Chattem Exceeds Earnings Forecasts

Chattem, Inc., Chattanooga, TN announced financial results for the fiscal first quarter ended Feb. 28, 2002, exceeded results for the first quarter of fiscal 2001 and also the company’s previous estimates.

Specifically, net sales for the quarter were $51.9 million up 9.4% and earnings before interest taxes, depreciation and amortization was $9.5 million, an increase of 11.2% over last year. Chattem previously expected first quarter net sales to only reach $48-50 million.

Net sales were led by the topical analgesic brands, Dexatrim, Gold Bond Powder and Foot, Garlique and pHisoderm. Sales of the topical analgesic franchise, with products such as FlexAll and Icy Hot, rose 31% over the corresponding year-ago period, led by Icy Hot whose sales alone increased 97% due to the Icy Hot Pain-Relieving patch.

Both Gold Bond Powder and Gold Bond Foot recorded impressive sales increases, up 12% and 114%, respectively. Sales of the overall Gold Bond franchise were hurt by weak sales of Gold Bond lotion, adversely affected by the mild winter weather. PHisoderm reversed a declining sales trend and saw revenues increase 12% over the first quarter of fiscal 2001.

Executives said international sales for the first quarter of 2002 increased 12% from last year’s first quarter, again led by a strong performance from Gold Bond in Canada.

Four products were newly distributed in the first quarter, including Dexatrim Results, Gold Bond Foot spray, pHisoderm Acne body wash and pHisoderm Acne Facial masque. Media support will begin in the second fiscal quarter for the new Dexatrim and Gold Bond products, and in the third quarter for the new pHisoderm items. Additionally, during the first quarter the company entered into a license agreement for the pHisoderm clear swab, an acne treatment in a patented cotton tip swab delivery system.

“We were extremely pleased with our business in our first fiscal quarter of 2002,” said Zan Guerry, chairman and chief executive officer, Chattem. “All of our major brands performed at or above expectations, and we were gratified by the market’s reception of our new line extensions. We believe this performance, combined with the expected positive effect of soon-to-be acquired Selsun Blue, should position us for another strong year of sales and earnings in 2002.”

During the first quarter, Chattem implemented Emerging Issues Task Force bulletins Numbers 14 and 25 accounting standard, which do not impact the company’s first quarter net income, according to executives.