leases

The Company conducts retail operations under operating leases which expire
at various dates through 2020. Some of the leases contain renewal options and
provide for additional rentals based upon sales plus certain tax and maintenance
costs.

Future minimal rental payments under the retail location and other leases
that have initial or noncancelable lease terms in excess of one year at
September 30, 1997 are as follows:

<TABLE>
<CAPTION>
YEAR ENDING
SEPTEMBER 30,
- --------------------------------------------------------------
<S> <C>
1998....................................................... $ 25,322
1999....................................................... 24,501
2000....................................................... 23,522
2001....................................................... 22,176
2002....................................................... 20,804
Thereafter................................................. 161,623
--------
$277,948
--------
--------
</TABLE>

Operating lease rental expense, including real estate tax and maintenance
costs, and leases on a month to month basis were approximately $1,358, $2,092
and $7,852 for the years ended September 30, 1995, 1996 and 1997, respectively.

F-24
<PAGE>
NBTY, INC. AND SUBSIDIARIES
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

12. COMMITMENTS--(CONTINUED)
Purchase commitments

The Company was committed to make future purchases under various purchase
order arrangements with fixed price provisions aggregating approximately $12,923
and $26,152 at September 30, 1996 and 1997, respectively.

Capital commitments

The Company had approximately $15,800 in open capital commitments related
to a manufacturing facility and computer hardware and software at September 30,
1997.

Employment and consulting agreements

NBTY has employment agreements with two of its officers. The agreements,
which expire in January 2004, provide for minimum salary levels, including cost
of living adjustments, and also contain provisions regarding severance and
changes in control of the Company. The commitment for salaries as of September
30, 1997 was approximately $749 per year.

Effective April 20, 1998, the Company entered into an employment agreement
with a former stockholder and officer of Nutrition Headquarters Group who is
currently an employee of the Company. Such agreement is for a one-year term,
subject to extension at the sole option of the officer for two additional
one-year terms, and requires an annual payment of $275.

The Company also has a two-year consulting agreement with its former
chairman and current director which expired on December 31, 1997. Such agreement
required annual payments of approximately $350. The parties have renewed the
agreement to provide services from January 1, 1998 through December 31, 2000.
During this period, the consulting fee payable shall be fixed by the Board of
Directors of the Company, provided that in no event will the consulting fee be
at a rate lower than $400 per year with certain fringe benefits accorded other
executives of NBTY. In addition, an entity owned by a relative of an officer
received sales commissions of $510, $417 and $541 in 1995, 1996 and 1997,
respectively.

13. STOCK OPTION PLANS

The Board of Directors approved the issuance of 6,660 non-qualified options
on September 23, 1990, exercisable at $0.21 per share, which options terminate
on September 23, 2000. In addition, on March 11, 1992, the Board approved the
issuance of an aggregate of 5,400 non-qualified stock options to directors and
officers, exercisable at $0.31 per share, and expiring on March 10, 2002. The
exercise price of each of the aforementioned issuances was in excess of the
market price at the date such options were granted.

During fiscal 1997, options were exercised with 37 shares of common stock
issued (prior to the aforementioned stock split) to certain officers and a
director for $23. As a result of the exercise of those options, the Company
received a compensation deduction for tax purposes of approximately $643 and a
tax benefit of approximately $257 which was credited to capital in excess of
par.

During fiscal 1996, options were exercised with 872 shares of common stock
issued (prior to the aforementioned stock split) to certain officers and
directors for $11 and interest bearing notes in the amount of $584. As a result
of the exercise of these options, the Company was entitled to a compensation
deduction for tax purposes of approximately $3,145 and a tax benefit of
approximately $1,274 which was credited to capital in excess of par.

F-25

<PAGE>
NBTY, INC. AND SUBSIDIARIES
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

13. STOCK OPTION PLANS--(CONTINUED)
$191. The promissory note, including interest, was paid by the surrender of 23
NBTY common shares to the Company at the prevailing market price. As a result of
the exercise of these options, the Company was entitled to a compensation
deduction of approximately $1,828 which resulted in a tax benefit of
approximately $731 which was credited to capital in excess of par.

A summary of stock option activity is as follows:

<TABLE>
<CAPTION>
1995 1996 1997
--------------------- --------------------- ---------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
NUMBER EXERCISE NUMBER EXERCISE NUMBER EXERCISE
OF SHARES PRICE OF SHARES PRICE OF SHARES PRICE
--------- -------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year..... 8,475 $.24 7,185 $.25 4,569 $.25
Exercised............................ 1,290 .17 2,616 .23 111 .31
--------- -------- --------- -------- --------- --------
Outstanding at end of year........... 7,185 $.25 4,569 $.25 4,458 $.25
--------- -------- --------- -------- --------- --------
--------- -------- --------- -------- --------- --------
Exercisable at end of year........... 7,185 $.25 4,569 $.25 4,458 $.25
--------- -------- --------- -------- --------- --------
--------- -------- --------- -------- --------- --------
</TABLE>

As of September 30, 1997, the weighted average remaining contractual life
of outstanding options was 4 years. In addition, there were no options available
for grant at September 30, 1995, 1996 or 1997.

14. EMPLOYEE BENEFIT PLANS

The Company maintains defined contribution savings plans and an employee
stock ownership plan. The accompanying financial statements reflect
contributions to these plans in the approximate amount of $498, $489 and $1,209
for the years ended September 30, 1995, 1996 and 1997, respectively.

15. LITIGATION

L-tryptophan

The Company and certain other companies in the industry have been named as
defendants in cases arising out of the ingestion of products containing
L-tryptophan. The Company had been named in more than 265 lawsuits, of which

four are still pending against the Company. The other 261 lawsuits have been
settled at no cost to the Company. The Company's supplier of L-tryptophan agreed
to indemnify the Company and the other companies named in the lawsuits through
the final resolution of all cases involving L-tryptophan. In addition, the
supplier has posted, for the benefit of the Company and the other companies
named in the lawsuits, a revolving, irrevocable letter of credit of $20,000 to
be used in the event that the supplier is unable or unwilling to satisfy any
claims or judgments. While not all of these suits quantify the amount demanded,
the Company believes that the amount required to either settle these cases or to
pay judgments rendered therein will be paid by the supplier or by the Company's
product liability insurance carrier.

While the outcome of any litigation is uncertain, it is the opinion of
management and legal counsel of the Company that it is remote that the Company
will incur a material loss as a result of the L-tryptophan litigation and
claims. Accordingly, no provision for liability, if any, that may result
therefrom has been made in the Company's financial statements.

F-26
<PAGE>
NBTY, INC. AND SUBSIDIARIES
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

15. LITIGATION--(CONTINUED)
Shareholder litigation

In October 1994, two lawsuits were commenced in the U.S. District Court,
Eastern District of New York, against the Company and two of its officers. On
October 17, 1997, a Memorandum of Understanding was entered into between the
Company and the attorneys representing the Plaintiff class agreeing to an $8,000
($4,400 cash, $3,600 stock) settlement of the lawsuit. Subsequently, the Company
entered into a Capital Stipulation of Settlement calling for, among other
things, a total cash payment of $8,000. The Company has been notified by its
insurance carrier that it is willing to reimburse the Company to the extent of
$2,400. Accordingly, as of September 30, 1997, the Company recorded a $5,600
provision for its portion of the settlement which, along with related legal fees
of approximately $768, has been reflected separately in the statement of income.

Other litigation

The Company is also involved in miscellaneous claims and litigation which
management believes, taken individually or in the aggregate, would not have a
material adverse effect on the Company's financial position or its business.

16. FOREIGN OPERATIONS

In connection with NBTY's recent acquisition of H&B which operates
primarily in the United Kingdom, the Company has significantly expanded its
operations outside of the United States. The following information has been
summarized by geographic area as of September 30, 1997 and for the year then
ended.

<TABLE>
<CAPTION>
IDENTIFIABLE OPERATING
ASSETS SALES INCOME
------------ -------- ---------
<S> <C> <C> <C>
United States...................................................... $356,987 $328,839 $49,755
United Kingdom..................................................... 214,190 26,497 (3,281)
------------ -------- ---------
$571,177 $355,336 $46,474
------------ -------- ---------
------------ -------- ---------
</TABLE>

17. RELATED PARTY TRANSACTIONS

Nutrition Headquarters Group has outstanding promissory notes of $2,245, as
described in Note 9, which are payable to a relative of a stockholder. Interest
on the obligation amounted to approximately $224 for each of the three years
ended September 30, 1995, 1996 and 1997.

