<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED FEBRUARY 28, 1997
COMMISSION FILE NUMBER 0-5905
CHATTEM, INC.
A TENNESSEE CORPORATION
I.R.S. EMPLOYER IDENTIFICATION NO. 62-0156300
1715 WEST 38TH STREET
CHATTANOOGA, TENNESSEE 37409
TELEPHONE: 423-821-4571
REGISTRANT HAS FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 DURING THE PRECEDING 12 MONTHS, AND HAS BEEN
SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS.
AS OF APRIL 11, 1997, 8,613,641 SHARES OF THE COMPANY'S COMMON STOCK, WITHOUT
PAR VALUE, WERE OUTSTANDING.
Page 1
<PAGE>
CHATTEM, INC.
INDEX
PAGE NO.
--------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of February 28, 1997 and
November 30, 1996 ................................................ 3
Condensed Consolidated Statements of Operations for the Three
Months Ended February 28, 1997 and February 29, 1996 ............. 5
Consolidated Statements of Cash Flows for the Three Months Ended
February 28, 1997 and February 29, 1996 .......................... 6
Notes to Condensed Consolidated Financial Statements ............... 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations .......................................... 9
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K ............................ 14
SIGNATURES ............................................................. 15
EXHIBIT 11 - Statement Regarding Computation of Per Share Earnings......
EXHIBIT 27 - Financial Data Schedule ...................................
2
<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CHATTEM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FEBRUARY 28, NOVEMBER 30,
ASSETS 1997 1996
- ------ ---------- ----------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents ................................... $ 9,925 $ 9,254
Accounts receivable, net .................................... 22,879 20,276
Refundable and deferred income taxes ........................ 3,019 5,405
Inventories ................................................. 11,724 10,295
Prepaid expenses and other current assets ................... 615 912
---------- ----------
Total current assets ...................................... 48,162 46,142
---------- ----------
PROPERTY, PLANT AND EQUIPMENT, NET ............................ 9,643 9,774
---------- ----------
OTHER NONCURRENT ASSETS:
Investment in Elcat, Inc. ................................... 6,148 5,984
Patents, trademarks and other purchased product rights, net . 75,399 76,024
Debt issuance costs, net .................................... 3,713 3,819
Other ....................................................... 6,135 10,440
---------- ----------
Total other noncurrent assets ............................. 91,395 96,267
---------- ----------
TOTAL ASSETS ............................................ $ 149,200 $ 152,183
---------- ----------
---------- ----------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
CHATTEM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FEBRUARY 28, NOVEMBER 30,
LIABILITIES AND SHAREHOLDERS' DEFICIT 1997 1996
- ------------------------------------- ------------ ------------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Current maturities of long-term debt . . . . . . . . . . $ 3,475 $ 3,906
Accounts payable . . . . . . . . . . . . . . . . . . . . 4,244 6,602
Payable to bank. . . . . . . . . . . . . . . . . . . . . 3,835 1,710
Accrued liabilities. . . . . . . . . . . . . . . . . . . 12,312 14,131
--------- ---------
Total current liabilities. . . . . . . . . . . . . . . 23,866 26,349
--------- ---------
LONG-TERM DEBT, less current maturities. . . . . . . . . . 126,553 127,438
--------- ---------
DEFERRED INCOME TAXES. . . . . . . . . . . . . . . . . . . 2,917 2,917
--------- ---------
OTHER NONCURRENT LIABILITIES . . . . . . . . . . . . . . . 2,940 2,659
--------- ---------
SHAREHOLDERS' DEFICIT:
Preferred shares, without par value, authorized
1,000, none issued . . . . . . . . . . . . . . . . . .
