-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, C7vCGpQkAslcRx239vfEOtuJnx8I7X1XX9zvXOMiPZ/v7FKUW/zBocftlzmCWyDT tnSsRpBadMPw20/bCNFAgg== 0001157523-06-009757.txt : 20061010 0001157523-06-009757.hdr.sgml : 20061009 20061010084550 ACCESSION NUMBER: 0001157523-06-009757 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20061010 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20061010 DATE AS OF CHANGE: 20061010 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHATTEM INC CENTRAL INDEX KEY: 0000019520 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 620156300 STATE OF INCORPORATION: TN FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-05905 FILM NUMBER: 061135625 BUSINESS ADDRESS: STREET 1: 1715 W 38TH ST CITY: CHATTANOOGA STATE: TN ZIP: 37409 BUSINESS PHONE: 4238214571 MAIL ADDRESS: STREET 1: 1715 W 38TH ST CITY: CHATTANOOGA STATE: TN ZIP: 37409 FORMER COMPANY: FORMER CONFORMED NAME: CHATTEM DRUG & CHEMICAL CO DATE OF NAME CHANGE: 19790111 8-K 1 a5245129.txt CHATTEM, INC. 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ----------------------- Date of Report (Date of earliest event reported): October 10, 2006 CHATTEM, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Tennessee 0-5905 62-0156300 - ------------------------ --------------------- ------------------- (State of incorporation) (Commission File No.) (IRS Employer Identification No.) 1715 West 38th Street, Chattanooga, Tennessee 37409 ------------------------------------------------------------ (Address of principal executive offices, including zip code) (423) 821-4571 ---------------------------------------------------- (Registrant's telephone number, including area code) Item 2.02. Results of Operations and Financial Condition - ---------- --------------------------------------------- On October 10, 2006, the Company issued a press release announcing financial results for the fiscal third quarter and the nine month period ended August 31, 2006 (the "Press Release"). A copy of the Press Release is attached as Exhibit 99.1 and is incorporated by reference herein. The Press Release contains disclosure regarding net income and earnings per share, excluding certain identified items. The adjusted net income and earnings per share disclosures are non-GAAP financial measures (the "Operating Measures"). The Operating Measures exclude (i) for the third fiscal quarter of 2006, a net recovery related to the Dexatrim litigation settlement and the effect of employee stock option expenses under SFAS 123R; (ii) for the third fiscal quarter of 2005, legal expenses related to the Dexatrim litigation and a severance charge; (iii) for the first nine months of fiscal 2006, the effect of loss on early extinguishment of debt, net recoveries related to the Dexatrim litigation settlement and employee stock option expenses under SFAS 123R; and (iv) for the first nine months of fiscal 2005, the effect of loss on early extinguishment debt, a net recovery related to the Dexatrim litigation settlement and a severance charge. A reconciliation of each of the Operating Measures to the most comparable GAAP measurement for the fiscal third quarter period and the nine month period is contained in the Company's unaudited consolidated statements of income attached to the Press Release. The Company considers disclosure of the Operating Measures to be meaningful information to an investor's understanding of the Company's operating performance and useful for comparison with prior period and forecasted net income and earnings per share. The Company believes that the Operating Measures improve and clarify an investor's understanding of the Company's financial and operational performance. Management of the Company uses these non-GAAP measures to analyze the Company's performance compared to forecasted and prior period results and for other internal purposes. The Press Release also contains disclosure regarding the Company's earnings before interest, taxes, depreciation and amortization ("EBITDA") and EBITDA adjusted to exclude a severance charge and litigation settlement items for the third fiscal quarter and first nine months of fiscal 2005 and 2006, non-GAAP financial measures. A reconciliation of EBITDA