Nutrition Headquarters Group has outstanding loans to a stockholder in the
aggregate amount of $301 and $617, as described in Note 9 as of September 30,
1996 and 1997, respectively. Interest on these loans amounted to approximately
$29, $30 and $56 for the years ended September 30, 1995, 1996 and 1997,
respectively.

For the years ended September 30, 1995, 1996 and 1997, Nutrition
Headquarters Group provided distributions to its stockholders in the aggregate
amount of $6,750, $6,935 and $8,360, respectively.

18. SUBSEQUENT EVENTS

In April 1998, the Company agreed to sell certain assets of its cosmetic
pencil operation for approximately $6,000. The Company will receive $4,500 in
cash with additional payments of $1,500 over the next three years. Revenues
applicable to this business were $581, $577 and $1,875 for fiscal 1995, 1996 and
1997, respectively, and the related results of operations were insignificant.

F-27
<PAGE>
NBTY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS AND SHARES IN THOUSANDS)

<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31,
1997 1998
------------- -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:

Cash and cash equivalents........................................................... $ 18,419 $ 16,350
Short-term investments.............................................................. 8,362 --
Accounts receivable, less allowance for doubtful accounts of $991 in 1997 and $985
in 1998.......................................................................... 15,701 15,623
Inventories......................................................................... 75,936 87,762
Deferred income taxes............................................................... 6,032 6,032
Prepaid catalog costs and other current assets...................................... 18,885 11,913
------------- -----------
Total current assets........................................................... 143,335 137,680

Cash held in escrow................................................................... 144,262 --

Property, plant and equipment......................................................... 155,611 194,760
Less accumulated depreciation and amortization...................................... 47,438 53,651
------------- -----------
108,173 141,109

Intangible assets, net................................................................ 140,447 142,959

Other assets.......................................................................... 6,521 7,515
------------- -----------
Total assets................................................................... $ 542,738 $ 429,263
------------- -----------
------------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt and capital lease obligations..................... $ 1,016 $ 1,060
Accounts payable.................................................................... 44,514 40,445
Accrued expenses.................................................................... 34,325 26,428
------------- -----------
Total current liabilities...................................................... 79,855 67,933
Long-term debt........................................................................ 163,447 208,218
Obligations under capital leases...................................................... 2,700 2,446
Promissory note payable............................................................... 169,909 --
Deferred income taxes................................................................. 7,474 7,642
Other liabilities..................................................................... 2,293 2,293
------------- -----------
Total liabilities.............................................................. 425,678 288,532
------------- -----------
Commitments and contingencies
Stockholders' equity:
Common stock, $0.008 par; authorized 25,000 in 1997 and 75,000 shares in 1998;
issued 60,351 in 1997 and 60,483 in 1998 and outstanding 55,842 shares in 1997
and 55,974 shares in 1998........................................................ 483 484
Capital in excess of par............................................................ 55,982 56,589
Retained earnings................................................................... 61,238 77,464
------------- -----------
117,703 134,537
Less 4,509 treasury shares at cost, in 1997 and 1998................................ (3,206) (3,206)
Cumulative translation adjustment................................................... 2,563 9,400
------------- -----------
Total stockholders' equity..................................................... 117,060 140,731
------------- -----------
Total liabilities and stockholders' equity..................................... $ 542,738 $ 429,263
------------- -----------
------------- -----------
</TABLE>

See notes to condensed consolidated financial statements.
F-28

<PAGE>

NBTY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(DOLLARS AND SHARES IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED MARCH 31,
--------------------
1997 1998
-------- --------
<S> <C> <C>
Net sales................................................................................. $122,347 $244,404
-------- --------
Costs and expenses:
Cost of sales........................................................................... 58,247 116,227
Catalog printing, postage and promotion................................................. 9,942 9,444
Selling, general and administrative..................................................... 35,409 84,517
-------- --------
103,598 210,188
-------- --------
Income from operations.................................................................... 18,749 34,216
-------- --------

Other income (expenses):
Interest, net........................................................................... (869) (8,850)
Miscellaneous, net...................................................................... 327 1,312
-------- --------
(542) (7,538)
-------- --------
Income before income taxes................................................................ 18,207 26,678
Income taxes.............................................................................. 7,283 10,453
-------- --------
Net income.............................................................................. $ 10,924 $ 16,225
-------- --------
-------- --------

Net income per share:
Basic................................................................................... $ 0.20 $ 0.29
Diluted................................................................................. $ 0.18 $ 0.27

Weighted average common shares outstanding:
Basic................................................................................... 55,806 55,890
Diluted................................................................................. 60,147 60,195
</TABLE>

See notes to condensed consolidated financial statements.
F-29

<PAGE>
NBTY INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED MARCH 31,
---------------------
1997 1998
-------- ---------
<S> <C> <C>
Net income............................................................................... $ 10,924 $ 16,225
Adjustments to reconcile net income to cash provided by operating activities:
Loss on sale of property, plant and equipment.......................................... 26
Depreciation and amortization.......................................................... 2,966 9,366
Provision (recovery) for allowance for doubtful accounts............................... 206 (5)
Increase in deferred taxes............................................................. 7
Changes in assets and liabilities, net of acquisitions:
Decrease (increase) in accounts receivable.......................................... (4,155) 685
Increase in inventories............................................................. (8,331) (11,111)
Decrease (increase) in prepaid catalog costs and other current assets............... (948) 9,104
Decrease in other assets............................................................ 288 535
(Decrease) increase in accounts payable............................................. 8,680 (4,976)
(Decrease) increase in accrued expenses............................................. 4,904 (12,791)
-------- ---------
Net cash provided by operating activities........................................... 14,560 7,039
-------- ---------
Cash flow from investing activities:
Purchase of property, plant and equipment.............................................. (9,328) (38,133)
Proceeds from sale of property, plant and equipment.................................... 20
Proceeds from sale of short-term investments........................................... 8,362
Purchase of short-term investments..................................................... (4,651)
Receipt of payments from direct-mail cosmetics business................................ 322
-------- ---------
Net cash used in investing activities............................................... (13,637) (29,771)
-------- ---------
Cash flows from financing activities:
Borrowings under long term debt agreements............................................. 45,000
Cash held in escrow.................................................................... 144,730
Principal payments under long-term debt agreements and capital leases.................. (456) (496)
Purchase of treasury stock............................................................. (15)
Proceeds from stock options exercised.................................................. 23 40
Repayment of promissory note........................................................ (168,770)
-------- ---------
Net cash provided by (used in) financing activities................................. (448) 20,504
-------- ---------
Effect of Exchange Rate Changes on Cash and Cash Equivalents............................. 159
-------- ---------
Net (decrease) increase in cash and cash equivalents..................................... 475 (2,069)
Cash and cash equivalents at beginning of quarter........................................ 9,292 18,419
-------- ---------

Cash and cash equivalents at end of quarter.............................................. $ 9,767 $ 16,350
-------- ---------
-------- ---------
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest............................................... $ 869 $ 11,777
Cash paid during the period for taxes.................................................. $ 4,677 $ 10,082
</TABLE>

See notes to condensed consolidated financial statements.
F-30

<PAGE>
NBTY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

1. In the opinion of the Company, the accompanying unaudited condensed
consolidated financial statements contain all adjustments necessary to present
fairly its financial position as of March 31, 1998 and results of operations and
statements of cash flows for the six months ended March 31, 1997 and 1998. The
consolidated condensed balance sheet as of September 30, 1997 has been derived
from the audited balance sheet as of that date. This report should be read in
conjunction with the Company's annual report filed on Form 10-K for the fiscal
year ended September 30, 1997.

Estimates

Foreign currency translation

Common shares and earnings per share

Accounting changes

Effective October 1, 1996, the Company adopted the disclosure-only
provisions of Statement of Financial Accounting Standards ('SFAS') No. 123,
'Accounting for Stock-Based Compensation.' As permitted by SFAS No. 123, the
Company continues to measure compensation cost in accordance with Accounting
Principles Board Opinion ('APB') No. 25, 'Accounting for Stock Issued to
Employees.' As the Company has not granted any options during the six months
ended March 31, 1998, nor fiscal 1997 or 1996, there would not have been any
impact on the Company's financial position or results of operations on a pro
forma basis.

F-31
<PAGE>
NBTY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

New accounting standards

Year 2000 Software Compatibility

compatible with the year 2000. Expenditures specifically related to software
modifications for year 2000 compatibility are not expected to be material.

2. The results of operations and statements of cash flows for the six
months ended March 31, 1998 are not necessarily indicative of the results to be
expected for the full year.

