<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE , 1998.
REGISTRATION NO. 333--50099
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
POST-EFFECTIVE AMENDMENT NO. 1
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:
MITCHELL S. FISHMAN, ESQ.
PAUL, WEISS, RIFKIND, WHARTON & GARRISON
1285 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019-6064
(212) 373-3000
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of the Post-Effective Amendment No. 1.
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 REQUESTS THAT THIS POST-EFFECTIVE AMENDMENT NO. 1
BECOME EFFECTIVE AS SOON AS PRACTICABLE PURSUANT TO SECTION 8(C) OF THE
SECURITIES ACT OF 1933.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
EXPLANATORY NOTE
This Post-Effective Amendment No. 1 is being filed by Playtex Products, Inc.
(the "Registrant") to amend the Registration Statement on Form S-3 (No.
333-50099), filed with the Securities and Exchange Commission (the "Commission")
on April 15, 1998, and amended on April 23, 1998 and May 15, 1998 (the
"Registration Statement'), pursuant to which the Registrant registered an
aggregate of 14,611,352 shares of its common stock, par value $.01 per share
(the "Common Stock"), to be offered for sale to the public by certain
stockholders of the Registrant in two separate offerings, through two separate
groups of underwriters (see below). The Commission declared the Registration
Statement effective on May 19, 1998 (the "Effective Date").
On May 21, 1998 the Registrant filed a final Prospectus pursuant to rule
424(b)(4) with respect to the sale of all of the 4,008,063 shares of Common
Stock, offered by certain stockholders of the Registrant (the "International
Selling Stockholders") for sale initially outside the United States and Canada
(the "International Offering").
The Registration Statement contemplated that, concurrently with the
International Offering, other stockholders (the "U.S. Selling Stockholders") of
the Registrant would offer to sell 8,610,682 shares of Common Stock in the
United States and Canada (the "U.S. Offering") through a separate group of
underwriters (the "U.S. Underwriters"). After the Effective Date, however, the
U.S. Selling Stockholders and the U.S. Underwriters failed to reach an agreement
on the proposed terms of the U.S. Offering and, consequently, the U.S. Offering
was not consummated.
On June 1, 1998, one of the U.S. Selling Stockholders, J.W. Childs Equity
Partners, L.P. ("Childs LP"), entered into a "Stock Purchase Agreement" with
RCBA Playtex, L.P. (the "U.S. Purchaser") and Richard C. Blum & Associates, Inc.
("Blum"). Pursuant to the Stock Purchase Agreement, Childs LP agreed to sell and
the U.S. Purchaser agreed to buy, in each case subject to the satisfaction of
certain conditions, 6,000,000 shares of Common Stock for $13.25 per share.
Accordingly, this Post-Effective Amendment No. 1 is being filed to amend the
form of prospectus included in the Registration Statement to (a) describe the
transaction contemplated by the Stock Purchase Agreement and (b) revise the
description of the intended plan of distribution of the shares not previously
sold. See "Plan of Distribution."
<PAGE>
PROSPECTUS
JUNE , 1998
6,000,000 SHARES
[LOGO]
PLAYTEX PRODUCTS, INC.
COMMON STOCK
------------------
All of the 6,000,000 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") to the U.S. Purchaser for
$13.25 per share, or an aggregate purchase price of $79,500,000, net to the U.S.
Selling Stockholders, subject to the terms and conditions of a "Stock Purchase
Agreement," dated June 1, 1998, between certain of the U.S. Selling Stockholders
and the U.S. Purchaser. The U.S. Selling Stockholders of the Company previously
had planned to offer to sell up to 8,610,682 shares of Common Stock in the U.S.
and Canada (the "Proposed U.S. Offering") through a group of underwriters (the
"U.S. Underwriters"). The U.S. Selling Stockholders and the U.S. Underwriters
failed to reach an agreement on the proposed terms of the U.S. Offering and,
consequently, the U.S. Offering was not consummated. The transaction
contemplated by the Stock Purchase Agreement will be referred to herein as the
U.S. Direct Sale. 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."
On May 21, 1998, other stockholders (the "International Selling
Stockholders") of the Company offered 4,008,063 shares of Common Stock outside
the United States and Canada (the "International Offering") through a separate
group of underwriters (the "International Managers").
The Common Stock is listed on the New York Stock Exchange ("NYSE") under the
symbol "PYX." On June 11, 1998, the last reported sale price of the Common Stock
on the NYSE was $15 7/8 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.
The date of this Prospectus is , 1998.
<PAGE>
Group photo of Infant Care products
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 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.
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>
1
<PAGE>
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 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.
2
<PAGE>
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.
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.
3
<PAGE>
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............................... 6,000,000 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. Direct Sale and the
International Offering..................... 60,296,851 shares (2)
Use of proceeds.............................. The Company will not receive any proceeds
from the U.S. Direct Sale or the
International Offering unless the
International Manager's 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) Offered by the International Managers in a separate offering exclusively
outside the United States and Canada pursuant to a Prospectus dated May 21,
1998.
(2) Excludes 4,887,971 shares of Common Stock reserved for issuance pursuant to
the Company's 1994 Stock Option Plan. On June 4, 1998, at the annual
meeting, 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"). 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. Direct Sale and
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 International Offering is exercised, the
Company will be required to sell up to 601,209 shares of Common Stock and will
receive net proceeds of $7.5 million (based on the offering price of $13.875 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 cost 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 June 11, 1998 was $15 7/8 per share.
<TABLE>
<CAPTION>
PRICE RANGE
----------------------
<S> <C> <C>
HIGH LOW
----- ---
FISCAL 1998:
First Quarter............................................................................... $ 141 /16 $ 97/16
Second Quarter (through June 11, 1998)...................................................... 163/8 133/4
FISCAL 1997:
First Quarter............................................................................... $ 113/4 $ 77/8
Second Quarter.............................................................................. 111/2 9
Third Quarter............................................................................... 101/4 813/16
Fourth Quarter.............................................................................. 11 9
FISCAL 1996:
First Quarter............................................................................... $ 85/8 $ 65/8
Second Quarter.............................................................................. 103/8 71/8
Third Quarter............................................................................... 91/2 71/2
Fourth Quarter.............................................................................. 91/2 71/8
</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. On June 4, 1998,
at the annual meeting, 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"). 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.
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<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.
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<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.
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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
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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%.
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<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
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
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.
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 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.
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<PAGE>
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.
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). At the last annual meeting of stockholders on June 4, 1998, Mr.
Childs was re-elected to the Company's Board of Directors. Mr. Childs submitted
a letter of resignation to the Company, and will resign from his position as
director effective as of the closing date of the transaction contemplated by the
Stock Purchase Agreement.
Pursuant to the Stockholders Agreement between the U.S. Purchaser and the
Company executed in connection with the Stock Purchase Agreement, the Company
has agreed to appoint Messrs. Blum and Ubben to the Company's Board of
Directors.
RICHARD C. BLUM is the Chairman and President of Richard C. Blum &
Associates, Inc., a merchant banking firm he founded in 1975. Mr. Blum is a
member of the Board of Directors of Northwest Airlines Corporation (a commercial
airline); Glenborough Realty (a real estate investment trust) and URS
Corporation (a construction services company). Mr. Blum also serves as
vice-Chairman of URS Corporation and has been a director of CB Commercial Real
Estate Services Group, Inc. (a real estate services company) since 1993.
JEFFREY W. UBBEN has been a managing director of Richard C. Blum &
Associates, Inc. since 1995. Prior to that time he was a portfolio manager of
the $5 billion Fidelity Value Fund (a mutual fund) and had been employed by
Fidelity since 1984. He has been a director of Kinetic Concepts, Inc. (a
therapeutic furniture company) since March 1998.
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 (after giving effect to approval of an
amendment to the plan by the stockholders of the Company at the annual meeting
on June 4, 1998).
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.
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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 sold in the International Offering pursuant to a
Prospectus dated May 21, 1998 and 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 SHARES BENEFICIALLY
OWNED OWNED
PRIOR TO THE U.S. AFTER THE U.S. DIRECT
DIRECT SALE (1) NUMBER OF SALE
NAME AND ADDRESS ----------------------- SHARES -----------------------
OF BENEFICIAL OWNERS NUMBER PERCENT BEING SOLD 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 *
Kenneth F. Yontz........................ 10,600 * -- 10,600 *
Timothy O. Fisher....................... 21,663(4) * -- 21,663(4) *
Douglas D. Wheat........................ -- -- -- -- --
Michael R. Eisenson..................... 2,915,963(5) 4.8% -- 2,915,963(5) 4.8%
C. Ann Merrifield....................... 1,800 * -- 1,800 *
Wyche H. Walton......................... -- -- -- -- --
John W. Childs.......................... 8,128,666(6) 13.5% 6,000,000( (8) 2,128,666(8) 3.5%
All current directors and executive
officers as a group (14 persons)...... 29,121,399 (6) 48.8% 6,000,000( (8) 23,121,399 35.4%
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 10) 8.3% -- 11,758,700 19.5%
J.W. Childs Equity Partners, L.P........ 7,855,764 13.0% 6,000,000( (8) 1,855,764(8) 3.0%
</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
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<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 16,663 shares held of record by Mr. Fisher's spouse and children.
Mr. Fisher disclaims beneficial ownership of these shares.
(5) 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.
(6) 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 272,902 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.
(7) 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 sold hereby, John
W. Childs sold 209,756 shares pursuant to a separate Prospectus dated May
21, 1998 in the International Offering. See "Plan of Distribution."
(8) The number in the table reflects a maximum of 6,000,000 shares to be sold by
Childs LP pursuant to the Stock Purchase Agreement. In addition, other
permitted assigns under the Stock Purchase Agreement (none owning more than
1% individually or in the aggregate) may elect to sell a maximum of 754,918
shares, in which event the number of shares sold by Childs LP will be
reduced accordingly.
(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) The amount in the table does not include 6,000,000 shares agreed to be
purchased by RCBA Playtex, LP, an affiliate of Richard C. Blum & Associates,
Inc., pursuant to the Stock Purchase Agreement. See "Plan of Distribution."
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<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.
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<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.
On June 4, 1998, the stockholders of the Company approved an amendment to
the By-laws requiring that one of the Non-Purchaser Directors 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. Following the closing of
the transactions contemplated by the Stock Purchaser Agreement, Childs LP will
hold fewer that 4,628,688 shares of Common Stock and, accordingly, its right
under the By-laws will lapse. On June 1, 1998, Mr. Childs submitted a letter of
resignation as a director, subject to the consummation of the transaction
contemplated by the Stock Purchase Agreement.
Pursuant to a Stockholders Agreement, dated as of June 1, 1998 between the
Company and the U.S. Purchaser, 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 the U.S. Purchaser shall be
entitled to designate two of the Non-Purchaser Directors to serve on the
Company's Board, until the earlier of (i) the date upon which the U.S. Purchaser
or its affiliates hold, in the aggregate, less than 11% of the outstanding
shares of Common Stock, or (ii) the tenth anniversary of the date of the closing
of the
48
<PAGE>
transaction contemplated by the Stock Purchase Agreement, PROVIDED that one such
designated director is either Jeffery W. Ubben or N. Colin Lind for so long as
he is an employee, officer, director, member or partner of the U.S. Purchaser or
any of its Affilates, and any other director designated by the U.S. Purchaser
shall be approved by a majority of the members of the Board who are either
Purchaser Directors or officers 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").
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
49
<PAGE>
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 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 (the "Investors Registration Rights Agreement"). In connection
with the acquisition of PCH, the former stockholders of PCH who received shares
of Common Stock in the acquisition of PCH (the "PCH Stockholders") and the
Company entered into a registration rights agreement granting the PCH
Stockholders 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 shares of
Common Stock to be sold by the Company or by stockholders of the Company the
shares of Common Stock held by the PCH Stockholders (the "PCH Stockholders
Registration Rights Agreement"). Simultaneously with the execution of the Stock
Purchase Agreement, the Company and the U.S. Purchaser entered into a
registration rights agreement (the "Blum Registration Rights Agreement"). Under
the Blum Registration Rights Agreement, the U.S. Purchaser (under certain
circumstances and subject to certain conditions) has the right to require the
Company to register under the Securities Act the shares of Common Stock held by
the U.S. Purchaser. After a period of 364 days from the closing of the
transaction contemplated by the Stock Purchase Agreement, the U.S. Purchaser may
demand on two occasions that the Company register its shares of Common Stock
under the Securities Act. Expenses incurred in connection with such a
registration generally will be paid by the Company. However, if the U.S.
Purchaser
50
<PAGE>
initiates a second demand registration within twelve months of the effectiveness
of the first demand registration, the U.S. Purchaser must pay the expenses
incurred in connection with such registration. The Blum Registration Rights
Agreement also grants the U.S. Purchaser the right to include the shares of
Common Stock held by the U.S. Purchaser in certain registrations under the
Securities Act of shares of Common Stock to be sold by the Company or other
stockholders of the Company.
As a condition to entering into the Blum Registration Rights Agreement, the
Company agreed to amend the Investors Registration Rights Agreement and the PCH
Stockholders Registration Rights Agreement in certain respects. The Investors
Registration Rights Agreement was amended to modify rights previously granted by
the Company to the Investors in the event of a cutback to conform these rights
to the similar provisions governing priority contained in the Blum Registration
Rights Agreement. The PCH Stockholders Registration Rights Agreement was amended
to eliminate rights previously granted to the PCH Stockholders to require the
Company to register the shares of Common Stock held by the PCH Stockholders
under the Securities Act, and to limit the rights of the PCH Stockholders to
include their shares in certain registrations under the Securities Act of shares
of Common Stock to be sold by the Company or by other stockholders of the
Company to those transactions in which the U.S. Purchaser or the Investors are
participants, and where a minimum of 250,000 shares held by PCH Stockholders are
included in such registration (of which 50,000 shares must be shares held by
Childs LP).
In connection with the International Offering, the Company agreed with the
International Managers that the Company would not file, without the consent of
Donaldson, Lufkin & Jenrette International (which such consent shall not be
unreasonably withheld), another registration statement with the Securities and
Exhange Commission at any time prior to November 19, 1998 in order to permit the
shares held by the U.S. Selling Stockholders to be sold. The Company has
received a letter from Donaldson, Lufkin & Jenrette International waiving this
restriction in connection with the U.S. Direct Sale. Additionally, the U.S.
Purchaser has agreed not to sell, transfer or otherwise dispose of any shares of
Common Stock or securities convertible into or exchangeable or exercisable for
shares of Common Stock, without the prior written consent of Donaldson, Lufkin &
Jenrette International, for a period of 180 days after the closing of the
transaction contemplated by the Stock Purchase Agreement.
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.
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PLAN OF DISTRIBUTION
Subject to the terms and conditions set forth in a purchase agreement (the
"Stock Purchase Agreement"), dated as of June 1, 1998 among Childs LP, the U.S.
Purchaser and Blum, Childs LP and certain other stockholders of the Company (the
"U.S. Selling Stockholders"), have agreed to sell to the U.S. Purchaser, and the
U.S. Purchaser has agreed to purchase from the U.S. Selling Stockholders,
6,000,000 shares of Common Stock.
On May 21, 1998, the Company and certain other stockholders of the Company
(the "International Selling Stockholders") entered into a purchase agreement
(the "International Purchase Agreement") with Donaldson, Lufkin & Jenrette
International, Goldman Sachs International, PaineWebber International (U.K.)
Ltd. and Smith Barney Inc. (the "International Managers"). Subject to the terms
and conditions set forth in the International Purchase Agreement, the
International Selling Stockholders sold to the International Managers and the
International Managers purchased from the International Selling Stockholders, an
aggregate of 4,008,063 shares of Common Stock. The International Offering was
undertaken independently of the U.S. Offering.
The Company and the U.S. Purchaser 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 180 days after the date of this Prospectus.
No action has been or will be taken in any jurisdiction (outside 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.
In connection with the International Offering, the Company granted an option
to the International Managers, exercisable within 30 days of the date of the May
21, 1998 Prospectus, to purchase up to an aggregate of 601,209 additional shares
of Common Stock at the public offering price of $13.875 per share, less the
$0.66 underwriting discount. The International Managers may exercise this option
only to cover over-allotments, if any, made on the sale of the Common Stock
offered pursuant to the May 21, 1998 Prospectus. To the extent that the
International Managers exercise this option, each International Manager will be
obligated, subject to certain conditions to purchase a number of additional
shares of Common Stock proportionate to such International Managers' initial
purchase, as reflected in the May 21, 1998 Prospectus.
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.
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 U.S. PURCHASER. 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
Plan of Distribution........................... 52
Legal Matters.................................. 53
Experts........................................ 53
Available Information.......................... 53
Incorporation of Certain Documents
by Reference.................................. 53
Index to Consolidated Financial Statements..... F-1
</TABLE>
6,000,000 SHARES
[LOGO]
PLAYTEX PRODUCTS, INC.
COMMON STOCK
------------------
PROSPECTUS
------------------
JUNE , 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.*
10.1 Stock Purchase Agreement, dated as of June 1, 1998, between the U.S. Purchaser, Childs LP and Blum.
10.2 Stockholders Agreement, dated as of June 1, 1998, between the Company and the U.S. Purchaser.
10.3 Agreement No. 1, dated as of June 1, 1998, to the Stock Purchase Agreement, dated as of March 17,
1995, by and among the Company and the Investors.