excluding severance charges and litigation settlement items to net income, the most directly comparable GAAP financial measure, is contained in the Company's unaudited consolidated statements of income attached to the Press Release. The Company considers EBITDA an important indicator of its operational strength and performance, including its ability to pay interest, service debt and fund capital expenditures. The Company believes that EBITDA adjusted to exclude severance charges and litigation settlement items provides investors with a useful measure of the Company's ongoing operating performance. Further, EBITDA adjusted to exclude litigation settlement items is one measure used in the calculation of certain ratios to determine the Company's compliance with its existing credit facility. The Company's presentation of adjusted EBITDA should not be construed as an inference that the Company's future results will be unaffected by items similar to those excluded from the calculation of adjusted EBITDA. EBITDA and adjusted EBITDA are not measurements of financial performance and liquidity under GAAP and should not be considered as alternatives to net income, income from operations or any performance measures derived in accordance with GAAP, or as alternatives to cash flows provided by operating, investing or financing activities as measures of liquidity. The non-GAAP financial measures used by the Company do not have standardized meanings prescribed by GAAP and may not be comparable to similar measures for other companies. The information in this current report on Form 8-K is being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing. Item 9.01. Financial Statements and Exhibits. - ---------- ---------------------------------- (c) Exhibits: 99.1 Press Release dated October 10, 2006 SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. October 10, 2006 CHATTEM, INC. By: /s/ Theodore K. Whitfield, Jr. ------------------------------------ Theodore K. Whitfield, Jr., Vice President and General Counsel EXHIBIT INDEX ------------- Exhibit No. Exhibit Description - ----------- ------------------- 99.1 Press Release dated October 10, 2006 EX-99.1 2 a5245129ex99_1.txt EXHIBIT 99.1 EXHIBIT 99.1 ------------ Chattem Reports Results for the Third Fiscal Quarter 2006 CHATTANOOGA, Tenn.--(BUSINESS WIRE)--October 10, 2006--Chattem, Inc. (NASDAQ: CHTT), a leading marketer and manufacturer of branded consumer products, today announced financial results for the third fiscal quarter and nine months ended August 31, 2006. THIRD QUARTER FINANCIAL RESULTS Total revenues for the third quarter of fiscal 2006 were $72.0 million, compared to total revenues of $68.2 million in the prior year quarter, representing a 6% increase. Total revenues increased 9% over the third 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(R) franchise, up 24%, led by increases in Gold Bond Lotion, up 57%, Gold Bond Powders, up 18% and Gold Bond Foot Care, up 15%; the Dexatrim(R) franchise, up 42%, reflecting strong sales of Dexatrim Max2O(TM); the BullFrog(R) franchise, up 9%, due to sales of BullFrog Mosquito Coast(TM); along with incremental sales growth from Icy Hot(R) Pro-Therapy(TM) and Selsun(R) Salon(TM). Net income in the third quarter of fiscal 2006 was $15.2 million, compared to $9.4 million in the prior year quarter, and earnings per share were $0.81, compared to $0.46 in the prior year quarter. Net income in the third quarter of fiscal 2006 included a net recovery related to the Dexatrim litigation settlement and SFAS 123R employee stock option expense. Net income for the third quarter of fiscal 2005 included legal expenses related to the Dexatrim litigation settlement and a severance charge. As adjusted to exclude these items, net income for the third quarter of fiscal 2006 was $8.9 million, compared to $11.3 million in the prior year quarter, and earnings per share were $0.47, compared to $0.55 in the prior year quarter.