3. ACQUISITION OF HOLLAND & BARRETT HOLDINGS LTD.

F-32
<PAGE>
NBTY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

4. Inventories have been estimated by using the gross profit method for the
interim periods. The components of the inventories are as follows:

<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31,
1997 1998
---------------- -----------
(UNAUDITED)
<S> <C> <C>

Raw materials and work-in-process................................. $ 33,408 $32,367
Finished goods.................................................... 42,528 55,395
---------------- -----------
$ 75,936 $87,762
---------------- -----------
---------------- -----------
</TABLE>

5. Intangible assets, at cost, acquired at various dates are as follows:

<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31,
1997 1998
---------------- ------------
(UNAUDITED)
<S> <C> <C>
Goodwill......................................................... $136,972 $142,510
Customer lists................................................... 9,816 9,816
Trademark and licenses........................................... 1,201 1,201
Covenants not to compete......................................... 1,305 1,305
---------------- ------------
149,294 154,832
Less, accumulated amortization................................... 8,847 11,873
---------------- ------------
$140,447 $142,959
---------------- ------------
---------------- ------------
</TABLE>

6. ACCRUED EXPENSES:

<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31,
1997 1998
---------------- -----------
(UNAUDITED)
<S> <C> <C>
Litigation settlement costs....................................... $ 5,600
Payroll and related payroll taxes................................. 4,185 $ 3,149
Customer deposits................................................. 2,363 885
Accrued purchases................................................. 2,800 5,639
Income taxes payable.............................................. 7,456 7,431
Other............................................................. 11,921 9,324
---------------- -----------
$ 34,325 $ 26,428
---------------- -----------
---------------- -----------
</TABLE>

F-33

<PAGE>
NBTY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

7. Basic earnings per share are based on the weighted average number of
common shares outstanding during the six month periods ended March 31, 1997 and
1998. Diluted earnings per share include the effect of outstanding stock
options, if exercised. The following is a reconciliation between the basic and
diluted earnings per share:

Denominator:
Denominator for basic earnings per share--weighted-average shares..... 55,806 55,890
Effective of dilutive securities:
Stock options...................................................... 4,341 4,305
------- -------
Denominator for diluted earnings per share--weighted-average shares... 60,147 60,195
------- -------
------- -------

Basic earnings per share................................................ $ 0.20 $ 0.29
------- -------
------- -------
Diluted earnings per share.............................................. $ 0.18 $ 0.27
------- -------
------- -------
</TABLE>

8. SHAREHOLDER LITIGATION

($4,400 cash, $3,600 stock) settlement of the lawsuit. Subsequently, the Company
entered into a Capital Stipulation of Settlement calling for, among other
things, a total cash payment of $8,000. Cash payments aggregating $8,000 were
made in November and December 1997. The Company had been notified by its
insurance carrier that it was willing to reimburse the Company to the extent of
$2,400. The Company recorded a $5,600 provision for its portion of the
settlement in fiscal 1997, which, along with related legal fees of approximately
$768, has been reflected separately in the fiscal 1997 statements of income
(refer to the Company's 10-K). In January 1998, an insurance carrier paid the
Company $2,650.

9. SUBSEQUENT EVENT

In April 1998, the Company acquired Nutrition Headquarters, Inc., Lee
Nutrition, Inc., Nutro Laboratories, Inc. and Brunswick Laboratories, Inc. in an
exchange of approximately 8,772 shares of NBTY common stock, $0.008 par value,
fair market value approximates $185 million. The merger constituted a tax-free
reorganization in accordance with Section 368(a)(1)(A) of the Internal Revenue
Service and has been accounted for as a pooling

F-34

<PAGE>
NBTY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
of interests under APB No. 16. The financial statements presented, herein, have
not been restated to include the combined results of operations, financial
position and cash flows.

Nutrition Headquarters, Inc. and Lee Nutrition, Inc. are mail order vitamin
and nutritional supplement companies and Nutro Laboratories, Inc. and Brunswick
Laboratories, Inc. are vitamin and nutritional supplement manufacturers.

The following table, represents the combined results of operations for the
six month periods ended March 31, 1997 and 1998 as if the companies had been
pooled:

<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED MARCH 31,
--------------------
1997 1998
-------- --------
(UNAUDITED)
<S> <C> <C>
Revenues:
NBTY................................................................ $122,347 $244,404
Nutrition Headquarters, Lee Nutrition, Brunswick Laboratories and
Nutro Laboratories............................................... 36,758 42,416
-------- --------
Combined.................................................... $159,105 $286,820
-------- --------
-------- --------
Net income
NBTY................................................................ $ 10,924 $ 16,225
Nutrition Headquarters, Lee Nutrition, Brunswick Laboratories and
Nutro Laboratories............................................... 4,918 7,408
-------- --------
Combined.................................................... $ 15,842 $ 23,633
-------- --------
-------- --------
</TABLE>

F-35

<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

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

We have audited the accompanying consolidated balance sheets of NBTY, Inc. and
Subsidiaries as of September 30, 1996 and 1997 and the related consolidated
statements of income, stockholders' equity and cash flows for each of the three
years in the period ended September 30, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of NBTY,
Inc. and Subsidiaries as of September 30, 1996 and 1997, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended September 30, 1997, in conformity with generally accepted
accounting principles.

COOPERS & LYBRAND L.L.P.

Melville, New York
November 6, 1997,
except as to Note 1
the date of which is
April 3, 1998

F-36

<PAGE>
NBTY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1996 AND 1997
(DOLLARS AND SHARES IN THOUSANDS)

<TABLE>
<CAPTION>
1996 1997
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................................................... $ 9,292 $ 18,419
Short-term investments.................................................................. 11,024 8,362
Accounts receivable, less allowance for doubtful accounts of $794 in 1996 and $991 in
1997................................................................................. 11,625 15,701
Inventories............................................................................. 38,070 75,936
Deferred income taxes................................................................... 3,155 6,032
Prepaid catalog costs and other current assets.......................................... 5,683 18,885
-------- --------
Total current assets............................................................... 78,849 143,335
Cash held in escrow....................................................................... 144,262
Property, plant and equipment, net........................................................ 61,732 108,173
Intangible assets, net.................................................................... 3,975 140,447
Other assets.............................................................................. 994 6,521
-------- --------
Total assets....................................................................... $145,550 $542,738
-------- --------
-------- --------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt and capital lease obligations......................... $ 935 $ 1,016
Accounts payable........................................................................ 10,943 44,514
Accrued expenses........................................................................ 14,705 34,325
-------- --------
Total current liabilities.......................................................... 26,583 79,855
Long-term debt............................................................................ 15,178 163,447
Obligations under capital leases.......................................................... 3,219 2,700
Promissory note payable................................................................... 169,909
Deferred income taxes..................................................................... 2,827 7,474
Other liabilities......................................................................... 793 2,293
-------- --------
Total liabilities.................................................................. 48,600 425,678
-------- --------
Commitments and contingencies
Stockholders' equity:
Common stock, $.008 par; authorized 25,000 shares in 1996 and 75,000 in 1997; issued
20,080 shares in 1996 and 60,351 shares in 1997 and outstanding 18,593 shares in 1996
and 55,842 shares in 1997............................................................ 160 483
Capital in excess of par................................................................ 56,014 55,982
Retained earnings....................................................................... 44,008 61,238
-------- --------

100,182 117,703
Less 1,487 and 4,509 treasury shares at cost, in 1996 and 1997, respectively............ (2,648) (3,206)
Stock subscriptions receivable.......................................................... (584)
Cumulative translation adjustment....................................................... 2,563
-------- --------
Total stockholders' equity......................................................... 96,950 117,060
-------- --------
Total liabilities and stockholders' equity......................................... $145,550 $542,738
-------- --------
-------- --------
</TABLE>

See notes to consolidated financial statements.
F-37

<PAGE>
NBTY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED SEPTEMBER 30, 1995, 1996 AND 1997
(DOLLARS AND SHARES IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
1995 1996 1997
-------- -------- --------
<S> <C> <C> <C>
Net sales.................................................................... $178,760 $194,403 $281,407
-------- -------- --------
Costs and expenses:
Cost of sales.............................................................. 93,875 95,638 135,886
Catalog printing, postage and promotion.................................... 19,262 17,635 19,227
Selling, general and administrative........................................ 56,728 58,515 86,588
Litigation settlement costs................................................ 6,368
-------- -------- --------
169,865 171,788 248,069
-------- -------- --------
Income from operations....................................................... 8,895 22,615 33,338
-------- -------- --------

Other income (expense):
Interest, net.............................................................. (1,084) (1,445) (6,655)
Miscellaneous, net......................................................... 571 1,203 2,033
-------- -------- --------
(513) (242) (4,622)
-------- -------- --------
Income before income taxes................................................... 8,382 22,373 28,716
Income taxes................................................................. 3,246 9,021 11,486
-------- -------- --------
Net income.............................................................. $ 5,136 $ 13,352 $ 17,230
-------- -------- --------
-------- -------- --------

