<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
FORM 8-K/A
AMENDMENT NO. 1 TO CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 28, 1998
PLAYTEX PRODUCTS, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
Delaware 33-25485-01 51-0312772
- --------------------------------------------------------------------------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
300 Nyala Farms Road, Westport, CT 06880
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (203) 341-4000
------------------------------
N/A
- --------------------------------------------------------------------------------
(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 February 12, 1998.
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 condensed financial statements are filed as Exhibit 99.2 to
this report.
(b) Pro Forma Financial Information
The pro forma unaudited condensed combined financial information are filed
as Exhibit 99.3 to this report.
(c) Exhibits
Exhibit
Numbers Description
------- -----------
99.1 Personal Holding Corporation, Inc., audited financial statements,
as of and for the year ended March 29, 1997 (with the Independent
Auditor's Report thereon).
99.2 Personal Holding Corporation, Inc., unaudited condensed financial
statements, as of and for the nine month periods ended December
27, 1997 and December 28, 1996.
99.3 Playtex Products, Inc., Personal Care Holdings, Inc., Carewell
Industries, Inc., and certain assets from Binky-Griptight Inc.
unaudited pro forma condensed 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 behalf by the undersigned
hereunto duly authorized.
PLAYTEX PRODUCTS, INC.
Date: April 13, 1998 By: /s/ Michael F. Gross
----------------------------------
Michael F. Goss
Executive Vice President
Chief Financial Officer
<PAGE>
Exhibit 99.1
PERSONAL CARE HOLDINGS, INC.
AND SUBSIDIARIES
Consolidated Financial Statements
March 29, 1997
(With Independent Auditors' Report Thereon)
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Personal Care Holdings, Inc.
We have audited the accompanying consolidated balance sheet of Personal Care
Holdings, Inc. and subsidiaries as of March 29, 1997, and the related
consolidated statements of operations, changes in stockholders' equity and cash
flows for the year then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Personal Care
Holdings, Inc. and subsidiaries as of March 29, 1997, and the results of their
operations and their cash flows for the year then ended, in conformity with
generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
May 30, 1997, except for footnote 15
which is as of January 28, 1998
<PAGE>
PERSONAL CARE HOLDINGS, INC.
AND SUBSIDIARIES
Consolidated Balance Sheet
March 29, 1997
ASSETS
Current assets:
Cash and cash equivalents $ 3,187,205
Accounts receivable, net of allowances of $406,268 15,997,425
Inventories (note 3) 10,321,244
Prepaid expenses and other current assets 314,894
Deferred tax assets (note 8) 1,316,300
------------
Total current assets 31,137,068
Property and equipment, net (notes 4 and 6) 18,760,581
Other assets, net of accumulated amortization of $267,803 1,805,241
Goodwill, net of accumulated amortization of $1,995,689 77,857,828
------------
Total assets $129,560,718
------------
------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt (note 6) 10,640,500
Accounts payable 4,217,446
Accrued promotional expenses 4,406,960
Other accrued expenses 8,178,792
------------
Total current liabilities 27,443,698
Long-term debt, excluding current portion (note 6) 61,354,136
Deferred tax liabilities (note 8) 1,003,300
------------
Total liabilities 89,801,134
------------
Commitments (note 10)
Stockholders' equity (note 11):
Common stock, $.01 par value. Authorized 1,300,000
shares; issued and outstanding 1,001,737 shares 10,017
Additional paid-in capital 40,359,985
Accumulated deficit (610,418)
------------
Total stockholders' equity 39,759,584
------------
Total liabilities and stockholders' equity $129,560,718
------------
------------
See accompanying notes to consolidated financial statements.
<PAGE>
PERSONAL CARE HOLDINGS, INC.
AND SUBSIDIARIES
Consolidated Statement of Operations
Year ended March 29, 1997
Net sales (note 12) $110,988,652
Cost of goods sold 75,509,050
------------
Gross profit 35,479,602
Selling, general and administrative expenses (note 12) 29,654,798
------------
Operating profit 5,824,804
Other (income) expense:
Interest expense 6,670,303
Interest income (56,431)
Other expense, net 134,350
------------
Loss from operations before income taxes (923,418)
Income tax benefit (note 8) 313,000
------------
Net loss $ (610,418)
------------
------------
See accompanying notes to consolidated financial statements.
<PAGE>
PERSONAL CARE HOLDINGS, INC.
AND SUBSIDIARIES
Consolidated Statement of Changes in Stockholders' Equity
Year ended March 29, 1997
Additional
Common paid-in Accumulated
Stock Capital Deficit Total
-------- ----------- --------- -----------
Balance, April 1, 1996 $ 9,944 $40,065,056 $ - $40,075,000
Issuance of shares of
common stock 73 294,929 - 295,002
Net loss - - (610,418) (610,418)
-------- ----------- --------- -----------
Balance, March 29, 1997 $ 10,017 $40,359,985 $(610,418) $39,759,584
-------- ----------- --------- -----------
-------- ----------- --------- -----------
See accompanying notes to consolidated financial statements.
<PAGE>
PERSONAL CARE HOLDINGS, INC.
