UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
or
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarter Ended June 27, 1998
PLAYTEX PRODUCTS, INC.
(Exact name of registrant as specified in its charter)
Delaware 33-25485-01 51-0312772
(State or other jurisdiction of (Commission File No.) (I.R.S. Employer
incorporation or organization) Identification No.)
300 Nyala Farms Road
Westport, Connecticut 06880
(203) 341-4000
-------------------------------------------------
(Address, including zip code, and
telephone number, including area
code, of principal executive offices)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrants were required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
Yes |X| No |_|
At August 3, 1998, 60,314,318 shares of Playtex Products, Inc. common
stock, par value of $.01 per share, were outstanding.
<PAGE>
PLAYTEX PRODUCTS, INC.
INDEX
PAGE
----
PART I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements 3 - 12
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 13 - 19
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 20
Item 2. Changes in Securities and Use of Proceeds 20
Item 4. Submission of Matters to a Vote of Security Holders 21
Item 6. Exhibits and Reports on Form 8-K:
(a) Exhibits 21
(b) Reports on Form 8-K 22
Signatures 23
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PLAYTEX PRODUCTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
June 27, December 27,
ASSETS 1998 1997
----------- ------------
(Unaudited)
Current assets:
Cash and cash equivalents $ 6,154 $ 3,231
Receivables, less allowance for doubtful accounts 125,604 66,876
Inventories 51,853 42,500
Current deferred taxes 14,782 7,806
Other current assets 1,628 4,949
----------- ---------
Total current assets 200,021 125,362
Net property, plant and equipment 73,674 54,810
Intangible assets, net 556,101 388,743
Due from related party 80,017 80,017
Other noncurrent assets 3,564 3,626
----------- ---------
Total assets $ 913,377 $ 652,558
=========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 22,475 $ 24,512
Accrued expenses 76,847 38,827
Income taxes payable 7,047 4,121
Current maturities of long-term debt 3,000 1,500
----------- ---------
Total current liabilities 109,369 68,960
Long-term debt 841,950 736,300
Due to related party 78,386 78,386
Other noncurrent liabilities 12,992 13,563
Deferred income taxes 26,182 23,412
----------- ---------
Total liabilities 1,068,879 920,621
Stockholders' equity:
Common stock, $.01 par value, authorized
100,000,000 shares, issued 60,314,318
shares at June 27, 1998 and 50,941,812
shares at December 27, 1997 603 509
Additional paid-in capital 516,996 424,706
Retained earnings (deficit) (670,651) (691,065)
Foreign currency translation adjustments (2,450) (2,213)
----------- ---------
Total stockholders' equity (155,502) (268,063)
----------- ---------
Total liabilities and stockholders' equity $ 913,377 $ 652,558
=========== =========
See notes to condensed consolidated financial statements.
-3-
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PLAYTEX PRODUCTS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited, in thousands, except per share data)
Three Months Ended
--------------------
June 27, June 28,
1998 1997
-------- --------
Net sales $177,560 $134,872
Cost of sales 70,464 53,362
-------- --------
Gross profit 107,096 81,510
Operating expenses:
Advertising and sales promotion 43,278 32,275
Selling, distribution and research 18,996 15,133
Administrative 5,973 4,591
Amortization of intangibles 4,451 3,224
-------- --------
Total operating expenses 72,698 55,223
-------- --------
Operating earnings 34,398 26,287
Interest expense, including related party interest
expense of $3,038 for both periods presented,
net of related party interest income of $3,000
for both periods presented 18,368 15,927
-------- --------
Earnings before income taxes 16,030 10,360
Income taxes 6,926 4,843
-------- --------
Net earnings $ 9,104 $ 5,517
======== ========
Earnings per share:
Basic $ .15 $ .11
======== ========
Diluted $ .15 $ .11
======== ========
Weighted average shares outstanding:
Basic 60,294 50,917
======== ========
Diluted 61,397 51,123
======== ========
See notes to condensed consolidated financial statements.
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PLAYTEX PRODUCTS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited, in thousands, except per share data)
Six Months Ended
--------------------
June 27, June 28,
1998 1997
-------- --------
Net sales $350,249 $271,282
Cost of sales 143,410 105,666
-------- --------
Gross profit 206,839 165,616
Operating expenses:
Advertising and sales promotion 80,169 64,006
Selling, distribution and research 34,774 28,974
Administrative 11,464 9,223
Amortization of intangibles 8,315 6,447
-------- --------
Total operating expenses 134,722 108,650
-------- --------
Operating earnings 72,117 56,966
Interest expense, including related party interest
expense of $6,075 for both periods presented,
net of related party interest income of $6,001
for both periods presented 36,318 32,209
-------- --------
Earnings before income taxes 35,799 24,757
Income taxes 15,385 11,392
-------- --------
Net earnings $ 20,414 $ 13,365
======== ========
Earnings per share:
Basic $ .35 $ .26
======== ========
Diluted $ .34 $ .26
======== ========
Weighted average shares outstanding:
Basic 58,632 50,910
======== ========
Diluted 59,561 51,108
======== ========
See notes to condensed consolidated financial statements.
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PLAYTEX PRODUCTS, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited, in thousands)
Foreign
Additional Retained Currency
Common Paid-In Earnings Translation
Stock Capital (Deficit) Adjustments
------ ---------- --------- -----------
Balance, December 27, 1997 $509 $424,706 $(691,065) $(2,213)
Net earnings -- -- 20,414 --
Stock issued to employees
exercising stock options 1 966 -- --
Stock issued in conjunction
with business acquisition 93 91,324 -- --
Foreign currency translation
adjustments -- -- -- (237)
---- -------- --------- -------
Balance, June 27, 1998 $603 $516,996 $(670,651) $(2,450)
==== ======== ========= =======
See notes to condensed consolidated financial statements.
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PLAYTEX PRODUCTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands, except share and per share data)
Six Months Ended
--------------------
June 27, June 28,
1998 1997
-------- --------
Cash flows provided by (used for) operations:
Net earnings $ 20,414 $ 13,365
Non-cash items included in earnings:
Amortization of intangibles 8,315 6,447
Amortization of deferred financing costs 1,474 1,083
Depreciation 4,525 3,752
Deferred taxes 6,004 3,191
Other, net (150) 30
Net increase in working capital accounts, net
of acquisitions (31,020) (29,248)
--------- --------
Net cash flows provided by (used for) operations 9,562 (1,380)
--------- --------
Cash flows used for investing activities:
Cash portion of businesses acquired (106,246) --
Purchases of property, plant and equipment (5,483) (6,017)
--------- --------
Net cash flows used for investing activities (111,729) (6,017)
--------- --------
Cash flows provided by financing activities:
Net borrowings under working capital facilities 7,900 18,000
Repayment of long-term debt (1,250) (12,500)
Issuance of note payable 500 --
Long-term debt borrowings 100,000 --
Payment of deferred financing costs (3,027) --
Issuance of shares of common stock 967 228
--------- --------
Net cash flows provided by financing activities 105,090 5,728
--------- --------
Change in cash and cash equivalents 2,923 (1,669)
Cash and cash equivalents at beginning of period 3,231 6,205
--------- --------
Cash and cash equivalents at end of period $ 6,154 $ 4,536
========= ========
Supplemental disclosures of cash flow information
Net cash paid during the periods for:
Interest $ 33,808 $ 31,096
========= ========
Income taxes, net of refunds $ 6,475 $ 2,842
========= ========
In connection with the acquisition of Personal Care Holdings, Inc., the
Company issued 9,257,345 shares of Common Stock with a value of $9.875 per
share, aggregating $91,417.
See notes to condensed consolidated financial statements.
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PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Consolidated Financial Statements
The accompanying quarterly condensed consolidated financial statements of
Playtex Products, Inc. ("Playtex" or the "Company") are unaudited; however, such
statements include all adjustments (consisting of normal recurring adjustments)
considered necessary in the opinion of management for a fair presentation of the
financial position, results of operations and cash flows of the Company. The
results of the interim period ended June 27, 1998 are not necessarily indicative
of the results that may be expected for the full year.
The Company presumes the users of this Quarterly Report on Form 10-Q have
read or have access to the audited financial statements contained in the
Company's Annual Report on Form 10-K for the year ended December 27, 1997.
Accordingly, all footnote disclosures which would substantially duplicate the
disclosures contained therein have been omitted.
2. Acquisitions
On January 6, 1998, the Company acquired Carewell Industries, Inc.
("Carewell") for approximately $9.2 million in cash. Carewell manufactures and
markets the Dentax(R) line of toothbrushes, toothpaste, and dental floss for
distribution through food stores, drug chains, and mass merchandisers. The
acquisition, which was financed through the Company's 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(R) pacifier business ("Binky") from Binky-Griptight,
Inc. for approximately $1.2 million in cash and $0.5 million in notes payable
due and paid on July 27, 1998. The acquisition, which was financed through the
Company's 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 of the
Company's Common Stock. PCH manufactures and markets a number of leading
consumer product brands, including Wet Ones(R) pre-moistened towelettes,
Chubs(R) baby wipes, Ogilvie(R) home permanent products, Binaca(R) breath spray
and drops, Mr. Bubble(R) children's bubble bath products, Diaparene(R) infant
care products, Tussy(R) deodorants, Dorothy Gray(R) skin care products and
Better Off(R) depilatories. The cash portion of the consideration paid for the
PCH transaction was financed with borrowings under the Company's credit facility
(see Note 6). The acquisition was accounted for as a purchase.