Net income per share:
Basic...................................................................... $ 0.10 $ 0.24 $ 0.31
Diluted.................................................................... $ 0.09 $ 0.22 $ 0.29

Weighted average common shares outstanding:
Basic...................................................................... 53,387 55,425 55,839
Diluted.................................................................... 59,923 59,927 60,163
</TABLE>

See notes to consolidated financial statements.
F-38

<PAGE>
NBTY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED SEPTEMBER 30, 1995, 1996 AND 1997
(DOLLARS AND SHARES IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK TREASURY STOCK
------------------ ------------------- STOCK CUMULATIVE
NUMBER OF CAPITAL IN RETAINED NUMBER OF SUBSCRIPTIONS TRANSLATION
SHARES AMOUNT EXCESS OF PAR EARNINGS SHARES AMOUNT RECEIVABLE ADJUSTMENT
--------- ------ ------------- -------- --------- ------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, September 30, 1994... 18,778 $150 $53,209 $25,520 1,213 $ (863)
Net income for year ended
September 30, 1995........ 5,136
Exercise of stock options... 430 3 212
Tax benefit from exercise of
stock options............. 731
Purchase of treasury stock,
at cost................... 228 (1,483)
--------- ------ ------------- -------- --------- ------- ------------- ----------
Balance, September 30, 1995... 19,208 153 54,152 30,656 1,441 (2,346)
Net income for year ended
September 30, 1996........ 13,352
Exercise of stock options... 872 7 588 $ (584)
Tax benefit from exercise of
stock options............. 1,274
Purchase of treasury stock,
at cost................... 46 (302)
--------- ------ ------------- -------- --------- ------- ------------- ----------
Balance, September 30, 1996... 20,080 160 56,014 44,008 1,487 (2,648) (584)
Net income for year ended
September 30, 1997........ 17,230
Gain on foreign currency
translation............... $2,563
Exercise of stock options... 37 1 33
Tax benefit from exercise of
stock options............. 257
Repayment of stock
subscriptions receivable
for options exercised..... 96
Stock tendered as payment
for options exercised..... 16 (558) 488
April 3, 1998 three-for-one
stock split effected in
the form of a 200% stock
dividend.................. 40,234 322 (322) 3,006
--------- ------ ------------- -------- --------- ------- ------------- ----------
Balance, September 30, 1997... 60,351 $483 $55,982 $61,238 4,509 $(3,206) $ -- $2,563
--------- ------ ------------- -------- --------- ------- ------------- ----------
--------- ------ ------------- -------- --------- ------- ------------- ----------

TOTAL
--------
<S> <C>
Balance, September 30, 1994... $ 78,016
Net income for year ended
September 30, 1995........ 5,136
Exercise of stock options... 215
Tax benefit from exercise of
stock options............. 731
Purchase of treasury stock,
at cost................... (1,483)
--------
Balance, September 30, 1995... 82,615
Net income for year ended
September 30, 1996........ 13,352
Exercise of stock options... 11
Tax benefit from exercise of
stock options............. 1,274
Purchase of treasury stock,
at cost................... (302)
--------
Balance, September 30, 1996... 96,950
Net income for year ended
September 30, 1997........ 17,230
Gain on foreign currency
translation............... 2,563
Exercise of stock options... 34
Tax benefit from exercise of
stock options............. 257
Repayment of stock
subscriptions receivable
for options exercised..... 96
Stock tendered as payment
for options exercised..... (70)
April 3, 1998 three-for-one
stock split effected in
the form of a 200% stock
dividend..................
--------
Balance, September 30, 1997... $117,060
--------
--------
</TABLE>

See notes to consolidated financial statements.

F-39

<PAGE>
NBTY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 1995, 1996 AND 1997
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
1995 1996 1997
------- ------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income................................................................... $ 5,136 $13,352 $ 17,230
Adjustments to reconcile net income to cash provided by operating activities:
Loss on disposal/sale of property, plant and equipment.................... 374 31
Depreciation and amortization............................................. 4,840 5,623 8,167
Provision (recovery) for allowance for doubtful accounts.................. (18) 216 197
Deferred income taxes..................................................... 685 (642) (2,750)
Changes in assets and liabilities, net of acquisitions:
Accounts receivable..................................................... (2,120) 1,616 (4,048)
Inventories............................................................. 4,454 (2,036) (19,545)
Prepaid catalog costs and other current assets.......................... (264) 487 (4,499)
Other assets............................................................ 1,124 675 47
Accounts payable........................................................ 3,160 (5,468) 13,694
Accrued expenses........................................................ 2,810 5,690 14,590
Other liabilities....................................................... 275 24 1,500
Income tax receivable................................................... 1,300
------- ------- ---------
Net cash provided by operating activities............................ 21,756 19,537 24,614
------- ------- ---------
Cash flows from investment activities:
Increase in intangible assets................................................ (1,064) (67) (1,843)
Purchase of property, plant and equipment.................................... (11,548) (15,750) (21,092)
Proceeds from sale of property, plant and equipment.......................... 4 20
Proceeds from sale of short-term investments................................. 2,662
Purchase of short-term investments........................................... (11,024)
Receipt of payments on notes from sale of direct mail cosmetics business..... 741 1,047
Proceeds from sale of direct mail cosmetics business......................... 350
Cash from acquisition........................................................ 5,580
------- ------- ---------
Net cash used in investing activities................................ (12,612) (25,746) (13,626)
------- ------- ---------
Cash flows from financing activities:
Net payments under line of credit agreement.................................. (5,000)
Proceeds from bond offering, net of discount................................. 148,763
Cash held in escrow.......................................................... (144,262)
Bond issue costs............................................................. (5,575)
Borrowings under long-term debt agreements................................... 2,400 6,000
Principal payments under long-term debt agreements and capital leases........ (798) (586) (932)
Purchase of treasury stock................................................... (1,292) (302) (70)
Proceeds from stock options exercised........................................ 24 11 34
Repayment of stock subscription receivable................................... 96
------- ------- ---------
Net cash (used in) provided by financing activities.................. (4,666) 5,123 (1,946)

------- ------- ---------
Effect of exchange rate changes on cash and cash equivalents................... 85
------- ------- ---------
Net increase (decrease) in cash and cash equivalents........................... 4,478 (1,086) 9,127
Cash and cash equivalents at beginning of year................................. 5,900 10,378 9,292
------- ------- ---------
Cash and cash equivalents at end of year....................................... $10,378 $ 9,292 $ 18,419
------- ------- ---------
------- ------- ---------
Supplemental disclosure of cash flow information:
Cash paid during the period for interest..................................... $ 1,086 $ 1,454 $ 2,717
Cash paid during the period for income taxes................................. $ 1,649 $ 5,387 $ 14,008
</TABLE>

See notes to consolidated financial statements.
F-40

<PAGE>
NBTY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS--(CONTINUED)

YEARS ENDED SEPTEMBER 30, 1995, 1996 AND 1997
(DOLLARS IN THOUSANDS)

Non-cash investing and financing information

On October 9, 1995, the Company sold certain assets of its direct-mail
cosmetics business for $2,495. The Company received $350 in cash and
non-interest bearing notes aggregating $2,145 for inventory, a customer list and
other intangible assets. The inventory note was repaid in full in October 1996.
In April 1997, the Company received the final payment of the customer list note.
(See Note 3)

During fiscal 1996, the Company entered into capital leases for machinery
and equipment aggregating $2,635.

In connection with the acquisition of Holland & Barrett Holdings Ltd. on
August 7, 1997, the Company issued two promissory notes aggregating $170,000 as
consideration for the purchase of capital stock. Such notes were paid in October
1997 from the cash held in escrow at September 30, 1997. (See Note 2)

See notes to consolidated financial statements.
F-41

<PAGE>
NBTY, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

1. BUSINESS OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business operations

NBTY, Inc., formerly Nature's Bounty, Inc. (the 'Company'), manufactures
and distributes vitamins, food supplements and health and beauty aids primarily
in the United States and the United Kingdom. The processing, formulation,
packaging, labeling and advertising of the Company's products are subject to
regulation by one or more federal agencies, including the Food and Drug
Administration, the Federal Trade Commission, the Consumer Product Safety
Commission, the United States Department of Agriculture, the United States
Environmental Protection Agency and the United States Postal Service.

Principles of consolidation and basis of presentation

The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries. All intercompany accounts and transactions
have been eliminated.