AND SUBSIDIARIES
Consolidated Statement of Cash Flows
Year ended March 29, 1997
Cash flows from operating activities:
Net loss $ (610,418)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 4,120,130
Deferred income taxes (313,000)
Loss on disposal of fixed assets 145,851
Changes in operating assets and liabilities:
Increase in accounts receivable (3,705,425)
Decrease in inventories 11,177,756
Decrease in prepaid expenses and other current assets 28,106
Increase in other assets (480,273)
Increase in accounts payable and accrued expenses 8,310,197
------------
Net cash provided by operating activities 18,672,924
------------
Cash flows from investing activities:
Purchase of property and equipment (2,521,267)
Proceeds from sale of property and equipment 68,910
------------
Net cash used in investing activities (2,452,357)
------------
Cash flows from financing activities:
Repayment of long-term debt (13,505,364)
Proceeds from issuance of common stock 295,002
------------
(13,210,362)
Net increase in cash and cash equivalents 3,010,205
Cash and cash equivalents at beginning of year 177,000
------------
Cash and cash equivalents at end of year $ 3,187,205
------------
------------
Supplemental disclosure of cash flow information:
Cash paid during the year for interest $ 4,882,096
------------
------------
See accompanying notes to consolidated financial statements.
<PAGE>
PERSONAL CARE HOLDINGS, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 29, 1997
(1) ORGANIZATION AND BUSINESS
Personal Care Holdings, Inc. (the "Company") is a manufacturer, marketer
and distributor of personal care product lines, including Chubs, Wet Ones,
Diaparene, Binaca, Mr. Bubble, Ogilvie, Dorothy Gray, Satura, Better Off
and Tussy. The Company has operations in Australia, to market and
distribute Chubs to the Australian and New Zealand markets. The Company
was formed on April 1, 1996 as a result of the purchase of the Personal
Products Division of Reckitt & Colman by the Company. Although the Company
sells its products in thirty countries worldwide, approximately 90% of the
Company's sales are to customers in the United States. The Company
operates in the consumer products segment.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of
Personal Care Holdings, Inc. and its subsidiaries. All intercompany
transactions and balances have been eliminated.
INVENTORIES
Inventories are stated at the lower of cost or market. Cost is principally
determined by the first-in, first-out method.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is calculated
using the straight-line method over the estimated useful lives of the
related assets, which range from three to forty years. Leasehold
improvements are amortized utilizing the straight-line method over the
shorter of the life of the lease or the estimated useful lives of the
assets. Maintenance and repairs are charged to operations as incurred, and
replacements and betterments are capitalized.
INTANGIBLE ASSETS
Goodwill is related to the acquisition of the business and is being
amortized on a straight-line basis over forty years, the estimated future
period to be benefited.
Included in other assets are deferred financing fees and patents. These
costs are being amortized over seven years (the term of the loan agreement)
and ten years, respectively.
<PAGE>
PERSONAL CARE HOLDINGS, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(2) CONTINUED
The Company evaluates, when circumstances warrant, the recoverability of
its intangible assets on the basis of undiscounted cash flow projections
and through the use of various other measures, which include market share
and business plans.
REVENUE RECOGNITION
The Company recognizes sales upon shipment of merchandise. Net sales
consist of gross revenue less expected returns, trade discounts and
customer allowances.
INCOME TAXES
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to the differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases and operating loss and tax credit carryforwards.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is recognized
in income in the period that includes the enactment date.
STOCK COMPENSATION
The Company has adopted Statement of Financial Accounting Standards
("SFAS") No. 123, "Accounting for Stock-Based Compensation." As permitted
under SFAS No. 123, the Company elected not to adopt the fair value-based
method of accounting for its stock-based compensation plans, but will
account for such compensation under the provisions of Accounting Principles
Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees,"
and related interpretations. The Company has, however, complied with the
disclosure requirements of SFAS No. 123.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash on hand and short-term investments
with original maturities of three months or less.
FISCAL YEAR
The Company's fiscal year includes the 52 or 53 weeks ending on the last
Saturday in March. The year ended March 29, 1997 included 52 weeks.
USE OF ESTIMATES
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect
<PAGE>
PERSONAL CARE HOLDINGS, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(2) CONTINUED
the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the consolidated financial
statements and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates.
ADVERTISING COSTS
The Company generally expenses production costs of media advertising as of
the first date the advertisements take place. Advertising expense included
in selling, general and administrative expenses was $9,675,000 for the year
ended March 29, 1997.
(3) INVENTORIES
Inventories at March 29, 1997 consist of the following:
Raw materials and packaging $ 3,682,179
Work-in-process 262,196
Finished goods 6,376,869
-----------
$10,321,244
-----------
-----------
(4) PROPERTY AND EQUIPMENT
Property and equipment consist of the following at March 29, 1997:
Useful Lives
------------
Land and buildings $ 2,344,529 40 years (buildings)
Machinery and equipment 17,159,434 3-15 years
Furniture and fixtures 366,751 10 years
Computer software 243,302 5 years
Leasehold improvements 264,421 5 years
Construction in progress 238,782
------------
20,617,219
Less accumulated depreciation
and amortization 1,856,638
------------
$ 18,760,581
------------
------------
Depreciation and amortization expense totaled $1,856,638 for the year ended
March 29, 1997.
<PAGE>
PERSONAL CARE HOLDINGS, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(5) SHORT-TERM BORROWINGS
The Company has a commitment from Fleet Bank for a line of credit, expiring
April 2002, of up to $5,000,000 which can be used to support letters of
credit. At March_29, 1997, the Company has $5,000,000 available under this
line of credit. Any actual borrowings under this arrangement are governed
by the terms of the Fleet revolving credit line.
