UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) October 31, 1995
-----------------------------
PLAYTEX PRODUCTS, INC.
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(Exact Name of Registrant as Specified in Charter)
Delaware 33-25485-01 51-0312772
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(Date or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
300 Nyala Farms Road, Westport, Connecticut 06880
- -------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (203) 341-4000
---------------------------
______________________________________________________________________________
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
The Registrant hereby amends its current report on Form 8-K filed with the
Securities and Exchange Commission on November 14, 1995.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(a) Financial Statements
The audited financial statements are filed as Exhibit 99.1 to this report.
The unaudited financial statements are filed as Exhibit 99.2 to this
report.
(b) Pro Forma Financial Information
The pro forma financial information is filed as Exhibit 99.3 to this
report.
(c) Exhibits
Exhibit
Number Description
------ -----------
99.1 Banana Boat Holding Corporation, audited financial
statements, as of and for the years ended December 31, 1994
and December 25, 1993 (with Independent Auditor's Report
thereon)
99.2 Banana Boat Holding Corporation, unaudited financial
statements, as of and for the nine month period ended
September 30, 1995
99.3 Playtex Products, Inc. and Banana Boat Holding Corporation
unaudited pro forma combined financial information.
<PAGE>
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 hereunto duly authorized.
PLAYTEX PRODUCTS, INC.
Date: January 11, 1996 By: /s/ Michael F. Goss
---------------------------------
Michael F. Goss
Executive Vice President and
Chief Financial Officer
EXHIBIT 99.2
BANANA BOAT HOLDING CORPORATION
Unaudited Consolidated Financial Statements
September 30, 1995
<PAGE>
BANANA BOAT HOLDING CORPORATION
INDEX TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
PAGE
Consolidated Balance Sheet as of September 30, 1995 3
Consolidated Statement of Operations for the nine month period 4
ended September 30, 1995
Consolidated Statement of Cash Flows for the nine month period 5
ended September 30, 1995
Notes to Consolidated Financial Statements 6-14
2
<PAGE>
BANANA BOAT HOLDING CORPORATION
CONSOLIDATED BALANCE SHEET
(Unaudited, In Thousands)
<TABLE><CAPTION>
September 30,
1995
-------------
<S> <C>
ASSETS
Current Assets:
Cash $ 676
Receivables, less allowance for doubtful accounts 9,918
Inventories 6,932
Current deferred income taxes 113
Other current assets 857
-------
Total current assets 18,496
Property, plant and equipment, net 1,692
Intangible assets, net:
Excess of cost over net assets of acquired businesses 17,640
Proprietary formulas, patents and other 27,423
Deferred financing costs 843
Deferred income taxes 4,480
Notes receivable 1,135
-------
Total assets $71,709
=======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $13,952
Current maturities of long-term debt 6,583
-------
Total current liabilities 20,535
Long-term debt 29,730
-------
Total liabilities 50,265
-------
Stockholders' equity:
Common stock, $.01 par value; 250,000 shares authorized,
100,000 shares issued and outstanding 1
Additional paid-in capital 22,499
Retained earnings (deficit) (1,056)
-------
Total stockholders' equity 21,444
-------
Total liabilities and stockholders' equity $71,709
=======
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
BANANA BOAT HOLDING CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited, In Thousands except share data)
Nine Months Ended
September 30, 1995
------------------
Net sales $38,341
Cost of sales 23,716
-------
Gross profit 14,625
Operating expenses:
Selling, marketing and advertising 2,319
Administrative and distribution 2,357
Amortization of intangibles 3,255
-------
Total operating expenses 7,931
-------
Operating earnings 6,694
Interest expense 4,038
-------
Earnings before income taxes 2,656
Income tax expense 1,036
-------
Net earnings 1,620
Retained earnings (deficit), beginning of period (2,676)
-------
Retained earnings (deficit), end of period $(1,056)
=======
Earnings per share $ 16.20
=======
See notes to consolidated financial statements.
4
<PAGE>
BANANA BOAT HOLDING CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited, In Thousands)
<TABLE><CAPTION>
Nine Months Ended
September 30, 1995
------------------
<S> <C>
Cash flows provided from operations:
Net income $ 1,620
Non-cash items included in earnings:
Amortization of intangibles 3,255
Amortization of deferred financing costs 289
Depreciation/write-off of property, plant, and equipment 208
Deferred taxes 988
Changes in assets/liabilities
Increase in receivables (2,802)
Decrease in inventories 12,555
Decrease in other current assets 248
Increase in other assets (204)
Decrease in accounts payable and accrued expenses (6,136)
Decrease in accrued interest (834)
------------
Net cash provided from operations 9,187
-----------
Cash flows used for investing activities:
Purchases of property, plant and equipment (53)
-----------
Net cash used for investing activities (53)
-----------
Cash flows used for financing activities:
Repayments under working capital facilities (5,500)
Payments of long-term debt (4,937)
-----------
Net cash used for financing activities (10,437)
-----------
Decrease in cash (1,303)
Cash at beginning of period 1,979
-----------
Cash at end of period $ 676
===========
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest $ 4,583
===========
Income taxes $ -
===========
</TABLE>
See notes to consolidated financial statements.