Revenue recognition

Estimates

Inventories

Prepaid catalog costs

Mail order production and mailing costs are capitalized as prepaid catalog
costs and charged to expense over the catalog period, which typically
approximates three months.

Advertising expense

F-42
<PAGE>
NBTY, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

1. BUSINESS OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES--(CONTINUED)
Property, plant and equipment

Intangible assets

Foreign currency translation

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 bases of assets
and liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse.

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.

Short-term investments

Common shares and earnings per share

F-43
<PAGE>
NBTY, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

1. BUSINESS OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES--(CONTINUED)
September 30, 1995, 1996 and 1997, respectively. The financial statements and
related footnotes have been restated to reflect the adoption of SFAS No. 128.

In March 1998, the Company's board of directors declared a three-for-one
stock split payable in the form of a 200% stock dividend. This distribution has
been reflected in the fiscal 1997 consolidated financial statements and all per
common share amounts have been retroactively restated to account for the stock
split. In addition, stock options and the related exercise prices have been
amended to reflect this transaction. Also, in March 1998, the Company's
certificate of incorporation was amended to authorize the issuance of up to
75,000 shares of common stock, par value $.008 per share.

Reclassifications

Certain reclassifications have been made to conform prior year amounts to

the current year presentation.

Accounting changes

Effective October 1, 1996, the Company adopted the disclosure-only
provisions of SFAS No. 123, 'Accounting for Stock-Based Compensation'. As
permitted by SFAS No. 123, the Company continues to measure compensation cost in
accordance with Accounting Principles Board Opinion No. 25, 'Accounting for
Stock Issued to Employees.' As the Company has not granted any options during
fiscal 1996 or 1997, there would not have been any impact on the Company's
financial position or results of operations on a pro forma basis.

Effective October 1, 1996, the Company adopted SFAS No. 121, 'Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of.' This statement requires that certain assets be reviewed for impairment and,
if impaired, be measured at fair value, whenever events or changes in
circumstances indicate that the carrying amount of the asset may not be
recoverable. The adoption of SFAS No. 121 at October 1, 1996 and its application
during fiscal 1997 had no material impact on the Company's financial position or
results of operations.

New accounting standards

F-44
<PAGE>
NBTY, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

2. ACQUISITION OF HOLLAND & BARRETT HOLDINGS LTD.

In connection with the Acquisition, the Company (i) entered into a $50,000
revolving credit facility (the 'Revolving Credit Facility'), which provides
borrowings for working capital and general corporate purposes, and (ii) issued
$150,000 in Senior Subordinated Notes due 2007.

The pro forma information, which does not give effect to anticipated
intercompany product sales, is not necessarily indicative of the results of
operations had H&B been acquired as of the earliest period presented below.

<TABLE>
<CAPTION>
SEPTEMBER 30, SEPTEMBER 30,
1996 1997
------------- -------------
<S> <C> <C>
Net sales....................................................... $ 345,305 $ 428,953
Net income...................................................... $ 6,110 $ 12,458
Net income per diluted share.................................... $ 0.10 $ 0.21
</TABLE>

3. SALE OF DIRECT-MAIL COSMETICS BUSINESS

On October 9, 1995, the Company sold certain assets of its direct-mail
cosmetics business for $2,495. The Company received $350 in cash and non

interest bearing notes aggregating $2,145 for inventory, a customer list and
other intangible assets. Revenues applicable to this marginally unprofitable
business were $8,284 and $137 for fiscal 1995 and 1996, respectively. The
inventory note was repaid in full in October 1996 and, in April 1997, the
Company received the final payment of the customer list note.

F-45
<PAGE>
NBTY, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

4. INVENTORIES

<TABLE>
<CAPTION>
SEPTEMBER 30,
------------------
1996 1997
------- -------
<S> <C> <C>
Raw materials........................................................... $17,132 $29,892
Work-in-process......................................................... 1,523 3,516
Finished goods.......................................................... 19,415 42,528
------- -------
$38,070 $75,936
------- -------
------- -------
</TABLE>

5. PROPERTY, PLANT AND EQUIPMENT

<TABLE>
<CAPTION>
SEPTEMBER 30,
-------------------
1996 1997
------- --------
<S> <C> <C>
Land................................................................... $ 4,765 $ 5,050
Buildings and leasehold improvements................................... 38,088 47,819
Machinery and equipment................................................ 28,560 33,540
Furniture and fixtures................................................. 8,484 53,552
Transportation equipment............................................... 641 1,015
Computer equipment..................................................... 8,545 14,635
------- --------
89,083 155,611
Less accumulated depreciation and amortization....................... 27,351 47,438
------- --------
$61,732 $108,173
------- --------
------- --------
</TABLE>

Depreciation and amortization of property, plant and equipment for the
years ended September 30, 1995, 1996 and 1997 was approximately $3,190, $4,974
and $7,104, respectively.

Property, plant and equipment includes approximately $4,051 for assets
recorded under capital leases for fiscal 1996 and 1997.

6. INTANGIBLE ASSETS

Intangible assets, at cost, acquired at various dates are as follows:

<TABLE>
<CAPTION>
SEPTEMBER 30,
------------------- AMORTIZATION
1996 1997 PERIOD
------- -------- ------------
<S> <C> <C> <C>
Goodwill........................................................... $ 469 $136,972 20-40
Customer lists..................................................... 8,784 9,816 6-15
Trademark and licenses............................................. 1,201 1,201 2-3
Covenants not to compete........................................... 1,305 1,305 5-7
------- --------
11,759 149,294
Less accumulated amortization.................................... 7,784 8,847
------- --------
$ 3,975 $140,447
------- --------
------- --------
</TABLE>

Amortization included in the consolidated statements of income under the
caption 'selling, general and administrative expenses' in 1995, 1996 and 1997
was approximately $776, $649 and $1,063, respectively.

F-46
<PAGE>
NBTY, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

7. ACCRUED EXPENSES

<TABLE>
<CAPTION>
SEPTEMBER 30,
------------------
1996 1997
------- -------
<S> <C> <C>
Litigation settlement costs............................................. $ 5,600
Payroll and related payroll taxes....................................... $ 2,731 4,185

Customer deposits....................................................... 1,863 2,363
Accrued purchases and interest.......................................... 2,800
Income taxes payable.................................................... 2,670 7,456
Other................................................................... 7,441 11,921
------- -------
$14,705 $34,325
------- -------
------- -------
</TABLE>

8. LONG-TERM DEBT

<TABLE>
<CAPTION>
SEPTEMBER 30,
-------------------
1996 1997
------- --------
<S> <C> <C>
Senior debt:
8 5/8% Senior subordinated notes due 2007, net of unamortized
discount of $1,237 (a)............................................ $148,763
Mortgages:
First mortgage, payable in monthly principal and interest (10.375%)
installments (b).................................................. $ 7,447 7,317
First mortgage payable in monthly principal and interest (9.73%)
installments of $25 (c)........................................... 2,258 2,169
First mortgage, payable in monthly principal and interest (7.375%)
installments of $55 (d)........................................... 5,926 5,693
Revolving credit agreement (e).........................................
------- --------
15,631 163,942
Less current portion................................................. 453 495
------- --------
$15,178 $163,447
------- --------
------- --------
</TABLE>

- ------------------
(a) In September 1997, the Company issued 10-year Senior Subordinated Notes due
2007. The Notes are unsecured and subordinated in right of payment for all
existing and future indebtedness of the Company. The Company is in the
process of registering these Notes under the Securities Act of 1933 through
an exchange offer. Such Exchange Notes, once issued, will have terms
substantially identical to the original Notes.

(b) In September 1990, the Company obtained an $8,000 first mortgage,
collateralized by the underlying building, issued through the Town of Islip,
New York Industrial Development Agency. The taxable bond, held by an
insurance company, has monthly principal and interest payments of $75 for
ten years through 2000, with a final payment of $6,891 in September 2000.

occupied under a long-term lease. The purchase price of approximately $3,090
was funded with $690 in cash and the balance through a 15-year mortgage note
payable. This agreement contains various restrictive covenants which require
the maintenance of certain financial ratios and limits capital expenditures.

(d) In April 1996, the Company obtained a $6,000 first mortgage with a fixed
interest rate of 7.375%, collateralized by the underlying real estate. The
mortgage has monthly principal and interest payments of $55 for fifteen
years through 2011.

F-47
<PAGE>
NBTY, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

8. LONG-TERM DEBT--(CONTINUED)
(e) In September 1997, the Company entered into a Revolving Credit Agreement
(the 'Agreement') with five banks that provides for borrowings up to
$50,000, which expires September 23, 2003. Virtually all of the Company's
assets serve as collateral under the Agreement, which is subject to normal
banking terms and conditions. The Agreement provides that loans may be made
under a selection of rate formulas including Prime or Euro currency rates.
The Agreement provides for the maintenance of various financial ratios and
covenants. As of September 30, 1997, there were no outstanding borrowings
under the Agreement.