10.4 Registration Rights Agreement, dated June 1, 1998, between the Company and the U.S. Purchaser.
10.5 First Amended and Restated Registration Rights Agreement, dated June 1, 1998, between the Company and
the Investors.
10.6 First Amended and Restated Registration Rights Agreement, dated June 1, 1998, between the Company and
Childs LP.
10.7 Letter Agreement, dated June 1, 1998, from the Company to Childs LP.
10.8 Letter of Waiver, dated June 1, 1998, from the Company to the International Managers.
12 Statement of Computation of Ratio of Earnings to Fixed Charges.*
17 Letter of Resignation, dated June 1, 1998, from John W. Childs to the Company.
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.
II-2
<PAGE>
(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
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
II-3
<PAGE>
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-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant certifies
that it has reasonable grounds to believe that it meets all of the requirements
for filing on Form S-3 and has duly caused this Post-Effective Amendment No. 1
to the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the Town of Westport, Connecticut, on June 11,
1998.
PLAYTEX PRODUCTS, INC.
BY: /S/ MICHAEL R. GALLAGHER
-----------------------------------------
Michael R. Gallagher
CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Act, this Post-Effective
Amendment No. 1 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 June 11, 1998
Robert B. Haas
/s/ MICHAEL R. GALLAGHER Chief Executive Officer
- ------------------------------ (Principal Executive June 11, 1998
Michael R. Gallagher Officer) and Director
Executive Vice President
* and Chief Financial
- ------------------------------ Officer (Principal June 11, 1998
Michael F. Goss Financial and Accounting
Officer) and Director
Director
- ------------------------------ June, 1998
Kenneth F. Yontz
Director
- ------------------------------ June, 1998
Timothy O. Fisher
II-5
<PAGE>
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------
*
- ------------------------------
Douglas D. Wheat Director June 11, 1998
*
- ------------------------------
John W. Childs Director June 11, 1998
*
- ------------------------------
Michael R. Eisenson Director June 11, 1998
- ------------------------------
C. Ann Merrifield Director June, 1998
*By: /s/ MICHAEL R.
GALLAGHER
-------------------------
Michael R. Gallagher
ATTORNEY-IN-FACT
II-6
<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.*
10.1 Stock Purchase Agreement, dated as of June 1, 1998, between the U.S. Purchaser, Childs LP and Blum.
10.2 Stockholders Agreement, dated as of June 1, 1998, between the Company and the U.S. Purchaser.
10.3 Agreement No. 1, dated as of June 1, 1998, to the Stock Purchase Agreement, dated as of March 17,
1995, by and among the Company and the Investors.
10.4 Registration Rights Agreement, dated June 1, 1998, between the Company and the U.S. Purchaser.
10.5 First Amended and Restated Registration Rights Agreement, dated June 1, 1998, between the Company and
the Investors.
10.6 First Amended and Restated Registration Rights Agreement, dated June 1, 1998, between the Company and
Childs LP.
10.7 Letter Agreement, dated June 1, 1998, from the Company to Childs LP.
10.8 Letter of Waiver, dated June 1, 1998, from the Company to the International Managers.
12 Statement of Computation of Ratio of Earnings to Fixed Charges.*
17 Letter of Resignation, dated June 1, 1998, from John W. Childs to the Company.
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 10.1
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is entered into as of June
1, 1998 between J.W. Childs Equity Partners, L.P. (the "Seller"), RCBA Playtex,
L.P. (the "Buyer"), and Richard C. Blum & Associates, Inc. (the "Guarantor").
BACKGROUND
A. The Seller is the owner of a total of in excess of six million
(6,000,000) shares of Common Stock (the "Shares") of Playtex Products, Inc., a
Delaware corporation (the "Company").
B. Richard C. Blum & Associates, L.P., a California limited partnership
("RCBA"), is the general partner of RCBA Playtex, L.P., and RCBA is also the
beneficial owner of shares of the Company through limited partnerships for which
it serves as general partner and managed accounts for which it serves as
investment adviser.
C. The Seller desires to sell, and the Buyer desires to purchase, all of
the Shares upon the terms and conditions set forth in this Agreement.
NOW, THEREFORE, the parties agree as follows:
1. BASIC TRANSACTION.
(a) PURCHASE OF SHARES. Pursuant to the terms and conditions set
forth below, the Seller shall sell 6,000,000 Shares to Buyer, and Buyer shall
purchase those Shares from Seller. Seller may assign its rights in whole or in
part at any time and from time to time before the Closing to sell Shares
hereunder to any one or more of those persons listed on Schedule A hereto, so
long as (i) such assignees become signatories to this Agreement, (ii) RCBA shall
be reasonably satisfied they have the capacity to perform the obligations of
Seller in respect of their Shares, and (iii) the aggregate number of Shares
subject to this Agreement is 6,000,000. Buyer may assign its rights to purchase
some or all of its Shares to any of its Affiliates listed on Schedule B hereto,
all of whom are presently stockholders of the Company.
(b) PURCHASE PRICE. The purchase price is $13.25 per Share, for a
total purchase price of $79.5 million for the 6,000,000 Shares.
2. CONDITIONS; CLOSING.
(a) BUYER'S CONDITIONS. The Buyer's obligations under this Agreement
are conditioned upon (i) the Company's execution of a Stockholders Agreement
with the Buyer, (ii) all of the Shares being sold to the Buyer, (iii) the
waiting period under the Hart-Scott-Rodino Antitrust Improvements Acts of 1976
("HSR") shall have expired or been terminated, to the extent applicable, (iv)
there shall be no judgment, injunction, order or decree enjoining the Buyer from
consummating the transactions contemplated by this Agreement, (v) the
representations and warranties of Seller and the Guarantor shall be true and
correct, (vi) the Company's performance of its obligations under a certain
Letter Agreement dated June 1, 1998 with the Seller, and (vii) receipt by the
Seller of a written consent to the sale by John W. Childs and
<PAGE>
Steven G. Segal of shares of Common Stock from Donaldson Lufkin & Jenrette
International ("DLJ Consent").
(b) SELLER'S CONDITIONS. The Seller's obligations under this
Agreement are conditioned upon (i) all of the Shares being bought by the Buyer,
(ii) the waiting period under the HSR shall have expired or been terminated, to
the extent, applicable, (iii) there shall be no judgment, injunction, order or
decree enjoining the Seller from consummating the transactions contemplated by
this Agreement, (iv) the representations and warranties of Buyer and Guarantor
shall be true and correct, (v) the Company's performance of its obligations
under a certain Letter Agreement dated June 1, 1998 with the Seller, and (vi)
receipt by the Seller of a written consent to the sale by John W. Childs and
Steven G. Segal of shares of Common Stock from Donaldson Lufkin & Jenrette
International ("DLJ Consent").
(c) SETTLEMENT DATE. If the conditions in Sections 2(a) and 2(b) are
satisfied or waived, settlement (the "Closing") shall occur one (1) business day
after the expiration or termination of the waiting period under the HSR. In
exchange for the Seller's good delivery of the Shares being transferred at
settlement, the Buyer will wire transfer immediately available funds into the
Seller's account an amount equal to the purchase price of the Shares being
transferred, pursuant to wire transfer instructions to be provided by the Seller
to RCBA.
(d) TERMINATION. This Agreement may be terminated by Seller or Buyer
if the Closing has not occurred on or before July 31, 1998. If this Agreement
is terminated, the Agreement shall become void and of no effect, except that any
party shall remain liable for any breach of his obligations prior to
termination.
3. REPRESENTATIONS OF SELLER. The Seller represents, warrants and
covenants to the Buyer that:
(a) OWNERSHIP. Such Seller owns its Shares free and clear of any
pledge, lien, charge, claim, security interest or other encumbrance of any kind,
nature or description. Seller has been assured by the Company that such
Seller's Shares are validly issued, fully paid and non-assessable.
(b) AUTHORITY AND COMPLIANCE. Subject to receipt of the DLJ Consent,
such Seller has full power and authority to transfer its Shares and has complied
with or will comply with all legal requirements, if any, in connection with the
sale of its Shares. Subject to receipt of the DLJ Consent, such transfer will
not violate the rights of any third party.
(c) NO RESTRICTIONS. Subject to receipt of the DLJ Consent, the
Shares being transferred by such Seller are either free of any transfer
restrictions applicable to such Seller or, if there are any transfer
restrictions, such Seller has received assurances from the Company and/or its
counsel that such restrictions will not prevent the transfer of such Shares
pursuant to the terms set forth in this Agreement.
4. REPRESENTATIONS OF BUYER. The Buyer represents, warrants and
covenants to the Seller that:
(a) ACCREDITED. Such Buyer is or will be an accredited investor as
defined in Regulation D under The Securities Act of 1933, as amended (the
"Securities Act").
2
<PAGE>
(b) INVESTMENT INTENT. The Shares being acquired by the Buyer are
being acquired for investment for Buyer's own account, and not with a view to a
prompt distribution of any part thereof.
(c) TRANSFER. Such Buyer understands that it must bear the economic
risk of this investment in the Shares for an indefinite period of time because
such Shares cannot be transferred by such Buyer unless such transfer is
registered under the Securities Act or an exemption from such registration is
available, and such share certificates will bear a legend to such effect.
(d) AUTHORITY AND COMPLIANCE. Such Buyer has or will have full power
and authority to purchase its Shares and has complied with or will comply with
all legal requirements, if any, in connection with the purchase of its Shares.
4A. REPRESENTATIONS AND WARRANTIES OF GUARANTOR. The Guarantor
represents, warrants and covenants to the Seller that:
(a) AUTHORITY. Such Guarantor has the full power and authority to
(i) unconditionally guarantee the obligations of the Buyer pursuant to this
Agreement and (ii) perform all of such obligations in the place of the Buyer in
the event the Buyer fails to so perform.
(b) FINANCIAL CAPABILITY. The Guarantor has sufficient net worth to
pay the aggregate purchase price for the Shares in accordance with the
provisions of this Agreement.
5. MISCELLANEOUS.
(a) FURTHER ACTION. Each party agrees to use best efforts to take,
or cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective the transactions
contemplated by this Agreement.
(b) ENTIRE AGREEMENT; SUCCESSORS AND ASSIGNS. This Agreement
constitutes the entire understanding among the parties with regard to the
subjects hereof, superseding all prior understandings, agreements,
representations and negotiations, whether oral or written. The terms and
conditions of this Agreement will inure to the benefit of, and be binding upon,
the respective executors, administrators, heirs, successors and assigns of the
parties.
(c) CHOICE OF LAW. This agreement will be interpreted and enforced
in accordance with the laws of the State of Delaware as applied to contracts
executed and performed entirely therein.
(d) COUNTERPARTS. This Agreement may be signed in any number of
counterparts and by facsimile, and when so signed and delivered will have the
same effect as if all signatures appeared on the same document.
(e) NOTICES. All notices required or permitted under this Agreement
must be given in writing (which may include facsimile). All notices will be
effective upon the earlier of (i) receipt (including confirmation that a
facsimile has been received) or (ii) five business days after being deposited in
the U.S. mail or two business days after being delivered to an overnight
3
<PAGE>
courier, in each case properly addressed as set forth on Schedule A or B (as the
case may be), as such address may be changed by proper notice to the other
parties.
(f) INTERPRETATION. All parties have been assisted by counsel in
connection with this Agreement. The normal rule of construction that any
ambiguity will be resolved against the drafting party will not be used in the
interpretation of this Agreement.
(g) GENDER AND NUMBER. As the context so requires, (i) the masculine
gender will include the feminine and neuter, and vice versa, and (ii) the
singular will include the plural, and vice versa.
(h) AMENDMENT OF AGREEMENT. This Agreement may be amended only by a
written instrument signed by all of the parties.
(i) SEVERABILITY. If any provision of this Agreement or the
application of any such provision to any party is held by a court of competent
jurisdiction to be contrary to law, such provision will be deemed amended to the
minimum extent possible to comply with such law, and the remaining provisions of
this Agreement will remain in full force and effect.
(j) ATTORNEYS' FEES. If it becomes necessary for any party to
initiate legal action or any other proceeding to enforce, defend or construe
such party's rights or obligations under this Agreement, the prevailing party
will be entitled to reasonable costs and expenses, including attorneys' fees and
costs, incurred and paid in connection with such action or proceeding.
(k) FEES AND EXPENSES. The Seller, on the one hand, and the Buyer,
on the other, shall each bear their own respective fees and costs in connection
with the negotiation and execution of this Agreement and the consummation of the
transactions contemplated hereby, including the payment of any commission,
finder's fee or similar payment because of any act or omission by such party.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
4
<PAGE>
IN WITNESS WHEREOF, the parties hereby have executed this Agreement as of
the date set forth above.
THE SELLER:
J.W. Childs Equity Partners, L.P.,
By: J.W. Childs Advisors, L.P.,
its general partner
By: J.W. Childs Associates, L.P.,
its general partner
By: J.W. Childs Associates, Inc.,
its general partner
By:
-----------------------------------
THE BUYER:
RCBA Playtex, L.P.
By: Richard C. Blum & Associates, L.P.,
Its general partner
By: Richard C. Blum & Associates, Inc.,
Its general partner
By:
-----------------------------------
5
<PAGE>
THE GUARANTOR:
Richard C. Blum & Associates, Inc.
By:
-----------------------------------
Its: Managing Director
6
<PAGE>
SCHEDULE A
Permitted Assignees of Seller
-----------------------------
- ---------------------------------------------------- -------------
Bock Family Trust 4,298
- ---------------------------------------------------- -------------
John W. Childs 272,902
- ---------------------------------------------------- -------------
Richard S Childs 11,786
- ---------------------------------------------------- -------------
James E. Childs 11,786
- ---------------------------------------------------- -------------
Adam T. Field 5,663
- ---------------------------------------------------- -------------
Glenn A. Hopkins 17,894
- ---------------------------------------------------- -------------
Jerry D. Horn 19,347
- ---------------------------------------------------- -------------
Lambros J. Lambros 24,773
- ---------------------------------------------------- -------------
Stephanie L. Mansfield 2,149
- ---------------------------------------------------- -------------
Lawrence & Edith Mansfield 1,074
- ---------------------------------------------------- -------------
Jenny Childs Preston 1,039
- ---------------------------------------------------- -------------
Raymond B. Rudy 58,394
- ---------------------------------------------------- -------------
Steven G. Segal 67,558
- ---------------------------------------------------- -------------
Steven G. Segal 1995 Irrevocable Trust 12,221
- ---------------------------------------------------- -------------
SGS 1995 Family Limited Partnership 4,847
- ---------------------------------------------------- -------------
SGS III Family Limited Partnership 3,820
- ---------------------------------------------------- -------------
Adam L. Suttin 17,894
- ---------------------------------------------------- -------------
Suttin Family Trust 9,043
- ---------------------------------------------------- -------------
The Dowds Family Investment Trust 1,827
- ---------------------------------------------------- -------------
Gagan Verma 2,686
- ---------------------------------------------------- -------------
Stephen H. Wise 2,686
- ---------------------------------------------------- -------------
Timothy J. Healy 5,333
- ---------------------------------------------------- -------------
Michael Cox 1,500
- ---------------------------------------------------- -------------
Teresita Eugenio 650
- ---------------------------------------------------- -------------
Kenneth M. Evans 5,333
- ---------------------------------------------------- -------------
<PAGE>
- ---------------------------------------------------- -------------
Bruce A. Goldsmith 2,133
- ---------------------------------------------------- -------------
Peter Gower 1,875
- ---------------------------------------------------- -------------
Neil P. Guller 3,860
- ---------------------------------------------------- -------------
Lee Jacobs 1,500
- ---------------------------------------------------- -------------
Koss Trust 85,330
- ---------------------------------------------------- -------------
Cheryl Lawler 1,875
- ---------------------------------------------------- -------------
Kim Levine 2,796
- ---------------------------------------------------- -------------
Donald W. Miller 3,199
- ---------------------------------------------------- -------------
Dennis I. Moore 10,666
- ---------------------------------------------------- -------------
Donald G. Morgan 7,901
- ---------------------------------------------------- -------------
Joseph M. Pachella 3,929
- ---------------------------------------------------- -------------
Leslie A. Paparone 8,180
- ---------------------------------------------------- -------------
Jay E. Politi 1,033
- ---------------------------------------------------- -------------
Kenneth F. Reilly 2,133
- ---------------------------------------------------- -------------
Joel Slank 2,796
- ---------------------------------------------------- -------------
Mario E. Soussou 35,314
- ---------------------------------------------------- -------------
James D. Tates 1,066
- ---------------------------------------------------- -------------
Sharad B. Tilak 10,666
- ---------------------------------------------------- -------------
Marianne Wojcicki 2,133
--------
- ---------------------------------------------------- -------------
754,918
========
- ---------------------------------------------------- -------------
<PAGE>
SCHEDULE B
BUYER'S AFFILIATES
Stinson Capital Partners, L.P.
Stinson Capital Partners II, L.P.
BK Capital Partners IV, L.P.
Stinson Capital Fund (Cayman), Ltd.
Insurance Company Supported Organizations Pension Plan
United Brotherhood of Carpenters and Joiners of America Local Unions and
Councils Pension Fund
The Carpenters Pension Trust for Southern California
The Common Fund
B-1
<PAGE>
Exhibit 10.2
STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT (the "Agreement") dated as of June 1, 1998,
between PLAYTEX PRODUCTS, INC., a Delaware corporation (the "Company"), and RCBA
PLAYTEX, L.P., a Delaware limited partnership (the "Principal Stockholder").