(6) LONG-TERM DEBT
Long-term debt at March 29, 1997 consists of the following:
Reckitt & Colman
----------------
Term loan, with interest, payable semiannually in
March and September, increasing from 11% in
1997 to 15% in 2001. Principal due
September 30, 2003 (see note 11(b)) $ 15,000,000
Fleet Bank
----------
Revolving credit line of up to $20,000,000,
with interest at LIBOR + 2.0%
(7.6875% at March 29, 1997)
and principal and interest due in quarterly
installments through April 3, 2002 (a) 1,994,637
Term loan A - Tranche 1, with interest at LIBOR
+ 2.0% (7.6875% at March 29, 1997)
and principal and interest due in quarterly
installments through April 3, 2002 (a) 25,890,639
Term loan A - Tranche 2, with interest at LIBOR
+ 2.0% (7.6602% at March 29, 1997)
and principal and interest due in quarterly
installments through April 3, 2002 (a) 17,109,360
Term loan B, with interest at LIBOR + 2.5%
(8.1875% at March 29, 1997)
and principal and interest due in quarterly
installments through April 3, 2003 (a) 12,000,000
------------
Total long-term debt 71,994,636
Less current installments 10,640,500
------------
Total long-term debt, excluding
current installments $ 61,354,136
------------
------------
(a) The Fleet Bank agreement, which is secured by real property owned by the
Company, provides for accelerated repayments based on specified levels of
operating cash flows, as defined in the agreement. As of March_29, 1997,
this prepayment amounted to approximately $4,490,500, which has been
classified in the current portion of long-term debt.
<PAGE>
PERSONAL CARE HOLDINGS, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(6) CONTINUED
Maturities of long-term debt at March 29, 1997 are: $10,640,500 in fiscal
1998; $7,000,000 in fiscal 1999; $10,000,000 in fiscal 2000; $10,000,000 in
fiscal 2001; $10,169,000 in fiscal 2002 and $24,185,136 thereafter.
The Company's debt agreements contain certain covenants, including those
relating to a minimum consolidated net worth, a minimum fixed charge
coverage ratio and a maximum leverage ratio, as defined by the agreements.
As of March 29, 1997, the Company is in compliance with all the terms and
conditions of the agreements.
(7) RETIREMENT AND SAVINGS PLAN
The Company provides a defined contribution retirement plan covering all
employees in the United States. The plan provides that employees can
contribute from 1% to 15% of their annual earnings, as defined, subject to
the maximum allowed under Section 401(k) of the Internal Revenue Code
($9,500 for 1996). Employee contributions are matched with a contribution
by the Company of 75% of the employee's contribution up to 6% of eligible
compensation. The sum of an employee's annual contribution and the
Company's match is subject to the limit of the lesser of $30,000 or 25% of
the employee's compensation. For the year ended March 29, 1997, the
Company contributed approximately $257,426 to the plan.
(8) INCOME TAXES
Losses from operations before income taxes for the year ended March 29,
1997 are as follows:
U.S. $ (784,978)
Foreign (138,440)
-----------
$ (923,418)
-----------
-----------
The Company's income tax benefit for the year ended March 29, 1997 consists
of the following:
Deferred
Federal $ 254,137
State 58,863
-----------
$ 313,000
-----------
-----------
<PAGE>
PERSONAL CARE HOLDINGS, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(8) CONTINUED
A reconciliation of the differences between the Company's actual income tax
benefit and the Federal income tax benefit computed at the statutory rate
of 35% for the year ended March 29, 1997 is as follows:
Expected federal income tax benefit
at statutory rate $ (323,196)
Foreign losses not tax effected 48,454
State tax benefit, net of federal income tax effect (38,258)
-----------
Total tax benefit $ (313,000)
-----------
-----------
The tax effect of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at March
29, 1997 are presented below:
Deferred tax assets:
Allowances on accounts receivable $ 154,400
Inventories 503,000
Promotional accruals 376,200
Compensation and benefits 282,700
Net operating loss carryforwards 575,000
-----------
Total gross deferred tax assets 1,891,300
Deferred tax liabilities:
Property and equipment 300,300
Goodwill 1,265,600
Other 12,400
-----------
Total gross deferred tax liabilities 1,578,300
-----------
Net deferred tax asset $ 313,000
-----------
-----------
Management of the Company has determined, based upon expected income in the
future, that it is more likely than not that operating income will be
sufficient to fully realize the net deferred tax asset and, therefore, no
valuation allowance is warranted at March 29, 1997.
At March 29, 1997, the Company has net operating loss carryforwards of
approximately $1,334,000, expiring in fiscal 2012, to offset against future
taxable income for Federal income tax purposes.
<PAGE>
PERSONAL CARE HOLDINGS, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(9) FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of financial instruments approximate their fair value
as of March_29, 1997. The methods and assumptions used to estimate the
fair value of the financial instruments vary among the types of
instruments. For cash and cash equivalents, accounts receivable, accounts
payable and accrued expenses, the short maturity of the instruments and
obligations supports their fair value at their respective carrying amounts.
The carrying amount of the Company's debt approximates its fair value due
to the variable interest rates which approximate current market rates.
(10) COMMITMENTS
The Company has several noncancellable operating leases, primarily for
office and warehouse space and automobiles, expiring at various dates
through 2002.
Future minimum rental commitments under noncancelable operating leases as
of March_29, 1997 are as follows:
Year ending March 29 Amount
------------------- ------
1998 $1,060,744
1999 1,048,470
2000 1,009,765
2001 987,468
2002 721,637
----------
$4,828,084
----------
----------
Rent expense under all operating leases charged to selling, general and
administrative expenses in the accompanying consolidated statement of
operations for the year ended March_29, 1997 was approximately $377,074.