Common shares, without par value, authorized 20,000,
issued 8,613 at February 28, 1997 and 8,592 at
November 30, 1996. . . . . . . . . . . . . . . . . . . . 1,857 1,843
Paid-in surplus. . . . . . . . . . . . . . . . . . . . . 58,617 58,561
Accumulated deficit. . . . . . . . . . . . . . . . . . . (65,978) (66,114)
--------- ---------
(5,504) (5,710)
Minimum pension liability adjustment . . . . . . . . . . (112) (112)
Foreign currency translation adjustment. . . . . . . . . (1,460) (1,358)
--------- ---------
Total shareholders' deficit. . . . . . . . . . . . . (7,076) (7,180)
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS'
DEFICIT. . . . . . . . . . . . . . . . . . . . . . $ 149,200 $ 152,183
--------- ---------
--------- ---------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
CHATTEM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited and in thousands, except per share amounts)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
--------------------------
FEBRUARY 28, FEBRUARY 29,
1997 1996
----------- -----------
<S> <C> <C>
NET SALES .................................................. $ 27,946 $ 18,697
--------- ---------
COSTS AND EXPENSES:
Cost of sales ............................................ 8,394 5,749
Advertising and promotion ................................ 11,267 7,001
Selling, general and administrative ...................... 4,657 4,223
--------- ---------
Total costs and expenses ............................... 24,318 16,973
--------- ---------
INCOME FROM OPERATIONS ..................................... 3,628 1,724
--------- ---------
OTHER INCOME (EXPENSE):
Interest expense ......................................... (3,798) (2,618)
Investment income ........................................ 241 655
Other, net ............................................... 78 (2)
--------- ---------
Total other income (expense) ........................... (3,479) (1,965)
--------- ---------
INCOME (LOSS) BEFORE INCOME TAXES .......................... 149 (241)
PROVISION FOR (BENEFIT FROM) INCOME TAXES .................. 13 (203)
--------- ---------
NET INCOME (LOSS) .......................................... $ 136 $ (38)
--------- ---------
--------- ---------
WEIGHTED AVERAGE NUMBER OF COMMON
AND COMMON EQUIVALENT SHARES
OUTSTANDING ............................................... 8,807 7,292
--------- ---------
NET INCOME (LOSS) PER COMMON SHARE ......................... $ .02 $ (.01)
--------- ---------
--------- ---------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
CHATTEM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited and in thousands)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
--------------------------
FEBRUARY 28, FEBRUARY 29,
1997 1996
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) ......................................... 136 $ (38)
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Depreciation and amortization ........................... 1,467 999
Dividend receivable from Elcat, Inc. .................... (164) (164)
Other, net .............................................. 282 (484)
Changes in operating assets and liabilities:
Increase in accounts receivable ........................ (2,603) (648)
Increase in inventories ................................ (1,429) (1,577)
(Increase) decrease in prepaid expenses and other
current assets ....................................... 1,285 (106)
Decrease in refundable and deferred income
taxes ................................................ 2,386 14
Decrease in accounts payable ........................... (2,358) (3,041)
Decrease in other accrued liabilities .................. (1,819) (3,984)
---------- ----------
Net cash used in operating activities ................. (2,817) (9,029)
---------- ----------
INVESTING ACTIVITIES:
Purchase of property, plant and equipment ............... (203) (276)
Increase in other assets, net........................... (147) (32)
---------- ----------
Net cash used in investing activities ................ (350) (308)
---------- ----------
FINANCING ACTIVITIES:
Repayment of long-term debt ............................. (1,363) (400)
Proceeds from long-term debt ............................ -- 9,000
Change in payable to bank................................ 2,125 927
Other, net .............................................. (27) --
---------- ----------
Net cash provided by financing activities ............ 735 9,527
---------- ----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS ...................................... (115) (80)
---------- ----------
CASH AND CASH EQUIVALENTS:
Increase (decrease) for the period ...................... (2,547) 110
At beginning of period .................................. 16,040 3,636
--------- ---------
At end of period ........................................ $ 13,493 $ 3,746
--------- ---------
--------- ---------
PAYMENTS FOR:
Interest ................................................ $ 5,287 $ 4,600
Taxes ................................................... $ 145 $ 727
</TABLE>
See accompanying notes to condensed consolidated financial statements.
6
<PAGE>
CHATTEM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note: All monetary amounts are expressed in thousands of dollars.
