Chattem Announces Voluntary Recall of Icy Hot(R) Heat Therapy(TM) Product

Discusses Impact on Fiscal 2008
CHATTANOOGA, Tenn.--(Business Wire)--
Chattem, Inc. (NASDAQ: CHTT), a leading marketer and manufacturer
of branded consumer products, today announced that it has initiated a
voluntary recall to the consumer level of its Icy Hot Heat Therapy
product.

Icy Hot Heat Therapy, launched in December 2006, is an
air-activated, self-heating disposable device for the temporary relief
of muscular and joint pain. Since its introduction, the Company has
received some consumer reports of first, second and third degree burns
and skin irritation resulting from the use or possible misuse of the
product. Based upon the Company's review of these reports in
consultation with a medical expert, Chattem believes the reported
injuries are temporary or medically reversible. The number of adverse
events reported to date represents less than 1/10th of one percent of
the approximately 1.8 million units of product sold at retail.

In September 2007, Chattem began shipping product that included
more information on the product's label in order to clarify the
directions for use and added expanded warnings and precautionary
statements to further guide the consumer as to proper product usage
and to prevent product misuse. After recent consultation with the FDA,
in which the FDA suggested that further action was needed, the Company
decided to initiate the voluntary recall of all Icy Hot Heat Therapy
products. The recall is intended to eliminate the potential risk of
the reported claims occurring to other consumers.

The recall does not affect Chattem's other topical pain care
products, including other Icy Hot products. The mechanism and purpose
of the Company's other Icy Hot products are fundamentally different
from Icy Hot Heat Therapy. Because of these differences, the Company
does not expect this recall to have a material effect on sales of its
other topical pain care products. After further study, the Company may
introduce a new Icy Hot Heat Therapy product, but it is not now known
when or whether such product will be introduced.

Sales of Icy Hot Heat Therapy in fiscal 2007 represented 2.3% of
the Company's total revenues of $423 million and less than 1% of its
total EBITDA. For fiscal 2008, Icy Hot Heat Therapy was forecasted to
represent less than 2% of total revenues and less than 1% of EBITDA.
In the first quarter of fiscal 2008, the Company expects to record a
charge for the Icy Hot Heat Therapy recall related costs and expenses
of approximately $6 million to $9 million, or $0.20 to $0.30 per
share. The charge encompasses the return of products from the
Company's distributors, retail customers and end-user consumers,
impairment of the affected in-house inventory and other recall-related
costs.

As previously disclosed on the fourth quarter and fiscal year 2007
earnings conference call, Chattem's portfolio of brands is performing
well at retail and has continued its 2007 momentum with increases in
A.C. Nielsen plus mass merchandiser point-of-sale data of 7% for the
four-week period ending January 26, 2008 as compared to the same prior
year period, excluding Icy Hot Heat Therapy and Icy Hot Pro-Therapy.
Specifically, this retail sales data was highlighted by strong results
from Chattem's key brands, led by ACT(R), up 37%, and Cortizone-10(R),
up 19%, driven by strong media support, Gold Bond(R) continuing its
strong performance, up 25%, and Unisom, up 5%, all compared to the
prior year four-week period. During this same period, Selsun Blue(R)
A. C. Nielsen plus mass merchandiser point-of-sale data showed a
decrease of 11% in advance of media support for Selsun Blue Naturals
that started airing the last week of January.

Chattem believes that this retail sales momentum and strong
year-to-date factory shipments to customers, combined with the
strength of its broad portfolio of products, will enable it to achieve
its previously forecasted earnings per share for fiscal 2008 of $4.00
to $4.20 and trend toward the upper end of this range, excluding the
impact of the Icy Hot Heat Therapy recall charge, stock option expense
under FAS 123R and any loss on debt extinguishment. In striving to
achieve these results, we will maintain strong advertising and
promotional support for its brands and remain focused on the growth
and profitability of the brands in fiscal 2008.

-0-
*T
FY2008 EPS Guidance
----------------------------------------------------------------------
$4.00 - $4.20 Excluding recall costs and expenses, stock option
expense under SFAS 123R and loss on debt
extinguishment
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$3.54 - $3.74 Including recall costs and expenses at the midpoint
($0.25) of the Company's estimate and stock option
expense under SFAS 123R ($0.21)
------------- --------------------------------------------------------
*T

After consultation with the FDA as to content and timing, the
Company has issued a separate release addressed primarily to consumers
and retailers concerning the recall. The timing of this release for
the Company's shareholders and investors has thus been predicated on
the timing of the separate release.

Forward-Looking Statements

This press release contains forward-looking statements within the
meaning of the federal securities laws. Statements that are not
historical facts, including statements about our beliefs and
expectations, are forward-looking statements. Forward-looking
statements include statements preceded by, followed by or that include
the words, "believes," "expects," "anticipates," "plans," "estimates"
or similar expressions. Examples of forward-looking statements in this
press release include the expected impact of the recall on sales of
other topical pain care products, the introduction of a potential new
product, the amount of the estimated recall charge and the fiscal 2008
guidance in this release. Forward-looking statements are only
predictions and are not guarantees of performance. These statements
are based on beliefs and assumptions of management, which in turn are
based on currently available information. The forward-looking
statements also involve risks and uncertainties, which could cause
actual results to differ materially from those contained in any
forward-looking statement. Many of these factors are beyond our
ability to control or predict. Important factors that could cause
actual results to differ materially from those contained in any
forward-looking statement include, but are not limited to the expected
impact of the recall on sales of other topical analgesic products, the
introduction of a potential new product and the amount of the
estimated recall charge and the risk factors disclosed in our Annual
Report on Form 10-K for the year ended November 30, 2007, under the
caption "Risk Factors." We believe these forward-looking statements
are reasonable; however, undue reliance should not be placed on any
forward-looking statements, which are based on current expectations.
Further, forward-looking statements speak only as of the date they are
made, and we undertake no obligation to update publicly any of these
in light of new information or future events.

About Chattem

Chattem, Inc. is a leading marketer and manufacturer of a broad
portfolio of branded OTC healthcare products, toiletries and dietary
supplements. The Company's products target niche market segments and
are among the market leaders in their respective categories across
food, drug and mass merchandisers. The Company's portfolio of products
includes well-recognized brands such as Icy Hot, Gold Bond, Selsun
Blue, ACT, Cortizone-10 and Unisom. Chattem conducts a portion of its
global business through subsidiaries in the United Kingdom, Ireland
and Canada. For more information, please visit the Company's website:
www.chattem.com.

Chattem, Inc.
Catherine Baker, Investor Relations, 423-822-3209

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