(1) NINE MONTH PERIOD FINANCIAL RESULTS For the first nine months of fiscal 2006, total revenues were $235.4 million, compared to total revenues of $215.4 million in the prior year period, representing a 9% increase. Total revenues increased 13% over the prior year period excluding sales of pHisoderm, which was divested in November 2005. Revenue growth for the first nine months of fiscal 2006 was led by the new product launches of Icy Hot Pro-Therapy and Selsun Salon and continued growth of the Gold Bond business. For the first nine months of fiscal 2006, the Selsun franchise increased 11% and the Gold Bond franchise increased 16%, as compared to the prior year period. Net income in the first nine months of fiscal 2006 was $40.2 million, compared to $33.6 million in the prior year period, and earnings per share were $2.07, compared to $1.64 in the prior year period. Net income in the first nine months of fiscal 2006 included a loss on early extinguishment of debt, net recoveries related to the Dexatrim litigation settlement and SFAS 123R employee stock option expense. Net income in the first nine months of fiscal 2005 included a loss on early extinguishment of debt, a net recovery related to the Dexatrim litigation settlement and a severance charge. As adjusted to exclude these items, net income in the first nine months of fiscal 2006 was $31.6 million, compared to $34.0 million in the prior year period, and earnings per share were $1.62, compared to $1.66 in the prior year period.(1) INCOME STATEMENT HIGHLIGHTS Operating Metrics -- Gross margin for the third quarter and first nine months of fiscal 2006 was lower compared to the prior year quarter and nine month period. The decline was largely attributable to the launch of Icy Hot Pro-Therapy, which has lower gross margins than our other products. -- Advertising and promotion expense increased for the third quarter and first nine months of fiscal 2006 compared to the prior year quarter and nine month period, due primarily to increased spending to support the Company's new product introductions. -- Selling, general and administrative expenses decreased for the third quarter and first nine months of fiscal 2006 compared to the prior year quarter and nine month period reflecting lower restricted stock and variable compensation expense, offset by share-based payment expense under SFAS 123R. Interest Expense Interest expense decreased for the third quarter and first nine month period of fiscal 2006 as compared to the same prior year periods as a result of the Company's retirement of the $75.0 million Floating Rate Senior Notes in the first quarter of fiscal 2006, offset in part by borrowings under our Amended Revolving Credit Facility. SHARE REPURCHASE AND CAPITAL RESOURCES On July 25, 2006, the Company successfully completed a consent solicitation from the holders of its $107.5 million 7% Senior Subordinated Notes due 2014 to an amendment to the indenture to increase the Company's capacity to make restricted payments by an additional $85.0 million, including payments for the repurchase of the Company's common stock, and adjust the fixed charge coverage ratio as defined in the indenture. In connection with the consent solicitation, the Company's Board of Directors authorized the repurchase of up to an additional $100.0 million of the Company's common stock under the terms of the Company's existing stock repurchase program. Under the program, the Company may, from time to time, purchase shares of its common stock based on a number of factors, including market conditions, the market price of the common stock, effect on earnings, available cash and other factors as the Company deems appropriate, subject to the limitations under the indenture, the Company's credit agreement and applicable regulatory requirements. From June 1, 2006 to October 5, 2006, the Company repurchased 572,863 shares of its common stock at an average cost of $31.42 per share, or $18.0 million in the aggregate. As of October 5, 2006 a total of $88.1 million remains available under the Company's board authorized stock repurchase program. Year to date, the Company has repurchased 1,171,663 shares of its common stock at an average cost of $33.57 per share, or $39.3 million in the aggregate. The Company's net debt (total debt less cash) as of August 31, 2006 was $134.1 million compared to $139.4 million as of August 31, 2005. The Company's leverage ratio (net debt/EBITDA(2) on a trailing 12 month basis) was 1.8x as of