5
<PAGE>
BANANA BOAT HOLDING CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1995
1. The Company
In December 1992, Banana Boat Holding Corporation ("Banana Boat") and
its wholly owned subsidiary, Sun Pharmaceuticals Corp. ("Sun" and, together
with Banana Boat, the "Company") were organized by an investor group
consisting of Thomas H. Lee Equity Partners, L.P. and other employees and
affiliates of the Thomas H. Lee Company (collectively the "Lee Investors")
for the sole purpose of effecting the acquisition of the assets and the
assumption of certain liabilities of Sun Pharmaceuticals, Ltd.'s ("SPL")
business (the "SPL Acquisition").
Banana Boat is a holding company and its only asset is an investment in
Sun, the operating company. Therefore, all references to the Company refer
to the activities of the consolidated companies. The Company manufactures
and markets a line of sun and skin care products in the United States and
abroad under the tradename Banana Boat(R).
On October 31, 1995, Playtex Products, Inc., a Delaware corporation
("Playtex"), and BBA Acquisition, Inc., a Delaware corporation and wholly
owned subsidiary of Playtex, acquired all issued and outstanding common
shares, not previously owned by Playtex, of Banana Boat Holding Corporation
("BBH") (the "BBH Acquisition"). The BBH Acquisition was pursuant to an
agreement and plan of merger dated October 17, 1995.
2. Seasonality of Business
The sun and skin care business is highly seasonal in nature. The
results from operations for the nine month period ended September 30,
1995 are not necessarily indicative of results of operations for a full
fiscal year.
3. Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of Banana
Boat and its wholly owned subsidiary, Sun. All significant intercompany
balances have been eliminated.
Inventories
Inventories are stated at the lower of cost (first in, first out method)
or market. Inventory costs include material, labor and manufacturing
overhead.
Property, Plant and Equipment, Net
Property, plant and equipment are stated at cost. Depreciation is
computed on the straight-line method over the estimated useful lives of the
applicable assets, ranging from 3 to 10 years. Repairs and maintenance are
expensed; renewals, and betterments are capitalized.
6
<PAGE>
BANANA BOAT HOLDING CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1995
Intangible Assets
Amortization of proprietary formulas, patents and other intangible
assets is provided on the straight-line method over their estimated useful
lives which range from 1 to 40 years. Excess of cost over net assets of
acquired businesses ("Excess Cost") were amortized on the straight-line
method over the expected periods to be benefitted, not to exceed 40 years.
The Company assesses the recoverability of these intangible assets on a
systematic basis by determining whether the amortization of the intangible
assets over their remaining life can be recovered through projected future
operating results.
Deferred Financing Costs
Fees and expenses relating to debt issuance costs were classified as
deferred financing costs and were amortized, under the interest method,
over the average life of the related debt (ranging from 5 to 10 years).
As a result of the BBH Acquisition, BBH's deferred financing was subsequently
written off.
Earnings Per Share
Earnings per share are net earnings divided by the weighted average
number of common shares (100,000 at September 30, 1995) issued and
outstanding for the period. Per share data does not assume the exercise of
the warrants and stock options outstanding.
4. Acquisition of Distributors
In March 1995, Sun renegotiated the Distribution Agreement with the
Hawaii Distributor. The agreement extended the term for 5 years through
December 31, 1999 at which time Sun would own the distribution rights.
5. Distribution Agreement
In December 1992, Playtex Products, Inc. ("Playtex"), a company in which
certain Lee Investors are stockholders and in which certain Lee Investors
are directors, and a party to the original investor group, acquired a 22%
common equity interest (17.5% on a fully diluted basis) in Banana Boat and
an option to acquire the remaining common equity of Banana Boat at a
formula price. Concurrent with its' acquisition of the equity interest in
Banana Boat, Playtex entered into a distribution agreement (the
"Distribution Agreement") with Sun, pursuant to which Playtex became the
exclusive distributor of Banana Boat products in all areas that the Company
has been able to repurchase distribution rights from its existing
distributors at the time of the SPL Acquisition. Effective November 1993,
Playtex began distributing Banana Boat products in the territories where
the distribution rights had been acquired. At September 30, 1995, the
Company had acquired distribution rights representing approximately 80% and
100% of Banana Boat sales in the United States and Canada, respectively.
7
<PAGE>
BANANA BOAT HOLDING CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1995
Under the terms of the Distribution Agreement, Sun manufactures the
products, establishes marketing plans, and develops new products. Playtex
purchases and resells these products, at a distribution margin, using its
own sales and distribution facilities and also provides operational and
administrative support to Sun. Playtex is subject to minimum purchase
requirements and minimum advertising and promotion commitments.
Sale of Banana Boat products to Playtex amounted to $30.0 million for
the nine month period ended September 30, 1995. Receivables include
amounts due from Playtex of $4.8 million at September 30, 1995. Accrued
expenses include amounts due to Playtex of $11.5 million at September
30, 1995.
In connection with the BBH Acquisition, the Distribution Agreement was
subsequently cancelled.