1. The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial information and the instructions to Form 10-Q and
Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. These consolidated financial
statements should be read in conjunction with the audited consolidated
financial statements and related notes thereto included in the Company's
annual report to Shareholders for the year ended November 30, 1996. The
1996 annual report has previously been filed with the Securities and
Exchange Commission as an exhibit to the Company's Form 10-K. The
accompanying unaudited condensed consolidated financial statements, in the
opinion of management, include all adjustments necessary for a fair
presentation. All such adjustments are of a normal recurring nature.
2. The Company incurs significant expenditures on television, radio and print
advertising to support its nationally branded over-the-counter
pharmaceuticals and functional toiletries and cosmetics. Customers
purchase products from the Company with the understanding that the brands
will be supported by the Company's extensive media advertising. This
advertising supports the retailers' sales effort and maintains the
important brand franchise with the consuming public. Accordingly, the
Company considers its advertising program to be clearly implicit in its
sales arrangements with its customers. Therefore, the Company believes it
is appropriate to allocate a percentage of the necessary supporting
advertising expenses to each dollar of sales by charging a percentage of
sales on an interim basis based upon anticipated annual sales and
advertising expenditures (in accordance with APB Opinion No. 28) and
adjusting that accrual to the actual expenses incurred at the end of the
year.
3. The results of operations for the three months ended February 28, 1997 and
February 29, 1996 are not necessarily indicative of the results to be
expected for the respective full years. Seasonality is a factor in the
Company's overall business, with the first quarter sales and income
trailing the other fiscal quarters.
4. Certain amounts in the prior years' financial information have been
reclassified to conform to the current period presentation.
5. For purposes of reporting cash flows, the Company considers all short-term
deposits and investments with original maturities of three months or less
to be cash equivalents, including cash and cash equivalents available
exclusively for the repayment of long-term debt.
6. Inventories consisted of the following at February 28, 1997 and November
30, 1996:
February 28, November 30,
1997 1996
----------- -----------
Raw materials ..................... $ 5,711 $ 5,365
Finished goods and work in process 8,567 7,484
Excess of current cost over LIFO
values ............................ (2,554) (2,554)
---------- ----------
Total inventories ................. $ 11,724 $ 10,295
---------- ----------
---------- ----------
7
<PAGE>
7. Accrued liabilities consisted of the following at February 28, 1997 and
November 30, 1996:
February 28, November 30,
1997 1996
----------- -----------
Income and other taxes ............ $ 227 $ --
Salaries, wages and commissions ... 311 1,287
Advertising and promotion ......... 4,293 2,827
Interest .......................... 2,283 3,996
Accrued pension benefits .......... 2,076 2,076
Other ............................. 3,122 3,945
---------- ----------
Total accrued liabilities ......... $ 12,312 $ 14,131
---------- ----------
---------- ----------
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Note: All monetary amounts are expressed in thousands of dollars unless
contrarily evident.
GENERAL
For the three months ended February 28, 1997, the Company experienced a
$9,249, or 49.5%, increase in sales to $27,946 from $18,697 in the first
quarter of fiscal 1996. Operating income during the period likewise increased
$1,904, or 110.4%, to $3,628 from $1,724. Net income of $136, or $.02 per
share, was recorded during the period compared to a net loss of $38, or $.01
per share, during the same period last year. Seasonality is a factor in the
Company's overall business with the first quarter sales and income
traditionally trailing the other fiscal quarters.
The GOLD BOND and HERPECIN-L product lines, which were acquired in the second
and third quarters of fiscal 1996, respectively, were largely responsible for
the improvement in the Company's operating results for the three months
ended February 28, 1997.
The Company will continue to seek increases in sales through a combination of
acquisitions and internal growth while maintaining high operating income. As
previously high growth brands mature, sales increases will become even more
dependent on acquisitions and the development of successful line extensions.
At the end of the first quarter of 1997, the Company began shipping a
number of new line extensions including GOLD BOND Medicated Foot Powder,
GOLD BOND CORNSTARCH PLUS Medicated Baby Powder and ICY HOT Arthritis Therapy
Gel. In addition to the line extensions, CORNSILK was relaunched with
completely new packaging. Strategically, the Company continually evaluates
its products and businesses as part of its sales growth strategy and, in
instances where the Company's objectives are not realized, will dispose of
these brands or businesses and redeploy the assets to products or businesses
with greater growth potential or to reduce indebtedness.