As indicated above, the acquisitions of PCH, Carewell, and Binky (the
"Acquisitions") were accounted for as purchases and at June 27, 1998 the Company
has substantially completed the assignment of fair value to all assets acquired
and liabilities assumed. Final fair value determinations are pending for certain
identifiable intangible assets acquired and certain employee benefit obligations
assumed. At June 27, 1998, the unallocated excess purchase price has been
assigned to goodwill pending final fair value assessment. The Company does not
believe that the fair value determinations, when completed, will have a material
impact on the recorded amounts of amortization of intangibles for the three and
six months ended June 27, 1998.
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<PAGE>
PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2. Acquisitions (continued)
The following consolidated unaudited pro forma results of operations
assumes the Acquisitions occurred as of December 29, 1996. The pro forma
financial information is not necessarily indicative of operating results that
would have occurred had the Acquisitions been consummated as of December 29,
1996, nor is it indicative of future operating results. The pro forma
adjustments used to derive the unaudited pro forma results of operations are
based upon available information and certain assumptions that management of the
Company believes are reasonable, and do not give effect to consolidation savings
or other changes in revenue or other costs of the Acquisitions that may occur
subsequent to their acquisition by the Company.
Six Months Ended
-----------------------
June 27, June 28,
(Unaudited, in thousands, except share data) 1998 1997
-------- --------
Net sales $356,983 $338,696
Net earnings $ 16,818 $ 12,700
Earnings per share:
Basic $ 0.28 $ 0.21
Diluted $ 0.27 $ 0.21
Weighted average shares outstanding:
Basic 60,262 60,166
Diluted 61,192 60,366
3. Comprehensive Earnings
Playtex adopted Statement of Financial Accounting Standards ("SFAS") No.
130, "Reporting Comprehensive Income" at the beginning of fiscal year 1998. The
only component of comprehensive earnings that impacts the Company is foreign
currency translation adjustments. There were no material differences between net
earnings and comprehensive earnings for the three or six month periods ended
June 27, 1998 and June 28, 1997. The net loss associated with the foreign
currency translation adjustments for the three and six month periods ended June
27, 1998 was $0.3 million and $0.2 million, respectively. The net loss
associated with the foreign currency translation adjustments for the three and
six month periods ended June 28, 1997 was $0.1 million and $0.2 million,
respectively. Accumulated other comprehensive earnings at June 27, 1998 and
December 27, 1997 consisted solely of foreign currency translation adjustments
with debit balances of $2.4 million and $2.2 million, respectively.
-9-
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PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
4. Balance Sheet Components
The components of certain balance sheet accounts are as follows (in
thousands):
June 27, December 27,
1998 1997
---------- -------------
(Unaudited)
Receivables $ 128,173 $ 68,545
Less allowance for doubtful accounts (2,569) (1,669)
--------- ---------
Net $ 125,604 $ 66,876
========= =========
Inventories:
Raw materials $ 9,381 $ 14,866
Work in process 832 845
Finished goods 41,640 26,789
--------- ---------
Total $ 51,853 $ 42,500
========= =========
Net property, plant and equipment:
Land $ 1,435 $ 1,190
Buildings 28,128 24,650
Machinery and equipment 123,118 103,767
--------- ---------
152,681 129,607
Less accumulated depreciation (79,007) (74,797)
--------- ---------
Net $ 73,674 $ 54,810
========= =========
Accrued expenses:
Advertising and sales promotion $ 26,259 $ 13,480
Interest 9,658 8,622
Employee compensation and benefits 9,879 7,808
Insurance 2,945 2,945
Accrued returns reserve 11,968 1,551
Accrued expenses - business combinations 7,852 --
Other 8,286 4,421
--------- ---------
Total $ 76,847 $ 38,827
========= =========
5. Accrued Expenses - Business Combinations
In connection with the Acquisitions (see Note 2), the Company accrued for
certain direct costs as part of the purchase price allocations. These costs
include $7.0 million for costs to exit activities of the acquired companies,
$2.0 million of costs to involuntarily terminate employees of the acquired
companies, and $0.8 million to relocate employees of the acquired companies. As
of June 27, 1998, the Company has incurred $0.9 million of expenses associated
with exit activities and $1.0 million of expenses associated with involuntary
terminations.
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<PAGE>
PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
6. Long-Term Debt
Long-term debt consists of the following (in thousands):
June 27, December 27,
1998 1997
--------- ------------
(Unaudited)
7.25% Note Payable, due July 27, 1998 $ 500 $ --
1997 Credit Agreement:
Term A Loan 55,000 55,000
Revolving Credit Facility 31,450 23,550
Term Loan 248,000 149,250
8 7/8% Unsecured Senior Notes due 2004 150,000 150,000
9% Senior Subordinated Notes due 2003 360,000 360,000
--------- ---------
844,950 737,800
Less current maturities (3,000) (1,500)
--------- ---------
Total long-term debt $ 841,950 $ 736,300
========= =========
In connection with the Company's acquisition of PCH on January 28, 1998
(see Note 2), the Company increased its borrowings under the Term Loan by $100
million. Required quarterly principal repayments on the incremental borrowings
commenced on March 15, 1998, in aggregate annual amounts equal to $1.0 million
through and including December 15, 2002, and in the amount of $250,000 on March
15, 2003 and June 15, 2003, with a final payment of $94.5 million on September
15, 2003. Fees and expenses associated with the incremental borrowings are being
amortized over its term. Additionally, in connection with the Company's
acquisition of Binky (see Note 2), the Company issued a $0.5 million note
payable due July 27, 1998.
The Term Loan provides for quarterly repayment of principal of $625,000 on
June 15, 1998, September 15, 1998, December 15, 1998 and March 15, 1999. The
rate of interest on borrowings under the 1997 Credit Agreement is, at the
Company's option, a function of various alternative short-term borrowing rates,
as defined in the 1997 Credit Agreement. At June 27, 1998 and June 28, 1997, the
weighted average variable interest rate was 7.18% and 7.58%, respectively. The
weighted average variable interest rate for the quarters ended June 27, 1998 and
June 28, 1997 was 7.13% and 7.46%, respectively. Quarterly commitment fees of
three-eighths of 1% on the unutilized portion of the 1997 Credit Agreement and
an agency fee of $0.1 million per annum are also required. At June 27, 1998,
aggregate unused lines of credit (giving effect to outstanding letters of
credit) under the 1997 Credit Agreement amounted to $82.5 million.
-11-
<PAGE>
PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
7. Contingent Liabilities
In the opinion of management, there are no claims, commitments, guarantees
or litigation pending to which the Company or any of its subsidiaries is a party
that would have a material adverse effect on the consolidated financial
position, results of operations or cash flows of the Company.
-12-
<PAGE>
PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
The following discussion and analysis of the Company's financial condition
and results of operations should be read in conjunction with the financial data
and condensed notes thereto included elsewhere in this quarterly report and with
the Annual Report on Form 10-K for the year ended December 27, 1997 filed with
the Securities and Exchange Commission (File No. 33-25485).
Cautionary Statement For Purposes of the "Safe Harbor" Provisions of the
Private Securities Litigation Reform Act of 1995
This document contains statements that constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. When used in this document, the words "anticipates," "intends," "plans,"
"believes," "estimates," "expects" and similar expressions are intended to
identify forward-looking statements. Such forward-looking statements involve
known and unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements of the Company to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements. Such factors include, but are not
limited to: the Company's highly leveraged capital structure, its substantial
principal repayment obligations, price and product changes and promotional
activity by competitors, the loss of a significant customer, the difficulties of
integrating acquisitions, adverse publicity and product liability claims and
dependence on key employees. The risk factors described herein could cause
actual results or outcomes to differ materially from those expressed in any
forward-looking statements of the Company and investors, therefore, should not
place undue reliance on any such forward-looking statements. Further, any
forward-looking statement speaks only as of the date on which such statement is
made, and the Company undertakes no obligation to update any forward-looking
statement or statements to reflect events or circumstances after the date on
which such statement is made or to reflect the occurrence of unanticipated
events. New factors emerge from time to time, and it is not possible for
management to predict all of such factors. Further, management cannot assess the
impact of each such factor on the Company's business or the extent to which any
factor, or combination of factors, may cause actual results to differ materially
from those contained in any forward-looking statements.
