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 September 26, 1998
Commission File No. 1-12620
PLAYTEX PRODUCTS, INC.
(Exact name of registrant as specified in its charter)
Delaware 51-0312772
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
300 Nyala Farms Road
Westport, Connecticut 06880
--------------------------------------
(Address of principal executive offices)
(203) 341 - 4000
--------------------------------------------------
(Registrant's telephone number, including area code)
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 November 5, 1998, 60,335,419 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 - 22
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 23
Item 6. Exhibits and Reports on Form 8-K:
(a) Exhibits 23
(b) Reports on Form 8-K 23
Signatures 24
Exhibit Index 25
-2-
<PAGE>
PLAYTEX PRODUCTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
September 26, December 27,
ASSETS 1998 1997
----------- -----------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 20,389 $ 3,231
Receivables, less allowance for doubtful accounts 95,256 66,876
Inventories 49,595 42,500
Current deferred taxes 12,629 7,806
Other current assets 1,277 4,949
--------- ---------
Total current assets 179,146 125,362
Net property, plant and equipment 75,388 54,810
Intangible assets, net 550,988 388,743
Due from related party 80,017 80,017
Other noncurrent assets 3,618 3,626
--------- ---------
Total assets $ 889,157 $ 652,558
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 21,738 $ 24,512
Accrued expenses 77,545 38,827
Income taxes payable 6,861 4,121
Current maturities of long-term debt 2,500 1,500
--------- ---------
Total current liabilities 108,644 68,960
Long-term debt 809,875 736,300
Due to related party 78,386 78,386
Other noncurrent liabilities 12,885 13,563
Deferred income taxes 26,989 23,412
--------- ---------
Total liabilities 1,036,779 920,621
Stockholders' equity:
Common stock, $.01 par value, authorized 100,000,000
shares, issued 60,331,419 shares at
September 26, 1998 and 50,941,812 shares at
December 27, 1997 603 509
Additional paid-in capital 517,133 424,706
Retained earnings (deficit) (662,728) (691,065)
Foreign currency translation adjustments (2,630) (2,213)
--------- ---------
Total stockholders' equity (147,622) (268,063)
--------- ---------
Total liabilities and stockholders' equity $ 889,157 $ 652,558
========= =========
</TABLE>
See notes to condensed consolidated financial statements.
-3-
<PAGE>
PLAYTEX PRODUCTS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
---------------------------
September 26, September 27,
1998 1997
------------ ------------
<S> <C> <C>
Net sales $ 162,597 $ 117,675
Cost of sales 66,158 44,533
--------- ---------
Gross profit 96,439 73,142
Operating expenses:
Advertising and sales promotion 35,440 26,905
Selling, distribution and research 19,064 14,257
Administrative 5,831 4,625
Amortization of intangibles 4,333 3,225
--------- ---------
Total operating expenses 64,668 49,012
--------- ---------
Operating earnings 31,771 24,130
Interest expense, including related party interest
expense of $3,037 for both periods presented,
net of related party interest income of $3,001
for both periods presented 17,872 16,119
--------- ---------
Earnings before income taxes 13,899 8,011
Income taxes 5,976 3,977
--------- ---------
Earnings before extraordinary loss 7,923 4,034
--------- ---------
Extraordinary loss on early extinguishment
of debt, net of $2,344 tax benefit -- (4,078)
--------- ---------
Net earnings (loss) $ 7,923 $ (44)
========= =========
Earnings per share before extraordinary loss:
Basic $ .13 $ .08
========= =========
Diluted $ .13 $ .08
========= =========
Earnings per share:
Basic $ .13 $ -
========= =========
Diluted $ .13 $ -
========= =========
Weighted average shares outstanding:
Basic 60,326 50,931
========= =========
Diluted 61,228 51,101
========= =========
</TABLE>
See notes to condensed consolidated financial statements.