RECITALS
--------
WHEREAS, J.W. Childs Equity Partners, L.P. (the "Seller") and the
Principal Stockholder are parties to a Stock Purchase Agreement, dated as of
June 1, 1998 (the "Purchase Agreement"), pursuant to which the Principal
Stockholder will purchase from the Seller, an aggregate 6,000,000 shares (the
"Purchased Shares") of common stock of the Company, par value $.01 ("Common
Stock"); and
WHEREAS, upon the Closing (as defined in the Purchase Agreement,
referred to herein as the "Effective Date"), the Principal Stockholder will
hold, in aggregate, 11,758,700 shares of the Common Stock (the "Shares");
NOW, THEREFORE, in consideration of the covenants and agreements set
forth herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
-----------
1.1 DEFINITIONS. The following terms, whenever used herein, shall
have the following meanings for all purposes of this Agreement.
<PAGE>
2
"1933 ACT" means the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder.
"1934 ACT" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
An "AFFILIATE" of, or a person "AFFILIATED" with, a specified Person,
means a Person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the Person
specified. The term "control" (including the terms "controlling," "controlled
by" and "under common control with") means the possession, direct or indirect,
of the power to direct or cause the direction of the management and policies of
a person, whether through the ownership of voting securities, by contract, or
otherwise.
"BY-LAWS" means the by-laws of the Company.
"BY-LAWS AMENDMENT" means the proposed amendment to the By-Laws in the
form attached as Exhibit A hereto.
"TRANSFER" or "TRANSFERRED" means, in relation to any share of Common
Stock, any sale, assignment, transfer or disposition by gift or otherwise,
including without limitation, any distribution in liquidation or otherwise by a
corporation or partnership; PROVIDED, HOWEVER, that "Transfer" does not mean,
with respect to any such share of Common Stock, any pledge, mortgage,
hypothecation or grant of a security interest therein.
"PERSON" means any individual, firm, corporation, partnership, limited
liability company or partnership, trust, incorporated or unincorporated
association, joint
<PAGE>
3
venture, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind, and shall include any successor (by merger
or otherwise) of such entity.
ARTICLE II
DIRECTORS
---------
2.1 INCREASE IN THE SIZE OF THE BOARD OF DIRECTORS. The Company
hereby agrees that it will upon or immediately following the Effective Date
(i) increase the size of its Board of Directors (the "Board") to a number
necessary to effect clause (ii) of this Section 2.1, and (ii) cause two of the
vacancies thus created (or created by resignation) to be filled by Richard C.
Blum and Jeffrey W. Ubben.
2.2 NOMINATION OF DESIGNATED DIRECTORS. The Company hereby agrees
that for so long as the Principal Stockholder owns, in the aggregate, at least
11% of the outstanding shares of Common Stock, the Company will use its best
efforts to ensure that, following any vote for the election of directors of the
Company at a stockholders' meeting or otherwise, two directors (each a
"Designated Director") designated by the Principal Stockholder are members of
the Board, PROVIDED, that (i) one Designated Director is either Jeffrey W. Ubben
or N. Colin Lind for so long as he is an employee, officer, director, member or
partner of the Principal Stockholder or any of its Affiliates, (ii) any other
Designated Director shall be approved by a majority of the members of the Board
who are either Purchaser Directors (as defined in the By-Laws) or officers of
the Company (which such consent shall not be unreasonably
<PAGE>
4
withheld), and (iii) that the proposed Designated Directors are nominated in
accordance with the By-Laws.
2.3 STOCKHOLDER MEETING; PROXY MATERIAL; BY-LAWS AMENDMENT. The
Company shall cause proxies of its stockholders to be solicited, in accordance
with the By-Laws and the 1934 Act, for the purpose of voting for the adoption of
the By-Laws Amendment (the "Stockholder Meeting") at the annual meeting of the
Company's stockholders to be held in 1999 (the "Stockholders Meeting"). In
connection with the Stockholders Meeting, the Company: (A) shall prepare and
file with the Securities and Exchange Commission (the "SEC") in accordance with
the 1934 Act an information statement relating to the By-Laws Amendment (the
"Information Statement"), use all reasonable efforts to have the Information
Statement and/or any amendment or supplement thereto cleared by the SEC and
thereafter mail to its stockholders, as promptly as practicable following such
clearance, the Information Statement; (B) shall use its reasonable best efforts
to obtain the necessary approvals by its stockholders for the adoption of the
By-Laws Amendment (unless the Board shall have determined in good faith, based
upon advice of outside counsel, that taking such actions would be inconsistent
with the Board's fiduciary duties under applicable law); and (C) shall otherwise
comply with all legal requirements applicable to the Stockholders Meeting. The
Company shall make available to the Principal Stockholder prior to the filing
thereof with the SEC copies of the preliminary Information Statement and any
amendments or supplements thereto and shall make any changes therein reasonably
<PAGE>
5
requested by the Principal Stockholder insofar as such changes relate to any
matters relating to the Principal Stockholder.
2.4 VOTING FOR DIRECTORS. For so long as the Principal Stockholder
owns at least 11% of the outstanding shares of Common Stock, the Principal
Stockholder agrees that it shall vote (and shall cause each of its affiliates
owning, directly or indirectly, any shares of Common Stock to vote) all the
shares of Common Stock owned directly or indirectly by the Principal Stockholder
or such Affiliate in favor of all the persons nominated by the Board in
accordance with the Amended By-Laws; provided this Section 2.4 shall terminate
upon the tenth anniversary of the Effective Date.
ARTICLE III
TRANSFERS OF SECURITIES
-----------------------
3.1 RESTRICTIONS ON TRANSFER OF COMPANY COMMON STOCK. The Principal
Stockholder agrees that, from the Effective Date to the date 364 days after the
Effective Date, it shall not (i) Transfer any of the Purchased Shares, by
distribution or otherwise, to any of its shareholders, partners, members or
owners (in each case other than Affiliates), (ii) sell any of the Purchased
Shares pursuant to Rule 144 under the 1933 Act.
3.2 TRANSFERS SUBJECT TO COMPLIANCE WITH SECURITIES LAWS. After the
Effective Date, no Shares may be Transferred by the Principal Stockholder (other
than pursuant to an effective registration statement under the 1933 Act) unless
such Principal
<PAGE>
6
Stockholder first delivers to the Company an opinion of counsel, reasonably
satisfactory to the Company, to the effect that such Transfer is not required to
be registered under the 1933 Act.
3.3 CERTIFICATES FOR SHARES TO BEAR LEGENDS. (A) After the
Effective Date, so long as the Purchased Shares are not sold pursuant to an
effective registration statement under the 1933 Act or pursuant to Rule 144
under the 1933 Act, the Purchased Shares shall be subject to a stop-transfer
order and the certificates therefor shall bear the following legend by which
each holder thereof shall be bound:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED OR
SOLD EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933, OR (ii) AN APPLICABLE EXEMPTION FROM
REGISTRATION THEREUNDER."
(B) So long as the Purchased Shares are subject to the
terms and conditions of Section 3.1, the Purchased Shares shall be subject to a
stop-transfer order and the certificates shall bear the following legend:
"UNTIL JUNE __, 1999, THE SALE OR TRANSFER OF THE SHARES REPRESENTED
BY THIS CERTIFICATE IS FURTHER SUBJECT TO RESTRICTIONS WHICH ARE
CONTAINED IN A STOCKHOLDERS AGREEMENT DATED AS OF JUNE [1], 1998, A
COPY OF WHICH IS ON FILE WITH THE ISSUER OF THESE SHARES AND WILL BE
FURNISHED BY THE ISSUER OF THESE
<PAGE>
7
SHARES TO THE STOCKHOLDER ON REQUEST AND WITHOUT CHARGE."
(C) After the termination of the legend requirements of
either Section 3.3(A) or Section 3.3(B), the Company shall, upon the written
request of the holders of the Shares and receipt by the Company of evidence
reasonably satisfactory to it that such requirement has terminated (including,
with respect to the legend required by the Section 3.3(A), a written opinion of
counsel), issue certificates for such Shares that do not bear all or part of the
legend described in Section 3.3(A) or Section 3.3(B), as the case may be, and
release the applicable stop-transfer order.
ARTICLE IV
RESTRICTIONS ON PURCHASE
------------------------
4.1 RESTRICTED PURCHASES. From the Effective Date through the fifth
anniversary of the Effective Date, the Principal Stockholder agrees that it will
not, nor will it permit any of its Affiliates to, directly or indirectly, take
any action, including, without limitation, to acquire, offer to acquire, or
agree to acquire, by purchase or otherwise, any shares of Common Stock (or any
options, warrants, convertible securities, or other rights to purchase or
subscribe for Common Stock), if immediately thereafter the number of shares of
Common Stock (including, for this purpose, shares of Common Stock issuable
pursuant to any options, warrants, convertible securities, or other rights to
purchase or subscribe for Common Stock) beneficially owned (within the meaning
of Rule 13d-3 of the Securities Exchange Act of 1934) by the Principal
<PAGE>
8
Stockholder and its Affiliates exceeds the sum of (i) the number of Shares as of
the Effective Date (the "Effective Date Shares") plus (ii) 2,000,000 (in the
case of each of clause (i) and (ii), as adjusted for stock splits, combination
of stock, stock dividends or similar recapitalizations by the Company), PROVIDED
HOWEVER that nothing in this Section 4.1 shall prohibit the Principal
Stockholder or any of its Affiliates from acquiring any Common Stock in
accordance with the provisions of Section 4.2 below.
4.2 PREEMPTIVE RIGHTS.
(a) From and after the Effective Date, except as provided below,
the Company shall not issue, sell or transfer or allow any of its subsidiaries
to issue, sell or transfer any Common Stock (or any options, warrants,
convertible securities, or other rights to purchase or subscribe for Common
Stock) (collectively, the "Offered Securities") unless the Principal Stockholder
is offered in writing the right to purchase, at the same price and on the same
terms proposed to be issued and sold, a portion of the Offered Securities
(the "Stated Percentage") equal to the product of (i) the total number of
Offered Securities multiplied by (ii) a fraction, the numerator of which is the
lesser of (x) the number of Effective Date Shares or (y) the number of shares of
Common Stock then owned by the Principal Stockholder and the denominator of
which is the total number of the then outstanding shares of Common Stock,
computed on a fully diluted basis (the "Preemptive Rights"). If the Offered
Securities are being issued in connection with the issuance of any other
securities, or incurrence of any debt, by the Company ("Other Securities or
Debt"), each Principal Stockholder shall be required to purchase its Stated
Percentage of such Other Securities or Debt in
<PAGE>
9
order to exercise its Preemptive Rights. The Principal Stockholder shall have
the right, during the period specified in Section 4.2(b), to accept the offer
for any or all of their portion of the Offered Securities.
(b) Any Principal Stockholder who does not deliver to the
Company written notice of acceptance of any offer made pursuant to Section
4.2(a) within 10 business days after such Principal Stockholder's receipt of
such offer shall be deemed to have waived its right to purchase the Offered
Securities which are the subject of such offer (including, if the Offered
Securities include convertible securities, options, or other rights to acquire
other securities, such other securities.)
(c) Section 4.2 (a) shall not apply to (i) the grant of options
to purchase Common Stock, or the issuance of shares of Common Stock, to
employees of the Company or any of its subsidiaries, (ii) shares of Common Stock
issuable upon exercise of any option, warrant, convertible security or other
rights to purchase or subscribe for Common Stock which, in each case, had been
issued in compliance with Section 4.2(a) or under Section 4.2(c)(i),
(iii) securities issued pursuant to any stock split, combination of stock, stock
dividend or other similar stock recapitalization, (iv) shares of Common Stock
issued pursuant to an employee stock option or similar plan, (v) shares of
Common Stock issued in connection with the acquisition of stock or assets or of
any other Person, (vi) shares of Common Stock issued pursuant to any registered
public offering under the 1933 Act, or (vii) any issuance of Offered Securities
occurring after the Principal owns less than 11% of the outstanding shares of
Common Stock.
<PAGE>
10
ARTICLE V
MISCELLANEOUS
-------------
5.1 AMENDMENT. This Agreement may be altered or amended only with
the consent of the Company and the Principal Stockholder.
5.2 SPECIFIC PERFORMANCE. The parties recognize that the obligations
imposed on them in this Agreement are special, unique and of extraordinary
character, and that in the event of breach by any party, damages will be an
insufficient remedy; consequently, it is agreed that the parties hereto may have
specific performance (in addition to damages) as a remedy for the enforcement
hereof, without proving damages.
5.3 ASSIGNMENT. Except as other provided herein, the terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the respective successors of the parties hereto; PROVIDED, HOWEVER, that this
Agreement may not be assigned by any party without the prior written consent of
the Company and the Principal Stockholder except that the Company may assign its
rights herein to any successor to all or substantially all its assets (by merger
or otherwise). Any assignment of rights hereunder shall be coupled with the
assumption by the assignee of all of the obligations of the assignor hereunder
and shall thereby relieve such assignor of such obligations. Any purported
assignment made in violation of this Section 6.3 shall be void and of no force
and effect.
<PAGE>
11
5.4 NOTICES. Any and all notices, designations, consents, offers,
acceptances, or any other communication provided for herein shall be given in
writing and deemed received when delivered by overnight courier or hand
delivery, or when sent by facsimile transmission which shall be addressed, or
sent, as follows:
If to the Company, to it at:
Playtex Products, Inc.
300 Nyala Farms Road
Westport, Connecticut 06880
Attention: Michael R. Gallagher,
Chief Executive Officer
Telecopier: (203) 341-4260
with a copy to:
Haas Wheat & Partners Incorporated
300 Crescent Court
Suite 700
Dallas, Texas 75201
Attention: Robert B. Haas
Telecopier: (214) 871-8364
and another copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: Robert M. Hirsh, Esq.
Telecopier: (212) 373-2159
If to the Principal Stockholder, to:
Richard C. Blum & Associates, L.P.
909 Montgomery Street, Suite 400
San Francisco, California 94133
Attention: Murray A. Indick, Esq.
Telecopier: (415) 434-3130
With a copy to:
<PAGE>
12
Wilmer, Cutler & Pickering
2445 M Street, N.W.
Washington, D.C. 20037
Attention: Michael R. Klein, Esq.
Telecopier: (202) 663-6363
5.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts and each counterpart shall be deemed to be an original and which
counterparts together shall constitute one and the same agreement of the parties
hereto.
5.6 SECTION HEADINGS. Headings contained in this Agreement are
inserted only as a matter of convenience and in no way define, limit or extend
the scope or intent of this Agreement or any provisions hereof.
5.7 CHOICE OF LAW. This Agreement shall be governed by the laws of
the State of New York, without regard to principles of conflicts of laws.
5.8 ENTIRE AGREEMENT. This Agreement, the Stock Purchase Agreement
and the Registration Rights Agreement contain the entire understanding of the
parties hereto respecting the subject matter hereof and thereof and supersede
all prior agreements, discussions, and understandings with respect to such
subject matters.
<PAGE>
13
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
PLAYTEX PRODUCTS, INC.
By:
--------------------------------
Name:
Title:
RCBA PLAYTEX, L.P.
By:
--------------------------------
Name:
Title:
<PAGE>
14
FORM OF AMENDMENT TO
THE BY-LAWS OF THE COMPANY
A. The existing Section 15(b)B shall be replaced in its entirety to read
as follows:
"(B) From the Effective Date until the earlier of (1) the date
upon which the Principal Stockholder holds, in the aggregate, less
than 11% of the outstanding shares of common stock of the Company or
(2) the tenth anniversary of the Effective Date, two of the
Non-Purchaser Directors shall be Designated Directors, PROVIDED, that
(1) one Designated Director is either Jeffrey W. Ubben or N. Colin
Lind for so long as he is an employee, officer, director, member or
partner of the Principal Stockholder or any of its Affiliates, and
(2) any other Designated Director shall be approved by a majority of
the members of the Board who are either Purchaser Directors or
officers of the Company, which approval shall not be unreasonably
withheld. The "Effective Date" shall have the meaning given to that
term in the Stockholders Agreement, dated as of June 1, 1998, among
the Company, and RCBA PLAYTEX, L.P. (the "Principal Stockholder").
The "Designated Directors" means the Directors designated by the
Principal Stockholder."
<PAGE>
AMENDMENT NO. 1
Amendment No. 1, dated as of June 1, 1998, by and among PLAYTEX
PRODUCTS, INC., a Delaware corporation (the "Company"), HWH CAPITAL PARTNERS,
L.P., a Delaware limited partnership ("HWH"), HWH VALENTINE PARTNERS, L.P., a
Delaware limited partnership, ("HWHV"), and HWH SURPLUS VALENTINE PARTNERS,
L.P., a Delaware limited partnership ("HWHSV" and, together with HWH and HWHV,
the "Purchasers"), to the Stock Purchase Agreement ("Agreement"), dated as of
March 17, 1995, among the Company and the Purchasers.
