Chattem Posts Revenue Increase of 21% in First Quarter

Chattem Inc., Chattanooga, TN, said revenues for first quarter ended Feb. 28 were $58.4 million, operating income was $12.5 million and income before accounting change was $4.6 million, representing increases of 21%, 47% and 93%, respectively, over the corresponding year-ago period results. Earnings per share for the fiscal 2003 first quarter were $.23, a 77% increase.

The company said the 21% increase in total revenues for the first fiscal quarter of 2003 over the first quarter of 2002 was led by Selsun blue, Gold Bond, pHisoderm and Garlique. Selsun blue, which was acquired last March, achieved a 38% increase in net sales for the quarter versus the same period a year ago. Net sales of the Gold Bond franchise increased 11%, led by Gold Bond Lotion and the early shipments of three new Gold Bond items. pHisoderm’s net sales increased by 13% over the corresponding year-ago period behind the Acne Facial Wash and the Clear Swab.

Offsetting these sales increases were year-over-year sales declines in Chattem’s topical analgesic portfolio (Icy Hot, FlexAll, Aspercreme, Sportscreme, Capsazin-P, Capsazin-HP and Arthritis Hot), Dexatrim, Pamprin and Premsyn. International total revenues for the first quarter of 2003 increased 89% over the prior year comparable period, led by sales of Selsun blue and the continuing strength of Gold Bond in Canada.

During the first quarter Chattem purchased 103,000 of its shares at an average price of $15.27 per share. A total of approximately $8.4 million remains available under the Company’s $10 million board stock repurchase authorization.

For the balance of the 2003 fiscal year, Chattem reaffirmed its earlier guidance for the year of net revenues of $240-245 million, EBITDA of $60-64 million and earnings per share of $1.10-1.15, subject to risks, uncertainties and assumptions, including those described in the Company’s filings with the Securities and Exchange Commission.

Chattem separately announced that it has acquired the Fisoderm, Fisohex and Fisoac product line in Brazil and nearly all of the worldwide trademarks for pHisoDerm, pHisohex and other related trademarks from GlaxoSmithKline.

For the balance of the 2003 fiscal year, Chattem reaffirmed its earlier guidance for the year of net revenues of $240-245 million, EBITDA of $60-64 million and earnings per share of $1.10-1.15.

Executives said shipping of Chattem’s three newly offered Gold Bond items, the First Aid Wipe, First Aid Quick Spray and the Antifungal Foot Swab, will increase in the second quarter of fiscal 2003. Also, Chattem expects to begin shipping the Icy Hot Pain Relieving Back Patch at the beginning of its third fiscal quarter, following the highly successful launch of the Pain Relieving Patch.