6. Balance Sheet Components
The components of certain balance sheet accounts are as follows (in
thousands):
September 30,
1995
------------
Accounts Receivable
Gross $ 10,194
Less allowance for doubtful accounts (276)
---------
Net $ 9,918
=========
Inventories:
Raw materials/packaging $ 3,118
Finished goods 3,814
---------
Total $ 6,932
=========
Property, plant and equipment, net:
Machinery, equipment, furniture and fixtures $ 2,303
Less accumulated depreciation (611)
---------
Net $ 1,692
=========
Excess cost:
Cost $ 18,962
Less accumulated amortization (1,322)
---------
Net $ 17,640
=========
Proprietary formulas, patents and other:
Gross $ 38,269
Less accumulated amortization (10,846)
---------
Net $ 27,423
=========
8
<PAGE>
BANANA BOAT HOLDING CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1995
September 30,
1995
------------
Deferred financing costs:
Gross $ 2,746
Less accumulated amortization (1,903)
---------
Net $ 843
=========
Accounts payable and accrued expenses:
Accounts payable $ 968
Due to Playtex 11,451
Interest 21
Advertising and sales promotion 282
Employee compensation and benefits 65
Other 1,165
---------
Total $ 13,952
=========
Long-Term Debt
Long-term debt consists of the following (in thousands):
September 30,
1995
-------------
Credit Agreement:
Working Capital Facility $ 5,646
Term Loan Facility 13,167
12-1/2% Subordinated Notes due 2002 17,500
---------
36,313
Less current maturities (6,583)
---------
Total long-term debt $ 29,730
=========
9
<PAGE>
BANANA BOAT HOLDING CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1995
At September 30, 1995, the Company's principal bank financing (the
"Credit Agreement") consisted of a Term Loan Facility and a Working
Capital Facility which provided for borrowings of $19,750,000 and of up
to $20,000,000, respectively, with a maturity date of December 17,
1997. The rate of interest on borrowings under the Credit Agreement
was, at the Company's option, a function of various alternative short-
term borrowing rates, as defined in the Credit Agreement. The interest
rate for the Term Loan Facility was 10.5% at September 30, 1995. The
interest rate for the Working Capital Facility was 10.25% on September
30, 1995. The average rate paid on the Term Loan was 9.30% for the
nine month period ended September 30, 1995. The average rate paid on
Working Capital borrowings was 9.0% for the nine months ended September
30, 1995. The Term Loan Facility provided for quarterly repayment of
principal of $1,645,833.
The Credit Agreement also provided for mandatory reduction of the
outstanding commitment after the end of each fiscal year based upon an
Excess Cash Flow formula, as defined in the Credit Agreement. Based on
this formula, there were no required reductions for nine month period
ended September 30, 1995 in the outstanding commitment. Quarterly
commitment fees of 1/2 of 1% per annum on the unused portion of the
commitment and an agency fee of $65,000 per annum were also required.
At September 30, 1995, unused lines of credit under the Working Capital
Facility amounted to $16,000,000.
Although the Company's outstanding obligations under the Credit
Agreement bear interest at floating rates, the Credit Agreement
required the Company to enter into interest rate protection agreements
such that for the period through May 5, 1995, at least 40% of its
outstanding indebtedness at December 17, 1992 carry interest at fixed
rates. On May 4, 1993, the Company entered into an interest cap
agreement which entitles the Company to receive from the counterparty,
on a quarterly basis the product of $18.4 million times the amount, if
any, by which the 90 day LIBOR exceeds 6.0%. Net receipts or payments
under the cap agreement are recognized as an adjustment to interest
expense.
The provisions of the Credit Agreement required the Company to meet
certain financial covenants and ratios and also include limitations or
restrictions on: new indebtedness and liens; major acquisitions or
mergers; capital expenditures; disposition of assets; certain dividends
and other distributions; and prepayment and modification of all
indebtedness or equity capitalization. The Subordinated Notes contain
certain similar restrictions and requirements. Under the terms of the
Credit Agreement and the Subordinated Notes, payment of cash dividends
on the common stock of the Company is restricted.
10
<PAGE>
BANANA BOAT HOLDING CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1995
On December 3, 1992, in connection with the SPL Acquisition, the
Company issued $17,500,000 aggregate principal amount of 12-1/2%
Subordinated Notes due 2002 (the "Subordinated Notes"). Interest on
the Subordinated Notes accrued at an annual rate of 12-1/2% and is
payable on each March 31, June 30, September 30 and December 31. At
September 30, 1995, the Subordinated Notes were owned by entities
advised by affiliates of the Lee Investors.
Aggregate minimum annual maturities on the long term debt, were (in
thousands): $6,583 in fiscal 1995, $6,583 in fiscal 1996, $16,084 in
fiscal 1997, and $17,500 in fiscal 2002.
As a result of the BBH Acquisition, all of BBH's long-term debt,
working capital facilities and accrued interest were subsequently paid
off in full.
8. Common Stock
In connection with the SPL Acquisition, the Company granted to the
holders of the Subordinated Notes, warrants to purchase 15,663 shares
of common stock, at a price of $225.00 per share, representing the fair
market value of such shares at the time of the grant. The warrants are
exercisable at any time on or prior to December 3, 2002.
Additionally, in connection with the execution of the Credit Agreement,
the Company granted to the participating banks, warrants to purchase
4,819 shares of common stock, at a price of $225.00 per share,
representing the fair market value of such shares at the time of the
grant. The warrants are exercisable at any time on or prior to
December 17, 2002.