August 31, 2006 and 2005. DEXATRIM LITIGATION UPDATE Over the past two years, the Company has resolved all of the claims submitted in the Dexatrim PPA class action settlement. All claims in the settlement have been paid by the settlement trust that was funded by our insurance carriers and the manufacturer of Dexatrim products containing PPA. On July 14, 2006, the court granted a motion to dissolve the settlement trust. In accordance with the approved dissolution of the trust, the Company received a payment of $10.7 million from the trust on August 31, 2006. Receipt of this payment and the dissolution of the settlement trust concludes the Dexatrim PPA class action settlement. ACQUISITION OF BRANDS On October 6, 2006, the Company announced that it has entered into an agreement to acquire the U.S. rights to five leading consumer and over-the-counter ("OTC") brands from Johnson & Johnson and the consumer healthcare business of Pfizer Inc., including ACT(R), Unisom(R), Cortizone, Kaopectate(R) and Balmex(R). The Company agreed to pay $410 million in cash for the brands and assume certain obligations related to such brands. The transaction is subject to review and approval by the Federal Trade Commission and certain closing conditions, including the acquisition by Johnson & Johnson of the consumer healthcare business of Pfizer Inc., which is expected to close by the end of 2006. FISCAL 2006 AND 2007 GUIDANCE As previously announced, the Company expects total revenues for fiscal 2006 to be in the range of $295 to $310 million, and currently expects earnings per share in fiscal 2006 to be in the range of $1.90 to $2.20. In each case, these estimates exclude any litigation related items, debt extinguishment charges and the estimated $0.15 per share fiscal 2006 impact of adopting SFAS 123R, which requires the expensing of stock based compensation. The Company reiterates its confidence in the outlook for fiscal 2007, and currently expects that earnings per share in fiscal 2007 will be $2.50 or greater, excluding compensation expense under SFAS 123R and any litigation related items. These estimates exclude any financial impact associated with the Company's pending acquisition of the U.S. rights to five leading consumer and OTC brands from Johnson & Johnson and the consumer healthcare business of Pfizer Inc., as described above and as previously disclosed on October 6, 2006. NON-GAAP FINANCIAL MEASURES In addition to presenting financial results in accordance with generally accepted accounting principles, or GAAP, this earnings release also presents certain non-GAAP financial measures, including adjusted net income, adjusted earnings per share, EBITDA and adjusted EBITDA. The non-GAAP financial measures exclude certain non-cash charges, such as stock option expenses, and certain charges, such as loss on early extinguishment of debt, 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 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 2006 and 2007 Guidance section of this release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act 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 third quarter 2006 conference call. The live broadcast of the call will be available online at www.chattem.com and www.streetevents.com today, Tuesday, October 10, 2006 beginning at 9:30 a.m. ET. The online replay will follow shortly after the call and be available through October 24, 2006. Please note that the webcast requires Windows Media Player. For additional information please contact Catherine Baker, Investor Relations 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 and dietary supplements. The Company's products target niche market 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(R), Garlique(R), Pamprin(R) and BullFrog(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 third quarter and first nine months of fiscal 2006 and fiscal 2005, provided in the unaudited consolidated statements of income attached hereto. (2) See the reconciliation of EBITDA excluding litigation settlement items and executive severance charge to net income reported in accordance with GAAP for the third quarter and first nine months of fiscal 2006 and fiscal 2005, provided in the unaudited