(11) STOCKHOLDERS' EQUITY
(a) STOCK OPTION PLAN
The Company has adopted the Non-qualified Stock Option Plan (the
"Plan") providing for the granting of options to purchase up to
151,619 shares of common stock to officers, directors, consultants and
key employees. Any options granted generally become exercisable,
commencing twelve months from the date of grant, at the rate of 20%
per year for five years, subject to the attainment of certain
financial targets by the Company. Each option granted under the Plan
is generally exercisable for ten years.
<PAGE>
PERSONAL CARE HOLDINGS, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(11) CONTINUED
The following table summarizes information about stock options
outstanding, of which none was exercisable, at March 29, 1997:
Outstanding:
Exercise price $ 40.30
Number outstanding 151,619
Remaining contractual life 9 years
The Company applies APB No. 25 and related interpretations in
accounting for its stock-based compensation plan. Accordingly, as the
exercise price at the date of grant equaled the estimated fair value
of a common share, no compensation cost has been recognized in
connection with the Plan. The Company has adopted the disclosure-only
option under SFAS No. 123. If the accounting provisions of SFAS_No.
123 had been adopted, the Company's net loss for the year ended
March_29, 1997 would have been increased on a pro forma basis to
$1,624,467. This effect was calculated using the minimum value method
to value stock options at the date of grant. Zero dividends, a 6.72%
risk-free interest rate, and a ten year life were assumed in the
calculation.
(b) WARRANTS
In connection with the term loan agreement with Reckitt & Colman
("R&C"), on April_1, 1996, the Company issued 20,000 common stock
purchase warrants to R&C. These warrants allow R&C to purchase 20,000
shares of the Company's common stock at an exercise price of $40.30,
adjusted as defined in the agreement. In general, the warrants allow
R&C to purchase 6,666 shares on July 31, 1998; an additional 6,666
shares on August_31, 1999; and an additional 6,667 shares on
August_31, 2000. The warrants are canceled if the term loan payable
to R&C (see note 6) is paid in full prior to the July 1998 exercise
date.
(c) COMMON STOCK
During the year ended March 29, 1997, the Company sold 7,320 shares of
common stock to certain key employees at a price of $40.30 per share.
(12) BUSINESS CONCENTRATION
Most of the Company's customers are located in the United States. One
customer accounted for approximately 20% of the Company's net sales in the
year ended March_29, 1997. The Company's top five customers accounted for
approximately 30% of total net sales in the same period.
<PAGE>
PERSONAL CARE HOLDINGS, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(13) RELATED PARTY TRANSACTION
The Company pays a management fee to its principal shareholder of $20,000
per month, plus expenses incurred.
(14) INFORMATION BY MAJOR GEOGRAPHIC SEGMENT
Net sales by geographic area represent sales to unaffiliated customers only
for the year ended March 29, 1997:
Sales:
United States $100,430,589
Canada 8,135,126
Australia/New Zealand 2,422,937
------------
$110,988,652
------------
------------
Operating profit (loss) is defined as total revenue less operating
expenses, exclusive of other miscellaneous expense, interest and income
taxes, for the year ended March 29, 1997:
Operating profit (loss):
United States $ 4,120,479
Canada 1,842,763
Australia/New Zealand (138,438)
------------
$ 5,824,804
------------
------------
Identifiable assets by geographic area represent those assets that are used
in operations in each area as of March 29, 1997:
Identifiable assets:
United States $123,712,327
Canada 4,235,735
Australia/New Zealand 1,612,656
------------
$129,560,718
------------
------------
(15) SUBSEQUENT EVENTS
In November 1997, using borrowings under the Fleet Bank credit facilities,
the Company repaid the term loan of $15.0 million due to Reckitt & Colman.
<PAGE>
PERSONAL CARE HOLDINGS, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(15) CONTINUED
On January 28, 1998, all of the common stock of the Company was acquired by
Playtex Products, Inc. (Playtex) for approximately $91,000,000 in cash and
9,257,345 shares of Playtex common stock. In connection with the
acquisition by Playtex, the borrowings under the Fleet Bank credit
facilities were repaid and the agreement terminated.
<PAGE>
Exhibit 99.2
PERSONAL CARE HOLDINGS, INC.
AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 27, 1997
<PAGE>
PERSONAL CARE HOLDINGS, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited, in thousands)
ASSETS December 27,
1997
--------
Current Assets:
Cash and cash equivalents $ 551
Accounts receivable, net 13,970
Inventories 15,702
Prepaid expenses and other current assets 335
Deferred tax assets 1,059
--------
Total current assets 31,617
Property and equipment 18,917
Other assets 2,916
Goodwill 75,466
--------
Total assets $128,916
--------
--------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 5,000
Accounts payable and accrued expenses 17,318
--------
Total current liabilities 22,318
Long-term debt, excluding current portion 60,500
Deferred tax liabilities 2,602
--------
Total liabilities 85,420
Stockholders' equity:
Common Stock, $0.01 par value, authorized
1,300,000 shares; issued and
outstanding 1,003,123 shares 10
Additional paid-in capital 40,450
Retained earnings 3,036
--------
Total stockholders' equity 43,496
--------
Total liabilities and stockholders' equity $128,916
--------
--------
See accompanying condensed notes to consolidated financial statements.
