Chattem Reports Increases of 80% in Sales and 487% in Earnings for the First Quarter of 1999.CHATTANOOGA Chattanooga (chăt'ən  `gə), city (1990 pop. 152,466), seat of Hamilton co., E Tenn., on both sides of the Tennessee River near the Georgia line; inc. 1839. , Tenn.--(BUSINESS WIRE)--March 25, 1999--Chattem Inc.
(NASDAQ NASDAQin 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 CHTT may refer to:
The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight increased 80%, operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. 194% and earnings per share before extraordinary item 487% over the prior year period, all record first quarter results. Net sales for the quarter increased $27.8 million to $62.7 million from $34.9 million in the corresponding period of 1998. Net income before extraordinary item for the first quarter of 1999 was $3.6 million or $0.35 per share as compared to $609,000 or $0.06 per share for the first quarter of 1998. The increase in earnings per share was achieved despite a 7% increase in the average number of shares outstanding from 1998 to 1999. During the first quarter, the Company experienced an extraordinary loss net of taxes of $427,000, or $.04 per share, on the early 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. of debt related to the financing of the acquisition of the Thompson Thompson, city, Canada Thompson, city (1991 pop. 14,977), central Man., Canada, on the Burntwood River. A mining town, it developed after large nickel deposits were discovered in the area in 1956. Medical Company brands. Included in the Company's income statement are substantial non-cash expenses Noun 1. non-cash expense - an expense (such as depreciation) that is not paid for in cash disbursal, disbursement, expense - amounts paid for goods and services that may be currently tax deductible (as opposed to capital expenditures) related to the amortization of intangibles associated principally with the acquisition of certain brands. These expenses amounted to approximately $1.6 million or $0.16 per share for the first quarter of 1999. Adjusting for these 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. , earnings for the first quarter of 1999 would have been $0.51 per share. Chattem's record 1999 first fiscal quarter results follow a three year compound annual growth rate in sales of 30% and earnings of 74%. Additionally, the first quarter financial performance again demonstrates Chattem's disciplined control of expenses with S, G & A costs representing 10.7% of sales, and its dedication to heavy advertising and promotional support, as it spent $24.7 million, or 39.4% of revenues, behind its brands. The record sales and earnings growth were driven primarily by a strong performance from the GOLD BOND family of products. In particular, GOLD BOND Medicated medicated /med·i·cat·ed/ (med´i-kat?id) imbued with a medicinal substance. medicated contains a medicinal substance. Lotion lotion /lo·tion/ (lo´shun) a liquid suspension, solution, or emulsion for external application to the body. lo·tion n. 1. , which was launched late in the third quarter of fiscal 1998, has proven to be the most successful new product introduction in the Company's 120 year history. In addition to the success of this brand, sales of the remaining family of GOLD BOND products have strengthened during the GOLD BOND Medicated Lotion launch, resulting in a doubling of fiscal 1999 first quarter sales for the GOLD BOND franchise over the corresponding prior year period's revenues. Additionally, sales of BAN, which was acquired on March 24, 1998, continue to be stable with upside potential Upside potential The amount by which analysts or investors expect the price of a security may increase. upside potential The potential price or gain that may be expected in a security or in a security average, generally stated as the dollar possible from recently launched line extensions and new packaging. BAN will receive heavy advertising and promotional support throughout the balance of fiscal 1999. Seasonality is a factor in the Company's overall business, with first quarter sales and income trailing the other fiscal quarters. The timing of receipt of orders, particularly for seasonal products, is somewhat difficult to predict and can largely fall in either the first or second quarter. For example, orders for the Company's seasonal products, 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. , SUN-IN and ULTRASWIM, were somewhat slower than expected in the first quarter of 1999, but the Company remains confident with its overall budget for these brands for the fiscal year. The Company's international division's sales, which account for approximately 8% of overall annual revenues, were below budget in the first quarter but have strengthened since the quarter's end. In particular, Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. sales have been aided by the addition of BAN and the strength of the GOLD BOND products sold there. On December December: see month. 