WHEREAS, there is a Stock Purchase Agreement dated as of June 1, 1998
(the "Purchase Agreement") between RCBA Playtex, L.P. ("Blum") and J.W. Childs
Equity Partners, L.P. ("Childs LP"), pursuant to which Blum has agreed to
purchase 6,000,000 shares of the Company's common stock, par value $.01 from
Childs LP; and
WHEREAS, the parties to the Agreement wish to amend the Agreement as
set forth herein.
NOW, THEREFORE, the Company and the Purchasers agree as follows:
1. EFFECTIVENESS. The Agreement, as amended, herein, shall be
effective upon (and only upon) the Closing (as defined in the Purchase
Agreement, and hereinafter referred to as the "Effective Date"). In the event
the Purchase Agreement is terminated, this Agreement shall be deemed not to have
been so amended and
<PAGE>
2
restated and shall remain in full force and effect in the form it existed
immediately prior to the date hereof.
2. AMENDMENT TO ARTICLE 6 OF THE AGREEMENT. Article 6 of the
Agreement shall be amended by adding at the end thereof the following:
6.12 PREEMPTIVE RIGHTS.
(a) From and after the Effective Date, except as
provided below, the Company shall not issue, sell or transfer or allow
any of its subsidiaries to issue, sell or transfer any Voting
Securities (the "Offered Securities") unless the Purchasers are
offered in writing the right to purchase, at the same price or on the
same terms proposed to be issued and sold, a portion of the Offered
Securities (the "Stated Percentage") equal to the product of (i) the
total number of Offered Securities multiplied by (ii) a fraction, the
numerator of which is the lesser of (x) 20,000,000 or (y) the number
of Voting Securities then owned by the Purchasers and the denominator
of which is the total number of the then outstanding shares of Common
Stock, computed on a fully diluted basis (the "Preemptive Rights").
If the Offered Securities are being issued in connection with the
issuance of any other securities, or incurrence of any debt, by the
Company ("Other Securities or Debt"), the Purchasers shall be required
to purchase their Stated Percentage of such Other Securities or Debt
in order to exercise their Preemptive Rights. The Purchasers shall
have the right, during the period specified
<PAGE>
3
in Section 6.12(b), to accept the offer for any or all of their
portion of the Offered Securities.
(b) Any Purchaser who does not deliver to the Company
written notice of acceptance of any offer made pursuant to
Section 6.12(a) within 10 business days after such Purchaser's receipt
of such offer shall be deemed to have waived its rights to purchase
the Offered Securities which are the subject of such offer (including,
if the Offered Securities include convertible securities, options, or
other rights to acquire securities, such other securities.)
(c) Section 6.12(a) shall not apply to (i) the grant
of options to purchase Voting Securities, or the issuance of shares of
Voting Securities, to employees of the Company or any of its
subsidiaries, (ii) shares of Voting Securities issuable upon exercise
of any option, warrant, convertible security or other rights to
purchase or subscribe for Voting Securities which, in each case, had
been issued in compliance with Section 6.12(a) or under Section
6.12(c)(i), (iii) securities issued pursuant to any stock split,
combination of stock, stock dividend or other similar stock
recapitalization, (iv) shares of Voting Securities issued pursuant to
an employee stock option or similar plan, (v) shares of Voting
Securities issued in connection with the acquisition of the stock or
assets or of any other Person (vi) shares of Voting Securities issued
pursuant to any registered public offering under
<PAGE>
4
the 1933 Act, or (vii) any issuance of Offered Securities occurring
after the Purchasers collectively own less than 11% of the outstanding
shares of Common Stock.
3. AMENDMENT TO ARTICLE 7 OF THE AGREEMENT: Article 7 of the
Agreement is deleted in the entirety and replaced with the following:
7. STANDSTILL
7.1 PROHIBITED ACTIVITIES. The Purchasers agree that during
the Standstill Period they will not, nor will they permit any of their
Affiliates to, directly or indirectly, acquire, offer to acquire, or agree
to acquire, by purchase any Voting Securities; PROVIDED, HOWEVER, that
nothing contained herein shall prohibit the Purchasers or any of their
Affiliates from acquiring any Voting Securities (i) as a result of a stock
split, stock dividend or similar recapitalization by the Company, the
consummation of which shall not result in a violation of Section 7.1 or
(ii) so long as the Purchasers and their Affiliates beneficially own
(within the meaning of Rule 13d-3 of the Exchange Act), in the aggregate,
no more than 22,000,000 shares of Voting Securities (as adjusted for stock
splits, combination of stock, stock dividends or similar recapitalization
by the Company) immediately following such acquisition of Voting
Securities; PROVIDED, HOWEVER, that nothing in this Section 7.1 shall
prohibit the Purchasers from acquiring any Voting Securities in accordance
with the provisions of Section 6.12. Notwithstanding the foregoing, if any
breach of Section 7.1 caused by an acquisition of a non-material amount of
Voting Securities shall
<PAGE>
5
have been cured by disposition of Voting Securities within 30 days after
the Purchasers become aware of such breach, then no breach of this
Section 7.1 shall be deemed to have occurred.
7.2 STANDSTILL PERIOD. As used herein, the term "Standstill
Period" shall mean the period from the date that the Closing occurs until
the earliest to occur of (each a "Termination Event"):
(A) the date that is the fifth anniversary of the
Effective Date;
(B) the date on which the Purchasers and their
Affiliates cease to beneficially own (within the meaning of Rule 13d-3
of the Exchange Act), in the aggregate, at least 10% of the
outstanding Voting Securities;
(C) a Change of Control;
(D) the sale of substantially all of the Common Stock
of the Company or all or substantially all of the assets of the
Company or its Subsidiaries, taken as a whole, through a stock
purchase agreement, merger or other business combination not in
violation of Section 6.10;
(E) a Post-Closing Event;
(F) a Bankruptcy Event; or
(G) default in the payment of principal or interest
when due (whether at maturity, upon acceleration or otherwise) after
the
<PAGE>
6
expiration of any grace periods applicable thereto with respect to
indebtedness of the Company or any of its Subsidiaries for money
borrowed having an aggregate outstanding principal amount in excess of
$10,000,000 or more (unless at the time thereof the Company shall have
unrestricted cash, cash equivalents or commitments under existing debt
instruments available to make such payment).
4. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original and both of which together shall
be deemed to be one and the same instrument.
<PAGE>
7
IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
PLAYTEX PRODUCTS, INC.
By: /s/ Michael F. Goss
-------------------------------
Name: Michael F. Goss
Title: Chief Financial Officer
HWH CAPITAL PARTNERS, L.P.
By: HWH, L.P., its general partner
By: HWH Incorporated, its
general partner
By: /s/ Douglas D. Wheat
-------------------------------
Name: Douglas D. Wheat
Title:
HWH VALENTINE PARTNERS, L.P.
By: HWH Valentine, L.P., its
general partner
By: HWH Valentine Incorporated, its
general partner
By: /s/ Douglas D. Wheat
-------------------------------
<PAGE>
8
Name:
Title:
HWH SURPLUS VALENTINE PARTNERS, L.P.
By: HWH Valentine, L.P., its
general partner
By: HWH Valentine Incorporated, its
general partner
By: /s/ Douglas D. Wheat
-------------------------------
Name: Douglas D. Wheat
Title:
<PAGE>
Exhibit 10.4
================================================================================
REGISTRATION RIGHTS AGREEMENT
among
PLAYTEX PRODUCTS, INC.,
and
RCBA PLAYTEX, L.P.
-------------------------------------
Dated as of June 1, 1998
-------------------------------------
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
1. Background .......................................................... 1
2. Registration Under Securities Act, etc. ............................. 1
2.1 Registration on Request ...................................... 1
2.2 Incidental Registration ...................................... 4
2.3 Registration Procedures ...................................... 6
2.4 Underwritten Offerings ....................................... 9
2.5 Preparation; Reasonable Investigation ........................ 11
2.6 Limitations, Conditions and Qualifications to Obligations
under Registration Covenants ............................... 11
2.7 Indemnification .............................................. 11
3. Definitions ......................................................... 16
4. Rule 144 ............................................................ 18
5. Amendments and Waivers .............................................. 18
6. Nominees for Beneficial Owners ...................................... 19
7. Notices ............................................................. 19
8. Assignment .......................................................... 20
9. Calculation of Percentage Interests in Registrable Securities ....... 20
10. No Inconsistent Agreements .......................................... 20
11. Remedies ............................................................ 20
12. Severability ........................................................ 20
13. Entire Agreement .................................................... 21
14. Headings ............................................................ 21
15. Governing Law ....................................................... 21
16. Counterparts ........................................................ 21
i
<PAGE>
17. Termination ......................................................... 21
ii
<PAGE>
REGISTRATION RIGHTS AGREEMENT, dated as of June 1, 1998, between
PLAYTEX PRODUCTS, INC., a Delaware corporation (the "Company"), and RCBA
PLAYTEX, L.P. (the "Principal Stockholder").
The parties hereby agree as follows:
1. Background. Pursuant to a Stock Purchase Agreement, dated as of
June 1, 1998, among J.W. Childs Equity Partners, L.P. (the "Seller") and the
Principal Stockholder (the "Purchase Agreement"), the Principal Stockholder has
agreed to purchase from the Seller, and the Seller has agreed to sell to the
Principal Stockholder, an aggregate of 6,000,000 shares (the "Shares") of the
Company's Common Stock, par value $.01 per share. Capitalized terms used herein
but not otherwise defined shall have the meanings given them in Section 3.
2. Registration Under Securities Act, etc.
2.1 Registration on Request.
(a) Request. At any time after the date that is 364 days
after the Closing Date (as defined in the Purchase Agreement, hereinafter
referred to as the "Effective Date"), upon the written request of one or more
holders (the "Initiating Holders") of Registrable Securities that the Company
effect the registration under the Securities Act of all or part of such
Initiating Holders' Registrable Securities, the Company promptly will give
written notice of such requested registration to all registered holders of
Registrable Securities, and thereupon the Company will use its best efforts to
effect, at the earliest possible date, the registration under the Securities Act
of:
(i) the Registrable Securities which the Company
has been so requested to register by such Initiating Holders; and
(ii) all other Registrable Securities which the
Company has been requested to register by the holders thereof (such
holders together with the Initiating Holders hereinafter are referred to
as the "Selling Holders") by written request given to the Company within
30 days after the giving of such written notice by the Company, all to the
extent necessary to permit the disposition of the Registrable Securities
so to be registered.
(b) Registration of Other Securities. Whenever the
Company shall effect a registration pursuant to this Section 2.1, no securities
other than Registrable Securities shall be included among the securities covered
by such registration unless the Selling Holders of not less than 66-2/3% of all
Registrable Securities to be covered by such registration shall have consented
in writing to the inclusion of such other securities; provided, however, that
such consent shall not be
<PAGE>
2
required with respect to securities being registered pursuant to the Other
Registration Rights Agreements.
(c) Registration Statement Form. Registrations under
this Section 2.1 shall be on such appropriate registration form of the
Commission as shall be reasonably selected by the Company.
(d) Effective Registration Statement. A registration
requested pursuant to this Section 2.1 shall not be deemed to have been effected
(i) unless a registration statement with respect thereto has become effective
and remained effective in compliance with the provisions of the Securities Act
with respect to the disposition of all Registrable Securities covered by such
registration statement until such time as all of such Registrable Securities
have been disposed of in accordance with the intended methods of disposition by
the seller or sellers thereof set forth in such registration statement (unless
the failure to so dispose of such Registrable Securities shall be caused solely
by reason of a failure on the part of the Selling Holders); provided, that such
period need not exceed 135 days; (ii) if after it has become effective, such
registration is interfered with by any stop order, injunction or other order or
requirement of the Commission or other governmental agency or court for any
reason not attributable solely to the Selling Holders or (iii) if the conditions
to closing specified in the underwriting agreement, if any, entered into in
connection with such registration are not satisfied or waived, other than solely
by reason of a failure on the part of the Selling Holders.
(e) Selection of Underwriters. The underwriter or
underwriters of each underwritten offering of the Registrable Securities so to
be registered shall be selected by the Company and shall be reasonably
acceptable to the Selling Holders of more than 50% of each class of Registrable
Securities to be included in such registration.
(f) Priority in Requested Registration. If the managing
underwriter of any underwritten offering shall advise the Company in writing
(and the Company shall so advise each Selling Holder of Registrable Securities
requesting registration of such advice) that, in its opinion, the number of
securities requested to be included in such registration exceeds the number
which can be sold in such offering within a price range acceptable to the
Selling Holders of 66-2/3% of the Registrable Securities requested to be
included in such registration, the Company, except as provided in the following
sentence, will include in such registration, to the extent of the number and
type which the Company is so advised can be sold in such offering, first,
Registrable Securities requested to be included in such registration, pro rata
(based on the number of Registrable Securities requested by each of the Selling
Holders) among the Selling Holders requesting such registration, second, such
Registrable Securities (as defined in the Other Registration Rights Agreements
and
<PAGE>
3
hereinafter referred to as "Third Party Securities") requested to be included in
such registration pursuant to the Other Registration Rights Agreements, pro rata
(based on the number of Third Party Securities requested by each Securityholder
requesting such registration) among the Securityholders requesting such
registration, and third all securities to be sold by the Company for its own
account. Notwithstanding the foregoing, if the total number of Registrable
Securities requested to be included in any registration cannot be included,
holders of Registrable Securities requesting registration thereof pursuant to
Section 2.1, representing not less than 50% of the Registrable Securities with
respect to which registration has been requested, shall have the right to
withdraw the request for registration by giving written notice to the Company
within 20 days after receipt of the notice from the managing underwriter
described above by the Company and, in the event of such withdrawal, such
request shall not be counted for purposes of the requests for registration to
which holders of Registrable Securities are entitled pursuant to Section 2.1
hereof. If a request for registration is withdrawn pursuant to the immediately
preceding sentence and at least 80% of the Registrable Securities requested to
be included in such withdrawn registration could have been included therein, the
Registration Expenses incurred by the Company in connection with such withdrawn
registration shall be reimbursed by the Selling Holders, pro rata (based on the
number of Registrable Securities requested to be included therein) among the
Selling Holders.
(g) Limitations on Registration Requests.
Notwithstanding anything in this Section 2.1 to the contrary, in no event will
the Company be required to:
(i) effect, in the aggregate, more than two
registrations pursuant to this Section 2.1;
(ii) effect a registration pursuant to this
Section 2.1 within the six-month period occurring immediately subsequent
to the effectiveness (within the meaning of Section 2.1(d)) of a
registration statement filed pursuant to this Section 2.1, unless the
Board of Directors of the Company determines that effecting a second
registration within the six-month period would not have a material adverse
effect on the market price of the Common Stock; or
(iii) effect a registration pursuant to Section
2.1 covering less than 25% of the number of outstanding Registrable
Securities as of the Effective Date.
(h) Expenses. The Company will pay all Registration
Expenses in connection with any registrations requested pursuant to this Section
2.1; provided, that if the registration is requested pursuant to this Section
2.1 within 364
<PAGE>
4
days of the effective date (within the meaning of Section 2.1(d)) of a
registration statement effected pursuant to this Section 2.1, all Registration
Expenses with respect to such requested registration shall be paid by the
Selling Holders, pro rata (based on the number of Registrable Securities
included in such registration by each Selling Holder).
2.2 Incidential Registration.
(a) Right to Include Registrable Securities. If the
Company at any time proposes to register any of its Common Stock under the
Securities Act by registration on any form other than Forms S-4 or S-8, whether
or not for sale for its own account, it will each such time give prompt written
notice to all registered holders of Registrable Securities of its intention to
do so and of such holders' rights under this Section 2.2. Upon the written
request of any such holder (a "Requesting Holder") made as promptly as
practicable and in any event within 30 days after the receipt of any such notice
from the Company (15 days if the Company states in such written notice or gives
telephonic or telecopied notice to all registered holders of Registrable
Securities, with written confirmation to follow promptly thereafter, that (i)
such registration will be on Form S-3 and (ii) such shorter period of time is
required because of a planned filing date) (which request shall specify the
Registrable Securities intended to be disposed of by such Requesting Holder),
the Company will use its best efforts to effect the registration under the
Securities Act of all Registrable Securities which the Company has been so
requested to register by the Requesting Holders thereof; provided, that prior to
the effective date of the registration statement filed in connection with such
registration, immediately upon notification to the Company from the managing
underwriter of the price at which such securities are to be sold, if such price
is below the price which any Requesting Holder shall have indicated to be
acceptable to such Requesting Holder, the Company shall so advise such
Requesting Holder of such price, and such Requesting Holder shall then have the
right to withdraw its request to have its Registrable Securities included in
such registration statement; provided, further, however, that if, at any time
after giving written notice of its intention to register any securities and
prior to the effective date of the registration statement filed in connection
with such registration, the Company shall determine for any reason not to
register or to delay registration of such securities, the Company may, at its
election, give written notice of such determination to each Requesting Holder of
Registrable Securities and (x) in the case of a determination not to register,
shall be relieved of its obligation to register any Registrable Securities in
connection with such registration (but not from any obligation of the Company to
pay the Registration Expenses in connection therewith), without prejudice,
however, to the rights of any holder or holders of Registrable Securities
entitled to do so to cause such registration to be effected as a registration
under Section 2.1, and (y) in the case of a determination to delay registering,
shall be permitted to delay registering any Registrable Securities, for the same
period as the delay in registering such other securities. No registration
<PAGE>
5
effected under this Section 2.2 shall relieve the Company of its obligation to
effect any registration upon request under Section 2.1.