<PAGE>
PERSONAL CARE HOLDINGS, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands)
Nine Month Period Ended
---------------------------
December 27, December 26,
1997 1996
-------- --------
Net sales $90,987 $ 80,443
Cost of goods sold 66,681 52,937
-------- --------
Gross profit 24,306 27,506
Selling, general and administrative expenses 15,380 24,939
-------- --------
Operating profit 8,926 2,567
Other expenses:
Interest expense, net 4,364 4,904
Other (income) and expense 36 (10)
-------- --------
Earnings (loss) from operations
before income taxes and
extraordinary gain 4,526 (2,327)
Income tax expense (benefit) 1,795 (848)
-------- --------
Earnings (loss) before extraordinary
gain 2,731 (1,479)
Extraordinary gain on early extinguishment
of debt, net of $585 of tax expense 915 --
-------- --------
Net earnings (loss) $ 3,646 $ (1,479)
-------- --------
-------- --------
See accompanying condensed notes to consolidated financial statements.
<PAGE>
PERSONAL CARE HOLDINGS, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT
OF CHANGES IN STOCKHOLDERS' EQUITY
NINE MONTH PERIOD ENDED DECEMBER 27, 1997
(Unaudited, in thousands)
Additional
Common Paid-in Accumulated
Stock Capital Deficit Total
----- ------- ------- -----
Balance, March 29, 1997 $10 $40,360 $ (610) $39,760
Issuance of shares of
common stock -- 90 -- 90
Net earnings -- -- 3,646 3,646
--- ------- ------ -------
Balance, December 27, 1997 $10 $40,450 $3,036 $43,496
--- ------- ------ -------
--- ------- ------ -------
See accompanying condensed notes to consolidated financial statements.
<PAGE>
PERSONAL CARE HOLDINGS, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
Nine Month Period Ended
-----------------------
December 27, December 26,
1997 1996
------- -------
Cash flows provided by operating activities:
Net earnings (loss) $3,646 $(1,479)
Non-cash items included in earnings:
Depreciation and amortization 3,174 3,055
Deferred income taxes 1,856 1,197
Loss on disposal of fixed assets -- 145
(Increase) Decrease in working capital items (3,220) 10,118
------- -------
Net cash flows provided by operations 5,456 13,036
------- -------
Cash flows used in investing activities:
Purchase of property and equipment (1,687) (1,930)
------- -------
Net cash flows used in investing activities (1,687) (1,930)
------- -------
Cash flows used in financing activities:
Repayment of Reckitt & Colman term loan (15,000) --
Net borrowings (repayments) under
credit facilities 8,505 (9,172)
Proceed from issuance of common stock 90 295
------- -------
Net cash flows used in financing activities (6,405) (8,877)
------- -------
Net decrease in cash and cash equivalents (2,636) 2,229
Cash and cash equivalents at beginning of period 3,187 177
------- -------
Cash and cash equivalents at end of period $ 551 $ 2,406
------- -------
------- -------
Supplemental disclosure of cash flow information:
Cash paid during the period for :
Interest $ 5,130 $ 2,406
------- -------
------- -------
Income taxes $ -- $ --
------- -------
------- -------
See accompanying condensed notes to consolidated financial statements.
<PAGE>
PERSONAL CARE HOLDINGS, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. LONG-TERM DEBT
In November 1997, using borrowings under the Fleet Bank Credit Facilities,
the Company repaid the term loan of $15.0 million due to Reckitt & Colman for
$13.5 million and recognized an extraordinary gain on early extinguishment of
debt of $0.9 million, net of $0.6 million of income tax expense. Concurrent
with the repayment of the Term Loan, the Company amended the terms of the Fleet
Bank Credit Facilities.
Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
December 27,
1997
---------
<S> <C>
Fleet Bank Credit Facilities
- ----------------------------
Revolving credit line of up to $20 million, with interest at LIBOR +1.50%
(7.1875% at December 27, 1997) interest due quarterly and principal
and installments through December 31, 2003 4,000
Term Loan A - Tranche 1, with interest at LIBOR +1.50%
(7.34375% at December 27,1997) interest due quarterly and principal
and installments through December 31, 2003 35,204
Term Loan A - Tranche 2, with interest at LIBOR +1.50%
(7.21875% at December 27, 1997) interest due quarterly and principal
and installments through December 31, 2003 1,204
Term Loan A - Tranche 3, with interest at LIBOR +1.50%
(7.25000% at December 27, 1997) interest due quarterly and principal
and installments through December 31, 2003 46
Term Loan A - Tranche 4, with interest at LIBOR +1.50%
(7.21875% at December 27, 1997) interest due quarterly and principal
and installments through December 31, 2003 25,046
-------
65,500
Less current maturities (5,000)
-------
Total long-term debt $60,500
-------
-------
</TABLE>
2. SUBSEQUENT EVENT
On January 28, 1998, Personal Care Holdings, Inc. Merged with a
wholly-owned subsidiary of Playtex Products, Inc. (Playtex) for approximately
$91.0 million in cash and 9,257,345 shares of Playtex common stock.
<PAGE>
Exhibit 99.3
PLAYTEX PRODUCTS, INC.
PRO FORMA UNAUDITED CONDENSED COMBINED FINANCIAL INFORMATION
<PAGE>
PLAYTEX PRODUCTS, INC.
INDEX TO THE PRO FORMA UNAUDITED
CONDENSED COMBINED FINANCIAL INFORMATION
Pages
Basis of Presentation of Pro Forma Information 3
Pro Forma Condensed Combined Balance Sheet as of December 27, 1997 5
Notes to Pro Forma Condensed Combined Balance Sheet as of
December 27, 1997 6
Pro Forma Condensed Combined Statement of Operations for the
twelve month period ended December 27, 1997 7
Notes to Pro Forma Condensed Combined Statement of Operations for the
twelve month period ended December 27, 1997 8
<PAGE>
PLAYTEX PRODUCTS, INC.