-4-
<PAGE>
PLAYTEX PRODUCTS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited, in thousands, except per share data)
<TABLE>
<CAPTION>
Nine Months Ended
--------------------------
September 26, September 27,
1998 1997
------------ ------------
<S> <C> <C>
Net sales $ 512,846 $ 388,957
Cost of sales 209,568 150,199
--------- ---------
Gross profit 303,278 238,758
Operating expenses:
Advertising and sales promotion 115,609 90,911
Selling, distribution and research 53,838 43,231
Administrative 17,295 13,848
Amortization of intangibles 12,648 9,672
--------- ---------
Total operating expenses 199,390 157,662
--------- ---------
Operating earnings 103,888 81,096
Interest expense, including related party interest
expense of $9,112 for both periods presented,
net of related party interest income of $9,002
for both periods presented 54,190 48,328
--------- ---------
Earnings before income taxes 49,698 32,768
Income taxes 21,361 15,369
--------- ---------
Earnings before extraordinary loss 28,337 17,399
--------- ---------
Extraordinary loss on early extinguishment
of debt, net of $2,344 tax benefit -- (4,078)
--------- ---------
Net earnings $ 28,337 $ 13,321
========= =========
Earnings per share before extraordinary loss:
Basic $ .48 $ .34
========= =========
Diluted $ .47 $ .34
========= =========
Earnings per share:
Basic $ .48 $ .26
========= =========
Diluted $ .47 $ .26
========= =========
Weighted average shares outstanding:
Basic 59,196 50,917
========= =========
Diluted 60,117 51,106
========= =========
</TABLE>
See notes to condensed consolidated financial statements.
-5-
<PAGE>
PLAYTEX PRODUCTS, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited, in thousands)
<TABLE>
<CAPTION>
Foreign
Additional Retained Currency
Common Paid-In Earnings Translation
Stock Capital (Deficit) Adjustments
----- ------- --------- -----------
<S> <C> <C> <C> <C>
Balance, December 27, 1997 $ 509 $ 424,706 $(691,065) $ (2,213)
Net earnings -- -- 28,337 --
Stock issued to employees
exercising stock options 1 1,103 -- --
Stock issued in conjunction
with business acquisition 93 91,324 -- --
Foreign currency translation
adjustments -- -- -- (417)
--------- --------- --------- ---------
Balance, September 26, 1998 $ 603 $ 517,133 $(662,728) $ (2,630)
========= ========= ========= =========
</TABLE>
See notes to condensed consolidated financial statements.
-6-
<PAGE>
PLAYTEX PRODUCTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands, except per share data)
<TABLE>
<CAPTION>
Nine Months Ended
---------------------------
September 26, September 27,
1998 1997
------------ ------------
<S> <C> <C>
Cash flows provided by operations:
Net earnings $ 28,337 $ 13,321
Non-cash items included in earnings:
Extraordinary loss -- 4,078
Amortization of intangibles 12,648 9,672
Amortization of deferred financing costs 2,233 1,558
Depreciation 7,083 5,575
Deferred taxes 8,882 3,221
Other, net (354) 275
Net decrease (increase) in working capital accounts,
net of acquisitions 1,704 (15,656)
--------- ---------
Net cash flows provided by operations 60,533 22,044
--------- ---------
Cash flows used for investing activities:
Cash portion of businesses acquired (106,246) --
Purchases of property, plant and equipment (9,781) (8,159)
--------- ---------
Net cash flows used for investing activities (116,027) (8,159)
--------- ---------
Cash flows provided by (used for) financing activities:
Net (repayments) borrowings under working capital
facilities, net (23,550) 18,100
Repayment of long-term debt (1,875) (380,075)
Long-term debt borrowings 100,000 355,000
Payment of deferred financing costs (3,027) (9,104)
Issuance of shares of common stock 1,104 366
--------- ---------
Net cash flows provided by (used for) financing
activities 72,652 (15,713)
--------- ---------
Change in cash and cash equivalents 17,158 (1,828)
Cash and cash equivalents at beginning of period 3,231 6,205
--------- ---------
Cash and cash equivalents at end of period $ 20,389 $ 4,377
========= =========
Supplemental disclosures of cash flow information
Net cash paid during the periods for:
Interest $ 46,331 $ 38,815
========= =========
Income taxes, net of refunds $ 9,701 $ 5,309
========= =========
</TABLE>
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.
-7-
<PAGE>
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 September 26, 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 September 26, 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 September 26, 1998, the unallocated excess purchase
price has been assigned to goodwill pending final fair value assessment. The
Company does not believe that the fair
-8-
<PAGE>
PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2. Acquisitions (continued)
value determinations, when completed, will have a material impact on the
recorded amounts of amortization of intangibles for the three and nine months
ended September 26, 1998.
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.
<TABLE>
<CAPTION>
Nine Months Ended
---------------------------
(Unaudited, in thousands, except per share data) September 26, September 27,
1998 1997
------------ ------------
<S> <C> <C>
Net sales $ 519,580 $ 495,576
Earnings before extraordinary loss $ 24,741 $ 16,331
Net earnings $ 24,741 $ 12,253
Earnings per share before extraordinary loss:
Basic $ 0.41 $ 0.27
Diluted $ 0.40 $ 0.27
Earnings per share:
Basic $ 0.41 $ 0.20
Diluted $ 0.40 $ 0.20
Weighted average shares outstanding:
Basic 60,283 60,173
Diluted 61,204 60,363
</TABLE>
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 nine month periods ended
September 26, 1998 and September 27, 1997. The net loss associated with the
foreign currency translation adjustments for the three and nine month periods
ended September 26, 1998 was $0.2 million and $0.4 million, respectively. The
net loss associated with the foreign currency translation adjustments for the
three and nine month periods ended September 27, 1997 was $0.0 million and $0.2
million, respectively. Accumulated other comprehensive earnings at September 26,
1998 and December 27, 1997 consisted solely of foreign currency translation
adjustments with debit balances of $2.6 million and $2.2 million, respectively.
-9-
<PAGE>
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):
<TABLE>
<CAPTION>
September 26, December 27,
1998 1997
------------ ------------
(Unaudited)
<S> <C> <C>
Receivables $ 97,860 $ 68,545
Less allowance for doubtful accounts (2,604) (1,669)
--------- ---------
Net $ 95,256 $ 66,876
========= =========
Inventories:
Raw materials $ 9,341 $ 14,866
Work in process 1,244 845
Finished goods 39,010 26,789
--------- ---------
Total $ 49,595 $ 42,500
========= =========
Net property, plant and equipment:
Land $ 1,435 $ 1,190
Buildings 28,471 24,650
Machinery and equipment 126,777 103,767
--------- ---------
156,683 129,607
Less accumulated depreciation (81,295) (74,797)
--------- ---------
Net $ 75,388 $ 54,810
========= =========
Accrued expenses:
Advertising and sales promotion $ 25,324 $ 13,480
Interest 14,248 8,622
Employee compensation and benefits 10,910 7,808
Insurance 3,019 2,945
Accrued returns reserve 9,952 1,551
Accrued expenses - business combinations 7,104 --
Other 6,988 4,421
--------- ---------
Total $ 77,545 $ 38,827
========= =========
</TABLE>
-10-
<PAGE>
PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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 September 26, 1998, the Company has incurred $1.6 million of costs associated
with involuntary terminations, $1.0 million of costs associated with exit
activities and $0.1 million associated with relocating employees of the acquired
companies.
6. Long-Term Debt
Long-term debt consists of the following (in thousands):
September 26, December 27,
1998 1997
------------ -----------
(Unaudited)
1997 Credit Agreement:
Term A Loan $ 55,000 $ 55,000
Revolving Credit Facility -- 23,550
Term Loan 247,375 149,250
8 7/8% Unsecured Senior Notes due 2004 150,000 150,000
9% Senior Subordinated Notes due 2003 360,000 360,000
--------- ---------
812,375 737,800
Less current maturities (2,500) (1,500)
--------- ---------
Total long-term debt $ 809,875 $ 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.
The Term Loan provides for quarterly repayment of principle of $375,000
from September 15, 1997 through December 15, 1997 and, due to the $100 million
of incremental borrowings associated with the Company's acquisition of PCH,
$625,000 from March 15, 1998 through June 15, 2003. The remaining principle
balance on the Term Loan of $235.5 million is due on September 15, 2003.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
-11-
<PAGE>
PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
6. Long-Term Debt (continued)
1997 Credit Agreement. At September 26, 1998 and September 27, 1997, the
weighted average variable interest rate was 7.14% and 7.12%, respectively. The
weighted average variable interest rate for the quarters ended September 26,
1998 and September 27, 1997 was 7.15% and 7.37%, 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 September 26, 1998, aggregate unused lines of credit (giving effect to
outstanding letters of credit) under the 1997 Credit Agreement amounted to
$114.0 million.