Results of Operations
Basis of Management's Discussion and Analysis
The Company is a leading manufacturer and marketer of a diversified line
of well recognized branded consumer products in a variety of categories. In
January 1998, the Company acquired PCH, Carewell and Binky (the "Acquisitions")
(see Note 2 of the Condensed Notes to Consolidated Financial Statements included
elsewhere in this quarterly report). As a result of the Acquisitions, the
Company's brand portfolio was strengthened with the addition of a number of
widely-recognized branded consumer products. The Feminine Care product category
includes a wide range of plastic and cardboard applicator tampons marketed under
such brand names as Playtex(R) Gentle Glide(R), Soft Comfort(R), Slimfits(R) and
Silk Glide(R). The Infant Care product
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<PAGE>
PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
category was comprised of the Playtex(R) disposable nurser system, cups and
mealtime products, reusable hard bottles and pacifiers. As a result of the
Acquisitions, the following brands were added to the Company's Infant Care
product category: Binky(R) pacifiers, Mr. Bubble(R) children's bubble bath,
Chubs(R) baby wipes, Diaparene(R) infant care products, and Wet Ones(R) hand and
face towelettes. The Company's Sun Care business consists of an extensive line
of sun care products marketed under the Banana Boat(R) and BioSun(R) trade
names. The Household Products category includes Playtex(R) household latex
gloves and Woolite(R) rug and upholstery cleaning products ("Woolite"). The
Company's Personal Grooming business consisted of Jhirmack(R) hair care products
and Tek(R) toothbrushes. As a result of the Acquisitions, the following brands
were added to the Company's Personal Grooming product category: Better Off(R)
depilatories, Binaca(R) breath spray and drops, Dentax(R) oral care products,
and Dorothy Gray(R) skin care products, Ogilvie(R) at-home permanents and
Tussy(R) deodorant.
Three Months Ended June 27, 1998 Versus
Three Months Ended June 28, 1997:
Net Sales - The Company's net sales grew $42.7 million, or 32%, to $177.6
million for the second quarter of 1998 from $134.9 million in the second quarter
of 1997. Acquisitions accounted for $33.1 million of the increase in net sales;
excluding this impact, Playtex's base businesses grew by $9.6 million or 7%
versus the second quarter of 1997.
Net sales in the Infant Care business grew $27.1 million, or 89%, to $57.4
million for the second quarter of 1998 from $30.3 million in the second quarter
of 1997. These results reflect the first full quarter of sales of Infant Care
brands acquired in the Acquisitions. Net sales of the acquired brands in the
second quarter of 1998 were $23.0 million and accounted for 85% of the increase
in Infant Care net sales. The Company's base Infant Care business grew $4.1
million in the second quarter of 1998, or 15%, predominately led by continued
growth in the Company's cups and mealtime products.
Feminine Care net sales increased $3.5 million, or 7%, to $52.2 million in
the second quarter of 1998 from $48.7 million in the second quarter of 1997.
These results reflect: (i) an increase in dollar market share of 1.5% to 27.0%
in the second quarter of 1998 from 25.5% in the second quarter of 1997, (ii) a
14.0% increase in retail dollar sales in the second quarter of 1998 compared to
the second quarter of 1997 and (iii) 7.0% dollar category growth in the second
quarter of 1998 over the comparable quarter in 1997.
Sun Care net sales increased $1.4 million, or 4%, to $38.1 million in the
second quarter of 1998 from $36.7 million in the second quarter of 1997.
Household Products net sales grew $2.3 million, or 17%, to $15.5 million
for the second quarter of 1998 from $13.2 million in the second quarter of 1997.
Net sales of Woolite increased $1.7 million, or 27%, and accounted for 71% of
the increase in Household Products net sales.
Personal Grooming net sales grew $8.3 million, or 138%, to $14.3 million
for the second quarter of 1998 from $6.0 million in the second quarter of 1997.
The Personal Grooming brands
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<PAGE>
PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
acquired in the Acquisitions increased net sales in the second quarter of 1998
by $10.1 million offsetting decreased net sales of Jhirmack products.
Gross Profit - Gross profit increased $25.6 million, or 31%, to $107.1
million for the second quarter of 1998 from $81.5 million in the second quarter
of 1997. As a percent of net sales gross profit decreased marginally to 60.3% in
the second quarter of 1998 from 60.4% in the second quarter of 1997 due
primarily to lower overall gross margins of the brands acquired in the
Acquisitions. The increase in gross profit was primarily due to the higher net
sales noted previously.
Operating Earnings - Operating earnings increased $8.1 million, or 31%, to
$34.4 million for the second quarter of 1998 from $26.3 million in the second
quarter of 1997. The increase in operating earnings resulted from (i) higher net
sales resulting from the brands acquired in the Acquisitions (ii) higher net
sales in the Company's base businesses, primarily Infant Care, Feminine Care,
and Household Products and (iii) stability of gross profit margins and operating
expenses as a percent of net sales.
Interest Expense - Interest expense grew $2.4 million, or 15%, to $18.4
million in the second quarter of 1998 from $15.9 million in the second quarter
of 1997. This resulted from an increase in long term debt of $107.2 million
(including current obligations). The Company assumed $110.4 million of
additional indebtedness due to the Acquisitions.
Income Taxes - Income taxes increased $2.1 million, or 43%, to $6.9
million in the second quarter of 1998 from $4.8 million in the second quarter of
1997. As a percent of pretax earnings, the Company's effective tax rate
decreased 3.5% to 43.2% of pretax earnings in the second quarter of 1998 from
46.7% in the second quarter of 1997. The favorable decrease in the Company's
effective tax rate is primarily due to the fixed nature of the Company's
non-deductible amortization expense.
Net Earnings - Net earnings increased $3.6 million, or 65%, to $9.1
million in the second quarter of 1998 from $5.5 million in the second quarter of
1997. This increase is due to the combined effects of all of the factors
described above.
Six Months Ended June 27, 1998 Versus
Six Months Ended June 28, 1997:
Net Sales - The Company's net sales grew $78.9 million, or 29%, to $350.2
million for the six month period ended June 27, 1998 from $271.3 million for the
same period in 1997. Acquisitions accounted for $57.9 million of the increase in
net sales; excluding this impact, Playtex's base businesses grew by $21.0
million or 8% versus the same period in 1997.
Net sales in the Infant Care business grew $45.1 million, or 72%, to
$107.9 million for the six months ended June 27, 1998 from $62.8 million for the
same period in 1997. These results reflect the net sales of Infant Care products
acquired in the Binky acquisition since January 26, 1998 and the PCH acquisition
since January 28, 1998. Net sales of the acquired Infant Care brands for the six
months ended June 27, 1998 were $39.6 million and accounted for 88% of the
increase in
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<PAGE>
PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
Infant Care net sales. The Company's base Infant Care business grew $5.5 million
for the six month period ended June 27, 1998, or 9%, predominately led by
continued growth in the Company's cups and mealtime products.
Feminine Care net sales increased $15.3 million, or 17%, to $103.0 million
for the six months ended June 28, 1998 from $87.8 million for the same period in
1997. These results reflect: (i) an increase in dollar market share of 1.6% to
26.8% in the six month period ended June 27, 1998 from 25.2% in the comparable
period of 1997, (ii) a 13.0% increase in retail dollar sales in the six month
period ended June 27, 1998 compared to the comparable period of 1997, (iii) 6.0%
dollar category growth in the six month period ended June 27, 1998 over the
comparable period in 1997, and (iv) relatively weak shipments to retailers in
the first six months of 1997, due to high retail inventories created by earlier
price-oriented promotional activities and by management's strategic decision to
reduce these excess inventories by curtailing its trade discount programs.
Sun Care net sales increased $2.5 million, or 3%, to $82.9 million for the
six months ended June 27, 1998 from $80.4 million for the same period in 1997.
Household Products net sales grew $2.3 million, or 8%, to $29.8 million
for the six months ended June 27, 1998 from $27.5 million for the same period in
1997. Net sales of Woolite increased $1.8 million, or 13%, and accounted for 78%
of the increase in Household Products net sales.
Personal Grooming net sales grew $13.8 million, or 108%, to $26.6 million
for the six months ended June 27, 1998 from $12.8 million for the same period in
1997. The Personal Grooming brands acquired in the Acquisitions increased net
sales for the six month period ended June 27, 1998 by $18.3 million offsetting
decreased net sales of Jhirmack products.
Gross Profit - Gross profit increased $41.2 million, or 25%, to $206.8
million for the six months ended June 27, 1998 from $165.6 million in the same
period of 1997. As a percent of net sales, gross profit decreased to 59.1% in
the six month period ended June 27, 1998 from 61.0% in the same period of 1997
due primarily to lower overall gross margins of the brands acquired in the
Acquisitions. The increase in gross profit was due primarily to the higher net
sales noted previously.
Operating Earnings - Operating earnings in the six month period ended June
27, 1998 increased $15.2 million, or 27%, to $72.1 million from $57.0 million in
the same period in 1997. The increase in operating earnings resulted from (i)
higher net sales resulting from the brands acquired in the Acquisitions (ii)
higher net sales in the Company's base businesses, primarily Feminine Care,
Infant Care, and Sun Care and (iii) lower operating expenses as a percent of net
sales.
Interest Expense - Interest expense grew $4.1 million, or 13%, to $36.3
million in the six month period ended June 27, 1998 from $32.2 million in the
same period of 1997. This resulted from an increase in long term debt of $107.2
million (including current obligations). The Company assumed $110.4 million of
additional indebtedness due to the Acquisitions.
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<PAGE>
PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
Income Taxes - Income taxes increased $4.0 million, or 35%, to $15.4 million in
the six month period ended June 27, 1998 from $11.4 million in the same period
of 1997. As a percent of pretax earnings, the Company's effective tax rate
decreased 3.0% to 43.0% of pretax earnings in the six month period ended June
27, 1998 from 46.0% in the same period of 1997. The favorable decrease in the
Company's effective tax rate is primarily due to the fixed nature of the
Company's non-deductible amortization expense.