consolidated statements of income attached hereto. CHATTEM, INC. CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) (Unaudited) For the Three Months For the Nine Months Ended August 31, Ended August 31, -------------------- ------------------- 2006 2005 2006 2005 ---------- --------- --------- --------- REVENUES: Net sales $71,947 $68,185 $235,276 $215,305 Royalties 58 30 164 128 ---------- --------- --------- --------- Total revenues 72,005 68,215 235,440 215,433 COSTS AND EXPENSES: Cost of sales 22,238 18,575 73,312 59,951 Advertising and promotion 23,607 17,657 75,575 58,739 Selling, general and administrative 10,855 12,122 33,974 36,341 Executive severance charges - 2,269 - 2,269 Litigation settlement (10,800) 431 (19,305) (2,401) ---------- --------- --------- --------- Total costs and expenses 45,900 51,054 163,556 154,899 ---------- --------- --------- --------- INCOME FROM OPERATIONS 26,105 17,161 71,884 60,534 ---------- --------- --------- --------- OTHER INCOME (EXPENSE): Interest expense (3,018) (3,332) (8,318) (10,285) Investment and other income, net 188 274 616 676 Loss on early extinguishment of debt - - (2,805) (744) ---------- --------- --------- --------- Total other income (expense) (2,830) (3,058) (10,507) (10,353) ---------- --------- --------- --------- INCOME BEFORE INCOME TAXES 23,275 14,103 61,377 50,181 PROVISION FOR INCOME TAXES 8,046 4,654 21,175 16,560 ---------- --------- --------- --------- NET INCOME $15,229 $9,449 $40,202 $33,621 ========== ========= ========= ========= DILUTED SHARES OUTSTANDING 18,912 20,487 19,468 20,456 ========== ========= ========= ========= NET INCOME PER COMMON SHARE (DILUTED) $0.81 $0.46 $2.07 $1.64 ========== ========= ========= ========= - ---------------------------------------------------------------------- NET INCOME (EXCLUDING DEBT EXTINGUISHMENT, SFAS 123R EXPENSE, LITIGATION SETTLEMENT ITEMS AND EXECUTIVE SEVERANCE CHARGES) PER COMMON SHARE (DILUTED): Net income $15,229 $9,449 $40,202 $33,621 Add: Loss on early extinguishment of debt - - 2,805 744 SFAS 123R expense 1,130 - 3,322 - Litigation settlement items (10,800) 431 (19,305) (2,401) Executive severance charges - 2,269 - 2,269 Benefit from (provision for) income taxes 3,343 (891) 4,546 (202) ---------- --------- --------- --------- Net income (excluding debt extinguishment, SFAS 123R expense, litigation settlement items and executive severance charges) $8,902 $11,258 $31,570 $34,031 ========== ========= ========= ========= Net income (excluding debt extinguishment, SFAS 123R expense, litigation settlement items and executive severance charges) per common share (diluted) $0.47 $0.55 $1.62 $1.66 ========== ========= ========= ========= - ---------------------------------------------------------------------- EBITDA RECONCILIATION (EXCLUDING EXECUTIVE SEVERANCE CHARGES AND LITIGATION SETTLEMENT ITEMS): Net income $15,229 $9,449 $40,202 $33,621 Add: Provision for income taxes 8,046 4,654 21,175 16,560 Interest expense, net (includes loss on early extinguishment of debt) 2,830 3,058 10,507 10,353 Depreciation and amortization less amounts included in interest 2,411 1,094 7,259 3,820 ---------- --------- --------- --------- EBITDA $28,516 $18,255 $79,143 $64,354 Executive severance charges $- $2,269 $- $2,269 Litigation settlement items (10,800) 431 (19,305) (2,401) ---------- --------- --------- --------- EBITDA (excluding executive severance charges and litigation settlement items) $17,716 $20,955 $59,838 $64,222 ---------- --------- --------- --------- Depreciation & amortization $2,578 $1,264 $7,661 $4,371 Capital expenditures $1,466 $1,441 $3,557 $2,639 - ---------------------------------------------------------------------- Statements in this press release which are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks, uncertainties and assumptions that could cause actual outcomes and results to differ materially from those expressed or projected. CHATTEM, INC. SELECTED SUMMARY FINANCIAL DATA (In thousands) (Unaudited) SELECTED INCOME STATEMENT DATA: The following table sets forth, for the periods indicated, certain items from our Consolidated Statements of Income expressed as a percentage of total revenues: For the Three Months For