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
which would have a material adverse effect on the consolidated financial
position, results of operations or cash flows of the Company.
Reference is made to the discussion of litigation contained under the
caption "Financial Condition and Liquidity" in Item 2 of this Report
(Management's Discussion and Analysis of Financial Condition and Results of
Operations), which is incorporated herein by such reference.
8. Extraordinary Loss
On July 21, 1997 the Company completed a refinancing of its senior
indebtedness (the "1997 Refinancing") designed to increase its financial and
operational flexibility. The 1997 Refinancing included: (i) the issuance of
$150.0 million principal amount of 8 7/8% unsecured senior notes due July 15,
2004 (the "Senior Notes"), and (ii) a $150.0 million senior secured term loan
due September 15, 2003 (the "1997 Term Loan") and (iii) senior secured credit
facilities of $170.0 million (the "1997 Senior Credit Facilities") comprised of
a $115.0 million revolving credit facility (the "1997 Revolving Credit
Facility") and a $55.0 million term loan facility (the "1997 Term A Loan"). The
net proceeds from the 1997 Refinancing were used to retire the indebtedness
outstanding under the 1995 Credit Agreement; concurrently, the 1995 Credit
Agreement was terminated. In connection with the 1997 Refinancing, the Company
recorded an extraordinary loss of $4.1 million (net of income tax benefit of
$2.3 million) for costs and expenses related to the write-off of the unamortized
portion of the deferred financing costs associated with the 1995 Credit
Agreement.
-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. 1-12620).
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, issues related to the year 2000, 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 Operation
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
-13-
<PAGE>
PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
Playtex(R) Gentle Glide(R), Soft Comfort(R), Slimfits(R) and Silk Glide(R). The
Infant Care product 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 September 26, 1998 Versus
Three Months Ended September 27, 1997:
Net Sales - The Company's net sales grew $44.9 million, or 38%, to $162.6
million for the third quarter of 1998 from $117.7 million in the third quarter
of 1997. Acquisitions accounted for $32.8 million of the increase in net sales;
excluding this impact, Playtex's base businesses grew by $12.1 million or 10%
versus the third quarter of 1997.
Net sales in the Infant Care business grew $28.6 million, or 90%, to $60.4
million for the third quarter of 1998 from $31.8 million in the third quarter of
1997. These results reflect the impact of Infant Care brands acquired in the
Acquisitions and continued growth in the Company's base Infant Care business.
Net sales of the acquired brands in the third quarter of 1998 were $21.7 million
and accounted for 76% of the increase in Infant Care net sales. The Company's
base Infant Care business grew $6.9 million in the third quarter of 1998, or
22%, predominately led by continued growth in the Company's cups and mealtime
products and disposable feeding systems.
Feminine Care net sales increased $5.4 million, or 9%, to $62.8 million in
the third quarter of 1998 from $57.4 million in the third quarter of 1997. These
results reflect: (i) an increase in dollar market share of 0.7% to 27.0% in the
third quarter of 1998 from 26.3% in the third quarter of 1997, (ii) a 7.2%
increase in retail dollar sales in the third quarter of 1998 compared to the
third quarter of 1997 and (iii) 4.3% dollar category growth in the third quarter
of 1998 over the comparable quarter in 1997.
Sun Care net sales decreased $0.8 million, or 9%, to $7.8 million in the
third quarter of 1998 from $8.6 million in the third quarter of 1997.
Household Products net sales grew $2.5 million, or 18%, to $16.5 million
for the third quarter of 1998 from $14.0 million in the third quarter of 1997.
Net sales of Woolite increased $1.5 million, or 21%, and accounted for 60% of
the increase in Household Products net sales.
Personal Grooming net sales grew $9.2 million, or 159%, to $15.0 million
for the third
-14-
<PAGE>
PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
quarter of 1998 from $5.8 million in the third quarter of 1997. The Personal
Grooming brands acquired in the Acquisitions increased net sales in the third
quarter of 1998 by $11.1 million offsetting decreased net sales of Jhirmack
products.