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

<TABLE>
<CAPTION>
YEARS ENDED
SEPTEMBER 30,
- --------------------------------------------------------------
<S> <C>
1998........................................................ $ 495
1999........................................................ 539
2000........................................................ 7,420
2001........................................................ 444
2002........................................................ 481
Thereafter.................................................. 154,563
--------
$163,942
--------
--------
</TABLE>

In August 1997, in connection with the promissory notes issued as
consideration for the purchase of H&B, the Company was issued two standby
letters of credit aggregating $170,000. At September 30, 1997, there were no
borrowings outstanding under the letters of credit. As of October 17, 1997, upon
payment of the promissory notes, the letters of credit were cancelled.

In 1997, the Company recorded a loss of $2,265 in connection with an
interest rate lock which was settled on October 28, 1997.

9. CAPITAL LEASE OBLIGATIONS

<TABLE>
<S> <C>
1998........................................................... $ 759
1999........................................................... 759
2000........................................................... 759
2001........................................................... 759
2002........................................................... 692
Thereafter..................................................... 172
------
3,900
Less, amount representing interest............................. 679
------
Present value of minimum lease payments (including $521 due
within one year)............................................ $3,221
------
------
</TABLE>

F-48
<PAGE>
NBTY, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

10. INCOME TAXES

Provision (benefit) for income taxes consists of the following:

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
---------------------------
1995 1996 1997
------ ------ -------
<S> <C> <C> <C>
Federal
Current................................................................. $2,225 $7,551 $14,207
Deferred................................................................ 637 (501) (2,530)
State
Current................................................................. 336 2,112 1,218
Deferred................................................................ 48 (141) (220)
Foreign benefit........................................................... (1,189)
------ ------ -------

Total provision........................................................... $3,246 $9,021 $11,486
------ ------ -------
------ ------ -------
</TABLE>

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.

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
---------------------------------------------------------------------
1995 1996 1997
-------------------- -------------------- ---------------------
PERCENT OF PERCENT OF PERCENT OF
PRETAX PRETAX PRETAX
AMOUNT INCOME AMOUNT INCOME AMOUNT INCOME
------ ---------- ------ ---------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Income tax expense at statutory
rate................................ $2,850 34.0% $7,831 35.0% $10,051 35.0%
State income taxes, net of federal
income tax benefit.................. 254 3.0% 1,281 5.7% 649 2.3%
Other, individually less than 5%...... 142 1.7% (91) (0.4%) 786 2.7%
------ ---------- ------ ---------- ------- ----------
Actual income tax provision........... $3,246 38.7% $9,021 40.3% $11,486 40.0%
------ ---------- ------ ---------- ------- ----------
------ ---------- ------ ---------- ------- ----------
</TABLE>

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

<TABLE>
<CAPTION>
1996 1997
------- -------
<S> <C> <C>
Deferred tax assets:
Current:
Inventory capitalization............................................ $ 243 $ 351
Accrued expenses and reserves not currently deductible.............. 2,591 5,350
Tax credits......................................................... 321 331
------- -------
Current deferred tax assets....................................... 3,155 6,032
------- -------
Noncurrent:
Intangibles......................................................... 335 333
Reserves not currently deductible................................... 200 188
------- -------
Total noncurrent.................................................. 535 521
------- -------
Deferred tax liabilities:
Property, plant and equipment.......................................... (3,362) (7,995)

------- -------
Net deferred tax (liability) asset................................ $ 328 $(1,442)
------- -------
------- -------
</TABLE>

Available state tax credits of $321 and $331 in 1996 and 1997,
respectively, are scheduled to expire through fiscal 2002.

F-49
<PAGE>
NBTY, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

11. COMMITMENTS

Leases

Future minimal rental payments under the retail location and other leases
that have initial or noncancelable lease terms in excess of one year at
September 30, 1997 are as follows:

<TABLE>
<CAPTION>
YEAR ENDING
SEPTEMBER 30,
- -------------
<S> <C>
1998........................................................ $ 25,322
1999........................................................ 24,501
2000........................................................ 23,522
2001........................................................ 22,176
2002........................................................ 20,804
Thereafter.................................................. 161,623
--------
$277,948
--------
--------
</TABLE>

Operating lease rental expense, including real estate tax and maintenance
costs, and leases on a month to month basis were approximately $1,248, $1,979
and $7,750 for the years ended September 30, 1995, 1996 and 1997, respectively.

Purchase commitments

The Company was committed to make future purchases under various purchase

order arrangements with fixed price provisions aggregating approximately $12,923
and $26,102 at September 30, 1996 and 1997, respectively.

Capital commitments

The Company had approximately $15,800 in open capital commitments related
to a manufacturing facility and computer hardware and software at September 30,
1997.

Employment and consulting agreements

The Company has employment agreements with two of its officers. The
agreements, which expire in January 2004, provide for minimum salary levels,
including cost of living adjustments, and also contain provisions regarding
severance and changes in control of the Company. The commitment for salaries as
of September 30, 1997 was approximately $749 per year.

The Company also has a two-year consulting agreement with its former
chairman and current director which expires on December 31, 1997. Such agreement
requires annual payments of approximately $350. The parties are presently
negotiating a renewal of the agreement under substantially comparable terms. In
addition, an entity owned by a relative of an officer received sales commissions
of $510, $417 and $541 in 1995, 1996 and 1997, respectively.

F-50
<PAGE>
NBTY, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

12. STOCK OPTION PLANS

During fiscal 1995, options were exercised with 430 shares of common stock
issued (prior to the aforementioned stock split) to certain officers and
directors for $24 and an interest bearing note in the amount of $191. The
promissory note, including interest, was paid by the surrender of 23 NBTY common
shares to the Company at the prevailing market price. As a result of the
exercise of these options, the Company was entitled to a compensation deduction
of approximately $1,828 which resulted in a tax benefit of approximately $731
which was credited to capital in excess of par.

A summary of stock option activity is as follows:

<TABLE>
<CAPTION>
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
NUMBER OF EXERCISE NUMBER OF EXERCISE NUMBER OF EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
--------- -------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year...... 8,475 $ .24 7,185 $ .25 4,569 $ .25
Exercised............................. 1,290 .17 2,616 .23 111 .31
--------- -------- --------- -------- --------- --------
Outstanding at end of year............ 7,185 $ .25 4,569 $ .25 4,458 $ .25
--------- -------- --------- -------- --------- --------
--------- -------- --------- -------- --------- --------
Exercisable at end of year............ 7,185 $ .25 4,569 $ .25 4,458 $ .25
--------- -------- --------- -------- --------- --------
--------- -------- --------- -------- --------- --------
</TABLE>

13. EMPLOYEE BENEFIT PLANS

F-51
<PAGE>
NBTY, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

14. LITIGATION

L-tryptophan

The Company and certain other companies in the industry have been named as

defendants in cases arising out of the ingestion of products containing
L-tryptophan. The Company had been named in more than 265 lawsuits, of which
four are still pending against the Company. The other 261 lawsuits have been
settled at no cost to the Company. The Company's supplier of L-tryptophan agreed
to indemnify the Company and the other companies named in the lawsuits through
the final resolution of all cases involving L-tryptophan. In addition, the
supplier has posted, for the benefit of the Company and the other companies
named in the lawsuits, a revolving, irrevocable letter of credit of $20,000 to
be used in the event that the supplier is unable or unwilling to satisfy any
claims or judgments. While not all of these suits quantify the amount demanded,
the Company believes that the amount required to either settle these cases or to
pay judgments rendered therein will be paid by the supplier or by the Company's
product liability insurance carrier.

Shareholder litigation

Other litigation

15. FOREIGN OPERATIONS

In connection with the Company's recent acquisition of H&B which operates
primarily in the United Kingdom, the Company has significantly expanded its
operations outside of the United States. The following information has been
summarized by geographic area as of September 30, 1997 and for the year then
ended.