PRO FORMA CONDENSED COMBINED BALANCE SHEET AND
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
BASIS OF PRESENTATION OF PRO FORMA INFORMATION
On July 21, 1997, Playtex Products, Inc. (the "Company") completed a
refinancing of its senior indebtedness (the "1997 Refinancing") designed to
increase its financial and operational flexibility. The 1997 Refinancing
includes: (i) the issuance of $150.0 million principal amount of 87/8%
unsecured senior notes due July 15, 2004 (the "Senior Notes"), (ii) a $150.0
million senior secured term loan due September 15, 2003 (the "1997 Term Loan"),
and (iii) senior secured credit facilities (the "1997 Senior Secured Credit
Facilities") of $170.0 million comprised of a $115.0 million revolving credit
facility (the "1997 Revolving Credit Facility") and a $55.0 million term loan
facility (the "1997 Term A Loan"). The 1997 Term Loan and the 1997 Senior
Secured Credit Facilities are known collectively as the 1997 Credit Agreement
("1997 Credit Agreement"). The net proceeds from the 1997 Refinancing were used
to retire the indebtedness outstanding under the Company's prior credit
agreement originated in 1995. Concurrently, this credit agreement was
terminated. The rates of interest on borrowings under the 1997 Credit Agreement
are, at the Company's option, a function of various alternative short-term
borrowing rates, as defined in the associated credit agreement. Quarterly
commitment fees of three-eighths of one percent on the unutilized portion of the
1997 Revolving Credit Facility and an agency fee of approximately $0.1 million
per annum are also required. Fees and expenses associated with the 1997
Refinancing of approximately $10.0 million are amortized over the term of the
associated indebtness.
On January 6, 1998, the Company acquired Carewell Industries, Inc.
("Carewell") for approximately $9.2 million in cash. Carewell manufactures and
markets the Dentax-Registered Trademark- line of toothbrushes, toothpaste, and
dental floss for distribution through food stores, drug chains, and mass
merchandisers. The acquisition, which was financed under the Company's 1997
Revolving Credit Facility, was accounted for as a purchase.
On January 26, 1998, the Company acquired certain tangible and intangible
assets related to the Binky-Registered Trademark- pacifier business ("Binky')
from Binky-Griptight, Inc. for approximately $1.2 million in cash and $0.5
million in notes payable due July 27,1998. The acquisition, which was financed
under the Company's 1997 Revolving Credit Facility, was accounted for as a
purchase.
On January 28, 1998, the Company acquired Personal Care Holdings, Inc.
("PCH") for approximately $91.0 million in cash and 9,257,345 shares valued
at $9.875 per share of the Company's common stock. PCH manufactures and
markets a number of leading consumer product brands, including Wet
Ones-Registered Trademark- pre-moistened towelettes, Chubs-Registered
Trademark- baby wipes, Ogilvie-Registered Trademark- home permanent products,
Binaca-Registered Trademark- breath spray and drops, Mr. Bubble-Registered
Trademark-children's bubble bath products, Diaparene-Registered Trademark-
infant care products, Tussy-Registered Trademark- deodorants, Dorothy
Gray-Registered Trademark- skin care products and Better Off-Registered
Trademark-depilatories. The cash portion of the consideration paid for the
PCH transaction was financed with borrowings under the 1997 Term Loan. The
acquisition was accounted for as a purchase.
The pro forma condensed combined balance sheet gives effect to the
acquisitions of Carewell, Binky, and PCH (the "Acquired Companies") as if they
had occurred on December 27, 1997.
<PAGE>
PLAYTEX PRODUCTS, INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
AND PRO FORMA CONDENSED COMBINED BALANCE SHEET
BASIS OF PRESENTATION OF PRO FORMA INFORMATION (continued)
The pro forma condensed combined statement of operations for the twelve
month period ended December 27, 1997 gives effect to the acquisitions of the
Acquired Companies and the 1997 Refinancing as if they had occurred on December
29, 1996, the first day of the Company's fiscal year ended December 27, 1997.
The pro forma condensed combined balance sheet and pro forma condensed combined
statement of operations are unaudited and were derived by adjusting the
historical consolidated financial statements of the Company for the impact of
the events listed above and as described in the respective notes hereto. These
pro forma condensed 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 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 financial information and accompanying notes
should be read in conjunction with the historical consolidated financial
statements of the Company, including the notes thereto, and any other
information pertaining to the Company, previously provided to stockholders.
The pro forma adjustments for the Acquired Companies do not give effect to
consolidation savings or other changes in revenue or other costs of the Acquired
Companies that may occur subsequent to their acquisition by the Company.
The unaudited pro forma information includes financial information for
Carewell at and for the twelve month period ended December 31, 1997, Binky at
and for the twelve month period ended December 31, 1997, and PCH at and for the
twelve month period ended December 27, 1997. For ease of reference, all column
headings used in the unaudited pro forma information refer to December 27, 1997
or the twelve month period ended December 27, 1997, which is the Company's
fiscal year end date.
<PAGE>
PLAYTEX PRODUCTS, INC.