Effective in 1993, the Company established a management stock option
plan which provides for the grant of options to purchase common stock
of the Company by certain key employees. The maximum number of shares
to be granted under this plan is 6,341 shares, representing 5% of the
Company's common stock on a fully diluted basis. Options vest over a
five year period. The sale of the Company before 5 years from the date
of grant would accelerate the vesting to 100%. As of September 30,
1995, the Company has issued options to purchase an aggregate of 2,250
shares of common stock at $225.00 per share.
9. Income Taxes
Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes" ("SFAS 109") requires an asset and liability approach for
financial accounting and reporting for income taxes. The provision for
income taxes is the tax payable or refundable for the period plus or
minus the change during the period in deferred tax assets and
liabilities. Deferred income tax assets and liabilities are computed
for differences between the financial statement and tax basis of assets
and liabilities that will result in taxable or deductible amounts in
the future based on enacted tax laws and rates applicable to the
periods in which the differences are expected to affect taxable income.
Valuation allowances are established when necessary to reduce deferred
tax assets to amounts which are more likely than not to be realized.
11
<PAGE>
BANANA BOAT HOLDING CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1995
The Company's provision for income taxes for the nine months ended September
30, 1995 is as follows (in thousands):
Nine Months Ended
September 30, 1995
------------------
Current:
Federal $ --
State and local --
Foreign 48
-------
48
-------
Deferred:
Federal 838
State and local 150
-------
988
-------
Total $ 1,036
=======
Taxable and deductible temporary differences and tax operating loss
carryforwards which give rise to the Company's deferred tax assets and
liabilities at September 30, 1995 are as follows (in thousands):
September 30,
1995
-------------
ASSETS:
Net operating loss carryforward $ 3,934
Allowances and reserves not currently deductible 113
Acquired intangible assets 826
-------
Total deferred tax assets $ 4,873
=======
LIABILITIES:
Plant, property and equipment $ 280
-------
Total deferred tax liabilities $ 280
=======
12
<PAGE>
BANANA BOAT HOLDING CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1995
The Company expected to have sufficient taxable income in future years
to fully realize all deferred tax assets. Accordingly, no valuation
allowance account was established.
The Company's tax provision differed from the amount computed using the
federal statutory rate of 35% as follows (in thousands):
Nine Months Ended
September 30, 1995
------------------
Expected federal income tax
at statutory rate $ 930
State and local income taxes 98
Amortization of non-deductible excess cost 40
Other (32)
---------
Total provision for income taxes $ 1,036
=========
At September 30, 1995, the Company had net operating losses for regular
and alternative minimum tax purposes of $10.4 million and $9.8 million,
respectively, which are available to offset future federal taxable income
through 2009.
10. Related Party Transactions
The Company and Thomas H. Lee Company (the "Consultant") had entered
into a management agreement, providing for the performance by the
Consultant of certain consulting and management services for the Company.
The Company has paid the Consultant $135,000 plus reimbursement of expenses
pursuant to such management agreement for the nine months ended September
30, 1995.
As a result of the BBH Acquisition, the management agreement with the
consultant was subsequently cancelled.
11. Business and Credit Concentrations
Prior to November 1993, the majority of the Company's customers
consisted of distributors located throughout the United States. Effective
November 1993, pursuant to the Distribution Agreement (See Note 5), Playtex
began distributing Banana Boat products in the territories where
distribution rights had been acquired from the then existing distributors.
Sales to Playtex as a percentage of total sales for the nine month period
ended September 30, 1995 was approximately 90.0%. Moreover, as a result of
the Distribution Agreement, the Company was extremely dependent upon
Playtex (a highly leveraged company) for its operations. Nonetheless, the
Company, based upon Playtex's past experiences, anticipates that the highly
leveraged position of Playtex should have no adverse effect on the
financial position, results of operations or cash flows of the Company.
13
<PAGE>
BANANA BOAT HOLDING CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1995
12. Disclosure about the Fair Value of Financial Instruments.
Cash, Receivables, Accounts Payable, Income Taxes and Accrued Expenses
The carrying amount approximates fair value because of the short-term
maturity of these instruments.
Credit Agreement
The carrying amount approximates fair value because the rate of
interest on borrowings under the Credit Agreement fluctuates with interest
rate indices as defined in the Credit Agreement.
Long-term Debt
The fair value of the Subordinated Notes was estimated at $17.5 million
at September 30, 1995, based upon current prices for similar instruments.
These securities are held by entities advised by affiliates of the Lee
Investors, and there is no public market information available.
Other Financial Instruments
The estimated fair value of the Company's other financial instruments
are summarized as follows (in thousands):
September 30, 1995
-------------------------------
Carrying Estimated
Amount Fair Value
------ ----------
Notes receivable $ 934 $ 859
The fair values are based on the amount of future cash flows associated
with these instruments discounted using the Company's borrowing rate for
similar instruments.
13. Commitments and Contingent Liabilities
The Company is obligated under operating leases for substantially all
of its warehouse and distribution space that expire periodically
through May of 1997. Rent expense for the nine month period ended
September 30, 1995 was approximately $424,000.
In the opinion of management, there are no claims, commitments,
guarantees or litigation pending to which the Company is a party which
would have a materially adverse effect on it's consolidated financial
position, results of operations or cash flows.