Net Earnings - Net earnings increased $7.0 million, or 53%, to $20.4
million in the six months ended June 27, 1998 from $13.4 million in the same
period of 1997. This increase is due to the combined effects of all of the
factors described above.
Financial Condition and Liquidity
At June 27, 1998, the Company's working capital (current assets net of
current liabilities) increased by $34.3 million to $90.7 million from $56.4
million at December 27, 1997. The increase resulted primarily from (i) an
increase of $58.7 million in receivables, primarily as a result of (a) higher
net sales versus the fourth quarter of 1997, especially in Sun Care, where sales
carry extended credit terms, and (b) the Acquisitions, and (ii) an increase of
$9.4 million in inventories and $7.0 million in current deferred tax assets,
both due principally to the Acquisitions. These working capital increases were
partially offset by an increase in accrued expenses of $38.0 million primarily
as a result of the Acquisitions, higher accrued advertising and sales
promotions, and higher returns reserves associated with the seasonal nature of
Sun Care sales. All other working capital components decreased $2.8 million.
The Company's businesses, with the exception of Sun Care, generally have
not been seasonal. Sun Care product sales are highly seasonal, with 85 to 90
percent of sales occurring in the first six months of the year. This seasonality
requires increased inventory to support the selling season, and extended credit
terms which are typical in the sun care industry which result in higher
receivables for the Company during the first six months of the fiscal year.
Capital expenditures for equipment and facility improvements were $5.5
million and $6.0 million for the six months ended June 27, 1998 and June 28,
1997, respectively. These expenditures were primarily to upgrade production
equipment and maintain facilities in the ordinary course of business. Capital
expenditures for 1998 are expected to be approximately $18 million, mostly for
production related equipment and facility improvements and for projects
consistent with those of prior years. The 1998 projection includes increased
capital expenditures related to the acquired businesses.
At June 27, 1998 long-term debt (including current portion but excluding
obligations due to related party) was $845.0 million versus $737.8 million at
December 27, 1997, an increase of $107.2 million. The increase was primarily the
result of the Acquisitions. In January 1998, the Company acquired PCH, Carewell
and Binky. The purchase of Carewell and Binky was financed from available
borrowings under the Company's revolving credit facility. The Company increased
its borrowings under the 1997 Term Loan by $100 million to fund the cash portion
of the
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<PAGE>
PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
acquisition price of PCH. The Company also issued 9,257,345 shares of its Common
Stock as part of the PCH acquisition. At June 27, 1998, the Company had unused
lines of credit (giving effect to outstanding letters of credit) under its
credit facility of $82.5 million.
Terms of the 1997 Revolving Credit Facility and the 1997 Term A Loan
(collectively the "1997 Senior Secured Credit Facilities") require the Company
to meet certain financial covenants and ratios and also include conditions or
restrictions on new indebtedness and liens, major acquisitions or mergers,
capital expenditures and disposition of assets, certain dividends and other
distributions, and prepayment and modification of indebtedness or equity
capitalization. The 9% Senior Subordinated Notes and the 8 7/8% Unsecured Senior
Notes (collectively, the "Notes") also contain restrictions and requirements
with regard to similar matters. Under the terms of these debt instruments,
payment of cash dividends on the Common Stock of the Company is restricted.
The Company believes that it will generate sufficient cash flow from
operations for working capital requirements, capital expenditures and to make
the scheduled interest and principal payments under the 1997 Term Loan and 1997
Senior Secured Credit Facilities, and interest payments on the Notes. However,
the Company does not expect to generate sufficient cash flow from operations to
make the $360 million principal payment due in 2003 on the 9% Senior
Subordinated Notes nor the $150 million principal payment due in 2004 on the
8 7/8% Unsecured Senior Notes. Accordingly, the Company will have to either
refinance its obligations with respect to the Notes prior to their maturity,
sell assets or raise equity capital to repay the principal amounts of the Notes.
The Company's ability to make scheduled principal payments, to refinance its
obligations with respect to its indebtedness, sell assets or raise equity
capital depends on its financial and operating performance, which is, in part,
subject to prevailing economic conditions and to financial, business and other
factors beyond its control. Although the Company's cash flow from operations and
borrowings have been sufficient to meet its historical debt service obligations,
there can be no assurance that the Company's operating results will continue to
be sufficient or that future borrowing facilities will be available for the
payment or refinancing of the Company's indebtedness.
The Company will continue to regularly consider the acquisition of other
companies or businesses engaged in the manufacture and distribution of related
products. Such potential transactions may require substantial capital resources,
which in certain circumstances would require the Company to seek additional debt
and/or equity financing. As there can be no assurance that such financing will
be available, the Company's ability to expand its operations through acquisition
may be restricted. However, the Company believes that capital will be available
to achieve its acquisition objectives.
Inflation in the United States and Canada has not had a significant effect
on the Company during recent periods.
New Accounting Pronouncements
The Financial Accounting Standards Board (FASB) has issued two accounting
pronouncements which the Company will adopt in the fourth quarter of 1998.
"Disclosures About Segments of an Enterprise and Related Information"("SFAS No.
131") establishes requirements for
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<PAGE>
PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
disclosure about operating segments in the interim financial reports and annual
financial statements. It also establishes standards for related disclosures
about products and services, geographic area and major customers. This statement
supersedes SFAS No. 14, "Financial Reporting for Segments of Business
Enterprises". The Company is in the process of evaluating the disclosure
requirements.
SFAS No. 132, "Employers' Disclosures about Pensions and Other
Postretirement Benefits"("SFAS No. 132"), which revises employers' disclosures
about these types of benefits. SFAS No. 132 does not change the measurement or
recognition of those plans, but requires additional information to facilitate
financial analysis and eliminates certain disclosures which are no longer
useful. To the extent practicable, the Statement also standardizes disclosure
for retiree benefits. SFAS No. 132 requires that comparative information from
earlier years be restated to conform to the requirements of the new standard.
The Company is in the process of evaluating the disclosure requirements.
Additionally in June of 1998, the FASB issued SFAS No. 133, "Accounting
for Derivative Instruments and Hedging Activities" which is effective for the
Company beginning in fiscal year 2000. The Statement requires the recognition of
certain derivative instruments on the balance sheet, with resulting transition
adjustments reported in other comprehensive earnings or net earnings as the
effect of a change in accounting principle, as appropriate. The Company is in
the process of evaluating the Statement.
The Accounting Standards Executive Committee ("AcSEC") has issued
Statement of Position ("SOP") 98-5 "Reporting on the Costs of Start-Up
Activities" ("SOP 98-5") which is effective for the Company for fiscal years
beginning after December 15, 1998 and permits early adoption. Start-up
activities are broadly defined as one time activities related to opening a new
facility, introducing a new product or service, conducting business in a new
territory, conducting business with a new class of customer or beneficiary,
initiating a new process in an existing facility, or commencing some new
operation. Start-up activities include activities related to organizing a new
entity (commonly referred to as organization costs). This SOP provides guidance
on the financial reporting of start-up costs and organization costs. It requires
costs of start-up activities and organization costs to be expensed as incurred.
The Company is currently evaluating SOP 98-5.
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<PAGE>
PLAYTEX PRODUCTS, INC.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The following should be read in conjunction with Part 1, Item 3., "Legal
Proceedings" in the Registrant's Annual Report on Form 10-K for the year ended
December 27, 1997.
As of the end of June 1998, there were approximately 8 pending toxic shock
syndrome claims relating to Playtex tampons, although additional claims may be
made in the future.
Item 2. Changes in Securities and Use of Proceeds
On January 28, 1998, in connection with the acquisition of Personal Care
Holdings, Inc. ("PCH") the Company issued 9,257,345 shares of unregistered
shares of the Company's Common Stock to former stockholders of PCH in a private
offering pursuant to Section 4(2) of the securities Act of 1933, as amended.
On April 23, 1998, pursuant to registration rights agreements with certain
former stockholders of PCH and other selling stockholders, the Company
registered pursuant to a Registration Statement on Form S-3 (No. 333-50099) (the
"Registration Statement") an aggregate of 14,611,352 shares of its Common Stock,
to be offered for sale to the public in two separate offerings through two
separate groups of underwriters. The Securities and Exchange Commission (the
"Commission") declared the Registration Statement effective on May 19, 1998 (the
"Effective Date").
On May 21, 1998 the Company filed a final prospectus pursuant to rule
424(b)(4) with respect to the sale of all of the 4,008,063 shares of Common
Stock, offered by certain stockholders of the Company (the "International
Selling Stockholders") for sale initially outside the United States and Canada
(the "International Offering").
The Registration Statement contemplated that, concurrently with the
International Offering, other stockholders (the "U.S Selling Stockholders")
would offer to sell 8,610,682 shares of Common Stock in the United States and
Canada (the "U.S Offering") through a separate group of underwriters (the "U.S
Underwriters"). After the Effective Date, however, the U.S Selling Stockholders
and the U.S Underwriters failed to reach an agreement on the proposed terms of
the U.S. Offering and, consequently, the U.S Offering was not consummated.