PRO FORMA CONDENSED COMBINED BALANCE SHEET
DECEMBER 27, 1997
<TABLE>
<CAPTION>
Historical Pro Forma
------------------------ ---------------------------
Playtex
Products, Acquired
ASSETS Inc. Companies Adjustments Combined
--------- --------- --------- ---------
(1) (2) (3) (4)
<S> <C> <C> <C> <C>
Cash..................................... $ 3,231 $ 625 $ -- $ 3,856
Receivables, less allowances............. 66,876 15,120 -- 81,996
Inventories.............................. 42,500 16,064 2,535 (a) 61,099
Other current assets..................... 12,755 1,861 6,142 (b) 20,758
--------- --------- --------- ---------
Current assets ..................... 125,362 33,670 8,677 167,709
Net property, plant and
equipment............................. 54,810 19,319 (1,423) (a) 72,706
Intangible assets........................ 388,743 77,049 91,228 (c) 557,020
Due from related party................... 80,017 127 (127) (d) 80,017
Other noncurrent assets.................. 3,626 1,356 2,542 (e) 7,524
--------- --------- --------- ---------
Total assets $ 652,558 $ 131,521 $ 100,897 $884,976
--------- --------- --------- ---------
--------- --------- --------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and
accrued expenses.................... $ 63,339 $ 19,837 $ 8,958 (f) $ 92,134
Other current liabilities................ 5,621 5,000 (3,500)(g) 7,121
--------- --------- --------- ---------
Current liabilities................. 68,960 24,837 5,458 99,255
Long-term debt........................... 736,300 60,500 47,604 (h) 844,404
Due to related party..................... 78,386 3,780 (3,780)(i) 78,386
Other noncurrent liabilities............. 36,975 2,602 -- 39,577
--------- --------- --------- ---------
Total liabilities................... 920,621 91,719 49,282 1,061,622
Stockholders' equity..................... (268,063) 39,802 51,615 (j) (176,646)
--------- --------- --------- ---------
Total liabilities and
stockholders' equity............ $ 652,558 $ 131,521 $ 100,897 $ 884,976
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
- --------------------------------
(1) Represents the historical financial position of Playtex Products, Inc. at
December 27, 1997.
(2) Represents the combined historical financial position of the Acquired
Companies at December 27, 1997.
(3) See Note II of the notes to pro forma condensed combined balance sheet.
(4) Reflects the financial position of Playtex Products, Inc. on a pro forma
basis assuming the acquisitions of the Acquired Companies had occurred on
December 27, 1997.
See notes to pro forma condensed combined balance sheet.
<PAGE>
PLAYTEX PRODUCTS, INC.
NOTES TO PRO FORMA CONDENSED COMBINED BALANCE SHEET
DECEMBER 27, 1997
(UNAUDITED)
I. BASIS OF PRESENTATION
The pro forma condensed combined balance sheet gives effect to the
acquisitions of the Acquired Companies as if they had occurred on December
27, 1997.
II. PRO FORMA ADJUSTMENTS
(a) To adjust the carrying value of inventory and net property, plant and
equipment acquired to fair value in conformity with Accounting
Principles Board Opinion No. 16 "Business Combinations" ("APB 16").
(b) Primarily to record the net current deferred tax asset that arises as
a result of purchase accounting adjustments.
(c) To record intangible assets of $89.8 million associated with the
acquisition of the Acquired Companies which was calculated as the
excess of acquisition costs over the estimated fair value of net
assets acquired in conformity with APB 16, the deferred financing
costs of $3.0 million associated with obtaining funding to acquire the
Acquired Companies, and the elimination of the unamortized balance of
deferred financing costs recorded by PCH of $1.6 million.
(d) To record the repayment of loans from Carewell shareholders at
closing.
(e) To record net long-term deferred tax assets arising as a result of
purchase accounting adjustments, principally the anticipated benefit
of net operating loss carryforwards associated with the acquisitions
of PCH and Carewell.
(f) To record net liabilities assumed as a result of the acquisition of
the Acquired Companies. These liabilities are primarily associated
with the costs to exit certain business activities of the Acquired
Companies and to involuntarily terminate or relocate certain employees
of the Acquired Companies.
(g) To record the repayment of $5.0 million of current portion of
long-term debt of PCH, the issuance of $0.5 million note payable
associated with the acquisition of Binky, and the current portion of
long-term debt of $1.0 million arising from additional borrowings
under the 1997 Term Loan to fund the acquisition of PCH.
(h) To record long-term bank borrowings under the 1997 Credit Agreement of
$108.1 million to finance the acquisition of the Acquired Companies
and to record the retirement of the Acquired Companies' long-term debt
of $60.5 million at the closing of the PCH acquisition.
(i) To record the repayment of the Acquired Companies' related party debt
at closing.
(j) To record the portion of the acquisition costs of PCH paid in the form
of the issuance of 9,257,345 of the Company's Common Stock valued
at $9.875 per share or $91.4 million and the elimination of
stockholders' equity of the Acquired Companies of $39.8 million.