the Nine Months Ended Ended --------------------- --------------------- August 31, August 31, August 31, August 31, 2006 2005 2006 2005 ---------- ----------- ---------- ---------- TOTAL REVENUES 100% 100% 100% 100% --------- ---------- --------- ---------- COSTS AND EXPENSES: Cost of sales 30.9 27.2 31.2 27.8 Advertising and promotion 32.8 25.9 32.1 27.3 Selling, general and administrative 15.1 17.8 14.4 16.9 Executive severance charges - 3.3 - 1.0 Litigation settlement (15.0) 0.6 (8.2) (1.1) --------- ---------- --------- ---------- Total costs and expenses 63.8 74.8 69.5 71.9 --------- ---------- --------- ---------- INCOME FROM OPERATIONS 36.2 25.2 30.5 28.1 --------- ---------- --------- ---------- OTHER INCOME (EXPENSE): Interest expense (4.2) (4.9) (3.5) (4.8) Investment and other income, net 0.3 0.4 0.3 0.3 Loss on early extinguishment of debt - - (1.2) (0.3) --------- ---------- --------- ---------- Total other income (expense) (3.9) (4.5) (4.4) (4.8) --------- ---------- --------- ---------- INCOME BEFORE INCOME TAXES 32.3 20.7 26.1 23.3 PROVISION FOR INCOME TAXES 11.2 6.8 9.0 7.7 --------- ---------- --------- ---------- NET INCOME 21.1% 13.9% 17.1% 15.6% ========= ========== ========= ========== - ---------------------------------------------------------------------- SELECTED BALANCE SHEET August 31, August 31, DATA: 2006 2005 ---------- ----------- (as adjusted)(1) Cash and cash equivalents $26,903 $43,138 Accounts receivable, net $33,976 $33,576 Inventories $28,903 $24,251 Accounts payable and accrued liabilities $25,196 $29,159 Senior bank debt $53,500 $- Subordinated debt $107,500 $182,500 --------- ---------- Total debt $161,000 $182,500 ========= ========== - ---------------------------------------------------------------------- SELECTED CASH FLOW DATA: For the Three Months For the Nine Months Ended Ended --------------------- --------------------- August 31, August 31, August 31, August 31, 2006 2005 2006 2005 ---------- ----------- ---------- ---------- Shares repurchased 573 308 1,172 547 Cash paid for share repurchases $18,000 $13,068 $39,332 $21,664 - ---------------------------------------------------------------------- SUMMARY OF NET SALES: Net sales by domestic product category and total international for the third quarter of fiscal 2006, as compared to the corresponding period in fiscal 2005, were as follows: Increase (Decrease) --------------------- 2006 2005 Amount Percentage --------- ---------- --------- ---------- Topical pain care products $21,767 $20,965 $802 4% Medicated skin care products(a) 17,340 15,775 1,565 10% Dietary supplements 9,934 8,521 1,413 17% Medicated dandruff shampoos and conditioner 7,798 7,653 145 2% Other OTC and toiletry products 9,472 8,873 599 7% --------- ---------- --------- Total domestic 66,311 61,787 4,524 7% International revenues (including royalties) 5,694 6,428 (734) (11%) --------- ---------- --------- Total revenues $72,005 $68,215 $3,790 6% ========= ========== ========= (a) Includes pHisoderm sales Net sales by domestic product category and total international for the first nine months of fiscal 2006, as compared to the corresponding period in fiscal 2005, were as follows: Increase (Decrease) --------------------- 2006 2005 Amount Percentage --------- ---------- --------- ---------- Topical pain care products $82,605 $67,415 $15,190 23% Medicated skin care products(a) 49,620 49,232 388 1% Dietary supplements 27,696 27,461 235 1% Medicated dandruff shampoos and conditioner 28,075 25,341 2,734 11% Other OTC and toiletry products 28,911 26,590 2,321 9% --------- ---------- --------- Total domestic 216,907 196,039 20,868 11% International revenues (including royalties) 18,533 19,394 (861) (4%) --------- ---------- --------- Total revenues $235,440 $215,433 $20,007 9% ========= ========== ========= (a) Includes pHisoderm sales - ---------------------------------------------------------------------- (1) The 2005 financial statements have been adjusted to effect the retroactive change in accounting principle from the LIFO to the FIFO method of inventory valuation. CONTACT: Chattem, Inc., Chattanooga Catherine Baker, 423-822-3209 Director, Investor Relations -----END PRIVACY-ENHANCED MESSAGE-----