9
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated certain items from the
Company's Condensed Consolidated Statements of Operations expressed as a
percentage of net sales:
Three Months Ended
February 28, February 29,
------------ -----------
1997 1996
---- ----
NET SALES .............................. 100.0% 100.0%
------ ------
COSTS AND EXPENSES:
Cost of sales ......................... 30.0 30.8
Advertising and promotion ............. 40.3 37.4
Selling, general and administrative ... 16.7 22.6
----- -----
Total costs and expenses ............. 87.0 90.8
----- -----
INCOME FROM OPERATIONS ................. 13.0 9.2
----- -----
OTHER INCOME (EXPENSE):
Interest expense .................... (13.6) (14.0)
Investment income, net ................ .8 3.5
Other, net ............................ .3 --
----- -----
Total other income (expense) ..... (12.5) (10.5)
----- -----
INCOME (LOSS) BEFORE INCOME TAXES ...... .5 (1.3)
BENEFIT FROM INCOME TAXES .............. -- (1.1)
----- -----
NET INCOME (LOSS) ...................... 0.5% (0.2)%
------ -------
------ -------
10
<PAGE>
COMPARISON OF THREE MONTHS ENDED FEBRUARY 28, 1997 AND FEBRUARY 29, 1996
Net sales for the three months ended February 28, 1997 increased $9,249, or
49.5%, to $27,946 from $18,697 for the same period last year. Domestic
consumer product sales increased $9,076, or 54.9%, to $25,614 from $16,538
for last year's comparative period. Net sales of international consumer
products increased $173, or 8.0%, from $2,159 in the 1996 period to $2,332 in
the current period.
The increase in domestic consumer product sales in the 1996 period was largely
associated with the GOLD BOND and HERPECIN-L product lines, which were
acquired in the second and third quarters, respectively, of fiscal 1996, and
from PHISODERM Antibacterial Hand Cleanser, introduced in mid 1996. Sales
increases were also registered for the FLEXALL, ICY HOT, PREMSYN, MUDD,
SUN-IN, CORNSILK and BENZODENT brands, while decreases were recognized for
the BULLFROG, NORWICH Aspirin, ULTRASWIM and PHISODERM facial cleanser
products. All sales variances were principally due to volume changes.
The increase in sales of the existing products at the beginning of fiscal
1996 was largely the result of repackaging (MUDD), new product introductions
(FLEXALL Ultra Plus) and increased marketing support for all of these lines.
Completely repackaged CORNSILK was shipped in the first quarter of 1997 to
replace then existing inventory of the trade. As a result, an increase in
sales was also recognized for this line in the 1997 period. The decline in
sales of the brands listed above primarily reflects the maturation of these
products and increased competition in their respective product categories.
International consumer product sales for the first quarter of 1997 increased
$303, or 55.7%, for the Canadian operation but declined by $115, or 8.3%, for
the United Kingdom business. The increase in Canadian sales is largely
associated with the GOLD BOND product line although sales increases were
recorded for the PAMPRIN, FLEXALL, SUN-IN and PHISODERM facial cleanser
brands. Sales declines were experienced for all of the United Kingdom brands
except for the MUDD product line. These declines are largely the result of
reduced advertising and promotion expenditures. U.S. export sales decreased
$15, or 6.5%, for the 1997 quarter as compared to the same period in fiscal
1996. All sales variances were primarily due to volume changes.
Cost of goods sold as a percentage of net sales improved to 30.0% from 30.8%
in the 1996 period. The decline was primarily the result of increased sales
of higher gross margin product lines in the current period.
Advertising and promotion expenses increased $4,266, or 60.9%, in the 1997
period and were 40.3% of net sales compared to 37.4% in the corresponding
1996 period. All brands recorded increased planned expenditures in the 1997
period, except for PHISODERM facial cleanser and BENZODENT. Substantial
increases were noted for the FLEXALL, ICY HOT, PREMSYN, SUN-IN, MUDD and
CORNSILK product lines. GOLD BOND and HERPECIN-L also contributed to the
increase over the prior year period.