On June 1, 1998, one of the U.S Selling Stockholders, J.W. Childs Equity
Partners, L.P. ("Childs LP"), entered into a "Stock Purchase Agreement" with
RCBA Playtex, L.P. and Richard C. Blum & Associates, Inc. Pursuant to the Stock
Purchase Agreement, Childs LP agreed to sell and subsequently sold and the U.S.
Purchaser agreed to buy and subsequently purchased, in each case subject to the
satisfaction of certain conditions, 6,000,000 shares of Common Stock.
The Company did not receive any proceeds from the sale of the Company's
Common Stock offered by the International Selling Stockholders or Childs LP. The
estimated cost to the Company with regard to the issuance and distribution of
the registered securities has been estimated as $0.8 million.
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<PAGE>
PLAYTEX PRODUCTS, INC.
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
At the Annual Meeting of Stockholders held on June 4, 1998, the following
actions were taken:
Nine nominees were elected as Directors to hold office until the Annual
Meeting of Stockholders in 1999 and until their successors are duly elected and
qualified.
Name Votes For Votes Withheld
-------------------------- --------------- --------------
Robert B. Haas 53,766,800 214,917
Michael R. Gallagher 53,777,000 204,717
Michael F. Goss 53,767,250 214,467
Kenneth F. Yontz 53,774,450 207,267
Timothy O. Fisher 53,776,250 205,467
Douglas D. Wheat 53,761,850 219,867
Michael R. Eisenson 53,776,850 204,867
C. Ann Merrifield 53,774,950 206,767
John W. Childs 53,755,500 226,217
The amendment to the Company's By-laws was ratified, requiring that one
Non-Purchaser Director (as defined in the By-laws of the Company) be designated
by J.W. Childs Equity Partners, L.P.
Votes For Votes Against Votes Abstain
-------------- ------------- -------------
48,346,115 729,608 32,518
The amendment to the Playtex 1994 Stock Option Plan for Directors and
Executives and Key Employees was ratified.
Votes For Votes Against Votes Abstain
-------------- ------------- -------------
53,495,322 434,531 51,864
The selection of the firm of KPMG Peat Marwick LLP was ratified as the
Company's independent auditors for fiscal year 1998.
Votes For Votes Against Votes Abstain
-------------- ------------- -------------
53,946,694 25,551 9,472
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits:
(3B) Bylaws of the Company, as amended through June 4, 1998.
(13) Computation of Earnings Per Share
(27) Financial Data Schedule
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<PAGE>
PLAYTEX PRODUCTS, INC.
PART II - OTHER INFORMATION
b. The following report on Form 8-K was filed during the quarter ended
June 27, 1998:
On April 13, 1998, the Company filed a Current Report on Form 8-K/A
regarding audited historical financial statements of Personal Care Holding
Corporation, Inc. for the year ended March 29, 1997 and unaudited condensed
historical financial statements of Personal Care Holding Corporation, Inc. for
the nine month periods ended December 27, 1997 and December 28, 1996. Unaudited
pro forma condensed combined financial information for Playtex Products, Inc.,
Personal Care Holdings, Inc., Carewell Industries, Inc., and certain assets from
Binky-Griptight Inc. were also included.
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<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 thereunto duly authorized.
PLAYTEX PRODUCTS, INC.
Date: August 11, 1998 By: /s/ Michael R. Gallagher
------------------------ --------------------------------
Michael R. Gallagher
Chief Executive Officer
Date: August 11, 1998 By: /s/ Michael F. Goss
------------------------ --------------------------------
Michael F. Goss
Executive Vice President
and
Chief Financial Officer
BY-LAWS
OF
PLAYTEX PRODUCTS, INC.
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of Wilmington,
County of New Castle, State of Delaware.
Section 2. The corporation may also have offices at such other
places both within and without the State of Delaware as the Board of Directors
may from time to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Meetings of stockholders shall be held at any place
within or outside the State of Delaware designated by the Board of Directors. In
the absence of any such designation, stockholders' meetings shall be held at the
principal executive office of the corporation.
Section 2. The annual meeting of stockholders shall be held each
year on a date and a time designated by the Board of Directors. At each annual
meeting directors shall be elected and any other proper business may be
transacted.
Section 3. A majority of the stock issued and outstanding and
entitled to vote at any meeting of stockholders, the holders of which are
present in person or represented by proxy, shall constitute a quorum for the
transaction of business except as otherwise provided by law, by the Certificate
of Incorporation, or by these By-Laws. A quorum, once established, shall not be
broken by the withdrawal of enough votes to leave less than a quorum and the
votes present may continue to transact business until adjournment. If, however,
such quorum shall not be present or represented at any meeting of the
stockholders, a majority of the voting stock represented in person or by proxy
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented. At
such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified. If the adjournment is for more than thirty days, or if
after the adjournment a new record date is fixed for the adjourned
<PAGE>
meeting, a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote thereat.
Section 4. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes, or
the Certificate of Incorporation, or these By-Laws, a different vote is required
in which case such express provision shall govern and control the decision of
such question.
Section 5. At each meeting of the Stockholders, each stockholder
having the right to vote may vote in person or may authorize another person or
persons to act for him by proxy appointed by an instrument in writing subscribed
by such Stockholder and bearing a date not more than three years prior to said
meeting, unless said instrument provides for a longer period. All proxies must
be filed with the Secretary of the corporation at the beginning of each meeting
in order to be counted in any vote at the meeting. Each stockholder shall have
one vote for each share of stock having voting power, registered in his name on
the books of the corporation on the record date set by the Board of Directors as
provided in Article V, Section 6 hereof. All elections shall be had and all
questions decided by a plurality vote.
Section 6. Special meetings of the stockholders, for any purpose, or
purposes, unless otherwise prescribed by statute or by the Certificate of
Incorporation, may be called by the President and shall be called by the
President or the Secretary at the request in writing of a majority of the Board
of Directors, or at the request in writing of stockholders owning a majority in
amount of the entire capital stock of the corporation issued and outstanding,
and entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.
Section 7. Whenever stockholders are required or permitted to take
any action at a meeting, a written notice of the meeting shall be given which
notice shall state the place, date and hour of the meeting, and, in the case of
a special meeting, the purpose or purposes for which the meeting is called. The
written notice of any meeting shall be given to each stockholder entitled to
vote at such meeting not less than ten nor more than sixty days before the date
of the meeting. If mailed, notice is given when deposited in the United States
mail, postage prepaid, directed to the stockholder at his address as it appears
on the records of the corporation.
Section 8. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting,
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<PAGE>
either at a place within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or, if not so specified, at the
place where the meeting is to be held. The list shall also be produced and kept
at the time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present.
Section 9. Unless otherwise provided in the Certificate of
Incorporation, any action required to be taken at any annual or special meeting
of stockholders of the corporation, or any action which may be taken at any
annual or special meeting of such stockholders, may be taken without a meeting,
without prior notice and without a vote, if a consent in writing, setting forth
the action so taken, shall be signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon
were present and voted. Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
Section 10. (a) From the Closing until the Termination Date, at any
annual or special meeting of stockholders, persons who are nominated for
election as directors by stockholders ("stockholder nominees") shall only be
considered for election if such stockholder nominees are nominated in accordance
with the terms of this paragraph. All nominations of stockholder nominees must
be made by written notice given by or on behalf of a stockholder of record of
the corporation (the "Notice of Nomination"). The Notice of Nomination must be
delivered personally to, or mailed to, and received at the principal executive
office of the corporation, addressed to the attention of the Secretary, no later
than ten days after the first date of public disclosure by the Company of the
date of the annual meeting or special meeting of stockholders; provided,
however, that such Notice of Nomination shall not be required to be given more
than sixty (60) days prior to an annual or special meeting of stockholders. For
purposes of this Section 10(a), disclosure shall be deemed to be first made when
disclosure of such date of the annual meeting or special meeting of stockholders
is first made in a press release reported by the Dow Jones News Services,
Associated Press or comparable national news service, or in a document publicly
filed by the corporation with the Securities and Exchange Commission pursuant to
Sections 13, 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") or any successor thereto. Such Notice of Nomination shall set
forth (i) the name and address of the person proposing to make nominations, (ii)
the class and number of shares of capital stock held of record, held
beneficially and represented by proxy held by such person as of the record date
for the meeting and as of the date of such Notice of Nomination, (iii) all
information regarding each stockholder nominee that would be required to be set
forth in a definitive proxy statement filed with the Securities and Exchange
Commission pursuant to Section 14 of the Exchange Act, or any successor thereto,
and the written consent of each such stockholder nominee to serve if elected,
and (iv) all other information that would be required to be filed with the
Securities and Exchange Commission if the person proposing such nominations were
a participant in a solicitation subject to Section 14 of the Exchange Act or any
successor thereto. The chairman of the meeting shall, if the facts warrant,
determine and declare to the meeting, that any proposed nomination of a
stockholder nominee was not made in
3
<PAGE>
accordance with the foregoing procedures and, if he should so determine, he
shall so declare to the meeting and the defective nomination shall be
disregarded.
(b) "Termination Date" means the first date on which no party is
contractually obligated to vote for nominees for director under the Stock
Purchase Agreement, dated as of March 17, 1995, among the corporation, HWH
Capital Partners, L.P., HWH Valentine Partners, L.P. and HWH Surplus Valentine
Partners, L.P. (as such agreement may be amended, restated or otherwise
modified, the "Stock Purchase Agreement"). "Closing" means the consummation of
the sale and purchase of common stock under the Stock Purchase Agreement.