14
EXHIBIT 99.3
PLAYTEX PRODUCTS, INC.
UNAUDITED, COMBINED PRO FORMA FINANCIAL INFORMATION
<PAGE>
PLAYTEX PRODUCTS, INC.
INDEX TO THE UNAUDITED COMBINED PRO FORMA FINANCIAL INFORMATION
PAGES
Basis of Presentation of Pro Forma Information 3
Pro Forma Combined Balance Sheet as of September 30, 1995 4
Notes to Pro Forma Combined Balance Sheet as of September 30, 1995 5
Pro Forma Combined Condensed Statement of Operations for the 6
Twelve Month Period Ended December 31, 1994
Pro Forma Combined Condensed Statement of Operations for the 7
Nine Month Period Ended September 30, 1995
Notes to Pro Forma Combined Condensed Statements of Operations 8-11
for the Nine Month Period Ended September 30, 1995
and for the Twelve Month Period Ended December 31, 1994
<PAGE>
PLAYTEX PRODUCTS, INC.
PRO FORMA COMBINED BALANCE SHEET AND
PRO FORMA COMBINED STATEMENTS OF EARNINGS
BASIS OF PRESENTATION OF PRO FORMA INFORMATION
On October 31, 1995 Playtex Products, Inc., a Delaware corporation
("Playtex" or the "Company"), and BBA Acquisition, Inc., a Delaware
corporation and wholly owned subsidiary of Playtex, acquired all issued
and outstanding common shares, not previously owned by Playtex, of
Banana Boat Holding Corporation ("BBH"), a Delaware corporation and
manufacturer of Banana Boat sun and skin care products (the "BBH
Acquisition"). The BBH Acquisition was pursuant to an agreement and
plan of merger dated October 17, 1995. Playtex intends to continue to
use the assets acquired as part of the Acquisition, to support the
Banana Boat sun and skin care business.
The net funds expended associated with the BBH Acquisition, included
cash of approximately $40.4 million, the retirement of $27.1 million of
BBH's long-term debt, the assumption of BBH's working capital facility
and the payment of accrued interest and transaction fees of
approximately $4.5 million. The BBH Acquisition was financed with
approximately $34.5 million of existing cash balances and advances on
its acquisition credit facility of $37.5 million.
The pro forma combined balance sheet gives effect to the BBH
Acquisition as if BBH had been acquired on September 30, 1995. The pro
forma combined statements of operations gives effect to the BBH
Acquisition as if it had occurred at the beginning of each of the
periods presented. These statements also give effect to the Woolite
asset acquisition and the 1995 Transaction (as defined in the notes
included in this report) as if they had also occurred at the beginning
of both periods presented. Additionally, the pro forma combined
statement of operations for the twelve month period ended December 31,
1994 gives effect to the Recapitalization (as defined in the notes
included in this report) as if it had occurred at the beginning of the
period presented. The pro forma combined balance sheet and pro forma
condensed combined statements of operations are unaudited and were
derived by adjusting the historical consolidated financial statements
of the Company for the pro forma adjustments listed above and as
described in the respective notes thereto. These pro forma combined
financial statements are provided for informational purposes only and
should not be construed to be indicative of the financial condition or
results of operations of the Company had such transactions been
consummated on the dates indicated and are not intended to be
predictive of the financial condition or results of operations of the
Company at any future date or for any future period.
The pro forma adjustments are based upon available information and upon
certain assumptions that the Company believes are reasonable under the
circumstances. The pro forma combined financial information and
accompanying notes should be read in conjunction with the historical
consolidated financial statements of the Company, including the notes
thereto, and the other information pertaining to the Company,
previously provided to stockholders.
3
<PAGE>
PLAYTEX PRODUCTS, INC.