The increase of $434, or 10.3%, in selling, general and administrative
expenses in the 1997 period was largely associated with increased direct
selling expenses resulting from increased sales. General and administrative
expenses declined slightly from the 1996 period. The selling, general and
administrative expenses were 16.7% of net sales in the current period as
compared to 22.6% in the same period of last fiscal year.
11
<PAGE>
Interest expenses increased $1,180, or 45.1%, in the 1997 period, reflecting
primarily the additional debt incurred for the GOLD BOND and HERPECIN-L
product acquisitions in fiscal 1996.
Investment income decreased to $241 in the 1997 period largely due to the
absence in 1997 of an investment gain recognized in the 1996 period.
The increase of $174 in net income in 1997 is largely the result of increased
sales offset largely by increased interest charges.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically financed its operations and acquisitions with a
combination of internally generated funds and borrowings. The Company's
principal uses of cash are for operating expenses, acquisitions, working
capital, capital expenditures and long-term debt servicing.
Cash used in operations was $2,817 for the first quarter of fiscal 1997
compared to $9,029 for the comparable prior year period. The decrease in
cash flows used in operations was primarily a result of changes in accounts
receivable, refundable and deferred income taxes, prepaid expenses and other
current assets, accounts payable and accrued liabilities. These changes were
due primarily to the acquisitions of GOLD BOND and HERPECIN-L.
Investing activities used cash of $350 in the first quarter of fiscal 1997
compared to $308 for the comparable prior year period primarily due to lower
capital expenditures and increases in other assets.
Financing activities provided cash of $735 and $9,527 in the first quarter
of fiscal 1997 and 1996, respectively. The decrease in cash provided was
primarily the borrowing of $9,000 in the fiscal 1996 period.
The following table presents working capital data at February 28, 1997 and
November 30, 1996 or for the respective years then ended:
Item 1997 1996
------------ --------- ---------
Working capital (current assets less current
liabilities) .................................. $ 24,296 $ 19,793
Current ratio (current assets divided by
current liabilities) .......................... 2.02 1.75
Quick ratio (cash and cash equivalents and
accounts receivable divided by current
liabilities) .................................. 1.37 1.12
Average accounts receivable turnover ........... 6.46 6.51
Average inventory turnover ..................... 3.44 3.70
Working capital as a percentage of total
assets ........................................ 16.28% 13.01%
The improvement in the current and quick ratios at February 28, 1997 as compared
to November 30, 1996 reflects primarily the increase in accounts receivable
and the reduction of accounts payable and accrued liabilities.
12
<PAGE>
Total loans outstanding were $130,028 at February 28, 1997 compared to
$131,344 at November 30, 1996, a decrease of $1,316 during the first quarter
of 1997. The revolving line of credit is available to the Company up to
$24,000 or such lesser amount as is determined to be available under the
terms of the Company's bank credit agreement. The availability of
credit under the revolvers is determined based on the Company's cash,
accounts receivable and inventories. The amount of cash and cash equivalents
on deposit in excess of the calculated availability is included as a current
asset in the accompanying consolidated balance sheet as of February 28, 1997
and is available for general operating purposes. The amount of cash and cash
equivalents on deposit up to the calculated availability is included in other
noncurrent assets in the accompanying consolidated balance sheet as of
February 28, 1997 and is available exclusively for the repayment of long-term
bank debt. As of February 28, 1997, the Company had total cash and cash
equivalents of $13,493. The Company had $8,455 invested in highly liquid
short-term investments as of February 28, 1997 and has no further availability
under its credit facility.
Management of the Company believes that cash flows generated by operations,
along with funds available from its short-term, highly liquid investments, will
be sufficient to fund the Company's current commitments and proposed operations.