(b) Priority in Incidental Registrations. If the
managing underwriter of any underwritten offering shall inform the Company by
letter of its opinion that the number or type of Registrable Securities and
Third Party Securities requested to be included in such registration would
materially adversely affect such offering, and the Company has so advised the
Requesting Holders, then the Company will include in such registration, to the
extent of the number and type which the Company is so advised can be sold in (or
during the time of) such offering, first, (x) if such registration is being
effected pursuant to the request of Securityholders under provisions of one of
the Other Registration Rights Agreements comparable to Section 2.1, all Third
Party Securities so requested by such Securityholders under such Other
Registration Rights Agreement, or (y) if such registration is not being so
effected, all securities of the Company to be sold for its own account, second
such Registrable Securities requested to be included in such registration
pursuant to this Agreement and such Third Party Securities requested to be
included in such registration pursuant to the provisions of the Other
Registration Rights Agreements comparable to this Section 2.2, pro rata (based
on the number of Registrable Securities requested to be included therein by each
Selling Holder and the number of Third Party Securities requested to be included
therein by each Securityholder) among such Selling Holders and the
Securityholders, and third, if clause (x) of this Section 2.2(b) applies, all
securities proposed by the Company to be sold for its own account.
(c) Expenses. The Company will pay all Registration
Expenses in connection with any registration contemplated pursuant to this
Section 2.2.
2.3 Registration Procedures. If and whenever the Company is
required to use its best efforts to effect the registration of any Registrable
Securities under the Securities Act as provided in Sections 2.1 and 2.2, the
Company will, as expeditiously as possible:
(i) prepare and (within 90 days after the end of
the period within which requests for registration may be given to the
Company) file with the Commission the requisite registration statement to
effect such registration and thereafter use its best efforts to cause such
registration statement to become effective; provided, however, that the
Company may discontinue any registration of its securities which are not
Registrable Securities (and, under the circumstances specified in Section
2.2(b), Registrable Securities) at any time prior to the effective date of
the registration statement relating thereto;
(ii) prepare and file with the Commission such
amendments and supplements to such registration statement and the
prospectus
<PAGE>
6
used in connection therewith as may be necessary to keep such registration
statement effective in accordance with Section 2.1(d)(i) hereof and to
comply with the provisions of the Securities Act with respect to the
disposition of all Registrable Securities covered by such registration
statement until such time as all of such Registrable Securities have been
disposed of in accordance with the intended methods of disposition by the
seller or sellers thereof set forth in such registration statement;
provided, that except with respect to any such registration statement
filed pursuant to Rule 415 under the Securities Act, such period need not
exceed 135 days;
(iii) furnish to each seller of Registrable
Securities covered by such registration statement, such number of
conformed copies of such registration statement and of each such amendment
and supplement thereto (in each case including all exhibits), such number
of copies of the prospectus contained in such registration statement
(including each preliminary prospectus and any summary prospectus) and any
other prospectus filed under Rule 424 under the Securities Act, in
conformity with the requirements of the Securities Act, and such other
documents, as such seller may reasonably request;
(iv) use its reasonable best efforts (x) to
register or qualify all Registrable Securities and other securities
covered by such registration statement under such other securities or blue
sky laws of such States of the United States of America where an exemption
is not available and as the sellers of Registrable Securities covered by
such registration statement shall reasonably request, (y) to keep such
registration or qualification in effect for so long as such registration
statement remains in effect and (z) to take any other action which may be
reasonably necessary or advisable to enable such sellers to consummate the
disposition in such jurisdictions of the securities to be sold by such
sellers, except that the Company shall not for any such purpose be
required to qualify generally to do business as a foreign corporation in
any jurisdiction wherein it would not but for the requirements of this
subdivision (iv) be obligated to be so qualified or to consent to general
service of process in any such jurisdiction;
(v) use its best efforts to cause all Registrable
Securities covered by such registration statement to be registered with or
approved by such other federal or state governmental agencies or
authorities as may be necessary in the reasonable opinion of counsel to
the Company and counsel to the seller or sellers of Registrable Securities
to enable the seller or sellers thereof to consummate the disposition of
such Registrable Securities;
<PAGE>
7
(vi) furnish at the effective date of such
registration statement to each seller of Registrable Securities, and each
such seller's underwriters, if any, a signed counterpart of:
(x) an opinion of counsel for the Company,
dated the effective date of such registration statement and, if
applicable, the date of the closing under the underwriting
agreement, and
(y) a "comfort" letter signed by the
independent public accountants who have certified the Company's
financial statements included or incorporated by reference in such
registration statement,
covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of the
accountants' comfort letter, with respect to events subsequent to the date
of such financial statements, as are customarily covered in opinions of
issuer's counsel and in accountants' comfort letters delivered to the
underwriters in underwritten public offerings of securities and, in the
case of the accountants' comfort letter, such other financial matters,
and, in the case of the legal opinion, such other legal matters, as the
underwriters may reasonably request;
(vii) notify each seller of Registrable Securities
covered by such registration statement at any time when a prospectus
relating thereto is required to be delivered under the Securities Act,
upon discovery that, or upon the happening of any event as a result of
which, the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading, in the light of the circumstances under
which they were made, and at the request of any such seller promptly
prepare and furnish to it a reasonable number of copies of a supplement to
or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such securities, such prospectus
shall not include 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 in the light of the circumstances under
which they were made;
(viii) otherwise use its best efforts to comply
with all applicable rules and regulations of the Commission, and make
available to its security holders, as soon as reasonably practicable (but
not more than eighteen months after the effective date of such
registration statement), an earnings statement covering the period of at
least twelve months beginning with the first full calendar month after the
effective date of such registration statement, which
<PAGE>
8
earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 promulgated thereunder;
(ix) provide and cause to be maintained a transfer
agent and registrar (which, in each case, may be the Company) for all
Registrable Securities covered by such registration statement from and
after a date not later than the effective date of such registration; and
(x) use its best efforts to list all Registrable
Securities covered by such registration statement on any national
securities exchange on which Registrable Securities of the same class
covered by such registration statement are then listed and, if no such
Registrable Securities are so listed, on any national securities exchange
on which the Common Stock is then listed.
The Company may require each seller of Registrable Securities as to which any
registration is being effected to furnish the Company (i) such information
regarding such seller and the distribution of such securities as the Company may
from time to time reasonably request in writing and (ii) if requested by the
Company an executed custody agreement and power of attorney in form and
substance reasonably satisfactory to the Company with respect to the Registrable
Securities to be registered pursuant to this Agreement.
Each holder of Registrable Securities agrees that, upon receipt of
any notice from the Company of the happening of any event of the kind described
in subdivision (vii) of this Section 2.3, such holder will forthwith discontinue
such holder's disposition of Registrable Securities pursuant to the registration
statement relating to such Registrable Securities until such holder's receipt of
the copies of the supplemented or amended prospectus contemplated by subdivision
(vii) of this Section 2.3 and, if so directed by the Company, will deliver to
the Company (at the Company's expense) all copies, other than permanent file
copies, then in such holder's possession of the prospectus relating to such
Registrable Securities current at the time of receipt of such notice.
2.4 Underwriting Offerings.
(a) Requested Underwritten Offerings. If requested by
the underwriters for any underwritten offering by holders of Registrable
Securities pursuant to a registration requested under Section 2.1, the Company
will enter into an underwriting agreement with such underwriters for such
offering, such agreement to be reasonably satisfactory in substance and form to
each such holder and the underwriters and to contain such representations and
warranties by the Company and such other terms as are generally prevailing in
agreements of that type, including, without limitation, indemnities to the
effect and to the extent provided in Section 2.7 or such
<PAGE>
9
other indemnities as are customarily received by underwriters in public
offerings of similar securities. The holders of the Registrable Securities
proposed to be sold by such underwriters will reasonably cooperate with the
Company in the negotiation of the underwriting agreement. Such holders of
Registrable Securities to be sold by such underwriters shall be parties to such
underwriting agreement and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of, the
Company to and for the benefit of such underwriters shall also be made to and
for the benefit of such holders of Registrable Securities and that any or all of
the conditions precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of such
holders of Registrable Securities. No holder of Registrable Securities shall be
required to make any representations or warranties to or agreements with the
Company other than representations, warranties or agreements regarding such
holder, such holder's Registrable Securities and such holder's intended method
of distribution or any other representations required by applicable law.
(b) Incidental Underwritten Offerings. If the Company
proposes to register any of its securities under the Securities Act as
contemplated by Section 2.2 and such securities are to be distributed by or
through one or more underwriters, the Company will, if requested by any
Requesting Holder of Registrable Securities, use its reasonable best efforts to
arrange for such underwriters to include all the Registrable Securities to be
offered and sold by such Requesting Holder among the securities of the Company
to be distributed by such underwriters, subject to the provisions of Section
2.2(b). The holders of Registrable Securities to be distributed by such
underwriters shall be parties to the underwriting agreement between the Company
and such underwriters and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of, the
Company to and for the benefit of such underwriters shall also be made to and
for the benefit of such holders of Registrable Securities and that any or all of
the conditions precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of such
holders of Registrable Securities. Any such Requesting Holder of Registrable
Securities shall not be required to make any representations or warranties to or
agreements with the Company or the underwriters other than representations,
warranties or agreements regarding such Requesting Holder, such Requesting
Holder's Registrable Securities and such Requesting Holder's intended method of
distribution or any other representations required by applicable law.
2.5 Preparation; Reasonable Investigation. In connection with
the preparation and filing of each registration statement under the Securities
Act pursuant to this Agreement, the Company will give the holders of Registrable
Securities to be registered under such registration statement, their
underwriters, if any, and their respective counsel the opportunity to
participate in the preparation of such registration statement, each prospectus
included therein or filed with the Commission, and each
<PAGE>
10
amendment thereof or supplement thereto, and will give each of them such
reasonable access to its books and records and such opportunities to discuss the
business of the Company with its officers and the independent public accountants
who have certified its financial statements as shall be necessary, in the
opinion of such holders' and such underwriters' respective counsel, to conduct a
reasonable investigation within the meaning of the Securities Act.
2.6 Limitations, Conditions and Qualifications to Obligations
under Registration Covenants. The Company shall be entitled to postpone for a
reasonable period of time (but not exceeding 90 days) the filing of any
registration statement otherwise required to be prepared and filed by it
pursuant to Section 2.1 if the Company determines, in its reasonable judgment,
that such registration and offering would interfere with any financing,
acquisition, corporate reorganization or other material transaction involving
the Company and promptly gives the holders of Registrable Securities requesting
registration thereof pursuant to Section 2.1 written notice of such
determination, containing a general statement of the reasons for such
postponement and an approximation of the anticipated delay. If the Company shall
so postpone the filing of a registration statement, holders of Registrable
Securities requesting registration thereof pursuant to Section 2.1, representing
not less than 50% of the Registrable Securities with respect to which
registration has been requested, shall have the right to withdraw the request
for registration by giving written notice to the Company within 30 days after
receipt of the notice of postponement and, in the event of such withdrawal, such
request shall not be counted for purposes of the requests for registration to
which holders of Registrable Securities are entitled pursuant to Section 2.1
hereof.
2.7 Indemnification.
(a) Indemnification by the Company. The Company will,
and hereby does, indemnify and hold harmless, in the case of any registration
statement filed pursuant to Section 2.1 or 2.2, each seller of any Registrable
Securities covered by such registration statement and each other Person who
participates as an underwriter in the offering or sale of such securities and
each other Person, if any, who controls such seller or any such underwriter
within the meaning of the Securities Act or the Exchange Act, and their
respective directors, officers, partners, agents and affiliates, against any
losses, claims, damages or liabilities, joint or several, to which such seller
or underwriter or any such director, officer, partner, agent, affiliate or
controlling person may become subject under the Securities Act or otherwise,
including, without limitation, the reasonable fees and expenses of legal
counsel, insofar as such losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which such
securities were registered under the Securities Act, any
<PAGE>
11
preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and the Company will
reimburse such seller or underwriter and each such director, officer, partner,
agent, affiliate and controlling Person for any reasonable legal or any other
expenses incurred by them in connection with investigating or defending any such
loss, claim, liability, action or proceeding; provided, however, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage, liability (or action or proceeding in respect thereof) or expense
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in such registration statement, any such
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement in reliance upon and in conformity with written information furnished
to the Company by or on behalf of such seller or underwriter, as the case may
be, specifically stating that it is for use in the preparation thereof;
provided, further, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage, liability or expense arises out of or
is based upon an untrue statement or alleged untrue statement of any material
fact contained in any such registration statement, preliminary prospectus, final
prospectus or summary prospectus contained therein or any omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein in light of the circumstances in which they were made not
misleading in a prospectus or prospectus supplement, if (i) such untrue
statement or omission is completely corrected in an amendment or supplement to
such prospectus or prospectus supplement, the seller of the Registrable
Securities has an obligation under the Securities Act to deliver a prospectus or
prospectus supplement in connection with such sale of Registrable Securities and
the seller of Registrable Securities thereafter fails to deliver such prospectus
or prospectus supplement as so amended or supplemented prior to or concurrently
with the sale of Registrable Securities to the person asserting such loss,
claim, damage or liability after the Company has furnished such seller with a
sufficient number of copies of the same or (ii) if the seller received written
notice from the Company of the existence of such an untrue statement or such an
omission and the seller continued to dispose of Registrable Securities prior to
the time of the receipt of either (a) an amended or supplemented prospectus or
prospectus supplement that completely corrected the untrue statement or the
omission or (b) a notice from the Company that the use of the existing
prospectus or prospectus supplement may be resumed. Such indemnity shall remain
in full force and effect regardless of any investigation made by or on behalf of
such seller or underwriter or any such director, officer, partner, agent,
affiliate or controlling person and shall survive the transfer of such
securities by such seller or underwriter.
(b) Indemnification by the Sellers. As a condition to
including any Registrable Securities in any registration statement, the Company
shall have received an undertaking reasonably satisfactory to it from the
prospective seller of
<PAGE>
12
such Registrable Securities, to indemnify and hold harmless (in the same manner
and to the same extent as set forth in Section 2.7(a)) the Company, and each
director of the Company, each officer of the Company and each other Person, if
any, who participates as an underwriter in the offering or sale of such
securities and each other Person who controls the Company or any such
underwriter within the meaning of the Securities Act or the Exchange Act, with
respect to any statement or alleged statement in or omission or alleged omission
from such registration statement, any preliminary prospectus, final prospectus
or summary prospectus contained therein, or any amendment or supplement thereto,
if such statement or alleged statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished to the
Company by such seller specifically stating that it is for use in the
preparation of such registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement; provided however, that
the liability of such indemnifying party under this Section 2.7(b) shall be
limited to the amount of proceeds received by such indemnifying party in the
offering giving rise to such liability. Such indemnity shall remain in full
force and effect, regardless of any investigation made by or on behalf of the
Company or any such director, officer or controlling person and shall survive
the transfer of such securities by such seller.
(c) Notices of Claims, etc. Promptly after receipt by an
indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in Section 2.7(a) or (b), such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying party,
give written notice to the latter of the commencement of such action; provided,
however, that the failure of any indemnified party to give notice as provided
herein shall not relieve the indemnifying party of its obligations under the
preceding subdivisions of this Section 2.7, except to the extent that the
indemnifying party is actually and materially prejudiced by such failure to give
notice. In case any such action shall be brought against any indemnified party
and it shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it may wish, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; provided, however, that any indemnified
party may, at its own expense, retain separate counsel to participate in such
defense. Notwithstanding the foregoing, in any action or proceeding in which
both the Company and an indemnified party is, or is reasonably likely to become,
a party, such indemnified party shall have the right to employ separate counsel
at the Company's expense and to control its own defense of such action or
proceeding if, in the reasonable opinion of counsel to such indemnified party,
(a) there are or may be legal defenses available to such indemnified party or to
other indemnified parties that are different from or additional to those
available to the Company or (b) any conflict or potential conflict exists
between the Company and such indemnified party that would make such separate
representation advisable; provided, however, that in no event shall the Company
be required to pay fees and expenses under this Section 2.7 for more than
<PAGE>
13
one firm of attorneys representing the indemnified parties (together, if
appropriate, with one firm of local counsel per jurisdiction) in any one legal
action or group of related legal actions. No indemnifying party shall be liable
for any settlement of any action or proceeding effected without its written
consent, which consent shall not be unreasonably withheld. No indemnifying party
shall, without the consent of the indemnified party, which consent shall not be
unreasonably withheld, consent to entry of any judgment or enter into any
settlement which does not include as a term thereof the giving by the claimant
or plaintiff to such indemnified party of a release from all liability in
respect to such claim or litigation or which requires action other than the
payment of money by the indemnifying party.
(d) Contribution. If the indemnification provided for in
this Section 2.7 shall for any reason be held by a court to be unavailable to an
indemnified party under Section 2.7(a) or (b) hereof in respect of any loss,
claim, damage or liability, or any action in respect thereof, then, in lieu of
the amount paid or payable under Section 2.7(a) or (b), the indemnified party
and the indemnifying party under Section 2.7(a) or (b) shall contribute to the
aggregate losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating the same), (i) in
such proportion as is appropriate to reflect the relative fault of the Company
and the prospective sellers of Registrable Securities covered by the
registration statement which resulted in such loss, claim, damage or liability,
or action or proceeding in respect thereof, with respect to the statements or
omissions which resulted in such loss, claim, damage or liability, or action or
proceeding in respect thereof, as well as any other relevant equitable
considerations or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as shall be appropriate to
reflect the relative benefits received by the Company and such prospective
sellers from the offering of the securities covered by such registration
statement, provided, that for purposes of this clause (ii), the relative
benefits received by the prospective sellers shall be deemed not to exceed the
amount of proceeds received by such prospective sellers. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation. Such prospective sellers'
obligations to contribute as provided in this Section 2.7(d) are several in
proportion to the relative value of their respective Registrable Securities
covered by such registration statement and not joint. In addition, no Person
shall be obligated to contribute hereunder any amounts in payment for any
settlement of any action or claim effected without such Person's consent, which
consent shall not be unreasonably withheld.
(e) Other Indemnification. Indemnification and
contribution similar to that specified in the preceding subdivisions of this
Section 2.7 (with appropriate modifications) shall be given by the Company and
each seller of Registrable Securities with respect to any required registration
or other qualification of
<PAGE>
14
securities under any federal or state law or regulation of any governmental
authority other than the Securities Act.
(f) Indemnification Payments. The indemnification and
contribution required by this Section 2.7 shall be made by periodic payments of
the amount thereof during the course of the investigation or defense, as and
when bills are received or expense, loss, damage or liability is incurred.
3. Definitions. As used herein, unless the context otherwise
requires, the following terms have the following respective meanings:
"Child's Agreement" means the Registration Rights Agreement, dated
as of January 28, 1998, as amended, between Playtex Products, Inc. and J.W.
Childs Equity Partners L.P.
"Commission" means the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"Common Stock" shall mean and include the Common Stock, par value
$.O1 per share, of the Company and each other class of capital stock of the
Company that does not have a preference over any other class of capital stock of
the Company as to dividends or upon liquidation, dissolution or winding up of
the Company and, in each case, shall include any other class of capital stock of
the Company into which such stock is reclassified or reconstituted.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any superseding Federal statute, and the rules and regulations
promulgated thereunder, all as the same shall be in effect at the time.
Reference to a particular section of the Securities Exchange Act of 1934, as
amended, shall include a reference to the comparable section, if any, of any
such superseding Federal statute.
"HWH Agreement" means the Registration Rights Agreement dated as of
March 17, 1995, as amended, among the Company, HWH Capital Partners, L.P., HWH
Valentine Partners, L.P., and HWH Surplus Valentine Partner, L.P.
"Initiationing Holder" is defined in Section 2.1.
"Other Registration Rights Agreement" means each of the HWH
Agreement and the Childs Agreement.
"Person" means any individual, firm, corporation, partnership,
limited liability company or partnership, trust, incorporated or unincorporated
association, joint venture, joint stock company, government (or an agency or
political subdivision
<PAGE>
15
thereof) or other entity of any kind and shall include any successor (by merger
or otherwise) of such entity.
"Registrable Securities" means any Shares, any other shares of
Common Stock owned by the Principal Shareholder as of the date of this Agreement
(the "Currently Held Shares"), and any Related Registrable Securities. As to any
particular Registrable Securities, once issued, such securities shall cease to
be Registrable Securities when (a) a registration statement with respect to the
sale of such securities shall have become effective under the Securities Act and
such securities shall have been disposed of in accordance with such registration
statement, (b) they shall have been sold as permitted by Rule 144 (or any
successor provision) under the Securities Act, (c) they shall have been
otherwise transferred, new certificates for them not bearing a legend
restricting further transfer shall have been delivered by the Company and
subsequent public distribution of them shall not require registration of such
distribution under the Securities Act or (d) they shall have ceased to be
outstanding. All references to percentages of Registrable Securities shall be
calculated pursuant to Section 9.
"Registration Expenses" means all expenses incident to the Company's
performance of or compliance with Section 2, including, without limitation, all
registration and filing fees, all fees of the New York Stock Exchange, Inc.,
other national securities exchanges or the National Association of Securities
Dealers, Inc., all fees and expenses of complying with securities or blue sky
laws, all word processing, duplicating and printing expenses, messenger and
delivery expenses, the fees and disbursements of counsel for the Company and of
its independent public accountants, including the expenses of "comfort" letters
required by or incident to such performance and compliance, any fees and
disbursements of underwriters customarily paid by issuers or sellers of
securities (excluding any underwriting discounts or commissions with respect to
the Registrable Securities) and the reasonable fees and expenses of one counsel
to the Selling Holders (selected by Selling Holders representing at least 50% of
the Registrable Securities covered by such registration); provided, however,
that in the event the Company shall determine, in accordance with Section 2.2(a)
or Section 2.6, not to register any securities with respect to which it had
given written notice of its intention to so register to holders of Registrable
Securities, all of the costs of the type (and subject to any limitation to the
extent) set forth in this definition and incurred by Requesting Holders in
connection with such registration on or prior to the date the Company notifies
the Requesting Holders of such determination shall be deemed Registration
Expenses.
"Related Registrable Securities" means with respect to the Shares or
the Currently Held Shares any securities of the Company issued or issuable with
respect to any of the Shares or the Currently Held Shares by way of a dividend
or stock split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization or otherwise.
<PAGE>
16
"Requesting Holder" is defined in Section 2.2.
"Securities Act" means the Securities Act of 1933, as amended, or
any superseding Federal statute, and the rules and regulations promulgated
thereunder, all as the same shall be in effect at the time. References to a
particular section of the Securities Act of 1933, as amended, shall include a
reference to the comparable section, if any, of any such superseding Federal
statute.
"Securityholder" means any of the parties to each of the Other
Registration Rights Agreements, in each case other than the Company.
"Selling Holder" is defined in Section 2.1.
4. Rule 144. The Company shall take all actions reasonably necessary
to enable holders of Registrable Securities to sell such securities without
registration under the Securities Act within the limitation of the provisions of
(a) Rule 144 under the Securities Act, as such Rule may be amended from time to
time, or (b) any similar rules or regulations hereafter adopted by the
Commission. Upon the request of any holder of Registrable Securities, the
Company will deliver to such holder a written statement as to whether it has
complied with such requirements.
5. Amendments and Waivers. This Agreement may be amended with the
consent of the Company and the Company may take any action herein prohibited, or
omit to perform any act herein required to be performed by it, only if the
Company shall have obtained the written consent to such amendment, action or
omission to act, of the holder or holders of at least 66-2/3% of the Registrable
Securities affected by such amendment, action or omission to act. Each holder of
any Registrable Securities at the time or thereafter outstanding shall be bound
by any consent authorized by this Section 5, whether or not such Registrable
Securities shall have been marked to indicate such consent.
6. Nominees for Beneficial Owners. In the event that any Registrable
Securities are held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may, at its election in writing delivered to the
Company, be treated as the holder of such Registrable Securities for purposes of
any request or other action by any holder or holders of Registrable Securities
pursuant to this Agreement or any determination of any number or percentage of
shares of Registrable Securities held by any holder or holders of Registrable
Securities contemplated by this Agreement. If the beneficial owner of any
Registrable Securities so elects, the Company may require assurances reasonably
satisfactory to it of such owner's beneficial ownership of such Registrable
Securities.
<PAGE>
17
7. Notices. All notices, demands and other communications provided
for or permitted hereunder shall be made in writing and shall be by registered
or certified first-class mail, return receipt requested, telecopier, courier
service or personal delivery:
(a) if to the Principal Stockholder, addressed to it in the
manner set forth in the Purchase Agreement, or at such other address as it shall
have furnished to the Company in writing in the manner set forth herein;
(b) if to any other holder of Registrable Securities, at the
address that such holder shall have furnished to the Company in writing in the
manner set forth herein, or, until any such other holder so furnishes to the
Company an address, then to and at the address of the last holder of such
Registrable Securities who has furnished an address to the Company; or
(c) if to the Company, addressed to it in the manner set forth
in the Purchase Agreement, or at such other address as the Company shall have
furnished to each holder of Registrable Securities at the time outstanding in
the manner set forth herein.
All such notices and communications shall be deemed to have been
duly given: when delivered by hand, if personally delivered; when delivered by a
courier, if delivered by overnight courier service; three business days after
being deposited in the mail, postage prepaid, if mailed; and when receipt is
acknowledged, if telecopied.
8. Assignment. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and, with respect to the
Company, its respective successors and permitted assigns and, with respect to
the Principal Stockholder, any holder of at least 10% of the number of
outstanding Registrable Securities as of the Effective Date, subject to the
provisions respecting the minimum amount of Registrable Securities required in
order to be entitled to certain rights, or take certain actions, contained
herein. Except by operation of law, this Agreement may not be assigned by the
Company without the prior written consent of the holders of 66-2/3% of the
Registrable Securities outstanding at the time such consent is requested.
9. Calculation of Percentage Interests in Registrable Securities.
For purposes of this Agreement, all references to a percentage of the
Registrable Securities shall be calculated based upon the number of Registrable
Securities outstanding at the time such calculation is made.
10. No Inconsistent Agreements. The Company will not hereafter enter
into any agreement with respect to its securities which is inconsistent with the
<PAGE>
18
rights granted to the holders of Registrable Securities in this Agreement.
Without limiting the generality of the foregoing, the Company will not hereafter
enter into any agreement with respect to its securities which grants, or modify
any existing agreement with respect to its securities to grant, to the holder of
its securities in connection with an incidental registration of such securities,
higher priority to the rights granted under Section 2.
11. Remedies. Each holder of Registrable Securities, in addition to
being entitled to exercise all rights granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of this Agreement and hereby agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.
12. Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any way
impaired thereby, it being intended that all of the rights and privileges of the
Principal Stockholder shall be enforceable to the fullest extent permitted by
law.
13. Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein and therein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein and therein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
14. Heading. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
15. Governing Law. This Agreement has been negotiated, executed and
delivered in the State of New York and shall be governed by and construed in
accordance with the laws of the State of New York, without regard to principles
of conflicts of law.
16. Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed an original and all of which taken together
shall constitute one and the same instrument.
<PAGE>
19
17. Termination. Upon termination of the Purchase Agreement, in
accordance with Section 2(d) thereof, this Agreement shall terminate
automatically. In addition, this Agreement shall terminate in the event that
Registrable Securities constitute less than 5% of the outstanding Company's
Common Stock.
<PAGE>
20
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their respective representatives hereunto duly
authorized as of the date first above written.
PLAYTEX PRODUCTS, INC.
By:_________________________
Name:
Title:
RCBA PLAYTEX, L.P.
By:_________________________
Name:
Title:
<PAGE>
Exhibit 10.5
================================================================================
FIRST AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
among
PLAYTEX PRODUCTS, INC.,
HWH CAPITAL PARTNERS, L.P.,
HWH VALENTINE PARTNERS, L.P.
and
HWH SURPLUS VALENTINE PARTNERS, L.P.
_______________________________________
Dated as of June 1, 1998
_______________________________________
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
1. Background. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Registration Under Securities Act, etc. . . . . . . . . . . . . . . . . 1
2.1 Registration on Request. . . . . . . . . . . . . . . . . . . . . 1
2.2 Incidental Registration. . . . . . . . . . . . . . . . . . . . . 4
2.3 Registration Procedures. . . . . . . . . . . . . . . . . . . . . 5
2.4 Underwritten Offerings . . . . . . . . . . . . . . . . . . . . . 9
2.5 Preparation; Reasonable Investigation. . . . . . . . . . . . . . 10
2.6 Limitations, Conditions and Qualifications to Obligations under
Registration Covenants . . . . . . . . . . . . . . . . . . . . . 10
2.7 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . 10
3. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4. Rule 144. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5. Amendments and Waivers. . . . . . . . . . . . . . . . . . . . . . . . . 16
6. Nominees for Beneficial Owners. . . . . . . . . . . . . . . . . . . . . 16
7. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
8. Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
9. Calculation of Percentage Interests in Registrable Securities . . . . . 17
10. No Inconsistent Agreements. . . . . . . . . . . . . . . . . . . . . . . 17
11. Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
12. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
13. Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
14. Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
15. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
16. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
17. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
i
<PAGE>
FIRST AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT, dated as of
March 17, 1995, as amended and restated as of June 1, 1998, among PLAYTEX
PRODUCTS, INC., a Delaware corporation (the "Company"), HWH CAPITAL PARTNERS,
L.P., a Delaware limited partnership ("HWH"), HWH VALENTINE PARTNERS, L.P., a
Delaware limited partnership ("HWHV"), HWH Surplus Valentine Partners, L.P.
("HSVP" and, together with HWH and HWHV, the "Purchasers").
The parties hereby agree as follows:
1. BACKGROUND.
(a) There is a Stock Purchase Agreement dated as of June 1,
1998 (the "Purchase Agreement"), between RCBA PLAYTEX, L.P., a Delaware limited
partnership ("Blum"), and J.W. Childs Equity Partners, L.P. ("Childs LP"),
pursuant to which Blum has agreed to purchase 6,000,000 shares of the Company's
common stock, par value $.01 ("Common Stock") from Childs LP; and
(b) This Agreement, as amended and restated, herein, shall
be effective upon (and only upon) the Closing (as defined in the Purchase
Agreement, and hereinafter referred to as the "Effective Date"). In the event
the Purchase Agreement is terminated, this Agreement shall be deemed not to have
been so amended and restated and shall remain in full force and effect in the
form it existed immediately prior to the date hereof. Capitalized terms used
herein and not otherwise defined shall have the meanings given them in
Section 3.
2. REGISTRATION UNDER SECURITIES ACT, ETC.
2.1 REGISTRATION ON REQUEST.
(a) REQUEST. At any time, upon the written request of one
or more holders (the "Initiating Holders") of Registrable Securities that the
Company effect the registration under the Securities Act of all or part of such
Initiating Holders' Registrable Securities, the Company promptly will give
written notice of such requested registration to all registered holders of
Registrable Securities, and thereupon the Company will use its best efforts to
effect, at the earliest possible date, the registration under the Securities Act
of:
(i) the Registrable Securities which the Company
has been so requested to register by such Initiating Holders; and
<PAGE>
2
(ii) all other Registrable Securities which the
Company has been requested to register by the holders thereof (such holders
together with the Initiating Holders hereinafter are referred to as the
"Selling Holders") by written request given to the Company within 30 days
after the giving of such written notice by the Company, all to the extent
necessary to permit the disposition of the Registrable Securities so to be
registered.
(b) REGISTRATION OF OTHER SECURITIES. Whenever the Company
shall effect a registration pursuant to this Section 2.1, no securities other
than Registrable Securities shall be included among the securities covered by
such registration unless the Selling Holders of not less than 66-2/3% of all
Registrable Securities to be covered by such registration shall have consented
in writing to the inclusion of such other securities; PROVIDED, HOWEVER, that
such consent shall not be required with respect to securities being registered
pursuant to the Other Registration Rights Agreements.
(c) REGISTRATION STATEMENT FORM. Registrations under this
Section 2.1 shall be on such appropriate registration form of the Commission as
shall be reasonably selected by the Company.
(d) EFFECTIVE REGISTRATION STATEMENT. A registration
requested pursuant to this Section 2.1 shall not be deemed to have been effected
(i) unless a registration statement with respect thereto has become effective
and remained effective in compliance with the provisions of the Securities Act
with respect to the disposition of all Registrable Securities covered by such
registration statement until such time as all of such Registrable Securities
have been disposed of in accordance with the intended methods of disposition by
the seller or sellers thereof set forth in such registration statement (unless
the failure to so dispose of such Registrable Securities shall be caused solely
by reason of a failure on the part of the Selling Holders); PROVIDED, that such
period need not exceed 135 days; (ii) if after it has become effective, such
registration is interfered with by any stop order, injunction or other order or
requirement of the Commission or other governmental agency or court for any
reason not attributable solely to the Selling Holders, or (iii) if the
conditions to closing specified in the underwriting agreement, if any, entered
into in connection with such registration are not satisfied or waived, other
than solely by reason of a failure on the part of the Selling Holders.
(e) SELECTION OF UNDERWRITERS. The underwriter or
underwriters of each underwritten offering of the Registrable Securities so to
be registered shall be selected by the Selling Holders of more than 50% of each
class of Registrable Securities to be included in such registration and shall be
reasonably acceptable to the Company.
<PAGE>
3
(f) PRIORITY IN REQUESTED REGISTRATION. If the managing
underwriter of any underwritten offering shall advise the Company in writing
(and the Company shall so advise each Selling Holder of Registrable Securities
requesting registration of such advice) that, in its opinion, the number of
securities requested to be included in such registration exceeds the number
which can be sold in such offering within a price range acceptable to the
Selling Holders of 66-2/3% of the Registrable Securities requested to be
included in such registration, the Company, except as provided in the following
sentence, will include in such registration, to the extent of the number and
type which the Company is so advised can be sold in such offering, FIRST,
Registrable Securities requested to be included in such registration, PRO RATA
(based on the number of Registrable Securities held by each of the Selling
Holders) among the Selling Holders requesting such registration, SECOND, such
Registrable Securities (as defined in the Other Registration Rights Agreements
and hereinafter referred to as "Third Party Securities") requested to be
included in such registration pursuant to the Other Registration Rights
Agreements, PRO RATA (based on the number of Third Party Securities requested by
each Securityholder requesting such registration) among the Securityholders
requesting such registration and THIRD, all securities to be sold by the Company
for its own account. Notwithstanding the foregoing, if the total number of
Registrable Securities requested to be included in any registration cannot be
included, holders of Registrable Securities requesting registration thereof
pursuant to Section 2.1, representing not less than 50% of the Registrable
Securities with respect to which registration has been requested, shall have the
right to withdraw the request for registration by giving written notice to the
Company within 20 days after receipt of the notice from the managing underwriter
described above by the Company and, in the event of such withdrawal, such
request shall not be counted for purposes of the requests for registration to
which holders of Registrable Securities are entitled pursuant to Section 2.1
hereof. If a request for registration is withdrawn pursuant to the immediately
preceding sentence and at least 80% of the Registrable Securities requested to
be included in such withdrawn registration could have been included therein, the
Registration Expenses incurred by the Company in connection with such withdrawn
registration shall be reimbursed by the Selling Holders, PRO RATA (based on the
number of Registrable Securities requested to be included therein) among the
Selling Holders.
(g) LIMITATIONS ON REGISTRATION REQUESTS. Notwithstanding
anything in this Section 2.1 to the contrary, in no event will the Company be
required to:
(i) effect, in the aggregate, more than four
registrations pursuant to this Section 2.1,
(ii) effect a registration pursuant to this
Section 2.1 within the six-month period occurring immediately subsequent to
the effec-
<PAGE>
4
tiveness (within the meaning of Section 2.1(d)) of a registration statement
filed pursuant to this Section 2.1, unless a majority of the Disinterested
Directors determines that effecting a second registration within the
six-month period would not have a material adverse effect on the market
price of the Common Stock; or
(iii) effect a registration pursuant to Section 2.1
covering less than 15% of the then outstanding Registrable Securities.
(h) EXPENSES. The Company will pay all Registration
Expenses in connection with any registrations requested pursuant to this
Section 2.1; PROVIDED, that after two registrations have been effected under
Section 2.1, the Selling Holders and the Company will pay Registration Expenses
in connection with any registration requested pursuant to this Section 2.1, PRO
RATA (based on the number of Registrable Securities included in such
registration by each Selling Holder and the number of securities included
therein by the Company) among the Selling Holders and the Company. Solely for
purposes of this Section 2.1(b), Third Party Securities included in a
registration requested pursuant to this Section 2.1 shall be considered
securities included therein by the Company.
2.2 INCIDENTAL REGISTRATION.
(a) RIGHT TO INCLUDE REGISTRABLE SECURITIES. If the
Company at any time proposes to register any of its Common Stock under the
Securities Act by registration on any form other than Forms S-4 or S-8, whether
or not for sale for its own account, it will each such time give prompt written
notice to all registered holders of Registrable Securities of its intention to
do so and of such holders' rights under this Section 2.2. Upon the written
request of any such holder (a "Requesting Holder"), made as promptly as
practicable and in any event within 30 days after the receipt of any such notice
from the Company (15 days if the Company states in such written notice or gives
telephonic or telecopied notice to all registered holders of Registrable
Securities, with written confirmation to follow promptly thereafter, that
(i) such registration will be on Form S-3 and (ii) such shorter period of time
is required because of a planned filing date) (which request shall specify the
Registrable Securities intended to be disposed of by such Requesting Holder),
the Company will use its best efforts to effect the registration under the
Securities Act of all Registrable Securities which the Company has been so
requested to register by the Requesting Holders thereof; PROVIDED, that prior to
the effective date of the registration statement filed in connection with such
registration, immediately upon notification to the Company from the managing
underwriter of the price at which such securities are to be sold, if such price
is below the price which any Requesting Holder shall have indicated to be
acceptable to such Requesting Holder, the Company shall so advise such
Requesting Holder of such price, and such Requesting Holder shall then have the
right
<PAGE>
5
to withdraw its request to have its Registrable Securities included in such
registration statement; PROVIDED, FURTHER, HOWEVER, that if, at any time after
giving written notice of its intention to register any securities and prior to
the effective date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to register or to
delay registration of such securities, the Company may, at its election, give
written notice of such determination to each Requesting Holder of Registrable
Securities and (x) in the case of a determination not to register, shall be
relieved of its obligation to register any Registrable Securities in connection
with such registration (but not from any obligation of the Company to pay the
Registration Expenses in connection therewith), without prejudice, however, to
the rights of any holder or holders of Registrable Securities entitled to do so
to cause such registration to be effected as a registration under Section 2.1,
and (y) in the case of a determination to delay registering, shall be permitted
to delay registering any Registrable Securities, for the same period as the
delay in registering such other securities. No registration effected under this
Section 2.2 shall relieve the Company of its obligation to effect any
registration upon request under Section 2.1.
(b) PRIORITY IN INCIDENTAL REGISTRATIONS. If the managing
underwriter of any underwritten offering shall inform the Company by letter of
its opinion that the number or type of Registrable Securities and Third Party
Securities requested to be included in such registration would materially
adversely affect such offering, and the Company has so advised the Requesting
Holders, then the Company will include in such registration, to the extent of
the number and type which the Company is so advised can be sold in (or during
the time of) such offering, FIRST, (x) if such registration is being effected
pursuant to the request of Securityholders under provisions of one of the Other
Registration Rights Agreements comparable to Section 2.1, all Third Party
Securities so requested by such Securityholders under such Other Registration
Rights Agreement, or (y) if such registration is not being so effected, all
securities of the Company to be sold for its own account, and SECOND, such
Registrable Securities requested to be included in such registration pursuant to
this Agreement and such Third Party Securities requested to be included in such
registration pursuant to the provisions of the Other Registration Rights
Agreements comparable to this Section 2.2, PRO RATA (based on the number of
Registrable Securities requested to be included therein by each Selling Holder
and the number of Third Party Securities requested to be included therein by
each Securityholder) among such Selling Holders and the Securityholders and
THIRD, if clause (x) of this Section 2.2(b) applies, all securities proposed by
the Company be sold for its own account.
(c) EXPENSES. The Company will pay all Registration
Expenses in connection with any registration contemplated pursuant to this
Section 2.2.
2.3 REGISTRATION PROCEDURES. If and when-ever the Company is
required to use its best efforts to effect the registration of any Registrable
Securities
<PAGE>
6
under the Securities Act as provided in Sections 2.1 and 2.2, the Company will,
as expeditiously as possible:
(i) prepare and (within 90 days after the end of
the period within which requests for registration may be given to the
Company) file with the Commission the requisite registration statement to
effect such registration and thereafter use its best efforts to cause such
registration statement to become effective; PROVIDED, HOWEVER, that the
Company may discontinue any registration of its securities which are not
Registrable Securities (and, under the circumstances specified in
Section 2.2(b), Registrable Securities) at any time prior to the effective
date of the registration statement relating thereto;
(ii) prepare and file with the Commission such
amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep such
registration statement effective in accordance with Section 2.1(d)(i)
hereof and to comply with the provisions of the Securities Act with respect
to the disposition of all Registrable Securities covered by such
registration statement until such time as all of such Registrable
Securities have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof set forth in such registration
statement; PROVIDED, that except with respect to any such registration
statement filed pursuant to Rule 415 under the Securities Act, such period
need not exceed 135 days;
(iii) furnish to each seller of Registrable
Securities covered by such registration statement, such number of conformed
copies of such registration statement and of each such amendment and
supplement thereto (in each case including all exhibits), such number of
copies of the prospectus contained in such registration statement
(including each preliminary prospectus and any summary prospectus) and any
other prospectus filed under Rule 424 under the Securities Act, in
conformity with the requirements of the Securities Act, and such other
documents, as such seller may reasonably request;
(iv) use its reasonable best efforts (x) to register
or qualify all Registrable Securities and other securities covered by such
registration statement under such other securities or blue sky laws of such
States of the United States of America where an exemption is not available
and as the sellers of Registrable Securities covered by such registration
statement shall reasonably request, (y) to keep such registration or
qualification in effect for so long as such registration statement remains
in effect and (z) to take any other action which may be reasonably
necessary or advisable to enable such sellers to consummate the disposition
in such jurisdictions of the securities to be sold by such sellers, except
that the Company shall not for any such purpose be required
<PAGE>
7
to qualify generally to do business as a foreign corporation in any
jurisdiction wherein it would not but for the requirements of this
subdivision (iv) be obligated to be so qualified or to consent to general
service of process in any such jurisdiction;
(v) use its best efforts to cause all Registrable
Securities covered by such registration statement to be registered with or
approved by such other federal or state governmental agencies or
authorities as may be necessary in the reasonable opinion of counsel to the
Company and counsel to the seller or sellers of Registrable Securities to
enable the seller or sellers thereof to consummate the disposition of such
Registrable Securities;
(vi) furnish at the effective date of such
registration statement to each seller of Registrable Securities, and each
such seller's underwriters, if any, a signed counterpart of:
(x) an opinion of counsel for the Company,
dated the effective date of such registration statement and, if
applicable, the date of the closing under the underwriting agreement,
and
(y) a "comfort" letter signed by the
independent public accountants who have certified the Company's
financial statements included or incorporated by reference in such
registration statement,
covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of the
accountants' comfort letter, with respect to events subsequent to the date
of such financial statements, as are customarily covered in opinions of
issuer's counsel and in accountants' comfort letters delivered to the
underwriters in underwritten public offerings of securities and, in the
case of the accountants' comfort letter, such other financial matters, and,
in the case of the legal opinion, such other legal matters, as the
underwriters may reasonably request;
(vii) notify each seller of Registrable Securities
covered by such registration statement at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, upon
discovery that, or upon the happening of any event as a result of which,
the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, in the light of the circumstances under
which they were made, and at the request of any such seller promptly
prepare and furnish to it a reasonable number of copies of a
<PAGE>
8
supplement to or an amendment of such prospectus as may be necessary so
that, as thereafter delivered to the purchasers of such securities, such
prospectus shall not include 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 in the light of the circumstances
under which they were made;
(viii) otherwise use its best efforts to comply with
all applicable rules and regulations of the Commission, and make available
to its security holders, as soon as reasonably practicable (but not more
than eighteen months after the effective date of such registration
statement), an earnings statement covering the period of at least twelve
months beginning with the first full calendar month after the effective
date of such registration statement, which earnings statement shall satisfy
the provisions of Section 11(a) of the Securities Act and Rule 158
promulgated thereunder;
(ix) provide and cause to be maintained a transfer
agent and registrar (which, in each case, may be the Company) for all
Registrable Securities covered by such registration statement from and
after a date not later than the effective date of such registration; and
(x) use its best efforts to list all Registrable
Securities covered by such registration statement on any national
securities exchange on which Registrable Securities of the same class
covered by such registration statement are then listed and, if no such
Registrable Securities are so listed, on any national securities exchange
on which the Common Stock is then listed.
The Company may require each seller of Registrable Securities as to which
any registration is being effected to furnish the Company (i) such information
regarding such seller and the distribution of such securities as the Company may
from time to time reasonably request in writing and (ii) if requested by the
Company, an executed custody agreement and power of attorney in form and
substance reasonably satisfactory to the Company with respect to the Registrable
Securities to be registered pursuant to this Agreement.
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
happening of any event of the kind described in subdivision (vii) of this
Section 2.3, such holder will forthwith discontinue such holder's disposition of
Registrable Securities pursuant to the registration statement relating to such
Registrable Securities until such holder's receipt of the copies of the
supplemented or amended prospectus contemplated by subdivision (vii) of this
Section 2.3 and, if so directed by the Company, will deliver to the Company (at
the Company's expense) all copies, other
<PAGE>
9
than permanent file copies, then in such holder's possession of the prospectus
relating to such Registrable Securities current at the time of receipt of such
notice.
2.4 UNDERWRITTEN OFFERINGS.
(a) REQUESTED UNDERWRITTEN OFFERINGS. If requested by the
underwriters for any underwritten offering by holders of Registrable Securities
pursuant to a registration requested under Section 2.1, the Company will enter
into an underwriting agreement with such underwriters for such offering, such
agreement to be reasonably satisfactory in substance and form to each such
holder and the underwriters and to contain such representations and warranties
by the Company and such other terms as are generally prevailing in agreements of
that type, including, without limitation, indemnities to the effect and to the
extent provided in Section 2.7 or such other indemnities as are customarily
received by underwriters in public offerings of similar securities. The holders
of the Registrable Securities proposed to be sold by such underwriters will
reasonably cooperate with the Company in the negotiation of the underwriting
agreement. Such holders of Registrable Securities to be sold by such
underwriters shall be parties to such underwriting agreement and may, at their
option, require that any or all of the representations and warranties by, and
the other agreements on the part of, the Company to and for the benefit of such
underwriters shall also be made to and for the benefit of such holders of
Registrable Securities and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement be conditions
precedent to the obligations of such holders of Registrable Securities. No
holder of Registrable Securities shall be required to make any representations
or warranties to or agreements with the Company other than representations,
warranties or agreements regarding such holder, such holder's Registrable
Securities and such holder's intended method of distribution or any other
representations required by applicable law.
(b) INCIDENTAL UNDERWRITTEN OFFERINGS. If the Company
proposes to register any of its securities under the Securities Act as
contemplated by Section 2.2 and such securities are to be distributed by or
through one or more underwriters, the Company will, if requested by any
Requesting Holder of Registrable Securities, use its reasonable best efforts to
arrange for such underwriters to include all the Registrable Securities to be
offered and sold by such Requesting Holder among the securities of the Company
to be distributed by such underwriters, subject to the provisions of
Section 2.2(b). The holders of Registrable Securities to be distributed by such
underwriters shall be parties to the underwriting agreement between the Company
and such underwriters and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of, the
Company to and for the benefit of such underwriters shall also be made to and
for the benefit of such holders of Registrable Securities and that any or all of
the conditions precedent to the obligations of such underwriters under such
underwriting agreement be
<PAGE>
10
conditions precedent to the obligations of such holders of Registrable
Securities. Any such Requesting Holder of Registrable Securities shall not be
required to make any representations or warranties to or agreements with the
Company or the underwriters other than representations, warranties or agreements
regarding such Requesting Holder, such Requesting Holder's Registrable
Securities and such Requesting Holder's intended method of distribution or any
other representations required by applicable law.
2.5 PREPARATION; REASONABLE INVESTIGATION. In connection with
the preparation and filing of each registration statement under the Securities
Act pursuant to this Agreement, the Company will give the holders of Registrable
Securities to be registered under such registration statement, their
underwriters, if any, and their respective counsel the opportunity to
participate in the preparation of such registration statement, each prospectus
included therein or filed with the Commission, and each amendment thereof or
supplement thereto, and will give each of them such reasonable access to its
books and records and such opportunities to discuss the business of the Company
with its officers and the independent public accountants who have certified its
financial statements as shall be necessary, in the opinion of such holders' and
such underwriters' respective counsel, to conduct a reasonable investigation
within the meaning of the Securities Act.
2.6 LIMITATIONS, CONDITIONS AND QUALIFICATIONS TO OBLIGATIONS
UNDER REGISTRATION COVENANTS. The Company shall be entitled to postpone for a
reasonable period of time (but not exceeding 90 days) the filing of any
registration statement otherwise required to be prepared and filed by it
pursuant to Section 2.1 if the Company determines, in its reasonable judgment,
that such registration and offering would interfere with any financing,
acquisition, corporate reorganization or other material transaction involving
the Company and promptly gives the holders of Registrable Securities requesting
registration thereof pursuant to Section 2.1 written notice of such
determination, containing a general statement of the reasons for such
postponement and an approximation of the anticipated delay. If the Company
shall so postpone the filing of a registration statement, holders of Registrable
Securities requesting registration thereof pursuant to Section 2.1, representing
not less than 50% of the Registrable Securities with respect to which
registration has been requested, shall have the right to withdraw the request
for registration by giving written notice to the Company within 30 days after
receipt of the notice of postponement and, in the event of such withdrawal, such
request shall not be counted for purposes of the requests for registration to
which holders of Registrable Securities are entitled pursuant to Section 2.1
hereof.
