(RTTNews) - Over-the-counter healthcare products and dietary supplements maker Chattem, Inc. (CHTT: News ) reported Tuesday an increase in third-quarter profit, helped chiefly by a 3.5% growth in domestic revenues and the absence of a hefty litigation settlement that dented the year-ago results. The company also maintained its fiscal 2009 adjusted earnings outlook that surpassed consensus projection.

For the third quarter, net income surged to $23.43 million or $1.22 per share from $13.97 million or $0.73 per share in the previous year.

The results of the latest quarter included loss on early extinguishment of debt of $405 thousand. The prior-year results included a litigation settlement or $11.19 million related to claims alleging injury as a result of ingestion of Dexatrim products in 1998 through 2003. Loss on early extinguishment of debt and employee stock option expenses under SFAS 123R rose to $2.12 million from $1.70 million.

Excluding items, net income increased to $25.04 million or $1.31 a share from $22.28 million or $1.17 a share in the year-ago period.

On average, 11 analysts polled by Thomson Reuters expected the company to report earnings of $1.21 per share in the third quarter. Analysts' estimates typically exclude special items.

Revenues for the quarter grew 2.9% to $115.17 million from $111.93 million. Seven analysts were expecting revenue of $116.70 million in the third quarter.
Chattem's domestic business, which accounts for 95% of the total revenues, increased 3.5% to $108.59 million from $104.96 million. The increase in domestic revenues was attributed to higher sales of Gold Bond, ACT, Icy Hot and Cortizone-10, partially offset by lower sales of certain smaller brands and a $1.8 million or 30% increase in promotional programs.

Revenues from international division dipped 5.6% to $6.57 million from $6.97 million reflecting a change in distributors in Latin America, general sales weakness in our European markets and an adverse foreign exchange rate impact. On a constant currency basis, international revenues for the period climbed 3% year-over-year.

Advertising and promotion costs reduced to $22.87 million from $26.79 million, reflecting the utilization by retail customers of more price promotion programs. Interest expense came down to $5.13 million from $6.17 million.

For the first nine months of fiscal 2009, net income grew sharply to $67.22 million or $3.48 per share from $49.57 million or $2.56 per share last year. Adjusted earnings was $71.54 million or $3.70 a share, up from $63.78 million or $3.29 a share in the past year. Revenues increased 1.1% to $353.09 million from $349.42 million.

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