FOREIGN OPERATIONS
The Company's primary foreign operations are conducted through its Canadian and
U.K. subsidiaries. The functional currencies of these subsidiaries are Canadian
dollars and British pounds, respectively. Fluctuations in exchange rates can
impact operating results, including total revenues and expenses, when
translations of the subsidiary financial statements are made in accordance with
SFAS No. 52, "Foreign Currency Translation." For the three months ended
February 28, 1997 and February 29, 1996, these subsidiaries accounted for 8% and
10% of total revenues, respectively, and 5% and 8% of total assets,
respectively. It has not been the Company's practice to hedge its assets and
liabilities in the U.K. and Canada or its intercompany transactions due to the
inherent risks associated with foreign currency hedging transactions and the
timing of payment between the Company and its two foreign subsidiaries.
Historically, gains or losses from foreign currency transactions have not had a
material impact on the Company's operating results. Losses of $10 and $24 for
the three months ended February 28, 1997 and February 29, 1996, respectively,
resulted from foreign currency transactions.
FORWARD LOOKING STATEMENTS
This Management's Discussion and Analysis of Financial Condition and Results
of Operations contain forward looking statements that are based on
management's current beliefs and assumptions about expectations, estimates,
strategies and projections for the Company. These statements are not
guarantees of future performance and involve risks, uncertainties and
assumptions that are difficult to predict. Therefore, actual outcomes and
results may differ materially from what is expressed or forecasted in such
forward looking statements. The Company undertakes no obligation to update
publicly any forward looking statements whether as a result of new
information, future events or otherwise.
The risks, uncertainties and assumptions regarding forward looking statements
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 or line extensions; the impact of
competitive products, pricing and advertising; constraints 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 the indenture; and other risks described in the Company's
Securities and Exchange Commission filings.
13
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
(1) Statement regarding computation of per share earnings (Exhibit
11).
(2) Financial data schedule (Exhibit 27).
(b) No reports on Form 8-K were filed with the Securities and Exchange
Commission during the three months ended February 28, 1997.
14
<PAGE>
CHATTEM, INC.
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 thereunto duly authorized.
CHATTEM, INC.
(Registrant)
Dated: April 14, 1997 \s\ Robert E. Bosworth
---------------- ------------------------------
Robert E. Bosworth,
Executive Vice President
and Chief Financial Officer
(principal financial officer)
15
<PAGE>
CHATTEM, INC.
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 thereunto duly authorized.
CHATTEM, INC.
(Registrant)
Dated: April 14, 1997
------------------------------
Robert E. Bosworth,
Executive Vice President
and Chief Financial Officer
(principal financial officer)
16
<PAGE>
EXHIBIT 11
CHATTEM, INC. AND SUBSIDIARIES
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
FOR THE THREE MONTHS ENDED FEBRUARY 28, 1997 AND FEBRUARY 29, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
FOR THE THREE MONTHS ENDED
FEBRUARY 28, FEBRUARY 29,
1997 1996
--------- ---------
NET INCOME (LOSS) ............................ $ 136 $ (38)
--------- ---------
WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING:
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING................................. 8,603 7,292
SHARES ISSUED UPON ASSUMED EXERCISE OF
OUTSTANDING STOCK OPTIONS AND STOCK
WARRANTS.................................... 204 --
--------- ---------
WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING............... 8,807 7,292
--------- ---------
--------- ---------
NET INCOME (LOSS) PER COMMON SHARE ........... $ .02 $ (.01)
--------- ---------
--------- ---------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Chattem,
Inc.'s unaudited financial statements and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-START> DEC-01-1996
<PERIOD-END> FEB-28-1997
<CASH> 9,925
<SECURITIES> 0
<RECEIVABLES> 23,279
<ALLOWANCES> 400
<INVENTORY> 11,724
<CURRENT-ASSETS> 48,162
<PP&E> 26,443
<DEPRECIATION> 16,800
<TOTAL-ASSETS> 149,200
<CURRENT-LIABILITIES> 23,866
<BONDS> 126,553
0
0
<COMMON> 1,857
<OTHER-SE> (8,933)
<TOTAL-LIABILITY-AND-EQUITY> 149,200
<SALES> 27,946
<TOTAL-REVENUES> 27,946
<CGS> 8,394
<TOTAL-COSTS> 24,318
<OTHER-EXPENSES> 0
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</TABLE>