ARTICLE III
DIRECTORS
Section 1. The number of directors which shall constitute the whole
Board shall not be less than one (l) nor more than fifteen (15). The directors
need not be stockholders. The directors shall be elected at the annual meeting
of the stockholders, except as provided in Section 2 of this Article, and each
director elected shall hold office until his successor is elected and qualified;
provided, however, that unless otherwise restricted by the Certificate of
Incorporation or By-Laws, any director or the entire Board of Directors may be
removed, either with or without cause, from the Board of Directors at any
meeting of stockholders by a majority of the stock represented thereat.
Notwithstanding the foregoing provisions of this paragraph, from the Closing
until the Termination Date (as defined in Article II, Section 10 (b), the number
of directors which shall constitute the whole Board shall be an odd number that
is not less than nine (9) nor more than fifteen (15).
Section 2. Except as provided for in Sections 14 and 15 of this
Article III, vacancies on the Board of Directors by reason of death,
resignation, retirement, disqualification, removal from office, or otherwise,
and newly created directorships resulting from any increase in the authorized
number of directors may be filled by a majority of the directors then in office,
although less than a quorum, or by a sole remaining director. The directors so
chosen shall hold office until the next annual election of directors and until
their successors are duly elected and shall qualify, unless sooner displaced. If
there are no directors in office, then an election of directors may be held in
the manner provided by statute.
Section 3. The property and business of the corporation shall be
managed by or under the direction of its Board of Directors. In addition to the
powers and authorities by these By-Laws expressly conferred upon them, the Board
may exercise all such powers of the corporation and do all such lawful acts and
things as are not by statute or by the Certificate of Incorporation or by these
By-Laws directed or required to be exercised or done by the stockholders.
4
<PAGE>
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The directors may hold their meetings and have one or
more offices, and keep the books of the corporation outside of the State of
Delaware.
Section 5. Regular meetings of the Board of Directors may be held
without notice at such time and place as shall from time to time be determined
by the Board.
Section 6. Special meetings of the Board of Directors may be called
by the President on forty-eight hours' notice to each director, either
personally or by mail or by telegram; special meetings shall be called by the
President or the Secretary in like manner and on like notice on the written
request of two directors unless the Board consists of only one director; in
which case special meetings shall be called by the President or Secretary in
like manner or on like notice on the written request of the sole director.
Section 7. At all meetings of the Board of Directors a majority of
the authorized number of directors shall be necessary and sufficient to
constitute a quorum for the transaction of business, and the vote of a majority
of the directors present at any meeting at which there is a quorum, shall be the
act of the Board of Directors, except as may be otherwise specifically provided
by statute, by the Certificate of Incorporation or by these By-Laws. If a quorum
shall not be present at any meeting of the Board of Directors the directors
present thereat may adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be present. If only one
director is authorized, such sole director shall constitute a quorum.
Section 8. Unless otherwise restricted by the Certificate of
Incorporation or these By-Laws, any action required or permitted to be taken at
any meeting of the Board of Directors or of any committee thereof may be taken
without a meeting, if all members of the Board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board or committee.
Section 9. Unless otherwise restricted by the Certificate of
Incorporation or these By-Laws, members of the Board of Directors, or any
committee designated by the Board of Directors, may participate in a meeting of
the Board of Directors, or any committee, by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and such participation in a meeting shall
constitute presence in person at such meeting.
COMMITTEES OF DIRECTORS
Section 10. The Board of Directors may, by resolution passed by a
majority of the whole Board, designate one or more committees, each such
committee to consist of one or more of the directors of the corporation. The
Board may designate one or more directors as alternate
5
<PAGE>
members of any committee, who may replace any absent or disqualified member at
any meeting of the committee. In the absence or disqualification of a member of
a committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the Board of Directors,
shall have and may exercise all the powers and authority of the Board of
Directors in the management of the business and affairs of the corporation, and
may authorize the seal of the corporation to be affixed to all papers which may
require it; but no such committee shall have the power or authority in reference
to amending the Certificate of Incorporation, adopting an agreement of merger or
consolidation, recommending to the stockholders the sale, lease or exchange of
all or substantially all of the corporation's property and assets, recommending
to the stockholders a dissolution of the corporation or a revocation of a
dissolution, or amending the By-Laws of the corporation; and, unless the
resolution or the Certificate of Incorporation expressly so provide, no such
committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock.
Section 11. Each committee shall keep regular minutes of its
meetings and report the same to the Board of Directors when required.
COMPENSATION OF DIRECTORS
Section 12. Unless otherwise restricted by the Certificate of
Incorporation or these By-Laws, the Board of Directors shall have the authority
to fix the compensation of directors. The directors may be paid their expenses,
if any, of attendance at each meeting of the Board of Directors and may be paid
a fixed sum for attendance at each meeting of the Board of Directors or a stated
salary as director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
INDEMNIFICATION
Section 13.1. Right to Indemnification. The corporation shall
indemnify and hold harmless, to the fullest extent permitted by applicable law
as it presently exists or may hereafter be amended, any person who was or is
made or is threatened to be made a party or is otherwise involved in any action,
suit or proceeding, whether civil, criminal, administrative or investigative (a
"proceeding") by reason of the fact that he, or a person for whom he is the
legal representative, is or was a director or officer of the corporation or is
or was serving at the written request of the corporation as a director, officer,
employee or agent of another corporation or of a partnership, joint venture,
trust, enterprise or nonprofit entity, including service with respect to
employee benefit plans, against all liability and loss suffered and expenses
(including attorney's fees) reasonably incurred by such person. The corporation
shall be required to indemnify a person in connection with a proceeding (or part
thereof) initiated by such person only if the proceeding (or part thereof) was
authorized by the Board of Directors of the corporation.
6
<PAGE>
Section 13.2. Prepayment of Expenses. The corporation shall pay the
expenses (including attorneys' fees) incurred by a director or officer in
defending any proceeding in advance of its final disposition, provided, however,
that the payment of expenses incurred by a director or officer in advance of the
final disposition of the proceeding shall be made only upon receipt of an
undertaking by the director or officer to repay all amounts advanced if it
should be ultimately determined that the director or officer is not entitled to
be indemnified under this Article or otherwise.
Section 13.3. Claims. If a claim for indemnification or payment of
expenses under this Article is not paid in full within sixty days after a
written claim therefor has been received by the corporation, the claimant may
file suit to recover the unpaid amount of such claim and, if successful in whole
or in part, shall be entitled to be paid the expense of prosecuting such claim.
In any such action the corporation shall have the burden of proving that the
claimant was not entitled to the requested indemnification or payment of
expenses under applicable law.
Section 13.4. Non-Exclusivity of Rights. The rights conferred on any
person by this Article III shall not be exclusive of any other rights which such
person may have or hereafter acquire under any statute, provision of the
certificate of incorporation, these by-laws, agreement, vote of stockholders or
disinterested directors or otherwise.
Section 13.5 Other Indemnification. The corporation's obligation, if
any, to indemnify any person who was or is serving at its request as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust, enterprise or nonprofit entity shall be reduced by any amount such person
may collect as indemnification from such other corporation, partnership, joint
venture, trust, enterprise or nonprofit entity.
Section 13.6. Amendment or Repeal. Any repeal or modification of the
foregoing provisions of this Article III shall not adversely affect any right or
protection hereunder of any person in respect of any act or omission occurring
prior to the time of such repeal or modification.
PURCHASER NOMINATING COMMITTEE
Section 14. (a) From the Closing until the Termination Date, a
committee of the Board of Directors shall be constituted and designated as the
"Purchaser Nominating Committee", which committee shall consist of those members
of the Board of Directors who both (i) were specified in Section 3.1.4(A) of the
Stock Purchase Agreement, were nominated for election as directors in accordance
with Section 14(b) of this Article III, or were elected in accordance with
Section 14(c) of this Article III (the "Purchaser Directors") and (ii) are
Obligated Parties or Affiliates of any Obligated Parties or who are directors,
officers or employees of any Obligated Party or any of its Affiliates.
"Obligated Party" means any person or persons contractually obligated under the
Stock Purchase Agreement to vote for nominees for election as directors of the
corporation. An "Affiliate" of a specified person means a person that
7
<PAGE>
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, the person specified. The term
"control" (including the terms "controlling," "controlled by" and "under common
control with") means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a person, whether
through the ownership of voting securities, by contract, or otherwise.
(b) From the Closing until the Termination Date, the Purchaser
Nominating Committee shall exclusively have and exercise all power and authority
of the Board of Directors in respect of nominating, on behalf of the Board of
Directors, a number of nominees for election as directors, at any meeting of
stockholders of the corporation at which one or more directors are to be elected
or by written consent of the stockholders, which (when added to the number of
continuing directors who are not then subject to election and who are Purchaser
Directors) is equal to the smallest number that constitutes a majority of the
total number of directors of the corporation as set in accordance with Section 1
of this Article III (a "Simple Majority of the Board of Directors"). In the
event that the Board of Directors solicits proxies from the stockholders of the
corporation for the election of any directors at any meeting of stockholders or
for any written consent of stockholders pursuant to this Section 14(b), then the
Board of Directors shall solicit proxies for the election at such meeting or by
such written consent of the persons nominated by the Purchaser Nominating
Committee pursuant to the immediately preceding sentence.