<PAGE>
PLAYTEX PRODUCTS, INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 27, 1997
(In thousands)
<TABLE>
<CAPTION>
Historical Pro Forma
----------------------- ---------------------------------------------
Playtex
Products Acquired 1997
Inc. Companies Refinancing Adjustments Combined
--------- --------- -------- --------- ---------
(1) (2) (3) (4) (5)
<S> <C> <C> <C> <C> <C>
Net revenues............................ $ 500,632 $ 134,912 $ -- $ -- $ 635,544
Cost of sales........................... 195,980 67,840 -- -- 263,820
--------- --------- -------- --------- ---------
Gross profit....................... 304,652 67,072 -- -- 371,724
Operating expenses:
Advertising and sales promotion......... 114,279 32,858 -- -- 147,137
Selling, distribution and research...... 58,657 11,948 -- -- 70,605
Administrative.......................... 19,120 9,901 -- -- 29,021
Amortization of intangibles............. 12,894 2,286 -- 2,605 (e) 17,785
--------- --------- -------- --------- ---------
Total operating expenses.......... 204,950 56,993 -- 2,605 264,548
--------- --------- -------- --------- ---------
Operating earnings (loss)......... 99,702 10,079 -- (2,605) 107,176
(31,511)(a) (6,415)(f)
Interest expense, net................... 64,470 6,415 32,612 (b) 8,540 (g) 74,111
--------- --------- -------- --------- ---------
Earnings before income taxes...... 35,232 3,664 (1,101) (4,730) 33,065
Income taxes............................ 16,501 1,475 (407)(c) (1,750)(h) 15,819
--------- --------- -------- --------- ---------
Earnings from
continuing operations........... $ 18,731 $ 2,189 $ (694) $ (2,980) $ 17,246
--------- --------- -------- --------- ---------
--------- --------- -------- --------- ---------
Net earnings (6)................... $ 14,653 $ 14,086
--------- --------- -------- --------- ---------
--------- --------- -------- --------- ---------
Weighted average shares outstanding:
Basic.............................. 50,923 9,257 (i) 60,180
Diluted............................ 51,006 9,257 (i) 60,263
Earnings per share (basis and diluted)
from continuing operations............ $ 0.37 $ 0.29
Net earnings per share (6).............. $ 0.29 $ 0.23
</TABLE>
- -----------------------------
(1) Represents the historical results of operations of Playtex Products, Inc.
for the twelve month period ended December 27, 1997 excluding the impact of
an extraordinary loss of $4.1 million, net of $2.3 million income tax
benefit, resulting from the write-off of the unamortized portion of
deferred financing costs associated with the Company's prior credit
agreement.
(2) Represents the historical results of operations of the Acquired Companies
for the twelve month period ended December 27, 1997 excluding the impact of
an extraordinary gain of $0.9 million, net of $0.6 million income tax
expense, resulting from the early retirement of the $15.0 million note
payable by PCH during 1997. Certain reclassifications (primarily
reducing Cost of Sales and reflecting Advertising in Sales Promotions)
have been made to the historical results of the Acquired Companies to
conform with the historical presentation of Playtex Products, Inc.
(3) See Note II of the notes to pro forma condensed combined statement of
operations.
(4) See Note III of the notes to pro forma condensed combined statement of
operations.
(5) Reflects the results of operations of Playtex Products, Inc. on a pro forma
basis assuming the 1997 Refinancing and the acquisitions of the Acquired
Companies had occurred on December 29, 1996.
(6) Net earnings and Net earnings per share give effect to extraordinary
loss (see note 1 above) and the extraordinary gain (see note 2 above).
See notes to pro forma condensed combined statement of operations.
<PAGE>
PLAYTEX PRODUCTS, INC.
NOTES TO PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 27, 1997
(UNAUDITED)
I. BASIS OF PRESENTATION
The pro forma condensed combined statement of operations for the twelve
month period ended December 27, 1997 gives effect as if the 1997
Refinancing and the acquisitions of the Acquired Companies had occurred
on December 29, 1996, the first day of the Company's fiscal year ending
December 27, 1997.
II. 1997 REFINANCING PRO FORMA ADJUSTMENTS - The following is a description of
the pro forma adjustments associated with the 1997 Refinancing.
(a) To eliminate interest expense of $31.1 million and amortization of
deferred financing of $0.4 million associated with the Company's prior
credit agreement.
(b) To record pro forma interest expense on borrowings in connection with
the 1997 Refinancing and to record the amortization of deferred
financing costs associated with the 1997 Refinancing. The pro forma
interest expense on the variable rate indebtedness included in the
1997 Refinancing was calculated using an average interest rate of
7.29%. This rate represents the average rate that would have been in
effect under the terms of the 1997 Refinancing for the twelve months
ended December 27, 1997. To the extent the assumed variable interest
rate fluctuates 1/2 of 1%, the Company's interest expense would be
impacted by approximately $1.2 million.
(c) To record the tax effect of the adjustments specified in notes (a) and
(b) at statutory rates.
III. ACQUISITION PRO FORMA ADJUSTMENTS - The following is a description of the
pro forma adjustments associated with the acquisitions of the Acquired
Companies.
(e) To record amortization of intangible assets associated with the
acquisition of the Acquired Companies over their estimated useful
lives (up to 40 years) of these assets in conformity with APB 16.
(f) To eliminate the Acquired Companies interest expense and amortization
of deferred financing costs.
<PAGE>
PLAYTEX PRODUCTS, INC.
NOTES TO PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 27, 1997
(UNAUDITED)
III. ACQUISITION PRO FORMA ADJUSTMENTS (continued)
(g) To record interest expense as if the borrowing under the Company's
1997 Credit Agreement used to finance the purchase of the Acquired
Companies had occurred at the beginning of the fiscal year ended
December 27, 1997. The average interest rates, as described in Note
II(b) above, were used to determine pro forma interest expense. To the
extent the assumed variable interest rate fluctuates 1/2 of 1%, the
Company's interest expense would be impacted by approximately $0.6
million.
(h) To record the tax effect of the adjustments specified in notes (e),
(f), and (g) at statutory rates.
(i) To record the issuance of 9,257,345 shares of Playtex's common stock
associated with the acquisition of PCH.
The pro forma adjustments for the Acquired Companies do not give effect to
consolidation savings or other changes in revenue or other costs of the Acquired
Companies that may occur subsequent to their acquisition by the Company.