<TABLE>
<CAPTION>
IDENTIFIABLE OPERATING
ASSETS SALES INCOME
------------ -------- ---------
<S> <C> <C> <C>

United States...................................................... $328,548 $254,910 $ 36,619
United Kingdom..................................................... 214,190 26,497 (3,281)
------------ -------- ---------
$542,738 $281,407 $ 33,338
------------ -------- ---------
------------ -------- ---------
</TABLE>

F-52
<PAGE>
NBTY, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

16. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

The following is a summary of the unaudited quarterly results of operations
for fiscal 1996 and 1997:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30,
------------ --------- -------- -------------
<S> <C> <C> <C> <C>
1996:
Net sales........................................ $ 38,589 $55,605 $ 47,900 $52,309
Gross profit..................................... 17,779 27,760 24,453 28,773
Income before income taxes....................... (412) 7,502 6,503 8,780(a)
Net income....................................... (251) 4,576 3,763 5,264
Net income per diluted share..................... $ -- $ 0.07 $ 0.06 $ 0.09

1997:
Net sales........................................ $ 47,327 $75,019 $ 61,761 $97,300
Gross profit..................................... 24,757 39,342 31,803 49,619
Income before income taxes....................... 5,484 12,723 8,548 1,961(a)
Net income....................................... 3,290 7,634 5,129 1,177
Net income per diluted share..................... $ 0.06 $ 0.13 $ 0.08 $ 0.02
</TABLE>

- ------------------
(a) Year-end adjustments resulting in an increase to pre-tax income of
approximately $2 million and $2.1 million primarily related to adjustments
of inventory amounts in 1996 and 1997, respectively.

F-53

<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER CONTAINED HEREIN AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY, THE SELLING STOCKHOLDERS OR BY THE UNDERWRITERS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THOSE TO
WHICH IT RELATES OR AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY THOSE
TO WHICH IT RELATES IN ANY STATE TO ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE
SUCH AN OFFER IN SUCH STATE. THE DELIVERY OF THIS PROSPECTUS AT ANY TIME DOES
NOT IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
THE DATE OF THIS PROSPECTUS.
------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary............................. 3
Risk Factors................................... 9
Use of Proceeds................................ 15
Price Range of Common Stock.................... 15
Dividend Policy................................ 16
Capitalization................................. 16
Selected Supplemental Consolidated Financial
Data......................................... 17
Selected Consolidated Financial Data........... 19
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................... 20
Business....................................... 25
Management..................................... 38
Principal and Selling Stockholders............. 40
Description of Capital Stock................... 41
Description of Certain Indebtedness............ 42
Shares Eligible for Future Sale................ 43
Certain United States Federal Tax Consequences
to Non-United States Holders................. 44
Underwriting................................... 47
Legal Matters.................................. 49
Experts........................................ 50
Available Information.......................... 50
Incorporation of Certain Information by
Reference.................................... 51
Index to Consolidated Financial Statements..... F-1
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

11,786,042 SHARES

[LOGO]

COMMON STOCK

----------
PROSPECTUS
, 1998
----------

SALOMON SMITH BARNEY

LEHMAN BROTHERS

ADAMS, HARKNESS & HILL, INC.

RAYMOND JAMES &
ASSOCIATES, INC.
PIPER JAFFRAY INC.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

<PAGE>
[ALTERNATE COVER PAGE FOR INTERNATIONAL PROSPECTUS]

SUBJECT TO COMPLETION, DATED MAY 8, 1998
PROSPECTUS

11,786,042 SHARES

[LOGO]

COMMON STOCK
------------------------

The Common Stock is traded on the Nasdaq National Market under the symbol
'NBTY.' The reported last sale price of the Company's Common Stock on the Nasdaq
National Market, on May 7, 1998 was $17.75 per share. See 'Price Range of Common
Stock.'
------------------------

SEE 'RISK FACTORS' BEGINNING ON PAGE 9 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK.
------------------------

<TABLE>
<CAPTION>
UNDERWRITING PROCEEDS TO
DISCOUNTS AND PROCEEDS TO SELLING
PRICE TO PUBLIC COMMISSIONS(1) COMPANY(2) STOCKHOLDERS(2)
<S> <C> <C> <C> <C>
Per Share $ $ $ $
Total(3) $ $ $ $
</TABLE>

(1) For information regarding indemnification of the Underwriters, see
'Underwriting.'

(2) Before deducting expenses related to the Offerings estimated at $700,000
payable by the Company (including certain expenses payable on behalf of
the Selling Stockholders).

The shares of Common Stock are being offered by the several International
Managers named herein, subject to prior sale, when, as and if accepted by them
subject to certain conditions. It is expected that certificates for the shares
of Common
Stock offered hereby will be available for delivery on or about ,
1998, at the offices of Smith Barney Inc., 333 West 34th Street, New York, New
York 10001.
------------------------
SALOMON SMITH BARNEY INTERNATIONAL
LEHMAN BROTHERS
ADAMS, HARKNESS & HILL, INC.
RAYMOND JAMES & ASSOCIATES, INC.
PIPER JAFFRAY INC.

, 1998

<PAGE>
[ALTERNATE COVER PAGE FOR INTERNATIONAL PROSPECTUS]

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary............................. 3
Risk Factors................................... 9
Use of Proceeds................................ 15
Price Range of Common Stock.................... 15
Dividend Policy................................ 16
Capitalization................................. 16
Selected Supplemental Consolidated Financial
Data......................................... 17
Selected Consolidated Financial Data........... 19
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................... 20
Business....................................... 25
Management..................................... 38
Principal and Selling Stockholders............. 40
Description of Capital Stock................... 41
Description of Certain Indebtedness............ 42
Shares Eligible for Future Sale................ 43
Certain United States Federal Tax Consequences
to Non-United States Holders................. 44
Underwriting................................... 47
Legal Matters.................................. 49
Experts........................................ 50
Available Information.......................... 50
Incorporation of Certain Information by
Reference.................................... 51
Index to Financial Statements.................. F-1
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

11,786,042 SHARES

[LOGO]

COMMON STOCK

----------
PROSPECTUS
, 1998
----------

SALOMON SMITH BARNEY
INTERNATIONAL

LEHMAN BROTHERS

ADAMS, HARKNESS & HILL, INC.

RAYMOND JAMES &
ASSOCIATES, INC.

PIPER JAFFRAY INC.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

<PAGE>
PART II

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The Company estimates that expenses payable by the Company in connection
with the offering described in this Registration Statement (other than the
underwriting discounts and commissions) will be as follows:

<TABLE>
<CAPTION>
TOTAL
- -----
<S> <C>
SEC registration fee (actual).............................. $ 69,692.37
NASD filing fee (actual)................................... 24,124.53
Blue Sky fees and expenses (including counsel fees)........ *
Accounting fees and expenses............................... *
Legal fees and expenses.................................... *
Printing and engraving expense............................. *
Transfer Agent and Registrar fees and expenses............. *
Miscellaneous expenses..................................... *
Total................................................. $700,000.00
</TABLE>

- ------------------
* To be completed by amendment.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Reference is made to Section 102(b)(7) of the Delaware General Corporation
Law (the 'DGCL'), which permits a corporation in its certificate of
incorporation or an amendment thereto to eliminate or limit the personal
liability of a director for violations of the director's fiduciary duty, except
(i) for any breach of the director's fiduciary duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii)
pursuant to Section 174 of the DGCL (providing for liability of directors for
unlawful payment of dividends or unlawful stock purchases or redemptions), or
(iv) for any transaction from which the director derived an improper personal
benefit. The Company's Second Amended and Restated Certificate of Incorporation
contains provisions permitted by Section 102(b)(7) of the DGCL.

Reference is made to Section 145 of the DGCL which provides that a
corporation may indemnify any persons, including directors and officers, who
are, or are threatened to be made, parties to any threatened, pending or
completed legal action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of such
corporation), by reason of the fact that such person is or was a director,
officer, employee or agent of such corporation, or is or was serving at the
request of such corporation as a director, officer, employee or agent of another
corporation or enterprise. The indemnity may include expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or

proceeding, provided such director, officer, employee or agent acted in good
faith and in a manner he reasonably believed to be in or not opposed to the
corporation's best interests and, with respect to any criminal actions or
proceedings, had no reasonable cause to believe that his conduct was unlawful. A
Delaware corporation may indemnify directors and/or officers in an action or
suit by or in the right of the corporation under the same conditions, except
that no indemnification is permitted without judicial approval if the director
or officer is adjudged to be liable to the corporation. Where a director or
officer is successful on the merits or otherwise in the defense of any action
referred to above, the corporation must indemnify him or her against the
expenses which such director or officer actually and reasonably incurred.

The Company's Second Amended and Restated Certificate of Incorporation and
Amended and Restated By-laws provide for the indemnification of directors and
officers of the Company to the fullest extent permitted by the DGCL.

Pursuant to the Underwriting Agreement filed as Exhibit 1.1 to this
Registration Statement, the Underwriters have agreed to indemnify the directors,
officers and controlling persons of the Company against certain civil
liabilities that may be incurred in connection with the Offering, including
certain liabilities under the Securities Act.