(c) From the Closing until the Termination Date, the Purchaser
Nominating Committee shall exclusively have and exercise all power and authority
of the Board of Directors in respect of filling (i) any vacancy occurring in a
directorship which was held by Purchaser Director or (ii) any newly created
directorship that results from increasing the size of the Board of Directors
(but only to the extent that the number of any such newly created directorships,
when added to the number of continuing directors who are Purchaser Directors,
equals a Simple Majority of the Board of Directors); provided, however, that if
there are no members of the Purchaser Nominating Committee, then such vacancy or
newly created directorship will be filled by a majority of the Purchaser
Directors and, if there are no Purchaser Directors to fill any such vacancy or
newly created directorship, then a special meeting of the stockholders shall be
called as soon as practicable and the stockholders shall have and exercise power
to fill any and all such vacancies or newly created directorships then existing.
NON-PURCHASER NOMINATING COMMITTEE
Section 15. (a) From the Closing until the Termination Date, a
committee of the Board of Directors shall be constituted and designated as the
"Non-Purchaser Nominating Committee" which committee shall consist of the
members of the Board of Directors who are not Purchaser Directors (the
"Non-Purchaser Directors").
(b) (A) From the Closing until the Termination Date, at least two of
the Non-Purchaser Directors shall be Unaffiliated Persons (one of whom must be
qualified under New
8
<PAGE>
York Stock Exchange rules and policies to sit on the audit committee of the
corporation) and at least two of the Non-Purchaser Directors shall be executive
officers of the corporation (as defined in Regulation 405 promulgated under the
Securities Act of 1933, as amended, or any successor thereto, for purposes of
this Section 15), one of whom shall be the chief executive officer of the
corporation (or the person acting in such capacity). "Unaffiliated Person" means
any Person (i) who is not an Obligated Party, (ii) who is not a partner or an
Affiliate of any Obligated Party, (iii) who is not a director, officer or
employee of any Obligated Party, any of their partners or any of their
Affiliates, (iv) who is not an officer or employee of the corporation, and (v)
who does not have a material business relationship with any Obligated Party, or
any of their Affiliates.
(B) From the Effective Date until the earlier of (1) the date upon
which the Principal Stockholder holds, in the aggregate, less than 4,628,375
shares of common stock of the Company or (2) the tenth anniversary of the
Effective Date, one of the Non-Purchaser Directors shall be the Target Director.
The "Effective Date" shall have the meaning given that term in the Merger
Agreement. The "Merger Agreement" means the Merger Agreement, dated as of
December 22, 1997 among the Corporation, PCG Acquisition Corp., Personal Care
Holdings, Inc. and J.W. Childs Equity Partners, L.P. (the "Principal
Stockholder"). The "Target Director" means the Director designated by the
Principal Stockholder."
(C) From the Closing until the Termination Date, the Non-Purchaser
Nominating Committee shall exclusively have and exercise all power and authority
of the Board of Directors in respect of nominating, on behalf of the Board of
Directors, a number of nominees for election as directors at any meeting of
stockholders of the corporation at which one or more directors are to be elected
or by written consent of the stockholders, which (when added to the number of
continuing directors who are not then subject to election and who are
Non-Purchaser Directors but who are not executive officers of the corporation)
is equal to (i) the total number of directors of the corporation as set in
accordance with Section 1 of this Article III less (ii) a Simple Majority of the
Board of Directors and the number of Non-Purchaser Directors who are executive
officers. Through December 31, 1997, if the Non-Purchaser Nominating Committee
is unable to agree to nominate persons for any one or more of the board seats
governed by this Section 15(c), then (x) if any Non-Purchaser Director currently
holding any such board seat is willing to continue to serve as a director, each
such Non-Purchaser Director shall be the nominee for each such board seat and
(y) if any Non-Purchaser Director currently holding any such board seat is
unwilling to continue to serve as a director, the nominee for such seat shall be
chosen by a majority of the other members of the Non-Purchaser Nominating
Committee who are either (i) the Non-Purchaser Directors who are executive
officers of the corporation or (ii) a Non-Purchaser Director who is willing to
continue to serve as a director. After December 31, 1997, if the Non-Purchaser
Nominating Committee is unable to agree on any nominee for any one or more of
the board seats governed by this Section 15(c), then the Board of Directors
shall have and exercise the power to nominate the nominees for such board seats;
provided, that any person nominated for election as a director by the Board of
Directors pursuant to this sentence must be an Unaffiliated Person. In the event
that the Board of Directors solicits proxies from the
9
<PAGE>
stockholders of the corporation for the election of any directors at any meeting
of stockholders or for any written consent of stockholders referred to in the
first sentence of this Section 15(c), then the Board of Directors shall solicit
proxies for the election at such meeting or by such written consent of the
persons nominated pursuant to this Section 15(c) and the officers of the
corporation nominated pursuant to Section 15(e) of this Article III. The
Non-Purchaser Nominating Committee shall at all times act in conformity with
section 15(b) of this Article III.
(D) From the Closing until the Termination Date, the Non-Purchaser
Nominating Committee shall exclusively have and exercise all power and authority
of the Board of Directors in respect of filling (i) any vacancy occurring in a
directorship which was held by Non-Purchaser Director who was not an executive
officer of the Company or (ii) any newly created directorship that results from
increasing the size of the Board of Directors to the extent such newly created
directorship is not required to be filled pursuant to Section 14(c) of this
Article III; provided, however, that if there are no Non-Purchaser Directors
then in office to exercise such power to fill any such vacancy or newly created
directorship, then the Board of Directors shall have and exercise such power to
fill any and all such vacancies or newly created directorships then existing;
and provided, further, that any directors elected pursuant to the immediately
preceding proviso of this Section 15(d) must be Unaffiliated Persons. The
Non-Purchaser Nominating Committee shall at all times act in conformity with
Section 15(b) of this Article III.
(E) Subject to the requirements of Section 15(b) of this Article
III, from the Closing until the Termination Date, (i) any nomination by the
Board of Directors of a nominee for election by the stockholders of the
corporation as a director to succeed a Non-Purchaser Director who is an
executive officer of the corporation must be made by the Board of Directors and
(ii) any vacancy occurring in a directorship which, immediately prior to
occurrence of such vacancy, was held by a Non-Purchaser Director who was at the
time an executive officer of the corporation may only be filled by the Board of
Directors, and such vacancy may not be filled by action of the stockholders of
the corporation."
ARTICLE IV
OFFICERS
Section 1. The officers of this corporation shall be chosen by the
Board of Directors and shall include a President, a Secretary, and a Treasurer.
The corporation may also have at the discretion of the Board of Directors such
other officers as are desired, including a Chairman of the Board, one or more
Vice Presidents, one or more Assistant Secretaries and Assistant Treasurers, and
such other officers as may be appointed in accordance with the provisions of
Section 3 hereof. In the event there are two or more Vice Presidents, then one
or more may be designated as Executive Vice President, Senior Vice President, or
other similar or dissimilar title. At the time of the election of officers, the
directors may by resolution determine the order of their rank. Any number of
offices may be held by the same person, unless the
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<PAGE>
Certificate of Incorporation or these By-Laws otherwise provide.
Section 2. The Board of Directors, at its first meeting after each
annual meeting of stockholders, shall choose the officers of the corporation.
Section 3. The Board of Directors may appoint such other officers
and agents as it shall deem necessary who shall hold their offices for such
terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the Board.
Section 4. The salaries of all officers and agents of the
corporation shall be fixed by the Board of Directors.
Section 5. The officers of the corporation shall hold office until
their successors are chosen and qualify in their stead. Any officer elected or
appointed by the Board of Directors may be removed at any time by the
affirmative vote of a majority of the Board of Directors. If the office of any
officer or officers becomes vacant for any reason, the vacancy shall be filled
by the Board of Directors.
CHAIRMAN OF THE BOARD
Section 6. The Chairman of the Board, if such an officer be elected,
shall, if present, preside at all meetings of the Board of Directors and
exercise and perform such other powers and duties as may be from time to time
assigned to him by the Board of Directors or prescribed by these By-Laws. If
there is no President, the Chairman of the Board shall in addition be the Chief
Executive Officer of the corporation and shall have the powers and duties
prescribed in Section 7 of this Article IV.
PRESIDENT
Section 7. Subject to such supervisory powers, if any, as may be
given by the Board of Directors to the Chairman of the Board, if there be such
an officer, the President shall be the Chief Executive Officer of the
corporation and shall, subject to the control of the Board of Directors, have
general supervision, direction and control of the business and officers of the
corporation. He shall preside at all meetings of the stockholders and, in the
absence of the Chairman of the Board, or if there be none, at all meetings of
the Board of Directors. He shall be an ex-officio member of all committees and
shall have the general powers and duties of management usually vested in the
office of President and Chief Executive Officer of corporations, and shall have
such other powers and duties as may be prescribed by the Board of Directors or
these By-Laws.