Gross Profit - Gross profit increased $23.3 million, or 32%, to $96.4
million for the third quarter of 1998 from $73.1 million in the third quarter of
1997. As a percent of net sales gross profit decreased to 59.3% in the third
quarter of 1998 from 62.1% in the third 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 $7.7 million, or 32%, to
$31.8 million for the third quarter of 1998 from $24.1 million in the third
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) lower operating expenses as a percent of net
sales.
Interest Expense - Interest expense grew $1.8 million, or 11%, to $17.9
million in the third quarter of 1998 from $16.1 million in the third quarter of
1997. This resulted from an increase in long-term debt of $74.6 million
(including current obligations). The Company incurred $110.4 million of
additional indebtedness due to the Acquisitions, offset by payments funded by
cash generated from operations.
Income Taxes - Income taxes increased $2.0 million, or 50%, to $6.0
million in the third quarter of 1998 from $4.0 million in the third quarter of
1997. As a percent of pretax earnings, the Company's effective tax rate
decreased 6.6% to 43.0% of pretax earnings in the third quarter of 1998 from
49.6% in the third 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 Before Extraordinary Loss - Net earnings before extraordinary
loss increased $3.9 million, or 96%, to $7.9 million in the third quarter of
1998 from $4.0 million in the third quarter of 1997. This increase is due to the
combined effects of all of the factors described above.
Nine Months Ended September 26, 1998 Versus
Nine Months Ended September 27, 1997:
Net Sales - The Company's net sales grew $123.8 million, or 32%, to $512.8
million for the nine month period ended September 26, 1998 from $389.0 million
for the comparable period in 1997. Acquisitions accounted for $90.7 million of
the increase in net sales; excluding this impact, Playtex's base businesses grew
by $33.1 million or 9% versus the comparable period in 1997.
Net sales in the Infant Care business grew $73.6 million, or 78%, to
$168.3 million for the nine months ended September 26, 1998 from $94.7 million
for the comparable period in 1997. These results reflect the impact of the
Infant Care brands acquired in the Acquisitions as well as continued growth in
the Company's base Infant Care business. Net sales of the acquired Infant
-15-
<PAGE>
PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
Care brands for the nine months ended September 26, 1998 were $61.2 million and
accounted for 83% of the increase in Infant Care net sales. The Company's base
Infant Care business grew $12.4 million for the nine month period ended
September 26, 1998, or 13%, predominately led by continued growth in the
Company's cups and mealtime products and disposable feeding systems.
Feminine Care net sales increased $20.7 million, or 14%, to $165.8 million
for the nine months ended September 26, 1998 from $145.1 million for the
comparable period in 1997. These results reflect: (i) an increase in dollar
market share of 1.3% to 26.8% in the nine month period ended September 26, 1998
from 25.5% in the comparable period of 1997, (ii) a 10.7% increase in retail
dollar sales in the nine month period ended September 26, 1998 compared to the
comparable period of 1997, (iii) 5.6% dollar category growth in the nine month
period ended September 26, 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 $1.7 million, or 2%, to $90.7 million for the
nine months ended September 26, 1998 from $89.0 million for the comparable
period in 1997.
Household Products net sales grew $4.7 million, or 11%, to $46.3 million
for the nine months ended September 26, 1998 from $41.6 million for the
comparable period in 1997. Net sales of Woolite increased $3.3 million, or 16%,
and accounted for 70% of the increase in Household Products net sales.
Personal Grooming net sales grew $23.0 million, or 124%, to $41.6 million
for the nine months ended September 26, 1998 from $18.6 million for the
comparable period in 1997. The Personal Grooming brands acquired in the
Acquisitions increased net sales for the nine month period ended September 26,
1998 by $29.4 million offsetting decreased net sales of Jhirmack products.
Gross Profit - Gross profit increased $64.5 million, or 27%, to $303.3
million for the nine months ended September 26, 1998 from $238.8 million in the
comparable period of 1997. As a percent of net sales, gross profit decreased to
59.1% in the nine month period ended September 26, 1998 from 61.4% in the
comparable 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 nine month period ended
September 26, 1998 increased $22.8 million, or 28%, to $103.9 million from $81.1
million in the comparable 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 Household Products and (iii) lower operating
expenses as a percent of net sales.
Interest Expense - Interest expense grew $5.9 million, or 12%, to $54.2
million in the nine month period ended September 26, 1998 from $48.3 million in
the comparable period of 1997.