21, 1998, the Company announced the completion of the previously announced acquisition of certain brands from Thompson Medical Company, Inc., including DEXATRIM Dexatrim is a dietary supplement meant to assist with weight loss. Its formula has changed over the years and at times Dexatrim has contained phenylpropanolamine and ephedra. , SPORTSCREME, ASPERCREME, CAPZASIN-P, CAPZASIN-HP and ARTHRITIS arthritis, painful inflammation of a joint or joints of the body, usually producing heat and redness. There are many kinds of arthritis. In its various forms, arthritis disables more people than any other chronic disorder. HOT. Concurrent with the closing of the Thompson Medical Company acquisition, the Company filed a shelf registration statement for $250,000,000 of equity and debt securities. The Thompson Medical Company brands will be immediately accretive to 1999 earnings, and the Company has been pleased with their integration into Chattem Chattem NASDAQ: CHTT is a Chattanooga, TN based producer and marketer of over-the-counter healthcare products, toiletries, dietary supplements, topical analgesics, and medicated skin care products. . For the balance of 1999, the Company foresees solid sales and earnings performance, highlighted by ten new product launches including GOLD BOND Antibiotic Ointment antibiotic ointment Any of a number of topical antibacterial ointments or creams , BAN Ultra Dry, REPOSE from SUNSOURCE and FLEXALL QUIK GEL. Chattem will support each of these launches with a substantial marketing campaign, and views the successful introduction of each of these new brands as a key objective for 1999. Looking ahead, the Company remains comfortable with an earnings estimate for fiscal 1999 of approximately $2.35 per share, based upon the current state of the business. If achieved, these earnings would represent an increase of approximately 85% over fiscal 1998 earnings of $1.25 per share. Finally, the Company continues to review opportunities for accretive acquisitions Accretive Acquisition An acquisition that will increase the acquiring company's EPS. Notes: As they are expected to increase the acquiring company's future earnings, these acquisitions tend to be favorable for the company's market price. and other strategic opportunities. Statements concerning the Company's business outlook, anticipated profitability, sales or expenses and sales growth, together with other statements made in this press release that are not historical facts are "forward looking statements" as that term is defined under the federal securities laws. All forward looking statements are subject to the risks and uncertainties which could cause actual results to differ materially from those projected, including those described in the Company's filings with the Securities and Exchange Commission. -0-
CHATTEM, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(unaudited)
For the Three Months Ended February 28,
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1999 1998 % Change
--------- --------- -------
NET SALES $ 62,728 $ 34,921 79.6%
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COSTS AND EXPENSES:
Cost of sales 16,880 9,682 74.3%
Advertising and promotion 24,738 15,180 63.0%
Selling, general and
administrative 6,700 5,159 29.9%
----------------------
Total costs and expenses 48,318 30,021 60.9%
----------------------
INCOME FROM OPERATIONS 14,410 4,900 194.1%
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OTHER INCOME (EXPENSE):
Interest expense (8,806) (4,180) 110.7%
Investment and other income, net 131 192 -31.8%
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Total other income (expense) (8,675) (3,988) 117.5%
----------------------
Income before income taxes 5,735 912 528.8%
Provision for income taxes (2,158) (303) 612.2%
----------------------
Income before extraordinary loss 3,577 609 487.4%
----------------------
Extraordinary loss on early
extinguishment of debt,
net of taxes (427) --
----------------------
NET INCOME $ 3,150 $ 609 417.2%
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Fully diluted shares outstanding 10,118 9,491 6.6%
======================
NET INCOME PER COMMON SHARE (DILUTED):
Operations $ 0.35 $ 0.06 483.3%
Extraordinary loss $ (0.04) --
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Net income per common share $ 0.31 $ 0.06
======================
EBITDA $ 17,506 $ 6,423
Depreciation & amortization $ 3,488 $ 1,691
Capital expenditures $ 864 $ 566
Cash and cash equivalents $ 3,120 $ 1,398
Senior bank debt $ 132,500 $ 79,365
Subordinated debt 248,880 65,758
----------------------
Total debt $ 381,380 $ 145,123
======================
Statements in this press release which are not historical facts, including statements about the Company's confidence, strategies and expectations about new and existing products and opportunities, the demand and acceptance of new and existing products and markets and the return on investments in products and markets 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 and uncertainties. These include, but are not limited to, product demand and market acceptance risks; product development risks, such as delays or difficulties in developing, producing and marketing new products; the impact of competitive products, pricing and advertising; constraints CONSTRAINTS - A language for solving constraints using value inference. ["CONSTRAINTS: A Language for Expressing Almost-Hierarchical Descriptions", G.J. Sussman et al, Artif Intell 14(1):1-39 (Aug 1980)]. resulting from the financial condition of the Company, including the degree to which the Company is leveraged, debt service requirements and restrictions under bank loan agreements and indentures; and other risks described in the Company's Securities and Exchange Commission filings. |
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