<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 15, 1998.
REGISTRATION NO. 333--50099
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
PLAYTEX PRODUCTS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 51-0312772
(State or other (I.R.S. Employer
jurisdiction of incorporation) Identification No.)
</TABLE>
------------------------
300 NYALA FARMS ROAD
WESTPORT, CONNECTICUT 06880
(203) 341-4000
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------------
PAUL E. YESTRUMSKAS, ESQ.
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
300 NYALA FARMS ROAD
WESTPORT, CONNECTICUT 06880
(203) 341-4000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
<TABLE>
<S> <C>
MITCHELL S. FISHMAN, ESQ. ROBERT EVANS III, ESQ.
PAUL, WEISS, RIFKIND, WHARTON & GARRISON SHEARMAN & STERLING
1285 AVENUE OF THE AMERICAS 599 LEXINGTON AVENUE
NEW YORK, NEW YORK 10019 NEW YORK, NEW YORK 10022
(212) 373-3000 (212) 848-4000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: / /
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 of the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: / /
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
EXPLANATORY NOTE
This Registration Statement contains a preliminary prospectus relating to a
public offering of Common Stock of Playtex Products, Inc. in the United States
and Canada (the "U.S. Offering"), together with separate preliminary prospectus
pages relating to a concurrent public offering of Common Stock outside the
United States and Canada (the "International Offering"). The complete
preliminary prospectus for the U.S. Offering follows immediately after this
Explanatory Note. After such preliminary prospectus are the following alternate
pages for the preliminary prospectus for the International Offering: a front
cover page, page 5 of the Prospectus Summary, a "Use of Proceeds" section, a
"Principal and Selling Stockholders" section, a "Certain United States Federal
Tax Consequences for Non-United States Holders" section, an "Underwriting"
section, a "Legal Matters" section, an "Experts" section, an "Available
Information" section, an "Incorporation of Certain Documents by Reference"
section and a back cover page. Each such page has been labeled "Alternate Page
for International Prospectus." All other pages of the preliminary prospectus for
the U.S. Offering are to be used for both the U.S. Offering and the
International Offering.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
PROSPECTUS
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED MAY 15, 1998
8,610,682 SHARES
[LOGO]
PLAYTEX PRODUCTS, INC.
COMMON STOCK
------------------
All of the 8,610,682 shares of common stock, par value $.01 per share (the
"Common Stock"), of Playtex Products, Inc., a Delaware corporation (the
"Company" or "Playtex"), offered hereby are being sold by certain stockholders
of the Company (the "U.S. Selling Stockholders") and are offered for sale
initially in the United States and Canada by the U.S. Underwriters (the "U.S.
Offering"). The Company will not receive any of the proceeds from the sale of
the shares by the U.S. Selling Stockholders. See "Principal and Selling
Stockholders."
Concurrently with the U.S. Offering, other stockholders (the "International
Selling Stockholders") of the Company are offering to sell 4,008,063 shares of
the Common Stock of the Company outside the United States and Canada (the
"International Offering") through a separate group of underwriters (the
"International Managers"). Pursuant to agreements between the U.S. Selling
Stockholders and the Company and the International Selling Stockholders and the
Company, the consummation of the U.S. Offering is contingent upon the
consummation of the International Offering. However, the consummation of the
International Offering is not contingent upon the consummation of the U.S.
Offering.
The Common Stock is listed on the New York Stock Exchange ("NYSE") under the
symbol "PYX." On May 14, 1998, the last reported sale price of the Common Stock
on the NYSE was $14 1/4 per share.
SEE "RISK FACTORS" (BEGINNING ON PAGE 9) FOR A DISCUSSION OF CERTAIN FACTORS
WHICH SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PROCEEDS TO
PRICE TO UNDERWRITING U.S. SELLING
PUBLIC DISCOUNT(1) STOCKHOLDERS(2)
<S> <C> <C> <C>
Per Share...................................................... $ $ $
Total(3)....................................................... $ $ $
</TABLE>
(1) The Company and the U.S. Selling Stockholders have agreed to indemnify the
several U.S. Underwriters against certain liabilities, including certain
liabilities under the Securities Act of 1933, as amended. See
"Underwriting."
(2) The expenses of the U.S. Offering, estimated to be $533,000, will be paid by
the Company.
(3) The Company has granted to the U.S. Underwriters an option, exercisable
within 30 days after the date hereof, to purchase up to an additional
1,892,811 shares of Common Stock to cover over-allotments, if any. If all
such additional shares are purchased, the total Price to Public,
Underwriting Discount and Proceeds to the Company will be $ , $
and $ , respectively, and the proceeds to the U.S. Selling Stockholders
would be unchanged. See "Underwriting."
------------------------
The shares of Common Stock are offered by the several U.S. Underwriters,
subject to prior sale, when, as and if delivered to and accepted by them, and
subject to the approval of certain legal matters by counsel for the U.S.
Underwriters and certain other conditions. The U.S. Underwriters reserve the
right to withdraw, cancel or modify such offer and to reject orders in whole or
in part. It is expected that delivery of the shares of Common Stock will be made
in New York, New York on or about , 1998.
------------------------
MERRILL LYNCH & CO.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
GOLDMAN, SACHS & CO.
PAINEWEBBER INCORPORATED
SALOMON SMITH BARNEY
------------------------
The date of this Prospectus is , 1998.
<PAGE>
Group photo of Infant Care products
Certain persons participating in this offering may engage in transactions
that stabilize, maintain or otherwise affect the price of the Common Stock. Such
transactions may include stabilizing and the purchase of Common Stock to cover
syndicate short positions. For a description of these activities, see
"Underwriting."
TRADEMARKS
The Company owns or has the proprietary rights to trademarks for ACTION
SPORT-TM-, AVANCE-TM-, BANANA BOAT-REGISTERED TRADEMARK-, BETTER
OFF-REGISTERED TRADEMARK-, BINACA-REGISTERED TRADEMARK-,
BINKY-REGISTERED TRADEMARK-, BIOSUN-TM-, BITE BLOCK-TM-,
CHERUBS-REGISTERED TRADEMARK-, CHUBS-REGISTERED TRADEMARK-,
COMFORTFLOW-REGISTERED TRADEMARK-, COOLSTRAW-TM-, DENTAX-REGISTERED TRADEMARK-,
DIAPARENE-REGISTERED TRADEMARK-, DOROTHY GRAY-REGISTERED TRADEMARK-,
DROP-INS-REGISTERED TRADEMARK-, EAZY-FEED-TM-, GENTLE
GLIDE-REGISTERED TRADEMARK-, GET ON THE BOAT-REGISTERED TRADEMARK-,
HANDSAVER-REGISTERED TRADEMARK-, HEATCARE-REGISTERED TRADEMARK-,
JHIRMACK-REGISTERED TRADEMARK-, LIVING-REGISTERED TRADEMARK-, LUNCHKINS-TM-,
MOST LIKE MOTHER-REGISTERED TRADEMARK-, MR. BUBBLE-REGISTERED TRADEMARK-,
NATURAL ACTION-REGISTERED TRADEMARK-, OGILVIE-REGISTERED TRADEMARK-,
PLAYTEX-REGISTERED TRADEMARK-, PORTABLES-REGISTERED TRADEMARK-, QUIKBLOK-TM-,
QUICKSTRAW-REGISTERED TRADEMARK-, SAFE 'N SURE-TM-, SILK
GLIDE-REGISTERED TRADEMARK-, SLIMFITS-REGISTERED TRADEMARK-, SOFT
COMFORT-REGISTERED TRADEMARK-, SPILL-PROOF-TM-, TAN
EXPRESS-REGISTERED TRADEMARK-, TEK-REGISTERED TRADEMARK-, TUSSY AND WET
ONES-REGISTERED TRADEMARK-. The Company also owns a royalty-free license in
perpetuity to the WOOLITE-Registered Trademark- trademark for rug and upholstery
cleaning products in the United States and Canada. This Prospectus also contains
product names, trademarks and trade names of other companies.
<PAGE>
Group photo of Feminine Care products:
<PAGE>
Group photo of Sun Care products
<PAGE>
Group photo of Household and Personal Grooming products
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO, AND
SHOULD BE READ IN CONJUNCTION WITH, THE MORE DETAILED INFORMATION AND FINANCIAL
STATEMENTS, INCLUDING THE NOTES THERETO, APPEARING ELSEWHERE IN THIS PROSPECTUS.
UNLESS OTHERWISE NOTED, ALL INFORMATION IN THIS PROSPECTUS ASSUMES NO EXERCISE
OF THE OVER-ALLOTMENT OPTION GRANTED BY THE COMPANY TO THE U.S. UNDERWRITERS.
UNLESS OTHERWISE INDICATED THE SOURCE OF ALL MARKET SHARE AND CATEGORY GROWTH
DATA IN THIS PROSPECTUS IS AC NIELSEN CORPORATION, AND SUCH DATA INCLUDES DATA
REPORTED BY FOOD STORES, DRUG STORES AND MASS MERCHANDISERS. UNLESS THE CONTEXT
INDICATES OR OTHERWISE REQUIRES, REFERENCES IN THIS PROSPECTUS TO "PLAYTEX" OR
THE "COMPANY" ARE TO PLAYTEX PRODUCTS, INC. AND ITS SUBSIDIARIES ON A
CONSOLIDATED BASIS, AND REFERENCES TO THE BUSINESS OF THE COMPANY INCLUDE (I)
THE BUSINESS OF PERSONAL CARE HOLDINGS, INC., (II) THE BUSINESS OF CAREWELL
INDUSTRIES, INC. AND (III) THE PACIFIER BUSINESS OF BINKY-GRIPTIGHT, INC., EACH
OF WHICH WAS ACQUIRED BY PLAYTEX IN JANUARY 1998.
STATEMENT OF OPERATIONS DATA IDENTIFIED IN THIS PROSPECTUS AS "PRO FORMA"
ARE UNAUDITED AND (I) FOR THE COMPANY'S 1997 FISCAL YEAR, GIVE EFFECT TO SUCH
ACQUISITIONS AND THE COMPANY'S JULY 1997 REFINANCING OF ITS SENIOR INDEBTEDNESS
(THE "1997 REFINANCING") AS IF THEY HAD OCCURRED ON DECEMBER 29, 1996, THE FIRST
DAY OF SUCH FISCAL YEAR AND (II) FOR THE THREE MONTHS ENDED MARCH 28, 1998, GIVE
EFFECT TO SUCH ACQUISITIONS AS IF THEY HAD OCCURRED ON DECEMBER 28, 1997, THE
FIRST DAY OF SUCH THREE MONTH PERIOD. PRO FORMA FINANCIAL DATA ARE PROVIDED FOR
INFORMATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSIDERED INDICATIVE OF THE
FINANCIAL CONDITION OR RESULTS OF OPERATIONS OF THE COMPANY IF SUCH TRANSACTIONS
HAD BEEN CONSUMMATED ON THE DATES INDICATED OR OF THE FINANCIAL CONDITION OR
RESULTS OF OPERATIONS OF THE COMPANY AT ANY FUTURE DATE OR FOR ANY FUTURE
PERIOD. SEE "PRO FORMA CONSOLIDATED FINANCIAL DATA." THE PRO FORMA ADJUSTMENTS
DO NOT GIVE EFFECT TO CONSOLIDATION SAVINGS OR OTHER CHANGES IN REVENUE OR OTHER
COSTS OF THE ACQUIRED COMPANIES THAT MAY OCCUR SUBSEQUENT TO THEIR ACQUISITION
BY THE COMPANY.
THE COMPANY
The Company is a leading manufacturer and marketer of a diversified line of
well-recognized branded consumer products, including PLAYTEX Infant Care
products, PLAYTEX tampons, BANANA BOAT Sun Care products, PLAYTEX household
latex gloves and WOOLITE rug and upholstery cleaning products. Through the
acquisitions of Personal Care Holdings, Inc. ("PCH"), Carewell Industries, Inc.
("Carewell") and the pacifier business of Binky-Griptight, Inc. ("Binky" and,
collectively with PCH and Carewell, the "Acquisitions") in January 1998, the
Company acquired a number of additional widely-recognized branded consumer
products to further strengthen its product lines, including CHUBS baby wipes,
WET ONES pre-moistened towelettes, BINKY pacifiers, MR. BUBBLE children's bubble
bath products, BINACA breath spray and drops, OGILVIE home permanent products
and DENTAX oral care products. The Company generated net sales of $172.7 million
and $500.6 million and EBITDA (as defined) of $43.7 million and $120.1 million
for the three months ended March 28, 1998 and the twelve months ended December
27, 1997, respectively. On a Pro Forma basis, the Company would have generated
net sales of $179.4 million and $635.5 million and EBITDA of $39.2 million and
$134.8 million for the three months ended March 28, 1998 and the twelve months
ended December 27, 1997, respectively.
1
<PAGE>
The following table sets forth the Company's principal product lines,
primary brand names making up each of these product lines on a Pro Forma basis
and certain related data for 1997 on an actual and Pro Forma basis:
<TABLE>
<CAPTION>
1997 ACTUAL 1997 PRO FORMA
------------------------------ ----------------------------
<S> <C> <C> <C> <C> <C>
NET SALES PERCENT OF NET SALES PERCENT OF
PRODUCT LINE PRIMARY BRAND NAMES (IN MILLIONS) NET SALES (IN MILLIONS) NET SALES
- -------------------------- ---------------------------------- ------------- --------------- ------------- -------------
Infant Care............... PLAYTEX, CHUBS, WET ONES, MR. $ 124.0 25% $ 212.6 33%
BUBBLE, BINKY
Feminine Care............. PLAYTEX 201.5 40 201.5 32
Sun Care.................. BANANA BOAT, BIOSUN 95.7 19 95.7 15
Personal Grooming......... OGILVIE, BINACA, JHIRMACK, TEK, 24.1 5 70.4 11
DENTAX
Household Products........ PLAYTEX, WOOLITE 55.3 11 55.3 9
------ --- ------ ---
Total..................... $ 500.6 100% $ 635.5 100%
------ --- ------ ---
------ --- ------ ---
</TABLE>
COMPETITIVE STRENGTHS
The Company believes it is distinguished by the following competitive
strengths:
BALANCED PORTFOLIO OF CONSUMER BUSINESSES. As a result of internal growth
and five acquisitions since 1994, the Company has built a balanced portfolio of
diversified consumer businesses, thereby reducing its dependence on any single
category. Infant Care is now the Company's single largest business with 33% of
Pro Forma net sales, followed by Feminine Care with 32% and Sun Care with 15%.
In 1994, Feminine Care accounted for 54% of net sales, while Infant Care
accounted for only 16% of net sales and Sun Care accounted for 10% of net sales.
The Company expects Feminine Care to continue to constitute a smaller component
of its overall business as a result of anticipated above-average growth in
Infant Care and Sun Care and further acquisitions in its non-Feminine Care
businesses.
EXCEPTIONAL CONSUMER FRANCHISES IN ATTRACTIVE CATEGORIES. The Company's
primary brand names are well-known and respected by both consumers and retailers
for their high product quality. In addition, the Company believes that the core
categories in which it competes are inherently attractive. The infant care
category has grown at a compound annual rate of 7% since 1994 primarily due to
the introduction of new products to the category. The sun care category has
grown at a compound annual rate of 8% since 1994 due primarily to increased
consumer awareness of the importance of sun protection. Further, the Company
believes that both the infant care and sun care categories are consolidating and
that this consolidation favors market leaders, such as the Company, with
marketing expertise, broad product lines and national distribution. The feminine
care category is characterized by slow but steady growth, a high degree of
customer brand loyalty and a relatively low sensitivity to economic cycles.
CONSUMER-FOCUSED PRODUCT INNOVATION. The Company devotes significant
resources and attention to product innovation and consumer research to develop
products which offer new and distinctive benefits to its consumers. This product
innovation has enabled the Company to increase its net sales and market share in
both the infant care and sun care categories. In the Infant Care business, the
Company's net sales grew at a compound annual rate of 17% between 1994 and 1997,
while its dollar market share increased from 30% to 39% over the same period. In
the Sun Care business, the Company's net sales grew at a compound annual rate of
25% between 1994 and 1997 and its unit market share increased from approximately
16% in 1994 to 20% in 1997.
WELL-ESTABLISHED DISTRIBUTION CHANNELS. The Company's products are
distributed in virtually every major food chain, drug chain, mass merchandiser
and price club in the United States through a combination of direct sales
personnel and independent brokers. This depth and breadth of distribution
permits the Company to rapidly introduce new products and to quickly realize
synergies in integrating acquired product lines. To further enhance its
relationship with its retailers, the Company is focusing sales and marketing
efforts on category management programs. In these programs, the Company works
with
2
<PAGE>
retailers to increase category sales and profitability through detailed analysis
of consumer buying habits and improved merchandising techniques. The Company
believes that such programs strengthen the relationship between the Company and
the retailer and increase the Company's sales.
STRONG AND STABLE CASH FLOWS. The strength of the Company's consumer
franchise and brand names is reflected in its consistently strong cash flows and
operating margins. These characteristics, together with relatively low levels of
capital expenditures, provide the Company with financial flexibility to
implement its growth strategy. In addition, the Company benefits from operating
and financial leverage. Given the predominantly fixed nature of the Company's
depreciation, amortization and interest expense, relatively small increases in
sales translate into disproportionately large increases in earnings per share.
GROWTH STRATEGY
In 1995, partnerships managed by Haas Wheat & Partners Incorporated ("Haas
Wheat"), a private investment firm, invested $180 million in the Company. The
proceeds of the equity investment were used by the Company to reduce bank debt
and increase its operating and financial flexibility. In addition, Michael R.
Gallagher, a seasoned executive with over 29 years of consumer marketing and
general management experience, was appointed chief executive officer to lead the
Company's growth strategy, the principal features of which are outlined below.
CONTINUE SALES GROWTH THROUGH PRODUCT INNOVATION. The Company intends to
grow its existing product lines through continued product innovation supported
by creative merchandising techniques and strong consumer marketing programs. In
December 1997, the Company introduced (i) 11 new Infant Care items, including
proprietary new offerings in each of the hard bottle and pacifier segments, (ii)
14 new Sun Care products and (iii) Odor Absorbing GENTLE GLIDE, a plastic
applicator tampon with an all-natural material which absorbs odors without the
use of a fragrance or deodorant. The Company intends to apply the same emphasis
on new product development to the brands acquired in the Acquisitions.
MAKE ADDITIONAL SYNERGISTIC ACQUISITIONS. The Company intends to accelerate
its growth in net sales and cash flow by acquiring brands with growth potential
in attractive categories. The Company seeks to acquire other consumer product
companies or brands whose products may be sold through the Company's
distribution channels and that would benefit from the PLAYTEX brand name or the
Company's expertise in marketing, sales and product development. The acquisition
of the BANANA BOAT product line demonstrates the Company's ability to add value
to the businesses it acquires. Since the Company first acquired the distribution
rights to the BANANA BOAT brand name, its unit market share has grown from
approximately 12% in 1992 to 20% in 1997, principally as a result of new product
introductions and significant improvements in the brand's distribution and
marketing. The acquisitions of WOOLITE, PCH, Carewell and Binky are further
examples of how the Company intends to aggressively grow through acquisitions of
complementary, or closely related, businesses.
SELECTIVELY EXTEND BRANDS INTO NEW PRODUCT CATEGORIES. The Company intends
to extend its portfolio of brand names into new product categories to capitalize
on its brand name recognition, its reputation for customer-focused product
development and its well-established distribution network. Initially, the
Company plans to focus on higher growth personal care categories closely related
to the Company's existing businesses.
BUILD INTERNATIONAL SALES. Historically, less than 5% of the Company's net
sales have been generated outside the United States and Canada. In recent years,
the Company has built a sales and marketing team dedicated to strengthening the
Company's competitive position overseas. The team is currently seeking to
identify strong local partners to distribute the Company's products abroad and
is also seeking to capitalize on its strong domestic relationship with key U.S.
retailers with international operations, such as Toys "R" Us, Inc. and Wal-Mart
Stores, Inc. ("Wal-Mart"). The Company intends to focus its initial efforts on
its Infant Care and Sun Care products, primarily in Europe, Latin America and
the Pacific Rim.
3
<PAGE>
RECENT DEVELOPMENTS
RECENT ACQUISITIONS. On January 28, 1998, the Company acquired PCH for
approximately $91 million in cash and 9,257,345 shares of Common Stock. PCH
manufactures and markets a number of leading consumer product brands, including
WET ONES pre-moistened towelettes, CHUBS baby wipes, OGILVIE home permanent
products, BINACA breath spray and drops, MR. BUBBLE children's bubble bath
products, DIAPARENE infant care products, TUSSY deodorants, DOROTHY GRAY skin
care products and BETTER OFF depilatories. The cash portion of the consideration
paid for PCH was financed with borrowings under an existing term loan agreement
which was amended concurrently with the PCH transaction. The acquisition was
accounted for as a purchase.
On January 6, 1998, the Company acquired Carewell for approximately $9.2
million in cash. Carewell manufactures and markets the DENTAX line of
toothbrushes, toothpaste and dental floss for distribution through food stores,
drug chains and mass merchandisers. On January 26, 1998, the Company acquired
certain tangible and intangible assets related to the BINKY pacifier business
from Binky-Griptight, Inc. for approximately $1.2 million in cash and the
issuance of a $0.5 million note payable due July 27, 1998. Both acquisitions
were financed with borrowings under the Company's revolving credit facility and
were accounted for as purchases.
------------------------
The Company was incorporated in Delaware on September 1, 1988. The Company's
principal executive office is located at 300 Nyala Farms Road, Westport,
Connecticut 06880, and its telephone number is (203) 341-4000.
4
<PAGE>
THE OFFERINGS
<TABLE>
<S> <C>
Common Stock offered by the U.S. Selling
Stockholders............................... 8,610,682 shares
Common Stock offered by the International
Selling Stockholders....................... 4,008,063 shares (1)
Common Stock to be outstanding before and
after the U.S. Offering and the
International Offering..................... 60,296,851 shares (2)
Use of proceeds.............................. The Company will not receive any proceeds
from the U.S. Offering or the International
Offering unless the U.S. Underwriters'
over-allotment option is exercised in whole
or in part. If this option is exercised, the
Company intends to use the proceeds to repay
borrowings under the Credit Facilities (as
defined).
Listing...................................... The Common Stock is listed on the NYSE under
the symbol "PYX."
</TABLE>
- ------------------------
(1) To be offered by the International Managers in a separate offering
exclusively outside the United States and Canada.
(2) Excludes 4,887,971 shares of Common Stock reserved for issuance pursuant to
the Company's 1994 Stock Option Plan. In February 1998, a majority of the
Company's stockholders approved an amendment to the 1994 Stock Option Plan
increasing the number of shares of Common Stock available for issuance upon
exercise of options and SARs by 2,000,000 (the "Stock Option Amendment").
The Company has included the Stock Option Amendment in its 1998 proxy
statement in order to afford all stockholders entitled to vote thereon, the
opportunity to vote on the Stock Option Amendment. See Note 9 of Notes to
the Consolidated Financial Statements (as defined) included elsewhere in
this Prospectus.
RISK FACTORS
Prospective purchasers of the Common Stock offered hereby should carefully
consider the information set forth in this Prospectus, including the factors set
forth under "Risk Factors" beginning on page 9, before making an investment in
the Common Stock.
5
<PAGE>
SUMMARY HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA
The following tables present certain consolidated historical financial data
concerning the Company for each of the periods specified and summary Pro Forma
financial data for the three months ended March 28, 1998 and for the twelve
months ended December 27, 1997. The historical information as of and for each of
the three months ended March 28, 1998 and March 29, 1997 is derived from the
unaudited financial statements of the Company. The historical information as of
and for each of the twelve months ended December 27, 1997, December 28, 1996 and
December 30, 1995 is derived from the audited consolidated financial statements
of the Company for such periods. The Company's consolidated financial statements
as of December 27, 1997 and December 28, 1996 and for the twelve months ended
December 27, 1997, December 28, 1996 and December 30, 1995 have been audited by
KPMG Peat Marwick LLP, independent certified public accountants, as indicated in
their report thereon which, together with the Company's consolidated financial
statements and related notes thereto (the "Consolidated Financial Statements"),
appears elsewhere in this Prospectus. The unaudited summary Pro Forma financial
data for the twelve months ended December 27, 1997 give effect to the
Acquisitions and the 1997 Refinancing as if they had occurred on December 29,
1996, the first day of the Company's 1997 fiscal year. The unaudited summary Pro
Forma financial data for the three months ended March 28, 1998 give effect to
the Acquisitions as if they had occurred on December 28, 1997, the first day of
such period. The Pro Forma adjustments 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. The unaudited Pro Forma results of operations are not necessarily
indicative of the results of operations that would have been achieved had the
1997 Refinancing and the Acquisitions been consummated at the beginning of the
period presented or that might be attained in the future. The following table
should be read in conjunction with "Pro Forma Consolidated Financial Data,"
"Selected Historical Consolidated Financial Data," "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the Consolidated
Financial Statements included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------------------
<S> <C> <C> <C>
PRO FORMA
MARCH 28, MARCH 28, MARCH 29,
1998 1998 1997
----------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE
DATA)
STATEMENT OF OPERATIONS DATA:
Net sales.................................................................... $ 179,423 $ 172,689 $ 136,410
Gross profit................................................................. 102,439 99,743 84,106
Operating expenses (1)....................................................... 65,431 58,160 50,204
Operating earnings........................................................... 32,761 37,719 30,679
Net earnings................................................................. $ 7,946 $ 11,310 $ 7,848
Net earnings per share (basic and diluted)................................... $ 0.13 $ 0.20 $ 0.15
----------- ---------- ----------
----------- ---------- ----------
Weighted average shares outstanding:
Basic...................................................................... 60,229 56,969 50,901
Diluted.................................................................... 60,985 57,725 51,094
OTHER DATA:
EBITDA (2)................................................................... $ 39,247 $ 43,652 $ 35,789
Amortization of intangible assets............................................ 4,247 3,864 3,223
Depreciation................................................................. 2,239 2,069 1,887
Interest expense, net........................................................ 18,552 17,950 16,282
Capital expenditures......................................................... 2,278 2,278 2,426
BALANCE SHEET DATA (AT PERIOD END):
Working capital.............................................................. $ 96,006 $ 56,402
Total assets................................................................. 921,590 652,558
Total long-term debt (3)..................................................... 862,275 737,800
Common stock and other stockholders' equity (deficit)........................ (164,559) (268,063)
(NOTES ON FOLLOWING PAGE)
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED
------------------------------------------------------
<S> <C> <C> <C> <C>
PRO FORMA
DECEMBER 27, DECEMBER 27, DECEMBER 28, DECEMBER 30,
1997 1997 1996 1995
------------ ------------ ------------ ------------
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.............................................. $ 635,544 $ 500,632 $ 498,742 $ 483,581
Gross profit........................................... 371,724 304,652 306,230 295,452
Operating expenses (1)................................. 246,763 192,056 194,184 195,457
Operating earnings..................................... 107,176 99,702 99,200 82,286
Earnings before extraordinary items (4)................ 17,246 18,731 18,199 2,774
Net earnings (loss).................................... $ 14,086 $ 14,653 $ 18,199 $ (5,161)
Earnings (loss) per share (basic and diluted):
Earnings before extraordinary items (4).............. $ 0.29 $ 0.37 $ 0.36 $ 0.07
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Net earnings (loss).................................. $ 0.23 $ 0.29 $ 0.36 $ (0.12)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Weighted average shares outstanding:
Basic................................................ 60,180 50,923 50,883 42,309
Diluted.............................................. 60,263 51,006 50,939 42,342
OTHER DATA:
EBITDA (2)............................................. $ 134,800 $ 120,116 $ 120,975 $ 108,491(5)
Amortization of intangible assets...................... 17,785 12,894 12,846 11,268
Write-off of intangible assets......................... -- -- -- 6,441
Depreciation........................................... 9,839 7,520 8,929 8,496
Interest expense, net.................................. 74,111 64,470 64,860 71,361
Capital expenditures................................... 11,214 9,004 9,740 12,395
BALANCE SHEET DATA (AT PERIOD END):
Working capital........................................ $ 56,402 $ 6,522 $ 28,637
Total assets........................................... 652,558 660,331 682,861
Total long-term debt (3)............................... 737,800 739,700 790,050
Common stock and other stockholders' equity
(deficit)............................................ (268,063) (282,727) (300,976)
</TABLE>
- ------------------------
(1) Excludes amortization of intangibles of $4.2 million for the 1998 Pro Forma
and $3.9 million and $3.2 million for the historical three months ended
March 28, 1998 and March 29, 1997. Excludes amortization of intangibles of
$17.8 million for the 1997 Pro Forma and $12.9 million, $12.8 million and
$11.3 million for historical 1997, 1996 and 1995 periods, respectively, and
in 1995, the write-off of the unamortized balance of certain intangible
assets of $6.4 million. See Note 10 of Notes to the Consolidated Financial
Statements included elsewhere in this Prospectus.
(2) EBITDA is defined as operating earnings plus depreciation and amortization.
EBITDA should not be considered as an alternative to operating earnings
(loss) or net income (loss) (as determined in accordance with generally
accepted accounting principles) as a measure of the Company's operating
performance or to net cash provided by operating, investing and financing
activities (as determined in accordance with generally accepted accounting
principles) as a measure of the Company's ability to meet cash needs. The
Company believes that EBITDA is a measure commonly reported and widely used
by investors and other interested parties as a measure of a company's
operating performance because it assists in comparing performance on a
consistent basis without regard to depreciation and amortization, which can
vary significantly depending upon accounting methods (particularly when
acquisitions are involved) or nonoperating factors (such as historical
cost). Accordingly, this information has been disclosed herein to permit a
more complete comparative analysis of the Company's operating performance
relative to other companies and of the Company's debt servicing ability.
However, EBITDA may not be comparable in all instances to other similar
types of measures used.
(3) Includes current portion of long-term debt and excludes obligations due to
related party of $78.4 million. See Note 7 of Notes to the Consolidated
Financial Statements included elsewhere in this Prospectus.
(NOTES CONTINUED ON FOLLOWING PAGE)
7
<PAGE>
(NOTES FROM PRECEDING PAGE)
(4) Extraordinary loss of $4.1 million and $7.9 million in 1997 and 1995
resulted from the write-off of unamortized deferred financing costs, net of
taxes, associated with the early extinguishment of debt. The 1997 Pro Forma
includes the extraordinary loss of $4.1 million that resulted from the
write-off of unamortized deferred financing costs, net of taxes, offset by
the extraordinary gain of $0.9 million that resulted from early retirement
of indebtedness, net of taxes.
(5) Excludes the write-off of intangible assets of $6.4 million.
8
<PAGE>
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus contains and incorporates 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. Accordingly, any such
statements are qualified in their entirety by reference to, and are accompanied
by, the factors discussed throughout this Prospectus, and particularly those set
forth herein under "Risk Factors." 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 made by or on behalf 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.
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, THE FOLLOWING
FACTORS SHOULD BE CONSIDERED CAREFULLY BEFORE INVESTING IN THE COMMON STOCK
OFFERED HEREBY.
HIGH LEVERAGE AND SUBSTANTIAL DEBT SERVICE REQUIREMENTS
As of March 28, 1998, the Company's long-term debt was $862.3 million
excluding $78.4 million due to a related party and the Company's stockholders'
deficit was $164.6 million. See "Capitalization." The Company may incur
additional indebtedness in the future, subject to certain limitations contained
in the instruments governing its indebtedness.
The degree to which the Company is leveraged could have important
consequences to holders of the Common Stock, including, but not limited to, (i)
the Company's ability to obtain additional financing in the future for working
capital, capital expenditures, acquisitions, general corporate purposes or other
purposes may be impaired; (ii) a significant portion of the Company's cash flow
from operations must be dedicated to the payment of principal and interest on
its indebtedness, thereby reducing the funds available to the Company for its
operations; (iii) certain of the Company's borrowings are and will continue to
be at variable rates of interest, which could result in higher interest expense
in the event of increases in interest rates; and (iv) such indebtedness
contains, and any refinancing thereof likely will contain, financial and
restrictive covenants, including covenants restricting the ability of the
Company to pay dividends, the failure to comply with which may result in an
event of default which, if not cured or waived, could have a material adverse
effect on the Company.
RISK OF PRINCIPAL REPAYMENT OBLIGATIONS
The Company has substantial principal repayment obligations. In 2003, the
Company will be required to have fully repaid its borrowings under the $250
million Term Loan Agreement among the Company, various financial institutions,
DLJ Capital Funding, Inc. ("DLJ Capital Funding"), and the facility manager
thereunder (the "1997 Term Loan") and under the $170 million Credit Agreement
among the Company,
9
<PAGE>
the several lenders from time to time party thereto, DLJ Capital Funding and the
agent thereunder (the "1997 Credit Agreement" and, together with the 1997 Term
Loan, the "Credit Facilities"). The Company's 9% Senior Subordinated Notes due
2003 (the "Senior Subordinated Notes") will mature on December 15, 2003 and the
Company's 8 7/8% Senior Notes due 2004 (the "Senior Notes" and, together with
the Senior Subordinated Notes, the "Notes") will mature on July 15, 2004. The
Company believes that it will generate sufficient cash flow from operations to
be able to make the scheduled payments of interest and principal under the
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 Senior Subordinated Notes or the
$150 million principal payment due in 2004 on the Senior Notes. Accordingly, the
Company will be required either to refinance its obligations with respect to the
Notes prior to maturity, sell assets or raise equity capital to repay the
principal amount of the Notes. The Company's ability to make scheduled principal
payments, refinance its obligations with respect to its indebtedness, sell
assets or raise equity capital depends on its financial and operating
performance, which, in turn, is subject in part to prevailing economic
conditions and to financial, business and other factors beyond the Company's
control. Although the Company's cash flow from its 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.
In the event the Company is unable to make required payments or otherwise
comply with the terms of its indebtedness, including borrowings under the Credit
Facilities and the Notes, the holders of such indebtedness could accelerate the
obligations of the Company thereunder, which could result in the Company's being
forced to seek protection under applicable bankruptcy laws or in an involuntary
bankruptcy proceeding being brought against the Company. Under such
circumstances, the holders of the Common Stock would be adversely affected.
CONTROL OF THE COMPANY
As of May 10, 1998 Haas Wheat held, and after the U.S. Offering and the
International Offering will continue to hold, approximately 33.2% of the
outstanding shares of Common Stock of the Company (assuming the exercise of all
outstanding stock options) and will likely continue to exercise control over the
business of the Company by virtue of its voting power with respect to the
election of directors and actions requiring stockholder approval. See
"Management" and "Principal and Selling Stockholders."
COMPETITIVE RETAIL ENVIRONMENT
The markets for the Company's products are highly competitive and are
characterized by the frequent introduction of new products. The success of new
and replacement products is highly dependent on consumer acceptance, the
effectiveness of the Company's marketing efforts and the actions of the
Company's competitors. The Company believes that the market for consumer
products will continue to be highly competitive and that the level of
competition could intensify in the future as a result of higher spending for
advertising and promotion, new product initiatives and continued activity in the
private label sector. The Company's competitors consist of a large number of
companies, some of which have significantly greater financial resources than the
Company. The Company's major competitors are The Procter & Gamble Company
("Procter & Gamble"), Kimberly-Clark Corporation and Johnson & Johnson. In
addition, consumer products are subject to significant price competition. There
can be no assurance that the Company will not be forced to engage in
price-cutting initiatives for products to respond to competitive and consumer
pressures. The failure of the Company's sales volume to grow sufficiently to
improve overall revenues and income as a result of a competitive price reduction
could have a material adverse effect on the financial performance of the
Company. See "Business--Competition."
DEPENDENCE ON KEY CUSTOMERS
Certain customers are material to the business and operations of the
Company. In each of 1997, 1996 and 1995 sales to Wal-Mart represented over 10%
of the net sales of the Company. While no other single
10
<PAGE>
customer accounted for more than 10% of the Company's net sales over the past
three years, aggregate net sales to the Company's next three largest customers
represented approximately 14% in 1997, 12% in 1996 and 12% in 1995 of the
aggregate net sales of the Company. The Company does not expect the Acquisitions
to materially increase this concentration. The loss of sales to Wal-Mart could
have a material adverse effect on the business and operations of the Company.
See "Business--Customers and Backlogs" and Note 15 of Notes to the Consolidated
Financial Statements included elsewhere in this Prospectus.
RISKS ATTENDANT TO ACQUISITION STRATEGY
The Company regularly considers the acquisition of other companies engaged
in the manufacture and sale of related products. At any given time, the Company
may be in various stages of considering such opportunities. Such acquisitions
are subject to the negotiation of definitive agreements and to conditions
typical in acquisition transactions, certain of which conditions may be beyond
the Company's control. There is no assurance that the Company will be able to
identify desirable acquisition candidates or will be successful in entering into
definitive agreements with respect to desirable acquisitions. Moreover, even if
definitive agreements are entered into, there is no assurance that any future
acquisition will thereafter be completed or, if completed, that the anticipated
benefits of the acquisition will be realized. The process of integrating
acquired operations, including those acquired in the Acquisitions, into the
Company's operations may result in unforeseen operating difficulties, may absorb
significant management attention and may require significant financial resources
that would otherwise be available for the ongoing development or expansion of
the Company's existing operations. Future acquisitions by the Company could
result in the incurrence of additional debt and contingent liabilities, which
could have a material adverse effect on the Company's financial condition and
results of operations.
ADVERSE PUBLICITY; PRODUCT LIABILITY
As a manufacturer and distributor of consumer products, the Company's
results of operations are highly susceptible to adverse publicity regarding the
quality or safety of the Company's products or product ingredients. In
particular, product liability claims challenging the safety of the Company's
products or those of its competitors, particularly in the infant care area, may
result in a sharp decline in sales for certain products which could adversely
affect the Company's results of operations. This is true even if the claims
themselves are ultimately settled for non-material amounts. There can be no
assurance that such adverse publicity will not occur or that such claims will
not be made in the future or as to their impact on the Company. See "--TSS
Litigation".
DEPENDENCE ON KEY EMPLOYEES
The operation of the Company requires managerial and operational expertise.
There can be no assurance that any of the Company's key employees will remain in
the Company's employ. The loss of such key personnel could have a material
adverse effect on the Company's operations. The Company does not maintain "key
man" life insurance policies on any of its executive officers.
TSS LITIGATION
Since 1980, the Company has been engaged in the defense of toxic shock
syndrome ("TSS") claims relating to the use of tampons. During the mid-1980's,
there were approximately 200 pending claims at any one time relating to PLAYTEX
tampons. As of March 28, 1998, there were approximately nine pending claims,
although additional claims may be made in the future. Three of the currently
pending claims relate to incidents of TSS prior to December 1, 1995, for which
period the Company maintained a self-insurance program and carried no insurance
with respect to such claims with third parties. Effective December 1, 1995, the
Company obtained insurance coverage with certain limits in excess of a
deductible of $1 million per occurrence and $4 million in the aggregate, on
claims occurring on or after December 1, 1995. Due to the inherent uncertainty
of litigation, the Company may be subject to adverse judgments which could be
substantial in amount and would not be covered by insurance. See
"Business--Legal Proceedings."
11
<PAGE>
THE COMPANY
The Company is a leading manufacturer and marketer of a diversified line of
well-recognized branded consumer products, including PLAYTEX Infant Care
products, PLAYTEX tampons, BANANA BOAT Sun Care products, PLAYTEX household
latex gloves and WOOLITE rug and upholstery cleaning products. Through the
Acquisitions in January 1998, the Company acquired a number of additional
widely-recognized branded consumer products to further strengthen its product
line, including CHUBS baby wipes, WET ONES pre-moistened towelettes, BINKY
pacifiers, MR. BUBBLE children's bubble bath products, BINACA breath spray and
drops, OGILVIE home permanent products and DENTAX oral care products. The
Company generated net sales of $172.7 million and $500.6 million and EBITDA of
$43.7 million and $120.1 million for the three months ended March 28, 1998 and
the twelve months ended December 27, 1997, respectively. On a Pro Forma basis,
the Company generated net sales of $179.4 million and $635.5 million and EBITDA
of $39.2 million and $134.8 million for the three months ended March 28, 1998
and the twelve months ended December 27, 1997, respectively.
HISTORY AND BACKGROUND
The Playtex businesses were founded in 1932 under the name International
Latex Company and operated for many years prior to 1986 under the name
International Playtex, Inc. ("IPI"). In the mid-1950's, using the latex
technology developed for the manufacture of girdles, IPI began to market
household gloves, the first of many products to constitute its Family Products
division. Through the marketing of gloves, the addition of disposable nursers in
the mid-1960's and the acquisition in 1967 and subsequent expansion of its
tampon manufacturing business, Playtex established a major presence in the drug
store, supermarket and mass merchandise channels of distribution.
In 1986, IPI was the subject of a management leveraged buyout and, in 1988,
the Company, which was formed by certain management investors and The Thomas H.
Lee Company, acquired the Family Products business from Playtex Holdings, Inc.
("PHI"), the successor to IPI. Concurrently, Playtex Apparel, Inc. ("Apparel"),
which manufactured women's intimate apparel, was divested to a partnership owned
by operating management of that business. In November 1991, Apparel was sold to
Sara Lee Corporation ("Sara Lee"). There is no longer any corporate relationship
between the Company and Sara Lee or Apparel, except that the Company and Apparel
each own 50% of the stock of Playtex Marketing Corporation ("Playtex
Marketing"), which owns the PLAYTEX and LIVING trademarks and licenses them on a
royalty-free basis in perpetuity to the Company.
In December 1992, the Company acquired, for $5 million, a 22% common equity
interest in Banana Boat Holding Corporation ("BBH") in conjunction with the
acquisition by BBH's wholly-owned subsidiary, Sun Pharmaceuticals Corp. ("Sun"),
of the assets and certain liabilities of Sun Pharmaceuticals, Ltd. BBH was
controlled by Thomas H. Lee Equity Partners, L.P. and other affiliates and
employees of The Thomas H. Lee Company. Sun manufactured and marketed a line of
sun and skin care products in the United States and abroad under the BANANA BOAT
trademark. Concurrently with its acquisition of the equity interest in BBH, the
Company entered into a distribution agreement with Sun under which it
distributed BANANA BOAT sun and skin care products for Sun from November 1993 to
October 1995.
On February 28, 1995, the Company acquired the assets of the WOOLITE rug and
upholstery cleaning products business ("WOOLITE") from Reckitt & Colman PLC
("R&C") under an exclusive, royalty-free trademark license in perpetuity in the
United States and Canada.
On June 6, 1995, the Company sold 20 million shares of Common Stock at a
price of $9.00 per share, for an aggregate purchase price of $180 million (the
"Investment") to HWH Capital Partners, L.P., HWH Valentine Partners, L.P. and
HWH Surplus Valentine Partners, L.P. (collectively, the "Investors"), each a
Delaware limited partnership managed by Haas Wheat, pursuant to a Stock Purchase
Agreement, dated as of March 17, 1995, between the Company and the Investors
(the "Stock Purchase Agreement"). The Investors' shares constituted
approximately 40% of the Company's outstanding Common Stock at the time
12
<PAGE>
of the Investment and designees of the Investors were elected by the Company's
stockholders as a simple majority of the Board of Directors. Concurrent with the
Investment, the Company entered into a new bank credit agreement and, together
with the Investment, the net proceeds were used by the Company to refinance all
outstanding borrowings under the Company's prior credit agreement.
On October 31, 1995, the Company and BBH Acquisition, Inc., a Delaware
corporation and wholly owned subsidiary of the Company, acquired all of the
issued and outstanding common shares of BBH not previously owned by the Company
(the "BBH Acquisition"). Following the BBH Acquisition, the Company's equity
ownership of BBH increased from 22% to 100% and the Company's interest in the
operating profits from the sale of BANANA BOAT products increased to 100%.
Concurrently with the BBH Acquisition, the distribution agreement between the
Company and BBH was terminated. On March 22, 1996, BBH was merged with and into
Sun, with Sun being the surviving corporation.
RECENT ACQUISITIONS
On January 28, 1998, the Company acquired PCH for approximately $91 million
in cash and 9,257,345 shares of Common Stock. PCH manufactures and markets a
number of leading consumer product brands, including WET ONES pre-moistened
towelettes, CHUBS baby wipes, OGILVIE home permanent products, BINACA breath
spray and drops, MR. BUBBLE children's bubble bath products, DIAPARENE infant
care products, TUSSY deodorant, DOROTHY GRAY skin care products and BETTER OFF
depilatories. The cash portion of the consideration paid for PCH was financed
under the 1997 Term Loan which was amended concurrently with the PCH
transaction. The acquisition was accounted for as a purchase.
On January 6, 1998, the Company acquired Carewell for approximately $9.2
million in cash. Carewell manufactures and markets the DENTAX line of
toothbrushes, toothpaste and dental floss for distribution through food stores,
drug chains and mass merchandisers. On January 26, 1998, the Company acquired
Binky for approximately $1.2 million in cash and the issuance of a $0.5 million
note payable due July 27, 1998. Both acquisitions were financed with borrowings
under the Company's revolving credit facility and were accounted for as
purchases.
13
<PAGE>
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the Common
Stock offered by the U.S. Selling Stockholders. However, in the event the
over-allotment option relating to the U.S. Offering is exercised, the Company
will be required to sell up to 1,892,811 shares of Common Stock and will receive
approximately $24.9 million (based on an assumed offering price of 14.25 per
share). Any funds received from such sale will be used to pay down variable
interest rate indebtedness under the Credit Facilities. The expenses of
preparing and filing the Registration Statement of which this Prospectus forms a
part are being paid by the Company, except that the U.S. Selling Stockholders
are bearing the costs of their own legal counsel.
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
The Common Stock is traded on the NYSE under the symbol "PYX." The table
below sets forth the high and low sale prices for the Common Stock as reported
on the NYSE for the periods indicated. The last reported sale price of the
Common Stock on the NYSE on May 14, 1998 was $14.25 per share.
<TABLE>
<CAPTION>
PRICE RANGE
--------------------
<S> <C> <C>
HIGH LOW
--------- ---------
FISCAL 1998:
First Quarter................................................................................ $14 15/16 $ 9 7/16
Second Quarter (through May 14, 1998)........................................................ 15 3/4 14
FISCAL 1997:
First Quarter................................................................................ $ 11 3/4 $ 7 7/8
Second Quarter............................................................................... 11 1/2 9
Third Quarter................................................................................ 10 1/4 8 13/16
Fourth Quarter............................................................................... 11 9
FISCAL 1996:
First Quarter................................................................................ $ 8 5/8 $ 6 5/8
Second Quarter............................................................................... 10 3/8 7 1/8
Third Quarter................................................................................ 9 1/2 7 1/2
Fourth Quarter............................................................................... 9 1/2 7 1/8
</TABLE>
The Company has not paid any cash dividends on shares of the Common Stock.
The Company presently anticipates that all of its future earnings will be
retained for development of its business and does not anticipate paying cash
dividends on the Common Stock in the foreseeable future. Additionally, the
Credit Facilities and the Notes limit the Company's ability to pay dividends or
make other distributions on the Common Stock. The payment of any future
dividends will be at the discretion of the Company's Board of Directors (the
"Board") and will depend on the Company's results of operations, financial
condition, capital requirements, contractual restrictions and other factors
deemed relevant at the time by the Board.
As of December 27, 1997, the Company had 406 stockholders of record.
14
<PAGE>
CAPITALIZATION
The following table sets forth the debt due within twelve months and
capitalization of the Company at March 28, 1998. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations," and "Selected
Historical Consolidated Financial Data". This table should be read in
conjunction with the Consolidated Financial Statements incorporated by reference
herein.
<TABLE>
<CAPTION>
MARCH 28, 1998
--------------------
(DOLLARS IN
THOUSANDS,
EXCEPT PER SHARE
DATA)
<S> <C>
Debt due within twelve months (1)........................................................... $ 3,000
----------
----------
Long-term debt (2):
1997 Term Loan............................................................................ $ 246,125
1997 Credit Agreement..................................................................... 103,150
Senior Notes.............................................................................. 150,000
Senior Subordinated Notes................................................................. 360,000
----------
Total long-term debt, excluding current portion......................................... 859,275
----------
Stockholders' equity:
Common stock ($0.01 par value; authorized 100,000,000 shares; issued and outstanding
60,282,650 shares)(3)................................................................... 603
Additional paid-in capital................................................................ 516,695
Retained earnings (deficit)............................................................... (679,755)
Foreign currency translation adjustment................................................... (2,102)
----------
Total stockholders' equity (deficit).................................................... (164,559)
----------
Total capitalization.................................................................... $ 694,716
----------
----------
</TABLE>
- ------------------------
(1) Includes a $0.5 million note payable due July 27, 1998 that was issued in
connection with the acquisition of Binky.
(2) Excludes current portion of long-term debt and obligations of $78.4 million
due to related party. See Note 7 of Notes to the Consolidated Financial
Statements included elsewhere in this Prospectus.
(3) Excludes approximately 4,887,971 shares of Common Stock reserved for
issuance pursuant to the Company's 1994 Stock Option Plan. In February 1998,
a majority of the Company's stockholders approved an amendment to the 1994
Stock Option Plan increasing the number of shares of Common Stock available
for issuance upon exercise of options and SARs by 2,000,000 (the "Stock
Option Amendment"). The Company has included the Stock Option Amendment in
its 1998 proxy statement in order to afford all stockholders entitled to
vote thereon, the opportunity to vote on the Stock Option Amendment. See
Note 9 of Notes to the Consolidated Financial Statements included elsewhere
in this Prospectus.
15
<PAGE>
PRO FORMA CONSOLIDATED FINANCIAL DATA
The tables below set forth certain consolidated historical and pro forma
financial data for the Company for the twelve months ended December 27, 1997 and
the three months ended March 28, 1998. The historical data for the twelve months
ended December 27, 1997 is derived from the audited consolidated financial
statements of the Company included in this Prospectus. The unaudited Pro Forma
statement of operations data for the twelve months ended December 27, 1997 give
effect to the Acquisitions and the 1997 Refinancing as if they occurred on
December 29, 1996, the first day of the Company's 1997 fiscal year. The
historical data for the three months ended March 28, 1998 is derived from the
unaudited Consolidated Financial Statements of the Company incorporated by
reference herein. The unaudited Pro Forma statement of operations data for the
three months ended March 28, 1998 give effect to the Acquisitions as if they had
ocurred on December 28, 1997, the first day of such period. The unaudited Pro
Forma adjustments are based upon available information and certain assumptions
that management believes are reasonable and factually supportable. Pro forma
financial data are provided for informational purposes only and should not be
considered indicative of the results of operations of the Company if such
transactions had been consummated on the dates indicated or of the results of
operations of the Company for any future period. The Pro Forma adjustments for
the Acquisitions 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.
The unaudited Pro Forma data for the twelve months ended December 27, 1997
includes financial information for PCH, Carewell and Binky. The unaudited Pro
Forma data for the three months ended March 28, 1998 includes financial
information for PCH prior to the date of its acquisition by the Company. The
January results of operations for Carewell and Binky prior to their acquisition
by the Company are immaterial and, accordingly have not been included for the
three months ended March 28, 1998. For convenience, all column headings refer to
March 28, 1998 and December 27, 1997, which is the Company's fiscal quarter end
and year end date, respectively. The following tables should be read in
conjunction with the "Selected Historical Consolidated Financial Data,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Consolidated Financial Statements included elsewhere in this
Prospectus or incorporated by reference herein.
16
<PAGE>
PLAYTEX PRODUCTS, INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 27, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL
------------------------ PRO FORMA
PLAYTEX --------------------------------------------
PRODUCTS, ACQUIRED 1997
INC.(1) COMPANIES(2) REFINANCING(3) ADJUSTMENTS(4) COMBINED(5)
--------- ------------- ------------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Net revenues................................. $ 500,632 $ 134,912 $ -- $ -- $ 635,544
Cost of sales................................ 195,980 67,840 -- -- 263,820
--------- ------------- ------------- ------- ------------
Gross profit............................... 304,652 67,072 -- -- 371,724
Operating expenses:
Advertising and sales promotion............ 114,279 32,858 -- -- 147,137
Selling, distribution and research......... 58,657 11,948 -- -- 70,605
Administrative............................. 19,120 9,901 -- -- 29,021
Amortization of intangibles................ 12,894 2,286 -- 2,605(d) 17,785
--------- ------------- ------------- ------- ------------
Total operating expenses................. 204,950 56,993 -- 2,605 264,548
--------- ------------- ------------- ------- ------------
Operating earnings (loss)................ 99,702 10,079 -- (2,605) 107,176
(31,511)(a) (6,415)(e)
Interest expense, net........................ 64,470 6,415 32,612(b) 8,540(f) 74,111
--------- ------------- ------------- ------- ------------
Earnings before income taxes............. 35,232 3,664 (1,101) (4,730) 33,065
Income taxes................................. 16,501 1,475 (407)(c) (1,750)(g) 15,819
--------- ------------- ------------- ------- ------------
Earnings from continuing operations...... $ 18,731 $ 2,189 $ (694) $ (2,980) $ 17,246
--------- ------------- ------------- ------- ------------
--------- ------------- ------------- ------- ------------
Net earnings (6)......................... $ 14,653 $ 14,086
--------- ------------
--------- ------------
Weighted average shares outstanding:
Basic...................................... 50,923 9,257(h) 60,180
Diluted.................................... 51,006 9,257(h) 60,263
Earnings per share (basic and diluted):
From continuing operations................. $ 0.37 $ 0.29
--------- ------------
--------- ------------
Net earnings (6)........................... $ 0.29 $ 0.23
--------- ------------
--------- ------------
</TABLE>
- --------------------------
(1) Represents the historical results of operations of the Company for the
twelve month period ended December 27, 1997 excluding the impact of an
extraordinary loss of $4.1 million, net of $2.3 million income tax benefit,
resulting from the write-off of the unamortized portion of deferred
financing costs associated with the Company's prior credit agreement.
(2) Represents the historical results of operations of PCH, Carewell and Binky
for the twelve month period ended December 27, 1997 excluding the impact of
an extraordinary gain of $0.9 million, net of $0.6 million income tax
expense, resulting from the early retirement of a $15.0 million note payable
by PCH during 1997. Certain reclassifications (primarily reducing cost of
sales and reflecting advertising in sales promotions) have been made to the
historical results of PCH, Carewell and Binky to conform with the historical
presentation of the Company.
(3) See Note II of the notes to pro forma condensed combined statement of
operations.
(4) See Note III of the notes to pro forma condensed combined statement of
operations.
(5) Reflects the results of operations of the Company on a pro forma basis
assuming the 1997 Refinancing and the Acquisitions had occurred on December
29, 1996.
(6) Net earnings and net earnings per share give effect to the extraordinary
loss (see note 1 above) and the extraordinary gain (see note 2 above).
SEE NOTES TO PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS.
17
<PAGE>
PLAYTEX PRODUCTS, INC.
NOTES TO PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 27, 1997
(UNAUDITED)
I. BASIS OF PRESENTATION
The pro forma condensed combined statement of operations for the twelve
month period ended December 27, 1997 gives effect to the 1997 Refinancing and
the Acquisitions as if they had occurred on December 29, 1996, the first day of
the Company's fiscal year ending December 27, 1997.
II. 1997 REFINANCING PRO FORMA ADJUSTMENTS
The following is a description of the pro forma adjustments associated with
the 1997 Refinancing.
(a) To eliminate interest expense of $31.1 million and amortization of
deferred financing costs of $0.4 million associated with the Company's
prior credit agreement.
(b) To record pro forma interest expense on borrowings in connection with
the 1997 Refinancing and to record the amortization of deferred financing
costs associated with the 1997 Refinancing. The pro forma interest
expense on the variable rate indebtedness included in the 1997
Refinancing was calculated using an average interest rate of 7.29%. This
rate represents the average rate that would have been in effect under the
terms of the 1997 Refinancing for the twelve months ended December 27,
1997. To the extent the assumed variable interest rate fluctuates 1/2 of
1%, the Company's interest expense would change by approximately $1.2
million.
(c) To record the tax effect of the adjustments specified in notes (a) and
(b) at statutory rates.
III. ACQUISITION PRO FORMA ADJUSTMENTS
The following is a description of the pro forma adjustments associated with
the Acquisitions.
(d) To record amortization of intangible assets associated with the
Acquisitions over the estimated useful lives (up to 40 years) of these
assets in conformity with APB 16.
(e) To eliminate PCH's, Carewell's and Binky's interest expense and
amortization of deferred financing costs.
(f) To record interest expense as if the borrowing under the Credit
Facilities used to finance the purchase of PCH, Carewell and Binky had
occurred at the beginning of the fiscal year ended December 27, 1997. The
average interest rates, as described in Note II(b) above, were used to
determine pro forma interest expense. To the extent the assumed variable
interest rate fluctuates 1/2 of 1%, the Company's interest expense would
change by approximately $0.6 million.
(g) To record the tax effect of the adjustments specified in notes (d), (e),
and (f) at statutory rates.
(h) To record the issuance of 9,257,345 shares of Common Stock associated
with the acquisition of PCH.
The pro forma adjustments for the Acquisitions 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.
18
<PAGE>
PLAYTEX PRODUCTS, INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 28, 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL
------------------------------
PLAYTEX PRO FORMA
PRODUCTS, ACQUIRED -----------------------------
INC.(1) COMPANIES(2) ADJUSTMENTS(3) COMBINED(4)
--------------- ------------- --------------- ------------
<S> <C> <C> <C> <C>
Net revenues....................................... $ 172,689 $ 6,734 $ -- $ 179,423
Cost of sales...................................... 72,946 4,038 -- 76,984
--------------- ------------- ----- ------------
Gross profit..................................... 99,743 2,696 -- 102,439
Operating expenses:
Advertising and sales promotion.................. 36,891 2,639 -- 39,530
Selling, distribution and research............... 15,778 2,524 -- 18,302
Administrative................................... 5,491 2,108 -- 7,599
Amortization of intangibles...................... 3,864 187 196(a) 4,247
--------------- ------------- ----- ------------
Total operating expense........................ 62,024 7,458 196 69,678
--------------- ------------- ----- ------------
Operating earnings (loss)...................... 37,719 (4,762) (196) 32,761
(369)(b)
Interest expense, net.............................. 17,950 369 602(c) 18,552
--------------- ------------- ----- ------------
Earnings before income taxes................... 19,769 (5,131) (429) 14,209
Income taxes....................................... 8,459 (2,037) (159)(d) 6,263
--------------- ------------- ----- ------------
Net earnings................................... $ 11,310 $ (3,094) $ (270) $ 7,946
--------------- ------------- ----- ------------
--------------- ------------- ----- ------------
Weighted average shares outstanding:...............
Basic............................................ 56,969 3,260(e) 60,229
Diluted.......................................... 57,725 3,260(e) 60,985
Earnings per share (basic and diluted)............. $ 0.20 $ 0.13
--------------- ------------
--------------- ------------
</TABLE>
- ------------------------
(1) Represents the historical results of operations of the Company for the three
months ended March 28, 1998 including the results of operations of (i)
Carewell subsequent to its acquisition on January 6, 1998, (ii) Binky
subsequent to its acquisition on January 26, 1998 and (iii) PCH subsequent
to its acquisition on January 28, 1998.
(2) Represents the historical results of operations of PCH for the period from
December 28, 1997 through January 28, 1998, the date of its acquisition by
the Company. The January results of operations for Carewell and Binky prior
to their acquisition by the Company are immaterial and have not been
included herein. Certain reclassifications (primarily reducing cost of sales
and reflecting advertising and sales promotions) have been made to the
historical results of PCH to conform to the historical presentation of the
Company.
(3) See Note II of the notes to pro forma condensed combined statement of
operations.
(4) Reflects the results of operations of the Company on a pro forma basis
assuming the Acquisitions had occurred on December 28, 1997.
19
<PAGE>
PLAYTEX PRODUCTS, INC.
NOTES TO PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 28, 1998
(UNAUDITED)
I. BASIS OF PRESENTATION
The pro forma condensed combined statement of operations for the three
months ended March 28, 1998 gives effect to the Acquisitions as if they had
occurred on December 28, 1997, the first day of the Company's fiscal quarter
ending March 28, 1998.
II. ACQUISITION PRO FORMA ADJUSTMENTS
The following is a description of the pro forma adjustments associated with
the Acquisitions.
(a) To record amortization of intangible assets associated with the
Acquisitions over the estimated useful lives (up to 40 years) of these
assets in conformity with APB 16.
(b) To eliminate PCH's interest expense and amortization of deferred
financing costs.
(c) To record interest expense as if the borrowing under the Credit
Facilities used to finance the purchase of PCH had occurred at the
beginning of the three months ended March 28, 1998.
(d) To record the tax effect of the adjustments specified in notes (a), (b)
and (c) at statutory rates.
(e) To record the effect on basic and diluted weighted average shares
outstanding after the issuance of 9,257,345 shares of Common Stock
associated with the acquisition of PCH.
The pro forma adjustments for the Acquisitions 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.
20
<PAGE>
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
The following tables present certain consolidated historical financial data
concerning the Company for each of the seven periods specified. The information
is derived from unaudited consolidated financial statements of the Company for
the three months ended March 28, 1998 and March 29, 1997 and from audited
consolidated financial statements of the Company for the twelve months periods
indicated. The Company's consolidated financial statements as of December 27,
1997 and December 28, 1996 and for the twelve months ended December 27, 1997,
December 28, 1996 and December 30, 1995 have been audited by KPMG Peat Marwick
LLP, independent certified public accountants, as indicated in their report
thereon which appears elsewhere in this Prospectus. The Company's audited
financial statements as of December 30, 1995 and as of and for the twelve months
ended December 31, 1994 and December 25, 1993 are not included in this
Prospectus. The following table should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Consolidated Financial Statements included elsewhere in this Prospectus or
incorporated by reference herein.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------
MARCH 28, MARCH 29,
1998 1997
----------- -----------
(IN THOUSANDS,
EXCEPT PER SHARE DATA)
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.................................................................................. $ 172,689 $ 136,410
Cost of sales.............................................................................. 72,946 52,304
----------- -----------
Gross profit............................................................................. 99,743 84,106
----------- -----------
Operating expenses:
Advertising and sales promotion.......................................................... 36,891 31,731
Selling, distribution and research....................................................... 15,778 13,841
Administrative........................................................................... 5,491 4,632
Amortization of intangibles.............................................................. 3,864 3,223
----------- -----------
Total operating expenses............................................................... 62,024 53,427
----------- -----------
Operating earnings..................................................................... 37,719 30,679
Interest expense including related party interest expense and income (1)................... 17,950 16,282
----------- -----------
Earnings before income taxes........................................................... 19,769 14,397
Income taxes............................................................................... 8,459 6,549
----------- -----------
Net earnings........................................................................... $ 11,310 $ 7,848
----------- -----------
----------- -----------
Earnings per share (basic and diluted)..................................................... $ 0.20 $ 0.15
----------- -----------
----------- -----------
Weighted average common shares outstanding:
Basic.................................................................................... 56,969 50,901
Diluted.................................................................................. 57,725 51,094
OTHER DATA:
EBITDA (2)................................................................................. $ 43,652 $ 35,789
Amortization of intangible assets.......................................................... 3,864 3,223
Capital expenditures....................................................................... 2,278 2,426
Depreciation............................................................................... 2,069 1,887
BALANCE SHEET DATA (AT PERIOD END):
Working capital............................................................................ $ 96,006 $ 56,402
Total assets............................................................................... 921,590 652,558
Total long-term debt(3).................................................................... 862,275 737,800
Common stock and other stockholders' equity (deficit)...................................... (164,559) (268,063)
</TABLE>
(NOTES ON FOLLOWING PAGE)
21
<PAGE>
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DECEMBER 27, DECEMBER 28, DECEMBER 30, DECEMBER 31, DECEMBER 25,
1997 1996 1995 1994 1993
------------- ------------- ------------- ------------- ------------
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales..................................... $ 500,632 $ 498,742 $ 483,581 $ 473,275 $ 409,858
Cost of sales................................. 195,980 192,512 188,129 166,601 136,722
------------- ------------- ------------- ------------- ------------
Gross profit................................ 304,652 306,230 295,452 306,674 273,136
------------- ------------- ------------- ------------- ------------
Operating expenses:
Advertising and sales promotion............. 114,279 119,380 117,581 98,999 87,446
Selling, distribution and research.......... 58,657 56,776 54,251 51,628 41,526
Administrative.............................. 19,120 18,028 23,625 16,172 14,862
Amortization of intangibles................. 12,894 12,846 11,268 10,181 14,529
Write-off of intangible assets (4).......... -- -- 6,441 -- 121,620
------------- ------------- ------------- ------------- ------------
Total operating expenses.................. 204,950 207,030 213,166 176,980 279,983
------------- ------------- ------------- ------------- ------------
Operating earnings (loss)................. 99,702 99,200 82,286 129,694 (6,847)
Interest expense including related party
interest expense and income (1)............. 64,470 64,860 71,361 76,153 115,949
------------- ------------- ------------- ------------- ------------
Earnings (loss) before income taxes,
cumulative effect of accounting changes
and extraordinary loss.................. 35,232 34,340 10,925 53,541 (122,796)
Income taxes.................................. 16,501 16,141 8,151 23,994 2,049
------------- ------------- ------------- ------------- ------------
Earnings (loss) before cumulative effect
of accounting changes and extraordinary
loss.................................... 18,731 18,199 2,774 29,547 (124,845)
Cumulative effect of accounting changes, net
of $693 income tax benefit.................. -- -- -- -- 923
------------- ------------- ------------- ------------- ------------
Earnings (loss) before extraordinary
loss.................................... 18,731 18,199 2,774 29,547 (123,922)
Extraordinary loss on early extinguishment
of debt, net of $2,344, $5,180 and $25,430
tax benefit for 1997, 1995 and 1993,
respectively.............................. (4,078) -- (7,935) -- (39,375)
------------- ------------- ------------- ------------- ------------
Net earnings (loss)....................... 14,653 18,199 (5,161) 29,547 (163,297)
Preferred dividend requirements............... -- -- -- (1,163) (12,810)
------------- ------------- ------------- ------------- ------------
Net earnings (loss) available to common
stockholders............................ $ 14,653 $ 18,199 $ (5,161) $ 28,384 $ (176,107)
------------- ------------- ------------- ------------- ------------
------------- ------------- ------------- ------------- ------------
Earnings (loss) per share (basic and diluted):
Earnings before cumulative effect of
accounting changes, extraordinary loss and
preferred dividend requirements........... $ 0.37 $ 0.36 $ 0.07 $ 0.99 $ (11.49)
------------- ------------- ------------- ------------- ------------
------------- ------------- ------------- ------------- ------------
Net earnings (loss)......................... $ 0.29 $ 0.36 $ (0.12) $ 0.97 $ (16.21)
------------- ------------- ------------- ------------- ------------
------------- ------------- ------------- ------------- ------------
Weighted average common shares outstanding:
Basic....................................... 50,923 50,833 42,309 29,212 10,867
Diluted..................................... 51,006 50,939 42,342 29,213 10,867
OTHER DATA:
EBITDA (2)(5)................................. $ 120,116 $ 120,975 $ 108,491 $ 147,287 $ 136,540
Amortization of intangible assets............. 12,894 12,846 11,268 10,181 14,529
Write-off of intangible assets(4)............. -- -- 6,441 -- 121,620
Capital expenditures.......................... 9,004 9,740 12,395 8,503 6,490
Depreciation.................................. 7,520 8,929 8,496 7,412 7,238
BALANCE SHEET DATA (AT PERIOD END):
Working capital............................... $ 56,402 $ 6,522 $ 28,637 $ 17,623 $ (24,632)
Total assets.................................. 652,558 660,331 682,861 599,400 588,457
Total long-term debt(3)....................... 737,800 739,700 790,050 875,700 915,413
Redeemable preferred stock.................... -- -- -- -- 139,644
Common stock and other stockholders' equity
(deficit)................................... (268,063) (282,727) (300,976) (465,997) (723,408)
</TABLE>
- ------------------------------
(1) Included in interest expense is related party interest expense of $3,037 net
of related party interest income of $3,001 for the three months ended March
28, 1998 and March 29, 1997, and $12,150 net of related party interest
income of $12,003 for the twelve months ended December 27, 1997, December
28, 1996, December 30, 1995 and December 31, 1994 and related party interest
expense of $10,587 net of related party interest income of $10,502 for the
twelve months ended December 25, 1993.
(2) EBITDA is defined as operating earnings, plus depreciation and amortization.
EBITDA should not be considered as an alternative to operating earnings
(loss) or net income (loss) (as determined in accordance with generally
accepted accounting principles) as a measure of the Company's operating
performance or to net cash provided by operating, investing and financing
activities (as determined in accordance with generally accepted accounting
principles) as a measure of the Company's ability to meet cash needs. The
Company believes that EBITDA is a measure commonly reported and widely used
by investors and other interested parties as a measure of a company's
operating performance because it assists in comparing performance on a
(NOTES CONTINUED ON FOLLOWING PAGE)
22
<PAGE>
(NOTES FROM PRECEDING PAGE)
consistent basis without regard to depreciation and amortization, which can
vary significantly depending upon accounting methods (particularly when
acquisitions are involved) or nonoperating factors (such as historical
cost). Accordingly, this information has been disclosed herein to permit a
more complete comparative analysis of the Company's operating performance
relative to other companies and of the Company's debt servicing ability.
However, EBITDA may not be comparable in all instances to other similar
types of measures used.
(3) Includes current portion of long-term debt and excludes obligations due to
related party of $78.4 million. See Note 7 of Notes to the Consolidated
Financial Statements included elsewhere in this Prospectus.
(4) Based on certain strategic decisions regarding the Company's SMILETOTE
infant care product line, the Company wrote off $6.4 million of intangible
assets associated with SMILETOTE in the fourth quarter of 1995. In the third
quarter of 1993, as a result of a management decision to reposition the
Company's JHIRMACK hair care product line, the Company wrote off $121.6
million of goodwill associated with its Playtex Beauty Care, Inc.
subsidiary.
(5) The calculation of EBITDA includes, in 1995, the write-off of intangible
assets of $6.4 million associated with the former SMILE-TOTE product line
and, in 1993, the write-off of intangible assets of $121.6 million
associated with the JHIRMACK product line.
23
<PAGE>
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 Consolidated
Financial Statements included elsewhere in this Prospectus.
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. 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 GENTLE GLIDE, SOFT COMFORT,
SLIMFITS and SILK GLIDE. The Infant Care product category is comprised of the
PLAYTEX 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 pacifiers, MR.
BUBBLE children's bubble bath, CHUBS baby wipes, DIAPARENE infant care products
and WET ONES hand and face towelettes. The Company's Sun Care business consists
of an extensive line of sun care products marketed under the BANANA BOAT and
BIOSUN trade names. The Household Products category includes PLAYTEX household
latex gloves and WOOLITE rug and upholstery cleaning products ("Woolite"). The
Company's Personal Grooming business consists of JHIRMACK hair care products and
TEK toothbrushes. As a result of the Acquisitions, the following brands were
added to the Company's Personal Grooming product category: BETTER OFF
depilatories, BINACA breath spray and drops, DENTAX oral care products, and
DOROTHY GRAY skin care products, OGILVIE at-home permanents and TUSSY deoderant.
THREE MONTHS ENDED MARCH 28, 1998 VERSUS THREE MONTHS ENDED MARCH 29, 1997:
NET SALES. The Company's net sales grew 27%, or $36.3 million, to $172.7
million for the first quarter of 1998 from $136.4 million in the first quarter
of 1997.
Net sales for the Feminine Care business were $50.9 million for the first
quarter of 1998, up $11.8 million, or 30%, versus $39.1 million in the first
quarter of 1997. These results reflect (i) an increase in dollar market share
from 24.9% for the first quarter of 1997 to 26.5% for the first quarter of 1998,
(ii) a 12% increase in retail dollar sales in the first quarter of 1998 compared
to the same quarter in 1997, (iii) 5% dollar category growth in the first
quarter of 1998 over the comparable quarter in 1997 and (iv) reduced shipments
following management's strategic decision to curtail price-oriented trade
discount programs.
Infant Care net sales increased $18.0 million, or 55%, to $50.5 million in
the first quarter of 1998 from $32.5 million in the first quarter of 1997. Of
this increase in net sales, $16.6 million was contributed by the brands acquired
in the Acquisitions and the remainder of the change was due to a 4% increase in
the Company's existing Infant Care business.
Sun Care net sales increased $1.1 million, or 3%, to $44.8 million in the
first quarter of 1998 from $43.7 million in the comparable period in 1997.
Household Products net sales in the first quarter of 1998 of $14.3 million
were $0.1 million, or 1%, lower than the year ago quarter of $14.4 million. Net
sales for Woolite were approximately the same as for the first quarter of 1997
and Glove net sales were down $0.1 million compared to the first quarter of
1997.
24
<PAGE>
Personal Grooming 1998 first quarter net sales increased by $5.5 million, or
82%, to $12.2 million, compared to $6.7 million in 1997. The Personal Grooming
brands acquired in the Acquisitions increased net sales in the first quarter by
$8.1 million offsetting decreased net sales of Jhirmack products.
GROSS PROFIT. Gross profit increased $15.6 million, or 19%, to $99.7
million for the first quarter of 1998 compared to $84.1 million in the first
quarter of 1997. Gross profit as a percent of net sales decreased to 57.7% in
the first quarter of 1998 from 61.7% in the first quarter 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 for the first quarter of 1998 were
$37.7 million, up $7.0 million, or 23%, over operating earnings for the first
quarter of 1997 of $30.7 million. The increase in operating earnings was due
primarily to higher net sales resulting from the brands acquired in the
Acquisitions and increased Feminine Care volume and lower operating expenses as
a percent of net sales.
INTEREST EXPENSE. Interest expense for the first quarter of 1998 was $18.0
million, up $1.7 million, or a 10% increase over interest expense for the first
quarter of 1997 of $16.3 million. This resulted from an increase in long term
debt of $124.5 million of which $110.4 million was associated with the
Acquisitions.
NET EARNINGS. Net earnings increased 45%, or $3.5 million, to $11.3 million
for the quarter ended March 28, 1998 from $7.8 million for the quarter ended
March 29, 1997. The favorable variance resulted from the combined effect of all
factors described above.
TWELVE MONTHS ENDED DECEMBER 27, 1997 VERSUS TWELVE MONTHS ENDED DECEMBER 28,
1996
NET SALES. Net sales in 1997 were $500.6 million, an increase of $1.9
million, or less than 1%, from $498.7 million in 1996.
Net sales of Feminine Care products decreased 11%, or $24 million, to $201.5
million from $225.5 million in 1996. The Company's shipments to retailers in the
first half of 1997 were negatively impacted by high retail inventories created
by earlier price-oriented promotional activity and by management's strategic
decision to reduce these excess inventories by curtailing its trade discount
programs. During the first half of 1997, shipments of Feminine Care products
fell 22% versus the prior year. During the same period in 1997, retail sales of
the Company's products exceeded the Company's shipments by 90 million tampons,
indicating that retailers reduced their inventories of PLAYTEX tampons by
approximately six weeks worth of sales. The Company believes that trade
inventories returned to more normal levels by mid-year 1997 given that (i)
shipments in the second half of 1997 were even with the same period in 1996 and
30% higher than shipments in the first half of 1997 and (ii) shipments and
retail sales in the second half of 1997 were in greater balance with one
another. Furthermore, retail sales of PLAYTEX tampons in the second half of 1997
increased 12% over the same period in 1996, the result of both higher market
shares and overall category growth.
Infant Care net sales increased $14.5 million, or 13%, to $124 million in
1997 from $109.5 million in 1996 while net sales of Sun Care products increased
$22.4 million, or 31%, to $95.7 million in 1997 versus $73.3 million in 1996.
The growth in both Infant Care and Sun Care was due to (i) successful new
product launches, (ii) increased distribution, (iii) continued market share
gains for the Playtex businesses and (iv) continued growth for the infant care
and sun care markets overall.
Household Products 1997 net sales decreased $5.2 million, or 9%, to $55.3
million due, in part, to a change in pricing strategy for PLAYTEX Gloves which
resulted in both lower reported revenue offset by lower trade spending versus
1996. In addition, the introduction of a new competitor in the carpet cleaning
business negatively impacted sales of WOOLITE during the year.
25
<PAGE>
Net sales in Personal Grooming declined by $5.8 million, or 19%, to $24.1
million in fiscal 1997. The decline is attributable to the strategic decision on
the part of the Company to reduce ineffective trade spending associated with the
JHIRMACK brand and to maximize the cash flow generated by the brand.
GROSS PROFIT. Gross profit decreased $1.5 million, or less than 1%, to
$304.7 million for 1997 versus $306.2 million for 1996. The gross profit margin
decreased to 60.9% for the 1997 fiscal year versus 61.4% for the prior fiscal
year. The decrease in gross profit in fiscal 1997 was attributable primarily to
the mix of products sold offset, in part, by marginally higher sales.
OPERATING EARNINGS. Operating earnings increased $0.5 million, or less than
1%, to $99.7 million for 1997 versus $99.2 million for 1996. Contributing to
this increase was lower trade spending in line with the Company's consumer
oriented marketing strategy. For fiscal 1997, trade spending was $8 million, or
12%, lower than in fiscal 1996. The lower trade spending was offset by higher
consumer spending, up $2.9 million versus fiscal 1996, lower gross profit of
$1.5 million as noted above, and increased selling, distribution, research and
administrative expenses which were collectively $3 million higher than fiscal
1996.
INTEREST EXPENSE. Interest expense of $64.5 million for fiscal 1997
decreased $0.4 million, or less than 1%, from $64.9 million in 1996.
EXTRAORDINARY LOSS. In July 1997, the Company refinanced its senior credit
agreement. 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 previous credit agreement.
NET EARNINGS. As a result of the factors noted above, net earnings were
$14.7 million in 1997 compared to $18.2 million in 1996.
TWELVE MONTHS ENDED DECEMBER 28, 1996 VERSUS TWELVE MONTHS ENDED DECEMBER 30,
1995
NET SALES. Net sales in 1996 increased to $498.7 million, up $15.1 million,
or 3%, from $483.6 million in 1995.
Net sales for the Feminine Care business were $225.5 million for 1996, down
$18.1 million, or 7%, versus $243.6 million in 1995. These results reflect (i)
the rigorous competitive environment in the tampon category, particularly in the
first half of the year and (ii) a reduction in the level of inventories carried
by retailers during the year. Although shipments to retailers declined 7% during
the year, retail sales to consumers in units decreased only 1%, and the
Company's unit market share was stable at 23% for the year.
Infant Care net sales increased $21.9 million, or 25%, to $109.5 million in
1996 from $87.5 million in 1995. The increase was due primarily to the continued
growth of the 6-ounce SPILL-PROOF cup and the successful introductions in 1996
of the 9-ounce SPILL-PROOF cup and the QUICKSTRAW cup.
Sun Care net sales increased $23 million, or 46%, to $73.3 million in 1996
from $50.3 million in 1995. This increase resulted from a higher market share
for the year, which increased from 18% to 19%, category growth of 2% versus 1995
and the addition of $10.3 million of revenues as a result of the acquisition of
the remaining portion of BBH (see Note 3 of Notes to Consolidated Financial
Statements included elsewhere in this Prospectus).
Household Products net sales increased $3.2 million, or 6%, to $60.5 million
in 1996 from $57.3 million in 1995. The WOOLITE brand's net sales increased $4.1
million, or 17%, to $27.8 million in 1996 compared to $23.7 million in 1995,
while PLAYTEX Gloves net sales decreased $0.8 million, or 2%, to $32.8 million
compared to $33.6 million in the prior year. The increase in the WOOLITE brand's
net sales was attributable to the complete integration of this business after
its acquisition in early 1995. Gloves net sales
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<PAGE>
declined primarily due to a change in pricing strategy which resulted in lower
reported revenue, more than offset by lower trade spending. The Company's market
share in the household latex glove category grew by 3% in 1996 from 35% to 38%.
Personal Grooming net sales declined by $14.8 million, or 33%, to $30
million, compared to $44.8 million in 1995. Much of this decline was
attributable to the strategic decision on the part of the Company to
significantly reduce ineffective and unprofitable trade spending associated with
the JHIRMACK brand.
GROSS PROFIT. Gross profit increased $10.7 million, or 4%, to $306.2
million for 1996 compared to $295.5 million for 1995. For the year, gross margin
was 61.4% of net sales compared to 61.1% of net sales in 1995. The increase in
margin was due, in part, to $3.4 million of pre-tax charges having been included
in the 1995 cost of sales related to the BBH Acquisition, partially offset by a
shift in product sales mix to lower margin goods.
OPERATING EARNINGS. Operating earnings increased $16.9 million, or 21%, to
$99.2 million for 1996 compared to $82.3 million for the prior year. This
increase was due to the margin impact of the increased net sales described above
and the fact that $15.5 million of one time pre-tax charges were included in the
1995 results. These one time charges consisted of $3.4 million in the cost of
sales as previously described, $5.7 million (included in administrative
expenses) to implement certain organizational changes arising from management's
plan to streamline and strengthen the Company and $6.4 million to write-off
intangible assets associated with the SMILETOTE business.
Advertising and promotional expenses increased by $1.8 million, or 2%, in
1996 compared to 1995. As part of its consumer oriented marketing strategy, the
Company invested more heavily in advertising and consumer spending and focused
less on trade spending. Excluding the impact of the 1995 one time items, the
remaining operating expenses increased $4.2 million, or 5%, compared to 1995,
mainly as a result of the BBH Acquisition in the fourth quarter of 1995 and a
continued focus on new product development.
INTEREST EXPENSE. The decrease in interest expense of $6.5 million for the
1996 year resulted from both lower debt levels and lower interest rates.
NET EARNINGS. As a result of the factors noted above, net earnings were
$18.2 million in 1996 compared to a net loss of $5.2 million in 1995.
FINANCIAL CONDITION AND LIQUIDITY
At March 28, 1998, the Company's working capital (current assets net of
current liabilities) increased by $39.6 million to $96.0 million from $56.4
million at December 27, 1997. The increase resulted primarily from (i) an
increase of $54.2 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
$17.5 million in inventories and $8.4 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 $34.1 million primarily
as a result of the Acquisitions, higher accrued interest due to timing of
payments, and higher returns reserves associated with the seasonal nature of Sun
Care sales. All other working capital components decreased $6.4 million.
The Company's businesses, with the exception of Sun Care, generally have not
been seasonal. Sun Care product sales are highly seasonal, with 85-90% 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 result in higher receivables for the
Company during the first quarter of its fiscal year.
Capital expenditures for equipment and facility improvements were $2.3
million and $2.4 million for the three months ended March 28, 1998 and March 29,
1997, respectively. These expenditures were primarily to upgrade production
equipment and maintain facilities in the ordinary course of business.
27
<PAGE>
Capital expenditures for 1998 are expected to be $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 March 28, 1998 long-term debt (including current portion but excluding
obligations due to related party) was $862.3 million versus $737.8 million at
December 27, 1997, an increase of $124.5 million. The increase was primarily the
result of the Acquisitions and the seasonal increase in working capital to
support the Sun Care business. At March 28, 1998, the Company had unused lines
of credit (giving effect to outstanding letters of credit) under the Credit
Facilities of $65.8 million.
Terms of the 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 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
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 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 Senior Subordinated Notes nor the $150 million principal
payment due in 2004 on the 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.
In January 1998, the Company acquired PCH, Carewell and Binky. The purchase
of Carewell and Binky were 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 acquisition
price of PCH. The Company also issued 9,257,345 shares of its Common Stock as
part of the consideration for the PCH acquisition.
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.
RECENTLY ISSUED ACCOUNTING STANDARDS
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
28
<PAGE>
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.
YEAR 2000
The Company has assessed and continues to assess the impact of the Year 2000
issue on its operations, including the development and implementation of project
plans and cost estimates required to make its information systems infrastructure
Year 2000 compliant. Based on existing information, the Company believes that
anticipated spending necessary to become Year 2000 compliant will not have a
material effect on the results of operations, financial position or cash flows
of the Company. However, if appropriate modifications are not made by the
Company's suppliers or customers to their information infrastructure on a timely
basis, or if the Company's actual costs or timing for the year 2000 date
conversion differ materially from its present estimates, the Company's
operations and financial results could be adversely affected.
29
<PAGE>
BUSINESS
The Company is a leading manufacturer and marketer of a diversified line of
well-recognized branded consumer products, including PLAYTEX Infant Care
products, PLAYTEX tampons, BANANA BOAT Sun Care products, PLAYTEX household
latex gloves and WOOLITE rug and upholstery cleaning products. Through the
Acquisitions in January 1998, the Company acquired a number of additional
widely-recognized branded consumer products to further strengthen its product
lines, including CHUBS baby wipes, WET ONES pre-moistened towelettes, BINKY
pacifiers, MR. BUBBLE children's bubble bath products, BINACA breath spray and
drops, OGILVIE home permanent products and DENTAX oral care products. The
Company generated net sales of $172.7 million and $500.6 million and EBITDA of
$43.7 million and $120.1 million for the three months ended March 28, 1998 and
the twelve months ended December 27, 1997, respectively. On a Pro Forma basis,
the Company generated net sales of $179.4 million and $635.5 million and EBITDA
of $39.2 million and $134.8 million for the three months ended March 28, 1998
and the twelve months ended December 27, 1997, respectively.
The following table sets forth the Company's principal product lines, the
primary brand names making up each of these product lines on a Pro Forma basis
and certain related data for 1997 on an actual and Pro Forma basis:
<TABLE>
<CAPTION>
1997 ACTUAL 1997 PRO FORMA
---------------------------- ----------------------------
NET SALES PERCENT OF NET SALES PERCENT OF
PRODUCT LINE PRIMARY BRAND NAMES (IN MILLIONS) NET SALES (IN MILLIONS) NET SALES
- ------------------------------ ------------------------------ ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Infant Care................... PLAYTEX, CHUBS, WET ONES, MR. $ 124.0 25% $ 212.6 33%
BUBBLE, BINKY
Feminine Care................. PLAYTEX 201.5 40 201.5 32
Sun Care...................... BANANA BOAT, BIOSUN 95.7 19 95.7 15
Personal Grooming............. OGILVIE, BINACA, JHIRMACK, 24.1 5 70.4 11
TEK, DENTAX
Household Products............ PLAYTEX, WOOLITE 55.3 11 55.3 9
------ --- ------ ---
Total..................... $ 500.6 100% $ 635.5 100%
------ --- ------ ---
------ --- ------ ---
</TABLE>
COMPETITIVE STRENGTHS
The Company believes it is distinguished by the following competitive
strengths:
BALANCED PORTFOLIO OF CONSUMER BUSINESSES. As a result of internal growth
and five acquisitions since 1994, the Company has built a balanced portfolio of
diversified consumer businesses, thereby reducing its dependence on any single
category. Infant Care is now the Company's single largest business with 33% of
Pro Forma net sales, followed by Feminine Care with 32% and Sun Care with 15%.
In 1994, Feminine Care accounted for 54% of net sales, while Infant Care
accounted for only 16% of net sales and Sun Care accounted for 10% of net sales.
The Company expects Feminine Care to continue to constitute a smaller component
of its overall business as a result of anticipated above-average growth in
Infant Care and Sun Care and further acquisitions in its non-Feminine Care
businesses.
EXCEPTIONAL CONSUMER FRANCHISES IN ATTRACTIVE CATEGORIES. The Company's
primary brand names are well-known and well-respected by both consumers and
retailers for their high product quality. In addition, the Company believes that
the core categories in which it competes are inherently attractive. The infant
care category has grown at a compound annual rate of 7% since 1994 due primarily
to the introduction of new products to the category. The sun care category has
grown at a compound annual rate of 8% since 1994 due primarily to increased
consumer awareness of the importance of sun protection. Further, the Company
believes that both the infant care and sun care categories are consolidating and
that this consolidation favors market leaders, such as the Company, with
marketing expertise, broad product lines
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<PAGE>
and national distribution. The feminine care category is characterized by slow
but steady growth, a high degree of customer brand loyalty and a relatively low
sensitivity to economic cycles.
CONSUMER-FOCUSED PRODUCT INNOVATION. The Company devotes significant
resources and attention to product innovation and consumer research to develop
products which offer new and distinctive benefits to its consumers. This product
innovation has enabled the Company to increase its net sales and market share in
both the infant care and sun care categories. In the Infant Care business, the
Company's net sales grew at a compound annual rate of 17% between 1994 and 1997,
while its dollar market share increased from 30% to 39% over the same period. In
the Sun Care business, the Company's net sales grew at a compound annual rate of
25% between 1994 and 1997 and its unit market share increased from approximately
16% in 1994 to 20% in 1997.
WELL-ESTABLISHED DISTRIBUTION CHANNELS. The Company's products are
distributed in virtually every major food chain, drug chain, mass merchandiser
and price club in the United States through a combination of direct sales
personnel and independent brokers. This depth and breadth of distribution
permits the Company to rapidly introduce new products and to quickly realize
synergies in integrating acquired product lines. To further enhance its
relationship with its retailers, the Company is focusing sales and marketing
efforts on category management programs. In these programs, the Company works
with retailers to increase category sales and profitability through detailed
analysis of consumer buying habits and improved merchandising techniques. The
Company believes that such programs strengthen the relationship between the
Company and the retailer and increase the Company's sales.
STRONG AND STABLE CASH FLOWS. The strength of the Company's consumer
franchise and brand names is reflected in its consistently strong cash flows and
operating margins. These characteristics, together with relatively low levels of
capital expenditures, provide the Company with financial flexibility to
implement its growth strategy. In addition, the Company benefits from operating
and financial leverage. Given the predominantly fixed nature of the Company's
depreciation, amortization and interest expense, relatively small increases in
sales translate into disproportionately large increases in earnings per share.
GROWTH STRATEGY
In 1995, partnerships managed by Haas Wheat, a private investment firm,
invested $180 million in the Company. The proceeds of the equity investment were
used by the Company to reduce bank debt and increase its operating and financial
flexibility. In addition, Michael R. Gallagher, a seasoned executive with over
29 years of consumer marketing and general management experience, was appointed
chief executive officer to lead the Company's growth strategy, the principal
features of which are outlined below.
CONTINUE SALES GROWTH THROUGH MARKET PRODUCT INNOVATION. The Company
intends to grow its existing product lines through continued product innovations
supported by creative marketing techniques and strong consumer marketing
programs. In December 1997, the Company introduced (i) 11 new infant care items,
including proprietary new offerings in each of the hard bottle and pacifier
segments, (ii) 14 new sun care products and (iii) Odor Absorbing GENTLE GLIDE, a
plastic applicator tampon with an all-natural material which absorbs odors
without the use of a fragrance or deodorant. The Company intends to apply the
same emphasis on new product development to the brands acquired in the
Acquisitions.
MAKE ADDITIONAL SYNERGISTIC ACQUISITIONS. The Company intends to accelerate
its growth in net sales and cash flow by acquiring brands with growth potential
in attractive categories. The Company seeks to acquire other consumer product
companies or brands whose products may be sold through the Company's
distribution channels and that would benefit from the PLAYTEX brand name or the
Company's expertise in marketing, sales and product development. The acquisition
of the BANANA BOAT product line demonstrates the Company's ability to add value
to the businesses it acquires. Since the Company first acquired the distribution
rights to the BANANA BOAT brand name, its unit market share has grown from
approximately 12% in 1992 to 20% in 1997, principally as a result of new product
introductions and significant
31
<PAGE>
improvements in the brand's distribution and marketing. The acquisitions of
WOOLITE, PCH, Carewell and Binky are further examples of how the Company intends
to aggressively grow through acquisitions of complementary, or closely related,
businesses.
SELECTIVELY EXTEND BRANDS INTO NEW PRODUCT CATEGORIES. The Company intends
to extend its portfolio of brand names into new product categories to capitalize
on its brand name recognition, its reputation for customer-focused product
development and its well-established distribution network. Initially, the
Company plans to focus on higher growth personal care categories closely related
to the Company's existing businesses.
BUILD INTERNATIONAL SALES. Historically, less than 5% of the Company's net
sales have been generated outside the United States and Canada. In recent years,
the Company has built a sales and marketing team dedicated to strengthening the
Company's competitive position overseas. The team is currently seeking to
identify strong local partners to distribute the Company's products abroad and
is also seeking to capitalize on its strong domestic relationship with key U.S.
retailers with international operations, such as Toys "R" Us, Inc. and Wal-Mart.
The Company intends to focus its initial efforts on its Infant Care and Sun Care
products, primarily in Europe, Latin America and the Pacific Rim.
PRODUCT LINES
INFANT CARE. The Company's largest business is Infant Care, accounting for
33% of the Company's 1997 Pro Forma net sales. The Company offers disposable
feeding systems, cups and mealtime products, reusable hard bottles, pacifiers,
pre-moistened towelettes and bubble bath products. In addition to the core
PLAYTEX brand, the Company owns the CHUBS, WET ONES, DIAPARENE, MR. BUBBLE and
BINKY trademarks which were acquired in the Acquisitions.
The Company's primary Infant Care business is in infant feeding products, in
which the Company held a market leading 39% dollar market share in 1997, up from
30% in 1995 and 36% in 1996, and more than three times the share of the
Company's largest competitor. The Company is particularly strong in both the
disposable feeding and the infant cup segments with 1997 dollar market shares of
75% and 72%, respectively. In the pre-moistened towelette business, the
Company's CHUBS baby wipe brand held a 7% dollar share of the market, while its
WET ONES hand and face towelette brand held a market leading 65% dollar share of
the hand and face segment.
The PLAYTEX disposable feeding system, introduced in 1960, was the first
disposable system on the market. Since that time, Playtex has provided
innovative product improvements as a healthy alternative to breast feeding. In
1996, Playtex continued to lead innovation in this category with its new
DROP-INS ready-formed disposable bottle. Since its introduction in 1996,
DROP-INS have steadily increased its market share in the disposable feeding
category.
In 1994, Playtex introduced the SPILL-PROOF cup. The domestic infant cup
segment of the infant feeding category has almost doubled since this
introduction. Sales of the popular 6-ounce version and a larger 9-ounce size
have increased the Company's dollar market share in the infant cup segment from
29% in 1994 to 72% in 1997. In 1996, the Company introduced another innovative
cup to the market, the QUICKSTRAW cup. This product, which is focused on the
older child, has a sliding cap that hides a retractable straw and extends the
age range of the children who use Playtex cups and bottles.
In the fourth quarter of 1997, the Company introduced an assortment of new
products which address the health and convenience concerns of parents. In the
disposable feeding segment, the Company launched a 4 ounce version of its
DROP-INS ready-formed disposable bottle along with a proprietary DROP-INS holder
and two new disposable nipples. In the cup segment, the Company introduced the
COOLSTRAW cup, an insulated version of the QUICKSTRAW cup introduced in 1996. In
the pacifier segment, the Company introduced a one-piece silicone pacifier under
the trademark SAFE 'N SURE. Also in late 1997, the Company introduced a new hard
bottle feeding system called AVANCE. Unlike conventional hard bottles which are
32
<PAGE>
vented near the nipple, this system incorporates a patented air vent on the
bottom of the bottle that eliminates air bubbles that form near the nipples of
conventional bottles as babies feed. In addition, the bottom of the bottle can
be unscrewed from the body of the bottle for easier and more effective cleaning.
The Company entered the baby wipe business in early 1998 with the
acquisition of the CHUBS and DIAPARENE brands. This $548 million category has
grown at a compound annual rate of 10% since 1992. CHUBS is best known for its
patented stackable plastic boxes which can be used as large building block toys
by children following their use as a baby wipe container. Both CHUBS and
DIAPARENE (a lower priced brand) are known for their canister dispensers.
The Company competes in a second segment of the pre-moistened towelette
business with WET ONES, the market leader in the hand and face segment of the
market. These products are used by parents in applications other than diaper
changing, such as cleaning up after meals or traveling away from home.
Historically, WET ONES has been offered in both canister and travel pack form,
but in 1998 the Company is introducing new individually wrapped towelettes,
called WET ONES SINGLES, and a second individually wrapped product targeted for
children's lunch boxes called LUNCHKINS.
The Company's acquisitions of the MR. BUBBLE children's bubble bath business
and the BINKY pacifier business provide the Company with new platforms for
leveraging strong Infant Care brands into new avenues for growth. MR. BUBBLE
held a 16% dollar share of the children's bubble bath market in 1997 and,
according to the Company's own research, commands an 86% brand awareness level
among consumers. BINKY pacifiers held a 7% dollar share of the market in 1997
and when combined with Playtex pacifiers, the Company held an 18% Pro Forma
share of the pacifier market. Similarly, the Company believes the BINKY
trademark is particularly well-known among parents and is well suited for
further growth through line extensions, better retail merchandising and more
innovative forms of consumer marketing.
FEMININE CARE. The Company's second largest business is Feminine Care,
which accounted for approximately 32% of the Company's 1997 Pro Forma net sales.
For over 20 years, PLAYTEX tampons have been the second largest-selling tampon
brand in the United States.
Tampons represented approximately 40% of the U.S. feminine sanitary
protection market in 1997 and accounted for approximately $785 million in retail
sales. Since 1992, the tampon market has grown at a compound annual rate of 2%
in dollar terms and 3% in unit terms. Company research indicates that brand
loyalty rates in the tampon category are high relative to other consumer product
categories. The research further suggests that women generally develop brand
preferences during their adolescent years and early twenties and are likely to
maintain a high degree of brand loyalty over time.
Playtex has two major product lines in the Feminine Care business: plastic
applicator tampons and cardboard applicator tampons. The plastic applicator
business represented 89% of the Playtex branded domestic tampon business in 1997
and is comprised of three product offerings: GENTLE GLIDE, Playtex's original
plastic tampon; SOFT COMFORT, with an applicator made of a soft material
designed to improve comfort, and SLIMFITS, a new line of tampons introduced in
late 1996 developed for the first-time tampon user. The SILK GLIDE brand is
Playtex's line of cardboard applicator tampons. This product line features a
rounded-tip cardboard applicator and a unique surface coating that provides the
consumer with a quality product in the cardboard applicator segment of the
tampon market.
The Company's dollar market share of the domestic tampon market declined
from 29% in 1994 to 26% in 1997 as a result of heavy promotional activity by
Tambrands Inc. in 1995 and early 1996 as Tambrands Inc. management sought to
accelerate category growth and increase its market share. As competitors
(including the Company) responded with their own promotional activities, average
retail selling prices in the category declined by approximately 7%, and retail
and consumer inventories grew. In the second half of 1996, the retail price
environment stabilized, and since the fourth quarter of 1996 average retail
selling prices for both the category and the Company have returned to 1994
levels.
33
<PAGE>
During the eighteen month period from July 1996 through December 1997, the
Company's dollar market share was relatively stable, ranging between 25% and 26%
in dollar terms. However, the Company's shipments to retailers in the first half
of 1997 were negatively impacted by the high retail inventories created by
earlier price-oriented promotional activity and by management's strategic
decision to reduce these excess inventories by curtailing its trade discount
programs. During the first half of 1997, dollar shipments of Feminine Care
products fell 22% versus the prior year. During the same period in 1997, retail
sales of the Company's products exceeded the Company's shipments by 90 million
tampons, indicating that retailers reduced their inventories of PLAYTEX tampons
by approximately six weeks worth of sales.
The Company believes that trade inventories returned to more normal levels
by mid-year 1997 given that (i) dollar shipments in the second half of 1997 were
even with the same period in 1996 and 30% higher than shipments in the first
half of 1997 and (ii) dollar shipments and retail sales in the second half of
1997 were in greater balance with one another. Furthermore, retail sales of
PLAYTEX tampons in the second half of 1997 increased 12% over the same period in
1996, the result of both higher market shares and overall category growth. In
the first quarter of 1998, the Company's Feminine Care business continued to
strengthen with a 30% increase in shipments over the first quarter of 1997. In
addition, the Company's dollar market share increased over the prior year for
the third consecutive quarter (from 25% to 26%), leading to a 12% increase over
the first quarter of 1997 in retail sales of Feminine Care products.
Management's strategy with respect to the Feminine Care business is to
maintain its market share at current levels and increase net sales in line with
growth in the category. The Company intends to continue shifting its marketing
resources into more consumer-driven, brand-building activities such as
advertising and product improvement in order to preserve the brand's premium
price position and maximize cash flow from the business.
The introductions of SLIMFITS in late 1996 and Odor Absorbing GENTLE GLIDE
in late 1997 are examples of Playtex's innovative product development and new
advertising and promotional strategies. SLIMFITS were developed to appeal to
young teens, a key segment of the tampon market. SLIMFITS have a softer and
narrower plastic applicator providing for greater comfort. The Company believes
that SLIMFITS will build its business by encouraging young women to use tampons
rather than pads at an earlier age, and by developing brand loyalty for PLAYTEX
tampons at a time when lifelong preferences are being formed. Odor Absorbing
GENTLE GLIDE tampons are plastic applicator tampons with an all-natural material
in the tampons that absorb odors without the use of a fragrance or deodorant.
This product is designed to appeal to a large group of women who are concerned
with odor protection yet reluctant to use a fragranced tampon.
SUN CARE. The Company's Sun Care business, which accounted for 15% of 1997
Pro Forma net sales, consists of an extensive line of sun care products designed
for specific uses, such as sun protection in sun protection factors ("SPFs")
from 4 to 50, waterproof and sweat proof formulas and infant and children's
products. The Company also sells a variety of BANANA BOAT skin care products,
including sunless tanning lotion, after-sun products, moisturizers and skin
treatment formulas containing additives such as Vitamin E and aloe vera gel. For
1997, the Company's Sun Care products had a 20% unit market share, compared to
an approximate 12% unit market share in 1992, prior to the Company's involvement
with the product line.
Since 1992, the sun care category has grown at a compound annual rate in
excess of 6%. The Company believes the growth prospects for the sun care market
are favorable as a result of increasing consumer awareness of the need for
sunscreen protection and consumers' desire for sun care products targeted
towards their specific age and needs.
Consistent with this trend, the Company has embarked on an aggressive
strategy to introduce new products. For the 1997 sun care season, the Company
launched 21 new product offerings targeted at clearly defined segments of the
sun care market. Among the new BANANA BOAT products were TAN EXPRESS, ACTION
SPORT spray gel, oil-free lotion and BITE BLOCK. The Company believes that one
of the most promising recent introductions is the BIOSUN Sun Care line,
positioned for today's active, health-conscious consumer.
34
<PAGE>
BIOSUN, a premium product line tested by dermatologists, was formulated to
provide long-lasting protection. The brand has gained visibility, in part, due
to an educational program specifically targeted to the medical community,
especially dermatologists.
In late 1997, the Company launched fourteen additional products for each of
the BANANA BOAT and BIOSUN product lines. In BANANA BOAT, the Company introduced
a line of trigger spray products under the QUIKBLOK trademark, a pump spray in
its Active Kids line and several additional TAN EXPRESS products with small
amounts of SPF. In its BIOSUN line, the Company launched a pump spray along with
a clear gel sunscreen.
The Company focuses on a number of different distribution outlets to deliver
its Sun Care products to the consumer. BANANA BOAT is particularly strong with
mass merchandisers among whom the brand held a 25% unit market share for 1997.
Another valuable part of the focused sales effort for Sun Care products is the
use of more than 35 vans to call upon key outlets in the southern and coastal
areas of the country. This ensures product availability and selection in the key
locations during the prime sun care buying season. The van operators manage
product inventory at the store level, invoice customers and transmit key
marketing data to the Company through a network of hand-held computers. This
technology and the information it supplies provide the Company with a
competitive advantage relative to its smaller competitors.
Industry convention and the seasonal nature of the sun care business
requires that manufacturers of sun care products provide retailers with the
opportunity to return unsold products at the end of the season. To better
reflect the impact of potential returns, the Company provides for estimated
returns in its reported operating results as sales are made throughout the year.
HOUSEHOLD PRODUCTS. Playtex competes in two segments of the household
products category: household latex gloves and rug and upholstery cleaning
products. These products accounted for 9% of the Company's Pro Forma net sales
in 1997.
Since the Company introduced the first household latex glove in the U.S. in
1954, PLAYTEX gloves have held the number one market share position in terms of
units sold. The Company's leadership position continued in 1997 with a 39% share
of this category on a units sold basis, up for the third consecutive year from
32% in 1994. Playtex's nationally recognized brand name, based upon its
reputation for superior quality, durability and protection, provides a strong
competitive advantage as the Company's primary competition is from private label
and regional brands. The non-disposable household latex glove market had retail
sales of approximately $82 million in 1997.
Playtex acquired the assets of WOOLITE for $20 million on February 28, 1995.
WOOLITE is the number two rug and upholstery cleaning product with a 17% unit
market share in 1997. Playtex acquired this product line because of its (i)
strong brand name; (ii) number two position in a growing category; (iii)
distribution alongside gloves in food stores, drug chains and mass merchandisers
and (iv) opportunity for line extensions and more effective marketing programs.
Since acquiring the brand in 1995, the Company has introduced new distinctive
packaging to enhance communication of the product attributes to the consumer, an
improved Pet Stain spray in 1996, a new foam Pet Carpet Cleaner in early 1997
and a new liquid carpet cleaning product called STAIN SOLUTIONS in early 1998.
PERSONAL GROOMING. Prior to January 1998, the Company's Personal Grooming
business consisted of JHIRMACK hair care products and TEK toothbrushes.
Following the Acquisitions, this category also includes OGILVIE home hair
permanents, BINACA breath freshener products, DENTAX oral care products, TUSSY
deodorants, DOROTHY GRAY skin care products and BETTER OFF depilatories. On a
Pro Forma basis, Personal Grooming contributed approximately 11% of the
Company's 1997 net sales.
The Company competes in the value priced end of the toothbrush business with
its TEK and DENTAX brands of toothbrushes. Additionally, the Company offers
value priced toothpaste and dental floss under the DENTAX brand.
35
<PAGE>
The Company's OGILVIE brand is the market leader of the $48 million market
for home hair permanents with a 51% dollar share of the market. Because this
category has declined at an annual rate of approximately 10% per year since
1992, it is the Company's strategy to more aggressively consolidate the market
behind its market leadership position and to prudently extend the well-known
OGILVIE brand into closely related hair care categories.
The Company's BINACA brand of breath fresheners is also a well-known brand.
A leader in the spray segment of the market with 48% of the market in terms of
dollar share in 1997, the brand also competes in the more rapidly growing drops
segment of the market. With recent Company research indicating that BINACA has
the highest brand awareness among breath freshener users, the Company believes
this brand equity can provide a platform for future growth initiatives. In
addition, Playtex intends to combine its TEK toothbrush, DENTAX oral care and
BINACA breath care product lines into a consolidated oral care business to
maximize each brand's respective strengths.
MARKETING
The Company allocates a significant portion of its revenues to the
advertising and promotion of its products. Expenditures for these purposes were
$114.3 million, $119.4 million and $117.6 million in fiscal 1997, 1996 and 1995,
respectively. Pro Forma for the Acquisitions, advertising and promotional
spending was $147.1 million in 1997. As part of the Company's strategic shift to
a more consumer driven marketing strategy, the Company has shifted a greater
percentage of its spending to brand-building activities, such as advertising and
sampling programs, and has decreased price-oriented trade spending. The Company
intends to extend this same strategy to the product lines added as a result of
the Acquisitions and any future acquisitions.
The Company believes it is responsible for, and will benefit from, the
building and development of the markets in which it competes. As a result, the
Company is also aggressively developing new category management programs--the
process of working with retailers to increase product category sales and
profitability through analysis of consumer buying habits and improved
merchandising techniques. The Company also intends to bring these skills and
resources to bear on the acquired businesses and in so doing, accelerate the
sales of the acquired businesses over their historical levels.
COMPETITION
The markets for the Company's principal products are highly competitive and
are characterized by the frequent introduction of new products, often
accompanied by major advertising and promotional programs. The Company competes
primarily on the basis of product quality, product differentiation and brand
name recognition supported by advertising and promotion.
The Company's competitors consist of a large number of companies, some of
which have significantly greater financial resources and less leverage than the
Company.
The Company believes that the market for consumer products will continue to
be highly competitive. The level of competition may intensify in the future,
including higher spending for advertising and promotion, new product initiatives
and continued activity in the private label sector.
DISTRIBUTION
The Company sells its products through approximately 175 direct sales
personnel, independent food brokers and exclusive distributors. Independent food
brokers supplement the direct sales force in the food class of trade, primarily
by providing more effective coverage at the store level. In 1997, mass
merchandisers and other similar outlets, supermarkets and drug stores accounted
for 45%, 36% and 19%, respectively, of the Company's net sales. In recent years,
sales through mass merchandisers and price clubs, as a
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<PAGE>
percentage of total sales, have increased at the expense of drug store sales,
while sales through supermarkets have remained generally consistent.
The field sales force makes sales presentations at the headquarters or home
offices of its customers, where applicable, as well as to individual retail
outlets. The sales representatives focus their efforts on selling the Company's
products, providing services to its direct customers and executing programs to
ensure sales to the ultimate consumer. Consumer-directed programs include
arranging for on-shelf and separate displays, obtaining temporary retail price
reductions from the retailer and coordinating cooperative advertising
participation.
During 1996, Playtex restructured its domestic sales force into two separate
organizations: the Consumer Products Division for Sun Care, Household Products
and Personal Grooming, and the Personal Products Division for Feminine Care and
Infant Care Products. This structure allows the Company's sales forces to focus
more effectively on individual product lines and the Company's new category
management initiatives, which the Company anticipates will allow a more
effective and efficient integration of newly acquired brands through its
existing distribution network.
RESEARCH AND DEVELOPMENT
The Company maintains ongoing research and development in Paramus, New
Jersey. Approximately 69 employees are engaged in these programs, for which
expenditures were $8.0 million, $7.3 million and $6.5 million, respectively,
during each of the last three fiscal years.
TRADEMARKS AND PATENTS
The Company has proprietary rights to a number of trademarks important to
its business, such as ACTION SPORT, AVANCE, BANANA BOAT, BETTER OFF, BINACA,
BINKY, BIOSUN, BITE BLOCK, CHERUBS, CHUBS, COMFORTFLOW COOLSTRAW, DENTAX,
DIAPARENE, DOROTHY GRAY, DROP-INS, EAZY-FEED, GENTLE GLIDE, GET ON THE BOAT,
HEAT CARE, JHIRMACK, LIVING, LUNCHKINS, MOST LIKE MOTHER, MR. BUBBLE, NATURAL
ACTION, OGILVIE, PLAYTEX, PORTABLES, QUIKBLOK, QUICKSTRAW, SAFE 'N SURE, SILK
GLIDE, SLIMFITS, SOFT COMFORT, SPILL-PROOF, TAN EXPRESS, TEK, TUSSY, WET ONES,
WET ONES HANDSAVER and WET ONES SINGLES. The PLAYTEX and LIVING trademarks in
the United States and Canada are owned by Playtex Marketing. Playtex Marketing
is responsible for protecting, exercising quality control over and enforcing the
trademarks. The Company and Apparel each have licenses from Playtex Marketing
for the use of such trademarks in the United States and Canada on a perpetual,
royalty-free basis; Apparel's license is for apparel and apparel-related
products, and the Company's license is for all other products. In all other
countries, Apparel retains title to the PLAYTEX and LIVING trademarks, subject
to a perpetual, royalty-free license to the Company to use such trademarks for
all products other than apparel products. The Company also owns a royalty-free
license in perpetuity to the WOOLITE trademark for rug and upholstery cleaning
products in the United States and Canada.
The Company also owns various patents related to certain products and their
method of manufacture, including patents for the tampon wrap material, the
assembly of the compact tampon, the tampon inserter, the baby nurser holder, the
configuration of certain baby pacifiers, nipples, caps and cups and formulations
for certain sun care and hair care products. The patents expire at varying
times, ranging from 1998 to 2014. The Company also has pending patent
applications for various products and methods of manufacture relating to its
tampon, nurser and toothbrush businesses. While the Company considers its
patents to be important to its business, it believes that the success of its
products is more dependent upon the quality of these products and the
effectiveness of its marketing programs. No single patent is material to the
business of the Company.
RAW MATERIALS AND SUPPLIERS
The principal raw materials used by the Company in the manufacture of its
products are synthetic fibers, resin-based plastics and other chemicals and
certain natural materials, all of which are normally
37
<PAGE>
readily available. While all raw materials are purchased from outside sources,
the Company is not dependent upon a single supplier in any of its operations for
any material essential to its business or not otherwise commercially available
to the Company. The Company has been able to obtain an adequate supply of raw
materials, and no shortage of such materials is currently anticipated.
CUSTOMERS AND BACKLOG
No single customer or affiliated group of customers, except Wal-Mart,
represented over 10% of the net sales of the Company in each of 1997, 1996 and
1995. For each of such periods, net sales to the Company's next three largest
customers represented in the aggregate approximately 14% in 1997, 12% in 1996
and 12% in 1995 of the net sales of the Company. The Company does not expect the
Acquisitions to materially increase this concentration. In accordance with
industry practice, the Company grants credit to its customers at the time of
purchase. In addition, the Company grants extended payment terms to new
customers and for the initial sales of introductory products and product line
extensions, and it grants extended terms on its Sun Care products due to
industry convention and the seasonal nature of this business. See Note 15 of
Notes to the Consolidated Financial Statements included elsewhere in this
Prospectus.
The Company's policy is not to accept returned goods, except for Sun Care
products, which are seasonal in nature. Exceptions to this policy are authorized
by management of the sales organization. Returns result primarily from Sun Care
seasonal products, damage and shipping discrepancies and generally are not
material to the total net sales of the Company.
Because of the short period between order and shipment dates (generally less
than one month) for most of the Company's sales, the dollar amount of current
backlog is not considered to be a reliable indicator of future sales volume.
REGULATION
Government regulation has not materially restricted or impeded the Company's
operations. Certain of the Company's products are subject to regulation under
Federal Food, Drug and Cosmetic Act and the Fair Packaging and Labeling Act. The
Company is also subject to regulation by the Federal Trade Commission with
respect to the content of its advertising, its trade practices and other
matters. The Company is subject to regulation by the United States Food and Drug
Administration in connection with its manufacture and sale of tampons. See
"Legal Proceedings."
ENVIRONMENTAL
The Company believes that it is in substantial compliance with federal,
state and local provisions enacted or adopted regulating the discharge of
materials hazardous to the environment. There are no significant environmental
expenditures anticipated for the current year or for 1999. See "Legal
Proceedings."
PROPERTIES
The principal executive offices of the Company are located at 300 Nyala
Farms Road, Westport, Connecticut 06880 and are occupied pursuant to a lease
which expires in 2004. The Company operates manufacturing and distribution
facilities in Dover, Delaware; Sidney, Ohio; Watervliet, New York; and Arnprior
and Malton, Canada. The Company maintains a research and development facility in
Paramus, New Jersey which is leased on a month-to-month basis. The Company
operates two facilities in Canada. The Arnprior facility, primarily a warehouse
and assembly operation, is owned by the Company. The Malton facility, a
warehouse and office site, is leased by the Company. This lease expires in 2004.
For 1997, the Company's average manufacturing capacity utilization rate was
approximately 82%.
38
<PAGE>
The following table sets forth the principal properties of the Company at
March 31, 1998:
<TABLE>
<CAPTION>
NO. OF ESTIMATED
FACILITIES OWNED FACILITIES SQUARE FOOTAGE
- --------------------------------------------------------------------------------- --------------- --------------
<S> <C> <C>
Manufacturing/Office/Distribution/Warehouse
Dover, DE.................................................................... 3 710,000
Watervliet, NY............................................................... 1 159,600
Arnprior, Canada............................................................. 1 91,800
Sidney, OH................................................................... 1 54,400
<CAPTION>
FACILITIES LEASED
- ---------------------------------------------------------------------------------
<S> <C> <C>
Office/Distribution/Warehouse
Dover, DE.................................................................... 5 310,000
Sidney, OH................................................................... 3 227,200
Malton, Canada............................................................... 1 72,800
Westport, CT................................................................. 1 41,700
Paramus, NJ.................................................................. 1 33,000
Montvale, NJ................................................................. 1 19,500
Guaynabo, PR................................................................. 1 13,700
Orlando, FL.................................................................. 1 10,400
Spokane, WA.................................................................. 1 8,400
</TABLE>
In May 1997, the Company signed an agreement to lease certain office space
located in Allendale, New Jersey. This facility contains 43,500 square feet and
will house the Company's Research and Development group. This new lease has a
term of 15 years with two five-year renewal options. The Paramus, New Jersey
facility noted in the above table will be vacated when construction of the
Allendale, New Jersey facility is completed.
EMPLOYEES AND LABOR RELATIONS
The Company's worldwide workforce consisted of approximately 1,930 employees
as of December 27, 1997, of whom 167 were located outside of the United States,
primarily in Canada. Of the United States facilities, only the operation at
Watervliet, New York, has union representation; it is organized by The Brush
Workers Union Local No. 20466 I.U.F.-A.F.L.-C.I.O. The collective bargaining
agreement covered 180 workers at December 27, 1997 and expires on June 24, 2000.
The Company believes that its labor relations are satisfactory and no material
labor cost increases are anticipated.
LEGAL PROCEEDINGS
Beginning in 1980, studies were published leading to the hypothesis that
tampons are associated with TSS. Since 1980, numerous claims have been filed
against manufacturers of tampons, a small percentage of which have been
litigated to conclusion.
The number of TSS claims relating to PLAYTEX tampons has declined
substantially over the years. During the mid-1980s, there were approximately 200
pending claims at any one time relating to PLAYTEX tampons. As of the end of
1997, there were approximately nine pending claims, although additional claims
may be asserted in the future. For claims filed from October 1, 1985 until
November 30, 1995, including three of the claims currently pending, the Company
is self-insured for TSS claims, and bears the costs of defending those claims,
including settlements and trials. Effective December 1, 1995, the Company
obtained insurance coverage with certain limits in excess of a deductible of $1
million per occurrence and $4 million in the aggregate, on claims occurring on
or after December 1, 1995.
The incidence rate of menstrually associated TSS among tampon users has
declined significantly over the years. In 1982, the rate was reported to be
between six and seventeen occurrences per 100,000
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<PAGE>
menstruating women per year. The most recent reported information as of 1989 is
that the rate is approximately one occurrence per 100,000.
Based on the Company's experience with TSS cases, its evaluation of the
currently pending claims, the reported decline in the incidence of menstrually
associated TSS, the federally-mandated warning about TSS on and in its tampon
packages and the development of case law upholding the adequacy of tampon
warnings which comply with federally-mandated warnings, the Company believes
that there are no claims or litigation pending, including the TSS cases, which
could have a material adverse effect on the consolidated financial position,
results of operations or cash flows of the Company.
The Company, as successor to the Family Products businesses of IPI, is
presently participating as part of a group of several potentially responsible
corporate parties ("PRP Group") in the remediation of the Wildcat Landfill in
Dover, Delaware, which has been designated as a "Superfund" site by the EPA. In
June 1989, the PRP Group entered into a settlement pursuant to which the Company
(together with Apparel) assumed a share of the remediation costs, which share,
based on reasonable engineering estimates, was $565,000 for both companies
combined. The Company and Apparel have each paid $300,000 (or a total of
$600,000) to an escrow fund under an agreement with other settling parties and
site remediation has been completed. Associated monitoring costs are not
expected to be material.
The Company has joined the PRP Group with respect to the Kent County
Landfill Site in Houston, Delaware, which has been designated a "Superfund" site
by the State of Delaware. A study of the site is being conducted to formulate a
remediation plan. The Company's allocated share of the costs of the remediation
study is not expected to exceed $100,000, which amount will be shared equally
with Apparel. Although the remedial costs associated with the site will be
difficult to assess until the study is completed, based on the information
currently available to the Company, the nature and quantity of material
deposited by the Company and the number of other entities in the PRP Group who
are expected to share in the costs and expenses, the Company does not believe
that the costs to the Company will be material. The Company and Apparel will
share equally all expenses and costs associated with IPI's involvement with this
site.
The Company is a defendant in various other legal proceedings, claims and
investigations which arise in the normal course of business. In the opinion of
management, the ultimate disposition of these matters, including those described
above, will not have a material adverse effect on the consolidated financial
position, results of operations or cash flows of the Company.
40
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information regarding the Company's directors
and executive officers:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------------------------- --- -----------------------------------------------------
<S> <C> <C>
Robert B. Haas....................................... 50 Chairman and Director
Michael R. Gallagher................................. 52 Chief Executive Officer and Director
Michael F. Goss...................................... 38 Executive Vice President, Chief Financial Officer and
Director
Richard G. Powers.................................... 52 President, Personal Products Division
Max R. Recone........................................ 43 President, Consumer Products Division
James S. Cook........................................ 46 Senior Vice President, Operations
Irwin S. Butensky, Ph.D.............................. 62 Senior Vice President, Research and Development
John D. Leahy........................................ 44 Senior Vice President, Corporate Sales/ International
Thomas H. Lee........................................ 54 Director
Kenneth F. Yontz..................................... 53 Director
Timothy O. Fisher.................................... 48 Director
Douglas D. Wheat..................................... 47 Director
Michael R. Eisenson.................................. 42 Director
C. Ann Merrifield.................................... 47 Director
Wyche H. Walton...................................... 32 Director
John W. Childs....................................... 56 Director
</TABLE>
The business experience, principal occupations and employment as well as the
periods of service of each of the directors and executive officers of the
Company during the last five years are set forth below.
ROBERT B. HAAS has been Chairman and a Director of the Company since 1995.
Mr. Haas has been actively involved in private investments since 1978,
specializing in leveraged buyouts. He has served as Chairman of the Board and
Chief Executive Officer of Haas Wheat since 1995; he has also been Chairman of
the Board and Chief Executive Officer of Haas Wheat Advisory Partners
Incorporated since 1992 and Chairman of the Board of Haas & Partners
Incorporated since 1989 (each of which is a private investment firm specializing
in leveraged acquisitions). Mr. Haas has been Chairman and a Director of
Nebraska Book Company, Inc. since 1998. Mr. Haas serves as a director of
Specialty Foods Acquisition Corporation, Specialty Foods Corporation (a producer
of specialty food products), Sybron International Corporation, Smarte Carte
Corporation, Walls Holding Company, Inc. and NBC Acquisition Corp.
MICHAEL R. GALLAGHER has been the Chief Executive Officer and a Director of
the Company since 1995. Prior to joining the Company, Mr. Gallagher was Chief
Executive Officer of North America for R&C from 1994 to 1995. Mr. Gallagher was
President and Chief Executive Officer of Eastman Kodak's L&F Products subsidiary
from 1988 until the subsidiary was sold to R&C in 1994. From 1984 to 1988, Mr.
Gallagher held various executive positions with the Lehn & Fink Group of
Sterling Drug. From 1982 to 1984, he was Corporate Vice President and General
Manager of the Household Products Division of The Clorox Company ("Clorox").
Prior to that, Mr. Gallagher had various marketing and general management
assignments with Clorox and with Procter & Gamble. He is presently a director of
Fleet Bank N.A. and the Grocery Manufacturers Association.
MICHAEL F. GOSS has been Executive Vice President and Chief Financial
Officer of the Company since December 1994. He has served as a Director of the
Company since 1995. From 1992 to 1994, Mr. Goss was Treasurer and Vice
President--Corporate Development of Oak Industries, Inc. ("Oak"), an electronic
components company. From 1990 to 1992, he was Director of Financial Planning for
Oak.
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<PAGE>
RICHARD G. POWERS has been the President of the Personal Products Division
of the Company since 1996. Prior to joining the Company, Mr. Powers was
President of R&C's North American Personal Products Division. From 1992 to 1995,
he was Vice President of Sales for R&C, and from 1990 to 1992 he was Vice
President of Marketing for R&C's Durkee-French Foods Division. From 1973 to
1990, Mr. Powers held various positions in marketing and general management at
General Foods Corp.
MAX R. RECONE has been the President of the Consumer Products Division of
the Company since March 1996. From 1995 to 1996, he was Vice President and
Business Manager for Sun Care, Hair Care and Household Products. From 1993 to
1995, he served as Vice President--Banana Boat. From 1992 to 1993, he was Vice
President--Sales of the Company. From 1990 to 1992, Mr. Recone served as Vice
President/ General Manager of Playtex Limited, the Company's Canadian
subsidiary.
JAMES S. COOK has been Senior Vice President, Operations of the Company
since 1991. From 1990 to 1991, he was Vice President, Dover Operations of the
Company. From 1988 to 1990, he was Vice President of Distribution, Logistics &
MIS of the Company. From 1982 to 1988, Mr. Cook held various senior level
positions in manufacturing and distribution with the Company. From 1974 to 1982,
he held various manufacturing and engineering positions at Procter & Gamble.
IRWIN S. BUTENSKY, Ph.D., has been Senior Vice President, Research and
Development of the Company since 1990. From 1979 to 1990 he was Vice President
of Research & Development for the Company. From 1967 to 1979, Dr. Butensky held
several senior technical positions at Richardson-Vicks, Inc., his last being
Director of Dermatology Research.
JOHN D. LEAHY has been Senior Vice President, Corporate Sales/International
of the Company since January of 1998. From June 1996 until January of 1998 he
was Vice President of Corporate Sales/ International. From June 1993 to June
1996 he was Vice President of Sales of the Company. From 1992 to 1993, he served
as Vice President of Trade Marketing. From 1982 to 1992, Mr. Leahy held various
field sales positions with the Company including Vice President of Field Sales.
THOMAS H. LEE has been a Director of the Company since 1988. Since 1974, Mr.
Lee has been President of The Thomas H. Lee Company, a firm engaged in
investment activities. He is currently a director of Finlay Enterprises, Inc.
(operator of leased fine jewelry departments), First Security Services
Corporation (provider of security services), Livent, Inc. (theater productions),
and Vail Resorts, Inc. (operator of resorts). Mr. Lee is also a general partner
of the ML-Lee Acquisition Fund, L.P., ML-Lee Acquisition Fund II, L.P. and
ML-Lee Acquisition Fund (Retirement Accounts) II, L.P. (collectively, the
"ML-Lee Acquisition Funds"). Mr. Lee is Chairman of Thomas H. Lee Advisors I,
and general partner of Thomas H. Lee Advisors II, L.P., the investment advisors
to the ML-Lee Acquisition Funds. He is the general partner of the THL Equity
Advisors Limited Partnership, the general partner of and investment advisor to
Thomas H. Lee Equity Partners, L.P. Mr. Lee has notified the Company that he
does not intend to stand for re-election as a Director of the Company at the
next annual meeting of stockholders.
KENNETH F. YONTZ has been a Director of the Company since 1995. Mr. Yontz
has been Chairman of the Board, President and Chief Executive Officer of Sybron
International Corporation (a manufacturer of dental and laboratory products)
since 1987. He previously served as Executive Vice President of the Allen
Bradley Company. He is a director of Berg Electronics, Inc. (a manufacturer of
connectors).
TIMOTHY O. FISHER has been a Director of the Company since 1996. Mr. Fisher
has been a Vice President since 1986 of The Hillman Company (diversified
investments and operations) and is a director of several private companies.
DOUGLAS D. WHEAT has been a Director of the Company since June 1995. Mr.
Wheat has been President of Haas Wheat since 1995 and President of Haas Wheat
Advisory Partners Incorporated since 1992 (each of which is a private investment
firm specializing in leveraged acquisitions). He was Co-Chairman of Grauer &
Wheat, Inc. (a private investment firm) from 1989 to 1992 and Senior Vice
President of Donaldson, Lufkin & Jenrette Securities Corporation from 1985 to
1989. Mr. Wheat serves as a director of
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<PAGE>
Specialty Foods Acquisition Corporation, Specialty Foods Corporation (a producer
of specialty food products), Smarte Carte Corporation, Walls Holding Company,
Inc., NBC Acquisition Corp. and the Nebraska Book Company, Inc.
MICHAEL R. EISENSON has been a Director of the Company since March 1997. Mr.
Eisenson is the President and Chief Executive Officer of Harvard Private Capital
Group, Inc. ("HPC"), which is the investment advisor for the private equity and
real estate portfolios of the Harvard University endowment fund. Prior to
joining HPC in 1986, Mr. Eisenson was a Manager with The Boston Consulting Group
from 1981 to 1985. He serves on the Boards of Directors of Harken Energy
Corporation, ImmunoGen, Inc., United Auto Group, Inc. and The W.M.F. Group, as
well as those of several private companies.
C. ANN MERRIFIELD has been a Director of the Company since May 1997. Ms.
Merrifield has been President of Genzyme Genetics, a wholly owned subsidiary of
Genzyme Corporation (a biotechnology company), since 1996. She previously served
as Vice President, Marketing and Business Development of Genzyme Genetics from
1992 to 1996. Prior to that, Ms. Merrifield was a Partner with Bain and Company
(a consulting firm) from 1987 to 1992.
WYCHE H. WALTON has been a Senior Vice President of Haas Wheat since 1995.
From 1994 to 1995, Mr. Walton was Chief Financial Officer of McGarr Capital
Management Corp., a private investment firm. During 1993 and 1994, he was a
Manager at KPMG Peat Marwick, LLP. Mr. Walton also serves as a Director of
Smarte Carte Corporation. Mr. Walton has notified the Company that he does not
intend to stand for re-election as a Director of the Company at the next annual
meeting of stockholders.
JOHN W. CHILDS has been a Director of the Company since January 1998. He has
been President of J.W. Childs Associates, L.P., a Boston-based private
investment firm, since July 1995. Prior to that time, he was an executive at The
Thomas H. Lee Company from May 1987, most recently holding the position of
Senior Managing Director. Prior to that, Mr. Childs was with the Prudential
Insurance Company of America where he held various executive positions in the
investment area ultimately serving as Senior Managing Director in charge of the
Capital Markets Group. He is a director of Beltone Electronics Corp.
(manufacturer of hearing aid devices), Big V Supermarkets, Inc. (an operator of
supermarkets), Central Tractor Farm & Country, Inc. (an operator of specialty
hardware stores and a mail order business), Chevys, Inc. (owner and operator of
full service, casual and "fast casual" Mexican restaurants), Cinnabon
International, Inc. (operator of Cinnabon bakery stores), DESA International,
Inc. (manufacturer and marketer of heating and power tool products), The Edison
Project, Inc. (private operator of public and charter schools), and Select
Beverages, Inc. (an independent bottler and distributor of soft drinks and new
age beverages).
There are no family relationships among any of the foregoing persons.
COMPENSATION OF EXECUTIVE OFFICERS
Amounts payable under the Company's Management Incentive Plan are calculated
based upon the following factors: (i) annual base salary; (ii) each employee's
targeted percentage (a percentage of base salary that increases for higher
positions within the Company, thereby placing a greater percentage of
compensation at risk for those with greater responsibility); (iii) corporate
results with respect to net sales, operating profit and cash flow (each as
defined in the Management Incentive Plan), measured against objectives
established at the beginning of each year by the Board and (iv) except for the
Company's chief executive officer (the "Chief Executive Officer"), an individual
performance factor based on measured accomplishment of goal-oriented projects.
For all plan participants other than the Chief Executive Officer, the three
financial targets and performance against the individual goals are weighted
equally. For the Chief Executive Officer, the targets are weighted 50% on
operating profit and 25% on each of net sales and cash flow. In 1997, 88
employees, including the Chief Executive Officer, participated in this plan.
43
<PAGE>
Mr. Gallagher was named Chief Executive Officer of the Company effective
July 10, 1995. The Company entered into a Memorandum of Understanding, dated as
of June 21, 1995 (the "Memorandum"), with Mr. Gallagher, providing for his
employment as the Company's Chief Executive Officer for a five-year period,
unless earlier terminated or extended in accordance with the Memorandum or by
agreement of the parties. The Memorandum, which was approved by the Compensation
Committee, provides for a base salary, certain incentive bonuses, and the grant
of stock options with respect to 800,000 shares of Common Stock pursuant to the
1994 Stock Option Plan to become exercisable in equal installments over a
four-year period. The incentive bonuses available to Mr. Gallagher under the
Memorandum are (i) an annual Incentive Bonus pursuant to the formulas set forth
in the Company's Management Incentive Plan, (ii) Special Bonuses as of the last
day of calendar year 1997, 1996 and 1995 in the amounts of $300,000, $300,000
and $650,000, respectively, and (iii) Special Price-Based Incentive Compensation
consisting of $1 million cash payments if and when the Company's Common Stock
first reaches trading price levels of $15, $20, $25, and $30, in each case for
at least 30 consecutive days prior to June 30, 2000.
During fiscal year 1996, Mr. Gallagher received stock options with respect
to an additional 100,000 shares of Common Stock pursuant to the 1994 Playtex
Stock Option Plan which become exercisable in equal installments over a
three-year period.
The 1994 Stock Option Plan, which has been approved by the Company's
stockholders, authorizes the grant to directors, executives and other key
employees of the Company of long-term incentive share awards in the form of
options ("Options") to purchase Common Stock and SARs. The 1994 Stock Option
Plan is administered by the Compensation Committee. The aggregate number of
shares of Common Stock which may be issued upon exercise of Options and SARs may
not exceed 5,047,785 shares (subject to further adjustments for stock dividends
and stock splits); provided that the aggregate number of such shares which may
be issued upon the exercise of Options and SARs granted to any single director
or Executive Officer (as defined in the 1994 Stock Option Plan) may not exceed
1,000,000. Options and SARs may not be granted under the 1994 Stock Option Plan
after October 2003. As of April 8, 1998, 2,009,076 shares remained available for
issuance under the 1994 Stock Option Plan (subject to stockholder approval at
the next annual meeting).
The Chief Executive Officer and each of his direct reports are parties to
agreements with the Company with respect to termination of employment. In the
event of termination by the Company without Cause (as defined in such
agreements) which occurs prior to a Change of Control (as defined in such
agreements), Mr. Gallagher and Mr. Goss are entitled to receive two years'
salary, bonus and fringe benefits, and the other executives are entitled to
receive one year's salary, bonus and fringe benefits. Additionally, in the event
of termination of employment prior to a Change of Control, due to death or
"Disability" (as defined in the Company's Long Term Disability Policy), Mr.
Gallagher or his estate is entitled to receive two years' salary, bonus and
fringe benefits. In the event employment is terminated within three years
following a Change of Control, each of the executives except Mr. Gallagher would
receive one year's salary, bonus and fringe benefits. Mr. Gallagher would enter
into a five year non-compete agreement following termination arising from a
Change of Control for total consideration equal to three years' salary, bonus
and fringe benefits. Mr. Goss is additionally obligated to make himself
available as a consultant to the Company for a period of six months following
termination arising from a Change of Control for total consideration equal to
one year's salary, bonus and fringe benefits. In the event of a Change of
Control, each executive is entitled to receive a one-time payment equal to the
highest annual bonus received in the last three fiscal years, whether or not
employment is terminated.
44
<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of Common Stock as of April 22, 1998, and as adjusted to reflect the
sale of the Common Stock offered hereby, by (i) the Chief Executive Officer and
each of the other four most highly compensated executive officers of the
Company, (ii) each Director of the Company, (iii) all Directors and executive
officers as a group, (iv) all persons known by the Company to own beneficially
5% or more of the Common Stock and (v) each U.S. Selling Stockholder. Unless
otherwise indicated, each of the stockholders has sole voting and investment
power with respect to the shares of Common Stock beneficially owned by such
stockholders.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED SHARES BENEFICIALLY
PRIOR TO THE U.S. OWNED
OFFERING (1) NUMBER OF AFTER THE U.S. OFFERING
NAME AND ADDRESS ----------------------- SHARES -----------------------
OF BENEFICIAL OWNERS NUMBER PERCENT BEING OFFERED NUMBER PERCENT
- --------------------------------------- ------------ --------- ------------- ------------ ---------
<S> <C> <C> <C> <C> <C>
Robert B. Haas......................... 20,000,000(2) 33.2% -- 20,000,000 33.2%
Michael R. Gallagher................... 485,668(3) * -- 485,668 *
Michael F. Goss........................ 163,001 * -- 163,001 *
Richard G. Powers...................... 16,667 * -- 16,667 *
Max R. Recone.......................... 126,667 * -- 126,667 *
James S. Cook.......................... 176,667 * -- 176,667 *
Thomas H. Lee.......................... 3,336,455(4) 5.5% -- (5) -- --(5)
Kenneth F. Yontz....................... 10,600 * -- 10,600 *
Timothy O. Fisher...................... 21,663(6) * -- 21,663(6) *
Douglas D. Wheat....................... -- -- -- -- --
Michael R. Eisenson.................... 2,915,963(7) 4.8% -- 2,915,963(7) 4.8%
C. Ann Merrifield...................... 1,800 * -- 1,800 *
Wyche H. Walton........................ -- -- -- -- --
John W. Childs......................... 8,338,422(8) 13.8% 8,128,666(9) -- --(9)
All current directors and executive
officers as a group (14 persons)..... 32,677,610 (8) 53.5% 8,128,666(9) 21,002,733 34.4%
Partnerships managed by Haas
Wheat(2)............................. 20,000,000(2) 33.2% -- 20,000,000(2) 33.2%
Stinson Capital Partners, L.P. et al.
909 Montgomery Street Suite 400 San
Francisco, CA 94113(10).............. 5,001,300 8.3% -- 5,001,300 8.3%
J.W. Childs Equity Partners, L.P....... 7,855,764 13.0% 7,855,764 -- --
Alan R. Koss Revocable Living Trust.... 85,330 * 85,330 -- --
42 other U.S. Selling Stockholders..... 412,163 * 396,686(11) 9,325 *
</TABLE>
- ------------------------
* Indicates less than one percent.
(1) Includes shares that may be acquired upon the exercise of stock options
granted by the Company that are exercisable within 60 days of April 8, 1998.
The shares beneficially owned include 466,668, 135,001, 16,667, 86,667,
86,667, 10,600, and 1,800 shares subject to currently exercisable options
granted to Messrs. Gallagher, Goss, Powers, Recone, Cook and Yontz and Ms.
Merrifield, respectively, and an aggregate of 804,070 shares subject to
currently exercisable options granted to all directors and executive
officers.
(2) Includes 8,055,555 shares (approximately 13.4% of the outstanding shares)
owned by HWH Capital Partners, L.P., 9,028,482 shares (approximately 15.0%
of the outstanding shares) owned by HWH Valentine Partners, L.P., and
2,915,963 shares (approximately 4.8% of the outstanding shares) owned by HWH
Surplus Valentine Partners, L.P. ("Surplus"). The address of each of the
foregoing partnerships is c/o Haas Wheat & Partners Incorporated, 300
Crescent Court, Suite 1700, Dallas, Texas
45
<PAGE>
75201. The sole general partner of each of such partnerships is a limited
partnership, and the sole general partner of each of such limited
partnerships is a corporation controlled by Mr. Haas. By virtue of his
control of such corporations, Mr. Haas has sole voting and dispositive power
over 17,084,037 shares and shared voting and dispositive power over
2,915,963 shares.
(3) Includes 9,000 shares held by Mr. Gallagher's children. Mr. Gallagher
disclaims beneficial ownership of these shares.
(4) Includes 1,361,951 shares held of record by the 1989 Thomas H. Lee Nominee
Trust dated September 29, 1989, 1,406,204 shares held of record by the
ML-Lee Acquisition Fund, L.P., 343,726 shares held of record by the ML-Lee
Acquisition Fund II, L.P. and 183,560 shares held of record by the ML-Lee
Acquisition Fund II (Retirement Accounts), L.P. While Mr. Lee has shared
voting and dispositive power over the shares held by the limited
partnerships, he disclaims beneficial ownership of such shares. Certain of
the 1,361,951 shares held of record by the 1989 Thomas H. Lee Nominee Trust
are subject to options to purchase granted by such trust to certain
employees and consultants of The Thomas H. Lee Company. Also included are
20,507 shares held by the Stephen Zachary Lee 1988 Irrevocable Trust and
20,507 shares held by the Robert Schiff Lee 1988 Irrevocable Trust. Mr. Lee
also disclaims beneficial ownership of the shares held by such trusts. The
address of Mr. Lee is c/o The Thomas H. Lee Company, 75 State Street, Suite
2600, Boston, MA 02109.
(5) All of the shares owned by the persons named in note (4) above are being
offered by them pursuant to a separate Prospectus in the International
Offering. These shares may not be sold by the International Underwriters
into the United States or Canada. The U.S. Offering is conditioned upon all
of the shares offered in the International Offering being sold. See
"Underwriting."
(6) Includes 16,663 shares held of record by Mr. Fisher's spouse and children.
Mr. Fisher disclaims beneficial ownership of these shares.
(7) Represents shares owned by Surplus, of which Phemus Corporation is the sole
Limited Partner. Mr. Eisenson is the President and Chief Executive Officer
of Harvard Private Capital Group, the investment advisor for Phemus
Corporation. While Mr. Eisenson has shared voting and dispositive power over
the shares, he disclaims beneficial ownership of such shares.
(8) Includes 7,855,764 shares (approximately 13.0% of the outstanding shares)
beneficially owned by J.W. Childs Equity Partners L.P. ("Childs LP"), a
Delaware limited partnership, and 482,658 shares owned by John W. Childs
directly. The address of Mr. Childs and Childs LP is c/o J.W. Childs
Associates, L.P., One Federal Street, Boston, MA 02110.
(9) Includes 7,855,764 shares beneficially owned by Childs LP and 272,902 shares
owned by John W. Childs. In addition to the shares being offered hereby,
John W. Childs is also offering 209,756 shares pursuant to a separate
Prospectus in the International Offering. See "Underwriting."
(10) On December 16, 1997, the Company received a Schedule 13D dated December 4,
1997 filed with the SEC in respect of ownership of an aggregate of 5,001,300
shares of Common Stock by a group comprised of Stinson Capital Partners,
L.P., BK Capital Partners IV, L.P., The Carpenters Pension Trust for
Southern California, United Brotherhood of Carpenters and Joiners of America
Local Unions and Councils Pension Fund, Insurance Company Supported
Organizations Pension Plan, Richard C. Blum & Associates, L.P., Richard C.
Blum & Associates, Inc. and Richard C. Blum. Each filing person reported
shared voting power and shared dispositive power with respect to all of such
shares. The Company has not attempted to verify independently any of the
information contained in the Schedule 13D.
(11) In addition to the shares being offered hereby, one of the U.S. Selling
Stockholders is also offering 6,152 shares pursuant to a separate Prospectus
in the International Offering. See "Underwriting."
46
<PAGE>
DESCRIPTION OF CAPITAL STOCK
As of the date of this Prospectus, the authorized capital stock of the
Company consists of 100,000,000 shares of Common Stock, par value $.01 per
share, and 50,000,000 shares of Preferred Stock, par value $.01 per share (the
"Preferred Stock").
COMMON STOCK
Both prior to and following the offering, 60,296,851 shares of Common Stock
will be issued and outstanding. The holders of Common Stock are entitled to one
vote per share on all matters voted on by the stockholders, including the
election of directors and, except as otherwise required by law or provided in
any resolution adopted by the Company's Board with respect to any series of
Preferred Stock, the holders of such Common Stock exclusively possess all voting
power. The Certificate of Incorporation does not provide for cumulative voting
in the election of directors. Subject to any preferential rights of any
outstanding series of Preferred Stock, the holders of Common Stock are entitled
to such dividends as may be declared from time to time by the Board from funds
available therefor, and upon liquidation are entitled to receive pro rata all
assets of the Company available for distribution to such holders. The Common
Stock does not have any preemptive rights.
PREFERRED STOCK
Subject to the provisions of the Certificate of Incorporation and
limitations prescribed by law, the Board has the authority to issue up to
50,000,000 shares of Preferred Stock in one or more series and to fix the
rights, preferences, privileges and restrictions thereof, including dividend
rights, dividend rates, conversion rates, voting rights, terms of redemption,
redemption prices, liquidation preferences and the number of shares constituting
any series or the designation of such series, which may be superior to those of
the Common Stock, without further vote or action by the stockholders. There will
be no shares of Preferred Stock outstanding upon the closing of the Offering and
the Company has no present plans to issue any Preferred Stock.
One of the effects of undesignated Preferred Stock may be to enable the
Board to render more difficult or to discourage an attempt to obtain control of
the Company by means of a tender offer, proxy contest, merger or otherwise, and
thereby to protect the continuity of the Company's management. The issuance of
shares of the Preferred Stock may adversely affect the rights of the holders of
Common Stock. For example, Preferred Stock issued by the Company may rank prior
to the Common Stock as to dividend rights, liquidation preference or both, may
have full or limited voting rights and may be convertible into shares of Common
Stock. Accordingly, the issuance of shares of Preferred Stock may discourage
bids for the Common Stock or may otherwise adversely affect the market price of
the Common Stock.
CERTAIN PROVISIONS OF CERTIFICATE OF INCORPORATION, BY-LAWS AND DELAWARE LAW
NUMBER OF DIRECTORS, FILLING VACANCIES AND REMOVAL. The Certificate of
Incorporation provides that the number of directors of the Board will be fixed
in the manner provided by the By-laws. The By-laws provide that the Board shall
consist of at least one and not more than 15 directors; provided that until the
Termination Date (defined below) the number of directors shall be an odd number
of at least nine and not more than 15. "Termination Date" means the first date
on which no party is contractually obligated to vote for nominees for director
under the Stock Purchase Agreement. The Termination Date has not yet occurred.
The By-laws create two special committees of the Board responsible for
nominating directors until the Termination Date. The purpose of the two
committees is to ensure that Haas Wheat has the ability to nominate a majority
of the members of the Board.
47
<PAGE>
The "Purchaser Nominating Committee," which consists of directors designated
by Haas Wheat or directors who have been nominated by such designees
(collectively, the "Purchaser Directors"), has the exclusive authority of the
Board to nominate a number of nominees for election at any stockholder meeting
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 Board (a "Simple Majority").
The By-laws also grant the Purchaser Nominating Committee exclusive authority to
fill any vacancies occurring in a directorship which was held by a Purchaser
Director or any newly created directorship that results from increasing the size
of the Board (but only when the increase, when added to the number of continuing
Purchaser Directors, is equal to the smallest number that constitutes a Simple
Majority). If there are no Purchaser Directors, then a special meeting of the
stockholders will be called and the stockholders will have the authority, and
will be required to, fill the vacancies.
The "Non-Purchaser Nominating Committee," which consists of the directors
who are not Purchaser Directors (the "Non-Purchaser Directors"), has the
exclusive authority of the Board to nominate a number of nominees for election
at any stockholders meeting at which one or more directors are to be elected or
by written consent of stockholders, which (when added to the number of
continuing directors who are not subject to election and who are not Purchaser
Directors is equal to the total number of directors less a Simple Majority);
provided that two of the Non-Purchaser Directors must be Unaffiliated Persons
(defined below) (one of whom must be qualified under NYSE rules and policies to
sit on the audit committee of the Board) and at least two of the Non-Purchaser
Directors must be executive officers of the Company (one of whom must be the
Chief Executive Officer). "Unaffiliated Person" means any person who is not
employed by, affiliated with or otherwise related to Haas Wheat or any entity
controlled by Haas Wheat, and who does not have a material business relationship
with Haas Wheat or any entity controlled by Haas Wheat.
The Non-Purchaser Nominating Committee also has the exclusive authority of
the Board to fill any vacancy occurring in a directorship which was held by a
Non-Purchaser Director who is not an executive officer of the Company or any
vacancies occurring in any newly-created directorship that results from
increasing the size of the Board to the extent such newly-created directorships
are not required to be filled by the Purchaser Nominating Committee. If there
are no Non- Purchaser Directors, then the board shall have the power to fill any
and all such vacancies or newly-created directorships then existing; provided
that any directors elected pursuant to the foregoing must be Unaffiliated
Persons.
Finally, until the Termination Date, any nomination of a nominee to succeed
a Non-Purchaser Director who is an executive officer must be made by the Board,
and any vacancy in a directorship which was held by a Non-Purchaser Director who
was an executive officer may be filled only by the Board and not by the
stockholders of the Company.
The Board has proposed an amendment to the By-laws, for approval by the
stockholders at the next annual meeting of the Company. The proposed amendment
provides that one of the Non-Purchaser Directors shall be designated to serve on
the Company's Board by Childs LP. Childs LP is entitled to make this designation
until the earlier of (i) the date upon which Childs LP holds in the aggregate
less than 4,628,688 shares of the Common Stock and (ii) the tenth anniversary of
the closing date of the PCH acquisition. In the event this Offering is
consummated in full, Childs LP would own an insufficient number of shares to be
entitled to make this designation.
Mr. Childs has indicated that he will resign as a Director of the Company if
and when Childs LP is no longer entitled to designate a Director as provided in
the proposed amendment to the By-laws of the Company.
ADVANCE NOTICE PROVISIONS FOR STOCKHOLDER NOMINATIONS AND STOCKHOLDER
PROPOSALS AT SPECIAL MEETINGS. The By-laws establish an advance notice procedure
for stockholders to make nominations of candidates for election as directors, or
to bring other business before a special meeting of stockholders of the Company
(the "Stockholder Notice Procedure").
48
<PAGE>
The Stockholder Notice Procedure provides that only individuals who are
nominated by, or at the direction of, the Board, or by a stockholder who has
given timely written notice to the Secretary of the Company prior to the meeting
at which directors are to be elected, will be eligible for election as directors
of the Company. Under the Stockholder Notice Procedure, for notice of
stockholder nominations to be timely made, such notice must be received by the
Company by the tenth day after public announcement of the date of such annual or
special meeting of stockholders is first made; provided that such notice is not
required to be made more than 60 days prior to such a meeting.
Under the Stockholder Notice Procedure, a stockholder's notice to the
Company must contain certain information, including, without limitation, the
identity and address of the nominating stockholder, the class and number of
shares of stock of the Company which are owned by such stockholder and all
information regarding the proposed nominee that would be required to be included
in a proxy statement soliciting proxies for the proposed nominee. If the
Chairman of the Board or other officer presiding at a meeting determines that a
person was not nominated in accordance with the Stockholder Notice Procedure
such person will not be eligible for election as a director.
By requiring advance notice of nominations by stockholders, the Stockholder
Notice Procedure affords the Board an opportunity to consider the qualifications
of the proposed nominees and, to the extent deemed necessary or desirable by the
Board, to inform stockholders about such qualifications.
The By-laws require the Board to attend the annual stockholders' meeting.
Except as otherwise provided by law, special meetings of the stockholders of the
Company may be called by the Company's President. A special meeting may also be
called at the written request of either a majority of the Board or by
stockholders owning a majority of the entire capital stock of the Company issued
and outstanding and entitled to vote.
Whenever stockholders are required or permitted to take any action at a
meeting, a written notice of the meeting shall be given, and in the case of a
special meeting, the purpose for the meeting. The written notice of any meeting
shall be given to each stockholder entitled to vote not less than ten nor more
than sixty days before the date of the meeting.
OTHER CHARTER AND BY-LAW PROVISIONS. The Certificate of Incorporation
expressly authorizes the Board to make, alter or repeal the By-laws. If a
proposed alteration, amendment, repeal or adoption of new By-laws is to be
introduced by way of a special meeting, then the notice of the meeting shall
include the proposed change. The power conferred upon the Board does not divest
or limit the power of the stockholders to adopt, amend or repeal the By-laws.
However, until the Termination Date, certain provisions of the By-laws may not
be repealed or amended without the affirmative vote of the holders of shares of
Common Stock representing at least 66 2/3% of the Company.
Additionally, the Certificate of Incorporation has limited the personal
liability of the Company's directors to the Company or its stockholders for
monetary damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to the Company or
its stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the General Corporation Law of the State of Delaware or (iv) for any transaction
from which the director derived an improper personal benefit.
SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW. The Company is subject
to the provisions of Section 203 of the General Corporation Law of the State of
Delaware ("Section 203"). Under Section 203, certain "business combinations"
between a Delaware corporation whose stock generally is publicly traded or held
of record by more than 2,000 stockholders and an "interested stockholder" are
prohibited for a three-year period following the date that such a stockholder
became an interested stockholder, unless (i) the corporation has elected in its
original certificate of incorporation not to be governed by Section 203 (the
Company did not make such an election), (ii) the business combination was
approved by the Board of Directors of the corporation before the other party to
the business combination became an interested
49
<PAGE>
stockholder, (iii) upon consummation in full of the transaction that made it an
interested stockholder, the interested stockholder owned at least 85% of the
voting stock of the corporation outstanding at the commencement of the
transaction (excluding voting stock owned by directors who are also officers or
held in employee benefit plans in which the employees do not have a confidential
right to tender or vote stock held by the plan) or (iv) the business combination
was approved by the Board of Directors of the corporation and ratified by
two-thirds of the voting stock which the interested stockholder did not own. The
three-year prohibition also does not apply to certain business combinations
proposed by an interested stockholder following the announcement or notification
of certain extraordinary transactions involving the corporation and a person who
had not been an interested stockholder during the previous three years or who
became an interested stockholder with the approval of the majority of the
corporation's directors. The term "business combination" is defined generally to
include mergers or consolidations between a Delaware corporation and an
"interested stockholder," transactions with an "interested stockholder"
involving the assets or stock of the corporation or its majority-owned
subsidiaries and transactions which increase an interested stockholder's
percentage ownership of stock. The term "interested stockholder" is defined
generally as a stockholder who, together with affiliates and associates, owns
(or, within three years prior, did own) 15% or more of a Delaware corporation's
voting stock. Section 203 could prohibit or delay a merger, takeover or other
change in control of the Company and therefore could discourage attempts to
acquire the Company.
REGISTRATION RIGHTS
In connection with the Investment, the Investors and the Company entered
into a registration rights agreement granting the Investors the right, under
certain circumstances, to cause the Company to register under the Securities Act
the shares of Common Stock held by them, and the right to include in certain
registrations under the Securities Act of shares of Common Stock to be sold by
the Company or by stockholders of the Company, the shares of Common Stock held
by the Investors. In addition, the U.S. Selling Stockholders and the
International Selling Stockholders have certain registration rights which, upon
the consummation in full of the U.S. Offering and International Offering,
respectively, will terminate.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Common Stock is ChaseMellon
Shareholder Services, LLC, located at 80 Challenger Road, Ridgefield Park, New
Jersey.
50
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in a purchase agreement (the
"U.S. Purchase Agreement") among the Company, each of the U.S. Selling
Stockholders and each of the underwriters named below (the "U.S. Underwriters"),
the U.S. Selling Stockholders have agreed to sell to each of the U.S.
Underwriters, and each of the U.S. Underwriters severally has agreed to purchase
from the U.S. Selling Stockholders, the number of shares of Common Stock set
forth opposite its name below.
<TABLE>
<CAPTION>
NUMBER
U.S. UNDERWRITERS OF SHARES
----------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated...............................................................................
Donaldson, Lufkin & Jenrette Securities Corporation..................................................
Goldman, Sachs & Co. ................................................................................
PaineWebber Incorporated.............................................................................
Smith Barney Inc.....................................................................................
----------
Total...................................................................................... 8,610,682
----------
----------
</TABLE>
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Donaldson, Lufkin &
Jenrette Securities Corporation, Goldman, Sachs & Co., PaineWebber Incorporated
and Smith Barney Inc. are acting as the representatives (the "U.S.
Representatives") of the U.S. Underwriters.
The Company and certain other stockholders of the Company (the
"International Selling Stockholders") have also entered into a purchase
agreement (the "International Purchase Agreement") with certain underwriters
outside the United States and Canada (collectively, the "International
Managers,"), for whom Donaldson, Lufkin & Jenrette International, Goldman Sachs
International, PaineWebber International (U.K.) Ltd. and Smith Barney Inc. are
acting as representatives (the "International Representatives"). Subject to the
terms and conditions set forth in the International Purchase Agreement, the
International Selling Stockholders have agreed to sell to the International
Managers and the International Managers have severally agreed to purchase from
the International Selling Stockholders, an aggregate of 4,008,063 shares of
Common Stock. The International Offering is being undertaken independently of
the U.S. Offering.
Pursuant to agreements between the U.S. Selling Stockholders and the Company
and the International Selling Stockholders and the Company, the consummation of
the U.S. Offering is contingent upon the consummation of the International
Offering. However, the consummation of the International Offering is not
contingent upon the consummation of the U.S. Offering.
The U.S. Underwriters and the International Managers have not entered into
an intersyndicate agreement and no shares of Common Stock are to be transferred
between the U.S. Underwriters and the International Managers. The U.S.
Underwriters will not offer to sell or sell shares of Common Stock to persons
who are non-U.S. or non-Canadian persons or to persons they believe intend to
resell to persons who are non-U.S. or non-Canadian persons, and the
International Managers and any dealer to whom they sell shares of Common Stock
will not offer to sell or sell shares of Common Stock to U.S. persons or to
Canadian persons or to persons they believe intend to resell to U.S. persons or
Canadian persons.
The U.S. Representatives have advised the Company that the U.S. Underwriters
propose initially to offer the shares of Common Stock to the public at the
public offering price set forth on the cover page of this Prospectus, and to
certain dealers at such price less a concession not in excess of $ per
share of Common Stock on sales to certain other dealers. The U.S. Underwriters
may allow, and such dealers may
51
<PAGE>
reallow, a discount not in excess of $ per share of Common Stock on sales
to certain other dealers. After the initial public offering, the public offering
price, concession and discount may be changed.
The Company and the U.S. Selling Stockholders have agreed, subject to
certain exceptions, not to sell or otherwise dispose of any shares of Common
Stock or securities convertible into or exchangeable or exercisable for Common
Stock, without the prior written consent of Merrill Lynch, for a period of 90
days after the date of this Prospectus. In addition, the Company and the
International Selling Stockholders have entered into similar arrangements with
Donaldson, Lufkin & Jenrette International.
The U.S. Underwriters do not intend to confirm sales of the Common Stock
offered hereby to any accounts over which they exercise discretionary authority.
The Company and the U.S. Selling Stockholders have agreed to indemnify the
several U.S. Underwriters against certain liabilities, including liabilities
under the Securities Act, or to contribute to payments the Underwriters may be
required to make in respect thereof. The Company has agreed to indemnify the
U.S. Selling Stockholders, under certain circumstances, in respect of payments
made by them pursuant to these agreements.
Until the distribution of the Common Stock is completed, rules of the
Securities and Exchange Commission may limit the ability of the U.S.
Underwriters and certain selling group members to bid for and purchase the
Common Stock. As an exception to these rules, the U.S. Representatives are
permitted to engage in certain transactions that stabilize the price of the
Common Stock. Such transactions consist of bids or purchases for the purpose of
pegging, fixing or maintaining the price of the Common Stock.
If the U.S. Underwriters create a short position in the Common Stock in
connection with the U.S. Offering, i.e., if they sell more shares of Common
Stock than are set forth on the cover page of this Prospectus, the U.S.
Representatives may reduce that short position by purchasing Common Stock in the
open market. The U.S. Representatives may also elect to reduce any short
position by exercising all or part of the over-allotment option described below.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases.
Neither the Company nor any of the U.S. Underwriters makes any
representation or prediction as to the direction or magnitude of any effect that
the transactions described above may have on the price of the Common Stock. In
addition, neither the Company nor any of the U.S. Underwriters makes any
representation that the U.S. Representatives will engage in such transactions or
that such transactions, once commenced, will not be discontinued without notice.
No action has been or will be taken in any jurisdiction (except in the
United States) that would permit a public offering of the shares of Common
Stock, or the possession, circulation or distribution of the Prospectus or any
other material relating to the Company or shares of Common Stock in any
jurisdiction where action for that purpose is required. Accordingly, the shares
of Common Stock may not be offered or sold, directly or indirectly, and neither
this Prospectus nor any other offering material or advertisements in connection
with the shares of Common Stock may be distributed or published, in or from any
country or jurisdiction except in compliance with any applicable rules and
regulations of any such country or jurisdiction.
The Company has granted an option to the U.S. Underwriters, exercisable
within 30 days after the date of this Prospectus, to purchase up to an aggregate
of 1,892,811 additional shares of Common Stock at the public offering price set
forth on the cover page of this Prospectus, less the underwriting discount. The
U.S. Underwriters may exercise this option only to cover over-allotments, if
any, made on the sale of the Common Stock offered hereby. To the extent that the
U.S. Underwriters exercise this option, each U.S. Underwriter will be obligated,
subject to certain conditions, to purchase a number of additional shares of
Common Stock proportionate to such U.S. Underwriter's initial amount reflected
in the foregoing table.
52
<PAGE>
LEGAL MATTERS
The validity of the Common Stock being offered hereby and certain other
legal matters relating to offerings pursuant to the Registration Statement will
be passed upon for the Company by Paul, Weiss, Rifkind, Wharton & Garrison, New
York, New York. Certain legal matters relating to the U.S. Offering will be
passed upon for the U.S. Underwriters by Shearman & Sterling, New York, New
York.
EXPERTS
The consolidated financial statements and schedule of Playtex Products, Inc.
and its subsidiaries as of December 27, 1997 and December 28, 1996, and the
twelve months ended December 27, 1997, December 28, 1996 and December 30, 1995,
have been included herein and in the registration statement in reliance upon the
report of KPMG Peat Marwick LLP, independent certified public accountants,
appearing elsewhere herein, and upon the authority of said firm as experts in
accounting and auditing.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"SEC") a registration statement on Form S-3 (together with any amendments
thereto, the "Registration Statement") under the Securities Act with respect to
the shares of Common Stock being offered hereby. This Prospectus, which forms
part of the Registration Statement, does not contain all of the information set
forth in the Registration Statement and the exhibits and schedules thereto, to
which reference is hereby made. Statements made in this Prospectus as to the
contents of any contract, agreement or other document referred to are not
necessarily complete. With respect to each such contract, agreement or other
document filed as an exhibit to the Registration Statement or to a document
incorporated by reference herein, reference is made to such exhibit or document
for a more complete description of the matter involved, and each such statement
shall be deemed qualified in its entirety by such reference. For further
information with respect to the Company and the Common Stock offered hereby,
reference is hereby made to the Registration Statement and to the exhibits and
schedules thereto.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the SEC.
Such reports, proxy statements and other information can be inspected and copied
at the public reference facilities maintained by the SEC at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the SEC's regional offices in New
York (7 World Trade Center, 13th Floor, New York, New York 10048) and Chicago
(Citicorp Center, 14th Floor, 500 West Madison Street, Chicago, Illinois 60661).
Copies of such reports, proxy statements and other information also may be
obtained at prescribed rates from the Public Reference Section of the SEC at 450
Fifth Street, N.W., Washington, D.C. 20549. In addition, the SEC maintains a Web
site that contains reports, proxy statements and other information regarding
registrants (such as the Company) that file electronically with the SEC. The
Internet address of such site is "http://www.sec.gov." In addition, copies of
such information may also be inspected and copied at the office of The New York
Stock Exchange, Inc., 20 Broad Street, New York, New York 10005, upon which the
Company's Common Stock is listed.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed by the Company with the SEC pursuant
to the Exchange Act (Commission File No. 1-12620) and are hereby incorporated
herein by reference:
(1) The Company's Annual Report on Form 10-K for the fiscal year ended
December 27, 1997;
(2) the Company's Current Report on Form 8-K/A dated April 13, 1998
filed on April 13, 1998;
(3) the description of the Common Stock contained in the Company's
Registration Statement on Form 8-A filed pursuant to Section 12(b) of the
Exchange Act, and declared effective on
53
<PAGE>
January 26, 1994 (including any amendment or report) filed for the purpose
of updating such description; and
(4) the Company's Quarterly Report on Form 10-Q for the three months
ended March 28, 1998.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of the initial filing of the
Registration Statement but prior to the consummation of the offering of the
Common Stock shall be deemed to be incorporated in this Prospectus by reference
and to be a part hereof from the date of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of such person, a copy
of any or all of the documents incorporated by reference herein (other than the
exhibits to such documents, unless such exhibits are specifically incorporated
by reference to in such documents). Requests for such copies should be directed
to Michael F. Goss, Chief Financial Officer, at 300 Nyala Farms Road, Westport,
Connecticut 06880, telephone number (203) 341-4000.
54
<PAGE>
INDEX TO FINANCIAL STATEMENTS
I. PLAYTEX PRODUCTS, INC. ANNUAL FINANCIAL STATEMENTS:
<TABLE>
<S> <C>
Report of KPMG Peat Marwick LLP................................................... F-2
Consolidated Statements of Operations for the twelve months ended December 27,
1997, December 28, 1996 and December 30, 1995................................... F-3
Consolidated Balance Sheets as of December 27, 1997 and December 28, 1996......... F-4
Consolidated Statements of Changes in Stockholders' Equity for the twelve months
ended December 27, 1997, December 28, 1996 and December 30, 1995................ F-5
Consolidated Statements of Cash Flows for the twelve months ended December 27,
1997, December 28, 1996 and December 30, 1995................................... F-6
Notes to Consolidated Financial Statements........................................ F-7
</TABLE>
F-1
<PAGE>
PLAYTEX PRODUCTS, INC.
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Playtex Products, Inc.:
We have audited the accompanying consolidated balance sheets of Playtex
Products, Inc. and subsidiaries as of December 27, 1997 and December 28, 1996,
and the related consolidated statements of operations, changes in stockholders'
equity and cash flows for the twelve months ended December 27, 1997, December
28, 1996 and December 30, 1995. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Playtex Products, Inc. and subsidiaries as of December 27, 1997 and December 28,
1996 and the results of their operations and their cash flows for the twelve
months ended December 27, 1997, December 28, 1996 and December 30, 1995, in
conformity with generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
February 5, 1998
Stamford, Connecticut
F-2
<PAGE>
PLAYTEX PRODUCTS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED
----------------------------------------
DECEMBER 27, DECEMBER 28, DECEMBER 30,
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Net sales............................................................. $ 500,632 $ 498,742 $ 483,581
Cost of sales......................................................... 195,980 192,512 188,129
------------ ------------ ------------
Gross profit........................................................ 304,652 306,230 295,452
------------ ------------ ------------
Operating expenses:
Advertising and sales promotion..................................... 114,279 119,380 117,581
Selling, distribution and research.................................. 58,657 56,776 54,251
Administrative...................................................... 19,120 18,028 23,625
Amortization of intangibles......................................... 12,894 12,846 11,268
Write-off of SMILETOTE intangible assets............................ -- -- 6,441
------------ ------------ ------------
Total operating expenses.......................................... 204,950 207,030 213,166
------------ ------------ ------------
Operating earnings.............................................. 99,702 99,200 82,286
Interest expense including related party interest expense of $12,150,
net of related party interest income of $12,003 for all periods
presented........................................................... 64,470 64,860 71,361
------------ ------------ ------------
Earnings before income taxes.................................... 35,232 34,340 10,925
Income taxes.......................................................... 16,501 16,141 8,151
------------ ------------ ------------
Earnings before extraordinary loss.............................. 18,731 18,199 2,774
Extraordinary loss on early extinguishment of debt, net of $2,344 and
$5,180 tax benefit in 1997 and 1995, respectively................... (4,078) -- (7,935)
------------ ------------ ------------
Net earnings (loss)............................................. $ 14,653 $ 18,199 $ (5,161)
------------ ------------ ------------
------------ ------------ ------------
Earnings (loss) per share (basic and diluted):
Before extraordinary loss........................................... $ .37 $ .36 $ .07
Net earnings (loss)................................................. $ .29 $ .36 $ (.12)
Weighted average shares outstanding:
Basic............................................................... 50,923 50,883 42,309
Diluted............................................................. 51,006 50,939 42,342
</TABLE>
See the accompanying notes to consolidated financial statements.
F-3
<PAGE>
PLAYTEX PRODUCTS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 27, DECEMBER 28,
1997 1996
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash............................................................................... $ 3,231 $ 6,205
Receivables, less allowance for doubtful accounts.................................. 66,876 63,982
Inventories........................................................................ 42,500 37,637
Deferred income taxes.............................................................. 7,806 9,702
Other current assets............................................................... 4,949 4,965
------------ ------------
Total current assets............................................................. 125,362 122,491
Net property, plant and equipment.................................................... 54,810 53,408
Intangible assets, net:
Goodwill........................................................................... 337,157 348,449
Patents, trademarks and other...................................................... 34,835 36,405
Deferred financing costs........................................................... 16,751 15,337
Due from related party............................................................... 80,017 80,017
Other noncurrent assets.............................................................. 3,626 4,224
------------ ------------
Total assets..................................................................... $ 652,558 $ 660,331
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable................................................................... $ 24,512 $ 36,131
Accrued expenses................................................................... 38,827 49,252
Income taxes payable............................................................... 4,121 5,586
Current maturities of long-term debt............................................... 1,500 25,000
------------ ------------
Total current liabilities........................................................ 68,960 115,969
Long-term debt....................................................................... 736,300 714,700
Due to related party................................................................. 78,386 78,386
Other noncurrent liabilities......................................................... 13,563 14,207
Deferred income taxes................................................................ 23,412 19,796
------------ ------------
Total liabilities................................................................ 920,621 943,058
------------ ------------
Stockholders' equity:
Common stock, $0.01 par value, authorized 100,000,000 shares, issued 50,941,812
shares at December 27,1997 and 50,887,200 shares at December 28,1996............. 509 509
Additional paid-in capital......................................................... 424,706 424,277
Retained earnings (deficit)........................................................ (691,065) (705,718)
Foreign currency translation adjustment............................................ (2,213) (1,795)
------------ ------------
Total stockholders' equity....................................................... (268,063) (282,727)
------------ ------------
Total liabilities and stockholders' equity....................................... $ 652,558 $ 660,331
------------ ------------
------------ ------------
</TABLE>
See the accompanying notes to consolidated financial statements.
F-4
<PAGE>
PLAYTEX PRODUCTS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOREIGN
ADDITIONAL RETAINED CURRENCY
COMMON PAID-IN EARNINGS TRANSLATION
STOCK CAPITAL (DEFICIT) ADJUSTMENT
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Balance, December 31, 1994....................................... $ 309 $ 254,417 $ (718,756) $ (1,967)
Net loss....................................................... -- -- (5,161) --
Issuance of shares of common stock............................. 200 169,800 -- --
Foreign currency translation adjustment........................ -- -- -- 182
----- ---------- ----------- -----------
Balance, December 30, 1995....................................... 509 424,217 (723,917) (1,785)
Net earnings................................................... -- -- 18,199 --
Issuance of shares of common stock............................. -- 60 -- --
Foreign currency translation adjustment........................ -- -- -- (10)
----- ---------- ----------- -----------
Balance, December 28, 1996....................................... 509 424,277 (705,718) (1,795)
Net earnings................................................... -- -- 14,653 --
Issuance of shares of common stock............................. -- 429 -- --
Foreign currency translation adjustment........................ -- -- -- (418)
----- ---------- ----------- -----------
Balance, December 27, 1997....................................... $ 509 $ 424,706 $ (691,065) $ (2,213)
----- ---------- ----------- -----------
----- ---------- ----------- -----------
</TABLE>
See the accompanying notes to consolidated financial statements.
F-5
<PAGE>
PLAYTEX PRODUCTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED
----------------------------------------
<S> <C> <C> <C>
DECEMBER 27, DECEMBER 28, DECEMBER 30,
1997 1996 1995
------------ ------------ ------------
Cash flows from operations:
Net earnings (loss)................................................. $ 14,653 $ 18,199 $ (5,161)
Non-cash items included in earnings:
Extraordinary loss, net of tax benefit............................ 4,078 -- 7,935
Write-off of SMILETOTE intangible assets.......................... -- -- 6,441
Amortization of intangibles....................................... 12,894 12,846 11,268
Amortization of deferred financing costs.......................... 2,163 2,089 2,246
Depreciation...................................................... 7,520 8,929 8,496
Deferred income taxes............................................. 5,493 6,842 (133)
Other, net........................................................ 249 48 (291)
Changes in working capital items,
net of effects of acquisitions:
Increase in receivables......................................... (2,894) (5,963) (4,471)
(Increase) decrease in inventories.............................. (4,863) 11,553 4,629
Increase in other current assets................................ (948) (420) (1,802)
(Decrease) increase in accounts payable......................... (11,619) 16,074 6,967
Decrease in accrued expenses.................................... (14,791) (12,794) (7,076)
Increase (decrease) in income taxes payable..................... 1,843 3,689 (4,207)
Increase (decrease) in accrued interest......................... 3,090 (788) 2,238
------------ ------------ ------------
Net cash flows from operations................................ 16,868 60,304 27,079
Cash flows used for investing activities:
Purchases of property, plant and equipment.......................... (9,004) (9,740) (12,395)
Businesses acquired................................................. -- -- (94,429)
------------ ------------ ------------
Net cash flows used for investing activities.................. (9,004) (9,740) (106,824)
Cash flows (used for) from financing activities:
Net borrowings (repayments) under working capital credit
facilities........................................................ 23,550 (2,850) (42,650)
Long-term debt borrowings........................................... 355,000 -- 425,000
Long-term debt repayments........................................... (380,450) (47,500) (468,000)
Payment of financing costs.......................................... (9,367) -- (9,113)
Issuance of shares of common stock.................................. 429 60 170,000
Other, net.......................................................... -- (9) 75
------------ ------------ ------------
Net cash flows (used for) from financing activities........... (10,838) (50,299) 75,312
(Decrease) increase in cash........................................... (2,974) 265 (4,433)
Cash at beginning of period........................................... 6,205 5,940 10,373
------------ ------------ ------------
Cash at end of period................................................. $ 3,231 $ 6,205 $ 5,940
------------ ------------ ------------
------------ ------------ ------------
Supplemental disclosures of cash flow information
Cash paid during the periods for:
Interest.......................................................... $ 59,217 $ 63,559 $ 66,884
Income taxes, net of refunds...................................... $ 9,165 $ 5,610 $ 10,748
</TABLE>
See the accompanying notes to consolidated financial statements.
F-6
<PAGE>
PLAYTEX PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION The consolidated financial statements include
the accounts of Playtex Products, Inc. and all of its subsidiaries ("Playtex" or
the "Company"). All significant intercompany balances have been eliminated.
INVENTORIES Inventories are stated at the lower of cost (first-in,
first-out basis) or market. Inventory costs include material, labor and
manufacturing overhead.
NET PROPERTY, PLANT AND EQUIPMENT Depreciation is provided on the
straight-line method over the estimated useful lives of the respective assets
(ranging from 3 to 40 years). Repair and maintenance costs ($5.2 million in
1997, $5.5 million in 1996 and $5.1 million in 1995) are expensed; renewals and
betterments are capitalized
INTANGIBLE AND LONG-LIVED ASSETS Intangible assets include goodwill, which
represents costs in excess of net assets of businesses acquired, patents,
trademarks, and organization costs. Intangible assets are amortized on a
straight-line basis over a period not exceeding 40 years. The Company
systematically reviews the recoverability of its goodwill using certain
financial indicators, such as historical and future ability to generate income
from operations. The Company systematically reviews the recoverability of the
other long-lived assets by comparing their unamortized carrying value to their
related anticipated undiscounted future cash flows. Any impairment related to
goodwill or other long-lived assets is measured by reference to the assets' fair
market value. Impairments are charged to expense when such determination is
made.
DEFERRED FINANCING COSTS Costs incurred in connection with the issuance of
long-term debt have been capitalized and are being amortized over the life of
the related debt agreements. Such costs, net of accumulated amortization,
amounted to $16.8 million and $15.3 million at December 27, 1997 and December
28, 1996, respectively.
INCOME TAXES Deferred tax assets and liabilities are provided using the
asset and liability method for temporary differences between financial and tax
reporting basis using the enacted tax rates in effect for the period in which
the differences are expected to reverse.
FOREIGN CURRENCY TRANSLATION The functional currency of Playtex's Canadian
operations is the local currency. Net exchange gains or losses resulting from
the translation of assets and liabilities are accumulated in a separate section
of stockholders' equity titled "Foreign currency translation adjustment."
EARNINGS PER SHARE In February 1997, the Financial Accounting Standards
Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No.
128 ("SFAS 128") "Earnings per Share". This statement establishes and simplifies
standards for computing and presenting earnings per share ("EPS"). SFAS 128
replaces primary and fully diluted EPS with basic and diluted earnings per
share. Basic EPS excludes dilution and is computed by dividing net earnings by
the weighted average number of common shares outstanding for the period. Diluted
EPS reflects the potential dilution that would occur if securities or other
contracts to issue common stock were exercised or converted into common stock or
resulted in the issuance of common stock that would then share in the earnings
of the Company. The Company has adopted SFAS 128 with its December 27, 1997
consolidated financial statements. For the periods presented, stock options
outstanding under the Company's 1994 Stock Option Plan are the only potentially
dilutive instrument that caused the diluted weighted average shares outstanding
to increase over the basic
F-7
<PAGE>
PLAYTEX PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
weighted average shares outstanding. The Company utilizes the treasury stock
method to determine the dilutive impact of potentially exercised stock options.
USE OF ESTIMATES The preparation of financial statements in accordance with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent liabilities at the date of the financial statements,
and the reported amounts of revenue and expenses during the reporting period.
Actual results could vary from those estimates.
RECLASSIFICATIONS For comparative purposes, certain amounts have been
reclassified to conform to the current year presentation.
2. THE 1995 TRANSACTION
On June 6, 1995, following the receipt of stockholder approval at the Annual
Meeting of Stockholders, the Company consummated the sale of 20 million shares
of common stock of the Company, par value $.01 per share, at a price of $9.00
per share to HWH Capital Partners, L.P., HWH Valentine Partners, L.P., and HWH
Surplus Valentine Partners, L.P. (collectively, the "Investors"), each a
Delaware limited partnership managed by Haas Wheat & Partners Incorporated,
pursuant to a Stock Purchase Agreement, dated as of March 17, 1995, between the
Company and the Investors. The Investors' shares constituted approximately 40%
of the Company's then outstanding Common Stock as of June 6, 1995. At the 1995
Annual Meeting, designees of the Investors were elected by the Company's
stockholders as a majority of the Company's Board of Directors. Costs and
expenses associated with the sale (the "Investment"), including advisory fees,
investment banking, legal and certain other expenses, amounted to approximately
$10.0 million. The net proceeds of the Investment were used by the Company,
together with borrowings under a new credit agreement to refinance all existing
bank debt.
3. ACQUISITION OF BANANA BOAT HOLDING CORPORATION ("BBH")
On October 31, 1995, the Company and BBH Acquisition, Inc., a Delaware
corporation and wholly-owned subsidiary of Playtex, acquired all issued and
outstanding common shares not previously owned by Playtex, of BBH, a Delaware
corporation and manufacturer of Banana Boat-Registered Trademark-sun and skin
care products (the "BBH Acquisition"). The BBH Acquisition was completed
pursuant to an agreement and plan of merger dated October 17, 1995.
Prior to the BBH Acquisition, Playtex had recognized 42.5% of the operating
profits from the sale of BANANA BOAT products, in accordance with the terms of a
distribution agreement between BBH and Playtex. Following the BBH Acquisition,
Playtex's equity ownership of BBH increased from 22% to 100% and the Company's
interest in the operating profits from the sale of BANANA BOAT products
increased to 100%. Concurrently with the BBH acquisition, the distribution
agreement was terminated.
The net funds expended for the BBH Acquisition included cash of $40.4
million, the retirement of $27.1 million of BBH's long-term debt, the assumption
of BBH's working capital facility and the payment of accrued interest and
transaction fees of $4.3 million. The BBH Acquisition was financed with $34.3
million of existing cash balances and advances under the Company's previous
credit facility of $37.5 million. The BBH Acquisition was accounted for as a
purchase and the results of operations of BBH have been included in the
consolidated statements of operations from the date of acquisition. The purchase
price was allocated to the assets acquired and the liabilities assumed based on
the fair values at the date of
F-8
<PAGE>
PLAYTEX PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. ACQUISITION OF BANANA BOAT HOLDING CORPORATION ("BBH") (CONTINUED)
acquisition. The excess purchase price over the fair value of net assets
acquired was $44.1 million and is being amortized on a straight-line basis over
40 years.
The following consolidated unaudited pro forma results of operations assumes
the BBH acquisition occurred as of January 1, 1995. The pro forma financial
information is not necessarily indicative of operating results that would have
occurred had the BBH acquisition been consummated as of December 31, 1994, nor
indicative of future operating results (In millions, except per share data).
<TABLE>
<CAPTION>
TWELVE
MONTHS ENDED
DECEMBER 30,
1995
---------------
<S> <C>
Net sales.......................................................................................... $ 495.6
Earnings before extraordinary loss................................................................. 4.0
Net loss........................................................................................... (4.0)
Earnings (loss) per share (basic and diluted):
Before extraordinary loss.................................................................. $ 0.09
Net loss................................................................................... (0.09)
</TABLE>
4. BALANCE SHEET COMPONENTS
The components of certain balance sheet accounts are as follows (in
thousands):
<TABLE>
<CAPTION>
DECEMBER 27, DECEMBER 28,
1997 1996
------------ ------------
<S> <C> <C>
Receivables.......................................................................... $ 68,545 $ 65,740
Less allowance for doubtful accounts................................................. (1,669) (1,758)
------------ ------------
Net................................................................................ $ 66,876 $ 63,982
------------ ------------
------------ ------------
Inventories:
Raw materials...................................................................... $ 14,866 $ 13,854
Work in process.................................................................... 845 1,004
Finished goods..................................................................... 26,789 22,779
------------ ------------
Total............................................................................ $ 42,500 $ 37,637
------------ ------------
------------ ------------
Net property, plant and equipment:
Land............................................................................... $ 1,190 $ 1,190
Buildings.......................................................................... 24,650 24,818
Machinery and equipment............................................................ 103,767 95,938
------------ ------------
129,607 121,946
Less accumulated depreciation...................................................... (74,797) (68,538)
------------ ------------
Net.............................................................................. $ 54,810 $ 53,408
------------ ------------
------------ ------------
</TABLE>
F-9
<PAGE>
PLAYTEX PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. BALANCE SHEET COMPONENTS (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 27, DECEMBER 28,
1997 1996
------------ ------------
<S> <C> <C>
Goodwill............................................................................. $ 446,607 $ 446,602
Less accumulated amortization........................................................ (109,450) (98,153)
------------ ------------
Net.............................................................................. $ 337,157 $ 348,449
------------ ------------
------------ ------------
Patents, trademarks and other........................................................ $ 49,669 $ 49,644
Less accumulated amortization........................................................ (14,834) (13,239)
------------ ------------
Net.............................................................................. $ 34,835 $ 36,405
------------ ------------
------------ ------------
Deferred financing costs............................................................. $ 20,350 $ 19,463
Less accumulated amortization........................................................ (3,599) (4,126)
------------ ------------
Net.............................................................................. $ 16,751 $ 15,337
------------ ------------
------------ ------------
Accrued expenses:
Advertising and sales promotion.................................................... $ 13,480 $ 19,191
Employee compensation and benefits................................................. 7,808 14,167
Interest........................................................................... 8,622 5,532
Insurance.......................................................................... 2,945 2,913
Other.............................................................................. 5,972 7,449
------------ ------------
Total............................................................................ $ 38,827 $ 49,252
------------ ------------
------------ ------------
</TABLE>
5. DUE FROM RELATED PARTY
Playtex Investment Corp., a wholly-owned subsidiary of the Company, is the
holder of $40 million aggregate principal amount of 15% debentures (the "Apparel
Debenture") issued by Playtex Apparel Partners, L.P. (the "Apparel Partnership")
in connection with its 1988 acquisition of Playtex Apparel, Inc. Interest on the
Apparel Debenture is payable annually in cash on each December 15. However, with
respect to any such interest amount payable prior to maturity, Apparel
Partnership may elect and elected for periods through December 15, 1993 to make
such payments in additional Apparel Debenture. For the periods ended after
December 15, 1993, the Apparel Partnership paid in cash the accrued interest.
Principal and any unpaid accrued interest are due in cash on December 15, 2003.
The obligations of the Apparel Partnership are nonrecourse to the partners of
the Apparel Partnership. The assets of the Apparel Partnership are Sara Lee
Corporation common stock with a market value at December 27, 1997 and December
28, 1996 of approximately $8.4 and $7.7 million, respectively, cash of
approximately $0.3 and $0.4 million, respectively, and Playtex's 15 1/2%
Subordinated Notes (see Note 7). Playtex believes that the Apparel Debenture
represents the only material liability of the Apparel Partnership.
F-10
<PAGE>
PLAYTEX PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. LONG-TERM DEBT
Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 27, DECEMBER 28,
1997 1996
------------ ------------
<S> <C> <C>
1997 Credit Agreement:
Term A Loan........................................................................ $ 55,000 $ --
Revolving Credit Facility.......................................................... 23,550 --
Term Loan.......................................................................... 149,250 --
1995 Credit Agreement:
Working Capital Facility........................................................... -- 2,200
Term Loan Facility................................................................. -- 367,500
Acquisition Credit Facility........................................................ -- 10,000
8 7/8% Unsecured Senior Notes due 2004............................................... 150,000 --
9% Senior Subordinated Notes due 2003................................................ 360,000 360,000
------------ ------------
737,800 739,700
Less current maturities............................................................ (1,500) (25,000)
------------ ------------
Total long-term debt............................................................. $ 736,300 $ 714,700
------------ ------------
------------ ------------
</TABLE>
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 includes: (i) the issuance of
$150.0 million principal amount of 8 7/8% unsecured senior notes due July 15,
2004 (the "Senior Notes"), (ii) a $150.0 million senior secured term loan due
September 15, 2003 (the "1997 Term Loan"), and (iii) senior secured credit
facilities (the "1997 Senior Secured Credit Facilities") of $170.0 million
comprised of a $115.0 million revolving credit facility (the "1997 Revolving
Credit Facility") and a $55.0 million term loan facility (the "1997 Term A
Loan"). The 1997 Term Loan and the 1997 Senior Secured Credit Facilities are
known collectively as the 1997 Credit Agreement ("1997 Credit Agreement").
The 1997 Term Loan provides for quarterly principal repayments of $375,000
from September 15, 1997 through June 15, 2003 and a payment of $141.0 million on
September 15, 2003. The 1997 Revolving Credit Facility will mature on June 15,
2003 and commitments thereunder are automatically and permanently reduced by (i)
$5.0 million on December 15, 2000 and June 15, 2001, (ii) $7.0 million on
December 15, 2001 and June 15, 2002, and (iii) $8.0 million on December 15, 2002
and June 15, 2003. The 1997 Term A Loan will require a reduction in commitment
amounts of $1.4 million in fiscal 1999, $7.6 million in fiscal 2000, $15.1
million in fiscal 2001, $19.9 million in fiscal 2002, and $11.0 million in
fiscal 2003.
The net proceeds from the 1997 Refinancing were used to retire the
indebtedness outstanding under the Company's prior credit agreement originated
in 1995. Concurrently, this credit agreement was terminated. Fees and expenses
associated with the 1997 Refinancing of $10.0 million are amortized over the
term of the associated financial instruments.
The rates of interest on borrowings under the 1997 Credit Agreement are, at
the Company's option, a function of various alternative short-term borrowing
rates, as defined in the associated credit agreement. Quarterly commitment fees
of three-eighths of one percent on the unutilized portion of the 1997 Revolving
Credit Facility and an agency fee of approximately $0.1 million per annum are
also required. At December 27, 1997 and December 28, 1996 the weighted average
interest rate on the Company's variable
F-11
<PAGE>
PLAYTEX PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. LONG-TERM DEBT (CONTINUED)
rate indebtedness was 7.38% and 7.32%, respectively. In addition, the weighted
average interest rates on the Company's variable rate indebtedness were 7.35%,
7.35% and 8.11% for the twelve month periods ended December 27, 1997, December
28, 1996, and December 30, 1995, respectively. At December 27, 1997, aggregate
unused lines of credit (giving effect to outstanding letters of credit) under
the 1997 Revolving Credit Facility amounted to $90.4 million.
The provisions of the 1997 Senior Secured Credit Facilities require the
Company to meet certain financial covenants and ratios and also include
limitations or restrictions on: indebtedness and liens; major acquisitions or
mergers; capital expenditures; disposition of assets; certain dividends and
other distributions; and prepayment and modification of all indebtedness or
equity capitalization. The 9% senior subordinated notes due 2003 in an aggregate
principal amount of $360 million (the "9% Notes"), the Senior Notes and the 1997
Term Loan also contain certain restrictions and requirements. Under the terms of
each of these agreements, payment of cash dividends on the common stock of the
Company is restricted. Certain wholly-owned subsidiaries of the Company are
guarantors of the 9% Notes and the Senior Notes (see Note 19).
In connection with the Company's acquisition of Personal Care Holdings, Inc.
("PCH") on January 28, 1998 (see Note 20), the Company increased its borrowings
under the 1997 Term Loan by $100 million. Quarterly principal repayments on the
incremental borrowings will commence 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.
On February 2, 1994, Playtex issued $360 million aggregate principal of the
9% Notes. The interest on the 9% Notes is payable in cash semi-annually on each
June 15 and December 15. Principal of the 9% Notes is due on December 15, 2003.
The Company selectively enters into interest rate protection agreements to
reduce the impact of interest rate changes on its variable rate indebtedness.
The interest rate protection agreements involve exchanges of floating for fixed
rate interest payments without the exchange of the underlying notional amount.
The Company may also use interest rate caps which limit net interest expense if
interest rates rise above a defined level. The notional amounts of such
agreements are used to measure the interest to be paid or received and do not
represent the amount of exposure to loss.
On August 26, 1997, the Company entered into an interest rate cap agreement,
whereby, for a one year period commencing November 28, 1997 the London Interbank
Offered Rate ("LIBOR") with respect to $100 million of its variable rate
outstanding indebtedness will be capped at 6.5% per annum (the "Cap Rate"). The
agreement provides for quarterly payments by the counterparty to the extent that
LIBOR, as determined on the quarterly reset dates, exceeds the Cap Rate. This
agreement effectively caps the rate on $100 million of variable rate
indebtedness at 8.00%, after giving effect to the 1.50% spread as provided for
in the 1997 Term Loan.
Prior to the 1997 Refinancing, the Company was party to three interest rate
protection agreements which hedged substantially all of the Company's
outstanding variable rate debt under the previous credit agreement. On July 7,
1997, an agreement with a notional amount of $125 million expired and in
conjunction with the 1997 Refinancing, the remaining two agreements with a
combined notional amount of
F-12
<PAGE>
PLAYTEX PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. LONG-TERM DEBT (CONTINUED)
$250 million were canceled. The net gain associated with the canceled interest
rate protection agreements was $0.3 million.
Aggregate annual maturities of the Company's long-term debt for the next
five years and thereafter as of December 27, 1997 are as follows (in millions):
$1.5 in fiscal 1998, $2.9 in fiscal 1999, $9.1 in fiscal 2000, $16.6 in fiscal
2001, $21.4 in fiscal 2002, and $686.3 thereafter.
7. DUE TO RELATED PARTY
Due to related party consists of 15 1/2% Subordinated Notes held by the
Apparel Partnership. Interest on the 15 1/2% Subordinated Notes is payable
annually in cash on each December 15. However, with respect to any such interest
amount payable prior to maturity, Playtex may elect and elected for periods
through December 15, 1993 to make such payments in additional 15 1/2%
Subordinated Notes. For the periods ended after December 15, 1993, Playtex paid
in cash the accrued interest. Principal and any unpaid accrued interest on the
15 1/2% Subordinated Notes are payable in cash on December 15, 2003.
8. INCOME TAXES
The provision for income taxes is the tax payable or refundable for the
period plus or minus the change during the period in deferred tax assets and
liabilities. Deferred income tax assets and liabilities are computed for
differences between the financial statement and tax bases of assets and
liabilities that will result in taxable or deductible amounts in the future
based on enacted tax laws and rates applicable to the periods in which the
differences are expected to affect taxable income.
Valuation allowances are established, when necessary, to reduce deferred tax
assets to amounts that are more likely than not to be realized.
Earnings before income taxes and extraordinary loss are as follows (in
thousands):
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED
----------------------------------------
<S> <C> <C> <C>
DECEMBER 27, DECEMBER 28, DECEMBER 30,
1997 1996 1995
------------ ------------ ------------
U.S................................................................... $ 35,129 $ 32,650 $ 8,579
Foreign............................................................... 103 1,690 2,346
------------ ------------ ------------
Total............................................................... $ 35,232 $ 34,340 $ 10,925
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
F-13
<PAGE>
PLAYTEX PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8. INCOME TAXES (CONTINUED)
Playtex's provisions for income taxes for the twelve months ended December
27, 1997, December 28, 1996, and December 30, 1995 are as follows (in
thousands):
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED
-----------------------------------------
<S> <C> <C> <C>
DECEMBER 27, DECEMBER 28, DECEMBER 30,
1997 1996 1995
------------ ------------ -------------
Current:
Federal............................................................. $ 10,197 $ 7,851 $ 9,174
State and local..................................................... 600 553 (2,123)
Foreign............................................................. 211 895 1,233
------------ ------------ ------
11,008 9,299 8,284
------------ ------------ ------
Deferred:
Federal............................................................. 4,939 6,851 (82)
State and local..................................................... 516 311 (26)
Foreign............................................................. 38 (320) (25)
------------ ------------ ------
5,493 6,842 (133)
------------ ------------ ------
Total............................................................. $ 16,501 $ 16,141 $ 8,151
------------ ------------ ------
------------ ------------ ------
</TABLE>
Taxable and deductible temporary differences and tax credit carryforwards
which give rise to Playtex's deferred tax assets and liabilities at December 27,
1997 and December 28, 1996 are as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 27, DECEMBER 28,
1997 1996
------------ ------------
<S> <C> <C>
Deferred tax assets:
Allowances and reserves not currently deductible................................... $ 9,356 $ 12,468
Net operating loss carryforwards................................................... 5,302 6,185
Postretirement benefits reserve.................................................... 2,915 2,256
Capitalized book expenses for tax purposes......................................... 564 675
State tax credits.................................................................. 242 58
------------ ------------
Total............................................................................ $ 18,379 $ 21,642
------------ ------------
------------ ------------
Deferred tax liabilities:
Deferred gain on sale of business.................................................. $ 14,650 $ 14,650
Property, plant and equipment...................................................... 10,126 8,845
Trademarks......................................................................... 5,980 5,139
Undistributed earnings of foreign subsidiary....................................... 2,622 2,622
Other.............................................................................. 607 480
------------ ------------
Total............................................................................ $ 33,985 $ 31,736
------------ ------------
------------ ------------
</TABLE>
Undistributed earnings of the Company's Canadian subsidiary for which U.S.
income taxes have not been provided were approximately $3.5 million at December
27, 1997. Such undistributed earnings are expected to be permanently reinvested
in the Canadian subsidiary.
F-14
<PAGE>
PLAYTEX PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8. INCOME TAXES (CONTINUED)
The Company has available net operating loss carryforwards of $13.8 million
at December 27, 1997 that expire in years 2008 through 2010. These net operating
loss carryforwards, primarily related to operations of BBH prior to its
acquisition by the Company, can be utilized by Playtex, with certain
limitations, on its federal, state and local tax returns for tax periods
subsequent to October 31, 1995. Playtex expects to fully utilize these net
operating loss carryforwards prior to their expiration.
The Company's tax provision differed from the amount computed using the
federal statutory rate of 35% as follows (in thousands):
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED
-----------------------------------------
<S> <C> <C> <C>
DECEMBER 27, DECEMBER 28, DECEMBER 30,
1997 1996 1995
------------ ------------ -------------
Expected federal income tax at statutory rates........................ $ 12,331 $ 12,019 $ 3,824
Amortization and write-off of intangible assets....................... 3,618 3,618 5,647
Settlement of tax examinations........................................ -- -- (2,385)
State and local income taxes.......................................... 725 562 786
Foreign tax rate differential......................................... 179 279 331
Effect on deferred taxes due to change in
Canadian withholding tax rates...................................... -- (214) --
Other, net............................................................ (352) (123) (52)
------------ ------------ ------
Total tax provision................................................. $ 16,501 $ 16,141 $ 8,151
------------ ------------ ------
------------ ------------ ------
</TABLE>
During 1995, several state jurisdictions concluded their examinations of tax
returns filed by the Company for various years 1987 through 1992 or the statute
of limitations related to other specific situations lapsed. As a result of these
favorable developments, Playtex recorded a $2.4 million tax benefit in the
provision for income taxes for the year ended December 30, 1995.
9. COMMON STOCK
During 1994, the Company established a long-term incentive plan (the "1994
Stock Option Plan") under which awards of incentive stock options, nonqualified
stock options and stock appreciation rights ("SARs") may be granted to directors
and key employees of the Company. Stock options granted under the 1994 Stock
Option Plan may have a term not in excess of ten years. The exercise price for
stock options may not be less than the fair market value of the common stock on
the date of grant. Except with respect to formula grants to certain non-employee
directors, options vest over a period determined by the Compensation and Stock
Option Committee.
SARs may be granted in tandem with a stock option grant or at any time
following the stock option grant. Upon exercise of a SAR, the grantee will
receive cash equal to the excess of the fair market value of a share of common
stock over the exercise price. No SARs have been granted.
In February 1998, the Company's stockholders approved an amendment to the
1994 Stock Option Plan increasing the number of shares of common stock available
for issuance upon exercise of options and SARs from 3,047,785 to 5,047,785.
In 1996, the Company adopted SFAS No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123"). As permitted by SFAS 123, the Company continues to
follow the provisions of APB No. 25,
F-15
<PAGE>
PLAYTEX PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. COMMON STOCK (CONTINUED)
"Accounting for Stock Issued to Employees" and related interpretations in
accounting for compensation expense related to the issuance of stock options.
Had compensation costs related to the issuance of stock options under the
Company's 1994 Stock Option Plan been determined based on the estimated fair
value at the grant dates under SFAS 123, the Company's earnings and earnings per
share for the twelve months ended December 27, 1997, December 28, 1996, and
December 30, 1995 would have been reduced to the pro forma amounts listed below
(in thousands, except per share data):
<TABLE>
<CAPTION>
DECEMBER 27, DECEMBER 28, DECEMBER 30,
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Net earnings (loss):
As reported:
Before extraordinary loss..................................... $ 18,731 $ 18,199 $ 2,774
Net earnings (loss)........................................... $ 14,653 $ 18,199 $ (5,161)
Pro forma:
Before extraordinary loss..................................... $ 17,071 $ 15,649 $ 1,324
Net earnings (loss)........................................... $ 12,993 $ 15,649 $ (6,611)
Earnings (loss) per share (basic and diluted):
As reported:
Before extraordinary loss..................................... $ .37 $ .36 $ .07
Net earnings (loss)........................................... $ .29 $ .36 $ (.12)
Pro forma:
Before extraordinary loss..................................... $ .34 $ .31 $ .03
Net earnings (loss)........................................... $ .25 $ .31 $ (.16)
Weighted average shares outstanding:
Basic............................................................... 50,923 50,883 42,309
Diluted............................................................. 51,006 50,939 42,342
</TABLE>
The fair value of each stock option grant was estimated on the date of grant
using the Black-Scholes option-pricing model with the following assumptions:
weighted average risk-free interest rates of 6.10%, 6.63% and 6.26% for fiscal
1997, 1996 and 1995, respectively; no dividend yield; expected lives of 5 years;
and volatility of 35%. A summary of the status of the Company's 1994 Stock
Option Plan for fiscal 1997, 1996 and 1995 and the changes during those years is
as follows:
<TABLE>
<CAPTION>
1997 1996 1995
----------------------- ----------------------- -----------------------
<S> <C> <C> <C> <C> <C> <C>
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
---------- ----------- ---------- ----------- ---------- -----------
Outstanding at beginning of year.................... 2,315,434 $ 9.14 2,240,800 $ 9.17 297,500 $ 12.21
Granted............................................. 636,000 9.59 166,000 8.76 2,080,700 8.82
Exercised........................................... (54,612) 7.88 (7,499) 7.87 -- --
Forfeited........................................... (80,224) 9.13 (83,867) 9.47 (137,400) 10.43
---------- ---------- ----------
Outstanding at end of year........................ 2,816,598 9.27 2,315,434 9.14 2,240,800 9.17
---------- ---------- ----------
---------- ---------- ----------
Options exercisable at year-end..................... 1,334,087 9.26 715,452 9.37 76,348 11.98
Weighted-average fair value of options granted
during the year................................... $ 4.72 $ 4.40 $ 4.43
</TABLE>
F-16
<PAGE>
PLAYTEX PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. COMMON STOCK (CONTINUED)
The following table summarizes information about fixed stock options
outstanding at December 27, 1997:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
---------------------------------------- -----------------------
<S> <C> <C> <C> <C> <C>
NUMBER WEIGHTED NUMBER
OUTSTANDING AVERAGE WEIGHTED EXERCISABLE WEIGHTED
AT REMAINING AVERAGE AT AVERAGE
DECEMBER 27, CONTRACTUAL EXERCISE DECEMBER 27, EXERCISE
RANGE OF EXERCISE PRICES 1997 LIFE PRICES 1997 PRICES
- ------------------------------------------------- ------------ --------------- --------- ------------ ---------
$6.750 to 7.000.................................. 37,500 6.97 $ 6.7500 37,500 $ 6.7500
$7.000 to 8.000.................................. 867,498 7.61 7.8750 570,581 7.8750
$8.000 to 9.000.................................. 66,000 8.44 8.1269 22,601 8.1302
$9.000 to 10.000................................. 1,495,000 8.43 9.6904 435,334 9.8069
$10.000 to 13.000................................ 350,600 7.10 11.3776 268,071 11.7632
------------ ------------
$6.750 to 13.000................................. 2,816,598 7.99 9.2655 1,334,087 9.2594
------------ ------------
------------ ------------
</TABLE>
10. WRITE-OFF OF SMILETOTE-REGISTERED TRADEMARK- INTANGIBLE ASSETS
During the fourth quarter of fiscal 1995 and in connection with certain
strategic decisions regarding the SMILETOTE product line, the Company prepared
financial projections to evaluate the SMILETOTE business in terms of projected
net earnings and operating cash flows. Based upon the projections, management
concluded that the unamortized value of the intangible assets associated with
SMILETOTE had been permanently impaired. Consequently, the Company wrote off, in
the fourth quarter of fiscal 1995, the remaining $6.4 million of intangible
assets associated with SMILETOTE.
11. EXTRAORDINARY LOSS
In July 1997, 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 deferred financing costs associated with the Company's previous
credit agreement (see Note 6).
In June 1995, in connection with the 1995 Transaction, Playtex recorded an
extraordinary loss of $7.9 million (net of income tax benefit of $5.2 million)
for costs and expenses related to the write-off of the unamortized portion of
deferred financing costs associated with a previous credit agreement (see Note
6).
12. LEASES
Future minimum payments under non-cancelable operating leases for fiscal
years ending after December 27, 1997 are as follows (in thousands): $5,988 in
1998, $5,399 in 1999, $4,667 in 2000, $3,997 in 2001, $3,343 in 2002 and $10,353
in later years.
Rent expense for operating leases amounted to (in thousands): $5,250,
$5,201, and $5,092 for the twelve months ended December 27, 1997, December 28,
1996, and December 30, 1995, respectively.
F-17
<PAGE>
PLAYTEX PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
13. PENSION AND OTHER POSTRETIREMENT BENEFITS
Defined Benefit Pension Plans--Substantially all Playtex U.S. hourly and
approximately 90% of all Canadian employees participate in pension plans. At
December 27, 1997, approximately 1,165 employees were covered by these plans, of
which approximately 210 retirees or beneficiaries were receiving benefits.
Changes in pension benefits, which are allocable to previous service of
employees, and gains and losses that occur because actual experience differs
from assumptions will be amortized over the estimated average future service
period of employees. Actuarial assumptions for the plans include: (a) 9.0% for
the expected long-term rate of return on plans assets, (b) 7.5% for the discount
rate for calculating the projected benefit obligation and (c) 3.25% for the rate
of average future increases in compensation levels.
Net pension expense for the twelve months ended December 27, 1997, December
28, 1996, and December 30, 1995 includes the following components (in
thousands):
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED
-------------------------------------------
<S> <C> <C> <C>
DECEMBER 27, DECEMBER 28, DECEMBER 30,
1997 1996 1995
------------- ------------- -------------
Service cost-benefits earned during the period........................ $ 875 $ 721 $ 616
Interest cost on projected benefit obligation......................... 2,003 1,688 1,559
Actual return on plan assets.......................................... (4,632) (3,711) (6,000)
Amortization of prior service cost.................................... 84 73 73
Amortization of unrecognized net gain................................. (29) (51) (2)
Amortization of transition gain over 10 years......................... (42) (193) (193)
Excess of actual return on plan assets over estimated................. 1,910 1,479 4,190
------ ------ ------
Net pension expense................................................. $ 169 $ 6 $ 243
------ ------ ------
------ ------ ------
</TABLE>
A reconciliation of the projected benefit obligation for the pension plans
to the prepaid pension expense recorded at December 27, 1997 and December 28,
1996 is as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 27, DECEMBER 28,
1997 1996
------------ ------------
<S> <C> <C>
Projected benefit obligation for service rendered to date............................ $ (29,116) $ (24,347)
Plan assets at fair value, primarily listed stocks, money market funds and guaranteed
investment contracts............................................................... 34,862 31,171
------------ ------------
Plan assets in excess of projected benefit obligation.............................. 5,746 6,824
Unrecognized net gain from past experience different from that assumed and effects of
changes in assumptions............................................................. (3,743) (4,398)
Prior service cost not yet recognized in net periodic pension cost................... 527 365
Unrecognized transition gain......................................................... (335) (395)
------------ ------------
Prepaid pension expense............................................................ $ 2,195 $ 2,396
------------ ------------
------------ ------------
</TABLE>
The portion of the projected benefit obligation at December 27, 1997 and
December 28, 1996 representing the accumulated benefit obligation was $26.4
million, of which $25.6 million was vested, and $22.0 million, of which $21.2
million was vested, respectively.
F-18
<PAGE>
PLAYTEX PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
13. PENSION AND OTHER POSTRETIREMENT BENEFITS (CONTINUED)
Postretirement Benefits Other than Pensions--Playtex provides
Company-sponsored postretirement health care and life insurance benefits to
certain U.S. retirees. These plans require employees to share in the costs.
Approximately 88% of all U.S. personnel may become eligible for
Company-sponsored postretirement health care and life insurance if they were to
retire from the Company. The components of the postretirement benefit expense
for the twelve months ended December 27, 1997, December 28, 1996, and December
30, 1995 are as follows (in thousands):
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED
-----------------------------------------------
<S> <C> <C> <C>
DECEMBER 27, DECEMBER 28, DECEMBER 30,
1997 1996 1995
------------- --------------- ---------------
Service cost-benefits earned during the period........................ $ 240 $ 218 $ 172
Interest cost on accumulated benefit obligation....................... 621 534 487
Net amortization and deferral......................................... 217 97 114
------ ----- -----
Net periodic expense................................................ $ 1,078 $ 849 $ 773
------ ----- -----
------ ----- -----
</TABLE>
The accumulated benefit obligations recorded on the consolidated balance
sheets as of December 27, 1997 and December 28, 1996 consist of the following
(in thousands):
<TABLE>
<CAPTION>
DECEMBER 27, DECEMBER 28,
1997 1996
------------- -------------
<S> <C> <C>
Retirees............................................................................. $ 3,945 $ 3,745
Fully eligible active employees...................................................... 2,211 2,099
Other active plan participants....................................................... 2,782 2,641
------ ------
Accumulated postretirement benefit obligations..................................... 8,938 8,485
Unrecognized prior service costs..................................................... (1,686) (1,903)
Unrecognized net loss................................................................ (50) (344)
------ ------
Accrued postretirement benefit obligations......................................... $ 7,202 $ 6,238
------ ------
------ ------
</TABLE>
The assumed health care cost trend rate for 1997 was 9.0%. This rate grades
down until the final trend rate of 5.25% is reached in 2005. A one percentage
point increase in the assumed health care costs trend rate increases the sum of
the service and interest costs components of the fiscal 1997 periodic
postretirement benefit cost by 17%, and the accumulated postretirement benefit
obligation as of December 27, 1997 by 15%. The discount rate used to estimate
the accumulated postretirement benefit obligations was 7.5% at December 27, 1997
and December 28, 1996.
Defined Contribution Benefit Plans -- Playtex also provides two
non-contributory defined contribution plans and a contributory 401(k) plan
covering various employee groups. The amounts charged to earnings for Playtex's
defined contribution plans totaled $4.1 million, $4.6 million, and $4.7 million
for the twelve months ended December 27, 1997, December 28, 1996, and December
30, 1995, respectively.
14. RELATED PARTY TRANSACTIONS
Joel E. Smilow and Hercules P. Sotos, both former directors and senior
executive officers of Playtex, are general partners of the Apparel Partnership,
holding beneficial interests of 58.5% and 13.5%, respectively, in the Apparel
Partnership. Under a consulting agreement, which commenced in the third
F-19
<PAGE>
PLAYTEX PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
14. RELATED PARTY TRANSACTIONS (CONTINUED)
quarter of 1995, the Company has retained Mr. Smilow as a consultant for a
five-year period at an annual fee of $250,000 plus expenses and certain
benefits. The consulting agreement does not require Mr. Smilow to devote any
minimum amount of time to the performance of consulting services.
On October 31, 1995, Playtex and a wholly-owned subsidiary acquired all
issued and outstanding common shares of BBH not previously owned by Playtex.
Prior to the BBH Acquisition, BBH was controlled by Thomas Lee Equity Partners,
L.P. and certain employees and affiliates of the Thomas H. Lee Company. Thomas
H. Lee, President of the Thomas H. Lee Company, is a director and a significant
stockholder of Playtex. Beginning in December 1992, Playtex had a distribution
agreement with Sun Pharmaceuticals Corp. ("Sun"), a wholly-owned subsidiary of
BBH, pursuant to which Playtex was the exclusive distributor of Banana Boat
products in all of the areas Sun had repurchased distribution rights from its
then current distributors. Concurrent with the BBH Acquisition, the distribution
agreement between Sun and Playtex was canceled. For the ten months ended October
31, 1995 Playtex purchased $30.1 million of Banana Boat products from Sun.
Playtex believes that the terms of all the arrangements with the Apparel
Partnership and BBH were fair to Playtex and comparable to those which could be
obtained from unrelated third parties.
15. BUSINESS AND CREDIT CONCENTRATIONS
Most of Playtex's customers are dispersed throughout the United States and
Canada. No single customer accounted for more than 10% of Playtex's net sales in
1997, 1996, or 1995 with the exception of its largest customer (approximately
20% in 1997, 18% in 1996, and 17% in 1995). At December 27, 1997 and December
28, 1996, no account receivable from any customer was significant, except for
the Company's largest customer (approximately $12.6 million in 1997 and $11.9
million in 1996). Aggregate receivables from high risk customers are not
considered significant and Playtex estimates, based upon past experience, that
it has sufficient reserves to cover any losses arising from any such accounts.
16. DISCLOSURE ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS
CASH, RECEIVABLES, ACCOUNTS PAYABLE, INCOME TAXES AND ACCRUED EXPENSES The
carrying amounts approximate fair value because of the short-term maturity of
these instruments.
1997 CREDIT AGREEMENT The carrying amounts approximate fair value because
the rate of interest on borrowings under the 1997 Credit Agreement is, at
Playtex's option, a function of various alternative short-term borrowing rates,
as defined in the associated Credit Agreement.
F-20
<PAGE>
PLAYTEX PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
16. DISCLOSURE ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
LONG-TERM DEBT AND OTHER FINANCIAL INSTRUMENTS The fair value of the
following financial instruments was estimated at December 27, 1997 and December
28, 1996 as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 27, 1997 DECEMBER 28, 1996
---------------------- ----------------------
<S> <C> <C> <C> <C>
CARRYING ESTIMATED CARRYING ESTIMATED
AMOUNT FAIR VALUE AMOUNT FAIR VALUE
---------- ---------- ---------- ----------
9% Senior Subordinated Notes (a)................................. $ 360,000 $ 369,000 $ 360,000 $ 353,400
8 7/8% Unsecured Senior Notes (a)................................ 150,000 153,750 -- --
15% Notes due from Playtex Apparel Partners, L.P. (b)............ 80,017 80,017 80,017 80,017
15 1/2% Subordinated Notes due to Playtex Apparel Partners, L.P.
(b)............................................................ 78,386 78,386 78,386 78,386
Other noncurrent assets (c)...................................... 3,626 3,520 4,224 4,100
Noncurrent liabilities (c)....................................... 13,563 12,340 14,207 12,930
</TABLE>
- ------------------------
(a) At December 27, 1997 and December 28, 1996, the estimates were based on the
average range of bid/ ask quotes provided by independent securities dealers.
(b) The estimated fair value approximates the carrying amount at December 27,
1997 and December 28, 1996, based on the amount of future cash flows
associated with these instruments, discounted using an appropriate interest
rate.
(c) The fair values are based on a combination of actual cost associated with
recent purchases or the amount of future cash flows discounted using
Playtex's borrowing rate for similar instruments.
F-21
<PAGE>
PLAYTEX PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
17. INFORMATION BY MAJOR GEOGRAPHIC SEGMENT
Net sales by geographic area represent sales to unaffiliated customers only.
Intergeographic sales and transfers between geographic areas are nominal and
have not been disclosed separately (in thousands).
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED
----------------------------------------
<S> <C> <C> <C>
DECEMBER 27, DECEMBER 28, DECEMBER 30,
1997 1996 1995
------------ ------------ ------------
Sales:
United States....................................................... $ 463,910 $ 459,075 $ 445,880
Canada.............................................................. 36,722 39,667 37,701
------------ ------------ ------------
$ 500,632 $ 498,742 $ 483,581
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
Operating earnings is defined as total revenue less operating expenses. In
computing operating earnings, interest and income taxes have not been deducted
(in thousands).
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED
----------------------------------------
<S> <C> <C> <C>
DECEMBER 27, DECEMBER 28, DECEMBER 30,
1997 1996 1995
------------ ------------ ------------
Operating earnings:
United States....................................................... $ 99,720 $ 97,702 $ 80,085
Canada.............................................................. (18) 1,498 2,201
------------ ------------ ------------
$ 99,702 $ 99,200 $ 82,286
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
Identifiable assets by geographic area represent those assets that are used
in Playtex's operations in each area (in thousands).
<TABLE>
<CAPTION>
DECEMBER 27, DECEMBER 28,
1997 1996
------------ ------------
<S> <C> <C>
Identifiable assets (at period end):
United States...................................................................... $ 642,085 $ 647,629
Canada............................................................................. 10,473 12,702
------------ ------------
$ 652,558 $ 660,331
------------ ------------
------------ ------------
</TABLE>
F-22
<PAGE>
PLAYTEX PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
18. QUARTERLY DATA (UNAUDITED)
The following is a summary of the quarterly results of operations and market
price data for the Company for the twelve months ended December 27, 1997 and
December 28, 1996 (in thousands, except per share data):
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
-------- -------- -------- --------
<S> <C> <C> <C> <C>
FISCAL 1997
Net sales..................... $136,410 $134,872 $117,675 $111,675
Operating earnings............ 30,679 26,287 24,130 18,606
Earnings before extraordinary
loss........................ 7,848 5,517 4,034 1,332
Net earnings (loss)........... 7,848 5,517 (44) 1,332
Earnings per share (a):
Before extraordinary loss..... $ .15 $ .11 $ .08 $ .03
Net earnings.................. $ .15 $ .11 $ .00 $ .03
Market price--high............ $ 113/4 $ 111/2 $ 101/4 $ 11
--low.............. $ 77/8 $ 9 $ 8 /16 $ 9
FISCAL 1996
Net sales..................... $143,067 $131,872 $117,500 $106,303
Operating earnings............ 27,841 26,735 26,334 18,290
Net earnings.................. 5,981 5,489 5,408 1,321
Earnings per share (a)........ $ .12 $ .11 $ .11 $ .03
Market price--high............ $ 85/8 $ 103/8 $ 91/2 $ 91/2
--low.............. $ 65/8 $ 71/8 $ 71/2 $ 71/8
</TABLE>
- ------------------------
(a) Earnings per share data is computed independently for each of the periods
presented; therefore, the sum of the earnings per share amounts for the
quarters may not equal the total for the year. Amounts represent basic and
diluted earnings per share.
F-23
<PAGE>
PLAYTEX PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
19. CONDENSED CONSOLIDATING FINANCIAL INFORMATION
8 7/8% UNSECURED SENIOR NOTES DUE 2004
The Senior Notes are guaranteed by certain wholly-owned subsidiaries of the
Company (the "8 7/8% Guarantors"), namely Playtex Sales & Services, Inc.
("PSSI"), Playtex Manufacturing, Inc. ("PMI"), Playtex Beauty Care, Inc.
("PBCI"), Playtex Investment Corp. ("PIC"), Playtex International Corp.
("PINTL"), TH Marketing Corp. ("THMC"), SmileTote, Inc. ("STI") and Sun
Pharmaceuticals Corp. ("Sun"). The remaining first tier and lower tier
subsidiaries of the Company are not guarantors of the 8 7/8% Notes (the " 8 7/8%
Non-Guarantors"). PSSI provides sales solicitation, management and
administrative services to Playtex and its U.S. affiliates. PMI is a contract
manufacturer and contract research and development services provider for Playtex
and its U.S. affiliates. PBCI is a manufacturer and distributor of JHIRMACK hair
care products. PIC is an investment holding company which holds the Apparel
Debentures (see Note 5). PINTL is sole shareholder of Playtex Limited, a
manufacturer and distributor of Playtex products in Canada. THMC is the sole
shareholder of Playtex Foreign Sales Corporation. STI is owner of certain infant
care related intangible assets. Sun owns the BANANA BOAT trade name and certain
other intangible assets associated with the BANANA BOAT business. Sun
distributes its products outside the U.S. and Puerto Rico and to certain U.S.
distributors excluding Playtex. Sun has entered into license agreements with
Playtex and other unrelated licensors for the right to use the BANANA BOAT trade
name and intangible assets associated with the BANANA BOAT sun and skin care
business and manufacture and distribute BANANA BOAT products.
The 8 7/8% Non-Guarantors include Playtex Limited and Playtex Foreign Sales
Corporation("PFSC"), a foreign sales corporation as defined by Internal Revenue
Code Section 922.
The 8 7/8% Guarantors are joint and several guarantors of the 8 7/8% Notes.
Such guarantees are joint and several obligations of the 8 7/8% Guarantors, are
irrevocable, full and unconditional and are limited to the largest amount that
would not render such 8 7/8% Guarantors' obligations under the guarantees
subject to avoidance under any applicable federal or state fraudulent conveyance
or similar law. The guarantees are senior subordinated obligations of the
applicable 8 7/8% Guarantor, and are subordinated to all senior obligations of
such 8 7/8% Guarantor, including guarantees of the Company's obligations under
the 1997 Credit Agreement.
The 8 7/8% Notes contain certain restrictions and limitations, which, among
other things, restrict the type and/or amount of additional indebtedness that
may be incurred by Playtex or its subsidiaries, payment of dividends and other
distributions, issuance of preferred stock; loans and advances; certain
transactions with Playtex stockholders and affiliates; certain mergers and
consolidations; certain sales or transfers of assets; the creation of certain
liens; the transfer of assets to certain subsidiaries; and restrictions on
dividends and other distributions by subsidiaries, including the 8 7/8%
Guarantors.
The information which follows presents the condensed financial position as
of December 27, 1997 and December 28, 1996 and condensed results of operations
and cash flows for each of the fiscal years in the three year period ended
December 27, 1997 of (a) the Company on a consolidated basis, (b) the parent
company only ("Parent Company"), (c) the combined 8 7/8% Guarantors, and (d) the
combined 8 7/8% Non-Guarantors.
F-24
<PAGE>
PLAYTEX PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
19. CONDENSED CONSOLIDATING FINANCIAL INFORMATION (CONTINUED)
CONDENSED CONSOLIDATING BALANCE SHEET DATA
AS OF DECEMBER 27, 1997
(In thousands)
<TABLE>
<CAPTION>
PARENT NON-
ASSETS CONSOLIDATED ELIMINATIONS COMPANY GUARANTORS GUARANTORS
----------- ----------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Current assets........................ $ 125,362 $ -- $ 71,923 $ 43,820 $ 9,619
Investment in subsidiaries............ -- (87,940) 77,776 10,164 --
Intercompany receivable............... -- (158,030) 143,647 13,286 1,097
Net property, plant and equipment..... 54,810 -- 235 53,718 857
Intangible assets..................... 388,743 -- 322,216 66,522 5
Other noncurrent assets............... 83,643 (503) 3,629 80,517 --
----------- ----------- --------- ----------- -----------
Total assets........................ $ 652,558 $(246,473) $ 619,426 $ 268,027 $ 11,578
----------- ----------- --------- ----------- -----------
----------- ----------- --------- ----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities................... $ 68,960 $ 22 $ 57,590 $ 8,807 $ 2,541
Intercompany payable.................. -- (158,029) -- 157,641 388
Long-term debt........................ 814,686 -- 814,686 -- --
Other noncurrent liabilities.......... 36,975 (507) 15,213 22,649 (380)
----------- ----------- --------- ----------- -----------
Total liabilities................... 920,621 (158,514) 887,489 189,097 2,549
Stockholders' equity.................. (268,063) (87,959) (268,063) 78,930 9,029
----------- ----------- --------- ----------- -----------
Total liabilities and stockholders'
equity............................ $ 652,558 $(246,473) $ 619,426 $ 268,027 $ 11,578
----------- ----------- --------- ----------- -----------
----------- ----------- --------- ----------- -----------
</TABLE>
CONDENSED CONSOLIDATING BALANCE SHEET DATA
AS OF DECEMBER 28, 1996
(In thousands)
<TABLE>
<CAPTION>
PARENT NON-
ASSETS CONSOLIDATED ELIMINATIONS COMPANY GUARANTORS GUARANTORS
----------- ----------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Current assets........................ $ 122,491 $ -- $ 66,474 $ 44,104 $ 11,913
Investment in subsidiaries............ -- (79,245) 70,924 8,321 --
Intercompany receivable............... -- (126,782) 120,717 6,065 --
Net property, plant and equipment..... 53,408 -- 309 52,310 789
Intangible assets..................... 400,191 -- 331,394 68,797 --
Other noncurrent assets............... 84,241 (504) 4,219 80,526 --
----------- ----------- --------- ----------- -----------
Total assets........................ $ 660,331 $(206,531) $ 594,037 $ 260,123 $ 12,702
----------- ----------- --------- ----------- -----------
----------- ----------- --------- ----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities................... $ 115,969 $ -- $ 69,584 $ 42,348 $ 4,037
Intercompany payable.................. -- (127,281) -- 126,500 781
Long-term debt........................ 793,086 -- 793,086 -- --
Other noncurrent liabilities.......... 34,003 (504) 14,094 20,850 (437)
----------- ----------- --------- ----------- -----------
Total liabilities................... 943,058 (127,785) 876,764 189,698 4,381
Stockholders' equity.................. (282,727) (78,746) (282,727) 70,425 8,321
----------- ----------- --------- ----------- -----------
Total liabilities and stockholders'
equity............................ $ 660,331 $(206,531) $ 594,037 $ 260,123 $ 12,702
----------- ----------- --------- ----------- -----------
----------- ----------- --------- ----------- -----------
</TABLE>
F-25
<PAGE>
PLAYTEX PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
19. CONDENSED CONSOLIDATING FINANCIAL INFORMATION (CONTINUED)
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS DATA
FOR THE TWELVE MONTHS ENDED DECEMBER 27, 1997
(In thousands)
<TABLE>
<CAPTION>
PARENT NON-
CONSOLIDATED ELIMINATIONS COMPANY GUARANTORS GUARANTORS
------------ ------------ ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net revenues................................... $ 500,632 $ (226,874) $ 443,673 $ 245,797 $ 38,036
Cost of sales.................................. 195,980 (177,208) 186,482 168,411 18,295
------------ ------------ ---------- ----------- -----------
Gross profit................................. 304,652 (49,666) 257,191 77,386 19,741
Operating expenses:
Advertising, selling and administrative........ 192,056 (49,666) 160,671 62,606 18,445
Amortization of intangibles.................... 12,894 -- 10,618 2,276 --
------------ ------------ ---------- ----------- -----------
Total operating expenses..................... 204,950 (49,666) 171,289 64,882 18,445
------------ ------------ ---------- ----------- -----------
Operating earnings........................... 99,702 -- 85,902 12,504 1,296
Interest expense, net.......................... 64,470 -- 76,594 (12,003) (121)
Equity in net earnings of subsidiaries......... -- 17,216 (16,110) (1,106) --
------------ ------------ ---------- ----------- -----------
Earnings before income taxes................. 35,232 (17,216) 25,418 25,613 1,417
Income taxes................................... 16,501 -- 6,687 9,503 311
------------ ------------ ---------- ----------- -----------
Earnings before extraordinary loss........... 18,731 (17,216) 18,731 16,110 1,106
Extraordinary loss on early extinguishment of
debt, net.................................... (4,078) -- (4,078) -- --
------------ ------------ ---------- ----------- -----------
Net earnings................................. $ 14,653 $ (17,216) $ 14,653 $ 16,110 $ 1,106
------------ ------------ ---------- ----------- -----------
------------ ------------ ---------- ----------- -----------
</TABLE>
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS DATA
FOR THE TWELVE MONTHS ENDED DECEMBER 28, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
PARENT NON-
CONSOLIDATED ELIMINATIONS COMPANY GUARANTORS GUARANTORS
------------ ------------ ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net revenues................................... $ 498,742 $ (167,269) $ 438,127 $ 188,217 $ 39,667
Cost of sales.................................. 192,512 (104,374) 161,849 116,884 18,153
------------ ------------ ---------- ----------- -----------
Gross profit................................. 306,230 (62,895) 276,278 71,333 21,514
Operating expenses:
Advertising, selling and administrative........ 194,184 (62,895) 171,534 65,721 19,824
Amortization of intangibles.................... 12,846 -- 10,570 2,276 --
------------ ------------ ---------- ----------- -----------
Total operating expenses..................... 207,030 (62,895) 182,104 67,997 19,824
------------ ------------ ---------- ----------- -----------
Operating earnings........................... 99,200 -- 94,174 3,336 1,690
Interest expense, net.......................... 64,860 -- 76,864 (12,004) --
Equity in net earnings of subsidiaries......... -- 11,339 (10,456) (883) --
------------ ------------ ---------- ----------- -----------
Earnings before income taxes................. 34,340 (11,339) 27,766 16,223 1,690
Income taxes................................... 16,141 -- 9,567 5,767 807
------------ ------------ ---------- ----------- -----------
Net earnings................................. $ 18,199 $ (11,339) $ 18,199 $ 10,456 $ 883
------------ ------------ ---------- ----------- -----------
------------ ------------ ---------- ----------- -----------
</TABLE>
F-26
<PAGE>
PLAYTEX PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
19. CONDENSED CONSOLIDATED FINANCIAL INFORMATION (CONTINUED)
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS DATA
FOR THE TWELVE MONTHS ENDED DECEMBER 30, 1995
(In thousands)
<TABLE>
<CAPTION>
PARENT NON-
CONSOLIDATED ELIMINATIONS COMPANY GUARANTORS GUARANTORS
------------ ------------ ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net revenues................................... $ 483,581 $ (7,879) $ 417,894 $ 35,865 $ 37,701
Cost of sales.................................. 188,129 (6,817) 163,233 15,196 16,517
------------ ------------ ---------- ----------- -----------
Gross profit................................. 295,452 (1,062) 254,661 20,669 21,184
Operating expenses:
Advertising, selling and administrative........ 195,457 (1,062) 152,975 24,685 18,859
Amortization of intangibles.................... 17,709 -- 10,427 7,282 --
------------ ------------ ---------- ----------- -----------
Total operating expenses..................... 213,166 (1,062) 163,402 31,967 18,859
------------ ------------ ---------- ----------- -----------
Operating earnings........................... 82,286 -- 91,259 (11,298) 2,325
Interest expense, net.......................... 71,361 -- 83,326 (11,944) (21)
Equity in net earnings of subsidiaries......... -- 491 808 (1,299) --
------------ ------------ ---------- ----------- -----------
Earnings before income taxes................. 10,925 (491) 7,125 1,945 2,346
Income taxes................................... 8,151 -- 4,351 2,753 1,047
------------ ------------ ---------- ----------- -----------
Earnings before extraordinary loss........... 2,774 (491) 2,774 (808) 1,299
Extraordinary loss on early extinguishment of
debt, net.................................... (7,935) -- (7,935) -- --
------------ ------------ ---------- ----------- -----------
Net (loss) earnings.......................... $ (5,161) $ (491) $ (5,161) $ (808) $ 1,299
------------ ------------ ---------- ----------- -----------
------------ ------------ ---------- ----------- -----------
</TABLE>
F-27
<PAGE>
PLAYTEX PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
19. CONDENSED CONSOLIDATED FINANCIAL INFORMATION (CONTINUED)
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS DATA
FOR THE TWELVE MONTHS ENDED DECEMBER 27, 1997
(In thousands)
<TABLE>
<CAPTION>
PARENT NON-
CONSOLIDATED ELIMINATIONS COMPANY GUARANTORS GUARANTORS
------------ ------------ ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net earnings.................................... $ 14,653 $ (17,216) $ 14,653 $ 16,110 $ 1,106
Non-cash items included in earnings:
Extraordinary loss.......................... 4,078 -- 4,078 -- --
Amortization of intangibles................. 12,894 -- 10,618 2,276 --
Amortization of deferred financing costs.... 2,163 -- 2,163 -- --
Depreciation................................ 7,520 -- 94 7,191 235
Deferred taxes.............................. 5,493 -- 3,752 1,798 (57)
Other, net.................................. 249 17,216 (16,742) 42 (267)
Increase in net working capital............... (30,182) -- (15,852) (11,173) (3,157)
------------ ------------ ---------- ----------- -----------
Net cash flows from (used for)
operations.............................. 16,868 -- 2,764 16,244 (2,140)
------------ ------------ ---------- ----------- -----------
Cash flows used for investing activities:
Purchase of property, plant and equipment..... (9,004) -- (82) (8,599) (323)
------------ ------------ ---------- ----------- -----------
Net cash flows used for investing
activities.............................. (9,004) -- (82) (8,599) (323)
------------ ------------ ---------- ----------- -----------
Cash flows used for financing activities:
Net repayments under working capital
facilities and long-term debt obligations... (1,900) -- (1,900) -- --
Payment of financing costs.................... (9,367) -- (9,367) -- --
Issuance of shares of common stock, net....... 429 -- 429 -- --
Receipt (payment) of dividends................ -- -- 7,645 (7,645) --
------------ ------------ ---------- ----------- -----------
Net cash flows used for financing
activities.............................. (10,838) -- (3,193) (7,645) --
------------ ------------ ---------- ----------- -----------
Decrease in cash................................ (2,974) -- (511) -- (2,463)
Cash at beginning of period..................... 6,205 -- 1,179 -- 5,026
------------ ------------ ---------- ----------- -----------
Cash at end of period........................... $ 3,231 $ -- $ 668 $ -- $ 2,563
------------ ------------ ---------- ----------- -----------
------------ ------------ ---------- ----------- -----------
</TABLE>
F-28
<PAGE>
PLAYTEX PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
19. Condensed Consolidated Financial Information (Continued)
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS DATA
FOR THE TWELVE MONTHS ENDED DECEMBER 28, 1996
(In thousands)
<TABLE>
<CAPTION>
PARENT NON-
CONSOLIDATED ELIMINATIONS COMPANY GUARANTORS GUARANTORS
------------ ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net earnings..................................... $ 18,199 $ (11,339) $ 18,199 $ 10,456 $ 883
Non-cash items included in earnings:
Amortization of intangibles.................. 12,846 -- 10,570 2,276 --
Amortization of deferred financing costs..... 2,089 -- 2,089 -- --
Depreciation................................. 8,929 -- 72 8,605 252
Deferred taxes............................... 6,842 -- 7,963 (1,130) 9
Other, net................................... 48 11,339 (10,279) (1,003) (9)
Decrease (increase) in net working capital..... 11,351 -- 13,273 (1,976) 54
------------ ------------ ----------- ----------- -----------
Net cash flows from operations............. 60,304 -- 41,887 17,228 1,189
------------ ------------ ----------- ----------- -----------
Cash flows used for investing activities:
Purchase of property, plant and equipment...... (9,740) -- (45) (9,426) (269)
------------ ------------ ----------- ----------- -----------
Net cash flows used for investing
activities............................... (9,740) -- (45) (9,426) (269)
------------ ------------ ----------- ----------- -----------
Cash flows used for financing activities:
Net repayments under working capital facilities
and long-term debt obligations............... (50,350) -- (50,350) -- --
Issuance of shares of common stock, net........ 60 -- 60 -- --
Receipt (payment) of dividends................. -- -- 7,802 (7,802) --
Other, net..................................... (9) -- (9) -- --
------------ ------------ ----------- ----------- -----------
Net cash flows used for financing
activities................................. (50,299) -- (42,497) (7,802) --
------------ ------------ ----------- ----------- -----------
Increase (decrease) in cash...................... 265 -- (655) -- 920
Cash at beginning of period...................... 5,940 -- 1,834 -- 4,106
------------ ------------ ----------- ----------- -----------
Cash at end of period............................ $ 6,205 $ -- $ 1,179 $ -- $ 5,026
------------ ------------ ----------- ----------- -----------
------------ ------------ ----------- ----------- -----------
</TABLE>
F-29
<PAGE>
PLAYTEX PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
19. CONDENSED CONSOLIDATED FINANCIAL INFORMATION (CONTINUED)
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS DATA
FOR THE TWELVE MONTHS ENDED DECEMBER 30, 1995
(In thousands)
<TABLE>
<CAPTION>
PARENT NON-
CONSOLIDATED ELIMINATIONS COMPANY GUARANTORS GUARANTORS
------------ ------------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net earnings.................................... $ (5,161) $ (491) $ (5,161) $ (808) $ 1,299
Non-cash items included in earnings:
Extraordinary loss.......................... 7,935 -- 7,935 -- --
Write-off of SMILETOTE intangibles.......... 6,441 -- -- 6,441 --
Amortization of intangibles................. 11,268 -- 10,424 844 --
Amortization of deferred financing costs.... 2,246 -- 2,246 -- --
Depreciation................................ 8,496 -- 8,000 295 201
Deferred taxes.............................. (133) -- 1,039 (1,147) (25)
Other, net.................................. (291) 491 268 (1,299) 249
(Increase) decrease in net working capital.... (3,722) -- (6,443) 2,838 (117)
------------ ----- ---------- ----------- -----------
Net cash flows from operations............ 27,079 -- 18,308 7,164 1,607
------------ ----- ---------- ----------- -----------
Cash flows (used for) from investing activities:
Purchase of property, plant and equipment..... (12,395) -- (12,296) (99) --
Business or investments acquired.............. (94,429) 737 (95,166) -- --
------------ ----- ---------- ----------- -----------
Net cash flows (used for) from investing
activities.............................. (106,824) 737 (107,462) (99) --
------------ ----- ---------- ----------- -----------
Cash flows from (used for) financing activities:
Net repayments under working capital
facilities and long-term debt obligations... (42,650) -- (42,650) -- --
Long-term debt borrowings..................... 425,000 -- 425,000 -- --
Long-term debt repayments..................... (468,000) -- (468,000) -- --
Payment of financing costs.................... (9,113) -- (9,113) -- --
Issuance of shares of common stock............ 170,000 -- 170,000 -- --
Receipt (payment) of dividends................ -- -- 7,802 (7,802) --
Other, net.................................... 75 -- 75 -- --
------------ ----- ---------- ----------- -----------
Net cash flows from (used for) financing
activities.............................. 75,312 -- 83,114 (7,802) --
------------ ----- ---------- ----------- -----------
(Decrease)increase in cash...................... (4,433) 737 (6,040) (737) 1,607
Cash at beginning of period..................... 10,373 (737) 7,874 737 2,499
------------ ----- ---------- ----------- -----------
Cash at end of period........................... $ 5,940 $ -- $ 1,834 $ -- $ 4,106
------------ ----- ---------- ----------- -----------
------------ ----- ---------- ----------- -----------
</TABLE>
F-30
<PAGE>
PLAYTEX PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
19. CONDENSED CONSOLIDATING FINANCIAL INFORMATION (CONTINUED)
9% SENIOR SUBORDINATED NOTES DUE 2003
The 9% Notes are guaranteed by certain wholly-owned subsidiaries of the
Company (the "9% Guarantors"), PSSI, PMI, THMC, STI, and Sun. The remaining
first tier and lower tier subsidiaries of the Company are not guarantors of the
9% Notes (the "9% Non-Guarantors"). The 9% Non-Guarantors include PBCI, PIC,
PINTL, Playtex Limited and PFSC.
The 9% Guarantors are joint and several guarantors of the 9% Notes. Such
guarantees are joint and several obligations of the 9% Guarantors, are
irrevocable, and full and unconditional and are limited to the largest amount
that would not render such 9% Guarantors' obligations under the guarantees
subject to avoidance under any applicable federal or state fraudulent conveyance
or similar law. The guarantees are senior subordinated obligations of the
applicable 9% Guarantor, and are subordinated to all senior obligations of such
9% Guarantor, including guarantees of the Company's obligations under the 1997
Refinancing.
The 9% Notes contain certain restrictions and limitations, which, among
other things, restrict the type and/or amount of additional indebtedness that
may be incurred by Playtex or its subsidiaries, payment of dividends and other
distributions, issuances of preferred stock; loans and advances; certain
transactions with Playtex stockholders and affiliates; certain mergers and
consolidations; certain sales or transfers of assets; the creation of certain
liens; the transfer of assets to certain subsidiaries; and restrictions on
dividends and other distributions by subsidiaries, including the 9% Guarantors.
The information which follows presents the condensed financial position as
of December 27, 1997 and December 28, 1996 and condensed results of operations
and cash flows for each of the fiscal years in the three year period ended
December 27, 1997 of (a) the Company on a consolidated basis, (b) the parent
company only ("Parent Company"), (c) the combined 9% Guarantors, and (d) the
combined 9% Non-Guarantors. In July 1997, the 9% Notes Indenture was amended
adding THMC and STI as guarantors of the 9% Notes. The 9% Notes Guarantor
financial statements for 1996 and 1995 have been restated to reflect the
addition of THMC and STI as guarantors.
F-31
<PAGE>
PLAYTEX PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
19. CONDENSED CONSOLIDATED FINANCIAL INFORMATION (CONTINUED)
CONDENSED CONSOLIDATING BALANCE SHEET DATA
AS OF DECEMBER 27, 1997
(In thousands)
<TABLE>
<CAPTION>
PARENT NON-
CONSOLIDATED ELIMINATIONS COMPANY GUARANTORS GUARANTORS
------------ ------------ ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets................................. $ 125,362 $ -- $ 71,923 $ 40,293 $ 13,146
Investment in subsidiaries..................... -- (80,084) 77,776 1,154 1,154
Intercompany receivable........................ -- (158,024) 143,647 13,280 1,097
Net property, plant and equipment.............. 54,810 -- 235 53,210 1,365
Intangible assets.............................. 388,743 -- 322,216 64,542 1,985
Other noncurrent assets........................ 83,643 (503) 3,629 -- 80,517
------------ ------------ ---------- ----------- -----------
Total assets................................. $ 652,558 $ (238,611) $ 619,426 $ 172,479 $ 99,264
------------ ------------ ---------- ----------- -----------
------------ ------------ ---------- ----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities............................ $ 68,960 $ 22 $ 57,590 $ 7,520 $ 3,828
Intercompany payable........................... -- (158,023) -- 29,179 128,844
Long-term debt................................. 814,686 -- 814,686 -- --
Other noncurrent liabilities................... 36,975 (507) 15,213 4,636 17,633
------------ ------------ ---------- ----------- -----------
Total liabilities............................ 920,621 (158,508) 887,489 41,335 150,305
Stockholders' equity........................... (268,063) (80,103) (268,063) 131,144 (51,041)
------------ ------------ ---------- ----------- -----------
Total liabilities and stockholders' equity... $ 652,558 $ (238,611) $ 619,426 $ 172,479 $ 99,264
------------ ------------ ---------- ----------- -----------
------------ ------------ ---------- ----------- -----------
</TABLE>
CONDENSED CONSOLIDATING BALANCE SHEET DATA
AS OF DECEMBER 28, 1996
(In thousands)
<TABLE>
<CAPTION>
PARENT NON-
CONSOLIDATED ELIMINATIONS COMPANY GUARANTORS GUARANTORS
------------ ------------ ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets................................. $ 122,491 $ -- $ 66,474 $ 39,436 $ 16,581
Investment in subsidiaries..................... -- (70,209) 70,209 -- --
Intercompany receivable........................ -- (127,497) 122,393 5,103 1
Net property, plant and equipment.............. 53,408 -- 309 51,743 1,356
Intangible assets.............................. 400,191 -- 331,394 66,749 2,048
Other noncurrent assets........................ 84,241 (495) 4,219 -- 80,517
------------ ------------ ---------- ----------- -----------
Total assets................................. $ 660,331 $ (198,201) $ 594,998 $ 163,031 $ 100,503
------------ ------------ ---------- ----------- -----------
------------ ------------ ---------- ----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities............................ $ 115,969 $ -- $ 70,545 $ 38,762 $ 6,662
Intercompany payable........................... -- (127,272) -- -- 127,272
Long-term debt................................. 793,086 -- 793,086 -- --
Other noncurrent liabilities................... 34,003 (504) 14,094 2,813 17,600
------------ ------------ ---------- ----------- -----------
Total liabilities............................ 943,058 (127,776) 877,725 41,575 151,534
Stockholders' equity........................... (282,727) (70,425) (282,727) 121,456 (51,031)
------------ ------------ ---------- ----------- -----------
Total liabilities and stockholders' equity... $ 660,331 $ (198,201) $ 594,998 $ 163,031 $ 100,503
------------ ------------ ---------- ----------- -----------
------------ ------------ ---------- ----------- -----------
</TABLE>
F-32
<PAGE>
PLAYTEX PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
19. CONDENSED CONSOLIDATING FINANCIAL INFORMATION (CONTINUED)
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS DATA
FOR THE TWELVE MONTHS ENDED DECEMBER 27, 1997
(In thousands)
<TABLE>
<CAPTION>
PARENT NON-
CONSOLIDATED ELIMINATIONS COMPANY GUARANTORS GUARANTORS
------------ ------------ ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net revenues................................... $ 500,632 $ (226,538) $ 443,673 $ 230,102 $ 53,395
Cost of sales.................................. 195,980 (176,872) 186,482 160,609 25,761
------------ ------------ ---------- ----------- -----------
Gross profit................................. 304,652 (49,666) 257,191 69,493 27,634
Operating expenses:
Advertising, selling and administrative........ 192,056 (49,666) 160,671 51,826 29,225
Amortization of intangibles.................... 12,894 -- 10,618 2,208 68
------------ ------------ ---------- ----------- -----------
Total operating expenses..................... 204,950 (49,666) 171,289 54,034 29,293
------------ ------------ ---------- ----------- -----------
Operating earnings (loss).................... 99,702 -- 85,902 15,459 (1,659)
Interest expense, net.......................... 64,470 -- 76,594 -- (12,124)
Equity in net earnings of subsidiaries......... -- 18,418 (16,110) (1,154) (1,154)
------------ ------------ ---------- ----------- -----------
Earnings before income taxes................. 35,232 (18,418) 25,418 16,613 11,619
Income taxes................................... 16,501 -- 6,687 6,229 3,585
------------ ------------ ---------- ----------- -----------
Earnings before extraordinary loss............. 18,731 (18,418) 18,731 10,384 8,034
Extraordinary loss on early extinguishment of
debt, net.................................... (4,078) -- (4,078) -- --
------------ ------------ ---------- ----------- -----------
Net earnings................................. $ 14,653 $ (18,418) $ 14,653 $ 10,384 $ 8,034
------------ ------------ ---------- ----------- -----------
------------ ------------ ---------- ----------- -----------
</TABLE>
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS DATA
FOR THE TWELVE MONTHS ENDED DECEMBER 28, 1996
(In thousands)
<TABLE>
<CAPTION>
PARENT NON-
CONSOLIDATED ELIMINATIONS COMPANY GUARANTORS GUARANTORS
------------ ------------ ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net revenues................................... $ 498,742 $ (167,269) $ 438,127 $ 169,020 $ 58,864
Cost of sales.................................. 192,512 (104,374) 161,849 108,699 26,338
------------ ------------ ---------- ----------- -----------
Gross profit................................. 306,230 (62,895) 276,278 60,321 32,526
Operating expenses:
Advertising, selling and administrative........ 194,184 (62,895) 171,534 53,671 31,874
Amortization of intangibles.................... 12,846 -- 10,570 2,208 68
------------ ------------ ---------- ----------- -----------
Total operating expenses..................... 207,030 (62,895) 182,104 55,879 31,942
------------ ------------ ---------- ----------- -----------
Operating earnings........................... 99,200 -- 94,174 4,442 584
Interest expense, net.......................... 64,860 -- 76,864 -- (12,004)
Equity in net earnings of subsidiaries......... -- 10,456 (10,456) -- --
------------ ------------ ---------- ----------- -----------
Earnings before income taxes................. 34,340 (10,456) 27,766 4,442 12,588
Income taxes................................... 16,141 -- 9,567 2,034 4,540
------------ ------------ ---------- ----------- -----------
Net earnings................................. $ 18,199 $ (10,456) $ 18,199 $ 2,408 $ 8,048
------------ ------------ ---------- ----------- -----------
------------ ------------ ---------- ----------- -----------
</TABLE>
F-33
<PAGE>
PLAYTEX PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
19. CONDENSED CONSOLIDATING FINANCIAL INFORMATION (CONTINUED)
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS DATA
FOR THE TWELVE MONTHS ENDED DECEMBER 30, 1995
(In thousands)
<TABLE>
<CAPTION>
PARENT NON-
CONSOLIDATED ELIMINATIONS COMPANY GUARANTORS GUARANTORS
------------ ------------ ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net revenues................................... $ 483,581 $ (7,427) $ 417,894 $ 1,622 $ 71,492
Cost of sales.................................. 188,129 (6,365) 163,233 1,227 30,034
------------ ------------ ---------- ----------- -----------
Gross profit................................. 295,452 (1,062) 254,661 395 41,458
Operating expenses:
Advertising, selling and administrative........ 195,457 (1,062) 152,975 830 42,714
Amortization of intangibles.................... 17,709 -- 10,427 7,214 68
------------ ------------ ---------- ----------- -----------
Total operating expenses..................... 213,166 (1,062) 163,402 8,044 42,782
------------ ------------ ---------- ----------- -----------
Operating earnings (loss).................... 82,286 -- 91,259 (7,649) (1,324)
Interest expense, net.......................... 71,361 -- 83,326 -- (11,965)
Equity in net earnings of subsidiaries......... -- (808) 808 -- --
------------ ------------ ---------- ----------- -----------
Earnings before income taxes................. 10,925 808 7,125 (7,649) 10,641
Income taxes................................... 8,151 -- 4,351 (150) 3,950
------------ ------------ ---------- ----------- -----------
Earnings before extraordinary loss........... 2,774 808 2,774 (7,499) 6,691
Extraordinary loss on early extinguishment of
debt, net.................................... (7,935) -- (7,935) -- --
------------ ------------ ---------- ----------- -----------
Net (loss) earnings.......................... $ (5,161) $ 808 $ (5,161) $ (7,499) $ 6,691
------------ ------------ ---------- ----------- -----------
------------ ------------ ---------- ----------- -----------
</TABLE>
F-34
<PAGE>
PLAYTEX PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
19. CONDENSED CONSOLIDATING FINANCIAL INFORMATION (CONTINUED)
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS DATA
FOR THE TWELVE MONTHS ENDED DECEMBER 27, 1997
(In thousands)
<TABLE>
<CAPTION>
PARENT NON-
CONSOLIDATED ELIMINATIONS COMPANY GUARANTORS GUARANTORS
------------ ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net earnings..................................... $ 14,653 $ (18,418) $ 14,653 $ 10,384 $ 8,034
Non-cash items included in earnings:
Extraordinary loss........................... 4,078 -- 4,078 -- --
Amortization of intangibles.................. 12,894 -- 10,618 2,208 68
Amortization of deferred financing costs..... 2,163 -- 2,163 -- --
Depreciation................................. 7,520 -- 94 7,074 352
Deferred taxes............................... 5,493 -- 3,752 1,823 (82)
Other, net................................... 249 18,418 (16,742) (5) (1,422)
Increase in net working capital................ (30,182) -- (15,852) (12,943) (1,387)
------------ ------------ ----------- ----------- -----------
Net cash flows from operations............. 16,868 -- 2,764 8,541 5,563
------------ ------------ ----------- ----------- -----------
Cash flows used for investing activities:
Purchase of property, plant and equipment...... (9,004) -- (82) (8,541) (381)
------------ ------------ ----------- ----------- -----------
Net cash flows used for investing
activities............................... (9,004) -- (82) (8,541) (381)
------------ ------------ ----------- ----------- -----------
Cash flows used for financing activities:
Net payments under working capital facilities
and long-term debt obligations............... (1,900) -- (1,900) -- --
Payment of financing costs..................... (9,367) -- (9,367) -- --
Issuance of shares of common stock............. 429 -- 429 -- --
Receipt (payment) of dividends................. -- -- 7,645 -- (7,645)
------------ ------------ ----------- ----------- -----------
Net cash flows used for financing
activities............................... (10,838) -- (3,193) -- (7,645)
------------ ------------ ----------- ----------- -----------
Decrease in cash................................. (2,974) -- (511) -- (2,463)
Cash at beginning of period...................... 6,205 -- 1,179 -- 5,026
------------ ------------ ----------- ----------- -----------
Cash at end of period............................ $ 3,231 $ -- $ 668 $ -- $ 2,563
------------ ------------ ----------- ----------- -----------
------------ ------------ ----------- ----------- -----------
</TABLE>
F-35
<PAGE>
PLAYTEX PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
19. CONDENSED CONSOLIDATING FINANCIAL INFORMATION (CONTINUED)
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS DATA
FOR THE TWELVE MONTHS ENDED DECEMBER 28, 1996:
(In thousands)
<TABLE>
<CAPTION>
PARENT NON-
CONSOLIDATED ELIMINATIONS COMPANY GUARANTORS GUARANTORS
------------ ------------ ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net earnings................................... $ 18,199 $ (10,456) $ 18,199 $ 2,409 $ 8,047
Non-cash items included in earnings:
Amortization of intangibles................ 12,846 -- 10,570 2,208 68
Amortization of deferred financing costs... 2,089 -- 2,089 -- --
Depreciation............................... 8,929 -- 72 8,428 429
Deferred taxes............................. 6,842 -- 7,963 (1,437) 316
Other, net................................. 48 10,456 (10,279) (120) (9)
Decrease (increase) in net working capital... 11,351 -- 13,273 (2,074) 152
------------ ------------ ---------- ----------- -----------
Net cash flows from operations........... 60,304 -- 41,887 9,414 9,003
------------ ------------ ---------- ----------- -----------
Cash flows used for investing activities:
Purchase of property, plant and equipment.... (9,740) -- (45) (9,414) (281)
------------ ------------ ---------- ----------- -----------
Net cash flows used for investing
activities............................. (9,740) -- (45) (9,414) (281)
------------ ------------ ---------- ----------- -----------
Cash flows used for financing activities:
Net payments under working capital facilities
and long-term debt obligations............. (50,350) -- (50,350) -- --
Issuance of shares of common stock........... 60 -- 60 -- --
Receipt (payment) of dividends............... -- -- 7,802 -- (7,802)
Other, net................................... (9) -- (9) -- --
------------ ------------ ---------- ----------- -----------
Net cash flows used for financing
activities............................. (50,299) -- (42,497) -- (7,802)
------------ ------------ ---------- ----------- -----------
Increase (decrease) in cash.................... 265 -- (655) -- 920
Cash at beginning of period.................... 5,940 -- 1,834 -- 4,106
------------ ------------ ---------- ----------- -----------
Cash at end of period.......................... $ 6,205 $ -- $ 1,179 $ -- $ 5,026
------------ ------------ ---------- ----------- -----------
------------ ------------ ---------- ----------- -----------
</TABLE>
F-36
<PAGE>
PLAYTEX PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
19. CONDENSED CONSOLIDATING FINANCIAL INFORMATION (CONTINUED)
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS DATA
FOR THE TWELVE MONTHS ENDED DECEMBER 30, 1995
(In thousands)
<TABLE>
<CAPTION>
PARENT NON-
CONSOLIDATED ELIMINATIONS COMPANY GUARANTORS GUARANTORS
------------ ------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net earnings................................... $ (5,161) $ 808 $ (5,161) $ (7,499) $ 6,691
Non-cash items included in earnings:
Extraordinary loss......................... 7,935 -- 7,935 -- --
Write-off of SMILETOTE intangibles......... 6,441 -- -- 6,441 --
Amortization of intangibles................ 11,268 -- 10,424 776 68
Amortization of deferred financing costs... 2,246 -- 2,246 -- --
Depreciation............................... 8,496 -- 8,000 -- 496
Deferred taxes............................. (133) -- 1,039 191 (1,363)
Other, net................................. (291) (808) 268 -- 249
(Increase) decrease in net working capital... (3,722) -- (6,443) (646) 3,367
------------ ----- ----------- ----------- -----------
Net cash flows from operations........... 27,079 -- 18,308 (737) 9,508
------------ ----- ----------- ----------- -----------
Cash flows (used for) from investing
activities:
Purchase of property, plant and equipment.... (12,395) -- (12,296) -- (99)
Business or investments acquired............. (94,429) 737 (95,166) -- --
------------ ----- ----------- ----------- -----------
Net cash flows (used for) from investing
activities............................. (106,824) 737 (107,462) -- (99)
------------ ----- ----------- ----------- -----------
Cash flows from (used for) financing
activities:
Net payments under working capital facilities
and long-term debt obligations............. (42,650) -- (42,650) -- --
Long-term debt borrowings.................... 425,000 -- 425,000 -- --
Long-term debt payments...................... (468,000) -- (468,000) -- --
Payment of financing costs................... (9,113) -- (9,113) -- --
Issuance of shares of common stock........... 170,000 -- 170,000 -- --
Receipt (payment) of dividends............... -- -- 7,802 -- (7,802)
Other, net................................... 75 -- 75 -- --
------------ ----- ----------- ----------- -----------
Net cash flows from (used for) financing
activities............................. 75,312 -- 83,114 -- (7,802)
------------ ----- ----------- ----------- -----------
(Decrease) increase in cash.................... (4,433) 737 (6,040) (737) 1,607
Cash at beginning of period.................... 10,373 (737) 7,874 737 2,499
------------ ----- ----------- ----------- -----------
Cash at end of period.......................... $ 5,940 $ -- $ 1,834 $ -- $ 4,106
------------ ----- ----------- ----------- -----------
------------ ----- ----------- ----------- -----------
</TABLE>
F-37
<PAGE>
PLAYTEX PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
20. SUBSEQUENT EVENTS
On January 6, 1998, the Company acquired Carewell Industries, Inc.
("Carewell") for approximately $9.2 million in cash. Carewell manufactures and
markets the Dentax-Registered Trademark- line of toothbrushes, toothpaste, and
dental floss for distribution through food stores, drug chains, and mass
merchandisers. The acquisition, which was financed through the Company's 1997
Revolving Credit Facility, has been accounted for as a purchase.
On January 26, 1998, the Company acquired certain tangible and intangible
assets related to the Binky-Registered Trademark- pacifier business from
Binky-Griptight, Inc. for approximately $1.2 million cash and $0.5 million in
notes payable due July 27,1998. The acquisition, which was financed through the
Company's 1997 Revolving Credit Facility, has been accounted for as a purchase.
On January 28, 1998, the Company acquired 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-Registered Trademark- pre-moistened towelettes,
Chubs-Registered Trademark- baby wipes, Ogilvie-Registered Trademark- home
permanent products, Binaca-Registered Trademark- breath spray and drops, Mr.
Bubble-Registered Trademark- children's bubble bath products,
Diaparene-Registered Trademark- infant care products,
Tussy-Registered Trademark- deodorants, Dorothy Gray-Registered Trademark- skin
care products and Better Off-Registered Trademark- depilatories. The cash
portion of the consideration paid for the PCH transaction was financed with
borrowings under the 1997 Term Loan (see Note 6). The acquisition has been
accounted for as a purchase.
F-38
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY, THE SELLING STOCKHOLDERS OR THE UNDERWRITERS. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE
COMMON STOCK IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR
IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Summary............................. 1
Special Note Regarding Forward
Looking Statements............................ 9
Risk Factors................................... 9
The Company.................................... 12
Use of Proceeds................................ 14
Price Range of Common Stock and Dividend
Policy........................................ 14
Capitalization................................. 15
Pro Forma Consolidated Financial Data.......... 16
Selected Historical Consolidated
Financial Data................................ 21
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................... 24
Business....................................... 30
Management..................................... 41
Principal and Selling Stockholders............. 45
Description of Capital Stock................... 47
Underwriting................................... 51
Legal Matters.................................. 53
Experts........................................ 53
Available Information.......................... 53
Incorporation of Certain Documents
by Reference.................................. 53
Index to Consolidated Financial Statements..... F-1
</TABLE>
8,610,682 SHARES
[LOGO]
PLAYTEX PRODUCTS, INC.
COMMON STOCK
------------------
PROSPECTUS
------------------
MERRILL LYNCH & CO.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
GOLDMAN, SACHS & CO.
PAINEWEBBER INCORPORATED
SALOMON SMITH BARNEY
, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION, DATED MAY 15, 1998
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
PROSPECTUS
, 1998
[LOGO]
4,008,063 SHARES
PLAYTEX PRODUCTS, INC.
COMMON STOCK
All of the 4,008,063 shares of common stock, par value $.01 per share (the
"Common Stock"), of Playtex Products, Inc., a Delaware corporation (the
"Company" or "Playtex"), offered hereby are being sold by certain stockholders
of the Company (the "International Selling Stockholders") and are offered for
sale initially outside the United States and Canada by the International
Managers (the "International Offering"). The Company will not receive any of the
proceeds from the sale of the shares by the International Selling Stockholders.
See "Principal and Selling Stockholders."
Concurrently with the International Offering, other stockholders (the "U.S.
Selling Stockholders") of the Company are offering to sell shares of the Common
Stock of the Company in the United States and Canada (the "U.S. Offering")
through a separate group of underwriters (the "U.S. Underwriters"). Pursuant to
agreements between the International Selling Stockholders and the Company and
the U.S. Selling Stockholders and the Company, the consummation of the U.S.
Offering is contingent upon the consummation of the International Offering.
However, the consummation of the International Offering is not contingent upon
the consummation of the U.S. Offering.
The Common Stock is listed on the New York Stock Exchange ("NYSE") under the
symbol "PYX." On May 14, 1998, the last reported sale price of the Common Stock
on the NYSE was $14 1/4 per share.
SEE "RISK FACTORS" (BEGINNING ON PAGE 9) FOR A DISCUSSION OF CERTAIN FACTORS
WHICH SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
PROCEEDS TO
INTERNATIONAL
PRICE TO UNDERWRITING SELLING
PUBLIC DISCOUNT(1) STOCKHOLDERS(2)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share............................ $ $ $
Total................................ $ $ $
- -------------------------------------------------------------------------------------------
</TABLE>
(1) THE COMPANY AND THE INTERNATIONAL SELLING STOCKHOLDERS HAVE AGREED TO
INDEMNIFY THE SEVERAL INTERNATIONAL MANAGERS AGAINST CERTAIN LIABILITIES,
INCLUDING CERTAIN LIABILITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
SEE "UNDERWRITING."
(2) THE EXPENSES OF THE INTERNATIONAL OFFERING, ESTIMATED TO BE $248,000, WILL
BE PAID BY THE COMPANY.
The shares of Common Stock are offered by the several International
Managers, subject to prior sale, when, as and if delivered to and accepted by
them, and subject to the approval of certain legal matters by counsel for the
International Managers and certain other conditions. The International Managers
reserve the right to withdraw, cancel or modify such offer and to reject orders
in whole or in part. It is expected that delivery of the shares of Common Stock
will be made in New York, New York on or about , 1998.
DONALDSON, LUFKIN & JENRETTE
INTERNATIONAL
GOLDMAN SACHS INTERNATIONAL
PAINEWEBBER INTERNATIONAL
SALOMON SMITH BARNEY INTERNATIONAL
<PAGE>
THE OFFERINGS
<TABLE>
<S> <C>
Common Stock offered by the International
Selling Stockholders....................... 4,008,063 shares
Common Stock offered by the U.S. Selling
Stockholders............................... 8,610,682 shares (1)
Common Stock to be outstanding before and
after the International Offering and the
U.S. Offering.............................. 60,296,851 shares (2)
Use of proceeds.............................. The Company will not receive any proceeds
from the International Offering or the U.S.
Offering unless the U.S. Underwriters'
over-allotment option is exercised in whole
or in part. If this option is exercised, the
Company intends to use the proceeds to repay
borrowings under the Credit Facilities (as
defined).
Listing...................................... The Common Stock is listed on the NYSE under
the symbol "PYX."
</TABLE>
- ------------------------
(1) To be offered by the U.S. Underwriters in a separate offering exclusively
inside the United States and Canada.
(2) Excludes 4,887,971 shares of Common Stock reserved for issuance pursuant to
the Company's 1994 Stock Option Plan. In February 1998, a majority of the
Company's stockholders approved an amendment to the 1994 Stock Option Plan
increasing the number of shares of Common Stock available for issuance upon
exercise of options and SARs by 2,000,000 (the "Stock Option Amendment").
The Company has included the Stock Option Amendment in its 1998 proxy
statement in order to afford all Stockholders entitled to vote thereon, the
opportunity to vote on the Stock Option Amendment. See Note 9 of Notes to
the Consolidated Financial Statements (as defined) included elsewhere in
this Prospectus.
RISK FACTORS
Prospective purchasers of the Common Stock offered hereby should carefully
consider the information set forth in this Prospectus, including the factors set
forth under "Risk Factors" beginning on page 9, before making an investment in
the Common Stock.
------------------------
This Prospectus does not constitute an offer to sell or the solicitation of
an offer to buy the shares of Common Stock in any jurisdiction in which such
offer or solicitation is unlawful. There are restrictions on the offer and sale
of the shares of Common Stock in the United Kingdom. All applicable provisions
of the Financial Services Act 1986 and the Public Offers of Securities
Regulations 1995 with respect to anything done by any person in relation to the
shares of Common Stock, in, from or otherwise involving the United Kingdom must
be complied with. See "Underwriting."
5
<PAGE>
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the Common
Stock offered by the International Selling Stockholders. However, in the event
the over-allotment option relating to the U.S. Offering is exercised, the
Company will be required to sell up to 1,892,811 shares of Common Stock and will
receive approximately $24.9 million (based on an assumed offering price of
$14.25 per share). Any funds received from such sale will be used to pay down
variable interest rate indebtedness under the Credit Facilities. The expenses of
preparing and filing the Registration Statement of which this Prospectus forms a
part are being paid by the Company, except that the International Selling
Stockholders are bearing the costs of their own legal counsel.
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
The Common Stock is traded on the NYSE under the symbol "PYX." The table
below sets forth the high and low sale prices for the Common Stock as reported
on the NYSE for the periods indicated. The last reported sale price of the
Common Stock on the NYSE on May 14, 1998 was $14.25 per share.
<TABLE>
<CAPTION>
PRICE RANGE
--------------------
<S> <C> <C>
HIGH LOW
--------- ---------
FISCAL 1998:
First Quarter................................................................................ $14 15/16 $ 9 7/16
Second Quarter (through May 14, 1998)........................................................ 15 3/4 14
FISCAL 1997:
First Quarter................................................................................ $ 11 3/4 $ 7 7/8
Second Quarter............................................................................... 11 1/2 9
Third Quarter................................................................................ 10 1/4 8 13/16
Fourth Quarter............................................................................... 11 9
FISCAL 1996:
First Quarter................................................................................ $ 8 5/8 $ 6 5/8
Second Quarter............................................................................... 10 3/8 7 1/8
Third Quarter................................................................................ 9 1/2 7 1/2
Fourth Quarter............................................................................... 9 1/2 7 1/8
</TABLE>
The Company has not paid any cash dividends on shares of the Common Stock.
The Company presently anticipates that all of its future earnings will be
retained for development of its business and does not anticipate paying cash
dividends on the Common Stock in the foreseeable future. Additionally, the
Credit Facilities and the Notes limit the Company's ability to pay dividends or
make other distributions on the Common Stock. The payment of any future
dividends will be at the discretion of the Company's Board of Directors (the
"Board") and will depend on the Company's results of operations, financial
condition, capital requirements, contractual restrictions and other factors
deemed relevant at the time by the Board.
As of December 27, 1997, the Company had 406 stockholders of record.
14
<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of Common Stock as of April 22, 1998, and as adjusted to reflect the
sale of the Common Stock offered hereby, by (i) the Chief Executive Officer and
each of the other four most highly compensated executive officers of the
Company, (ii) each Director of the Company, (iii) all Directors and executive
officers as a group, (iv) all persons known by the Company to own beneficially
5% or more of the Common Stock and (v) each International Selling Stockholder.
Unless otherwise indicated, each of the stockholders has sole voting and
investment power with respect to the shares of Common Stock beneficially owned
by such stockholders.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED SHARES BENEFICIALLY
PRIOR TO THE OWNED
INTERNATIONAL AFTER THE INTERNATIONAL
OFFERING(1) NUMBER OF OFFERING
NAME AND ADDRESS ------------------------ SHARES -----------------------
OF BENEFICIAL OWNERS NUMBER PERCENT BEING OFFERED NUMBER PERCENT
---------------------- ---------- ------- ------------- ---------- -------
<S> <C> <C> <C> <C> <C>
Robert B. Haas.................................... 20,000,000(2) 33.2% -- 20,000,000 33.2%
Michael R. Gallagher.............................. 485,668(3) * -- 485,668 *
Michael F. Goss................................... 163,001 * -- 163,001 *
Richard G. Powers................................. 16,667 * -- 16,667 *
Max R. Recone..................................... 126,667 * -- 126,667 *
James S. Cook..................................... 176,667 * -- 176,667 *
Thomas H. Lee..................................... 3,336,455(4) 5.5% 3,336,455(4) -- --
Kenneth F. Yontz.................................. 10,600 * -- 10,600 *
Timothy O. Fisher................................. 21,663(5) * -- 21,663(5) *
Douglas D. Wheat.................................. -- -- -- -- --
Michael R. Eisenson............................... 2,915,963(6) 4.8% -- 2,915,963(6) 4.8%
C. Ann Merrifield................................. 1,800 * -- 1,800 *
Wyche H. Walton................................... -- -- -- -- --
John W. Childs.................................... 8,338,422(7) 13.8% 209,756(8) -- -- (8)
All current directors and executive officers as a
group (14 persons).............................. 32,667,610(2)(7) 53.5% 3,546,211(8) 21,002,733 34.4%
Partnerships managed by Haas Wheat(2)............. 20,000,000(2) 33.2% -- 20,000,000(2) 33.2%
Stinson Capital Partners, L.P. et al.
909 Montgomery Street
Suite 400
San Francisco, CA 94113(9)...................... 5,001,300 8.3% -- 5,001,300 8.3%
ML-Lee Acquisition Fund, L.P...................... 1,406,204 2.3% 1,406,204 -- --
1989 Thomas H. Lee Nominee Trust dated September
29, 1989........................................ 1,361,951 2.3% 1,361,951 -- --
ML-Lee Acquisition Fund II, L.P................... 343,726 * 343,726 -- --
ML-Lee Acquisition Fund II
(Retirement Accounts), L.P...................... 183,560 * 183,560 -- --
Eight other International Selling Stockholders.... 579,121(10) * 502,866(10)(11) -- --
</TABLE>
- ------------------------
* Indicates less than one percent.
(1) Includes shares that may be acquired upon the exercise of stock options
granted by the Company that are exercisable within 60 days of the Record
Date. The shares beneficially owned include 466,668, 135,001, 16,667,
86,667, 86,667, 10,600, and 1,800 shares subject to currently exercisable
options granted to Messrs. Gallagher, Goss, Powers, Recone, Cook and Yontz
and Ms. Merrifield, respectively, and an aggregate of 804,070 shares subject
to currently exercisable options granted to all directors and executive
officers.
(2) Includes 8,055,555 shares (approximately 13.4% of the outstanding shares)
owned by HWH Capital Partners, L.P., 9,028,482 shares (approximately 15.0%
of the outstanding shares) owned by HWH
45
<PAGE>
Valentine Partners, L.P., and 2,915,963 shares (approximately 4.9% of the
outstanding shares) owned by HWH Surplus Valentine Partners, L.P.
("Surplus"). The address of each of the foregoing partnerships is c/o Haas
Wheat & Partners Incorporated, 300 Crescent Court, Suite 1700, Dallas, Texas
75201. The sole general partner of each of such partnerships is a limited
partnership, and the sole general partner of each of such limited
partnerships is a corporation controlled by Mr. Haas. By virtue of his
control of such corporations, Mr. Haas has sole voting and dispositive power
over 17,084,037 shares and shared voting and dispositive power over
2,915,963 shares.
(3) Includes 9,000 shares held by Mr. Gallagher's children. Mr. Gallagher
disclaims beneficial ownership of these shares.
(4) Includes 1,361,951 shares held of record by 1989 Thomas H. Lee Nominee Trust
dated September 29, 1989, 1,406,204 shares held of record by the ML-Lee
Acquisition Fund, L.P., 343,726 shares held of record by the ML-Lee
Acquisition Fund II, L.P. and 183,560 shares held of record by the ML-Lee
Acquisition Fund II (Retirement Accounts), L.P. While Mr. Lee has shared
voting and dispositive power over the shares held by the limited
partnership, he disclaims beneficial ownership of such shares. Certain of
the 1,361,951 shares held of record by the 1989 Thomas H. Lee Nominee Trust
are subject to options to purchase granted by such trust to certain
employees and consultants of The Thomas H. Lee Company. Also included are
20,506 shares held by the Stephen Zachary Lee 1988 Irrevocable Trust and
20,506 shares held by the Robert Schiff Lee 1988 Irrevocable Trust. Mr. Lee
also disclaims beneficial ownership of the shares held by such trusts. The
address of Mr. Lee is c/o The Thomas H. Lee Company, 75 State Street, Suite
2600, Boston, MA 02109.
(5) Includes 16,663 shares held of record by Mr. Fisher's spouse and children.
Mr. Fisher disclaims beneficial ownership of these shares.
(6) Represents shares owned by Surplus, of which Phemus Corporation is the sole
Limited Partner. Mr. Eisenson is the President and Chief Executive Officer
of Harvard Private Capital Group, the investment advisor for Phemus
Corporation. While Mr. Eisenson has shared voting and dispositive power over
the shares, he disclaims beneficial ownership of such shares.
(7) Includes 7,855,764 shares (approximately 13.0% of the outstanding shares)
beneficially owned by J.W. Childs Equity Partners L.P. ("Childs LP"), a
Delaware limited partnership, and 482,658 shares owned by John W. Childs
directly. The address of Mr. Childs and Childs LP is c/o J.W. Childs
Associates, L.P., One Federal Street, Boston, MA 02110.
(8) In addition to the shares being offered hereby, John W. Childs is offering
an aggregate of 8,128,666 shares pursuant to a separate Prospectus in the
U.S. Offering. See "Underwriting."
(9) On December 16, 1997, the Company received a Schedule 13D dated December 4,
1997 filed with the SEC in respect of ownership of an aggregate of 5,001,300
shares of Common Stock by a group comprised of Stinson Capital Partners,
L.P., BK Capital Partners IV, L.P., The Carpenters Pension Trust for
Southern California, United Brotherhood of Carpenters and Joiners of America
Local Unions and Councils Pension Fund, Insurance Company Supported
Organizations Pension Plan, Richard C. Blum & Associates, L.P., Richard C.
Blum & Associates, Inc. and Richard C. Blum. Each filing person reported
shared voting power and shared dispositive power with respect to all of such
shares. The Company has not attempted to verify independently any of the
information contained in the Schedule 13D.
(10) Includes the 20,506 shares held by each of the Stephen Zachary Lee 1988
Irrevocable Trust and the Robert Schiff Lee 1988 Irrevocable Trust.
(11) In addition to the shares being offered hereby, one of the International
Selling Stockholders is also offering 76,255 shares pursuant to a separate
Prospectus in the U.S. Offering. See "Underwriting."
46
<PAGE>
CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES
FOR NON-UNITED STATES HOLDERS
The following is a general discussion of certain United States federal
income and estate tax consequences of the ownership and disposition of Common
Stock applicable to Non-U.S. Holders. In general, a "Non-U.S. Holder" is any
holder of Common Stock other than (i) a citizen or resident of the United
States, (ii) a corporation or partnership created or organized in the United
States or under the laws of the United States or of any state (other than any
partnership treated as foreign under U.S. Treasury regulations), (iii) an
estate, the income of which is includable in gross income for United States
federal income tax purposes regardless of its source or (iv) a trust if (a) a
court within the United States is able to exercise primary supervision over the
administration of the trust and (b) one or more United States persons have the
authority to control all substantial decisions of the trust. This discussion is
based on current law and is for general information only. This discussion does
not address aspects of United States federal taxation other than income and
estate taxation, and does not address all aspects of income and estate taxation
nor does it consider any specific facts or circumstances that may apply to a
particular Non-U.S. Holder (including certain U.S. expatriates). ACCORDINGLY,
OFFEREES OF COMMON STOCK ARE URGED TO CONSULT THEIR TAX ADVISERS REGARDING THE
UNITED STATES FEDERAL, STATE, LOCAL AND NON-UNITED STATES INCOME AND OTHER TAX
CONSEQUENCES OF HOLDING AND DISPOSING OF SHARES OF COMMON STOCK.
An individual may, subject to certain exceptions, be deemed to be a resident
alien (as opposed to a non-resident alien) by virtue of being present in the
United States for at least 31 days in the calendar year and for an aggregate of
at least 183 days during a three-year period ending in the current calendar year
(counting for such purposes all of the days present in the current year,
one-third of the days present in the immediately preceding year, and one-sixth
of the days present in the second preceding year). In addition to the
"substantial presence test" described in the immediately preceding sentence, an
alien may be treated as a resident alien if he or she (i) meets a lawful
permanent residence test (a so-called "green card" test) or (ii) elects to be
treated as a U.S. resident and meets the "substantial presence test" in the
immediately following year. Resident aliens are subject to U.S. federal tax as
if they were U.S. citizens.
DIVIDENDS
In general, dividends paid to a Non-U.S. Holder will be subject to United
States withholding tax at a 30% rate (or a lower rate prescribed by an
applicable tax treaty) unless the dividends are either (i) effectively connected
with a trade or business carried on by the Non-U.S. Holder with the United
States, or (ii) attributable to a permanent establishment in the United States
maintained by the Non-U.S. Holder if certain income tax treaties apply.
Dividends effectively connected with such a United States trade or business or
attributable to such a United States permanent establishment generally will not
be subject to United States withholding tax if the Non-U.S. Holder files the
appropriate U.S. Internal Revenue Service ("IRS") form with the payor of the
dividend (which form, under U.S. Treasury regulations generally effective for
payments made after December 31, 1999 ("Final Regulations"), will require such
Non-U.S. Holder to provide a U.S. taxpayer identification number) and generally
will be subject to United States federal income tax on a net income basis, in
the same manner as if the Non-U.S. Holder were a resident of the United States.
A Non-U.S. Holder that is a corporation may be subject to an additional branch
profits tax at a rate of 30% (or such lower rate as may be specified by an
applicable treaty) on the repatriation from the United States of its
"effectively connected earnings and profits," subject to certain adjustments. To
determine the applicability of a tax treaty providing for a lower rate of
withholding, dividends paid to an address in a foreign country are presumed
under currently effective United States Treasury regulations (the "Current
Regulations") to be paid to a resident of that country absent knowledge to the
contrary. Under the Final Regulations, however, a Non-U.S. Holder of Common
Stock who wishes to claim the benefit of an applicable treaty rate generally
will be required to satisfy applicable certification and other requirements. In
addition, under the Final Regulations, in the case of Common Stock held by a
foreign
51
<PAGE>
partnership, (x) the certification requirement will generally be applied to the
partners of the partnership and (y) the partnership will be required to provide
certain information, including a United States taxpayer identification number.
The Final Regulations also provide look-through rules for tiered partnerships.
The Final Regulations generally would require Non-U.S. Holders to file an IRS
Form W-8 to obtain the benefit of any applicable tax treaty providing for a
lower rate of withholding tax on dividends. A Non-U.S. Holder that is eligible
for a reduced rate of U.S. withholding tax pursuant to a tax treaty may obtain a
refund of any excess amounts withheld by filing an appropriate claim for refund
with the IRS.
SALE OF COMMON STOCK
In general, a Non-U.S. Holder will not be subject to United States federal
income tax on any gain realized upon the disposition of such holder's shares of
Common Stock unless: (i) the gain is effectively connected with a trade or
business carried on by the Non-U.S. Holder within the United States or,
alternatively, if certain tax treaties apply, is attributable to a permanent
establishment in the United States maintained by the Non-U.S. Holder (and in
either case, the branch profits tax discussed above may also apply if the
Non-U.S. Holder is a corporation); (ii) the Non-U.S. Holder is an individual who
holds shares of Common Stock as a capital asset and is present in the United
States for 183 days or more in the taxable year of disposition, and either (a)
such individual has a "tax home" (as defined for United States federal income
tax purposes) in the United States (unless the gain from the disposition is
attributable to an office or other fixed place of business maintained by such
Non-U.S. Holder in a foreign country and such gain has been subject to a foreign
income tax equal to at least 10% of the gain derived from such disposition), or
(b) the gain is attributable to an office or other fixed place of business
maintained by such individual in the United States; or (iii) the Company is or
has been a United States real property holding corporation (a "USRPHC") for
United States federal income tax purposes (which the Company does not believe
that it is or is likely to become) at any time within the shorter of the
five-year period preceding such disposition or such Non-U.S. Holder's holding
period. If the Company were or were to become a USRPHC at any time during this
period, gains realized upon a disposition of Common Stock by a Non-U.S. Holder
which did not directly or indirectly own more than 5% of the Common Stock during
this period generally would not be subject to United States federal income tax,
provided that the Common Stock had been regularly traded on an established
securities market.
ESTATE TAX
Common Stock owned or treated as owned by an individual who is not a citizen
or resident (as defined for United States federal estate tax purposes) of the
United States at the time of death will be includable in the individual's gross
estate for United States federal estate tax purposes (unless an applicable
estate tax treaty provides otherwise), and therefore may be subject to United
States federal estate tax.
BACKUP WITHHOLDING, INFORMATION REPORTING AND OTHER REPORTING REQUIREMENTS
The Company must report annually to the IRS as to each Non-U.S. Holder the
amount of dividends paid to, and the tax withheld with respect to, each Non-U.S.
Holder. These reporting requirements apply regardless of whether withholding was
reduced or eliminated by an applicable tax treaty. Copies of this information
also may be made available under the provisions of a specific treaty or
agreement with the tax authorities in the country in which the Non-U.S. Holder
resides or is established.
Under the Current Regulations, United States backup withholding tax (which
generally is imposed at the rate of 31% on certain payments to persons that fail
to furnish the information required under the United States information
reporting requirements) and information reporting requirements (other than those
discussed above) generally will not apply to dividends paid on Common Stock to a
Non-U.S. Holder at an address outside of United States. Backup withholding and
information reporting generally will apply to dividends paid on shares of Common
Stock to a Non-U.S. Holder at an address in the United States, if such holder
fails to establish an exemption or to provide certain other information to the
payor. Under the
52
<PAGE>
Final Regulations, however, a Non-U.S. Holder of Common Stock that fails to
certify its Non-U.S. Holder status in accordance with the requirements of the
Final Regulations may be subject to United States backup withholding on payments
of dividends.
The payment of proceeds from the disposition of Common Stock to or through a
United States office of a broker will be subject to information reporting and
backup withholding unless the owner, under penalties of perjury, certifies,
among other things, such owner's status as a Non-U.S. Holder or otherwise
establishes an exemption. The payment of proceeds from the disposition of Common
Stock to or through a non-U.S. office of a non-U.S. broker generally will not be
subject to backup withholding and information reporting, except as noted below.
In the case of proceeds from a disposition of Common Stock paid to or through a
non-U.S. office of a broker that is (i) a United States person, (ii) a
"controlled foreign corporation" for United States federal income tax purposes
or (iii) a foreign person 50% or more of whose gross income from certain periods
is effectively connected with a United States trade or business, information
reporting (but not backup withholding) will apply unless the broker has
documentary evidence in its files that the owner is a Non-U.S. Holder (and the
broker has no actual knowledge to the contrary).
Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules from a payment to a Non-U.S. Holder will be refunded or
credited against the Non-U.S. Holder's United States federal income tax
liability, if any, provided that the required information is furnished to the
IRS.
53
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in a purchase agreement (the
"International Purchase Agreement") among the Company, each of the International
Selling Stockholders and each of the underwriters named below (the
"International Managers"), the International Selling Stockholders have agreed to
sell to each of the International Managers, and each of the International
Managers severally has agreed to purchase from the International Selling
Stockholders, the number of shares of Common Stock set forth opposite its name
below.
<TABLE>
<CAPTION>
NUMBER
INTERNATIONAL MANAGERS OF SHARES
- ----------------------------------------------------------------------------------------------------- ----------
<S> <C>
Donaldson, Lufkin & Jenrette International...........................................................
Goldman Sachs International..........................................................................
PaineWebber International (U.K.) Ltd.................................................................
Smith Barney Inc.....................................................................................
----------
Total........................................................................................ 4,008,063
----------
----------
</TABLE>
Donaldson, Lufkin & Jenrette International, Goldman Sachs International,
PaineWebber International (U.K.) Ltd. and Smith Barney Inc. are acting as the
representatives (the "International Representatives") of the International
Managers.
The Company and certain other stockholders of the Company (the "U.S. Selling
Stockholders") have also entered into a purchase agreement (the "U.S. Purchase
Agreement") with certain underwriters within the United States and Canada
(collectively, the "U.S. Underwriters"), for whom Merrill Lynch, Pierce, Fenner
& Smith Incorporated, Donaldson, Lufkin & Jenrette Securities Corporation,
Goldman, Sachs & Co., PaineWebber Incorporated and Smith Barney Inc. are acting
as representatives (the "U.S. Representatives"). Subject to the terms and
conditions set forth in the U.S. Purchase Agreement, the U.S. Selling
Stockholders have agreed to sell to the U.S. Underwriters, and the U.S.
Underwriters have severally agreed to purchase from the U.S. Selling
Stockholders, an aggregate of 8,610,682 shares of Common Stock. The U.S.
Offering is being undertaken independently of the International Offering.
Pursuant to agreements between the International Selling Stockholders and
the Company and the U.S. Selling Stockholders and the Company, the consummation
of the U.S. Offering is contingent upon the consummation of the International
Offering. However, the consummation of the International Offering is not
contingent upon the consummation of the U.S. Offering.
The International Managers and the U.S. Underwriters have not entered into
an intersyndicate agreement and no shares of Common Stock are to be transferred
between the International Managers and the U.S. Underwriters. The International
Managers and any dealer to whom they sell shares of Common Stock will not offer
to sell or sell shares of Common Stock to U.S. persons or to Canadian persons or
to persons they believe intend to resell to U.S. persons or Canadian persons,
and the U.S. Underwriters will not offer to sell or sell shares of Common Stock
to persons who are non-U.S. or non-Canadian persons or to persons they believe
intend to resell to persons who are non-U.S. or non-Canadian persons.
The International Representatives have advised the Company that the
International Managers propose initially to offer the shares of Common Stock to
the public at the public offering price set forth on the cover page of this
Prospectus, and to certain dealers at such price less a concession not in excess
of $ per share of Common Stock on sales to certain other dealers. The
International Managers may allow, and such dealers may reallow, a discount not
in excess of $ per share of Common Stock on sales to certain other
dealers. After the initial public offering, the public offering price,
concession and discount may be changed.
The Company and the International Selling Stockholders have agreed, subject
to certain exceptions, not to sell or otherwise dispose of any shares of Common
Stock or securities convertible into or exchangeable or exercisable for Common
Stock, without the prior written consent of Donaldson, Lufkin & Jenrette
International, for a period of 90 days after the date of this Prospectus. In
addition, the Company
54
<PAGE>
and the U.S. Selling Stockholders have entered into similar arrangements with
Merrill Lynch, Pierce, Fenner & Smith Incorporated.
The International Managers do not intend to confirm sales of the Common
Stock offered hereby to any accounts over which they exercise discretionary
authority.
The Company and the International Selling Stockholders have agreed to
indemnify the several International Managers against certain liabilities,
including liabilities under the Securities Act, or to contribute to payments the
International Managers may be required to make in respect thereof. The Company
has agreed to indemnify the International Selling Stockholders, under certain
circumstances, in respect of payments made by them pursuant to these agreements.
The International Managers have advised the Company that they do not
currently intend to engage in transactions intended to stabilize the price of
the Common Stock.
If the International Managers create a short position in the Common Stock in
connection with the International Offering, i.e., if they sell more shares of
Common Stock than are set forth on the cover page of this Prospectus, the
International Representatives may reduce that short position by purchasing
Common Stock in the open market. In general, purchases of a security to reduce a
short position could cause the price of the security to be higher than it might
be in the absence of such purchases.
Neither the Company nor any of the International Managers makes any
representation or prediction as to the direction or magnitude of any effect that
the transactions described above may have on the price of the Common Stock. In
addition, neither the Company nor any of the International Managers makes any
representation that the International Representatives will engage in such
transactions or that such transactions, once commenced, will not be discontinued
without notice.
No action has been or will be taken in any jurisdiction (except in the
United States) that would permit a public offering of the shares of Common
Stock, or the possession, circulation or distribution of the Prospectus or any
other material relating to the Company or shares of Common Stock in any
jurisdiction where action for that purpose is required. Accordingly, the shares
of Common Stock may not be offered or sold, directly or indirectly, and neither
this Prospectus nor any other offering material or advertisements in connection
with the shares of Common Stock may be distributed or published, in or from any
country or jurisdiction except in compliance with any applicable rules and
regulations of any such country or jurisdiction.
Each International Manager has agreed that (i) it has not offered or sold,
and will not for a period of six months following consummation of the
International Offering offer or sell, in the United Kingdom by means of any
document, any shares of Common Stock offered hereby, other than to persons whose
ordinary activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their businesses or
otherwise in circumstances than do not constitute an offer to the public within
the meaning of the Public Offers of Securities Regulations 1995, (ii) it has
complied with and will comply with all applicable provisions of the Financial
Services Act 1986 with respect to anything done by it in relation to the shares
of Common Stock in, from, or otherwise involving the United Kingdom and (iii) it
has only issued or passed on and will only issue or pass on to any person in the
United Kingdom any document received by it in connection with the issue of the
shares of Common Stock if that person is of a kind described in Article 11(3) of
the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order
1995, as amended, or is a person to whom the document may otherwise lawfully be
issued or passed on.
The Company has granted an option to the U.S. Underwriters, exercisable
within 30 days after the date of this Prospectus, to purchase up to an aggregate
of 1,892,811 additional shares of Common Stock to cover over-allotments at the
public offering price set forth on the cover page of this Prospectus, less the
underwriting discount. No similar over-allotment option has been granted to the
International Managers.
55
<PAGE>
LEGAL MATTERS
The validity of the Common Stock being offered hereby and certain other
legal matters relating to offerings pursuant to the Registration Statement will
be passed upon for the Company by Paul, Weiss, Rifkind, Wharton & Garrison, New
York, New York. Certain legal matters relating to the International Offerings
will be passed upon for the International Managers by Shearman & Sterling, New
York, New York.
EXPERTS
The consolidated financial statements and schedule of Playtex Products, Inc.
and its subsidiaries as of December 27, 1997 and December 28, 1996, and the
twelve months ended December 27, 1997, December 28, 1996 and December 30, 1995,
have been included herein and in the registration statement in reliance upon the
report of KPMG Peat Marwick LLP, independent certified public accountants,
appearing elsewhere herein, and upon the authority of said firm as experts in
accounting and auditing.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"SEC") a registration statement on Form S-3 (together with any amendments
thereto, the "Registration Statement") under the Securities Act with respect to
the shares of Common Stock being offered hereby. This Prospectus, which forms
part of the Registration Statement, does not contain all of the information set
forth in the Registration Statement and the exhibits and schedules thereto, to
which reference is hereby made. Statements made in this Prospectus as to the
contents of any contract, agreement or other document referred to are not
necessarily complete. With respect to each such contract, agreement or other
document filed as an exhibit to the Registration Statement or to a document
incorporated by reference herein, reference is made to such exhibit or document
for a more complete description of the matter involved, and each such statement
shall be deemed qualified in its entirety by such reference. For further
information with respect to the Company and the Common Stock offered hereby,
reference is hereby made to the Registration Statement and to the exhibits and
schedules thereto.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the SEC.
Such reports, proxy statements and other information can be inspected and copied
at the public reference facilities maintained by the SEC at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the SEC's regional offices in New
York (7 World Trade Center, 13th Floor, New York, New York 10048) and Chicago
(Citicorp Center, 14th Floor, 500 West Madison Street, Chicago, Illinois 60661).
Copies of such reports, proxy statements and other information also may be
obtained at prescribed rates from the Public Reference Section of the SEC at 450
Fifth Street, N.W., Washington, D.C. 20549. In addition, the SEC maintains a Web
site that contains reports, proxy statements and other information regarding
registrants (such as the Company) that file electronically with the SEC. The
Internet address of such site is "http://www.sec.gov." In addition, copies of
such information may also be inspected and copied at the office of The New York
Stock Exchange, Inc., 20 Broad Street, New York, New York 10005, upon which the
Company's Common Stock is listed.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed by the Company with the SEC pursuant
to the Exchange Act (Commission File No. 1-12620) and are hereby incorporated
herein by reference:
(1) The Company's Annual Report on Form 10-K for the fiscal year ended
December 27, 1997;
(2) the Company's Current Report on Form 8-K/A dated April 13, 1998
filed on April 13, 1998;
56
<PAGE>
(3) the description of the Common Stock contained in the Company's
Registration Statement on Form 8-A filed pursuant to Section 12(b) of the
Exchange Act, and declared effective on January 26, 1994 (including any
amendment or report) filed for the purpose of updating such description; and
(4) the Company's Quarterly Report on Form 10-Q for the three months
ended March 28, 1998.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of the initial filing of the
Registration Statement but prior to the consummation of the offering of the
Common Stock shall be deemed to be incorporated in this Prospectus by reference
and to be a part hereof from the date of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of such person, a copy
of any or all of the documents incorporated by reference herein (other than the
exhibits to such documents, unless such exhibits are specifically incorporated
by reference to in such documents). Requests for such copies should be directed
to Michael F. Goss, Chief Financial Officer, at 300 Nyala Farms Road, Westport,
Connecticut 06880, telephone number (203) 341-4000.
57
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY, THE SELLING STOCKHOLDERS OR THE UNDERWRITERS. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE
COMMON STOCK IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR
IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Prospectus Summary............................. 1
Special Note Regarding Forward
Looking Statements........................... 9
Risk Factors................................... 9
The Company.................................... 12
Use of Proceeds................................ 14
Price Range of Common Stock and
Dividend Policy.............................. 14
Capitalization................................. 15
Pro Forma Consolidated
Financial Data............................... 16
Selected Historical
Consolidated Financial Data.................. 21
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................... 24
Business....................................... 30
Management..................................... 41
Principal and Selling Stockholders............. 45
Description of Capital Stock................... 47
Certain United States Federal Tax Consequences
to Non-United States Holders................. 51
Underwriting................................... 54
Legal Matters.................................. 56
Experts........................................ 56
Available Information.......................... 56
Incorporation of Certain Documents
by Reference................................. 56
Index to Consolidated Financial Statements..... F-1
</TABLE>
4,008,063 SHARES
[LOGO]
PLAYTEX PRODUCTS, INC.
COMMON STOCK
--------------
PROSPECTUS
--------------
DONALDSON, LUFKIN & JENRETTE
INTERNATIONAL
GOLDMAN SACHS INTERNATIONAL
PAINEWEBBER INTERNATIONAL
SALOMON SMITH BARNEY INTERNATIONAL
[ ], 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
Registration fee.................................................................. $ 64,220
NASD filing fee................................................................... 22,270
Legal fees and expenses........................................................... 300,000
Accounting fees and expenses...................................................... 75,000
Printing and duplicating expenses................................................. 300,000
Blue Sky fees and expenses........................................................ 15,000
Miscellaneous expenses............................................................ 5,000
---------
Total............................................................................. $ 781,490
---------
---------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law (the "DGCL") grants a
Delaware corporation the power to indemnify any director, officer, employee or
agent against reasonable expenses (including attorneys' fees) incurred by him in
connection with any proceeding brought by or on behalf of the corporation and
against judgments, fines, settlements and reasonable expenses (including
attorneys' fees) incurred by him in connection with any other proceeding, if (a)
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, and (b) in the case of any
criminal proceeding, he had no reasonable cause to believe his conduct was
unlawful. Except as ordered by a court, however, no indemnification is to be
made in connection with any proceeding brought by or in the right of the
corporation where the person involved is adjudged to be liable to the
corporation.
Section 8 of the Company's restated certificate of incorporation and Section
13.1 of the Company's by-laws provide that the Company 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; PROVIDED,
HOWEVER, that the Company 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.
Section 102 of the DGCL permits the limitation of directors' personal
liability to the corporation or its stockholders for monetary damages for breach
of fiduciary duties as a director except for (i) any breach of the director's
duty of loyalty to the corporation or its stockholders, (ii) acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of the law, (iii) breaches under section 174 of the DGCL, which relate to
unlawful payments of dividends or unlawful stock repurchase or redemptions, and
(iv) any transaction from which the director derived an improper personal
benefit.
Section 7 of the Company's restated certificate of incorporation limits the
personal liability of directors of the Company to the fullest extent permitted
by paragraph (7) of subsection (b) of section 102 of the DGCL.
II-1
<PAGE>
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the Company has been informed that in the
opinion of the SEC such indemnification is against public policy as expressed in
the Securities Act and is therefore unenforceable.
The Company maintains directors' and officers' liability insurance for its
officers and directors.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ------------- -----------------------------------------------------------------------------------------------------
<C> <S>
1.1 Form of U.S. Purchase Agreement.
1.2 Form of International Purchase Agreement.
5 Opinion of Paul, Weiss, Rifkind, Wharton & Garrison as to legal matters.*
8 Opinion of Paul, Weiss, Rifkind, Wharton & Garrison as to tax matters.*
12 Statement of Computation of Ratio of Earnings to Fixed Charges.*
23.1 Consent of KPMG Peat Marwick LLP.*
23.2 Consent of Paul, Weiss, Rifkind, Wharton & Garrison regarding Exhibit 5 (included in the opinion
filed as Exhibit 5 to this Registration Statement).*
23.3 Consent of Paul, Weiss, Rifkind, Wharton & Garrison regarding Exhibit 8 (included in the opinion
filed as Exhibit 8 to this Registration Statement).*
24 Powers of Attorney*
</TABLE>
- ------------------------
* Previously filed.
(b) Financial Statement Schedules
All schedules for which provision is made in the applicable accounting
regulations of the SEC are either not required under the related instructions,
are not applicable (and therefore have been omitted), or the required
disclosures are contained in the financial statements included herein.
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) to reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in the volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering range
may be reflected on the form of Prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum aggregate
II-2
<PAGE>
offering price set forth in the "Calculation of Registration Fee" table in
the effective Registration Statement;
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement; provided,
however, that paragraph (1)(i) and (1)(ii) above do not apply if information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the registrant pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") that are incorporated by reference in the Registration
Statement;
(2) that, for the purpose of determining any liability under the Securities Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof; and
(3) to remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of
the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in this Registration
Statement shall be deemed to be a new registration statement relating to the
securities offered herein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions described under Item 15
above, or otherwise, the Registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in
the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
(4) For purposes of determining any liability under the Securities Act of 1933,
the information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in the form
of a Prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(5) For purposes of determining any liability under the Securities Act of 1933,
each post-effective amendment that contains a form of Prospectus shall be
deemed to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this amendment to the Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the Town of Westport,
Connecticut, on May 14, 1998.
PLAYTEX PRODUCTS, INC.
BY: /S/ MICHAEL R. GALLAGHER
-----------------------------------------
Michael R. Gallagher
CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Act, this amendment to the
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------
* Chairman of the Board and
- ------------------------------ Director May 14, 1998
Robert B. Haas
/s/ MICHAEL R. GALLAGHER Chief Executive Officer
- ------------------------------ (Principal Executive May 14, 1998
Michael R. Gallagher Officer) and Director
Executive Vice President
* and Chief Financial
- ------------------------------ Officer (Principal May 14, 1998
Michael F. Goss Financial and Accounting
Officer) and Director
* Director
- ------------------------------ May 14, 1998
Thomas H. Lee
Director
- ------------------------------ May , 1998
Kenneth F. Yontz
Director
- ------------------------------ May , 1998
Timothy O. Fisher
II-4
<PAGE>
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------
*
- ------------------------------
Douglas D. Wheat Director May 14, 1998
*
- ------------------------------
Wyche H. Walton Director May 14, 1998
*
- ------------------------------
John W. Childs Director May 14, 1998
*
- ------------------------------
Michael R. Eisenson Director May 14, 1998
- ------------------------------
C. Ann Merrifield Director May , 1998
*By: /s/ MICHAEL R.
GALLAGHER
-------------------------
Michael R. Gallagher
ATTORNEY-IN-FACT
II-5
<PAGE>
EXHIBIT INDEX
EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ------------- -----------------------------------------------------------------------------------------------------
<C> <S>
1 Form of U.S. Purchase Agreement.
1.2 Form of International Purchase Agreement.
5 Opinion of Paul, Weiss, Rifkind, Wharton & Garrison as to legal matters.*
8 Opinion of Paul, Weiss, Rifkind, Wharton & Garrison as to tax matters.*
12 Statement of Computation of Ratio of Earnings to Fixed Charges.*
23.1 Consent of KPMG Peat Marwick LLP.*
23.2 Consent of Paul, Weiss, Rifkind, Wharton & Garrison regarding Exhibit 5 (included in the opinion
filed as Exhibit 5 to this Registration Statement).*
23.3 Consent of Paul, Weiss, Rifkind, Wharton & Garrison regarding Exhibit 8 (included in the opinion
filed as Exhibit 8 to this Registration Statement.)*
24 Powers of Attorney (included on signature pages of this Part II).*
</TABLE>
- ------------------------
* Previously filed.
<PAGE>
Exhibit 1
S&S Draft
5/04/98
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
PLAYTEX PRODUCTS, INC.
(a Delaware corporation)
[________] Shares of Common Stock
U.S. PURCHASE AGREEMENT
Dated: May [__], 1998
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
U.S. PURCHASE AGREEMENT
PAGE
SECTION 1. REPRESENTATIONS AND WARRANTIES.....................................3
(a) REPRESENTATIONS AND WARRANTIES BY THE COMPANY..............3
(b) REPRESENTATIONS AND WARRANTIES BY THE SELLING
STOCKHOLDERS..............................................11
(c) OFFICER'S CERTIFICATES....................................14
SECTION 2. SALE AND DELIVERY TO UNDERWRITERS; CLOSING........................14
(a) INITIAL SECURITIES........................................14
(b) OPTION SECURITIES.........................................15
(c) PAYMENT...................................................15
(d) DENOMINATIONS; REGISTRATION...............................16
SECTION 3. COVENANTS OF THE COMPANY..........................................16
(a) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION
REQUESTS..................................................16
(b) FILING OF AMENDMENTS......................................17
(c) DELIVERY OF REGISTRATION STATEMENTS.......................17
(d) DELIVERY OF PROSPECTUS....................................17
(e) CONTINUED COMPLIANCE WITH SECURITIES LAWS.................17
(f) RULE 158..................................................18
(g) USE OF PROCEEDS...........................................18
(h) LISTING...................................................18
(i) RESTRICTION ON SALE OF SECURITIES.........................18
(j) REPORTING REQUIREMENTS....................................19
SECTION 4. PAYMENT OF EXPENSES...............................................19
(a) EXPENSES..................................................19
(b) EXPENSES OF THE SELLING STOCKHOLDERS......................20
(c) TERMINATION OF AGREEMENT..................................20
(d) ALLOCATION OF EXPENSES....................................20
SECTION 5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS...........................20
(a) EFFECTIVENESS OF REGISTRATION STATEMENT...................20
(b) OPINION OF COUNSEL FOR COMPANY............................20
(c) OPINION OF COUNSEL FOR SELLING STOCKHOLDERS...............21
(d) OPINION OF '40 ACT COUNSEL FOR CERTAIN SELLING
STOCKHOLDERS..............................................21
(e) OPINION OF COUNSEL FOR UNDERWRITERS.......................21
(f) OPINION OF '40 ACT COUNSEL FOR THE UNDERWRITERS...........22
(g) OFFICERS' CERTIFICATE.....................................22
(h) CERTIFICATE OF SELLING STOCKHOLDERS.......................22
(i) ACCOUNTANTS' COMFORT LETTER...............................22
(j) BRING-DOWN COMFORT LETTER.................................23
(k) APPROVAL OF LISTING.......................................23
(l) NO OBJECTION..............................................23
(m) LOCK-UP AGREEMENTS........................................23
<PAGE>
PAGE
(n) PURCHASE OF INITIAL INTERNATIONAL SECURITIES..........23
(o) CONDITIONS TO PURCHASE OF OPTION SECURITIES...........23
(p) ADDITIONAL DOCUMENTS..................................24
(q) TERMINATION OF AGREEMENT..............................24
SECTION 6. INDEMNIFICATION...............................................25
(a) INDEMNIFICATION OF UNDERWRITERS.......................25
(b) INDEMNIFICATION OF COMPANY, DIRECTORS AND OFFICERS
AND SELLING STOCKHOLDERS..............................26
(c) ACTIONS AGAINST PARTIES; NOTIFICATION.................27
(d) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE....27
(e) OTHER AGREEMENTS WITH RESPECT TO INDEMNIFICATION......28
SECTION 7. CONTRIBUTION..................................................28
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO
SURVIVE DELIVERY..............................................29
SECTION 9. TERMINATION OF AGREEMENT......................................30
(a) TERMINATION; GENERAL..................................30
(b) LIABILITIES...........................................30
SECTION 10. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS...................30
SECTION 11. DEFAULT BY ONE OR MORE OF THE SELLING STOCKHOLDERS...........31
SECTION 12. NOTICES......................................................32
SECTION 13. PARTIES......................................................32
SECTION 14. GOVERNING LAW AND TIME.......................................32
SECTION 15. EFFECT OF HEADINGS...........................................33
SCHEDULES
Schedule A - List of Underwriters............................. Sch A-1
Schedule B - List of Selling Stockholders..................... Sch B-1
Schedule C - Pricing Information.............................. Sch C-1
[Schedule D - List of Subsidiaries............................. Sch D-1]
[Schedule E - List of Persons and Entities Subject to Lock-up.. Sch E-1]
EXHIBITS
EXHIBIT A-1 - Form of Opinion of Company's Counsel............ A-1
EXHIBIT A-2 - Form of Opinion of Company's General Counsel.... A-2
EXHIBIT B-1 - Form of Opinion of Counsel for the Selling
Stockholders.................................... B-1
EXHIBIT B-2 - Form of Opinion of Counsel for the Selling
Stockholders.................................... B-2
EXHIBIT C - Form of Lock-up Letter............................ C-1
<PAGE>
S&S Draft
5/4/98
PLAYTEX PRODUCTS, INC.
(a Delaware corporation)
[_______] Shares of Common Stock
(Par Value $.01 Per Share)
U.S. PURCHASE AGREEMENT
-----------------------
May [__], 1998
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Donaldson, Lufkin & Jenrette Securities Corporation
Goldman, Sachs & Co.
PaineWebber Incorporated
Smith Barney Inc.
as Representatives of the several Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281
Ladies and Gentlemen:
PLAYTEX PRODUCTS, INC., a Delaware corporation (the
"Company"), and the persons listed in Schedule B hereto (the "Selling
Stockholders"), confirm their respective agreements with Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") and each
of the other Underwriters named in Schedule A hereto (collectively, the
"Underwriters", which term shall also include any underwriter substituted as
hereinafter provided in Section 10 hereof), for whom Merrill Lynch and
Donaldson, Lufkin & Jenrette Securities Corporation, Goldman, Sachs & Co.,
PaineWebber Incorporated and Smith Barney Inc. are acting as representatives
(in such capacity, the "Representatives"), with respect to (i) the sale by
the Selling Stockholders, acting severally and not jointly, and the purchase
by the Underwriters, acting severally and not jointly, of the respective
numbers of shares of Common Stock, par value $.01 per share, of the Company
("Common Stock") set forth in Schedules A and B hereto and (ii) the grant by
the Company to the Underwriters, acting severally and not jointly, of the
option described in
<PAGE>
2
Section 2(b) hereof to purchase all or any part of additional shares of Common
Stock to cover over-allotments, if any. The aforesaid [_______] shares of Common
Stock (the "Initial Securities") to be purchased by the Underwriters and all or
any part of the [ ] shares of Common Stock subject to the option described in
Section 2(b) hereof (the "Option Securities") are hereinafter called,
collectively, the "Securities".
It is understood that the Company and certain stockholders
(the "International Selling Stockholders") are concurrently entering into an
agreement dated the date hereof (the "International Purchase Agreement")
providing for the separate offering by the International Selling Stockholders
of an aggregate of [ ] shares of Common Stock (the "International
Securities") through arrangements with certain underwriters outside the
United States and Canada (the "International Managers") for which Donaldson,
Lufkin & Jenrette International, Goldman Sachs International, PaineWebber
International (U.K.) Ltd and Smith Barney Inc. are acting as lead manager(s)
(the "Lead Manager(s)"). It is understood that the Selling Stockholders are
not obligated or entitled to sell and the Underwriters are not obligated or
entitled to purchase, any Initial Securities unless all of the International
Securities are contemporaneously purchased by the International Managers.
The Company and the Selling Stockholders understand that the
Underwriters propose to make a public offering of the Securities as soon as the
Representatives deem advisable after this Agreement has been executed and
delivered.
The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-3 (No. 333-50099) covering
the registration of the Securities under the Securities Act of 1933, as amended
(the "1933 Act"), including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the
Company will either (i) prepare and file a prospectus in accordance with the
provisions of Rule 430A ("Rule 430A") of the rules and regulations of the
Commission under the 1933 Act (the "1933 Act Regulations") and paragraph (b) of
Rule 424 ("Rule 424(b)") of the 1933 Act Regulations or (ii) if the Company has
elected to rely upon Rule 434 ("Rule 434") of the 1933 Act Regulations, prepare
and file a term sheet (a "Term Sheet") in accordance with the provisions of Rule
434 and Rule 424(b). The form of prospectus relating to the securities is
hereinafter referred to as the "Form of Prospectus". The information included in
any such prospectus or in any such Term Sheet, as the case may be, that was
omitted from such registration statement at the time it became effective but
that is deemed to be part of such registration statement at the time it became
effective (a) pursuant to paragraph (b) of Rule 430A is referred to as "Rule
430A Information" or (b) pursuant to paragraph (d) of Rule 434 is referred to as
"Rule 434 Information". The Form of Prospectus used before such registration
statement became effective, and any prospectus that omitted, as applicable, the
Rule 430A Information
<PAGE>
3
or the Rule 434 Information, that was used after such effectiveness and prior to
the execution and delivery of this Agreement, is herein called a "preliminary
prospectus". Such registration statement, including the exhibits thereto,
schedules thereto, if any, and the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 under the 1933 Act, at the time it became
effective and including the Rule 430A Information and the Rule 434 Information,
as applicable, is herein called the "Registration Statement". Any registration
statement filed pursuant to Rule 462(b) of the 1933 Act Regulations is herein
referred to as the "Rule 462(b) Registration Statement", and after such filing
the term "Registration Statement" shall include the Rule 462(b) Registration
Statement. The final Form of Prospectus, including the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the 1933 Act, in the
forms first furnished to the Underwriters for use in connection with the
offering of the Securities are herein called the "Prospectus". If Rule 434 is
relied on, the term "Prospectus" shall refer to the preliminary Prospectus dated
April 23, 1998 together with the applicable Term Sheet and all references in
this Agreement to the date of such Prospectus shall mean the date of the
applicable Term Sheet. For purposes of this Agreement, all references to the
Registration Statement, any preliminary prospectus, the Prospectus or any Term
Sheet or any amendment or supplement to any of the foregoing shall be deemed to
include the copy filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval system ("EDGAR").
All references in this Agreement to financial statements and
schedules and other information which is "contained", "included" or "stated" in
the Registration Statement, any preliminary prospectus (including the Form of
Prospectus) or the Prospectus (or other references of like import) shall be
deemed to mean and include all such financial statements and schedules and other
information which is incorporated by reference in the Registration Statement,
any preliminary prospectus (including the Form of Prospectus) or the Prospectus,
as the case may be; and all references in this Agreement to amendments or
supplements to the Registration Statement, any preliminary prospectus or the
Prospectus shall be deemed to mean and include the filing of any document under
the Securities Exchange Act of 1934, as amended (the "1934 Act"), which is
incorporated by reference in the Registration Statement, such preliminary
prospectus or the Prospectus, as the case may be.
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) REPRESENTATIONS AND WARRANTIES BY THE COMPANY. The Company
represents and warrants to each Underwriter as of the date hereof, as of the
Closing Time referred to in Section 2(c) hereof, and as of each Date of Delivery
(if any) referred to in Section 2(b) hereof, and agrees with each Underwriter,
as follows:
(i) COMPLIANCE WITH REGISTRATION REQUIREMENTS. The Company meets
the requirements for use of Form S-3 under the 1933 Act. Each of the
Registration
<PAGE>
4
Statement and any Rule 462(b) Registration Statement has become
effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are pending or, to
the knowledge of the Company, are contemplated by the Commission, and
any request on the part of the Commission for additional information has
been complied with or withdrawn.
At the respective times the Registration Statement, any Rule
462(b) Registration Statement and any post-effective amendments thereto
became effective and at the Closing Time (and, if any Option Securities
are purchased, at the Date of Delivery), the Registration Statement, the
Rule 462(b) Registration Statement and any amendments and supplements
thereto complied and will comply in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations and did not
and will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading. Neither the Prospectus nor any
amendments or supplements thereto, at the time the Prospectus or any
such amendment or supplement was issued and at the Closing Time (and, if
any Option Securities are purchased, at the Date of Delivery), included
or will include an untrue statement of a material fact or omitted or
will omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading. If Rule 434 is used, the Company will comply
with the requirements of Rule 434. The representations and warranties in
this subsection shall not apply to statements in or omissions from the
Registration Statement or Prospectus made in reliance upon and in
conformity with information furnished to the Company in writing by any
Underwriter through Representatives expressly for use in the
Registration Statement or Prospectus.
Each preliminary prospectus and the prospectus filed as part of
the Registration Statement as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 424 under the 1933 Act,
complied when so filed in all material respects with the 1933 Act
Regulations and each preliminary prospectus and the Prospectus delivered
to the Underwriters for use in connection with this offering was
identical to the electronically transmitted copies thereof filed with
the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.
(ii) INCORPORATED DOCUMENTS. The documents incorporated or deemed
to be incorporated by reference in the Registration Statement and the
Prospectus, when they became effective or at the time they were or
hereafter are filed with the Commission, complied and will comply in all
material respects with the requirements of the 1933 Act and the 1933 Act
Regulations or the 1934 Act and the rules and regulations of the
Commission thereunder (the "1934 Act Regulations"), as applicable, and,
when read
<PAGE>
5
together with the other information in the Prospectus, at the time the
Registration Statement became effective, at the time the Prospectus was
issued and at the Closing Time (and, if any Option Securities are
purchased, at the Date of Delivery), did not and will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading.
(iii) INDEPENDENT ACCOUNTANTS. KPMG Peat Marwick L.L.P., who
certified the financial statements and supporting schedules included in
the Registration Statements, are independent public accountants as
required by the 1933 Act and the 1933 Act Regulations.
(iv) FINANCIAL STATEMENTS. The historical consolidated financial
statements included in the Registration Statement and the Prospectus,
together with the related schedules and notes, present fairly the
consolidated financial position of the Company and its subsidiaries at
the dates indicated on the basis therein and the statement of
operations, stockholders' equity and cash flows of the Company and its
consolidated subsidiaries for the periods specified, and said financial
statements have been prepared in conformity with generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout
the periods involved except as disclosed therein. The supporting
schedules, if any, included in the Registration Statement present fairly
in accordance with GAAP the information required to be stated therein.
The selected financial data and the summary financial information
included in the Prospectus present fairly the information shown therein
and have been compiled on a basis consistent with that of the audited
financial statements included in the Registration Statement. The pro
forma financial statements, the related notes thereto and other pro
forma financial information included in the Registration Statement and
the Prospectus present fairly the information shown therein, have been
prepared in accordance with the Commission's rules and guidelines with
respect to pro forma financial statements and have been properly
compiled on the basis described therein, and the assumptions used in the
preparation thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions and circumstances
referred to therein.
(v) NO MATERIAL ADVERSE CHANGE IN BUSINESS. Since the respective
dates as of which information is given in the Registration Statement and
the Prospectus, except as otherwise stated therein, (A) there has been
no material adverse change in the condition, financial or otherwise, or
in the earnings, business affairs or business prospects of the Company
and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business (a "Material Adverse
Effect"), (B) there have been no transactions entered into by the
Company or any of its subsidiaries, other than those in the ordinary
course of business, which are material with respect to the
<PAGE>
6
Company and its subsidiaries considered as one enterprise and (C) there
has been no dividend or distribution of any kind declared, paid or made
by the Company on any class of its capital stock.
(vi) GOOD STANDING OF THE COMPANY. The Company has been duly
organized and is validly existing as a corporation in good standing
under the laws of the State of Delaware and has corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus and to enter into and perform
its obligations under this Agreement; and the Company is duly qualified
as a foreign corporation to transact business and is in good standing in
each other jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of
business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect.
(vii) GOOD STANDING OF SUBSIDIARIES. The only subsidiaries of the
Company are the subsidiaries listed on Schedule D hereto (each a
"Subsidiary" and, collectively, the "Subsidiaries"). Each Subsidiary has
been duly organized and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, has
corporate power and authority to own, lease and operate its properties
and to conduct its business as described in the Prospectus and is duly
qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct
of business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect; except as
otherwise disclosed in the Registration Statement, all of the issued and
outstanding capital stock of each such Subsidiary (except Playtex
Marketing Corporation in which the Company owns 50% of the outstanding
shares of capital stock) has been duly authorized and validly issued, is
fully paid and non-assessable and is owned by the Company, directly or
through subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity; none of the outstanding
shares of capital stock of any Subsidiary was issued in violation of the
preemptive or similar rights of any securityholder of such Subsidiary.
(viii) CAPITALIZATION. The authorized, issued and outstanding
capital stock of the Company is as set forth in the Prospectus in the
column entitled "Actual" under the caption "Capitalization" (except for
subsequent issuances, if any, pursuant to this Agreement or pursuant to
the International Purchase Agreement, pursuant to reservations,
agreements or employee benefit plans referred to in the Prospectus or
pursuant to the exercise of convertible securities or options referred
to in the Prospectus). The shares of issued and outstanding capital
stock of the Company, including the Securities to be purchased by the
Underwriters from the Selling
<PAGE>
7
Stockholders, have been duly authorized and validly issued and are fully
paid and non-assessable; none of the outstanding shares of capital stock
of the Company, including the Securities to be purchased by the
Underwriters from the Selling Stockholders, was issued in violation of
the preemptive or other similar rights of any securityholder of the
Company.
(ix) AUTHORIZATION OF AGREEMENT. This Agreement has been duly
authorized, executed and delivered by the Company.
(x) AUTHORIZATION AND DESCRIPTION OF SECURITIES. The Securities
to be purchased by the Underwriters from the Company pursuant to the
Underwriters exercise of the over-allotment option, if any, have been
duly authorized for issuance and sale to the Underwriters pursuant to
this Agreement, and, when issued and delivered by the Company pursuant
to this Agreement against payment of the consideration set forth herein,
will be validly issued and fully paid and non-assessable; the Common
Stock conforms to all statements relating thereto contained in the
Prospectus and such description conforms in all material respects to the
rights set forth in the instruments defining the same; and no holder of
the Securities will be subject to personal liability by reason of being
such a holder; and the issuance of the Securities is not subject to the
preemptive or other similar rights of any securityholder of the Company.
(xi) ABSENCE OF DEFAULTS AND CONFLICTS. Neither the Company nor
any of its subsidiaries is in violation of its charter or by-laws or in
default in the performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage,
deed of trust, loan or credit agreement, note, lease or other agreement
or instrument to which the Company or any of its subsidiaries is a party
or by which it or any of them may be bound, or to which any of the
property or assets of the Company or any subsidiary is subject
(collectively, "Agreements and Instruments") except for such defaults
that would not result in a Material Adverse Effect; and the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated in this Agreement, and in the Registration
Statement (including the issuance and sale of the Securities and the use
of the proceeds from the sale of the Securities as described in the
Prospectus under the caption "Use of Proceeds") and compliance by the
Company with its obligations under this Agreement have been duly
authorized by all necessary corporate action and do not and will not,
whether with or without the giving of notice or passage of time or both,
conflict with or constitute a breach of, or default or Repayment Event
(as defined below) under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company
or any subsidiary pursuant to, the Agreements and Instruments (except
for such conflicts, breaches or defaults or
<PAGE>
8
liens, charges or encumbrances that would not result in a Material
Adverse Effect), nor will such action result in any violation of the
provisions of the charter or by-laws of the Company or any subsidiary or
any material applicable law, statute, rule, regulation, judgment, order,
writ or decree of any government, government instrumentality or court,
domestic or foreign, having jurisdiction over the Company or any
subsidiary or any of their assets, properties or operations. As used
herein, a "Repayment Event" means any event or condition which gives the
holder of any note, debenture or other evidence of indebtedness (or any
person acting on such holder's behalf) the right to require the
repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company or any subsidiary.
(xii) ABSENCE OF LABOR DISPUTE. No labor dispute with the
employees of the Company or any subsidiary exists or, to the knowledge
of the Company, is imminent, which may reasonably be expected to result
in a Material Adverse Effect.
(xiii) ABSENCE OF PROCEEDINGS. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Company, threatened, against or affecting the
Company or any subsidiary, which is required to be disclosed in the
Registration Statement (other than as disclosed therein), or which might
reasonably be expected to result in a Material Adverse Effect, or which
might reasonably be expected to materially and adversely affect the
properties or assets thereof or the consummation of the transactions
contemplated in this Agreement or the performance by the Company of its
obligations hereunder; the aggregate of all pending legal or
governmental proceedings to which the Company or any subsidiary is a
party or of which any of their respective property or assets is the
subject which are not described in the Registration Statement, including
ordinary routine litigation incidental to the business, could not
reasonably be expected to result in a Material Adverse Effect.
(xiv) ACCURACY OF EXHIBITS. There are no contracts or documents
which are required to be described in the Registration Statement, the
Prospectus or the documents incorporated by reference therein or to be
filed as exhibits thereto which have not been so described and filed as
required.
(xv) POSSESSION OF INTELLECTUAL PROPERTY. The Company and its
subsidiaries own or possess, or can acquire on reasonable terms,
adequate patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names or other
intellectual property (collectively, "Intellectual Property") necessary
to carry on the business now operated by them, except where the failure
to own or possess or otherwise be able to acquire
<PAGE>
9
such Intellectual Property would not result in a Material Adverse
Effect, and neither the Company nor any of its subsidiaries has received
any notice or is otherwise aware of any infringement of or conflict with
asserted rights of others with respect to any Intellectual Property or
of any facts or circumstances which would render any Intellectual
Property invalid or inadequate to protect the interest of the Company or
any of its subsidiaries therein, and which infringement or conflict (if
the subject of any unfavorable decision, ruling or finding) or
invalidity or inadequacy, singly or in the aggregate, would result in a
Material Adverse Effect.
(xvi) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency is necessary or required for the performance by the Company of
its obligations under this Agreement, in connection with the offering,
issuance or sale of the Securities hereunder or the consummation of the
transactions contemplated by this Agreement and the International
Purchase Agreement, except such as have been already obtained or as may
be required under the 1933 Act or the 1933 Act Regulations or state
securities laws.
(xvii) POSSESSION OF LICENSES AND PERMITS. The Company and its
subsidiaries possess such material permits, licenses, approvals,
consents and other authorizations (collectively, "Governmental
Licenses") issued by the appropriate federal, state, local or foreign
regulatory agencies or bodies necessary to conduct the business now
operated by them; the Company and its subsidiaries are in compliance
with the terms and conditions of all such Governmental Licenses, except
where the failure so to comply would not, singly or in the aggregate,
have a Material Adverse Effect; all of the Governmental Licenses are
valid and in full force and effect, except when the invalidity of such
Governmental Licenses or the failure of such Governmental Licenses to be
in full force and effect would not have a Material Adverse Effect; and
neither the Company nor any of its subsidiaries has received any notice
of proceedings relating to the revocation or modification of any such
Governmental Licenses which, singly or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, would result in a
Material Adverse Effect.
(xviii) TITLE TO PROPERTY. The Company and its subsidiaries have
good and marketable title to all real property owned by the Company and
its subsidiaries and good title to all other properties owned by them
which is material to the business of the Company and its subsidiaries,
in each case, free and clear of all mortgages, pledges, liens, security
interests, claims, restrictions or encumbrances of any kind except such
as (a) are described in the Prospectus or (b) do not, singly or in the
aggregate, materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by
the Company or any of its subsidiaries; and all of the
<PAGE>
10
leases and subleases material to the business of the Company and its
subsidiaries, considered as one enterprise, and under which the Company
or any of its subsidiaries holds properties described in the Prospectus,
are validly existing and enforceable, with such exceptions as are not
material and do not interfere with the use made and prepared to be made
of such property except as described in the Prospectus.
(xix) INVESTMENT COMPANY ACT. The Company is not, and upon the
issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Prospectus
will not be, an "investment company" or an entity "controlled" by an
"investment company" as such terms are defined in the Investment Company
Act of 1940, as amended (the "1940 Act").
(xx) ENVIRONMENTAL LAWS. Except as described in the Registration
Statement and except as would not, singly or in the aggregate, result in
a Material Adverse Effect, (A) neither the Company nor any of its
subsidiaries is in violation of any federal, state, local or foreign
statute, law, rule, regulation, ordinance, code, policy or rule of
common law or any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent, decree or
judgment, relating to pollution or protection of human health, the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including,
without limitation, laws and regulations relating to the release or
threatened release of chemicals, pollutants, contaminants, wastes, toxic
substances, hazardous substances, petroleum or petroleum products
(collectively, "Hazardous Materials") or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling
of Hazardous Materials (collectively, "Environmental Laws"), (B) the
Company and its subsidiaries have all permits, authorizations and
approvals required under any applicable Environmental Laws and are each
in compliance with their requirements, (C) there are no pending or, to
the Company's knowledge, threatened administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices
of noncompliance or violation, investigation or proceedings relating to
any Environmental Law against the Company or any of its subsidiaries and
(D) there are no events or circumstances that might reasonably be
expected to form the basis of an order for clean-up or remediation, or
an action, suit or proceeding by any private party or governmental body
or agency, against or affecting the Company or any of its subsidiaries
relating to Hazardous Materials or any Environmental Laws.
(xxi) INSURANCE. Except as set forth in the following sentence,
the Company and each of its subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in
such amounts as are prudent and customary in the businesses in which
they are engaged, including, but not limited to, insurance coverage with
certain limits in excess of a deductible of $1.0 million per occurrence
and $4.0
<PAGE>
11
million in the aggregate, on toxic shock syndrome claims occurring on or
after December 1, 1995; and neither the Company nor any of its
subsidiaries (i) has received notice from any insurer or agent of such
insurer that substantial capital improvements or other material
expenditures will have to be made in order to continue such insurance or
(ii) has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers at a cost that would not
have a Material Adverse Effect. For toxic shock syndrome claims filed
from October 1, 1985 until November 30, 1995, the Company is
self-insured and bears the costs of defending those claims, including
settlements and trials. The aggregate amount of all toxic shock syndrome
claims pending against the Company does not exceed 10% of the Company's
net asset value.
(xxii) REGISTRATION RIGHTS. Except as disclosed in the
Prospectus, there are no holders of securities (debt or equity) of the
Company, or holders of rights (including, without limitation, preemptive
rights), warrants or options to obtain securities of the Company or the
Subsidiaries, who have the right to request the Company to register
securities held by them under the Securities Act.
(xxiii) INTERNAL CONTROLS. The Company and the Subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance
with management's general and specific authorizations; (ii) transactions
are recorded as necessary to permit preparations of financial statements
in conformance with GAAP and to maintain accountability for assets;
(iii) access to assets is permitted in accordance with management's
general or specific authorizations; and (iv) the record of
accountability for assets is compared with the existing assets at
reasonable intervals, and appropriate action is taken with respect to
any differences.
(b) REPRESENTATIONS AND WARRANTIES BY THE SELLING STOCKHOLDERS.
Each Selling Stockholder severally and not jointly represents and warrants to
each Underwriter as of the date hereof, as of the Closing Time, and agrees with
each Underwriter, as follows:
(i) ACCURATE DISCLOSURE. To the best knowledge of such Selling
Stockholder, the representations and warranties of the Company contained
in Section 1(a) hereof are true and correct; such Selling Stockholder
has reviewed and is familiar with the Registration Statement and the
Prospectus and neither the Prospectus nor any amendments or supplements
thereto includes any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading; such Selling Stockholder is not prompted to sell the
Securities to be sold by such Selling Stockholder hereunder by any
information concerning the Company or any subsidiary of the Company
which is not set forth in the Prospectus.
<PAGE>
12
(ii) AUTHORIZATION OF AGREEMENTS. Such Selling Stockholder has
the full right, power and authority to enter into this Agreement and a
Power of Attorney and Custody Agreement (the "Power of Attorney and
Custody Agreement") and to sell, transfer and deliver the Securities to
be sold by such Selling Stockholder under this Agreement. The execution
and delivery of this Agreement and the Power of Attorney and Custody
Agreement and the sale and delivery of the Securities to be sold by such
Selling Stockholder and the consummation of the transactions
contemplated herein and compliance by such Selling Stockholder with its
obligations hereunder have been duly authorized by such Selling
Stockholder and do not and will not, whether with or without the giving
of notice or passage of time or both, conflict with or constitute a
breach of, or default under, or result in the creation or imposition of
any tax, lien, charge or encumbrance upon the Securities to be sold by
such Selling Stockholder or any property or assets of such Selling
Stockholder pursuant to any contract, indenture, mortgage, deed of
trust, loan or credit agreement, note, license, lease or other agreement
or instrument to which such Selling Stockholder is a party or by which
such Selling Stockholder may be bound, or to which any of the property
or assets of such Selling Stockholder is subject, nor will such action
result in any violation of the provisions of the charter or by-laws or
other organizational instrument of such Selling Stockholder, if
applicable, or any applicable treaty, law, statute, rule, regulation,
judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over
such Selling Stockholder or any of its properties.
(iii) GOOD AND MARKETABLE TITLE. Such Selling Stockholder has and
will at the Closing Time have good and marketable title to the
Securities to be sold by such Selling Stockholder hereunder, free and
clear of any security interest, mortgage, pledge, lien, charge, claim,
equity or encumbrance of any kind, other than pursuant to this
Agreement; and upon delivery of such Securities and payment of the
purchase price therefor as herein contemplated, assuming each such
Underwriter has no notice of any adverse claim, each of the Underwriters
will receive good and marketable title to the Securities purchased by it
from such Selling Stockholder, free and clear of any security interest,
mortgage, pledge, lien, charge, claim, equity or encumbrance of any
kind.
(iv) DUE EXECUTION OF POWER OF ATTORNEY AND CUSTODY AGREEMENT.
Such Selling Stockholder has duly executed and delivered, in the form
heretofore furnished to the Representatives, the Power of Attorney and
Custody Agreement with John W. Childs, Steven G. Segal and Adam L.
Suttin, or any of them, as attorneys-in-fact (the "Attorneys-in-Fact")
and Playtex Products, Inc., as custodian (the "Custodian"); the
Custodian is authorized to deliver the Securities to be sold by such
Selling Stockholder hereunder and to accept payment therefor; and each
Attorney-in-Fact is authorized to execute and deliver this Agreement and
the certificate referred to in Section 5(f) or that
<PAGE>
13
may be required pursuant to Section(s) 5(l) on behalf of such Selling
Stockholder, to sell, assign and transfer to the Underwriters the
Securities to be sold by such Selling Stockholder hereunder, to
determine the purchase price to be paid by the Underwriters to such
Selling Stockholder, as provided in Section 2(a) hereof, to authorize
the delivery of the Securities to be sold by such Selling Stockholder
hereunder, to accept payment therefor, and otherwise to act on behalf of
such Selling Stockholder in connection with this Agreement.
(v) ABSENCE OF MANIPULATION. Such Selling Stockholder has not
taken, and will not take, directly or indirectly, any action which is
designed to or which has constituted or which might reasonably be
expected to cause or result in stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of
the Securities.
(vi) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or consent,
approval, authorization, license, order, registration, qualification or
decree of, any court or governmental authority or agency, domestic or
foreign, is necessary or required for the performance by each Selling
Stockholder of its obligations hereunder or in the Power of Attorney and
Custody Agreement, or in connection with the sale and delivery of the
Securities hereunder or the consummation of the transactions
contemplated by this Agreement, except such as may have previously been
made or obtained or as may be required under the 1933 Act or the 1933
Act Regulations or state securities laws.
(vii) RESTRICTION ON SALE OF SECURITIES. During a period of 90
days from the date of the Prospectus, each of John W. Childs and J.W.
Childs Equity Partners, L.P. will not, without the prior written consent
of Merrill Lynch, (i) offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant to purchase or otherwise transfer or
dispose of, directly or indirectly, any share of Common Stock or any
securities convertible into or exercisable or exchangeable for Common
Stock or file any registration statement under the 1933 Act with respect
to any of the foregoing or (ii) enter into any swap or any other
agreement or any transaction that transfers, in whole or in part,
directly or indirectly, the economic consequence of ownership of the
Common Stock, whether any such swap or transaction described in clause
(i) or (ii) above is to be settled by delivery of Common Stock or such
other securities, in cash or otherwise. The foregoing sentence shall not
apply to (A) the Securities to be sold hereunder or under the
International Purchase Agreement, (B) the exercise of an option to
purchase Common Stock or the surrender of shares of Common Stock or of
an option in connection with the exercise of an option, in each case,
pursuant to existing employee benefit plans (including any shares of
Common Stock to be added to any such plan at the 1998 Annual Meeting of
the stockholders of the Company) of the Company referred to in the
<PAGE>
14
Prospectus, (C) transfers by way of testate or intestate succession or
operation of law, (D) transfers to immediate family members of such
Selling Stockholder or a trust or other entity of all of the beneficial
interests which are held by such Selling Stockholder and (E) transfers
to charitable organizations; PROVIDED that, in the case of transfers
pursuant to clauses (C), (D) and (E) of this sentence, the transferee
shall have agreed to be bound by the restrictions on transfer contained
in this paragraph (vii).
(viii) CERTIFICATES SUITABLE FOR TRANSFER. Certificates for all
of the Securities to be sold by such Selling Stockholder pursuant to
this Agreement, in suitable form for transfer by delivery or accompanied
by duly executed instruments of transfer or assignment in blank with
signatures guaranteed, have been placed in custody with the Custodian
with irrevocable conditional instructions to deliver such Securities to
the Underwriters pursuant to this Agreement.
(ix) NO ASSOCIATION WITH NASD. Neither such Selling Stockholder
nor any of its affiliates directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common
control with, or has any other association with (within the meaning of
Article I, Section 1(m) of the By-laws of the National Association of
Securities Dealers, Inc.), any member firm of the National Association
of Securities Dealers, Inc.
(c) OFFICER'S CERTIFICATES. Any certificate signed by any officer
of the Company or any of its subsidiaries delivered to the Representatives or to
counsel for the Underwriters shall be deemed a representation and warranty by
the Company to each Underwriter as to the matters covered thereby; and any
certificate signed by or on behalf of the Selling Stockholders as such and
delivered to the Representatives or to counsel for the Underwriters pursuant to
the terms of this Agreement shall be deemed a representation and warranty by
such Selling Stockholder to the Underwriters as to the matters covered thereby.
SECTION 2. SALE AND DELIVERY TO UNDERWRITERS; CLOSING.
(a) INITIAL SECURITIES. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, each Selling Stockholder, severally and not jointly, agrees to sell to
each Underwriter, severally and not jointly, that proportion of the number of
Initial Securities set forth in Schedule B opposite the name of such Selling
Stockholder and each Underwriter, severally and not jointly, agrees to purchase
from each Selling Stockholder, at the price per share set forth in Schedule C,
that number of Initial Securities set forth in Schedule A opposite the name of
such Underwriter, plus any additional number of Initial Securities which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof.
<PAGE>
15
(b) OPTION SECURITIES. In addition, on the basis of the
representations and warranties herein contained and subject to the terms and
conditions herein set forth, the Company hereby grants an option to the
Underwriters, severally and not jointly, to purchase up to an additional [ ]
shares of Common Stock, as set forth in Schedule B, at the price per share set
forth in Schedule C, less an amount per share equal to any dividends or
distributions declared by the Company and payable on the Initial Securities but
not payable on the Option Securities. The option hereby granted will expire 30
days after the date hereof and may be exercised in whole or in part from time to
time only for the purpose of covering over-allotments which may be made in
connection with the offering and distribution of the Initial Securities upon
notice by Merrill Lynch to the Company setting forth the number of Option
Securities as to which the several Underwriters are then exercising the option
and the time and date of payment and delivery for such Option Securities. Any
such time and date of delivery (a "Date of Delivery") shall be determined by
Merrill Lynch, but shall not be later than seven full business days after the
exercise of said option, nor in any event prior to the Closing Time, as
hereinafter defined. If the option is exercised as to all or any portion of the
Option Securities, each of the Underwriters, acting severally and not jointly,
will purchase that proportion of the total number of Option Securities then
being purchased which the number of Initial Securities set forth in Schedule A
opposite the name of such Underwriter bears to the total number of Initial
Securities, subject in each case to such adjustments as Merrill Lynch in its
discretion shall make to eliminate any sales or purchases of fractional shares.
(c) PAYMENT. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of
Shearman & Sterling, 599 Lexington Avenue, New York, New York, or at such other
place as shall be agreed upon by Merrill Lynch and the Company and the Selling
Stockholders, at 9:00 A.M. (Eastern time) on the third (fourth, if the pricing
occurs after 4:30 P.M. (Eastern time) on any given day) business day after the
date hereof (unless postponed in accordance with the provisions of Section 10),
or such other time not later than ten business days after such date as shall be
agreed upon by the Representatives and the Company and the Selling Stockholders
(such time and date of payment and delivery being herein called "Closing Time").
In addition, in the event that any or all of the Option
Securities are purchased by the Underwriters, payment of the purchase price for,
and delivery of certificates for, such Option Securities shall be made at the
above-mentioned offices, or at such other place as shall be agreed upon by
Merrill Lynch and the Company, on each Date of Delivery as specified in the
notice from Merrill Lynch to the Company.
Payment shall be made to the Company and the Selling Stockholders
by wire transfer of immediately available funds to bank accounts designated by
the Company and the Custodian pursuant to each Selling Stockholder's Power of
Attorney and Custody Agreement, as the case may be, against delivery to the
Representatives for the respective accounts of the
<PAGE>
16
Underwriters of certificates for the Securities to be purchased by them. It is
understood that each Underwriter has authorized the Representatives, for its
account, to accept delivery of, receipt for, and make payment of the purchase
price for, the Initial Securities and the Option Securities, if any, which it
has agreed to purchase. Merrill Lynch, individually and not as representative of
the Underwriters, may (but shall not be obligated to) make payment of the
purchase price for the Initial Securities or the Option Securities, if any, to
be purchased by any Underwriter whose funds have not been received by the
Closing Time or the relevant Date of Delivery, as the case may be, but such
payment shall not relieve such Underwriter from its obligations hereunder.
(d) DENOMINATIONS; REGISTRATION. Certificates for the Initial
Securities and the Option Securities, if any, shall be in such denominations and
registered in such names as the Representatives may request in writing at least
two full business days before the Closing Time or the relevant Date of Delivery,
as the case may be. The certificates for the Initial Securities and the Option
Securities, if any, will be made available for examination and packaging by the
Representatives in The City of New York not later than 10:00 A.M. (Eastern time)
on the business day prior to the Closing Time or the relevant Date of Delivery,
as the case may be.
SECTION 3. COVENANTS OF THE COMPANY. The Company covenants with
each Underwriter as follows:
(a) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION
REQUESTS. The Company, subject to Section 3(b), will comply with the
requirements of Rule 430A or Rule 434, as applicable, and will notify
Merrill Lynch and the Selling Stockholders immediately, and confirm the
notice in writing, (i) when any post-effective amendment to the
Registration Statement shall become effective, or any supplement to the
Prospectus or any amended Prospectus shall have been filed, (ii) of the
receipt of any comments from the Commission, (iii) of any request by the
Commission for any amendment to the Registration Statement or any
amendment or supplement to the Prospectus or for additional information,
and (iv) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or of any order
preventing or suspending the use of any preliminary prospectus, or of
the initiation or threatening of any proceedings for any of such
purposes. The Company will promptly effect the filings necessary
pursuant to Rule 424(b) and will take such steps as it deems necessary
to ascertain promptly whether the form of prospectus transmitted for
filing under Rule 424(b) was received for filing by the Commission and,
in the event that it was not, it will promptly file such prospectus. The
Company will make every reasonable effort to prevent the issuance of any
stop order and, if any stop order is issued, to obtain the lifting
thereof at the earliest possible moment.
<PAGE>
17
(b) FILING OF AMENDMENTS. The Company will give Merrill
Lynch notice of its intention to file or prepare any amendment to the
Registration Statement (including any filing under Rule 462(b)), any
Term Sheet or any amendment, supplement or revision to either the
Prospectus included in the Registration Statement at the time it became
effective or to the Prospectus, or any document incorporated by
reference thereto whether pursuant to the 1933 Act, the 1934 Act or
otherwise, will furnish Merrill Lynch and the Selling Stockholders with
copies of any such documents a reasonable amount of time prior to such
proposed filing or use, as the case may be, and will not file or use any
such document to which Merrill Lynch or counsel for the Underwriters
shall reasonably object.
(c) DELIVERY OF REGISTRATION STATEMENTS. The Company has
furnished or will, upon request, deliver to the Representatives and
counsel for the Underwriters and the Selling Stockholders, without
charge, signed copies of the Registration Statement as originally filed
and of each amendment thereto (including exhibits filed therewith or
incorporated by reference therein and documents incorporated or deemed
to be incorporated by reference therein) and signed copies of all
consents and certificates of experts, and will also deliver to the
Representatives, without charge, a conformed copy of the Registration
Statement as originally filed and of each amendment thereto (without
exhibits) for each of the Underwriters. The copies of the Registration
Statement and each amendment thereto furnished to the Underwriters will
be identical to the electronically transmitted copies thereof filed with
the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.
(d) DELIVERY OF PROSPECTUS. The Company has delivered to
each Underwriter and Selling Stockholders, without charge, as many
copies of each preliminary prospectus as such Underwriter reasonably
requested, and the Company hereby consents to the use of such copies for
purposes permitted by the 1933 Act. The Company will furnish to each
Underwriter, without charge, during the period when the Prospectus is
required to be delivered under the 1933 Act or the 1934 Act, such number
of copies of the Prospectus (as amended or supplemented) as such
Underwriter may reasonably request. The Prospectus and any amendments or
supplements thereto furnished to the Underwriters will be identical to
the electronically transmitted copies thereof filed with the Commission
pursuant to EDGAR, except to the extent permitted by Regulation S-T.
(e) CONTINUED COMPLIANCE WITH SECURITIES LAWS. The Company
will comply with the 1933 Act and the 1933 Act Regulations and the 1934
Act and the 1934 Act Regulations so as to permit the completion of the
distribution of the Securities as contemplated in this Agreement and in
the Prospectus. If at any time when a prospectus is required by the 1933
Act to be delivered in connection with sales of the
<PAGE>
18
Securities, any event shall occur or condition shall exist as a result
of which it is necessary, in the opinion of counsel for the Underwriters
or for the Company, to amend the Registration Statement or amend or
supplement any Prospectus in order that the Prospectus will not include
any untrue statements of a material fact or omit to state a material
fact necessary in order to make the statements therein not misleading in
the light of the circumstances existing at the time any such Prospectus
is delivered to a purchaser, or if it shall be necessary, in the opinion
of such counsel, at any such time to amend the Registration Statement or
amend or supplement any such Prospectus in order to comply with the
requirements of the 1933 Act or the 1933 Act Regulations, the Company
will promptly prepare and file with the Commission, subject to Section
3(b), such amendment or supplement as may be necessary to correct such
statement or omission or to make the Registration Statement or the
Prospectus comply with such requirements, and the Company will furnish
to the Underwriters and the Selling Stockholders such number of copies
of such amendment or supplement as the Underwriters and the Selling
Stockholders may reasonably request.
(f) RULE 158. The Company will timely file such reports
pursuant to the 1934 Act as are necessary in order to make generally
available to its securityholders as soon as practicable an earnings
statement for the purposes of, and to provide the benefits contemplated
by, the last paragraph of Section 11(a) of the 1933 Act.
(g) USE OF PROCEEDS. The Company will use the net proceeds
received by it from the sale of the Securities in the manner specified
in the Prospectus under "Use of Proceeds".
(h) LISTING. The Company will use its best efforts to
effect the listing of the Securities on the New York Stock Exchange.
(i) RESTRICTION ON SALE OF SECURITIES. During a period of
90 days from the date of the Prospectus, the Company will not, without
the prior written consent of Merrill Lynch, (i) directly or indirectly,
offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase or otherwise transfer or dispose of any
share of Common Stock or any securities convertible into or exercisable
or exchangeable for Common Stock or file any registration statement
under the 1933 Act with respect to any of the foregoing or (ii) enter
into any swap or any other agreement or any transaction that transfers,
in whole or in part, directly or indirectly, the economic consequence of
ownership of the Common Stock, whether any such swap or transaction
described in clause (i) or (ii) above is to be settled by delivery of
Common Stock or such other securities, in cash or otherwise. The
foregoing sentence shall not apply to (A) the Securities to be sold
hereunder or under the International Purchase Agreement,
<PAGE>
19
(B) any shares of Common Stock issued or options to purchase Common
Stock granted pursuant to existing employee benefit plans (including any
shares of Common Stock to be added to any such plan at the 1998 Annual
Meeting of the Stockholders) of the Company referred to in the
Prospectus or (C) any shares of Common Stock or any securities
convertible into or exchangeable for Common Stock issued as
consideration for or to otherwise finance an acquisition of a business
or substantially all the assets of a business, provided, in each case,
that such shares of Common Stock or other security are issued in
connection with a transaction not requiring registration under the 1933
Act and that such shares are subject to the same restriction on sale
provided by this clause (i).
(j) REPORTING REQUIREMENTS. The Company, during the period
when the Prospectus is required to be delivered under the 1933 Act or
the 1934 Act, will file all documents required to be filed with the
Commission pursuant to the 1934 Act within the time periods required by
the 1934 Act and the 1934 Act Regulations.
SECTION 4. PAYMENT OF EXPENSES
(a) EXPENSES. Except as set forth in Section 4(b), the Company
will pay or cause to be paid all expenses incident to the performance of its and
the Selling Stockholders obligations under this Agreement, including (i) the
preparation, printing and filing of the Registration Statement (including
financial statements and exhibits) as originally filed and of each amendment
thereto, (ii) the preparation, printing and delivery to the Underwriters of this
Agreement, any agreement among Underwriters and such other documents as may be
required in connection with the offering, purchase, sale, issuance or delivery
of the Securities, (iii) the preparation, issuance and delivery of the
certificates for the Securities to the Underwriters, including any stock or
other transfer taxes and any stamp or other duties payable upon the sale,
issuance or delivery of the Securities to the Underwriters, (iv) the fees and
disbursements of the Company's counsel, accountants and other advisors, (v) the
filing fees incident to any necessary filings under state securities laws and
the reasonable fees and disbursements of counsel for the Underwriters in
connection therewith and in connection with the preparation of the Blue Sky
Survey and any supplement thereto, (vi) the printing and delivery to the
Underwriters of copies of each preliminary prospectus, any Term Sheets and of
the Prospectus and any amendments or supplements thereto, (vii) the preparation,
printing and delivery to the Underwriters of copies of the Blue Sky Survey and
any supplement thereto, (viii) the fees and expenses of any transfer agent or
registrar for the Securities, (ix) the filing fees incident to, and the
reasonable fees and disbursements of counsel to the Underwriters in connection
with, the review by the National Association of Securities Dealers, Inc. (the
"NASD") of the terms of the sale of the Securities and (x) the fees and expenses
incurred in connection with the listing of the Securities on the New York Stock
Exchange
<PAGE>
20
(b) EXPENSES OF THE SELLING STOCKHOLDERS. The Selling
Stockholders, jointly and severally, will pay all expenses incident to the
performance of their respective obligations under, and the consummation of the
transactions contemplated by this Agreement, including (i) any stamp duties,
capital duties and stock transfer taxes, if any, payable upon the sale of the
Securities to the Underwriters, and their transfer between the Underwriters
pursuant to an agreement between such Underwriters, and (ii) the fees and
disbursements of their respective counsel and accountants.
(c) TERMINATION OF AGREEMENT. If this Agreement is terminated by
the Representatives in accordance with the provisions of Section 5, Section
9(a)(i) or Section 11 hereof, the Company shall reimburse the Underwriters for
all of their out-of-pocket expenses, including the reasonable fees and
disbursements of counsel for the Underwriters.
(d) ALLOCATION OF EXPENSES. The provisions of this Section shall
not affect any agreement that the Company and the Selling Stockholders may make
for the sharing of such costs and expenses.
SECTION 5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The
obligations of the several Underwriters hereunder are subject to the accuracy of
the representations and warranties of the Company and the Selling Stockholders
contained in Section 1 hereof or in certificates of any officer of the Company
or any subsidiary of the Company or on behalf of any Selling Stockholder
delivered pursuant to the provisions hereof, to the performance by the Company
and the Selling Stockholders of their respective covenants and other obligations
hereunder, and to the following further conditions:
(a) EFFECTIVENESS OF REGISTRATION STATEMENT. The
Registration Statement, including any Rule 462(b) Registration
Statement, has become effective and at Closing Time no stop order
suspending the effectiveness of the Registration Statement shall have
been issued under the 1933 Act or proceedings therefor initiated or
threatened by the Commission, and any request on the part of the
Commission for additional information shall have been complied with to
the reasonable satisfaction of counsel to the Underwriters. A prospectus
containing the Rule 430A Information shall have been filed with the
Commission in accordance with Rule 424(b) (or a post-effective amendment
providing such information shall have been filed and declared effective
in accordance with the requirements of Rule 430A) or, if the Company has
elected to rely upon Rule 434, a Term Sheet shall have been filed with
the Commission in accordance with Rule 424(b).
(b) OPINION OF COUNSEL FOR COMPANY. At Closing Time, the
Representatives shall have received the favorable opinions, dated as of
Closing Time, of (i) Paul, Weiss, Rifkind, Wharton & Garrison, counsel
for the Company, and (ii)
<PAGE>
21
Paul E. Yestrumskas, General Counsel for the Company, each in form and
substance reasonably satisfactory to counsel for the Underwriters,
together with signed or reproduced copies of each such letter for each
of the other Underwriters, to the effect set forth in Exhibits A-1 and
A-2 hereto and to such further effect as counsel to the Underwriters may
reasonably request. In giving their opinion, Paul, Weiss, Rifkind,
Wharton & Garrison may rely, as to all matters governed by the laws of
jurisdictions other than the law of the State of New York, the federal
law of the United States and the General Corporation Law of the State of
Delaware, upon the opinions of counsel satisfactory to the
Representatives. Paul, Weiss, Rifkind, Wharton & Garrison may also state
that, insofar as such opinion involves factual matters, they have
relied, to the extent they deem proper, upon certificates of officers of
the Company and its subsidiaries and certificates of public officials.
(c) OPINION OF COUNSEL FOR SELLING STOCKHOLDERS. At
Closing Time, the Representatives shall have received the favorable
opinions, dated as of Closing Time, of (i) Sullivan & Worcester, LLP,
counsel for the Selling Stockholders listed on Schedule F attached
hereto, and (ii) Paul, Weiss, Rifkind, Wharton & Garrison, counsel to
the Selling Stockholders listed on Schedule G attached hereto, each in
form and substance reasonably satisfactory to counsel for the
Underwriters, together with signed or reproduced copies of each such
letter for each of the other Underwriters to the effect set forth in
Exhibits B-1 and B-2 hereto and to such further effect as counsel to the
Underwriters may reasonably request.
(d) OPINION OF '40 ACT COUNSEL FOR CERTAIN SELLING
STOCKHOLDERS. At Closing Time, the Representatives shall have received
the favorable opinion, dated as of Closing Time, of Sullivan &
Worcester, LLP, '40 Act counsel for J.W. Childs Equity Partners, L.P.
and John W. Childs, in form and substance that has been agreed upon with
counsel for the Underwriters, together with signed or reproduced copies
of such letter for each of the other Underwriters.
(e) OPINION OF COUNSEL FOR UNDERWRITERS. At Closing Time,
the Representatives shall have received the favorable opinion, dated as
of Closing Time, of Shearman & Sterling, counsel for the Underwriters,
together with signed or reproduced copies of such letter for each of the
other Underwriters with respect to the matters set forth in clauses (i),
(ii), (v), (vi) (solely as to preemptive or other similar rights arising
by operation of law or under the charter or by-laws of the Company),
(viii) through (x), inclusive, (xiii), (xv) (solely as to the
information in the Prospectus under "Description of Capital
Stock--Common Stock") and the penultimate paragraph of Exhibit A hereto.
In giving such opinion such counsel may rely, as to all matters governed
by the laws of jurisdictions other than the law of the State of New
York, the federal law of the United States and the General Corporation
Law of the State of
<PAGE>
22
Delaware, upon the opinions of counsel satisfactory to the
Representatives. Such counsel may also state that, insofar as such
opinion involves factual matters, they have relied, to the extent they
deem proper, upon certificates of officers of the Company and its
subsidiaries and certificates of public officials.
(f) OPINION OF '40 ACT COUNSEL FOR THE UNDERWRITERS. At
Closing Time, each of the Representatives, J. W. Childs and J.W. Childs
Equity Partners, L.P., shall have received the favorable opinion, dated
as of Closing Time, of Shearman & Sterling, Counsel for the
Underwriters, in form and substance satisfactory to counsel for the
Underwriters, together with signed or reproduced copies of such letter
for each of the other Underwriters to the effect set forth in Exhibit C
hereto and to such further effect as counsel to J.W. Childs may
reasonably request.
(g) OFFICERS' CERTIFICATE. At Closing Time, there shall
not have been, since the date hereof or since the respective dates as of
which information is given in the Prospectus, any material adverse
change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, and the Representatives shall have received
a certificate signed by the President or a Vice President of the Company
and of the chief financial or chief accounting officer of the Company,
dated as of Closing Time, to the effect that (i) there has been no such
material adverse change, (ii) the representations and warranties in
Section 1(a) hereof are true and correct with the same force and effect
as though expressly made at and as of Closing Time, (iii) the Company
has complied with all agreements and satisfied all conditions on its
part to be performed or satisfied at or prior to Closing Time, and (iv)
to the best of the Company's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are pending or are
contemplated by the Commission.
(h) CERTIFICATE OF SELLING STOCKHOLDERS. At Closing Time,
the Representatives shall have received a certificate of an
Attorney-in-Fact on behalf of each Selling Stockholder, dated as of
Closing Time, to the effect that (i) the representations and warranties
of each Selling Stockholder contained in Section 1(b) hereof are true
and correct in all respects with the same force and effect as though
expressly made at and as of Closing Time and (ii) each Selling
Stockholder has complied in all material respects with all agreements
and all conditions on its part to be performed under this Agreement at
or prior to Closing Time.
(i) ACCOUNTANTS' COMFORT LETTER. At the time of the
execution of this Agreement, the Representatives shall have received
from KPMG Peat Marwick L.L.P.
<PAGE>
23
a letter dated such date, in form and substance reasonably satisfactory
to the Representatives, together with signed or reproduced copies of
such letter for each of the other Underwriters containing statements and
information of the type ordinarily included in accountants' "comfort
letters" to underwriters with respect to the financial statements and
certain financial information contained in the Registration Statement
and the Prospectus.
(j) BRING-DOWN COMFORT LETTER. At Closing Time, the
Representatives shall have received from KPMG Peat Marwick L.L.P. a
letter, dated as of Closing Time, to the effect that they reaffirm the
statements made in the letter furnished pursuant to subsection (g) of
this Section, except that the specified date referred to shall be a date
not more than three business days prior to Closing Time.
(k) APPROVAL OF LISTING. At Closing Time, the Securities
shall have been approved for listing on the New York Stock Exchange,
subject only to official notice of issuance.
(l) NO OBJECTION. The NASD shall have confirmed that
it has not raised any objection with respect to the fairness and
reasonableness of the underwriting terms and arrangements.
(m) LOCK-UP AGREEMENTS. At the date of this Agreement,
the Representatives shall have received an agreement substantially in
the form of Exhibit C hereto signed by the persons listed on Schedule D
hereto.
(n) PURCHASE OF INITIAL INTERNATIONAL SECURITIES.
Contemporaneously with the purchase by the Underwriters of the Initial
Securities under this Agreement, the International Managers shall have
purchased all of the Initial International Securities under the
International Purchase Agreement.
(o) CONDITIONS TO PURCHASE OF OPTION SECURITIES. In the
event that the Underwriters exercise their option provided in Section
2(b) hereof to purchase all or any portion of the Option Securities, the
representations and warranties of the Company and the Selling
Stockholders contained herein and the statements in any certificates
furnished by the Company, any subsidiary of the Company and the Selling
Stockholders hereunder shall be true and correct as of each Date of
Delivery and, at the relevant Date of Delivery, the Representatives
shall have received:
(i) OFFICERS' CERTIFICATE. A certificate,
dated such Date of Delivery, signed by the President or a Vice
President of the Company and of the chief financial or chief
accounting officer of the Company confirming that
<PAGE>
24
the certificate delivered at Closing Time pursuant to Section
5(e) hereof remains true and correct as of such Date of Delivery.
(ii) CERTIFICATE OF SELLING STOCKHOLDERS. A
certificate, dated such Date of Delivery, of an Attorney-in-Fact
on behalf of each Selling Stockholder confirming that the
certificate delivered at Closing Time pursuant to Section 5(f)
hereof remains true and correct as of such Date of Delivery.
(iii) OPINION OF COUNSEL FOR COMPANY. The favorable
opinion of Paul, Weiss, Rifkind, Wharton & Garrison, counsel for
the Company, in form and substance reasonably satisfactory to
counsel for the Underwriters, dated such Date of Delivery,
relating to the Option Securities to be purchased on such Date of
Delivery and otherwise to the same effect as the opinion required
by Section 5(b) hereof.
(iv) OPINION OF COUNSEL FOR UNDERWRITERS. The
favorable opinion of Shearman & Sterling, counsel for the
Underwriters, dated such Date of Delivery, relating to the Option
Securities to be purchased on such Date of Delivery and otherwise
to the same effect as the opinion required by Section 5(d)
hereof.
(v) BRING-DOWN COMFORT LETTER. A letter from KPMG
Peat Marwick L.L.P., in form and substance satisfactory to the
Representatives and dated such Date of Delivery, substantially in
the same form and substance as the letter furnished to the
Representatives pursuant to Section 5(h) hereof, except that the
"specified date" in the letter furnished pursuant to this
paragraph shall be a date not more than five days prior to such
Date of Delivery.
(p) ADDITIONAL DOCUMENTS. At Closing Time and at each Date
of Delivery counsel for the Underwriters shall have been furnished with
such documents and opinions as they may require for the purpose of
enabling them to pass upon the issuance and sale of the Securities as
herein contemplated, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the Company
and the Selling Stockholders in connection with the issuance and sale of
the Securities as herein contemplated shall be reasonably satisfactory
in form and substance to the Representatives and counsel for the
Underwriters.
(q) TERMINATION OF AGREEMENT. If any condition
specified in this Section shall not have been fulfilled when and as
required to be fulfilled, this Agreement, or, in the case of any
condition to the purchase of Option Securities on a
<PAGE>
25
Date of Delivery which is after the Closing Time, the obligations of the
several Underwriters to purchase the relevant Option Securities, may be
terminated by the Representatives by notice to the Company and the
Selling Stockholders at any time at or prior to Closing Time or such
Date of Delivery, as the case may be, and such termination shall be
without liability of any party to any other party except as provided in
Section 4 and except that Sections 1, 6, 7 and 8 shall survive any such
termination and remain in full force and effect.
SECTION 6. INDEMNIFICATION.
(a) INDEMNIFICATION OF UNDERWRITERS. The Company agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act to the extent and in the manner set forth below. In
addition, each of the Selling Stockholders agrees to indemnify and hold harmless
each Underwriter and each person, if any, who controls any Underwriter within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act to the
extent and in the manner set forth in clause (i) set forth below.
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including the Rule
430A Information and the Rule 434 Information, if applicable, or the
omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact included in any preliminary prospectus or
the Prospectus (or any amendment or supplement thereto), or the omission
or alleged omission therefrom of a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or proceeding
by any governmental agency or body, commenced or threatened, or of any
claim whatsoever based upon any such untrue statement or omission, or
any such alleged untrue statement or omission; PROVIDED that (subject to
Section 6(d) below) any such settlement is effected with the written
consent of the Company and the Selling Stockholders; and
(iii) against any and all expense whatsoever, as incurred
(including the reasonable fees and disbursements of counsel chosen by
Merrill Lynch), reasonably incurred in investigating, preparing or
defending against any litigation, or any
<PAGE>
26
investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or
(ii) above;
PROVIDED, HOWEVER, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through the Representatives expressly for use in the Registration
Statement (or any amendment thereto), including the Rule 430A Information and
the Rule 434 Information, if applicable, or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto); PROVIDED FURTHER, that with
respect to each Selling Stockholder this indemnity agreement shall only apply to
any loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information furnished to the
Company by such Selling Stockholder expressly for use in the Registration
Statement (or any amendment thereto, including the Rule 430A Information and the
Rule 434 Information, if applicable, or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto); and PROVIDED FURTHER, that
the Company will not be liable to an Underwriter with respect to any preliminary
Prospectus to the extent that the Company shall sustain the burden of proving
that any such loss, liability, claim, damage or expense solely resulting from
the fact that such Underwriter, in contravention of a requirement of this
Agreement or applicable law, sold Securities to a person to whom such
Underwriter failed to send or give, at or prior to the Closing Date, a copy of
the Final Prospectus as then amended or supplemented if the Company has
previously furnished copies thereof (sufficiently in advance of the Closing Date
to allow for distribution by the Closing Date) to the Underwriters and the loss,
liability, claim, damage or expense of such Underwriter resulted from an untrue
statement or omission or alleged untrue statement or omission of a material fact
contained in or omitted from the preliminary Prospectus which was corrected in
the Final Prospectus as, if applicable, amended or supplemented prior to the
Closing Date and such Prospectus was required by law to be delivered at or prior
to the written confirmation of sale to such person.
(b) INDEMNIFICATION OF COMPANY, DIRECTORS AND OFFICERS AND
SELLING STOCKHOLDERS. Each Underwriter severally agrees to indemnify and hold
harmless the Company, its directors, each of its officers who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, and
each Selling Stockholder against any and all loss, liability, claim, damage and
expense described in the indemnity contained in subsection (a) of this Section,
as incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or any
amendment thereto), including the Rule 430A Information and the Rule 434
Information, if applicable, or any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto) in reliance
<PAGE>
27
upon and in conformity with written information furnished to the Company by such
Underwriter through the Representatives expressly for use in the Registration
Statement (or any amendment thereto) or such preliminary prospectus or the
Prospectus (or any amendment or supplement thereto).
(c) ACTIONS AGAINST PARTIES; NOTIFICATION. Each indemnified party
shall give notice as promptly as reasonably practicable to each indemnifying
party of any action commenced against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve such indemnifying party from any liability hereunder to the extent it is
not materially prejudiced as a result thereof and in any event shall not relieve
it from any liability which it may have otherwise than on account of this
indemnity agreement. In the case of parties indemnified pursuant to Section 6(a)
above, counsel to the indemnified parties shall be selected by Merrill Lynch,
and, in the case of parties indemnified pursuant to Section 6(b) above, counsel
to the indemnified parties shall be selected by the Company. An indemnifying
party may participate at its own expense in the defense of any such action;
PROVIDED, HOWEVER, that counsel to the indemnifying party shall not (except with
the consent of the indemnified party) also be counsel to the indemnified party.
In no event shall the indemnifying parties be liable for fees and expenses of
more than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party (which consent shall not be unreasonably
withheld if the conditions in clauses (i) and (ii) herein have been satisfied).
(d) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. If at any
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 6(a)(ii) effected without its written consent if
(i) such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in
<PAGE>
28
accordance with such request (to the extent such reimbursement request is not
being disputed in good faith by such indemnifying party) prior to the date of
such settlement.
(e) OTHER AGREEMENTS WITH RESPECT TO INDEMNIFICATION. The
provisions of this Section shall not affect any agreement among the Company
and the Selling Stockholders with respect to indemnification.
SECTION 7. CONTRIBUTION. If the indemnification provided for in
Section 6 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages
and expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Selling Stockholders on the one hand and the Underwriters on the
other hand from the offering of the Securities pursuant to this Agreement or
(ii) if the allocation provided by clause (i) is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Company and the Selling Stockholders on the one hand and of the Underwriters on
the other hand in connection with the statements or omissions which resulted in
such losses, liabilities, claims, damages or expenses, as well as any other
relevant equitable considerations.
The relative benefits received by the Company and the Selling
Stockholders on the one hand and the Underwriters on the other hand in
connection with the offering of the Securities pursuant to this Agreement shall
be deemed to be in the same respective proportions as the total net proceeds
from the offering of the Securities pursuant to this Agreement (before deducting
expenses) received by the Company and the Selling Stockholders and the total
underwriting discount received by the Underwriters, in each case as set forth on
the cover of the Prospectus, or, if Rule 434 is used, the corresponding location
on the Term Sheet, bear to the aggregate initial public offering price of the
Securities as set forth on such cover.
The relative fault of the Company and the Selling Stockholders on
the one hand and the Underwriters on the other hand shall be determined by
reference to, among other things, whether any such untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact relates to information supplied by the Company or the Selling Stockholders
or by the Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, the Selling Stockholders and the Underwriters agree
that it would not be just and equitable if contribution pursuant to this Section
were determined by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred
<PAGE>
29
to above in this Section. The aggregate amount of losses, liabilities, claims,
damages and expenses incurred by an indemnified party and referred to above in
this Section shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever based upon any
such untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section, no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the Securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section, each person, if any, who controls
an Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company or any
Selling Stockholder within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act shall have the same rights to contribution as the Company or
such Selling Stockholder, as the case may be. The Underwriters' respective
obligations to contribute pursuant to this Section are several in proportion to
the number of Initial Securities set forth opposite their respective names in
Schedule A hereto and not joint.
The provisions of this Section shall not affect any agreement
among the Company and the Selling Stockholders with respect to contribution.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company or any of its
subsidiaries or the Selling Stockholders submitted pursuant hereto shall remain
operative and in full force and effect, regardless of any investigation made by
or on behalf of any Underwriter or controlling person, or by or on behalf of the
Company or the Selling Stockholders, and shall survive delivery of the
Securities to the Underwriters.
<PAGE>
30
SECTION 9. TERMINATION OF AGREEMENT.
(a) TERMINATION; GENERAL. The Representatives may terminate this
Agreement, by notice to the Company and the Selling Stockholders, at any time at
or prior to Closing Time (i) if there has been, since the time of execution of
this Agreement or since the respective dates as of which information is given in
the Prospectus, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, or (ii) if there has occurred any
material adverse change in the financial markets in the United States or the
international financial markets, any outbreak of hostilities or escalation
thereof or other calamity or crisis or any change or development involving a
prospective change in national or international political, financial or economic
conditions, in each case the effect of which is such as to make it, in the
judgment of the Representatives, impracticable to market the Securities or to
enforce contracts for the sale of the Securities, or (iii) if trading in any
securities of the Company has been suspended or materially limited by the
Commission or the New York Stock Exchange, or if trading generally on the
American Stock Exchange or the New York Stock Exchange or in the Nasdaq National
Market has been suspended or materially limited, or minimum or maximum prices
for trading have been fixed, or maximum ranges for prices have been required, by
any of said exchanges or by such system or by order of the Commission, the
National Association of Securities Dealers, Inc. or any other governmental
authority, or (iv) if a banking moratorium has been declared by either federal
or New York authorities.
(b) LIABILITIES. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 6, 7 and 8 shall survive such termination and remain in full force and
effect.
SECTION 10. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS. If one or
more of the Underwriters shall fail at Closing Time or a Date of Delivery to
purchase the Securities which it or they are obligated to purchase under this
Agreement (the "Defaulted Securities"), the Representatives shall have the
right, within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting Underwriters, or any other underwriters, to purchase all, but not
less than all, of the Defaulted Securities in such amounts as may be agreed upon
and upon the terms herein set forth; if, however, the Representatives shall not
have completed such arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of
the number of Securities to be purchased on such date, the
non-defaulting Underwriters shall be obligated, each severally and not
jointly, to purchase the full amount thereof in
<PAGE>
31
the proportions that their respective underwriting obligations
hereunder bear to the underwriting obligations of all non-defaulting
Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the
number of Securities to be purchased on such date, this Agreement or,
with respect to any Date of Delivery which occurs after Closing Time,
the obligation of the Underwriters to purchase and of the Company to
sell the Option Securities to be purchased and sold on such Date of
Delivery, shall terminate without liability on the part of any
non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any
defaulting Underwriter from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement or, in the case of a Date of Delivery which is
after Closing Time, which does not result in a termination of the obligation of
the Underwriters to purchase and the Company to sell the relevant Option
Securities, as the case may be, either (i) the Representatives or (ii) the
Company and any Selling Stockholder shall have the right to postpone Closing
Time or the relevant Date of Delivery, as the case may be, for a period not
exceeding seven days in order to effect any required changes in the Registration
Statement or Prospectus or in any other documents or arrangements. As used
herein, the term "Underwriter" includes any person substituted for an
Underwriter under this Section.
SECTION 11. DEFAULT BY ONE OR MORE OF THE SELLING STOCKHOLDERS.
(a) If a Selling Stockholder shall fail at Closing Time or at a Date of Delivery
to sell and deliver the number of Securities which such Selling Stockholder is
obligated to sell hereunder, and the remaining Selling Stockholders do not
exercise the right hereby granted to increase, pro rata or otherwise, the number
of Securities to be sold by them hereunder to the total number to be sold by all
Selling Stockholders as set forth in Schedule B hereto, then the Underwriters
may, at the option of the Representatives, by notice from the Representatives to
the Company and the non-defaulting Selling Stockholders, either (a) terminate
this Agreement without any liability on the part of any non-defaulting party
except that the provisions of Sections 1, 4, 6, 7 and 8 shall remain in full
force and effect or (b) elect to purchase the Securities which the
non-defaulting Selling Stockholders and the Company have agreed to sell
hereunder. No action taken pursuant to this Section shall relieve any Selling
Stockholder so defaulting from liability in respect of such default.
In the event of a default by any Selling Stockholder as referred
to in this Section, each of the Representatives, the Company and the
non-defaulting Selling Stockholders shall have the right to postpone Closing
Time or the relevant Date of Delivery for a period not
<PAGE>
32
exceeding seven days in order to effect any required change in the Registration
Statement or Prospectus or in any other documents or arrangements.
(b) If the Company shall fail at Closing Time or at a Date of
Delivery to sell the number of Securities that it is obligated to sell
hereunder, then this Agreement shall terminate without any liability on the part
of any non-defaulting party; PROVIDED, HOWEVER, that the provisions of Sections
1, 4, 6, 7 and 8 shall remain in full force and effect. No action taken pursuant
to this Section shall relieve the Company from liability in respect of such
default.
SECTION 12. NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
mailed or transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representatives at North Tower, World
Financial Center, New York, New York 10281, attention of o; notices to the
Company shall be directed to it at Playtex Products, Inc., 300 Nyala Farms Road,
Westport, CT 06880, attention of Michael F. Goss, Chief Financial Officer, with
a copy to Mitchell S. Fishman, Paul, Weiss, Rifkind, Wharton & Garrison, 1285
Avenue of the Americas, New York, NY 10019; and notices to the Selling
Stockholders shall be directed to o, attention of o.
SECTION 13. PARTIES. This Agreement shall inure to the benefit of
and be binding upon the Underwriters, the Company and the Selling Stockholders
and their respective successors. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any person, firm or
corporation, other than the Underwriters, the Company and the Selling
Stockholders and their respective successors and the controlling persons and
officers and directors referred to in Sections 6 and 7 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the Underwriters, the Company and the Selling Stockholders
and their respective successors, and said controlling persons and officers and
directors and their heirs and legal representatives, and for the benefit of no
other person, firm or corporation. No purchaser of Securities from any
Underwriter shall be deemed to be a successor by reason merely of such purchase.
SECTION 14. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK. SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
<PAGE>
33
SECTION 15. EFFECT OF HEADINGS. The Article and Section
headings herein and the Table of Contents are for convenience only and shall
not affect the construction hereof.
<PAGE>
34
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company and the Attorney-in-Fact for
the Selling Stockholders a counterpart hereof, whereupon this instrument, along
with all counterparts, will become a binding agreement among the Underwriters,
the Company and the Selling Stockholders in accordance with its terms.
Very truly yours,
PLAYTEX PRODUCTS, INC.
By:
------------------------------
Title:
[_______________________________]
By:
------------------------------
[As Attorney-in-Fact acting on behalf
of the Selling Stockholders named in
Schedule B hereto]
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
Donaldson, Lufkin & Jenrette Securities Corporation
Goldman, Sachs & Co.
PaineWebber Incorporated
Smith Barney Inc.
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:
-----------------------------------
Authorized Signatory
For themselves and as Representatives of the other Underwriters named in
Schedule A hereto.
<PAGE>
SCHEDULE A
Number of Number of
Initial Option
Name of Underwriter Securities Securities
------------------- ---------- ----------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated....................................
Donaldson, Lufkin & Jenrette Securities Corporation......
Goldman, Sachs & Co......................................
PaineWebber Incorporated.................................
Smith Barney Inc.........................................
--------- ---------
Total.................................................... [ ]
--------- ---------
--------- ---------
<PAGE>
B - 1
SCHEDULE B
<TABLE>
<CAPTION>
Number of Initial Maximum Number of Option
Securities to be Sold Securities to be Sold
--------------------- ------------------------
<S> <C> <C>
PLAYTEX PRODUCTS, INC. 0
John W. Childs....................... 272,902 0
J. W. Childs Equity Partners, L.P. 7,855,764 0
Total................................ [ ]
------------
------------
</TABLE>
<PAGE>
SCHEDULE C
PLAYTEX PRODUCTS, INC.
[ ] Shares of Common Stock
(Par Value $.01 Per Share)
1. The initial public offering price per share for the
Securities, determined as provided in said Section 2, shall be $-.
2. The purchase price per share for the Securities to be
paid by the several Underwriters shall be $-, being an amount equal to
the initial public offering price set forth above less $- per share;
provided that the purchase price per share for any Option Securities
purchased upon the exercise of the over-allotment option described in
Section 2(b) shall be reduced by an amount per share equal to any
dividends or distributions declared by the Company and payable on the
Initial Securities but not payable on the Option Securities.
<PAGE>
SCHEDULE D
Percent Jurisdiction of
Subsidiary Ownership Incorporation
- ---------- --------- -------------
Inter Stretch Ltd. 100% owned by Ireland
Limited
Playtex Beauty Care, Inc. 100% Delaware
Playtex Foreign Sales, Corp. 100% owned by TH Barbados
Marketing
Playtex International, Inc. 100% Delaware
("International")
Playtex Investment Corp. 100% Delaware
Playtex Limited ("Limited") 100% owned by Canada
International
Playtex Manufacturing, Inc. 100% Delaware
Playtex Marketing Corp. 50% Delaware
Playtex Sales & Services, Inc. 100% Delaware
Smile Tote, Inc. 100% California
Sun Pharmaceuticals Corp. 100% Delaware
TH Marketing Corp. 100% owned by Delaware
International
Personal Care Holdings, Inc.("PCH") 100% Delaware
Personal Care Group, Inc. ("PCG") 100% owned by PCH Delaware
Personal Care Group 100% owned by PCG Australia
Australia PTY, Ltd.
Personal Care Group FSC, Inc. 100% owned by PCG U.S. Virgin
Islands
Carewell Industries, Inc. 100% New York
<PAGE>
SCHEDULE E
List of Persons and Entities
Subject to Lock-up
Haas Wheat & Partners Incorporated
<PAGE>
EXHIBIT A-1
FORM OF OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware.
(ii) The Company has corporate power and authority to own, lease
and operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under the Purchase
Agreement.
(iii) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Prospectus in the column entitled "Actual" under
the caption "Capitalization" (except for subsequent issuances, if any, pursuant
to the Purchase Agreement and the International Purchase Agreement or pursuant
to reservations, agreements or employee benefit plans referred to in the
Prospectus or pursuant to the exercise of convertible securities or options
referred to in the Prospectus); the shares of issued and outstanding capital
stock of the Company, including the Securities to be purchased by the
Underwriters from the Selling Stockholders, have been duly authorized and
validly issued and are fully paid and non-assessable; and none of the
outstanding shares of capital stock of the Company was issued in violation of
the preemptive or other similar rights of any securityholder of the Company in
the Company's certificate of incorporation or by-laws or under the General
Corporation Law of the State of Delaware.
(iv) The Securities to be purchased by the Underwriters from the
Company have been duly authorized by all necessary action on the part of the
Company for issuance and sale to the Underwriters pursuant to the Purchase
Agreement and, when issued and delivered by the Company pursuant to the Purchase
Agreement against payment of the consideration set forth in the Purchase
Agreement, will be validly issued and fully paid and non-assessable and no
holder of the Securities is or will be subject to personal liability by reason
of being such a holder.
(v) The issuance and sale of the Securities by the Company and
the sale of the Securities by the Selling Stockholders is not subject to the
preemptive or other similar rights of any securityholder of the Company in the
Company's certificate of incorporation or by-laws or under the General
Corporation Law of the State of Delaware.
<PAGE>
A-1-2
(vi) Each Subsidiary (except for Playtex Limited, Inter Stretch
Ltd., Playtex Foreign Sales Corporation, Smile-Tote, Inc., Personal Care Group
Australia PTY Ltd. and Personal Care Group FSC, Inc. as to which such counsel
need not opine) has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Prospectus.
(vii) The Purchase Agreement has been duly authorized, executed
and delivered by the Company.
(viii) We have been advised orally by the staff of the Commission
that the Registration Statement, including any Rule 462(b) Registration
Statement, has been declared effective under the 1933 Act; and, we have been
advised orally by the staff of the Commission that no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b) Registration
Statement has been issued under the 1933 Act and, to our knowledge, no
proceedings for that purpose have been instituted or are pending or threatened
by the Commission.
(ix) The Registration Statement, including any Rule 462(b)
Registration Statement, the Rule 430A Information and the Rule 434 Information,
as applicable, the Prospectus, excluding the documents incorporated by reference
therein, and each amendment or supplement to the Registration Statement and
Prospectus, excluding the documents incorporated by reference therein, as of
their respective effective or issue dates (other than the financial statements,
supporting schedules and other financial data included therein or omitted
therefrom, as to which we need express no opinion) complied as to form in all
material respects with the requirements of the 1933 Act and the 1933 Act
Regulations. For purposes of this opinion, we have assumed that the statements
in the Registration Statement are complete and correct.
(x) The documents incorporated by reference in the Prospectus
(other than the financial statements, supporting schedules and other financial
data included therein or omitted therefrom, as to which we need express no
opinion), when they became effective or were filed with the Commission, as the
case may be, complied as to form in all material respects with the requirements
of the 1933 Act or the 1934 Act, as applicable, and the rules and regulations of
the Commission thereunder. For purposes of this opinion, we have assumed that
the statements in the Registration Statement are complete and correct.
[(xi) If Rule 434 has been relied upon, the Prospectus were not
"materially different", as such term is used in Rule 434, from the prospectus
included in the Registration Statement at the time it became effective.]
<PAGE>
A-1-3
(xii) The form of certificate used to evidence the Common Stock
complies in all material respects with all applicable statutory requirements,
with any applicable requirements of the charter and by-laws of the Company and
the requirements of the New York Stock Exchange.
(xiii) The information in the Prospectus under "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Financial Condition and Liquidity" and "Description of Capital Stock", and in
the Registration Statement under Item 15, to the extent that it constitutes
matters of law, summaries of legal matters, the Company's charter and by-laws or
legal proceedings, or legal conclusions, has been reviewed by us and is correct
in all material respects.
(xiv) To our knowledge, there are no statutes or regulations that
are required by the 1933 Act to be described in the Prospectus that are not
described as required.
(xv) All descriptions in the Registration Statement of contracts
and other documents to which the Company or its subsidiaries are a party are
accurate in all material respects; to our knowledge, there are no franchises,
contracts, indentures, mortgages, loan agreements, notes, leases or other
instruments required to be described or referred to in the Registration
Statement or to be filed as exhibits thereto other than those described or
referred to therein or filed or incorporated by reference as exhibits thereto,
and the descriptions thereof or references thereto are correct in all material
respects.
(xvi) No filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any court or
governmental authority or agency, of the States of Delaware or New York or the
United States (other than under the 1933 Act and the 1933 Act Regulations, which
have been obtained, or as may be required under the securities or blue sky laws
of the various states, as to which we need express no opinion), is necessary or
required in connection with the due authorization, execution and delivery of the
Purchase Agreement and the International Purchase Agreement or for the offering,
issuance, sale or delivery of the Securities.
(xvii) The execution, delivery and performance of the Purchase
Agreement and the consummation of the transactions contemplated in the Purchase
Agreement and the Registration Statement (including the issuance and sale of the
Securities and the use of the proceeds from the sale of the Securities as
described in the Prospectus under the caption "Use Of Proceeds") and compliance
by the Company with its obligations under the Purchase Agreement do not and will
not, whether with or without the giving of notice or lapse of time or both,
conflict with or constitute a breach of, or default or Repayment Event (as
defined in Section 1(a)(xi) of the Purchase Agreements) under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any
<PAGE>
A-1-4
subsidiary pursuant to, any contract, indenture, mortgage, deed of trust, loan
or credit agreement, note, lease or any other agreement or instrument, presented
to us by the Company as being material after our due inquiry to which the
Company or any subsidiary is a party or by which it or any of them may be bound,
or to which any of the property or assets of the Company or any subsidiary is
subject (except for such conflicts, breaches or defaults or liens, charges or
encumbrances that would not have a Material Adverse Effect), nor will such
action result in any violation of the provisions of the charter or by-laws of
the Company or any subsidiary, or any material applicable law, statute, rule,
regulation, judgment, order, writ or decree, known to us, of any government,
government instrumentality or court, domestic or foreign, having jurisdiction
over the Company or any subsidiary or any of their respective properties, assets
or operations.
(xviii)The Company is not required to be registered as an
"investment company" under the 1940 Act and the rules and regulations of the
Commission promulgated threunder.
We have participated in the preparation of the Registration
Statement and the Prospectus and, although we have not undertaken to investigate
or verify independently and do not assume responsibility for, the accuracy or
completeness of the statements contained in either of them (other than as
explicitly stated in paragraphs (iii) and (xiii) above), based upon such
participation (and relying as to materiality to the extent we deemed reasonable
on officers, employees and other representatives of the Company), nothing has
come to our attention that would lead us to believe that the Registration
Statement or any amendment thereto, including the Rule 430A Information and Rule
434 Information (if applicable) (except for financial statements and schedules
and other financial and statistical data included or incorporated by reference
therein or omitted therefrom, as to which we need make no statement), at the
time such Registration Statement or any such amendment became effective,
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading or that the Prospectus or any amendment or supplement thereto
(except for financial statements and schedules and other financial data included
or incorporated by reference therein or omitted therefrom, as to which we need
make no statement), at the time the Prospectus was issued, at the time any such
amended or supplemented prospectus was issued or at the Closing Time, included
or includes an untrue statement of a material fact or omitted or omits to state
a material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
In rendering such opinion, such counsel may rely, as to matters
of fact (but not as to legal conclusions), to the extent they deem proper, on
certificates of responsible officers of the Company and public officials. Such
opinion shall not state that it is to be governed or qualified by, or that it is
otherwise subject to, any treatise, written policy or other document
<PAGE>
A-1-5
relating to legal opinions, including, without limitation, the Legal Opinion
Accord of the ABA Section of Business Law (1991).
<PAGE>
EXHIBIT A-2
FORM OF OPINION OF COMPANY'S GENERAL COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(i) The Company is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify or
to be in good standing would not result in a Material Adverse Effect.
(ii) Except as disclosed in the Prospectus, to my knowledge,
there is not pending or threatened any action, suit, proceeding, inquiry or
investigation, to which the Company or any subsidiary is a party, or to which
the property of the Company or any subsidiary is subject, before or brought by
any court or governmental agency or body, domestic or foreign, which might
reasonably be expected to result in a Material Adverse Effect, or which might
reasonably be expected to materially and adversely affect the properties or
assets thereof or the consummation of the transactions contemplated in the
Purchase Agreement or the performance by the Company of its obligations
thereunder.
(iii) The information in the Prospectus under
"Business-Trademarks and Patents", "Business Regulation" and "Business-Legal
Proceedings", has been reviewed by me and is correct in all material respects.
(iv) The execution, delivery and performance of the Purchase
Agreement and the consummation of the transactions contemplated in the Purchase
Agreement and the Registration Statement (including the issuance and sale of the
Securities and the use of the proceeds from the sale of the Securities as
described in the Prospectus under the caption "Use Of Proceeds") and compliance
by the Company with its obligations under the Purchase Agreement do not and will
not, whether with or without the giving of notice or lapse of time or both,
conflict with or constitute a breach of, or default or Repayment Event (as
defined in Section 1(a)(xi) of the Purchase Agreements) under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any subsidiary pursuant to, any contract, indenture,
mortgage, deed of trust, loan or credit agreement, note, lease or any other
agreement or instrument to which the Company or any subsidiary is a party or by
which it or any of them may be bound, or to which any of the property or assets
of the Company or any subsidiary is subject (except for such conflicts, breaches
or defaults or liens, charges or encumbrances that would not have a Material
Adverse Effect), nor will such action result in any violation of the provisions
of the charter or by-laws of the Company or any subsidiary, or any material
applicable law, statute, rule, regulation, judgment, order, writ or decree,
known to us, of any government, government instrumentality or court, domestic or
foreign, having jurisdiction over the Company or any subsidiary or any of their
respective properties, assets or operations.
<PAGE>
EXHIBIT B-1
FORM OF OPINION OF COUNSEL FOR THE SELLING STOCKHOLDERS
TO BE DELIVERED PURSUANT TO SECTION 5(c)
(i) No filing with, or consent, approval, authorization, license,
order, registration, qualification or decree of, any court or governmental
authority or agency, domestic or foreign (other than the issuance of the order
of the Commission declaring the Registration Statement effective and such
authorizations, approvals or consents as may be necessary under state securities
laws, as to which we need express no opinion), is necessary or required to be
obtained by the Selling Stockholders for the performance by each Selling
Stockholder of its obligations under the Purchase Agreement or in the Power of
Attorney and Custody Agreement, or in connection with the offer, sale or
delivery of the Securities.
(ii) Each Power of Attorney and Custody Agreement has been duly
executed and delivered by the respective Selling Stockholders named therein and
constitutes the legal, valid and binding agreement of each such Selling
Stockholder.
(iii) The Purchase Agreement has been duly authorized, executed
and delivered by or on behalf of each Selling Stockholder.
(iv) Each Attorney-in-Fact has been duly authorized by the
Selling Stockholders to deliver the Securities on behalf of the Selling
Stockholders in accordance with the terms of the Purchase Agreement.
(v) The execution, delivery and performance of the Purchase
Agreement and the Power of Attorney and Custody Agreement and the sale and
delivery of the Securities and the consummation of the transactions contemplated
in the Purchase Agreement and in the Registration Statement and compliance by
the Selling Stockholders with their obligations under the Purchase Agreement
have been duly authorized by all necessary action on the part of the Selling
Stockholders and do not and will not, whether with or without the giving of
notice or passage of time or both, conflict with or constitute a breach of, or
default under or result in the creation or imposition of any tax, lien, charge
or encumbrance upon the Securities or any property or assets of the Selling
Stockholders pursuant to, any contract, indenture, mortgage, deed of trust, loan
or credit agreement, note, license, lease or other instrument or agreement known
to us after due inquiry made to the Selling Stockholders to which any Selling
Stockholder is a party or by which it may be bound, or to which any of the
property or assets of any Selling Stockholder may be subject, nor will such
action result in any violation of the provisions of the Partnership Agreement of
any Selling Stockholder, if applicable, or any law, administrative regulation,
judgment or order known to us of any governmental agency or body
<PAGE>
B-2
or any administrative or court decree having jurisdiction over such Selling
Stockholder or any of its properties.
(vi) Each Selling Stockholder is the sole record owner and to our
knowledge, is the sole beneficial owner of the Securities being sold by him, her
or it pursuant to the Purchase Agreement, free and clear of any pledge, lien,
security interest, charge, claim, equity or encumbrance of any kind, and, to our
knowledge, has the full right, power and authority to sell, transfer and deliver
such Securities pursuant to the Purchase Agreement. Upon proper delivery of the
certificates for the Securities of the Selling Stockholders accompanied by
proper stock transfer instruments to the Underwriters, assuming the Underwriters
have purchased the Securities for value in accordance with the terms of the
Purchase Agreement and without notice of any adverse claim, the Underwriters
will acquire all rights of the Selling Stockholders in the Securities free and
clear of any adverse claim.
<PAGE>
EXHIBIT B-2
FORM OF OPINION OF COUNSEL FOR THE SELLING STOCKHOLDERS
TO BE DELIVERED PURSUANT TO SECTION 5(c)
(i) No filing with, or consent, approval, authorization, license,
order, registration, qualification or decree of, any court or governmental
authority or agency, domestic or foreign (other than the issuance of the order
of the Commission declaring the Registration Statement effective and such
authorizations, approvals or consents as may be necessary under state securities
laws, as to which we need express no opinion), is necessary or required to be
obtained by the Selling Stockholders for the performance by each Selling
Stockholder of its obligations under the Purchase Agreement or in the Power of
Attorney and Custody Agreement, or in connection with the offer, sale or
delivery of the Securities.
(ii) Each Power of Attorney and Custody Agreement has been duly
executed and delivered by the respective Selling Stockholders named therein and
constitutes the legal, valid and binding agreement of each such Selling
Stockholder.
(iii) The Purchase Agreement has been duly authorized, executed
and delivered by or on behalf of each Selling Stockholder.
(iv) Each Attorney-in-Fact has been duly authorized by the
Selling Stockholders to deliver the Securities on behalf of the Selling
Stockholders in accordance with the terms of the Purchase Agreement.
(v) The execution, delivery and performance of the Purchase
Agreement and the Power of Attorney and Custody Agreement and the sale and
delivery of the Securities and the consummation of the transactions contemplated
in the Purchase Agreement and in the Registration Statement and compliance by
the Selling Stockholders with their obligations under the Purchase Agreement
have been duly authorized by all necessary action on the part of the Selling
Stockholders and do not and will not, whether with or without the giving of
notice or passage of time or both, conflict with or constitute a breach of, or
default under or result in the creation or imposition of any tax, lien, charge
or encumbrance upon the Securities or any property or assets of the Selling
Stockholders pursuant to, any contract, indenture, mortgage, deed of trust, loan
or credit agreement, note, license, lease or other instrument or agreement known
to us after due inquiry made to the Selling Stockholders to which any Selling
Stockholder is a party or by which it may be bound, or to which any of the
property or assets of any Selling Stockholder may be subject, nor will such
action result in any violation of the provisions of the Partnership Agreement of
any Selling Stockholder, if applicable, or any law, administrative regulation,
judgment or order known to us of any governmental agency or body or any
administrative or court decree having jurisdiction over such Selling Stockholder
or any of its properties.
<PAGE>
(vi) Each Selling Stockholder is the sole record owner and to our
knowledge, is the sole beneficial owner of the Securities being sold by him, her
or it pursuant to the Purchase Agreement, free and clear of any pledge, lien,
security interest, charge, claim, equity or encumbrance of any kind, and, to our
knowledge, has the full right, power and authority to sell, transfer and deliver
such Securities pursuant to the Purchase Agreement. Upon proper delivery of the
certificates for the Securities of the Selling Stockholders accompanied by
proper stock transfer instruments to the Underwriters, assuming the Underwriters
have purchased the Securities for value in accordance with the terms of the
Purchase Agreement and without notice of any adverse claim, the Underwriters
will acquire all rights of the Selling Stockholders in the Securities free and
clear of any adverse claim.
<PAGE>
EXHIBIT C
[FORM OF LOCK-UP FROM DIRECTORS, OFFICERS OR OTHER STOCKHOLDERS PURSUANT TO
SECTION 5(M)]
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated,
Donaldson, Lufkin & Jenrette Securities Corporation
Goldman, Sachs & Co.
PaineWebber Incorporated
Smith Barney Inc.
as Representatives of the several
Underwriters to be named in the
within-mentioned Purchase Agreement
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281
Re: Proposed Public Offering by Playtex Products, Inc.
--------------------------------------------------
Dear Sirs:
The undersigned, [a stockholder and an officer and/or director]
of Playtex Products, Inc., a Delaware corporation (the "Company"),
understands that Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch") and Donaldson, Lufkin & Jenrette Securities
Corporation, Goldman, Sachs & Co., PaineWebber Incorporated and Smith Barney
Inc. propose(s) to enter into a Purchase Agreement (the "Purchase Agreement")
with the Company and the Selling Stockholders providing for the public
offering of shares (the "Securities") of the Company's common stock, par
value $.01 per share (the "Common Stock"). In recognition of the benefit that
such an offering will confer upon the undersigned as a stockholder
[and an officer and/or director]2 of the Company, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the undersigned agrees with each underwriter to be named in the
Purchase Agreement that, during a period of 90 days from the date of the
Purchase Agreement, the undersigned will not, without the prior written
consent of Merrill Lynch, directly or indirectly, (i) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant for the
<PAGE>
sale of, or otherwise dispose of or transfer any shares of the Company's
Common Stock or any securities convertible into or exchangeable or
exercisable for Common Stock, whether now owned or hereafter acquired by the
undersigned or with respect to which the undersigned has or hereafter
acquires the power of disposition, or file any registration statement under
the Securities Act of 1933, as amended, with respect to any of the foregoing
or (ii) enter into any swap or any other agreement or any transaction that
transfers, in whole or in part, directly or indirectly, the economic
consequence of ownership of the Common Stock, whether any such swap or
transaction is to be settled by delivery of Common Stock or other securities,
in cash or otherwise, except, in each case, for (A) sales of Common Stock
pursuant to the International Purchase Agreement among Donaldson, Lufkin &
Jenrette International, Goldman Sachs International, PaineWebber
International (U.K.) Ltd., and Smith Barney Inc., and certain Selling
Stockholders, (B) the exercise of an option to purchase Common Stock or the
surrender of shares of Common Stock or of an option in connection with the
exercise of an option, in each case, pursuant to existing employee benefit
plans of the Company referred to in the Prospectus, (C) transfers by way of
testate or intestate succession or operation of law, (D) transfers to
immediate family members of such Selling Stockholder or a trust or other
entity of all of the beneficial interests which are held by such Selling
Stockholder and (E) transfers to charitable organizations; PROVIDED that, in
the case of transfers pursuant to clauses (C), (D) and (E) of this sentence,
the transferee shall have agreed to be bound by the restrictions on transfer
contained in this letter.
Very truly yours,
Signature:
--------------------------------
Print Name:
-------------------------------
<PAGE>
EXHIBIT 1.2
S&S Draft
5/13/98
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
PLAYTEX PRODUCTS, INC.
(a Delaware corporation)
[4,008,063] Shares of Common Stock
INTERNATIONAL PURCHASE AGREEMENT
Dated: May [19], 1998
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
INTERNATIONAL PURCHASE AGREEMENT
PAGE
<S> <C>
SECTION 1. Representations and Warranties...............................................3
(a) REPRESENTATIONS AND WARRANTIES BY THE COMPANY....................3
(b) REPRESENTATIONS AND WARRANTIES BY THE SELLING STOCKHOLDERS......11
(c) OFFICER'S CERTIFICATES..........................................14
SECTION 2. Sale and Delivery to International Managers; Closing........................14
(a) THE SECURITIES..................................................14
(b) PAYMENT.........................................................14
(c) DENOMINATIONS; REGISTRATION.....................................15
SECTION 3. Covenants of the Company....................................................15
(a) COMPLIANCE WITH SECURITIES REGULATIONS AND
COMMISSION REQUESTS.............................................15
(b) FILING OF AMENDMENTS............................................15
(c) DELIVERY OF REGISTRATION STATEMENTS.............................16
(d) DELIVERY OF PROSPECTUS..........................................16
(e) CONTINUED COMPLIANCE WITH SECURITIES LAWS.......................16
(f) RULE 158........................................................17
(g) LISTING.........................................................17
(h) RESTRICTION ON SALE OF SECURITIES...............................17
(i) REPORTING REQUIREMENTS..........................................18
SECTION 4. Payment of Expenses.........................................................18
(a) EXPENSES.........................................................18
(b) EXPENSES OF THE SELLING STOCKHOLDERS............................18
(c) TERMINATION OF AGREEMENT........................................18
(d) ALLOCATION OF EXPENSES..........................................19
SECTION 5. Conditions of International Managers' Obligations...........................19
(a) EFFECTIVENESS OF REGISTRATION STATEMENT.........................19
(b) OPINION OF COUNSEL FOR COMPANY..................................19
(c) OPINION OF COUNSEL FOR SELLING STOCKHOLDERS.....................20
(d) OPINION OF COUNSEL FOR CERTAIN SELLING STOCKHOLDERS.............20
(e) OPINION OF COUNSEL FOR INTERNATIONAL MANAGERS...................20
(f) OPINION OF COUNSEL FOR THE INTERNATIONAL MANAGERS...............20
(g) OFFICERS' CERTIFICATE...........................................21
(h) CERTIFICATE OF SELLING STOCKHOLDERS.............................21
(i) ACCOUNTANTS' COMFORT LETTER.....................................21
(j) BRING-DOWN COMFORT LETTER.......................................21
(k) APPROVAL OF LISTING.............................................22
(l) NO OBJECTION....................................................22
</TABLE>
<PAGE>
<TABLE>
ii
PAGE
<S> <C>
(m) LOCK-UP AGREEMENTS..............................................22
(n) ADDITIONAL DOCUMENTS............................................22
(o) TERMINATION OF AGREEMENT........................................22
SECTION 6. Indemnification.............................................................22
(a) INDEMNIFICATION OF INTERNATIONAL MANAGERS.......................22
(b) INDEMNIFICATION OF COMPANY, DIRECTORS AND OFFICERS AND SELLING
STOCKHOLDERS....................................................24
(c) ACTIONS AGAINST PARTIES; NOTIFICATION...........................24
(d) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE..............25
(e) OTHER AGREEMENTS WITH RESPECT TO INDEMNIFICATION................25
SECTION 7. Contribution................................................................25
SECTION 8. Representations, Warranties and Agreements to Survive Delivery..............27
SECTION 9. Termination of Agreement....................................................27
(a) TERMINATION; GENERAL............................................27
(b) LIABILITIES.....................................................28
SECTION 10. Default by One or More of the International Managers.......................28
SECTION 11. Default by One or More of the Selling Stockholders.........................29
SECTION 12. Notices....................................................................29
SECTION 13. Parties....................................................................29
SECTION 14. GOVERNING LAW AND TIME.....................................................30
SECTION 15. Effect of Headings.........................................................30
</TABLE>
<PAGE>
iii
<TABLE>
PAGE
SCHEDULES
<S> <C>
Schedule A - List of International Managers................................. Sch A-1
Schedule B - List of Selling Stockholders................................... Sch B-1
Schedule C - Pricing Information............................................ Sch C-1
[Schedule D - List of Subsidiaries........................................... Sch D-1]
[Schedule E - List of Persons and Entities Subject to Lock-up................ Sch E-1]
EXHIBITS
EXHIBIT A-1 - Form of Opinion of Company's Counsel.......................... A-1
EXHIBIT A-2 - Form of Opinion of Company's General Counsel.................. A-2
EXHIBIT B-1 - Form of Opinion of Counsel for the Selling Stockholders ...... B-1
EXHIBIT B-2 - Form of Opinion of Counsel for the Selling Stockholder ....... B-2
EXHIBIT C - Form of Lock-up Letter.......................................... C-1
</TABLE>
<PAGE>
S&S Draft
5/13/98
PLAYTEX PRODUCTS, INC.
(a Delaware corporation)
[4,008,063] Shares of Common Stock
(Par Value $.01 Per Share)
INTERNATIONAL PURCHASE AGREEMENT
May [19], 1998
DONALDSON, LUFKIN & JENRETTE
INTERNATIONAL
Goldman Sachs International
PaineWebber International (U.K.) Ltd.
Smith Barney Inc.
as Lead Managers of the several International Managers
c/o Donaldson Lufkin & Jenrette International
227 Park Avenue
New York, New York 10172
Ladies and Gentlemen:
PLAYTEX PRODUCTS, INC., a Delaware corporation (the "Company"),
and the persons listed in Schedule B hereto (the "Selling Stockholders"),
confirm their respective agreements with you and each of the other international
manager's named in Schedule A hereto (collectively, the "International
Managers", which term shall also include any International Manager substituted
as hereinafter provided in Section 10 hereof), for whom you, Goldman Sachs
International, PaineWebber International (U.K.) Ltd. and Smith Barney Inc. are
acting as Lead Managers (in such capacity, the "Lead Managers"), with respect to
the sale by the Selling Stockholders, acting severally and not jointly, and the
purchase by the International Managers, acting severally and not jointly, of the
respective numbers of shares of Common Stock, par value $.01 per share, of the
Company ("Common Stock") set forth in Schedules A and B hereto. The aforesaid
[4,008,063] shares of Common Stock to be purchased by the International Managers
are hereinafter called, collectively, the "Securities".
It is understood that the Company and certain stockholders (the
"U.S. Selling Stockholders") are concurrently entering into an agreement dated
the date hereof (the "U.S. Purchase Agreement") providing for the separate
offering by the U.S. Selling Stockholders of an aggregate of [8,609,182] shares
of Common Stock (the "U.S. Securities") through
<PAGE>
2
arrangements with certain underwriters within the United States and Canada (the
"U.S. Underwriters") for which Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Donaldson, Lufkin & Jenrette Securities Corporation, Goldman,
Sachs & Co., PaineWebber Incorporated and Smith Barney Inc. are acting as lead
manager(s) (the "U.S. Representatives").
The Company and the Selling Stockholders understand that the
International Managers propose to make a public offering of the Securities as
soon as the Lead Managers deem advisable after this Agreement has been executed
and delivered.
The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-3 (No. 333-50099) covering
the registration of the Securities under the Securities Act of 1933, as amended
(the "1933 Act"), including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the
Company will either (i) prepare and file a prospectus in accordance with the
provisions of Rule 430A ("Rule 430A") of the rules and regulations of the
Commission under the 1933 Act (the "1933 Act Regulations") and paragraph (b) of
Rule 424 ("Rule 424(b)") of the 1933 Act Regulations or (ii) if the Company has
elected to rely upon Rule 434 ("Rule 434") of the 1933 Act Regulations, prepare
and file a term sheet (a "Term Sheet") in accordance with the provisions of Rule
434 and Rule 424(b). The form of prospectus relating to the securities is
hereinafter referred to as the "Form of Prospectus". The information included in
any such prospectus or in any such Term Sheet, as the case may be, that was
omitted from such registration statement at the time it became effective but
that is deemed to be part of such registration statement at the time it became
effective (a) pursuant to paragraph (b) of Rule 430A is referred to as "Rule
430A Information" or (b) pursuant to paragraph (d) of Rule 434 is referred to as
"Rule 434 Information". The Form of Prospectus used before such registration
statement became effective, and any prospectus that omitted, as applicable, the
Rule 430A Information or the Rule 434 Information, that was used after such
effectiveness and prior to the execution and delivery of this Agreement, is
herein called a "preliminary prospectus". Such registration statement, including
the exhibits thereto, schedules thereto, if any, and the documents incorporated
by reference therein pursuant to Item 12 of Form S-3 under the 1933 Act, at the
time it became effective and including the Rule 430A Information and the Rule
434 Information, as applicable, is herein called the "Registration Statement".
Any registration statement filed pursuant to Rule 462(b) of the 1933 Act
Regulations is herein referred to as the "Rule 462(b) Registration Statement",
and after such filing the term "Registration Statement" shall include the Rule
462(b) Registration Statement. The final Form of Prospectus, including the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the 1933 Act, in the forms first furnished to the International Managers
for use in connection with the offering of the Securities are herein called the
"Prospectus". If Rule 434 is relied on, the term "Prospectus" shall refer to the
preliminary Prospectus dated April 23, 1998 together with
<PAGE>
3
the applicable Term Sheet and all references in this Agreement to the date of
such Prospectus shall mean the date of the applicable Term Sheet. For purposes
of this Agreement, all references to the Registration Statement, any preliminary
prospectus, the Prospectus or any Term Sheet or any amendment or supplement to
any of the foregoing shall be deemed to include the copy filed with the
Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval
system ("EDGAR").
All references in this Agreement to financial statements and
schedules and other information which is "contained", "included" or "stated" in
the Registration Statement, any preliminary prospectus (including the Form of
Prospectus) or the Prospectus (or other references of like import) shall be
deemed to mean and include all such financial statements and schedules and other
information which is incorporated by reference in the Registration Statement,
any preliminary prospectus (including the Form of Prospectus) or the Prospectus,
as the case may be; and all references in this Agreement to amendments or
supplements to the Registration Statement, any preliminary prospectus or the
Prospectus shall be deemed to mean and include the filing of any document under
the Securities Exchange Act of 1934, as amended (the "1934 Act"), which is
incorporated by reference in the Registration Statement, such preliminary
prospectus or the Prospectus, as the case may be.
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) REPRESENTATIONS AND WARRANTIES BY THE COMPANY. The Company
represents and warrants to each International Manager as of the date hereof and
as of the Closing Time referred to in Section 2(b) hereof, and agrees with each
International Manager, as follows:
(i) COMPLIANCE WITH REGISTRATION REQUIREMENTS. The Company meets
the requirements for use of Form S-3 under the 1933 Act. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are pending or, to
the knowledge of the Company, are contemplated by the Commission, and
any request on the part of the Commission for additional information has
been complied with or withdrawn.
At the respective times the Registration Statement, any Rule
462(b) Registration Statement and any post-effective amendments thereto
became effective and at the Closing Time the Registration Statement, the
Rule 462(b) Registration Statement and any amendments and supplements
thereto complied and will comply in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations and did not
and will not contain an untrue statement of a material fact or omit to
state a material
<PAGE>
4
fact required to be stated therein or necessary to make the statements
therein not misleading. Neither the Prospectus nor any amendments or
supplements thereto, at the time the Prospectus or any such amendment or
supplement was issued and at the Closing Time included or will include
an untrue statement of a material fact or omitted or will omit to state
a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading. If Rule 434 is used, the Company will comply with the
requirements of Rule 434. The representations and warranties in this
subsection shall not apply to statements in or omissions from the
Registration Statement or Prospectus made in reliance upon and in
conformity with information furnished to the Company in writing by any
International Manager through Lead Managers expressly for use in the
Registration Statement or Prospectus.
Each preliminary prospectus and the prospectus filed as part of
the Registration Statement as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 424 under the 1933 Act,
complied when so filed in all material respects with the 1933 Act
Regulations and each preliminary prospectus and the Prospectus delivered
to the International Managers for use in connection with this offering
was identical to the electronically transmitted copies thereof filed
with the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.
(ii) INCORPORATED DOCUMENTS. The documents incorporated or deemed
to be incorporated by reference in the Registration Statement and the
Prospectus, when they became effective or at the time they were or
hereafter are filed with the Commission, complied and will comply in all
material respects with the requirements of the 1933 Act and the 1933 Act
Regulations or the 1934 Act and the rules and regulations of the
Commission thereunder (the "1934 Act Regulations"), as applicable, and,
when read together with the other information in the Prospectus, at the
time the Registration Statement became effective, at the time the
Prospectus was issued and at the Closing Time, did not and will not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading.
(iii) INDEPENDENT ACCOUNTANTS. KPMG Peat Marwick L.L.P., who
certified the financial statements and supporting schedules included in
the Registration Statement, are independent public accountants as
required by the 1933 Act and the 1933 Act Regulations.
(iv) FINANCIAL STATEMENTS. The historical consolidated financial
statements included in the Registration Statement and the Prospectus,
together with the related schedules and notes, present fairly the
consolidated financial position of the Company
<PAGE>
5
and its subsidiaries at the dates indicated on the basis stated therein
and the statement of operations, stockholders' equity and cash flows of
the Company and its consolidated subsidiaries for the periods specified,
and said financial statements have been prepared in conformity with
generally accepted accounting principles ("GAAP") applied on a
consistent basis throughout the periods involved except as disclosed
therein. The supporting schedules, if any, included in the Registration
Statement present fairly in accordance with GAAP the information
required to be stated therein. The selected financial data and the
summary financial information included in the Prospectus present fairly
the information shown therein and have been compiled on a basis
consistent with that of the audited financial statements included in the
Registration Statement. The pro forma financial statements, the related
notes thereto and other pro forma financial information included in the
Registration Statement and the Prospectus present fairly the information
shown therein, have been prepared in accordance with the Commission's
rules and guidelines with respect to pro forma financial statements and
have been properly compiled on the basis described therein, and the
assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the
transactions and circumstances referred to therein.
(v) NO MATERIAL ADVERSE CHANGE IN BUSINESS. Since the respective
dates as of which information is given in the Registration Statement and
the Prospectus, except as otherwise stated therein, (A) there has been
no material adverse change in the condition, financial or otherwise, or
in the earnings, business affairs or business prospects of the Company
and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business (a "Material Adverse
Effect"), (B) there have been no transactions entered into by the
Company or any of its subsidiaries, other than those in the ordinary
course of business, which are material with respect to the Company and
its subsidiaries considered as one enterprise and (C) there has been no
dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock.
(vi) GOOD STANDING OF THE COMPANY. The Company has been duly
organized and is validly existing as a corporation in good standing
under the laws of the State of Delaware and has corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus and to enter into and perform
its obligations under this Agreement; and the Company is duly qualified
as a foreign corporation to transact business and is in good standing in
each other jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of
business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect.
<PAGE>
6
(vii) GOOD STANDING OF SUBSIDIARIES. The only subsidiaries of the
Company are the subsidiaries listed on Schedule D hereto (each a
"Subsidiary" and, collectively, the "Subsidiaries"). Each Subsidiary has
been duly organized and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, has
corporate power and authority to own, lease and operate its properties
and to conduct its business as described in the Prospectus and is duly
qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct
of business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect; except as
otherwise disclosed in the Registration Statement, all of the issued and
outstanding capital stock of each such Subsidiary (except Playtex
Marketing Corporation in which the Company owns 50% of the outstanding
shares of capital stock) has been duly authorized and validly issued, is
fully paid and non-assessable and is owned by the Company, directly or
through subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity; none of the outstanding
shares of capital stock of any Subsidiary was issued in violation of the
preemptive or similar rights of any securityholder of such Subsidiary.
(viii) CAPITALIZATION. The authorized, issued and outstanding
capital stock of the Company is as set forth in the Prospectus in the
column entitled "Actual" under the caption "Capitalization" (except for
subsequent issuances, if any, pursuant to this Agreement or pursuant to
the U.S. Purchase Agreement, pursuant to reservations, agreements or
employee benefit plans referred to in the Prospectus or pursuant to the
exercise of convertible securities or options referred to in the
Prospectus). The shares of issued and outstanding capital stock of the
Company, including the Securities to be purchased by the International
Managers from the Selling Stockholders, have been duly authorized and
validly issued and are fully paid and non-assessable; none of the
outstanding shares of capital stock of the Company, including the
Securities to be purchased by the International Managers from the
Selling Stockholders, was issued in violation of the preemptive or other
similar rights of any securityholder of the Company.
(ix) AUTHORIZATION OF AGREEMENT. This Agreement has been duly
authorized, executed and delivered by the Company.
(x) AUTHORIZATION AND DESCRIPTION OF SECURITIES. The Common Stock
conforms to all statements relating thereto contained in the Prospectus
and such description conforms in all material respects to the rights set
forth in the instruments defining the same; and no holder of the
Securities will be subject to personal liability
<PAGE>
7
by reason of being such a holder; and the issuance of the Securities is
not subject to the preemptive or other similar rights of any
securityholder of the Company.
(xi) ABSENCE OF DEFAULTS AND CONFLICTS. Neither the Company nor
any of its subsidiaries is in violation of its charter or by-laws or in
default in the performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage,
deed of trust, loan or credit agreement, note, lease or other agreement
or instrument to which the Company or any of its subsidiaries is a party
or by which it or any of them may be bound, or to which any of the
property or assets of the Company or any subsidiary is subject
(collectively, "Agreements and Instruments") except for such defaults
that would not result in a Material Adverse Effect; and the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated in this Agreement, and in the Registration
Statement and compliance by the Company with its obligations under this
Agreement have been duly authorized by all necessary corporate action
and do not and will not, whether with or without the giving of notice or
passage of time or both, conflict with or constitute a breach of, or
default or Repayment Event (as defined below) under, or result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any subsidiary pursuant to, the
Agreements and Instruments (except for such conflicts, breaches or
defaults or liens, charges or encumbrances that would not result in a
Material Adverse Effect), nor will such action result in any violation
of the provisions of the charter or by-laws of the Company or any
subsidiary or any material applicable law, statute, rule, regulation,
judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over
the Company or any subsidiary or any of their assets, properties or
operations. As used herein, a "Repayment Event" means any event or
condition which gives the holder of any note, debenture or other
evidence of indebtedness (or any person acting on such holder's behalf)
the right to require the repurchase, redemption or repayment of all or a
portion of such indebtedness by the Company or any subsidiary.
(xii) ABSENCE OF LABOR DISPUTE. No labor dispute with the
employees of the Company or any subsidiary exists or, to the knowledge
of the Company, is imminent, which, may reasonably be expected to result
in a Material Adverse Effect.
(xiii) ABSENCE OF PROCEEDINGS. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Company, threatened, against or affecting the
Company or any subsidiary, which is required to be disclosed in the
Registration Statement (other than as disclosed therein), or which might
reasonably be expected to result in a Material Adverse Effect, or which
might reasonably be expected
<PAGE>
8
to materially and adversely affect the properties or assets thereof or
the consummation of the transactions contemplated in this Agreement or
the performance by the Company of its obligations hereunder; the
aggregate of all pending legal or governmental proceedings to which the
Company or any subsidiary is a party or of which any of their respective
property or assets is the subject which are not described in the
Registration Statement, including ordinary routine litigation incidental
to the business, could not reasonably be expected to result in a
Material Adverse Effect.
(xiv) ACCURACY OF EXHIBITS. There are no contracts or documents
which are required to be described in the Registration Statement, the
Prospectus or the documents incorporated by reference therein or to be
filed as exhibits thereto which have not been so described and filed as
required.
(xv) POSSESSION OF INTELLECTUAL PROPERTY. The Company and its
subsidiaries own or possess, or can acquire on reasonable terms,
adequate patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names or other
intellectual property (collectively, "Intellectual Property") necessary
to carry on the business now operated by them, except where the failure
to own or possess or otherwise be able to acquire such Intellectual
Property would not result in a Material Adverse Effect, and neither the
Company nor any of its subsidiaries has received any notice or is
otherwise aware of any infringement of or conflict with asserted rights
of others with respect to any Intellectual Property or of any facts or
circumstances which would render any Intellectual Property invalid or
inadequate to protect the interest of the Company or any of its
subsidiaries therein, and which infringement or conflict (if the subject
of any unfavorable decision, ruling or finding) or invalidity or
inadequacy, singly or in the aggregate, would result in a Material
Adverse Effect.
(xvi) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or
authorization, approval, license, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency is necessary or required for the performance by the Company of
its obligations under this Agreement, in connection with the offering,
issuance or sale of the Securities hereunder or the consummation of the
transactions contemplated by this Agreement and the International
Purchase Agreement, except such as have been already obtained or as may
be required under the 1933 Act or the 1933 Act Regulations or state
securities laws.
(xvii) POSSESSION OF LICENSES AND PERMITS. The Company and its
subsidiaries possess such material permits, licenses, approvals,
consents and other authorizations (collectively, "Governmental
Licenses") issued by the appropriate federal, state, local
<PAGE>
9
or foreign regulatory agencies or bodies necessary to conduct the
business now operated by them; the Company and its subsidiaries are in
compliance with the terms and conditions of all such Governmental
Licenses, except where the failure so to comply would not, singly or in
the aggregate, have a Material Adverse Effect; all of the Governmental
Licenses are valid and in full force and effect, except when the
invalidity of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect would not have a
Material Adverse Effect; and neither the Company nor any of its
subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses which,
singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would result in a Material Adverse Effect.
(xviii)TITLE TO PROPERTY. The Company and its subsidiaries have
good and marketable title to all real property owned by the Company and
its subsidiaries and good title to all other properties owned by them
which is material to the business of the Company and its subsidiaries,
in each case, free and clear of all mortgages, pledges, liens, security
interests, claims, restrictions or encumbrances of any kind except such
as (a) are described in the Prospectus or (b) do not, singly or in the
aggregate, materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by
the Company or any of its subsidiaries; and all of the leases and
subleases material to the business of the Company and its subsidiaries,
considered as one enterprise, and under which the Company or any of its
subsidiaries holds properties described in the Prospectus, are validly
existing and enforceable, with such exceptions as are not material and
do not interfere with the use made and proposed to be made of such
property except as described in the Prospectus.
(xix) INVESTMENT COMPANY ACT. The Company is not, and upon the
issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Prospectus
will not be, an "investment company" or an entity "controlled" by an
"investment company" as such terms are defined in the Investment Company
Act of 1940, as amended (the "1940 Act").
(xx) ENVIRONMENTAL LAWS. Except as described in the Registration
Statement and except as would not, singly or in the aggregate, result in
a Material Adverse Effect, (A) neither the Company nor any of its
subsidiaries is in violation of any federal, state, local or foreign
statute, law, rule, regulation, ordinance, code, policy or rule of
common law or any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent, decree or
judgment, relating to pollution or protection of human health, the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including,
without limitation, laws and regulations relating to the release or
threatened release of
<PAGE>
10
chemicals, pollutants, contaminants, wastes, toxic substances,
hazardous substances, petroleum or petroleum products (collectively,
"Hazardous Materials") or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling
of Hazardous Materials (collectively, "Environmental Laws"), (B) the
Company and its subsidiaries have all permits, authorizations and
approvals required under any applicable Environmental Laws and are each
in compliance with their requirements, (C) there are no pending or, to
the Company's knowledge, threatened administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices
of noncompliance or violation, investigation or proceedings relating to
any Environmental Law against the Company or any of its subsidiaries and
(D) there are no events or circumstances that might reasonably be
expected to form the basis of an order for clean-up or remediation, or
an action, suit or proceeding by any private party or governmental body
or agency, against or affecting the Company or any of its subsidiaries
relating to Hazardous Materials or any Environmental Laws.
(xxi) INSURANCE. Except as set forth in the following sentence,
the Company and each of its subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in
such amounts as are prudent and customary in the businesses in which
they are engaged, including, but not limited to, insurance coverage with
certain limits in excess of a deductible of $1.0 million per occurrence
and $4.0 million in the aggregate, on toxic shock syndrome claims
occurring on or after December 1, 1995; and neither the Company nor any
of its subsidiaries (i) has received notice from any insurer or agent of
such insurer that substantial capital improvements or other material
expenditures will have to be made in order to continue such insurance or
(ii) has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers at a cost that would not
have a Material Adverse Effect. For toxic shock syndrome claims filed
from October 1, 1985 until November 30, 1995, the Company is
self-insured and bears the costs of defending those claims, including
settlements and trials. The aggregate amount of all toxic shock syndrome
claims pending against the Company does not exceed 10% of the Company's
net asset value.
(xxii) REGISTRATION RIGHTS. Except as disclosed in the
Prospectus, there are no holders of securities (debt or equity) of the
Company, or holders of rights (including, without limitation, preemptive
rights), warrants or options to obtain securities of the Company or the
Subsidiaries, who have the right to request the Company to register
securities held by them under the Securities Act.
(xxiii)INTERNAL CONTROLS. The Company and the Subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance
with management's general and specific
<PAGE>
11
authorizations; (ii) transactions are recorded as necessary to permit
preparations of financial statements in conformance with GAAP and to
maintain accountability for assets; (iii) access to assets is permitted
in accordance with management's general or specific authorizations; and
(iv) the record of accountability for assets is compared with the
existing assets at reasonable intervals, and appropriate action is taken
with respect to any differences.
(b) REPRESENTATIONS AND WARRANTIES BY THE SELLING STOCKHOLDERS.
Each Selling Stockholder severally and not jointly represents and warrants to
each International Manager as of the date hereof, as of the Closing Time, and
agrees with each International Manager, as follows:
(i) ACCURATE DISCLOSURE. Such Selling Stockholder has reviewed
and is familiar with any written information provided by such Selling
Stockholder expressly for use in the Registration Statement and the
Prospectus and such information does not include any untrue statement of
a material fact or omit to state a material fact necessary in order to
make such information not misleading; such Selling Stockholder is not
prompted to sell the Securities to be sold by such Selling Stockholder
hereunder by any information concerning the Company or any subsidiary of
the Company which is not set forth in the Prospectus.
(ii) AUTHORIZATION OF AGREEMENTS. Such Selling Stockholder has
the full right, power and authority to enter into this Agreement and a
Power of Attorney and Custody Agreement (the "Power of Attorney and
Custody Agreement") and to sell, transfer and deliver the Securities to
be sold by such Selling Stockholder under this Agreement. The execution
and delivery of this Agreement and the Power of Attorney and Custody
Agreement and the sale and delivery of the Securities to be sold by such
Selling Stockholder and the consummation of the transactions
contemplated herein and compliance by such Selling Stockholder with its
obligations hereunder have been duly authorized by such Selling
Stockholder and do not and will not, whether with or without the giving
of notice or passage of time or both, conflict with or constitute a
breach of, or default under, or result in the creation or imposition of
any tax, lien, charge or encumbrance upon the Securities to be sold by
such Selling Stockholder or any property or assets of such Selling
Stockholder pursuant to any contract, indenture, mortgage, deed of
trust, loan or credit agreement, note, license, lease or other agreement
or instrument to which such Selling Stockholder is a party or by which
such Selling Stockholder may be bound, or to which any of the property
or assets of such Selling Stockholder is subject, nor will such action
result in any violation of the provisions of the charter or by-laws or
other organizational instrument of such Selling Stockholder, if
applicable, or any applicable treaty, law, statute, rule, regulation,
judgment, order, writ or decree of any government, government
instrumentality or
<PAGE>
12
court, domestic or foreign, having jurisdiction over such Selling
Stockholder or any of its properties.
(iii) GOOD AND MARKETABLE TITLE. Such Selling Stockholder has and
will at the Closing Time have good and marketable title to the
Securities to be sold by such Selling Stockholder hereunder, free and
clear of any security interest, mortgage, pledge, lien, charge, claim,
equity or encumbrance of any kind, other than pursuant to this
Agreement; and upon delivery of such Securities and payment of the
purchase price therefor as herein contemplated, assuming each such
International Manager has no notice of any adverse claim, each of the
International Managers will receive good and marketable title to the
Securities purchased by it from such Selling Stockholder, free and clear
of any security interest, mortgage, pledge, lien, charge, claim, equity
or encumbrance of any kind.
(iv) DUE EXECUTION OF POWER OF ATTORNEY AND CUSTODY AGREEMENT.
Such Selling Stockholder has duly executed and delivered, in the form
heretofore furnished to the Lead Managers, the Power of Attorney and
Custody Agreement with Thomas H. Lee and Warren C. Smith, Jr., or any of
them, as attorney(s)-in-fact (the "Attorney(s)- in-Fact") and Playtex
Products, Inc., as custodian (the "Custodian"); the Custodian is
authorized to deliver the Securities to be sold by such Selling
Stockholder hereunder and to accept payment therefor; and each
Attorney-in-Fact is authorized to execute and deliver this Agreement and
the certificate referred to in Section 5(f) or that may be required
pursuant to Section(s) 5(l) on behalf of such Selling Stockholder, to
sell, assign and transfer to the International Managers the Securities
to be sold by such Selling Stockholder hereunder, to determine the
purchase price to be paid by the International Managers to such Selling
Stockholder, as provided in Section 2(a) hereof, to authorize the
delivery of the Securities to be sold by such Selling Stockholder
hereunder, to accept payment therefor, and otherwise to act on behalf of
such Selling Stockholder in connection with this Agreement.
(v) ABSENCE OF MANIPULATION. Such Selling Stockholder has not
taken, and will not take, directly or indirectly, any action which is
designed to or which has constituted or which might reasonably be
expected to cause or result in stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of
the Securities.
(vi) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or consent,
approval, authorization, order, registration, qualification or decree
of, any court or governmental authority or agency, domestic or foreign,
is necessary or required for the performance by each Selling Stockholder
of its obligations hereunder or in the Power of Attorney and Custody
Agreement, or in connection with the sale and delivery of the Securities
hereunder or the consummation of the transactions contemplated by this
Agreement,
<PAGE>
13
except such as may have previously been made or obtained or as may be
required under the 1933 Act or the 1933 Act Regulations or state
securities laws.
(vii) RESTRICTION ON SALE OF SECURITIES. During a period of 90
days from the date of the Prospectus, each of the Selling Stockholders
set forth in Schedule B, will not, without your prior written consent,
(i) offer, pledge, sell, contract to sell, sell any option or contract
to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase or otherwise transfer or dispose of,
directly or indirectly, any share of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock or file
any registration statement under the 1933 Act with respect to any of the
foregoing or (ii) enter into any swap or any other agreement or any
transaction that transfers, in whole or in part, directly or indirectly,
the economic consequence of ownership of the Common Stock, whether any
such swap or transaction described in clause (i) or (ii) above is to be
settled by delivery of Common Stock or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to (A) the Securities
to be sold hereunder or under the U.S. Purchase Agreement, (B) the
exercise of an option to purchase Common Stock or the surrender of
shares of Common Stock of an option in connection with the exercise of
an option, in each case, pursuant to existing employee benefit plans
(including any shares of Common Stock to be added to any such plan at
the 1998 Annual Meeting of the Stockholders of the Company) of the
Company referred to in the Prospectus, (C) transfers by way of testate
or intestate succession or operation of law, (D) transfers to immediate
family members of such Selling Stockholder or a trust or other entity of
all of the beneficial interests which are held by such Selling
Stockholder and (E) transfers to charitable organizations; PROVIDED
that, in the case of transfers pursuant to clauses (C), (D) and (E) of
this sentence, the transferee shall have agreed to be bound by the
restrictions on transfer contained in this paragraph (vii).
(viii) CERTIFICATES SUITABLE FOR TRANSFER. Certificates for all
of the Securities to be sold by such Selling Stockholder pursuant to
this Agreement, in suitable form for transfer by delivery or accompanied
by duly executed instruments of transfer or assignment in blank with
signatures guaranteed, have been placed in custody with the Custodian
with irrevocable conditional instructions to deliver such Securities to
the International Managers pursuant to this Agreement.
(ix) NO ASSOCIATION WITH NASD. Neither such Selling Stockholder
nor any of its affiliates directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common
control with, or has any other association with (within the meaning of
Article I, Section 1(m) of the By-laws of the National Association of
Securities Dealers, Inc.), any member firm of the National Association
of Securities Dealers, Inc., PROVIDED THAT, by virtue of the
relationship of certain of the Selling Stockholders with certain limited
partnerships, such Selling Stockholders may
<PAGE>
14
be deemed to control such limited partnerships, which own, in the
aggregate, approximately 25% of the outstanding capital stock of Freedom
Securities Corporation (the parent corporation of Tucker Anthony
Incorporated, Sutro & Co. Incorporated, Cleary Gull Reiland & McDevitt
Inc. and certain other NASD members). Such Selling Stockholders disclaim
being a "person associated with a member" or an "associated person of a
member."
(c) OFFICER'S CERTIFICATES. Any certificate signed by any officer
of the Company or any of its subsidiaries delivered to the Lead Managers or to
counsel for the International Managers shall be deemed a representation and
warranty by the Company to each International Manager as to the matters covered
thereby; and any certificate signed by or on behalf of the Selling Stockholders
as such and delivered to the Lead Managers or to counsel for the International
Managers pursuant to the terms of this Agreement shall be deemed a
representation and warranty by such Selling Stockholder to the International
Managers as to the matters covered thereby.
SECTION 2. SALE AND DELIVERY TO INTERNATIONAL MANAGERS; CLOSING.
(a) THE SECURITIES. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, each Selling Stockholder, severally and not jointly, agrees to sell to
each International Manager, severally and not jointly, that proportion of the
number of Securities set forth in Schedule B opposite the name of such Selling
Stockholder and each International Manager, severally and not jointly, agrees to
purchase from each Selling Stockholder, at the price per share set forth in
Schedule C, that number of Securities set forth in Schedule A opposite the name
of such International Manager, plus any additional number of Securities which
such International Manager may become obligated to purchase pursuant to the
provisions of Section 10 hereof.
(b) PAYMENT. Payment of the purchase price for, and delivery of
certificates for, the Securities shall be made at the offices of Shearman &
Sterling, 599 Lexington Avenue, New York, New York, or at such other place as
shall be agreed upon by you and the Company and the Selling Stockholders, at
9:00 A.M. (Eastern time) on the third (fourth, if the pricing occurs after 4:30
P.M. (Eastern time) on any given day) business day after the date hereof (unless
postponed in accordance with the provisions of Section 10), or such other time
not later than ten business days after such date as shall be agreed upon by the
Lead Managers and the Company and the Selling Stockholders (such time and date
of payment and delivery being herein called "Closing Time").
Payment shall be made to the Selling Stockholders by wire
transfer of immediately available funds to bank accounts designated by the
Custodian pursuant to each Selling Stockholder's Power of Attorney and Custody
Agreement against delivery to the Lead
<PAGE>
15
Managers for the respective accounts of the International Managers of
certificates for the Securities to be purchased by them. It is understood that
each International Manager has
authorized the Lead Managers, for its account, to accept delivery of, receipt
for, and make payment of the purchase price for, the Securities which it has
agreed to purchase. You, individually and not as Lead Manager of the
International Managers, may (but shall not be obligated to) make payment of the
purchase price for the Securities to be purchased by any International Manager
whose funds have not been received by the Closing Time but such payment shall
not relieve such International Manager from its obligations hereunder.
(c) DENOMINATIONS; REGISTRATION. Certificates for the Securities
shall be in such denominations and registered in such names as the Lead Managers
may request in writing at least two full business days before the Closing Time.
The certificates for the Securities will be made available for examination and
packaging by the Lead Managers in The City of New York not later than 10:00 A.M.
(Eastern time) on the business day prior to the Closing Time.
SECTION 3. COVENANTS OF THE COMPANY. The Company covenants with
each International Manager as follows:
(a) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION
REQUESTS. The Company, subject to Section 3(b), will comply with the
requirements of Rule 430A or Rule 434, as applicable, and will notify
you and the Selling Stockholders immediately, and confirm the notice in
writing, (i) when any post-effective amendment to the Registration
Statement shall become effective, or any supplement to the Prospectus or
any amended Prospectus shall have been filed, (ii) of the receipt of any
comments from the Commission, (iii) of any request by the Commission for
any amendment to the Registration Statement or any amendment or
supplement to the Prospectus or for additional information, and (iv) of
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing
or suspending the use of any preliminary prospectus, or of the
initiation or threatening of any proceedings for any of such purposes.
The Company will promptly effect the filings necessary pursuant to Rule
424(b) and will take such steps as it deems necessary to ascertain
promptly whether the form of prospectus transmitted for filing under
Rule 424(b) was received for filing by the Commission and, in the event
that it was not, it will promptly file such prospectus. The Company will
make every reasonable effort to prevent the issuance of any stop order
and, if any stop order is issued, to obtain the lifting thereof at the
earliest possible moment.
(b) FILING OF AMENDMENTS. The Company will give you notice
of its intention to file or prepare any amendment to the Registration
Statement (including any filing under Rule 462(b)), any Term Sheet or
any amendment, supplement or revision to either the Prospectus included
in the Registration Statement at the time it became
<PAGE>
16
effective or to the Prospectus, or any document incorporated by
reference thereto whether filed pursuant to the 1933 Act, the 1934 Act
or otherwise, will furnish you and
the Selling Stockholders with copies of any such documents a reasonable
amount of time prior to such proposed filing or use, as the case may be,
and will not file or use any such document to which you or counsel for
the International Managers shall reasonably object.
(c) DELIVERY OF REGISTRATION STATEMENTS. The Company has
furnished or will, upon request, deliver to the Lead Managers and
counsel for the International Managers and the Selling Stockholders,
without charge, signed copies of the Registration Statement as
originally filed and of each amendment thereto (including exhibits filed
therewith or incorporated by reference therein and documents
incorporated or deemed to be incorporated by reference therein) and
signed copies of all consents and certificates of experts, and will also
deliver to the Lead Managers, without charge, a conformed copy of the
Registration Statement as originally filed and of each amendment thereto
(without exhibits) for each of the International Managers. The copies of
the Registration Statement and each amendment thereto furnished to the
International Managers will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to EDGAR,
except to the extent permitted by Regulation S-T.
(d) DELIVERY OF PROSPECTUS. The Company has delivered to
each International Manager and each Selling Stockholder, without charge,
as many copies of each preliminary prospectus as such International
Manager reasonably requested, and the Company hereby consents to the use
of such copies for purposes permitted by the 1933 Act. The Company will
furnish to each International Manager, without charge, during the period
when the Prospectus is required to be delivered under the 1933 Act or
the 1934 Act, such number of copies of the Prospectus (as amended or
supplemented) as such International Manager may reasonably request. The
Prospectus and any amendments or supplements thereto furnished to the
International Managers will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to EDGAR,
except to the extent permitted by Regulation S-T.
(e) CONTINUED COMPLIANCE WITH SECURITIES LAWS. The Company
will comply with the 1933 Act and the 1933 Act Regulations and the 1934
Act and the 1934 Act Regulations so as to permit the completion of the
distribution of the Securities as contemplated in this Agreement and in
the Prospectus. If at any time when a prospectus is required by the 1933
Act to be delivered in connection with sales of the Securities, any
event shall occur or condition shall exist as a result of which it is
necessary, in the opinion of counsel for the International Managers or
for the Company, to amend the Registration Statement or amend or
supplement any Prospectus in order
<PAGE>
17
that the Prospectus will not include any untrue statements of a material
fact or omit to state a material fact necessary in order to make the
statements therein not misleading in the light of the circumstances
existing at the time any such Prospectus is delivered to a purchaser, or
if it shall be necessary, in the opinion of such counsel, at any such
time to amend the Registration Statement or amend or supplement any such
Prospectus in order to comply with the requirements of the 1933 Act or
the 1933 Act Regulations, the Company will promptly prepare and file
with the Commission, subject to Section 3(b), such amendment or
supplement as may be necessary to correct such statement or omission or
to make the Registration Statement or the Prospectus comply with such
requirements, and the Company will furnish to the International Managers
and the Selling Stockholders such number of copies of such amendment or
supplement as the International Managers may reasonably request.
(f) RULE 158. The Company will timely file such reports
pursuant to the 1934 Act as are necessary in order to make generally
available to its securityholders as soon as practicable an earnings
statement for the purposes of, and to provide the benefits contemplated
by, the last paragraph of Section 11(a) of the 1933 Act.
(g) LISTING. The Company will use its best efforts to
effect the listing of the Securities on the New York Stock Exchange.
(h) RESTRICTION ON SALE OF SECURITIES. During a period of
90 days from the date of the Prospectus, the Company will not, without
your prior written consent, (i) directly or indirectly, offer, pledge,
sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or
warrant to purchase or otherwise transfer or dispose of any share of
Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or file any registration statement under
the 1933 Act with respect to any of the foregoing or (ii) enter into any
swap or any other agreement or any transaction that transfers, in whole
or in part, directly or indirectly, the economic consequence of
ownership of the Common Stock, whether any such swap or transaction
described in clause (i) or (ii) above is to be settled by delivery of
Common Stock or such other securities, in cash or otherwise. The
foregoing sentence shall not apply to (A) the Securities to be sold
hereunder or under the U.S. Purchase Agreement, (B) any shares of Common
Stock issued or options to purchase Common Stock granted pursuant to
existing employee benefit plans (including any shares of Common Stock to
be added to any such plan at the 1998 Annual Meeting of Stockholders) of
the Company referred to in the Prospectus or (C) any shares of Common
Stock or securities convertible into or exchangeable for Common Stock
issued as consideration for or to otherwise finance an acquisition of a
business or substantially all the assets of a business, provided, in
each case, that such shares of Common Stock or other security are issued
in connection with
<PAGE>
18
a transaction not requiring registration under the 1933 Act and that
such shares are subject to the same restriction on sale provided by this
clause (i).
(i) REPORTING REQUIREMENTS. The Company, during the period
when the Prospectus is required to be delivered under the 1933 Act or
the 1934 Act, will file all documents required to be filed with the
Commission pursuant to the 1934 Act within the time periods required by
the 1934 Act and the 1934 Act Regulations.
SECTION 4. PAYMENT OF EXPENSES. (a) EXPENSES. Except as set forth
in Section 4(b), the Company will pay or cause to be paid all expenses incident
to the performance of its and the Selling Stockholders obligations under this
Agreement, including (i) the preparation, printing and filing of the
Registration Statement (including financial statements and exhibits) as
originally filed and of each amendment thereto, (ii) the preparation, printing
and delivery to the International Managers of this Agreement, any Agreement
among International Managers and such other documents as may be required in
connection with the offering, purchase, sale, issuance or delivery of the
Securities, (iii) the preparation, issuance and delivery of the certificates of
the Securities to the International Managers, including any stock or other
transfer taxes and any stamp or other duties payable upon the sale, issuance or
delivery of the Securities to the International Managers, (iv) the fees and
disbursements of the Company's counsel, accountants and other advisors, (v) the
filing fees incident to any necessary filings under state securities laws and
the reasonable fees and disbursements of counsel for the International Managers
in connection therewith and in connection with the preparation of the Blue Sky
Survey and any supplement thereto, (vi) the printing and delivery to the
International Managers of copies of each preliminary prospectus, any Term Sheets
and of the Prospectus and any amendments or supplements thereto, (vii) the
preparation, printing and delivery to the International Managers of copies of
the Blue Sky Survey and any supplement thereto, (viii) the fees and expenses of
any transfer agent or registrar for the Securities, (ix) the filing fees
incident to, and the reasonable fees and disbursements of counsel to the
International Managers in connection with, the review by the National
Association of Securities Dealers, Inc. (the "NASD") of the terms of the sale of
the Securities, (x) the fees and expenses incurred in connection with the
listing of the Securities on the New York Stock Exchange and (xi) the fees and
disbursements of the Selling Stockholders' respective counsel and accountants.
(b) EXPENSES OF THE SELLING STOCKHOLDERS. The Selling
Stockholders, jointly and severally, will pay any stamp duties, capital duties
and stock transfer taxes, if any, payable upon the sale of the Securities to the
International Managers, and their transfer between the International Managers
pursuant to an agreement between such International Managers.
(c) TERMINATION OF AGREEMENT. If this Agreement is terminated by
the Lead Managers in accordance with the provisions of Section 5, Section
9(a)(i) or Section 11 hereof, the Company shall reimburse the International
Managers for all of their out-of-pocket
<PAGE>
19
expenses, including the reasonable fees and disbursements of counsel for the
International Managers.
(d) ALLOCATION OF EXPENSES. The provisions of this Section shall
not affect any agreement that the Company and the Selling Stockholders may make
for the sharing of such costs and expenses.
SECTION 5. CONDITIONS OF INTERNATIONAL MANAGERS' OBLIGATIONS. The
obligations of the several International Managers hereunder are subject to the
accuracy of the representations and warranties of the Company and the Selling
Stockholders contained in Section 1 hereof or in certificates of any officer of
the Company or any subsidiary of the Company or on behalf of any Selling
Stockholder delivered pursuant to the provisions hereof, to the performance by
the Company and the Selling Stockholders of their respective covenants and other
obligations hereunder, and to the following further conditions:
(a) EFFECTIVENESS OF REGISTRATION STATEMENT. The
Registration Statement, including any Rule 462(b) Registration
Statement, has become effective and at Closing Time no stop order
suspending the effectiveness of the Registration Statement shall have
been issued under the 1933 Act or proceedings therefor initiated or
threatened by the Commission, and any request on the part of the
Commission for additional information shall have been complied with to
the reasonable satisfaction of counsel to the International Managers. A
prospectus containing the Rule 430A Information shall have been filed
with the Commission in accordance with Rule 424(b) (or a post-effective
amendment providing such information shall have been filed and declared
effective in accordance with the requirements of Rule 430A) or, if the
Company has elected to rely upon Rule 434, a Term Sheet shall have been
filed with the Commission in accordance with Rule 424(b).
(b) OPINION OF COUNSEL FOR COMPANY. At Closing Time, the
Lead Managers shall have received the favorable opinions, dated as of
Closing Time, of (i) Paul, Weiss, Rifkind, Wharton & Garrison, counsel
for the Company, and (ii) Paul E. Yestrumskas, General Counsel for the
Company, each in form and substance reasonably satisfactory to counsel
for the International Managers, together with signed or reproduced
copies of each letter for each of the other International Managers to,
the effect set forth in Exhibit A-1 and A-2 hereto and to such further
effect as counsel to the International Managers may reasonably request.
In giving their opinion, Paul, Weiss, Rifkind, Wharton & Garrison may
rely, as to all matters governed by the laws of jurisdictions other than
the law of the State of New York, the federal law of the United States
and the General Corporation Law of the State of Delaware, upon the
opinions of counsel satisfactory to the Lead Managers. Paul, Weiss,
Rifkind, Wharton & Garrison may also state that, insofar as such opinion
involves factual matters, they
<PAGE>
20
have relied, to the extent they deem proper, upon certificates of
officers of the Company and its subsidiaries and certificates of public
officials.
(c) OPINION OF COUNSEL FOR SELLING STOCKHOLDERS. At
Closing Time, the Lead Managers shall have received the favorable
opinion, dated as of Closing Time, of (i) Hutchins, Wheeler & Dittmar,
counsel for the Selling Stockholders listed on Schedule F attached
hereto, and (ii) Sullivan & Worcester, LLP, counsel to the Selling
Stockholder listed on Schedule G attached hereto, each in form and
substance reasonably satisfactory to counsel for the International
Managers, together with signed or reproduced copies of such letter for
each of the other International Managers to the effect set forth in
Exhibits B-1 and B-2 hereto and to such further effect as counsel to the
International Managers may reasonably request.
(d) OPINION OF COUNSEL FOR CERTAIN SELLING STOCKHOLDERS.
At Closing Time, the Lead Managers shall have received the favorable
opinion, dated as of Closing Time, of Hutchins, Wheeler & Dittmar,
counsel for the Selling Stockholders in form and substance that has been
previously agreed upon with counsel for the International Managers,
together with signed or reproduced copies of such letter for each of the
other International Managers to the effect as counsel to the
International Managers may reasonably request
(e) OPINION OF COUNSEL FOR INTERNATIONAL MANAGERS. At
Closing Time, the Lead Managers shall have received the favorable
opinion, dated as of Closing Time, of Shearman & Sterling, counsel for
the International Managers, together with signed or reproduced copies of
such letter for each of the other International Managers with respect to
the matters set forth in clauses (i), (ii), (v) (solely as to preemptive
or other similar rights arising by operation of law or under the charter
or by-laws of the Company), (vii) through (ix), inclusive, (xii), (xiv)
(solely as to the information in the Prospectus under "Description of
Capital Stock--Common Stock") and the penultimate paragraph of Exhibit A
hereto. In giving such opinion such counsel may rely, as to all matters
governed by the laws of jurisdictions other than the law of the State of
New York, the federal law of the United States and the General
Corporation Law of the State of Delaware, upon the opinions of counsel
satisfactory to the Lead Managers. Such counsel may also state that,
insofar as such opinion involves factual matters, they have relied, to
the extent they deem proper, upon certificates of officers of the
Company and its subsidiaries and certificates of public officials.
(f) OPINION OF COUNSEL FOR THE INTERNATIONAL MANAGERS. At
Closing Time, each of the Lead Managers, ML-Lee Acquisition Fund, L.P.,
ML-Lee Acquisition Fund II, L.P. and ML-Lee Acquisition Fund (Retirement
Accounts) II, L.P., shall have received the favorable opinion, dated as
of Closing Time, of Shearman
<PAGE>
21
& Sterling, Counsel for the Lead Manager, in form and substance
satisfactory to counsel for such persons, together with signed or
reproduced copies of such letter for each of the other International
Managers.
(g) OFFICERS' CERTIFICATE. At Closing Time, there shall
not have been, since the date hereof or since the respective dates as of
which information is given in the Prospectus, any material adverse
change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, and the Lead Managers shall have received a
certificate signed by the President or a Vice President of the Company
and of the chief financial or chief accounting officer of the Company,
dated as of Closing Time, to the effect that (i) there has been no such
material adverse change, (ii) the representations and warranties in
Section 1(a) hereof are true and correct with the same force and effect
as though expressly made at and as of Closing Time, (iii) the Company
has complied with all agreements and satisfied all conditions on its
part to be performed or satisfied at or prior to Closing Time, and (iv)
to the best of the Company's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are pending or are
contemplated by the Commission.
(h) CERTIFICATE OF SELLING STOCKHOLDERS. At Closing Time,
the Lead Managers shall have received a certificate of an
Attorney-in-Fact on behalf of each Selling Stockholder, dated as of
Closing Time, to the effect that (i) the representations and warranties
of each Selling Stockholder contained in Section 1(b) hereof are true
and correct in all respects with the same force and effect as though
expressly made at and as of Closing Time and (ii) each Selling
Stockholder has complied in all material respects with all agreements
and all conditions on its part to be performed under this Agreement at
or prior to Closing Time.
(i) ACCOUNTANTS' COMFORT LETTER. At the time of the
execution of this Agreement, the Lead Managers shall have received from
KPMG Peat Marwick L.L.P. a letter dated such date, in form and substance
reasonably satisfactory to the Lead Managers, together with signed or
reproduced copies of such letter for each of the other International
Managers containing statements and information of the type ordinarily
included in accountants' "comfort letters" to International Managers
with respect to the financial statements and certain financial
information contained in the Registration Statement and the Prospectus.
(j) BRING-DOWN COMFORT LETTER. At Closing Time, the Lead
Managers shall have received from KPMG Peat Marwick L.L.P. a letter,
dated as of Closing Time, to the effect that they reaffirm the
statements made in the letter furnished
<PAGE>
22
pursuant to subsection (g) of this Section, except that the specified
date referred to shall be a date not more than three business days prior
to Closing Time.
(k) APPROVAL OF LISTING. At Closing Time, the Securities
shall have been approved for listing on the New York Stock Exchange,
subject only to official notice of issuance.
(l) NO OBJECTION. The NASD shall have confirmed that it
has not raised any objection with respect to the fairness and
reasonableness of the underwriting terms and arrangements.
(m) LOCK-UP AGREEMENTS. At the date of this Agreement, the
Lead Managers shall have received an agreement substantially in the form
of Exhibit C hereto signed by the persons listed on Schedule E hereto.
(n) ADDITIONAL DOCUMENTS. At Closing Time counsel for the
International Managers shall have been furnished with such documents and
opinions as they may require for the purpose of enabling them to pass
upon the issuance and sale of the Securities as herein contemplated, or
in order to evidence the accuracy of any of the representations or
warranties, or the fulfillment of any of the conditions, herein
contained; and all proceedings taken by the Company and the Selling
Stockholders in connection with the issuance and sale of the Securities
as herein contemplated shall be satisfactory in form and substance to
the Lead Managers and counsel for the International Managers.
(o) TERMINATION OF AGREEMENT. If any condition specified
in this Section shall not have been fulfilled when and as required to be
fulfilled, this Agreement may be terminated by the Lead Managers by
notice to the Company and the Selling Stockholders at any time at or
prior to Closing Time and such termination shall be without liability of
any party to any other party except as provided in Section 4 and except
that Sections 1, 6, 7 and 8 shall survive any such termination and
remain in full force and effect.
<PAGE>
23
SECTION 6. INDEMNIFICATION.
(a) INDEMNIFICATION OF INTERNATIONAL MANAGERS. The Company,
agrees to indemnify and hold harmless each International Manager and each
person, if any, who controls any International Manager within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act to the extent and in
the manner set forth below. In addition, each of the Selling Stockholders agrees
to indemnify and hold harmless each International Manager and each person, if
any, who controls any International Manager within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act to the extent and in the manner set
forth in clause (i) set forth below.
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including the Rule
430A Information and the Rule 434 Information, if applicable, or the
omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact included in any preliminary prospectus or
the Prospectus (or any amendment or supplement thereto), or the omission
or alleged omission therefrom of a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission; PROVIDED
that (subject to Section 6(d) below) any such settlement is effected
with the written consent of the Company and the Selling Stockholders;
and
(iii) against any and all expense whatsoever, as incurred
(including the reasonable fees and disbursements of counsel chosen by
you), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, to the extent that any such
expense is not paid under (i) or (ii) above;
PROVIDED, HOWEVER, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged
<PAGE>
24
untrue statement or omission made in reliance upon and in conformity with
written information furnished to the Company by any International Manager
through the Lead Managers expressly for use in the Registration Statement (or
any amendment thereto), including the Rule 430A Information and the Rule 434
Information, if applicable, or any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto); PROVIDED FURTHER, that with respect to
each Selling Stockholder this indemnity agreement shall only apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by such
Selling Stockholder expressly for use in the Registration Statement (or any
amendment thereto, including the Rule 430A Information and the Rule 434
Information, if applicable, or any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto); and PROVIDED FURTHER, that the Company
will not be liable to an Underwriter with respect to any preliminary Prospectus
to the extent that the Company shall sustain the burden of proving that any such
loss, liability, claim, damage or expense solely resulting from the fact that
such Underwriter, in contravention of a requirement of this Agreement or
applicable law, sold Securities to a person to whom such Underwriter failed to
send or give, at or prior to the Closing Date, a copy of the Final Prospectus as
then amended or supplemented if the Company has previously furnished copies
thereof (sufficiently in advance of the Closing Date to allow for distribution
by the Closing Date) to the Underwriters and the loss, liability, claim, damage
or expense of such Underwriter resulted from an untrue statement or omission or
alleged untrue statement or omission of a material fact contained in or omitted
from the preliminary Prospectus which was corrected in the Final Prospectus as,
if applicable, amended or supplemented prior to the Closing Date and such
Prospectus was required by law to be delivered at or prior to the written
confirmation of sale to such person.
(b) INDEMNIFICATION OF COMPANY, DIRECTORS AND OFFICERS AND
SELLING STOCKHOLDERS. Each International Manager severally agrees to indemnify
and hold harmless the Company, its directors, each of its officers who signed
the Registration Statement, and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act,
and each Selling Stockholder against any and all loss, liability, claim, damage
and expense described in the indemnity contained in subsection (a) of this
Section, as incurred, but only with respect to untrue statements or omissions,
or alleged untrue statements or omissions, made in the Registration Statement
(or any amendment thereto), including the Rule 430A Information and the Rule 434
Information, if applicable, or any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Company by such International Manager
through the Lead Managers expressly for use in the Registration Statement (or
any amendment thereto) or such preliminary prospectus or the Prospectus (or any
amendment or supplement thereto).
<PAGE>
25
(c) ACTIONS AGAINST PARTIES; NOTIFICATION. Each indemnified party
shall give notice as promptly as reasonably practicable to each indemnifying
party of any action commenced against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve such indemnifying party from any liability hereunder to the extent it is
not materially prejudiced as a result thereof and in any event shall not relieve
it from any liability which it may have otherwise than on account of this
indemnity agreement. In the case of parties indemnified pursuant to Section 6(a)
above, counsel to the indemnified parties shall be selected by you, and, in the
case of parties indemnified pursuant to Section 6(b) above, counsel to the
indemnified parties shall be selected by the Company and shall be reasonably
satisfactory to the Selling Stockholders if the Selling Stockholders may be
entitled to indemnification. An indemnifying party may participate at its own
expense in the defense of any such action; PROVIDED, HOWEVER, that counsel to
the indemnifying party shall not (except with the consent of the indemnified
party) also be counsel to the indemnified party. In no event shall the
indemnifying parties be liable for fees and expenses of more than one counsel
(in addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances. No indemnifying party shall, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any litigation, or any investigation
or proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever in respect of which indemnification or contribution could
be sought under this Section 6 or Section 7 hereof (whether or not the
indemnified parties are actual or potential parties thereto), unless such
settlement, compromise or consent (i) includes an unconditional release of each
indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act by or on behalf of any
indemnified party (which consent shall not be unreasonably withheld if the
conditions in clauses (i) and (ii) herein have been satisfied).
(d) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. If at any
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 6(a)(ii) effected without its written consent if
(i) such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such request (to the
extent such reimbursement request is not being disputed in good faith by such
indemnifying party prior to the date of such settlement.
<PAGE>
26
(e) OTHER AGREEMENTS WITH RESPECT TO INDEMNIFICATION. The
provisions of this Section shall not affect any agreement among the Company and
the Selling Stockholders with respect to indemnification.
SECTION 7. CONTRIBUTION. If the indemnification provided for in
Section 6 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages
and expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Selling Stockholders on the one hand and the International
Managers on the other hand from the offering of the Securities pursuant to this
Agreement or (ii) if the allocation provided by clause (i) is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company and the Selling Stockholders on the one hand and of the
International Managers on the other hand in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Selling
Stockholders on the one hand and the International Managers on the other hand in
connection with the offering of the Securities pursuant to this Agreement shall
be deemed to be in the same respective proportions as the total net proceeds
from the offering of the Securities pursuant to this Agreement (before deducting
expenses) received by the Company and the Selling Stockholders and the total
underwriting discount received by the International Managers, in each case as
set forth on the cover of the Prospectus, or, if Rule 434 is used, the
corresponding location on the Term Sheet, bear to the aggregate initial public
offering price of the Securities as set forth on such cover.
The relative fault of the Company and the Selling Stockholders on
the one hand and the International Managers on the other hand shall be
determined by reference to, among other things, whether any such untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company or the
Selling Stockholders or by the International Managers and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company, the Selling Stockholders and the International
Managers agree that it would not be just and equitable if contribution pursuant
to this Section were determined by pro rata allocation (even if the
International Managers were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the equitable
considerations referred to above in this Section. The aggregate amount of
losses, liabilities,
<PAGE>
27
claims, damages and expenses incurred by an indemnified party and referred to
above in this Section shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in investigating, preparing or
defending against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever
based upon any such untrue or alleged untrue statement or omission or alleged
omission.
Notwithstanding the provisions of this Section, no International
Manager shall be required to contribute any amount in excess of the amount by
which the total price at which the Securities underwritten by it and distributed
to the public were offered to the public exceeds the amount of any damages which
such International Manager has otherwise been required to pay by reason of any
such untrue or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section, each person, if any, who controls
an International Manager within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as such
International Manager, and each director of the Company, each officer of the
Company who signed the Registration Statement, and each person, if any, who
controls the Company or any Selling Stockholder within the meaning of Section 15
of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as the Company or such Selling Stockholder, as the case may be. The
International Managers' respective obligations to contribute pursuant to this
Section are several in proportion to the number of Securities set forth opposite
their respective names in Schedule A hereto and not joint.
The provisions of this Section shall not affect any agreement
among the Company and the Selling Stockholders with respect to contribution.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company or any of its
subsidiaries or the Selling Stockholders submitted pursuant hereto shall remain
operative and in full force and effect, regardless of any investigation made by
or on behalf of any International Manager or controlling person, or by or on
behalf of the Company or the Selling Stockholders, and shall survive delivery of
the Securities to the International Managers.
<PAGE>
28
SECTION 9. TERMINATION OF AGREEMENT.
(a) TERMINATION; GENERAL. The Lead Managers may terminate this
Agreement, by notice to the Company and the Selling Stockholders, at any time at
or prior to Closing Time (i) if there has been, since the time of execution of
this Agreement or since the respective dates as of which information is given in
the Prospectus, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, or (ii) if there has occurred any
material adverse change in the financial markets in the United States or the
international financial markets, any outbreak of hostilities or escalation
thereof or other calamity or crisis or any change or development involving a
prospective change in national or international political, financial or economic
conditions, in each case the effect of which is such as to make it, in the
judgment of the Lead Managers, impracticable to market the Securities or to
enforce contracts for the sale of the Securities, or (iii) if trading in any
securities of the Company has been suspended or materially limited by the
Commission or the New York Stock Exchange, or if trading generally on the
American Stock Exchange or the New York Stock Exchange or in the Nasdaq National
Market has been suspended or materially limited, or minimum or maximum prices
for trading have been fixed, or maximum ranges for prices have been required, by
any of said exchanges or by such system or by order of the Commission, the
National Association of Securities Dealers, Inc. or any other governmental
authority, or (iv) if a banking moratorium has been declared by either federal
or New York authorities.
(b) LIABILITIES. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 6, 7 and 8 shall survive such termination and remain in full force and
effect.
SECTION 10. DEFAULT BY ONE OR MORE OF THE INTERNATIONAL MANAGERS.
If one or more of the International Managers shall fail at Closing Time to
purchase the Securities which it or they are obligated to purchase under this
Agreement (the "Defaulted Securities"), the Lead Managers shall have the right,
within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting International Managers, or any other International Managers, to
purchase all, but not less than all, of the Defaulted Securities in such amounts
as may be agreed upon and upon the terms herein set forth; if, however, the Lead
Managers shall not have completed such arrangements within such 24-hour period,
then:
(a) if the number of Defaulted Securities does not exceed
10% of the number of Securities to be purchased on such date, the
non-defaulting International Managers shall be obligated, each severally
and not jointly, to purchase the full amount
<PAGE>
29
thereof in the proportions that their respective underwriting
obligations hereunder bear to the underwriting obligations of all
non-defaulting International Managers, or
(b) if the number of Defaulted Securities exceeds 10% of
the number of Securities to be purchased on such date, this Agreement
shall terminate without liability on the part of any non-defaulting
International Manager.
No action taken pursuant to this Section shall relieve any
defaulting International Manager from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement, either (i) the Lead Managers or (ii) the Company
and any Selling Stockholder shall have the right to postpone Closing Time for a
period not exceeding seven days in order to effect any required changes in the
Registration Statement or Prospectus or in any other documents or arrangements.
As used herein, the term "International Manager" includes any person substituted
for an International Manager under this Section.
SECTION 11. DEFAULT BY ONE OR MORE OF THE SELLING STOCKHOLDERS.
(a) If a Selling Stockholder shall fail at Closing Time to
sell and deliver the number of Securities which such Selling Stockholder is
obligated to sell hereunder, and the remaining Selling Stockholders do not
exercise the right hereby granted to increase, pro rata or otherwise, the
number of Securities to be sold by them hereunder to the total number to be
sold by all Selling Stockholders as set forth in Schedule B hereto, then the
International Managers may, at the option of the Lead Managers, by notice
from the Lead Managers to the Company and the non-defaulting Selling
Stockholders, either (a) terminate this Agreement without any liability on
the part of any non-defaulting party except that the provisions of Sections
1, 4, 6, 7 and 8 shall remain in full force and effect or (b) elect to
purchase the Securities which the non-defaulting Selling Stockholders and the
Company have agreed to sell hereunder. No action taken pursuant to this
Section shall relieve any Selling Stockholder so defaulting from liability in
respect of such default.
In the event of a default by any Selling Stockholder as referred
to in this Section, each of the Lead Managers, the Company and the
non-defaulting Selling Stockholders shall have the right to postpone Closing
Time for a period not exceeding seven days in order to effect any required
change in the Registration Statement or Prospectus or in any other documents or
arrangements.
(b) If the Company shall fail at Closing Time to sell the number
of Securities that it is obligated to sell hereunder, then this Agreement shall
terminate without any liability on the part of any non-defaulting party;
PROVIDED, HOWEVER, that the provisions of Sections 1, 4, 6, 7 and 8 shall remain
in full force and effect. No action taken pursuant to this Section shall relieve
the Company from liability in respect of such default.
<PAGE>
30
SECTION 12. NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
mailed or transmitted by any standard form of telecommunication. Notices to the
International Managers shall be directed to the Lead Managers at 227 Park
Avenue, New York, New York 10172, attention of Duff Anderson, Donaldson Lufkin &
Jenrette Securities Corporation, 277 Park Avenue, New York, NY 10172; notices to
the Company shall be directed to it at Playtex Products, Inc., 300 Nyala Farms
Road, Westport, CT 06880, attention of Michael F. Goss, Chief Financial Officer;
and notices to the Selling Stockholders shall be directed to Thomas H. Lee,
Warren C. Smith, Jr. c/o Thomas H. Lee Company, 75 State Street, Boston, MA
02109, with a copy to Hutchins, Wheeler & Ditmar, 101 Federal Street, Boston, MA
02110, attention of Charles W. Robins.
SECTION 13. PARTIES. This Agreement shall inure to the benefit of
and be binding upon the International Managers, the Company and the Selling
Stockholders and their respective successors. Nothing expressed or mentioned in
this Agreement is intended or shall be construed to give any person, firm or
corporation, other than the International Managers, the Company and the Selling
Stockholders and their respective successors and the controlling persons and
officers and directors referred to in Sections 6 and 7 and their heirs and legal
Lead Managers, any legal or equitable right, remedy or claim under or in respect
of this Agreement or any provision herein contained. This Agreement and all
conditions and provisions hereof are intended to be for the sole and exclusive
benefit of the International Managers, the Company and the Selling Stockholders
and their respective successors, and said controlling persons and officers and
directors and their heirs and legal Lead Managers, and for the benefit of no
other person, firm or corporation. No purchaser of Securities from any
International Manager shall be deemed to be a successor by reason merely of such
purchase.
SECTION 14. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 15. EFFECT OF HEADINGS. The Article and Section headings
herein and the Table of Contents are for convenience only and shall not affect
the construction hereof.
<PAGE>
31
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company and the Attorney-in-Fact for
the Selling Stockholders a counterpart hereof, whereupon this instrument, along
with all counterparts, will become a binding agreement among the International
Managers, the Company and the Selling Stockholders in accordance with its terms.
Very truly yours,
PLAYTEX PRODUCTS, INC.
By:
----------------------
Title:
WARREN G. SMITH
By:
----------------------
As Attorney-in-Fact acting on behalf
of the Selling Stockholders named in
Schedule B hereto
CONFIRMED AND ACCEPTED,
as of the date first above written:
DONALDSON, LUFKIN & JENRETTE
INTERNATIONAL
Goldman Sachs International
PaineWebber International (UK) Limited
Smith Barney Inc.
By: DONALDSON, LUFKIN & JENRETTE
INTERNATIONAL
By:
--------------------------------
Authorized Signatory
For themselves and as Lead Managers of the other International Managers named in
Schedule A hereto.
<PAGE>
SCHEDULE A
NUMBER OF
NAME OF INTERNATIONAL MANAGER SECURITIES
Donaldson, Lufkin & Jenrette International........................
Goldman Sachs International.......................................
PaineWebber International (U.K.) Limited..........................
Smith Barney Inc..................................................
Total............................................................. [ ]
===========
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE B
NUMBER OF
SECURITIES TO BE SOLD
---------------------
<S> <C>
John W. Childs..................... 209,756
ML-Lee Acquisition Fund, L.P. 1,406,204
1989 Thomas H. Lee Nominee 1,361,951
Trust dated September 29, 1998.....
ML-Lee Acquisition Fund II, 343,726
L.P................................
ML-Lee Acquisition Fund II 183,560
(Retirement Accounts), L.P.........
Stephen Zachary Lee 1988 20,506
Irrevocable Trust..................
Robert Schiff Lee 1988 20,506
Irrevocable Trust..................
David V. Harkins................... 146,252
Thomas R. Shepherd................. 131,994
Scott A. Schoen.................... 83,465
C. Hunter Boll..................... 87,839
Steven G. Segal.................... 6,152
Wendy Masler....................... 6,152
Total.............................. 4,008,063
</TABLE>
<PAGE>
SCHEDULE C
PLAYTEX PRODUCTS, INC.
[4,008,063] Shares of Common Stock
(Par Value $.01 Per Share)
1. The initial public offering price per share for the
Securities, determined as provided in said Section 2, shall be $ .
2. The purchase price per share for the Securities to be
paid by the several International Managers shall be $ , being an amount
equal to the initial public offering price set forth above less $ per
share.
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE D
PERCENT JURISDICTION OF
SUBSIDIARY OWNERSHIP INCORPORATION
- ---------- --------- -------------
<S> <C> <C>
Inter Stretch Ltd. 100% owned by Ireland
Limited
Playtex Beauty Care, Inc. 100% Delaware
Playtex Foreign Sales, Corp. 100% owned by TH Barbados
Marketing
Playtex International, Inc. ("International") 100% Delaware
Playtex Investment Corp. 100% Delaware
Playtex Limited ("Limited") 100% owned by Canada
International
Playtex Manufacturing, Inc. 100% Delaware
Playtex Marketing Corp. 50% Delaware
Playtex Sales & Services, Inc. 100% Delaware
Smile Tote, Inc. 100% California
Sun Pharmaceuticals Corp. 100% Delaware
TH Marketing Corp. 100% owned by Delaware
International
Personal Care Holdings, Inc. ("PCH") 100% Delaware
Personal Care Group, Inc. ("PCG") 100% owned by PCH Delaware
Personal Care Group Australia PTY, Ltd. 100% owned by PCG Australia
Personal Care Group FSC, Inc. 100% owned by PCG U.S. Virgin
Islands
Carewell Industries, Inc. 100% New York
</TABLE>
<PAGE>
SCHEDULE E
List of Persons and Entities
Subject to Lock-up
Haas Wheat & Partners Incorporated
<PAGE>
SCHEDULE F
ML-Lee Acquisition Fund, L.P.
1989 Thomas H. Lee Nominee Trust
dated September 29, 1998
ML-Lee Acquisition Fund II, L.P.
ML-Lee Acquisition Fund II (Retirement
Accounts), L.P.
Stephen Zachary Lee 1988 Irrevocable
Trust
Robert Schiff Lee 1988 Irrevocable Trust
David V. Harkins
Thomas R. Shepherd
Scott A. Schoen
C. Hunter Boll
Wendy Masler
<PAGE>
SCHEDULE G
John W. Childs
Steven C. Segal
<PAGE>
EXHIBIT A-1
FORM OF OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware.
(ii) The Company has corporate power and authority to own, lease
and operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under the Purchase
Agreement.
(iii) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Prospectus in the column entitled "Actual" under
the caption "Capitalization" (except for subsequent issuances, if any, pursuant
to the Purchase Agreement and the International Purchase Agreement or pursuant
to reservations, agreements or employee benefit plans referred to in the
Prospectus or pursuant to the exercise of convertible securities or options
referred to in the Prospectus); the shares of issued and outstanding capital
stock of the Company, including the Securities to be purchased by the
International Managers from the Selling Stockholders, have been duly authorized
and validly issued and are fully paid and non-assessable; and none of the
outstanding shares of capital stock of the Company was issued in violation of
the preemptive or other similar rights of any securityholder of the Company in
the Company's certificate of incorporation or by-laws or under the General
Corporation Law of the State of Delaware.
(iv) The sale of the Securities by the Selling Stockholders is
not subject to the preemptive or other similar rights of any securityholder of
the Company in the Company's certificate of incorporation or by-laws or under
the General Corporation Law of the State of Delaware.
(v) Each Subsidiary (except for Playtex Limited, Inter Stretch
Ltd., Playtex Foreign Sales Corporation, Smile-Tote, Inc. Personal Care Group
Australia PTY, Ltd. and Personal Care Group FSC, Inc. as to which such counsel
need not opine) has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Prospectus.
<PAGE>
A - 2
(vi) The Purchase Agreement has been duly authorized, executed
and delivered by the Company.
(vii) We have been advised orally by the staff of the Commission
that the Registration Statement, including any Rule 462(b) Registration
Statement, has been declared effective under the 1933 Act; and we have been
advised orally by the staff of the Commission that no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b) Registration
Statement has been issued under the 1933 Act and, to our knowledge, no
proceedings for that purpose have been instituted or are pending or threatened
by the Commission.
(viii) The Registration Statement, including any Rule 462(b)
Registration Statement, the Rule 430A Information and the Rule 434 Information,
as applicable, the Prospectus, excluding the documents incorporated by reference
therein, and each amendment or supplement to the Registration Statement and
Prospectus, excluding the documents incorporated by reference therein, as of
their respective effective or issue dates (other than the financial statements,
supporting schedules and other financial statistical data included therein or
omitted therefrom, as to which we need express no opinion) complied as to form
in all material respects with the requirements of the 1933 Act and the 1933 Act
Regulations for purposes of this Opinion, we have assumed that the statements in
the Registration Statement are complete and correct.
(ix) The documents incorporated by reference in the Prospectus
(other than the financial statements, supporting schedules and other financial
statistical data included therein or omitted therefrom, as to which we need
express no opinion), when they became effective or were filed with the
Commission, as the case may be, complied as to form in all material respects
with the requirements of the 1933 Act or the 1934 Act, as applicable, and the
rules and regulations of the Commission thereunder. For purposes of this
Opinion, we have assured that the statements in the Registration Statement are
complete and correct.
(x) The form of certificate used to evidence the Common Stock
complies in all material respects with all applicable statutory requirements,
with any applicable requirements of the charter and by-laws of the Company and
the requirements of the New York Stock Exchange.
(xi) The information in the Prospectus under "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Financial Condition and Liquidity" and "Description of Capital Stock" and in the
Registration Statement under Item 15, to the extent that it constitutes matters
of law, summaries of legal matters, the Company's charter and by-laws or legal
proceedings, or legal conclusions, has been reviewed by us and is correct in all
material respects.
<PAGE>
A - 3
(xii) To our knowledge, there are no statutes or regulations that
are required by the 1933 Act to be described in the Prospectus that are not
described as required.
(xiii) All descriptions in the Registration Statement of
contracts and other documents to which the Company or its subsidiaries are a
party are accurate in all material respects; to the best of our knowledge, there
are no franchises, contracts, indentures, mortgages, loan agreements, notes,
leases or other instruments required to be described or referred to in the
Registration Statement or to be filed as exhibits thereto other than those
described or referred to therein or filed or incorporated by reference as
exhibits thereto, and the descriptions thereof or references thereto are correct
in all material respects.
(xiv) No filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any court or
governmental authority or agency of the State of Delaware or New York or the
United States (other than under the 1933 Act and the 1933 Act Regulations, which
have been obtained, or as may be required under the securities or blue sky laws
of the various states, as to which we need express no opinion), is necessary or
required in connection with the due authorization, execution and delivery of the
Purchase Agreement or for the offering, issuance, sale or delivery of the
Securities.
(xv) The Company is not required to be registered as an
"investment company" under the 1940 Act and the rules and regulations of the
Commission Promulgated thereunder.
(xvi) The execution, delivery and performance of the Purchase
Agreement and the consummation of the transactions contemplated in the Purchase
Agreement and the Registration Statement (including the issuance and sale of the
Securities and the use of the proceeds from the sale of the Securities as
described in the Prospectus under the caption "Use Of Proceeds") and compliance
by the Company with its obligations under the Purchase Agreement do not and will
not, whether with or without the giving of notice or lapse of time or both,
conflict with or constitute a breach of, or default or Repayment Event (as
defined in Section 1(a)(xi) of the Purchase Agreements) under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any subsidiary pursuant to, any contract, indenture,
mortgage, deed of trust, loan or credit agreement, note, lease or any other
agreement or instrument, presented to us by the Company as being material after
our due inquiry to which the Company or any subsidiary is a party or by which it
or any of them may be bound, or to which any of the property or assets of the
Company or any subsidiary is subject (except for such conflicts, breaches or
defaults or liens, charges or encumbrances that would not have a Material
Adverse Effect), nor will such action result in any violation of the provisions
of the charter or by-laws of the Company or any subsidiary, or any material
applicable law, statute, rule, regulation, judgment, order, writ or decree,
known to us, of any government, government instrumentality or court, domestic or
<PAGE>
A - 4
foreign, having jurisdiction over the Company or any subsidiary or any of their
respective properties, assets or operations.
We have participated in the preparation of the Registration
Statement and the Prospectus and, although we have not undertaken to investigate
or verify independently and do not assume responsibility for, the accuracy or
completeness of the statements contained in either of them (other than as
explicitly stated in paragraphs (iii) and (xiii) above), based upon such
participation (and relying as to materiality to the extent we deemed reasonable
on officers, employees and other representatives of the Company), nothing has
come to our attention that would lead us to believe that the Registration
Statement or any amendment thereto, including the Rule 430A Information and Rule
434 Information (if applicable) (except for financial statements and schedules
and other financial data included or incorporated by reference therein or
omitted therefrom, as to which we need make no statement), at the time such
Registration Statement or any such amendment became effective, contained an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
or that the Prospectus or any amendment or supplement thereto (except for
financial statements and schedules and other financial and statistical data
included or incorporated by reference therein or omitted therefrom, as to which
we need make no statement), at the time the Prospectus was issued, at the time
any such amended or supplemented prospectus was issued or at the Closing Time,
included or includes an untrue statement of a material fact or omitted or omits
to state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
In rendering such opinion, such counsel may rely, as to matters
of fact (but not as to legal conclusions), to the extent they deem proper, on
certificates of responsible officers of the Company and public officials. Such
opinion shall not state that it is to be governed or qualified by, or that it is
otherwise subject to, any treatise, written policy or other document relating to
legal opinions, including, without limitation, the Legal Opinion Accord of the
ABA Section of Business Law (1991).
<PAGE>
EXHIBIT A-2
FORM OF OPINION OF COMPANY'S GENERAL COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
`
(i) The Company is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify or
to be in good standing would not result in a Material Adverse Effect.
(ii) Except as disclosed in the Prospectus, to the best of my
knowledge, there is not pending or threatened any action, suit, proceeding,
inquiry or investigation, to which the Company or any subsidiary is a party, or
to which the property of the Company or any subsidiary is subject, before or
brought by any court or governmental agency or body, domestic or foreign, which
might reasonably be expected to result in a Material Adverse Effect, or which
might reasonably be expected to materially and adversely affect the properties
or assets thereof or the consummation of the transactions contemplated in the
Purchase Agreement or the performance by the Company of its obligations
thereunder.
(iii) The information in the Prospectus under
"Business-Trademarks and Patents", "Business Regulation" and "Business Legal
Proceedings" has been reviewed by me and is correct in all maternal respects.
<PAGE>
EXHIBIT B-1
FORM OF OPINION OF COUNSEL FOR THE SELLING STOCKHOLDERS
TO BE DELIVERED PURSUANT TO SECTION 5(c)
(i) No filing with, or consent, approval, authorization, license,
order, registration, qualification or decree of, any court or governmental
authority or agency, domestic or foreign (other than the issuance of the order
of the Commission declaring the Registration Statement effective and such
authorizations, approvals or consents as may be necessary under state securities
laws, as to which we need express no opinion), is necessary or required to be
obtained by the Selling Stockholders for the performance by each Selling
Stockholder of its obligations under the Purchase Agreement or in the Power of
Attorney and Custody Agreement, or in connection with the offer, sale or
delivery of the Securities.
(ii) Each Power of Attorney and Custody Agreement has been duly
executed and delivered by the respective Selling Stockholders named therein and
constitutes the legal, valid and binding agreement of each such Selling
Stockholder subject to (i) applicable bankruptcy, insolvency, reorganization,
moratorium, receivership and other laws affecting creditors' rights, (ii) the
effect of general principles of equity and the possible unavailability of
specific performance or injunctive relief and (iii) public policy considerations
or court decisions which may limit the rights of any party to obtain certain
remedies and to indemnification.
(iii) The Purchase Agreement has been duly authorized, executed
and delivered by or on behalf of each Selling Stockholder.
(iv) Each Attorney-in-Fact has been duly authorized by the
Selling Stockholders to deliver the Securities on behalf of the Selling
Stockholders in accordance with the terms of the Purchase Agreement.
(v) The execution, delivery and performance of the Purchase
Agreement and the Power of Attorney and Custody Agreement and the sale and
delivery of the Securities and the consummation of the transactions contemplated
in the Purchase Agreement and in the Registration Statement and compliance by
the Selling Stockholders with their obligations under the Purchase Agreement
have been duly authorized by all necessary action on the part of the Selling
Stockholders and do not and will not, whether with or without the giving of
notice or passage of time or both, conflict with or constitute a breach of, or
default under or result in the creation or imposition of any tax, lien, charge
or encumbrance upon the Securities or any property or assets of the Selling
Stockholders pursuant to, any contract, indenture, mortgage,
<PAGE>
B-1-2
deed of trust, loan or credit agreement, note, license, lease or other
instrument or agreement to which any Selling Stockholder is a party or by which
it may be bound, or to which any of the property or assets of any Selling
Stockholder may be subject, nor will such action result in any violation of the
provisions of the charter or by-laws of any Selling Stockholder, if applicable,
or any law, administrative regulation, judgment or order of any governmental
agency or body or any administrative or court decree having jurisdiction over
such Selling Stockholder or any of its properties.
(vi) To the best of our knowledge, each Selling Stockholder has
valid and marketable title to the Securities to be sold by such Selling
Stockholder pursuant to the Purchase Agreement, free and clear of any pledge,
lien, security interest, charge, claim, equity or encumbrance of any kind, and
has full right, power and authority to sell, transfer and deliver such
Securities pursuant to the Purchase Agreement. By delivery of a certificate or
certificates therefor such Selling Stockholder will transfer to the
International Managers who have purchased such Securities pursuant to the
Purchase Agreement (without notice of any defect in the title of such Selling
Stockholder and who are otherwise protected purchasers for purposes of the
Uniform Commercial Code) valid and marketable title to such Securities, free and
clear of any adverse claims.
Such opinion shall provide that it does not address matters
covered by the opinion of Hutchins, Wheeler & Dittmar called for by Section 5(d)
of the International Purchase Agreement.
Such opinion shall state that such counsel has relied, as to
factual matters, upon the representations and warranties given by the Selling
Stockholders in the Power of Attorney and Custody Agreement and that such
counsel has assumed that the Power of Attorney and Custody Agreement are
governed by Massachusetts law, notwithstanding their express terms.
<PAGE>
EXHIBIT B-2
FORM OF OPINION OF COUNSEL FOR THE SELLING STOCKHOLDERS
TO BE DELIVERED PURSUANT TO SECTION 5(c)
(i) No filing with, or consent, approval, authorization, license,
order, registration, qualification or decree of, any court or governmental
authority or agency, domestic or foreign (other than the issuance of the order
of the Commission declaring the Registration Statement effective and such
authorizations, approvals or consents as may be necessary under state securities
laws, as to which we need express no opinion), is necessary or required to be
obtained by John W. Childs and Steven C. Segal (collectively, the "Selling
Stockholders") for the performance by the Selling Stockholders of their
obligations under the Purchase Agreement or in the Power of Attorney and Custody
Agreement, or in connection with the offer, sale or delivery of the Securities.
(ii) The Power of Attorney and Custody Agreement has been duly
executed and delivered by each Selling Stockholder and constitutes the legal,
valid and binding agreement of such Selling Stockholder.
(iii) The Purchase Agreement has been duly authorized, executed
and delivered by or on behalf of the Selling Stockholders.
(iv) The Attorney-in-Fact has been duly authorized by each
Selling Stockholder to deliver the Securities on behalf of such Selling
Stockholder in accordance with the terms of the Purchase Agreement.
(v) The execution, delivery and performance of the Purchase
Agreement and the Power of Attorney and Custody Agreement and the sale and
delivery of the Securities and the consummation of the transactions contemplated
in the Purchase Agreement and in the Registration Statement and compliance by
the Selling Stockholders with their obligations under the Purchase Agreement
have been duly authorized by all necessary action on the part of the Selling
Stockholders and do not and will not, whether with or without the giving of
notice or passage of time or both, conflict with or constitute a breach of, or
default under or result in the creation or imposition of any lien, charge or
encumbrance upon the Securities or any property or assets of any Selling
Stockholder pursuant to, any contract, indenture, mortgage, deed of trust, loan
or credit agreement, note, license, lease or other instrument or agreement known
to us after due inquiry made to the Selling Stockholders to which any Selling
Stockholder is a party or by which it may be bound, or to which any of the
property or assets of any Selling
<PAGE>
B-2-2
Stockholder may be subject, nor will such action result in any violation of the
provisions of the Partnership Agreement of any Selling Stockholder, if
applicable, or any law, administrative regulation, judgment or order known to us
of any governmental agency or body or any administrative or court decree having
jurisdiction over any Selling Stockholder or any of its properties.
(vi) Each Selling Stockholder is the sole record owner and, to
our knowledge, is the sole beneficial owner of the Securities being sold by him,
her or it pursuant to the Purchase Agreement, free and clear of any pledge,
lien, security interest, charge, claim, equity or encumbrance of any kind, and,
to our knowledge, has the full right, power and authority to sell, transfer and
deliver such Securities pursuant to the Purchase Agreement. Upon proper delivery
of the certificates for the Securities of the Selling Stockholders accompanied
by proper stock transfer instruments to the Underwriters, assuming the
Underwriters have purchased the Securities for value in accordance with the
terms of the Purchase Agreement and without notice of any adverse claim, the
Underwriters will acquire all rights of the Selling Stockholders in the
Securities free and clear of any adverse claim.
<PAGE>
EXHIBIT C
DONALDSON, LUFKIN & JENRETTE
INTERNATIONAL
Goldman Sachs International
PaineWebber International (U.K.) Ltd.
Smith Barney Inc.
as Lead Managers of the several International Managers
c/o Donaldson Lufkin & Jenrette International
227 Park Avenue
New York, New York 10172
Re: PROPOSED PUBLIC OFFERING BY PLAYTEX PRODUCTS, INC.
Dear Sirs:
The undersigned, [a stockholder and an officer and/or director]
of Playtex Products, Inc., a Delaware corporation (the "Company"), understands
that Donaldson, Lufkin & Jenrette Securities Corporation, Goldman Sachs
International, PaineWebber International (U.K.) Ltd. and Smith Barney Inc.
propose(s) to enter into a Purchase Agreement (the "Purchase Agreement") with
the Company and the Selling Stockholders providing for the public offering of
shares (the "Securities") of the Company's common stock, par value $.01 per
share (the "Common Stock") outside of the United States & Canada. In recognition
of the benefit that such an offering will confer upon the undersigned as a
stockholder [and an officer and/or director]2 of the Company, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the undersigned agrees with each International Manager to be named
in the Purchase Agreement that, during a period of 90 days from the date of the
Purchase Agreement, the undersigned will not, without your prior written
consent, directly or indirectly, (i) offer, pledge, sell, contract to sell, sell
any option or contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant for the sale of, or otherwise dispose of or
transfer any shares of the Company's Common Stock or any securities convertible
into or exchangeable or exercisable for Common Stock, whether now owned or
hereafter acquired by the undersigned or with respect to which the undersigned
has or hereafter acquires the power of disposition, or file any registration
statement under the Securities Act of 1933, as amended, with respect to any of
the foregoing or (ii) enter into any swap or any other agreement or any
transaction that transfers, in whole or in part, directly or indirectly, the
economic consequence of ownership of the Common Stock, whether any such swap or
transaction is to be settled by delivery of Common Stock or other securities, in
cash or otherwise, except, in each case, for (A) sales of Common Stock pursuant
to the U.S. Purchase Agreement among Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Donaldson, Lufkin & Jenrette Securities
Corporation, Goldman, Sachs & Co., PaineWebber Incorporated and Smith Barney
Inc., and certain Selling Stockholders, (B) the exercise of an option to
purchase Common Stock or the surrender of shares of Common Stock or of an option
in connection with the exercise of an option, in each case, pursuant to existing
employee benefit plans of the Company referred to in the Prospectus, (C)
transfers by way of testate or intestate succession or operation of law, (D)
transfers to immediate family members of such Selling Stockholder or a trust or
other entity of all of the beneficial interests which are held by such Selling
Stockholder and (E) transfers to charitable organizations; PROVIDED that, in the
case of transfers pursuant to clauses (C), (D) and (E) of this sentence, the
transferee shall have agreed to be bound by the restrictions on transfer
contained in this letter.
Very truly yours,
Signature:
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