Chattem is beginning to reap benefits from several brand extensions announced last year.

Gold Bond Ultimate Healing Lotion, Dexatrim All-in-One bar and Icy Hot Sleeve were cited by CEO Zan Guerry in a Jan. 23 earnings call as products already demonstrating high potential for 2004.

Guerry singled out Gold Bond Ultimate as "probably one of the two or three best products we've ever produced." A successful launch led Chattem to add an additional month of media promotion, including a "Northeast or cold weather" FSI scheduled for March.

Dexatrim All-in-One Bar moved "several thousand" units without advertising in its first week in the New York area, according to Guerry. Chattem will further support the product with a media campaign "in excess of $20 mil." beginning in March.

Like its Icy Hot Back Patch, Chattem's Icy Hot Sleeve will be supported by an advertising blitz featuring basketball star Shaquille O'Neal (¹ 'The Tan Sheet' Dec. 22, 2003, In Brief).

"I think this [Sleeve] has the potential to be a $10 mil. to $15 mil. type of business, and the fact that we'll be the only guys out there with it, and it will be well-supported with advertising promotion, gives us cause for excitement," said President & Chief Operating Officer Alec Taylor Jan. 9.

Chattem said it will begin shipping and advertising the product earlier than expected due to retailer demand.

Sales for Chattem's NewPhase , Selsun Blue , Garlique Gold Bond and Icy Hot brands in fiscal 2003 (ended Nov. 30) increased 113%, 21%, 18% 17% and 4% respectively, leading the firm to a 5% advance in total revenue to $233.7 mil. Chattem projects revenue in the $243 mil. to $250 mil. range in 2004.

On the legal front, the firm may have reason to be upbeat after a ruling in favor of Novartis' Tavist D in California court involving product liability claims and phenylpropanolamine (see item In Brief). Chattem hopes to settle its own PPA-related litigation by mid-2004 (² Also see "Chattem Hopes To Settle All PPA Suits In The Next Six Months" - Pink Sheet, 22 December, 2003., p. 11).

Most of the firm's 2003 litigation expenses came in the fourth quarter, as Chattem settled PPA suits that will lead to a $20 mil. to $25 mil. pre-tax charge in the first half of 2004.

Chattem Optimistic On 2004 Line Extensions, Litigation Settlement

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