PRO FORMA COMBINED BALANCE SHEET
September 30, 1995
(Unaudited, In Thousands)
<TABLE><CAPTION>
Historical Pro Forma
----------------------------- --------------------------------
Banana
Playtex Boat BBH
Products, Holding Acquisition
Inc. Corp. Adjustments Combined
--------- -------- ----------- --------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash ...................................... $ 55,844 $ 676 $ (72,000) (a) $ 22,020
37,500 (a)
Receivables, less allowance for doubtful
accounts .................................. 70,948 9,918 (4,274) (b) 65,141
(11,451) (b)
Inventories ............................... 40,258 6,932 1,074 (d) 48,264
Current deferred taxes .................... 10,995 113 - 11,108
Other current assets ...................... 1,437 857 (523) (b) 1,771
--------- -------- --------- ---------
Total current assets ................. 179,482 18,496 (49,674) 148,304
Net property, plant and equipment ............ 51,787 1,692 - 53,479
Intangible assets, net:
Excess of cost over net assets of acquired
business .................................. 324,674 17,640 (17,640) (d) 363,728
39,054 (d)
Patents, trademarks and other .............. 12,359 27,423 (27,423) (d) 37,359
25,000 (d)
Deferred financing costs .................. 17,603 843 (843) (c) 17,603
Deferred income taxes ....................... - 4,480 (4,480) (e) -
Due from related party ...................... 89,519 - - 89,519
Other noncurrent assets ..................... 7,600 1,135 (5,000) (f) 3,735
--------- -------- --------- ---------
Total assets ........................ $ 683,024 $ 71,709 $ (41,006) $ 713,727
========= ======== ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable .......................... $ 21,568 $ 968 $ - $ 22,536
Accrued expenses .......................... 65,935 12,984 (11,451) (b) 62,650
(4,797) (b)
(21) (c)
Income taxes payable ...................... 1,517 - - 1,517
Current maturities of long-term debt ....... 20,000 6,583 (6,583) (c) 20,000
--------- -------- --------- ---------
Total current liabilities ............ 109,020 20,535 (22,852) 106,703
Long-term debt .............................. 727,500 29,730 (29,730) (c) 765,000
37,500 (a)
Due to related party ........................ 88,005 - - 88,005
Other noncurrent liabilities ................. 19,041 - - 19,041
Deferred income taxes ....................... 28,065 - (4,480) (e) 23,585
--------- -------- --------- ---------
Total liabilities ..................... 971,631 50,265 (19,562) 1,002,334
Common stock ................................ 509 1 (1) (g) 509
Additional paid-in capital ................... 423,517 22,499 (22,499) (g) 423,517
Retained earnings (deficit) .................. (710,929) (1,056) 1,056 (g) (710,929)
Foreign currency translation adjustment ...... (1,704) - - (1,704)
--------- -------- --------- ---------
Total stockholders' equity (deficit).... (288,607) 21,444 (21,444) (288,607)
--------- -------- --------- ---------
Total liabilities and stockholders'
equity (deficit) .................... $683,024 $ 71,709 $ (41,006) $ 713,727
========= ======== ========= =========
</TABLE>
See notes to Pro Forma Combined Balance Sheet
4
<PAGE>
PLAYTEX PRODUCTS, INC.
NOTES TO PRO FORMA COMBINED BALANCE SHEET
SEPTEMBER 30, 1995
(Unaudited)
I. Basis of Presentation
The pro forma combined balance sheet gives effect to the BBH
Acquisition as if it had occurred on September 30, 1995.
II. Pro Forma Adjustments
(a) To record the use of approximately $72.0 million of cash
partially funded by the draw down of $37.5 million of Playtex's
acquisition credit facility for the financing of the BBH
acquisition.
(b) To eliminate receivables and payables between Playtex and BBH.
(c) To record the retirement of BBH's long-term debt, accrued
interest, and write off of associated deferred financing costs.
(d) To record the purchase accounting adjustments in conformity with
Accounting Principles Board Opinion No. 16 "Business Combination"
(APB 16"). These adjustments are principally for excess of cost
over fair value of assets acquired and valuation of inventory
acquired.
(e) To reclass long-term deferred income tax assets to offset long-
term deferred income tax liabilities in accordance with Statement
Financial Accounting Standards No. 109 "Accounting for Income
Taxes".
(f) To eliminate Playtex's previous investment in BBH.
(g) To eliminate BBH's equity balances.
The historical financial statements of BBH for the nine month period ended
September 30, 1995 were provided to the Company by BBH management.
5
<PAGE>
<TABLE><CAPTION>
PLAYTEX PRODUCTS, INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
Twelve Months Ended December 31, 1994
(Unaudited, In Thousands, except per share data)
Audited Pro Forma
----------------------- ---------------------------------------------------
Banana Woolite
Playtex Boat Asset 1995
Products, Holding Recapitalization Acquisition Transaction
Inc. Corp. (A) (B) (C)
---------- ---------- ---------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net sales ............................... $473,275 $ 39,707 $ - $ 37,052 $ -
Cost of sales ........................... 164,112 25,247 - 8,310 -
-------- -------- -------- -------- --------
Gross profit ........................ 309,163 14,460 - 28,742 -
Operating expenses:
Advertising, selling,
distribution and
administrative .................... 169,288 6,361 - 23,741 -
Amortization of intangibles ........... 10,181 4,530 - 596 -
-------- -------- -------- -------- --------
Total operating expenses ............ 179,469 10,891 - 24,337 -
-------- -------- -------- -------- --------
Operating earnings .................. 129,694 3,569 - 4,405 -
Interest expense, net ................... 76,153 5,211 (2,582) 1,174 (39,956) (a)
22,207 (b)
1,143 (c)
-------- -------- -------- -------- --------
Earnings (loss) before income
taxes ............................. 53,541 (1,642) 2,582 3,231 16,606
Income taxes ........................... 23,994 (358) 1,060 1,292 6,642 (d)
-------- ------- -------- -------- --------
Earnings from continuing
operations ......................... 29,547 (1,284) 1,522 1,939 9,964
Preferred dividends ..................... (1,163) - 1,163 - -
-------- ------- -------- -------- --------
Earnings (loss) from continuing
