Chattem Reports Fourth Quarter and Fiscal 2006 Results; Company Increases Fiscal 2007 Year Outlook.CHATTANOOGA, Tenn. -- Chattem, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : CHTT), a leading marketer and manufacturer of branded consumer products, today announced results for the fiscal fourth quarter and year ended November 30, 2006. "The Company completed another outstanding year in fiscal 2006, highlighted by several key events. Most significantly, we reached an agreement to acquire five major brands from Johnson & Johnson, a transaction which subsequently closed on January 2, 2007," said Chief Executive Officer Zan Guerry. "From a capital structure perspective, we completed a $125 million convertible debt offering on very attractive terms and repurchased, during the first nine months of the fiscal year, 1.2 million shares of our common stock at an average price of $33.57 per share. Also, the Dexatrim[R] PPA PPA 1. Palpation, Percussion & Ausculation 2. Pittsburgh pneumonia agent 3. Postpartum amenorrhea 4. Price per accession 5. Pure pulmonary atresia litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. was brought to closure with the receipt of $19.3 million before taxes, or about $0.65 per share. Operationally, Chattem experienced a very good year with solid growth in sales led by strong performances from Gold Bond[R], Dexatrim, BullFrog bullfrog, common name of the largest North American frog, Rana catesbeiana. Native to the E United States, this species has been successfully introduced in the West and in other parts of the world. The body length is 4 to 8 in. [R], Pamprin[R] and Selsun[R], the latter in spite of unprecedented competitive pressures from Head & Shoulders[R]. Somewhat offsetting these positive events was the launch of Icy Hot[R] Pro-Therapy[TM] which, while contributing to sales growth, experienced disappointing overall performance resulting in a direct operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of about $0.20 and $0.40 per share in the fourth quarter and fiscal year, respectively, for the brand. Looking ahead to fiscal 2007, we anticipate another excellent year with continued impressive performance of the base business, smooth integration of the acquired brands and management of Icy Hot Pro-Therapy at about break-even levels." FISCAL YEAR 2006 FINANCIAL RESULTS Total revenues for fiscal 2006 were $300.5 million, up 8%, compared to total revenues of $279.3 million in the prior year. Total revenues increased 11% over the prior year excluding sales of pHisoderm[R], which was divested in November 2005. Revenue growth for fiscal year 2006 was led by Gold Bond, Dexatrim, Selsun, BullFrog and Pamprin along with the new product launch of Icy Hot Pro-Therapy. Net income for fiscal year 2006 was $45.1 million, up 25%, compared to $36.0 million in the prior year, and earnings per share were $2.34, up 32%, compared to $1.77 in the prior year. Adjusted net income for fiscal 2006 was $37.5 million, compared to $42.6 million in the prior year, and adjusted earnings per share were $1.95, compared to $2.09 in the prior year.a Adjusted net income for fiscal 2006 excludes a debt extinguishment The destruction or cancellation of a right, a power, a contract, or an estate. Extinguishment is sometimes confused with merger, though there is a clear distinction between them. charge, litigation settlement items and SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System 123R employee stock option expense. Adjusted net income for fiscal 2005 excludes a debt extinguishment charge, loss on product divestures, litigation settlement items and executive severance charges. FOURTH QUARTER FINANCIAL RESULTS Total revenues for the fourth quarter of fiscal 2006 were $65.1 million, compared to total revenues of $63.9 million in the prior year quarter, representing a 2% increase. Total revenues increased 5% over the fourth quarter of fiscal 2005 excluding sales of pHisoderm, which was divested in November 2005. Revenue growth for the quarter was driven by the continued strength of the Gold Bond, Dexatrim, BullFrog and Pamprin businesses offset by a reduction in sales of Icy Hot Pro-Therapy resulting from a reserve for retail returns recorded in the fourth quarter. Net income for the fourth quarter of fiscal 2006 was $4.9 million, compared to $2.4 million in the prior year quarter, and earnings per share were $0.26, compared to $0.12 in the prior year quarter. Adjusted net income for the fourth quarter of fiscal 2006 was $6.0 million, compared to $8.6 million in the prior year quarter, and adjusted earnings per share were $0.32, compared to $0.43 in the prior year quarter.a Adjusted net income in the fourth quarter of fiscal 2006 excludes litigation settlement items and SFAS 123R employee stock option expense. Adjusted net income for the fourth quarter of fiscal 2005 excludes a debt extinguishment charge, loss on product divestures and litigation settlement items. In the fourth quarter of fiscal 2006, the Company recorded a reserve for Icy Hot Pro-Therapy retail and in-house inventory exposure totaling $5.3 million, or $0.18 per share, which resulted in negative sales for the brand and higher costs of sales during the fiscal fourth quarter of 2006. FINANCIAL HIGHLIGHTS * Gross margin for fiscal 2006 was 68.7%, compared to 71.4% during fiscal 2005 largely attributable to the launch of Icy Hot Pro-Therapy, which has lower gross margins than our other products. * Advertising and promotion expense was 32.0% for fiscal 2006 compared to 27.5% during fiscal 2005, due primarily to increased spending to support the Company's new product introductions. * Selling, general and administrative expenses decreased to 15.6% during fiscal 2006 compared to 16.9% during fiscal 2005 reflecting lower restricted stock and variable compensation expense, offset by share-based payment expense under SFAS 123R. * During fiscal 2006, the Company repurchased 1.2 million shares at an average cost of $33.57 per share, or $39.3 million in the aggregate. * The Company completed a private offering of $125 million 2% Convertible Senior Notes, the proceeds of which were used to fund in part the acquisition of brands from Johnson & Johnson. * The Company successfully resolved its Dexatrim PPA litigation and recovered $19.3 million, net of legal