Jim:    Mr. Gary, welcome back to Mad Money.

Zan:     Pleasure, Jim, always. Thank you.

Jim:    Let’s just get a heads up right now. I was pulling up some research, and there is a guy who likes your stock very much, and it has been one of the reasons that we have liked your stock. This is a person at William Blair, who has an outperform for your company, but he was disappointed in how you did for the quarter. He says that you missed estimates by a lot. Is that the right depiction of what happened?

Zan:     I think it is fair to say that we were disappointed in the first quarter, and that we did miss some more, we haven’t missed a quarter in quite a while. We don’t officially give quarterly guidance, but our sales were off you know 8% more than usual. But the encouraging part was our consumer sales, which is my guide, which is to the consumer, we are up 10% at Wal-Mart, 6% the rest of the country. So what we saw was an inventory reduction of the trade. And we had several of our brands that normally might ship in February are shipping in March. So as I mentioned on our investor call the other day, March and Aprils sales are very strong. We indicated that we would meet guidance for the year, which was 48+ number. And we don’t give quarterly guidance on earnings, so I feel pretty good. I don’t like missing the first quarter. I feel pretty good.

Jim:    One of the things that I was disappointed about… we have been recommending and liking companies that have a lot of raw cost problems in the last year… you know a lot of the plastic bottles, a lot of the stuff that you make that had very high chemical costs in it… all of that is coming down because gasoline and oil is coming down. But it didn’t seem to flow thru the bottom line this quarter for you?

Zan:    Well, ours was probably the highest of any company that you will talk to this year in some ways at 33+%, so we made a lot of money for the quarter, we were up .06 cents. It did not flow as quickly because of our average costing system, you will see that come better. And then also, there is a lot of stuff promotion expenses moved around and they make the cost of goods percentage look a little different. But you are right, it was a little draggier in our PNL in our first quarter. We should see some improvement over the next few.

Jim:    How about the cost of advertising? Because one of the things that I loved about your brands is that you got a lot of brands from a company that had a diverse brands. They had put a lot of money into the brands. I had always hoped that you could ride on the coat tails. Did you have to up your spending?

Zan:     We have always been a good spender. We are not upping it this year. We are very similar. I think the big story with Chattem, which you can watch, is that over the next 4 months we have 7 new product introduction for Icy Hot, Cortozone, Act, and Gold Bond. And one of the things about the first quarter, I think people expected the first quarter than they really should. We all along, in my last call, said that it would be spring fever. I mean we are either going to hit it April, May, June, July, is where we are going to make the year with some of these new products. And obviously I am optimistic that we will but we will know a lot more in July.

Jim:    One last question, you are making a lot of money. You bought back some stock, you bought back some debt, how about giving us a nice big dividend here?

Zan:     Well, we like buying stock back, I think that that is an indication that when you find our company buying stock back and you find it buying debt back. You realize that we don’t agree with the analysts, which we don’t very often, and we think that they are overreacting to a short term thing. That gives us an opportunity to boost earnings per share for our shareholders who stay in by buying stock.

Jim:    Excellent, that is Chairman and CEO of Chattem, Zan Guerry, thank you so much for being back on the show sir.

Zan:     Always a pleasure, we will bring you better numbers next time.