operations available to
common stockholders ............... $ 28,384 $(1,284) $ 2,685 $ 1,939 $ 9,964
======== ======= ======== ======== ========
Earnings per share from continuing
operations (primary and fully diluted). $ .97
========
Weighted average common
shares outstanding .................... 29,212
========
<CAPTION>
----------------------------
BBH
Acquisition
Adjustments
(D) Combined
----------- --------
<S> <C> <C>
Net sales ............................... $(30,532) (e) $519,502
Cost of sales ........................... (30,532) (e) 167,137
-------- ---------
Gross profit ........................ - 352,365
Operating expenses:
Advertising, selling,
distribution and
administrative .................... - 199,390
Amortization of intangibles ........... (4,530) (f) 13,002
2,225 (h)
-------- ---------
Total operating expenses ............ (2,305) 212,392
-------- ---------
Operating earnings .................. 2,305 139,973
Interest expense, net ................... (5,211) (g) 60,889
2,750 (i)
-------- ---------
Earnings (loss) before income
taxes ............................. 4,766 79,084
Income taxes ........................... 1,906 (j) 34,536
-------- ---------
Earnings from continuing
operations ......................... 2,860 44,548
Preferred dividends ..................... - -
-------- ---------
Earnings (loss) from continuing
operations available to
common stockholders ............... $ 2,860 $ 44,548
======== ========
Earnings per share from continuing
operations (primary and fully diluted). $ .88
=========
Weighted average common
shares outstanding .................... 50,880
=========
</TABLE>
See notes to Pro Forma Condensed Combined Statement of Operations
6
<PAGE>
<TABLE><CAPTION>
PLAYTEX PRODUCTS, INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
Nine Months Ended September 30, 1995
(Unaudited, In Thousands, except per share data)
Historical Pro Forma
---------------------------- -------------------------------------------------------------
Banana Woolite The BBH
Playtex Boat Asset 1995 Acquisition
Products, Holding Acquisition Transaction Adjustments
Inc. Corp. (B) (C) (D) Combined
--------- ---------- ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net sales ........................... $380,138 $ 38,341 $ 3,460 $ - $ (29,969) (e) $ 391,970
Cost of sales ....................... 145,131 23,716 891 - (29,969) (e) 139,769
-------- -------- -------- --------- --------- ---------
Gross profit ................... 235,007 14,625 2,569 - - 252,201
Operating expenses:
Advertising, selling,
distribution and
administrative ................. 143,936 4,676 1,375 - - 149,987
Amortization of intangibles ...... 8,180 3,255 89 - (3,255) (f) 9,938
1,669 (h)
-------- -------- -------- --------- --------- ---------
Total operating expenses ........ 152,116 7,931 1,464 - (1,586) 159,925
-------- -------- -------- --------- --------- ---------
Operating earnings .............. 82,891 6,694 1,105 - 1,586 92,276
Interest expense, net ............... 55,067 4,038 238 (20,782) (a) (4,038) (g) 50,520
(1,099) (a) 3,439 (i)
13,165 (b)
492 (c)
-------- -------- -------- --------- --------- ---------
Earnings before income taxes 27,824 2,656 867 8,224 2,185 41,756
Income taxes ....................... 12,062 1,036 347 3,290 (d) 874 (j) 17,609
-------- -------- -------- --------- --------- ---------
Earnings from continuing
operations .....................$ 15,762 $ 1,620 $ 520 $ 4,934 $ 1,311 $ 24,147
========= ======== ======== ========= ========= =========
Earnings per share from continuing
operations (primary and fully
diluted) ..........................$ .40 $ .47
========= =========
Weighted average common
shares outstanding ................. 39,451 50,880
========= =========
See notes to Pro Forma Condensed Combined Statement of Operations
</TABLE>
7
<PAGE>
PLAYTEX PRODUCTS, INC.
NOTES TO PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
For the Nine Months Ended September 30, 1995 and
the Twelve Months Ended December 31, 1994
(Unaudited)
I. Basis of Presentation
The pro forma condensed combined statements of operations for the nine
month period ended September 30, 1995 and twelve month period ended
December 31, 1994 give effect to (i) the Woolite Asset Acquisition, (ii)
the 1995 Transaction and (iii) the BBH Acquisition, as if they had occurred
at the beginning of each of the periods presented (December 26, 1993 for
the twelve month period ended December 31, 1994 and January 1, 1995 for the
nine month period ended September 30, 1995). The pro forma condensed
combined statement of operations for the twelve month period ended December
31, 1994 also gives effect to the Recapitalization as if it had occurred at
the beginning of the twelve month period ended December 31, 1994.
II. Recapitalization (A)
Reference is made to the Company's Annual Report on Form 10-K for the
year ended December 31, 1994 - Financial Statements (note 1 of the
condensed Notes to Consolidated Financial Statements).
During the first quarter of fiscal 1994, the Company changed its name
from Playtex FP Group Incorporated and completed the Recapitalization,
which included: (i) the issuance of 20 million shares of Common Stock at a
price of $13.00 per share, (ii) borrowings from banks of $500.0 million in
term loans and of approximately $40.0 million under the working capital
facility under the Existing Bank Credit Agreement and (iii) the issuance of
$360.0 million aggregate principal amount of 9% Notes. Proceeds were used
to retire substantially all outstanding debt and preferred stock of the
Company and its subsidiaries. The Recapitalization and related public debt
and preferred stock redemptions were completed on March 4, 1994.
The Recapitalization pro forma adjustments only impact the pro forma
condensed combined statement of operations for the twelve month period
ended December 31, 1994 and they reflect the reduced interest expense and
related tax effect, and the elimination of preferred stock dividend
requirements.
III. The Woolite Asset Acquisition (B)
Reference is made to the Company's Quarterly Report on Form 10-Q for
the interim three month period ended April 1, 1995 - Financial Statements
(Note 3 of the Condensed Notes to Consolidated Financial Statements).