expenses, or $0.65 per share. ACQUISITION OF BRANDS On January 2, 2007, the Company completed the closing of the previously announced agreement to acquire the U.S. rights to five leading consumer and over-the-counter ("OTC OTC See: Over-the-counter. OTC See over-the-counter market (OTC). ") brands from Johnson & Johnson for $410 million. The acquired brands include ACT[R], an anti-cavity mouthwash/mouth rinse; Cortizone, a hydrocortisone hydrocortisone (hī'drəkôr`tĭzōn'), another name for the steroid hormone cortisol, more especially used to refer to preparations of this hormone used medicinally. anti-itch product; Unisom[R] an OTC sleep aid; Kaopectate[R], an anti-diarrhea product; and Balmex[R], a diaper rash Diaper Rash Definition Dermatitis of the buttocks, genitals, lower abdomen, or thigh folds of an infant or toddler is commonly referred to as diaper rash. product. The acquisition was funded in part with the proceeds from a new $300 million term loan arranged and led by Bank of America
Bank of America (NYSE: BAC TYO: 8648 ) is the largest commercial bank in the United States in terms of deposits, and the largest company of its kind in the world. pursuant to a Fifth Amendment to and restatement of the Company's Credit Agreement, with the remaining funds principally provided through the use of a portion of the proceeds derived from the Company's previously announced sale of $125 million 2% Convertible Senior Notes due 2013. FISCAL 2007 GUIDANCE The Company expects earnings per share for fiscal 2007 to be in the range of $2.80 - $3.05, excluding compensation expense under SFAS 123R. Stock option expense under SFAS 123R for fiscal 2007 is estimated to be $0.14 per share prior to the impact of any additional option grants in fiscal 2007. NON-GAAP FINANCIAL MEASURES In addition to presenting financial results in accordance with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting , or GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). , this earnings release also presents certain non-GAAP financial measures, including adjusted net income and adjusted earnings per share. The non-GAAP financial measures exclude certain non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. , such as stock option expenses, and certain charges, such as debt extinguishment charges, executive severance charges and litigation settlement items. Chattem believes these measures provide both management and investors with additional insight into the Company's operational strength and ongoing operating performance. The additional non-GAAP financial measures should be considered in conjunction with, but not as a substitute for, the financial information presented in accordance with GAAP. See the accompanying Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. under which this earnings release is furnished to the Securities and Exchange Commission for further discussion of the utility of these non-GAAP measures and the purposes for which they are used by management. FORWARD-LOOKING STATEMENTS Statements in this press release which are not historical facts, including, without limitation, statements in the Fiscal 2007 Guidance section of this release, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These forward-looking statements involve risks, uncertainties and assumptions, including those described in our filings with the Securities and Exchange Commission, that could cause actual outcomes and results to differ materially from those expressed or projected. WEBCAST Chattem will provide an online Web simulcast and rebroadcast of its fiscal fourth quarter 2006 conference call. The live broadcast of the call will be available online at www.chattem.com and www.streetevents.com today, Monday, February 12, 2007 beginning at 9:00 a.m. ET. The online replay will follow shortly after the call and be available through February 19, 2007. Please note that the webcast requires Windows Media Player Digital jukebox software for Windows from Microsoft that plays a variety of audio, video and streaming formats including MP3, WMA, CD audio and MIDI. Starting with Version 6.2 in 1999, the Windows Media Rights Manager was added for securing copyrighted content. . For additional information please contact Catherine Baker Catherine Baker (born 16 July 1947 in Lille) is a French journalist and home schooling essayist. She has also more recently written against the whole prison system, arguing for a complete abolition. , Investor Relations Investor relations The process by which the corporation communicates with its investors. at 423-821-2037 ext. 3209. About Chattem Chattem, Inc. is a leading marketer and manufacturer of a broad portfolio of branded OTC healthcare products, toiletries toi·let·ry n. pl. toi·let·ries An article, such as toothpaste or a hairbrush, used in personal grooming or dressing. toiletries npl → artículos mpl de aseo (= and dietary supplements. The Company's products target niche market A niche market also known as a target market is a focused, targetable portion (subset) of a market sector. By definition, then, a business that focuses on a niche market is addressing a need for a product or service that is not being addressed by mainstream providers. segments and are among the market leaders in their respective categories across food, drug and mass merchandisers. The Company's portfolio of products includes well-recognized brands such as Icy Hot[R], Gold Bond[R], Selsun Blue Selsun Blue is a shampoo, developed by Ross Laboratories, a subsidiary of Abbott Laboratories and later bought by Chattem, that functions as an over-the-counter treatment for dandruff. [R], ACT[R], Cortizone and Unisom[R]. Chattem conducts a portion of its global business through subsidiaries in the United Kingdom, Ireland and Canada. For more information, please visit the Company's website: www.chattem.com. (1) See the reconciliation of adjusted net income to net income reported in accordance with GAAP for the fourth quarter and fiscal 2006 and fiscal 2005, provided in the unaudited consolidated statements of income attached hereto here·to adv. To this document, matter, or proposition. hereto Adverb Formal or law to this place, matter, or document Adv. 1. . [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
|
||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion