Chattem,Inc.Announces Second Quarter Financial Results

Chattem, Inc., a marketer and manufacturer of branded consumer products, reported sales fell 5% for the second quarter ended May 31. For the six months, sales fell 3% to $142 million. Results for the quarter were impacted by continuing sales declines in the Company’s Sunsource business. Additionally, Ban sales declined versus the year ago period due to several factors. First, the company is dedicating its entire Ban advertising budget to support Ban Naturals in the second half of fiscal 2000. Consequently, Ban received no advertising support during the first half of fiscal 2000. Second, the year-over-year sales comparison is impacted by the successful Ultra Dry launch during the second quarter of fiscal 1999. Finally, the antiperspirant/deodorant category experienced strong competition during the first half of fiscal 2000, led by Lever Brothers’ Dove antiperspirant and deodorant launch.

Net sales of the Company’s remaining brands grew 4.1% for the quarter and 5.5% for the six months compared to the year ago periods. This growth was driven by strong performances from Chattem’s topical analgesic brands, as well as its Phisoderm, Mudd and Herpecin-L brands, and its international division.

Chattem projects fiscal year 2000 net sales in the range of $290-300 million, earnings per share in the range of $2.05-2.20, and EBITDA in the range of $82-85 million.The company said results could be positively impacted if the launches of Ban Naturals and Gold Bond Fragrance Free Lotion are successful, and if strong re-orders of Dexatrim Natural occur. Conversely, continuing heavy competitive activity in the antiperspirant/deodorant category and sales declines in the Sunsource business, among other factors, could negatively impact results.