-16-
<PAGE>
PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
This resulted from an increase in long term debt of $74.6 million (including
current obligations). The Company incurred $110.4 million of additional
indebtedness due to the Acquisitions, offset by payments funded by cash
generated from operations.
Income Taxes - Income taxes increased $6.0 million, or 39%, to $21.4
million in the nine month period ended September 26, 1998 from $15.4 million in
the comparable period of 1997. As a percent of pretax earnings, the Company's
effective tax rate decreased 3.9% to 43.0% of pretax earnings in the nine month
period ended September 26, 1998 from 46.9% in the comparable 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 Before Extraordinary Loss - Net earnings before extraordinary
loss increased $10.9 million, or 63%, to $28.3 million in the nine months ended
September 26, 1998 from $17.4 million in the comparable period of 1997. This
increase is due to the combined effects of all of the factors described above.
Financial Condition and Liquidity
At September 26, 1998, the Company's working capital (current assets net
of current liabilities) increased by $14.1 million to $70.5 million from $56.4
million at December 27, 1997. The increase resulted primarily from (i) an
increase of $28.4 million in receivables, primarily as a result of (a) higher
net sales versus the fourth quarter of 1997 and (b) the Acquisitions, and (ii)
an increase in the Company's cash position of $17.2 million to $20.4 million at
September 26, 1998 from $3.2 million at December 27, 1997, and (iii) an increase
of $7.1 million in inventories and $4.8 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 $38.7 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 $4.7 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 $9.8
million and $8.2 million for the nine months ended September 26, 1998 and
September 27, 1997, respectively. These expenditures were primarily to upgrade
production equipment and maintain facilities in the ordinary course of business.
Capital expenditures for the twelve months ended December 26, 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.
-17-
<PAGE>
PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
At September 26, 1998 long-term debt (including current portion but
excluding obligations due to related party) was $812.4 million versus $737.8
million at December 27, 1997, an increase of $74.6 million. The increase was as
a result of debt incurred to fund the Acquisitions. In January 1998, the Company
acquired PCH, Carewell and Binky. The Company increased its borrowings under the
1997 Term Loan by $100 million to fund the cash portion of the acquisition price
of PCH (the Company also issued 9,257,345 shares of its Common Stock as part of
the PCH acquisition) and the purchase of Carewell and Binky was financed from
available borrowings under the Company's revolving credit facility. At September
26, 1998, the Company had paid down its revolving credit facility with cashflow
generated from operations and has unused lines of credit (giving effect to
outstanding letters of credit) under its credit facility of $114.0 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 and for anticipated 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, among other things, 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 or if available, on terms acceptable to management, 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.
-18-
<PAGE>
PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
Inflation in the United States and Canada has not had a significant effect
on the Company during recent periods.
On August 13, 1998, the Company filed action in the United States District
Court, District of Delaware (the "Court") seeking, among other things, a
judgment declaring that the United States Patent No. 5,747,011 (the "'011
patent") (the "Complaint"), related to a "sunscreen with disappearing color
indicator," and held by Schering-Plough HealthCare Products, Inc. ("S-P
HealthCare"), as assigned, is invalid. On September 8, 1998, S-P HealthCare
answered the Complaint denying its material allegations, and asserted a
counterclaim against the Company for infringement of the '011 patent, seeking
unspecified damages and injunctive relief. On October 19, 1998, S-P HealthCare
moved for a preliminary injunction against the Company which would prohibit the
Company from selling its Banana Boat(R) Cool Colorz(TM) Sunscreen, which
allegedly infringe the '011 patent. The Company intends to vigorously pursue the
claims it has asserted in the Complaint seeking declaratory relief and to
vigorously defend S-P HealthCare's motion for a preliminary injunction.
Year 2000
- ---------
Historically certain computer programs were written using two digits
rather than four to define the applicable year. Accordingly, the Company's
software may recognize a date using "00" as 1900 rather than the year 2000,
which could result in computer system failures or miscalculations, commonly
referred to as the Year 2000 ("Y2K") issue. The Y2K issue can arise at any point
in the Company's supply, manufacturing, processing, distribution and financial
chains. Incomplete or untimely resolution of the Y2K issue by the Company, key
suppliers, customers and other parties could result in a temporary inability to
process transactions or engage in normal manufacturing or other business
activities. Such inabilities could potentially have a material adverse effect on
the Company's results of operations, financial condition and cashflows.
