CHATTEM BRAND PROMOTIONS WILL CONTINUE "AT OR ABOVE" PLANNED LEVELS

CHATTEM BRAND PROMOTIONS WILL CONTINUE "AT OR ABOVE" PLANNED LEVELS despite an unexpected slowdown in sales, the Chattanooga, Tenn. company said Sept. 16. "This marketing support is particularly important in a period in which two major line extensions, Maximum Strength Flex-All 454 and Nighttime Pamprin, are being launched," Chattem said. Nighttime Pamprin hot liquid drink powders debuted in September ("The Tan Sheet" June 28, p. 3); TV advertising for the Maximum Strength Flex-All 454 will begin in October ("The Tan Sheet" March 22, p. 10). Fiscal 1993 corporate sales "are now expected to rise less than 5%, reflecting the softness of the first nine months of the year, with an increase in Chattem Consumer Product sales being offset to some degree by sales reductions in Chattem Chemicals and the international consumer products operation," Chattem announced. The company attributed its performance to "temporary and unusual factors." Third quarter sales for the three months ended Aug. 31 fell 7.9% to $ 26.6 mil. Through nine months, sales were flat at $ 76.8 mil. Net income dropped 47% to $ 1.3 mil. in the third quarter and dropped 11% to $ 5.3 mil. for the nine months. Although corporate sales growth slowed, Chattem said that "gains were realized in certain key brands" in the U.S., including the Bullfrog sunscreen line and the Icy Hot and Flex-All 454 topical analgesic lines. Overall, domestic consumer product sales were ahead about 2% to $ 57 mil. for the nine month period; third quarter sales fell 4% to $ 20 mil. However, the company reported "shortfalls" in the sales of its Premsyn PMS, Pamprin and Norwich lines. "In reference to each of these brands, the decline in factory shipments did not signify underlying weakness of the products, as retail movement as measured by A. C. Nielsen actually increased during the period," the company explained. International sales of Chattem's Consumer Products brands dipped, but showed "an improvement in profitability." If the figures were "based on constant exchange rates, both sales and profitability would have improved," Chattem said. The company also noted "the emergence of a good general export business to Central and South America." For the quarter, international sales totalled $ 3 mil.; sales for the nine months were $ 7 mil. Chattem attributed its slowed sales growth to the "loss of an important customer of Chattem Chemicals, adverse foreign exchange rate fluctuations and the fact that factory shipments of certain consumer products trailed retail movement as retailers adjusted inventory levels." Operating earnings through nine months rose 4% to $ 10.6 mil., Chattem reported. The company suggested that operating income is "the most relevant measure of earnings performance given the leverage recapitalization consummated in June 1993" in which Chattem issued a special, one-time dividend to shareholders funded, in part, with bank financing ("The Tan Sheet" May 24, p. 17). Chattem predicted that operating income for fiscal 1993 will grow "in the range of 5% to 10% over fiscal 1992." Natural Alternatives International's fiscal 1993 sales advanced 36% to $ 19.4 mil., the San Marcos, Calif. supplement manufacturer announced Sept. 9. Earnings for the 12-month period ended June 30, 1993 rose 28% to $ 965,543 from $ 753,837 in fiscal 1992, Natural Alternatives reported. Fourth quarter sales jumped 50% to $ 6 mil., compared with $ 4 mil. in the same period in 1992. Earnings in the fourth quarter reached $ 242,240, up 116% year-to-year, Natural Alternatives said. Founded in 1980, Natural Alternatives characterizes itself as "a market-oriented company that formulates and encapsulates vitamins, minerals and micro-nutrients on a contractual basis for large institutional clients while accelerating the expansion of its proprietary product lines." Chart omitted.