8
<PAGE>
PLAYTEX PRODUCTS, INC.
NOTES TO PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
For the Nine Months Ended September 30, 1995 and
the Twelve Months Ended December 31, 1994
(Unaudited)
The historical results of operations for the twelve months ended
December 31, 1994 have been adjusted to reflect (i) purchase accounting
adjustments in conformity with Accounting Principles Board Opinion No. 16
"Business Combinations", (ii) the pro forma interest expense on borrowings
as if the acquisition had occurred at the beginning of the period and the
pro forma effect of the change in the recorded amount of intangible assets
and (iii) the pro forma tax effect of the adjustments at statutory rates.
The pro forma adjustments for the Woolite Asset Acquisition do not give
effect to changes in the operating cost structure of the Woolite Business
that may occur subsequent to its acquisition by the Company.
The historical results of operations of the Woolite(R) rug and upholstery
cleaning products business (Woolite) and associated interest and income
taxes from the date of acquisition by Playtex, February 24, 1995, through
September 30, 1995 are included in the historical results of operations of
Playtex Products, Inc.
The pro forma Woolite acquisition adjustments to the pro forma
condensed combined statement of operations for the nine month period ended
September 30, 1995, approximate the results of operations with associated
interest expense of Woolite for the period of January 1, 1995 through
February 23, 1995 as if the business had been acquired January 1, 1995.
IV. The 1995 Transaction (C)
Reference is made to the Company's Quarterly Report on Form 10-Q for
the interim three month period ended July 1, 1995 Financial Statements
(Note 2 of the Condensed Notes to the Consolidated Financial Statements).
On June 6, 1995 the Company sold 20,000,000 shares of common stock of
the Company, par value $.01 per share (the "Common Stock") at a price of
$9.00 per share to a group of investors, pursuant to Stock Purchase Agreement,
as of March 17, 1995 between the Company and the Investors (the "Investment").
Costs and expenses associated with the investment amounted to approximately
$10.7 million. The net proceeds of the sale were used by the Company,
together with borrowing under the 1995 Credit Agreement (as defined below),
to reduce and refinance all borrowings under the Company's previous credit
agreement.
Contemporaneously with the Investment, the Company entered into a new
bank credit agreement (the "1995 Credit Agreement" and, together with the
Investment, the "1995 Transaction") which provided for a new credit
facility in the aggregate amount of $500.0 million consisting of: (i)
$387.5 million in term loan, (ii) $75.0 million in a revolving credit
facility and (iii) a $37.5 million acquisition revolving credit facility.
9
<PAGE>
PLAYTEX PRODUCTS, INC.
NOTES TO PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
For the Nine Months Ended September 30, 1995 and
the Twelve Months Ended December 31, 1994
(Unaudited)
The following is a description of the pro forma adjustments associated
with the 1995 Transaction.
(a) To eliminate interest expense and amortization of deferred
financing costs associated with the Company's indebtedness to be repaid in
connection with the 1995 Transaction.
(b) To record pro forma interest expense on borrowings under the New
Bank Credit Agreement which will bear interest at variable rates. The
average rate used for the calculation of pro forma interest expense on
borrowings under the New Bank Credit Agreement is 5.875% and 7.757%, which
represents the average rate that would have been in effect under the
proposed terms of such indebtedness for the twelve-month and nine month
periods, respectively. To the extent the assumed interest rate fluctuates
1/2 of 1%, the Company's quarterly interest expense would be impacted by
approximately $0.5 million.
(c) To record amortization of deferred financing costs relating to the
borrowings under the New Bank Credit Agreement.
(d) To record the tax effect of adjustments specified in notes (a), (b)
and (c) at statutory rates.
V. Banana Boat Holding Corporation Acquisition (BBH Acquisition) (D)
The following is a description of the pro forma adjustments associated
with the BBH Acquisition:
(e) To eliminate sales and cost of sales associated with transactions
between Playtex and BBH.
(f) To eliminate the amortization of intangibles of BBH prior to the
Company's implementation of purchase accounting adjustments in conformity
with APB 16.
(g) To eliminate BBH's interest expense and amortization of deferred
financing costs.
(h) To record amortization of intangibles over the estimated life of
these assets in conformity with APB 16.
(i) To record interest expense as if borrowings to purchase BBH had
occurred at the beginning of the period presented. Interest expense for
both periods presented was based upon borrowings under the New Bank Credit
Agreement. The average interest rates, as described in Note IV(b) above,
were used in determining pro forma interest expense. To the extent the
assumed interest rate fluctuates 1/2 of 1%, the Company's quarterly interest
expense would be impacted by approximately $0.06 million.
10
<PAGE>
PLAYTEX PRODUCTS, INC.
NOTES TO PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
For the Nine Months Ended September 30, 1995 and
the Twelve Months Ended December 31, 1994
(Unaudited)
(j) To record the income tax impact of the above mentioned pro forma
adjustments at statutory rates.
The historical financial statements of BBH for the nine month period
ended September 30, 1995 were provided to the Company by BBH management.
The pro forma adjustments for the BBH Acquisition do not give effect to
changes in the operating cost structure of the BBH operation that may occur
subsequent to its acquisition by the Company.
11