II-1
<PAGE>
The Company provides liability insurance for each director and officer for
certain losses arising from claims or charges made against them while acting in
their capacities as directors or officers of the Company.

ITEM 16. EXHIBITS.

(a) The following is a complete list of exhibits filed as part of this
Registration Statement, which are incorporated herein.

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C>
*1.1 -- Form of Underwriting Agreement.
3.1 -- Certificate of Incorporation of NBTY, Inc. as amended. Filed as Exhibit 3.1 to the Company's
Registration Statement (No. 333-39527) on Form S-4 and incorporated herein by reference.
3.2 -- Certificate of Amendment of Certificate of Incorporation Amended and Restated By-Laws of NBTY, Inc.
Filed as Exhibit 3.2 to the Company's Registration Statement (No. 333-39527) on Form S-4 and
incorporated herein by reference.
4.1 -- Indenture, dated as of September 23, 1997, between NBTY, Inc. and IBJ Schroder Bank & Trust Company,
as Trustee, relating to $150,000 in aggregate principal amount of 8- 5/8% Senior Subordinated Notes
due 2007, Series A and Series B. Filed as Exhibit 4.1 to the Company's Registration Statement (No.
333-39527) on Form S-4 and incorporated herein by reference.
*5.1 -- Opinion of Michael C. Duban, P.C.
*10.1 -- Credit and Guarantee Agreement ('Revolving Credit Agreement'), dated September 23, 1997, as amended
April 20, 1998, between the Company and the Chase Manhattan Bank.
*12.1 -- Statement of Computation of Ratio of Earnings to Fixed Charges.
*23.1 -- Consent of Michael C. Duban, P.C.**

23.3 -- Consent of Coopers & Lybrand L.L.P. (Melville, New York)
23.4 -- Consent of Coopers & Lybrand L.L.P. (St. Louis, Missouri)
23.5 -- Consent of Amper, Politziner & Mattia P.A.
*24.1 -- Power of Attorney of NBTY, Inc. (included on signature page to this Registration Statement on Form
S-3).
</TABLE>

- ------------------
* To be filed by amendment.

** Included in the opinion filed as exhibit 5.1.

*** Included in the signature page to this Registration Statement.

ITEM 17. UNDERTAKINGS.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to provisions described in Item 15 above, or otherwise, the Company has
been advised that, in the opinion of the Commission, such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director, officer or controlling person of the Company in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the Common Stock covered hereby, the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.

The Company hereby undertakes that:

(a) For purposes of determining any liability under the Securities
Act, each filing of the Company's annual report pursuant to Section 13(a)
or 15(d) of the 1934 Act (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the 1934 Act)
that is incorporated by

II-2
<PAGE>
reference in the registration statement shall be deemed to be a new
registration statement relating to the Common Stock therein, and the
offering of such Common Stock at that time shall be deemed to be the
initial bona fide offering thereof.

(b) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Company pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.

(c) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

The Company hereby undertakes to deliver or cause to be delivered with the
Prospectus, to each person to whom the Prospectus is sent or given, the latest
annual report to security holders that is incorporated by reference in the
Prospectus and furnished pursuant to and meeting the requirements of Rule 14a-3
or Rule 14c-3 under the 1934 Act.

The Company hereby undertakes to provide to the Underwriters at the closing
specified in the Underwriting Agreement, certificates in such denominations and
registered in such names as required by the Underwriters to permit prompt
delivery to each purchaser.

II-3

<PAGE>
SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE COMPANY
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF NEW YORK, STATE OF NEW YORK, ON MAY 7, 1998.

NBTY, INC.

By: _________/s/ SCOTT RUDOLPH________
Scott Rudolph
Chairman of the Board,
Chief Executive Officer and
President

KNOW ALL MEN BY THESE PRESENTS, THAT EACH INDIVIDUAL WHOSE SIGNATURE
APPEARS BELOW, HEREBY CONSTITUTES AND APPOINTS SCOTT RUDOLPH AND HARVEY KAMIL,
AND EACH OF THEM, EACH WITH FULL POWER TO ACT WITHOUT THE OTHER, HIS TRUE AND
LAWFUL ATTORNEYS-IN-FACT AND AGENTS, EACH WITH FULL POWER OF SUBSTITUTION AND
RESUBSTITUTION FOR HIM AND IN HIS NAME, PLACE AND STEAD, IN ANY AND ALL
CAPACITIES, TO SIGN ANY OR ALL AMENDMENTS TO THIS REGISTRATION STATEMENT, AND TO
FILE THE SAME WITH ALL EXHIBITS THERETO AND OTHER DOCUMENTS IN CONNECTION
THEREWITH, WITH THE COMMISSION, GRANTING UNTO EACH OF SAID ATTORNEYS-IN-FACT AND
AGENTS FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND EVERY ACT AND THING
REQUISITE AND NECESSARY TO BE DONE IN CONNECTION THEREWITH, AS FULLY TO ALL
INTENTS AND PURPOSES AS HE MIGHT OR COULD DO IN PERSON HEREBY RATIFYING AND
CONFIRMING THAT EACH OF SAID ATTORNEYS-IN-FACT AND AGENTS OR HIS SUBSTITUTES MAY
LAWFULLY DO OR CAUSE TO BE DONE BY VIRTUE HEREOF.

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.

<TABLE>
<CAPTION>
SIGNATURE TITLE(S) DATE
--------- -------- ----
<S> <C> <C>
/s/ SCOTT RUDOLPH Chairman of the Board, Chief Executive May 6, 1998
- ------------------------------------------ Officer and President
Scott Rudolph

/s/ HARVEY KAMIL Executive Vice President, Secretary May 7, 1998
- ------------------------------------------
Harvey Kamil

/s/ ARTHUR RUDOLPH Director April 27, 1998
- ------------------------------------------
Arthur Rudolph

/s/ ARAM GARABEDIAN Director May 6, 1998

- ------------------------------------------
Aram Garabedian

/s/ BERNARD G. OWEN Director May 5, 1998
- ------------------------------------------
Bernard G. Owen

/s/ ALFRED SACKS Director May 5, 1998
- ------------------------------------------
Alfred Sacks

/s/ MURRAY DALY Director May 5, 1998
- ------------------------------------------
Murray Daly
</TABLE>

II-4
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE(S) DATE
--------- -------- ----
<S> <C> <C>
/s/ GLENN COHEN Director May 6, 1998
- ------------------------------------------
Glenn Cohen

/s/ BUD SOLK Director April 27, 1998
- ------------------------------------------
Bud Solk

/s/ NATHAN ROSENBLATT Director April 27, 1998
- ------------------------------------------
Nathan Rosenblatt

/s/ MICHAEL L. ASHNER Director April 26, 1998
- ------------------------------------------
Michael L. Ashner
</TABLE>

II-5

<PAGE>
EXHIBIT 23.3

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the inclusion in this registration statement on Form S-3 of our
reports dated November 6, 1997, except as to Note 1 the date of which is April
3, 1998, on our audits of the consolidated financial statements and financial
statement schedule of NBTY, Inc. and Subsidiaries (the 'Company') as of
September 30, 1997 and 1996 and for each of the three years in the period ended
September 30, 1997, and of our report dated April 24, 1998 on our audits of the
supplemental consolidated financial statements of the Company as of September
30, 1997 and 1996 and for each of the three years in the period ended September
30, 1997. We also consent to the reference to our firm under the caption
'Experts', 'Selected Supplemental Consolidated Financial Data' and 'Selected
Consolidated Financial Data.'

COOPERS & LYBRAND L.L.P.

Melville, New York
May 8, 1998

<PAGE>
EXHIBIT 23.4

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in this registration statement on
Form S-3 of our reports dated November 21, 1997, except for Note 7 as to which
the date is April 20, 1998, on our audits of the combined financial statements
of Nutrition Headquarters, Inc. and Lee Nutrition, Inc. as of September 30, 1997
and 1996 and for each of the three years in the period ended September 30, 1997.
We also consent to the reference to our firm under the caption 'Experts.'

COOPERS & LYBRAND L.L.P.

St. Louis, Missouri
May 8, 1998

<PAGE>
EXHIBIT 23.5

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in this registration statement on
Form S-3 of our reports dated November 7, 1997, except for Note 12 dated April
20, 1998, on our audits of the financial statements of Nutro Laboratories, Inc.
as of September 30, 1997 and 1996 and for each of the three years in the period
ended September 30, 1997. We also consent to the reference to our firm under the
caption 'Experts'.

AMPER, POLITZINER & MATTIA P.A.

Princeton, New Jersey
May 8, 1998