The Company, with the assistance of outside consultants, is addressing the
Y2K issue. The Company has inventoried and assessed all date-sensitive
information and transaction processing computer systems and determined that a
portion of its information technology must be modified or replaced. The Company
has identified the critical software and hardware installations that will be
necessary to be replaced or modified and has developed a four-tiered program to
deal with the Y2K issue. These tiers include: (i) network and hardware/software
infrastructure, (ii) internally developed and purchased application software,
(iii) critical manufacturing and other operating systems including those that
use embedded technology such as micro-controllers and microprocessors, and (iv)
external relationships including customers, suppliers and service providers.
The Company believes the complete Y2K project will be completed prior to
the year 2000. However, unforeseen difficulties may arise which could adversely
affect the Company's ability to complete its systems modifications correctly,
completely, on time and/or within its cost estimate. In addition, there can be
no assurance that customers, suppliers and service providers on which the
Company relies will resolve their Y2K issues accurately, thoroughly and on time.
Failure to complete the Y2K project by the year 2000 could have a material
adverse affect on the Company's
-19-
<PAGE>
PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
results of operations, financial condition and cashflows.
The Company anticipates that necessary modifications to (i) the primary
network and hardware/software infrastructure will be completed during the first
quarter of 1999; (ii) integration and validation testing will commence during
the second quarter of 1999; and (iii) embedded chip technology such as
micro-controllers and micro-processors utilized in the manufacturing or other
operating systems will be updated, replaced and validated as necessary by the
third quarter of 1999. The Company has initiated formal communications with its
significant suppliers, customers and service providers to determine the extent
to which the Company may be vulnerable to their failure to correct their own Y2K
issues. The Company will seek updates from these parties to attempt to ascertain
the adequacy of their programs as it relates to the Company. The Company
anticipates that it will develop contingency plans with respect to its principal
customers, suppliers and service providers by July 1999. There can be no
assurance, however, that the Company will be able to predict adequately Y2K
problems experienced by its suppliers, customers and service providers or the
Company's ability to address these potential issues on a timely basis or to
develop adequate contingency plans related thereto.
The total cost associated with required modifications of hardware and
software is not expected to be material to the Company's financial position. The
Company anticipates that its total cost associated with the Y2K project will be
approximately $3.9 million, including $0.6 million expended in 1997 and $1.3
million expended during the nine month period ended September 26, 1998. The
remaining $2.0 million will be spent during the balance of 1998 and throughout
1999 as the Company completes the installation and testing of new or modified
hardware and software. Costs related to the Y2K issue are either expensed as
incurred or capitalized and have been and will be funded from operating cash
flows.
The failure to properly anticipate and correct a material Y2K problem
could result in an interruption in, or a failure of, certain normal business
activities or operations. Such failures could materially and adversely affect
the Company's results of operations, financial condition and cashflows. Due to
the general uncertainty inherent in the Y2K problem, resulting in part from the
uncertainty of the Y2K readiness of third-party suppliers, customers and service
providers, the Company is unable to determine at this time whether the
consequences of Y2K failures will have a material impact on the Company's
results of operations, financial condition or cashflows. The Y2K project is
expected to significantly reduce the Company's level of uncertainty about the
Y2K problem. The Company believes that, with the implementation of new business
systems and completion of the Y2K project as scheduled, the possibility of
significant interruptions of normal operations should be reduced.
While the Company believes its efforts to address the Y2K issue will be
successful in avoiding any material adverse effect on the Company's results of
operations, financial condition and cashflows, investors and other interested
third parties should recognize that the Company's failure to resolve Y2K issues
on a timely basis would, in a "most reasonably likely worst case scenario",
significantly limit its ability to manufacture and distribute its products and
process its daily business transactions for a period of time, especially if such
failure is coupled with third party or infrastructure failures. Similarly, the
Company's operations subsequent to 1999 could be
-20-
<PAGE>
PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
significantly affected by the failure of one or more significant suppliers,
customers and service providers or components of the Company's infrastructure.