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VICE PRESIDENTS
Section 8. In the absence or disability of the President, the Vice
Presidents in order of their rank as fixed by the Board of Directors, or if not
ranked, the Vice President designated by the Board of Directors, shall perform
all the duties of the President, and when so acting shall have all the powers of
and be subject to all the restrictions upon the President. The Vice Presidents
shall have such other duties as from time to time may be prescribed for them,
respectively, by the Board of Directors.
SECRETARY AND ASSISTANT SECRETARY
Section 9. The Secretary shall attend all sessions of the Board of
Directors and all meetings of the stockholders and record all votes and the
minutes of all proceedings in a book to be kept for that purpose; and shall
perform like duties for the standing committees when required by the Board of
Directors. He shall give, or cause to be given, notice of all meetings of the
stockholders and of the Board of Directors, and shall perform such other duties
as may be prescribed by the Board of Directors or these By-Laws. He shall keep
in safe custody the seal of the corporation, and when authorized by the Board,
affix the same to any instrument requiring it, and when so affixed it shall be
attested by his signature or by the signature of an Assistant Secretary. The
Board of Directors may give general authority to any other officer to affix the
seal of the corporation and to attest the affixing by his signature.
Section 10. The Assistant Secretary, or if there be more than one,
the Assistant Secretaries in the order determined by the Board of Directors, or
if there be no such determination, the Assistant Secretary designated by the
Board of Directors, shall, in the absence or disability of the Secretary,
perform the duties and exercise the powers of the Secretary and shall perform
such other duties and have such other powers as the Board of Directors may from
time to time prescribe.
TREASURER AND ASSISTANT TREASURER
Section 11. The Treasurer shall have the custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all
moneys, and other valuable effects in the name and to the credit of the
corporation, in such depositories as may be designated by the Board of
Directors. He shall disburse the funds of the corporation as may be ordered by
the Board of Directors, taking proper vouchers for such disbursements, and shall
render to the Board of Directors, at its regular meetings, or when the Board of
Directors so requires, an account of all his transactions as Treasurer and of
the financial condition of the corporation. If required by the Board of
Directors, he shall give the corporation a bond, in such sum and with such
surety or sureties as shall be satisfactory to the Board of Directors, for the
faithful performance of the duties of his office and for the restoration to the
corporation, in case of his
12
<PAGE>
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the corporation.
Section 12. The Assistant Treasurer, or if there shall be more than
one, the Assistant Treasurers in the order determined by the Board of Directors,
or if there be no such determination, the Assistant Treasurer designated by the
Board of Directors, shall, in the absence or disability of the Treasurer,
perform the duties and exercise the powers of the Treasurer and shall perform
such other duties and have such other powers as the Board of Directors may from
time to time prescribe.
ARTICLE V
CERTIFICATES OF STOCK
Section 1. Every holder of stock of the corporation shall be
entitled to have a certificate signed by, or in the name of the corporation by,
the Chairman or Vice Chairman of the Board of Directors, or the President or a
Vice President, and by the Secretary or an Assistant Secretary, or the Treasurer
or an Assistant Treasurer of the corporation, certifying the number of shares
represented by the certificate owned by such stockholder in the corporation.
Section 2. Any or all of the signatures on the certificate may be a
facsimile. In case any officer, transfer agent, or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent, or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer, transfer agent, or registrar at the date of issue.
Section 3. If the corporation shall be authorized to issue more than
one class of stock or more than one series of any class, the powers,
designations, preferences and relative, participating, optional, or other
special rights of each class of stock or series thereof and the qualification,
limitations or restrictions of such preferences and/or rights shall be set forth
in full or summarized on the face or back of the certificate which the
corporation shall issue to represent such class or series of stock, provided
that, except as otherwise provided in section 202 of the General Corporation Law
of Delaware, in lieu of the foregoing requirements, there may be set forth on
the face or back of the certificate which the corporation shall issue to
represent such class or series of stock, a statement that the corporation will
furnish without charge to each stockholder who so requests the powers,
designations, preferences and relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.
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LOST, STOLEN OR DESTROYED CERTIFICATES
Section 4. The Board of Directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall require
and/or to give the corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
TRANSFERS OF STOCK
Section 5. Upon surrender to the corporation, or the transfer agent
of the corporation, of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignation or authority to transfer, it shall be
the duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
FIXING RECORD DATE
Section 6. In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of the
stockholders, or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board of Directors may fix a
record date which shall not be more than sixty nor less than ten days before the
date of such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
REGISTERED STOCKHOLDERS
Section 7. The corporation shall be entitled to treat the holder of
record of any share or shares of stock as the holder in fact thereof and
accordingly shall not be bound to recognize any equitable or other claim or
interest in such share on the part of any other person, whether or not it shall
have express or other notice thereof, save as expressly provided by the laws of
the State of Delaware.
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ARTICLE VI
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the corporation,
subject to the provisions of the Certificate of Incorporation, if any, may be
declared by the Board of Directors at any regular or special meeting, pursuant
to law. Dividends may be paid in cash, in property, or in shares of the capital
stock, subject to the provisions of the Certificate of Incorporation.
Section 2. Before payment of any dividend there may be set aside out
of any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interests of the
corporation, and the directors may abolish any such reserve.
CHECKS
Section 3. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers as the Board of
Directors may from time to time designate.
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed by
resolution of the Board of Directors.
SEAL
Section 5. The corporate seal shall have inscribed thereon the name
of the corporation, the year of its organization and the words "Corporate Seal,
Delaware". Said seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
NOTICES
Section 6. Whenever, under the provisions of the statutes or of the
Certificate of Incorporation or of these By-Laws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by telegram.
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<PAGE>
Section 7. Whenever any notice is required to be given under the
provisions of the statutes or of the Certificate of Incorporation or of these
By-Laws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be deemed
to be equivalent.
ANNUAL STATEMENT
Section 8. The Board of Directors shall present at each annual
meeting, and at any special meeting of the stockholders when called for by vote
of the stockholders, a full and clear statement of the business and condition of
the corporation.
ARTICLE VII
AMENDMENTS
Section 1. These By-Laws may be altered, amended or repealed or new
By-Laws may be adopted by the stockholders or by the Board of Directors, when
such power is conferred upon the Board of Directors by the Certificate of
Incorporation, at any regular meeting of the stockholders or of the Board of
Directors or at any special meeting of the stockholders or of the Board of
Directors if notice of such alteration, amendment, repeal or adoption of new
By-Laws be contained in the notice of such special meeting. If the power to
adopt, amend or repeal ByLaws is conferred upon the Board of Directors by the
Certificate of Incorporation it shall not divest or limit the power of the
stockholders to adopt, amend or repeal By-Laws.
Section 2. From the Closing until the Termination Date, the
provisions of (i) Section 10 in Article II of these By-Laws , (ii) the third
sentence of Section 1 in Article III of these By-Laws, (iii) Sections 14 and 15
in Article III of these By-Laws and (iv) Section 2 in Article IV of these
By-Laws may not be repealed or amended without the affirmative vote of holders
of shares of common stock representing at least 662/3% of the outstanding shares
of common stock of the corporation.
16
(Exhibit 13)
PLAYTEX PRODUCTS, INC.
Computation of Per Share Earnings
(Unaudited, in thousands, except per share Data)
Three Months Ended Six Months Ended
------------------ ------------------
June 27, June 28, June 27, June 28,
1998 1997 1998 1997
------- ------- ------- --------
Basic Earnings Per Share
- ------------------------
Net Earnings available to
Common Stockholders $ 9,104 $ 5,517 $20,414 $13,365
======= ======= ======= =======
Weighted Average Common
Shares Outstanding 60,294 50,917 58,632 50,910
Net Earnings Per Common Share $ 0.15 $ 0.11 $ 0.35 $ 0.26
======= ======= ======= =======
Diluted Earnings Per Share
- --------------------------
Net Earnings available to
Common Stockholders $ 9,104 $ 5,517 $20,414 $13,365
======= ======= ======= =======
Weighted Average Common
Shares Outstanding 60,294 50,917 58,632 50,910
Assumed Dilutive effect of
Stock Options (1) 1,103 206 929 198
------- ------- ------- -------
Weighted Average Common
Shares Outstanding - Diluted 61,397 51,123 59,561 51,108
Net Earnings Per Common Share $ 0.15 $ 0.11 $ 0.34 $ 0.26
======= ======= ======= =======
(1) Based on the Treasury Stock Method
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-26-1998
<PERIOD-END> JUN-27-1998
<CASH> 6,154
<SECURITIES> 0
<RECEIVABLES> 128,173
<ALLOWANCES> 2,569
<INVENTORY> 51,853
<CURRENT-ASSETS> 200,021
<PP&E> 152,681
<DEPRECIATION> 79,007
<TOTAL-ASSETS> 913,377
<CURRENT-LIABILITIES> 109,369
<BONDS> 844,950
0
0
<COMMON> 603
<OTHER-SE> (156,105)
<TOTAL-LIABILITY-AND-EQUITY> 913,377
<SALES> 350,249
<TOTAL-REVENUES> 350,249
<CGS> 143,410
<TOTAL-COSTS> 143,410
<OTHER-EXPENSES> 134,722
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 36,318
<INCOME-PRETAX> 35,799
<INCOME-TAX> 15,385
<INCOME-CONTINUING> 20,414
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,414
<EPS-PRIMARY> .35
<EPS-DILUTED> .34
</TABLE>