Adverse affects on the Company could include, among other things, business
disruption, increased costs, loss of business and other similar risks, and
litigation related thereto. The Company believes that contingency plans will be
developed prior to the year 2000 which address the most likely risks related to
the Y2K problem.
The foregoing discussion regarding Y2K project timing, effectiveness,
implementation and costs are based on management's current evaluation using
available information. Factors that might cause material changes include, but
are not limited to, the availability of key Y2K personnel, the readiness of
third parties, and the Company's ability to respond to unforeseen Y2K
complications.
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 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 areas
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
-21-
<PAGE>
PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
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.
-22-
<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.
Reference is made to the discussion of litigation contained under the
caption "Financial Condition and Liquidity" in Item 2 of this Report
(Management's Discussion and Analysis of Financial Condition and Results of
Operations), which is incorporated herein by such reference.
As of the end of September 1998, there were approximately 9 pending toxic
shock syndrome claims relating to Playtex tampons, although additional claims
may be made in the future.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits:
See exhibit index on Page 25 for exhibits filed with this Quarterly Report
on Form 10-K
b. Reports on Form 8-K
None
-23-
<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: November 10, 1998 By: /s/ Michael R. Gallagher
----------------- ----------------------------
Michael R. Gallagher
Chief Executive Officer
Date: November 10, 1998 By: /s/ Michael F. Goss
----------------- ----------------------------
Michael F. Goss
Executive Vice President
and
Chief Financial Officer
-24-
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description
- ----------- -----------
3(i) Restated Certificate of Incorporation of Registrant,
as amended *
3(ii) By-Laws of the Registrant, as amended through
June 4, 1998 **
11 Statement re computation of earnings per share
27 Financial Data Schedule
- ----------
* Incorporated by reference to Exhibit 3.2 to the Current Report on the
Registrant on Form 8-K dated June 6, 1995.
** Incorporated by reference to Exhibit 3(b) to the Registrant Quarterly
Report on Form 10-Q for the quarter ended June 27, 1998.
-25-
(Exhibit 11)
PLAYTEX PRODUCTS, INC.
Computation of Earnings Per Share
(Unaudited, in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
---------------------- ----------------------
Sept. 26, Sept. 27, Sept. 26, Sept. 27,
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Basic Earnings Per Share
- ------------------------
Net Earnings available to
Common Stockholders $ 7,923 $ (44) $ 28,337 $ 13,321
======== ======== ======== ========
Weighted Average Common
Shares Outstanding 60,326 50,931 59,196 50,917
Net Earnings Per Common Share $ 0.13 $ 0.00 $ 0.48 $ 0.26
======== ======== ======== ========
Diluted Earnings Per Share
- --------------------------
Net Earnings available to
Common Stockholders $ 7,923 $ (44) $ 28,337 $ 13,321
======== ======== ======== ========
Weighted Average Common
Shares Outstanding 60,326 50,931 59,196 50,917
Assumed Dilutive effect of
Stock Options (1) 902 170 921 189
-------- -------- -------- --------
Weighted Average Common
Shares Outstanding - Diluted 61,228 51,101 60,117 51,106
Net Earnings Per Common Share $ 0.13 $ 0.00 $ 0.47 $ 0.26
======== ======== ======== ========
</TABLE>
(1) Based on the Treasury Stock Method.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-26-1998
<PERIOD-END> SEP-26-1998
<CASH> 20,389
<SECURITIES> 0
<RECEIVABLES> 97,860
<ALLOWANCES> 2,604
<INVENTORY> 49,595
<CURRENT-ASSETS> 179,146
<PP&E> 156,683
<DEPRECIATION> 81,295
<TOTAL-ASSETS> 889,157
<CURRENT-LIABILITIES> 108,644
<BONDS> 812,375
0
0
<COMMON> 603
<OTHER-SE> (148,225)
<TOTAL-LIABILITY-AND-EQUITY> 889,157
<SALES> 512,846
<TOTAL-REVENUES> 512,846
<CGS> 209,568
<TOTAL-COSTS> 209,568
<OTHER-EXPENSES> 199,390
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 54,190
<INCOME-PRETAX> 49,698
<INCOME-TAX> 21,361
<INCOME-CONTINUING> 28,337
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 28,337
<EPS-PRIMARY> .48
<EPS-DILUTED> .47
</TABLE>