2.7 INDEMNIFICATION.
(a) INDEMNIFICATION BY THE COMPANY. The Company will, and
hereby does, indemnify and hold harmless, in the case of any registration
<PAGE>
11
statement filed pursuant to Section 2.1 or 2.2, each seller of any Registrable
Securities covered by such registration statement and each other Person who
participates as an underwriter in the offering or sale of such securities and
each other Person, if any, who controls such seller or any such underwriter
within the meaning of the Securities Act or the Exchange Act, and their
respective directors, officers, partners, agents and affiliates, against any
losses, claims, damages or liabilities, joint or several, to which such seller
or underwriter or any such director, officer, partner, agent, affiliate or
controlling person may become subject under the Securities Act or otherwise,
including, without limitation, the reasonable fees and expenses of legal
counsel, insofar as such losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which such
securities were registered under the Securities Act, any preliminary prospectus,
final prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and the Company will reimburse such seller or
underwriter and each such director, officer, partner, agent, affiliate and
controlling Person for any reasonable legal or any other expenses incurred by
them in connection with investigating or defending any such loss, claim,
liability, action or proceeding; PROVIDED, HOWEVER, that the Company shall not
be liable in any such case to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expense arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of such seller or underwriter, as the case may be,
specifically stating that it is for use in the preparation thereof; PROVIDED,
FURTHER, that the Company shall not be liable in any such case to the extent
that any such loss, claim, damage, liability or expense arises out of or is
based upon an untrue statement or alleged untrue statement of any material fact
contained in any such registration statement, preliminary prospectus, final
prospectus or summary prospectus contained therein or any omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein in light of the circumstances in which they were made not
misleading in a prospectus or prospectus supplement, if (i) such untrue
statement or omission is completely corrected in an amendment or supplement to
such prospectus or prospectus supplement, the seller of the Registrable
Securities has an obligation under the Securities Act to deliver a prospectus or
prospectus supplement in connection with such sale of Registrable Securities and
the seller of Registrable Securities thereafter fails to deliver such prospectus
or prospectus supplement as so amended or supplemented prior to or concurrently
with the sale of Registrable Securities to the person asserting such loss,
claim, damage or liability after the Company has furnished such seller with a
sufficient number of copies of the same or
<PAGE>
12
(ii) if the seller received written notice from the Company of the existence of
such an untrue statement or such an omission and the seller continued to dispose
of Registrable Securities prior to the time of the receipt of either (a) an
amended or supplemented prospectus or prospectus supplement that completely
corrected the untrue statement or the omission or (b) a notice from the Company
that the use of the existing prospectus or prospectus supplement may be resumed.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such seller or underwriter or any such
director, officer, partner, agent, affiliate or controlling person and shall
survive the transfer of such securities by such seller or underwriter.
(b) INDEMNIFICATION BY THE SELLERS. As a condition to
including any Registrable Securities in any registration statement, the Company
shall have received an undertaking reasonably satisfactory to it from the
prospective seller of such Registrable Securities, to indemnify and hold
harmless (in the same manner and to the same extent as set forth in
Section 2.7(a)) the Company, and each director of the Company, each officer of
the Company and each other Person, if any, who participates as an underwriter in
the offering or sale of such securities and each other Person who controls the
Company or any such underwriter within the meaning of the Securities Act or the
Exchange Act, with respect to any statement or alleged statement in or omission
or alleged omission from such registration statement, any preliminary
prospectus, final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, if such statement or alleged statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by such seller specifically stating
that it is for use in the preparation of such registration statement,
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement; PROVIDED, HOWEVER, that the liability of such indemnifying party
under this Section 2.7(b) shall be limited to the amount of proceeds received by
such indemnifying party in the offering giving rise to such liability. Such
indemnity shall remain in full force and effect, regardless of any investigation
made by or on behalf of the Company or any such director, officer or controlling
person and shall survive the transfer of such securities by such seller.
(c) NOTICES OF CLAIMS, ETC. Promptly after receipt by an
indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in Section 2.7(a) or (b), such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying party,
give written notice to the latter of the commencement of such action; PROVIDED,
HOWEVER, that the failure of any indemnified party to give notice as provided
herein shall not relieve the indemnifying party of its obligations under the
preceding subdivisions of this Section 2.7, except to the extent that the
indemnifying party is actually and materially prejudiced by such failure to give
notice. In case any such action shall be brought against any indemnified party
and it shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein
<PAGE>
13
and, to the extent that it may wish, to assume the defense thereof, with counsel
reasonably satisfactory to such indemnified party; PROVIDED, HOWEVER, that any
indemnified party may, at its own expense, retain separate counsel to
participate in such defense. Notwithstanding the foregoing, in any action or
proceeding in which both the Company and an indemnified party is, or is
reasonably likely to become, a party, such indemnified party shall have the
right to employ separate counsel at the Company's expense and to control its own
defense of such action or proceeding if, in the reasonable opinion of counsel to
such indemnified party, (a) there are or may be legal defenses available to such
indemnified party or to other indemnified parties that are different from or
additional to those available to the Company or (b) any conflict or potential
conflict exists between the Company and such indemnified party that would make
such separate representation advisable; PROVIDED, HOWEVER, that in no event
shall the Company be required to pay fees and expenses under this Section 2.7
for more than one firm of attorneys representing the indemnified parties
(together, if appropriate, with one firm of local counsel per jurisdiction) in
any one legal action or group of related legal actions. No indemnifying party
shall be liable for any settlement of any action or proceeding effected without
its written consent, which consent shall not be unreasonably withheld. No
indemnifying party shall, without the consent of the indemnified party, which
consent shall not be unreasonably withheld, consent to entry of any judgment or
enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect to such claim or litigation or which
requires action other than the payment of money by the indemnifying party.
(d) CONTRIBUTION. If the indemnification provided for in
this Section 2.7 shall for any reason be held by a court to be unavailable to an
indemnified party under Section 2.7(a) or (b) hereof in respect of any loss,
claim, damage or liability, or any action in respect thereof, then, in lieu of
the amount paid or payable under Section 2.7(a) or (b), the indemnified party
and the indemnifying party under Section 2.7(a) or (b) shall contribute to the
aggregate losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating the same), (i) in
such proportion as is appropriate to reflect the relative fault of the Company
and the prospective sellers of Registrable Securities covered by the
registration statement which resulted in such loss, claim, damage or liability,
or action or proceeding in respect thereof, with respect to the statements or
omissions which resulted in such loss, claim, damage or liability, or action or
proceeding in respect thereof, as well as any other relevant equitable
considerations or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as shall be appropriate to
reflect the relative benefits received by the Company and such prospective
sellers from the offering of the securities covered by such registration
statement, PROVIDED, that for purposes of this clause (ii), the relative
benefits received by the prospective sellers shall be deemed not to exceed the
amount of proceeds received by such prospective sellers. No Person guilty of
fraudulent misrep-
<PAGE>
14
resentation (within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any Person who was not guilty of such fraudulent
misrepresentation. Such prospective sellers' obligations to contribute as
provided in this Section 2.7(d) are several in proportion to the relative value
of their respective Registrable Securities covered by such registration
statement and not joint. In addition, no Person shall be obligated to
contribute hereunder any amounts in payment for any settlement of any action or
claim effected without such Person's consent, which consent shall not be
unreasonably withheld.
(e) OTHER INDEMNIFICATION. Indemnification and
contribution similar to that specified in the preceding subdivisions of this
Section 2.7 (with appropriate modifications) shall be given by the Company and
each seller of Registrable Securities with respect to any required registration
or other qualification of securities under any federal or state law or
regulation of any governmental authority other than the Securities Act.
(f) INDEMNIFICATION PAYMENTS. The indemnification and
contribution required by this Section 2.7 shall be made by periodic payments of
the amount thereof during the course of the investigation or defense, as and
when bills are received or expense, loss, damage or liability is incurred.
3. DEFINITIONS. As used herein, unless the context otherwise
requires, the following terms have the following respective meanings:
"BLUM AGREEMENT" means the Registration Rights Agreement dated as of
June 1, 1998, between RCBA PLAYTEX, L.P. and the Company.
"CHILDS AGREEMENT" means the Registration Rights Agreement dated as of
January 28, 1998, as amended, between the Company and Childs LP.
"COMMISSION" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
"COMMON STOCK" shall mean and include the Common Stock, par value $.01
per share, of the Company and each other class of capital stock of the Company
that does not have a preference over any other class of capital stock of the
Company as to dividends or upon liquidation, dissolution or winding up of the
Company and, in each case, shall include any other class of capital stock of the
Company into which such stock is reclassified or reconstituted.
"DISINTERESTED DIRECTOR" means, with respect to any transaction or
series of related transactions, a member of the board of directors of the
Company who does
<PAGE>
15
not have any material direct or indirect financial interest in or with respect
to such transaction or series of related transactions.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
or any superseding Federal statute, and the rules and regulations promulgated
thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Securities Exchange Act of 1934, as amended, shall
include a reference to the comparable section, if any, of any such superseding
Federal statute.
"INITIATING HOLDER" is defined in Section 2.1.
"OTHER REGISTRATION RIGHTS AGREEMENT" means each of the Blum Agreement
and the Childs Agreement.
"PERSON" means any individual, firm, corporation, partnership, limited
liability company or partnership, trust, incorporated or unincorporated
association, joint venture, joint stock company, government (or an agency or
political subdivision thereof) or other entity of any kind and shall include any
successor (by merger or otherwise) of such entity.
"REGISTRABLE SECURITIES" means any Shares and any Related Registrable
Securities. As to any particular Registrable Securities, once issued, such
securities shall cease to be Registrable Securities when (a) a registration
statement with respect to the sale of such securities shall have become
effective under the Securities Act and such securities shall have been disposed
of in accordance with such registration statement, (b) they shall have been sold
as permitted by Rule 144 (or any successor provision) under the Securities Act,
(c) they shall have been otherwise transferred, new certificates for them not
bearing a legend restricting further transfer shall have been delivered by the
Company and subsequent public distribution of them shall not require
registration of such distribution under the Securities Act or (d) they shall
have ceased to be outstanding. All references to percentages of Registrable
Securities shall be calculated pursuant to Section 9.
"REGISTRATION EXPENSES" means all expenses incident to the Company's
performance of or compliance with Section 2, including, without limitation, all
registration and filing fees, all fees of the New York Stock Exchange, Inc.,
other national securities exchanges or the National Association of Securities
Dealers, Inc., all fees and expenses of complying with securities or blue sky
laws, all word processing, duplicating and printing expenses, messenger and
delivery expenses, the fees and disbursements of counsel for the Company and of
its independent public accountants, including the expenses of "comfort" letters
required by or incident to such performance and compliance, any fees and
disbursements of underwriters customarily paid by issuers or sellers of
securities (excluding any underwriting discounts or commissions
<PAGE>
16
with respect to the Registrable Securities) and the reasonable fees and expenses
of one counsel to the Selling Holders (selected by Selling Holders representing
at least 50% of the Registrable Securities covered by such registration);
PROVIDED, HOWEVER, that in the event the Company shall determine, in accordance
with Section 2.2(a) or Section 2.6, not to register any securities with respect
to which it had given written notice of its intention to so register to holders
of Registrable Securities, all of the costs of the type (and subject to any
limitation to the extent) set forth in this definition and incurred by
Requesting Holders in connection with such registration on or prior to the date
the Company notifies the Requesting Holders of such determination shall be
deemed Registration Expenses.
"RELATED REGISTRABLE SECURITIES" means with respect to the Shares any
securities of the Company issued or issuable with respect to any of the Shares
by way of a dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization or
otherwise.
"REQUESTING HOLDER" is defined in Section 2.2.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
superseding Federal statute, and the rules and regulations promulgated
thereunder, all as the same shall be in effect at the time. References to a
particular section of the Securities Act of 1933, as amended, shall include a
reference to the comparable section, if any, of any such superseding Federal
statute.
"SECURITYHOLDER" means any of the parties to each of the Other
Registration Rights Agreements, in each case other than the Company.
"SELLING HOLDER" is defined in Section 2.1.
4. RULE 144. The Company shall take all actions reasonably
necessary to enable holders of Registrable Securities to sell such securities
without registration under the Securities Act within the limitation of the
provisions of (a) Rule 144 under the Securities Act, as such Rule may be amended
from time to time, or (b) any similar rules or regulations hereafter adopted by
the Commission. Upon the request of any holder of Registrable Securities, the
Company will deliver to such holder a written statement as to whether it has
complied with such requirements.
5. AMENDMENTS AND WAIVERS. This Agreement may be amended with the
consent of the Company and the Company may take any action herein prohibited, or
omit to perform any act herein required to be performed by it, only if the
Company shall have obtained the written consent to such amendment, action or
omission to act, of the holder or holders of at least 66-2/3% of the Registrable
Securities affected by such amendment, action or omission to act. Each holder
of any
<PAGE>
17
Registrable Securities at the time or thereafter outstanding shall be bound by
any consent authorized by this Section 5, whether or not such Registrable
Securities shall have been marked to indicate such consent.
6. NOMINEES FOR BENEFICIAL OWNERS. In the event that any
Registrable Securities are held by a nominee for the beneficial owner thereof,
the beneficial owner thereof may, at its election in writing delivered to the
Company, be treated as the holder of such Registrable Securities for purposes of
any request or other action by any holder or holders of Registrable Securities
pursuant to this Agreement or any determination of any number or percentage of
shares of Registrable Securities held by any holder or holders of Registrable
Securities contemplated by this Agreement. If the beneficial owner of any
Registrable Securities so elects, the Company may require assurances reasonably
satisfactory to it of such owner's beneficial ownership of such Registrable
Securities.
7. NOTICES. All notices, demands and other communications provided
for or permitted hereunder shall be made in writing and shall be by registered
or certified first-class mail, return receipt requested, telecopier, courier
service or personal delivery:
(a) if to the Purchasers, addressed to it in the manner set
forth in the Purchase Agreement, or at such other address as they shall have
furnished to the Company in writing in the manner set forth herein;
(b) if to any other holder of Registrable Securities, at the
address that such holder shall have furnished to the Company in writing in the
manner set forth herein, or, until any such other holder so furnishes to the
Company an address, then to and at the address of the last holder of such
Registrable Securities who has furnished an address to the Company; or
(c) if to the Company, addressed to it in the manner set forth
in the Purchase Agreement, or at such other address as the Company shall have
furnished to each holder of Registrable Securities at the time outstanding in
the manner set forth herein.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; when delivered by a
courier, if delivered by overnight courier service; three business days after
being deposited in the mail, postage prepaid, if mailed; and when receipt is
acknowledged, if telecopied.
8. ASSIGNMENT. This Agreement shall be binding upon and inure to
the benefit of and be enforceable by the parties hereto and, with respect to the
Company, its respective successors and permitted assigns and, with respect to
the
<PAGE>
18
Purchasers, any holder of any Registrable Securities, subject to the provisions
respecting the minimum amount of Registrable Securities required in order to be
entitled to certain rights, or take certain actions, contained herein. Except
by operation of law, this Agreement may not be assigned by the Company without
the prior written consent of the holders of 66-2/3% of the Registrable
Securities outstanding at the time such consent is requested.
9. CALCULATION OF PERCENTAGE INTERESTS IN REGISTRABLE SECURITIES.
For purposes of this Agreement, all references to a percentage of the
Registrable Securities shall be calculated based upon the number of Registrable
Securities outstanding at the time such calculation is made.
10. NO INCONSISTENT AGREEMENTS. The Company will not hereafter enter
into any agreement with respect to its securities which is inconsistent with the
rights granted to the holders of Registrable Securities in this Agreement.
Without limiting the generality of the foregoing, the Company will not hereafter
enter into any agreement with respect to its securities which grants, or modify
any existing agreement with respect to its securities to grant, to the holder of
its securities in connection with an incidental registration of such securities
equal or higher priority to the rights granted to the Purchasers under this
Section 2.
11. REMEDIES. Each holder of Registrable Securities, in addition to
being entitled to exercise all rights granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of this Agreement and hereby agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.
12. SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any way
impaired thereby, it being intended that all of the rights and privileges of the
Purchasers shall be enforceable to the fullest extent permitted by law.
13. ENTIRE AGREEMENT. This Agreement, together with the Purchase
Agreement (including the exhibits and schedules thereto), is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein and therein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein and therein.
<PAGE>
19
This Agreement and the Purchase Agreement (including the exhibits and schedules
thereto) supersede all prior agreements and understandings between the parties
with respect to such subject matter.
14. HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
15. GOVERNING LAW. This Agreement has been negotiated, executed and
delivered in the State of New York and shall be governed by and construed in
accordance with the laws of the State of New York, without regard to principles
of conflicts of law.
16. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed an original and all of which taken together
shall constitute one and the same instrument.
17. TERMINATION. Upon termination of the Purchase Agreement in
accordance with Section 10.1 thereof, this Agreement shall terminate
automatically.
[Remainder of page intentionally left blank]
<PAGE>
20
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their respective representatives hereunto duly
authorized as of the date first above written.
PLAYTEX PRODUCTS, INC.
By: /s/ Michael F. Goss
-----------------------------------------------------
Name: Michael F. Goss
Title: Chief Financial Officer
HWH CAPITAL PARTNERS, L.P.
By: HWH, L.P., its general partner
By: HWH Corporation, its general partner
By: /s/ Douglas D. Wheat
-----------------------------------------------------
Name: Douglas D. Wheat
Title:
HWH VALENTINE PARTNERS, L.P.
By: HWH Valentine, L.P., its general partner
By: HWH Valentine Incorporated, its general partner
By: /s/ Douglas D. Wheat
-----------------------------------------------------
Name: Douglas D. Wheat
Title:
HWH SURPLUS VALENTINE PARTNERS, L.P.
By: HWH Valentine, L.P., its general partner
By: HWH Valentine Incorporated, its general partner
By: /s/ Douglas D. Wheat
-----------------------------------------------------
Name:
Title:
<PAGE>
Exhibit 10.6
================================================================================
FIRST AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
between
PLAYTEX PRODUCTS, INC.
and
J.W. CHILDS EQUITY PARTNERS, L.P.
_______________________________________
Dated as of June 1, 1998
_______________________________________
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
1. Background. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Registration Under Securities Act . . . . . . . . . . . . . . . . . . . 1
2.1 Intentionally Omitted. . . . . . . . . . . . . . . . . . . . . . 1
2.2 Incidental Registration. . . . . . . . . . . . . . . . . . . . . 1
2.3 Registration Procedures. . . . . . . . . . . . . . . . . . . . . 3
2.4 Underwritten Offerings . . . . . . . . . . . . . . . . . . . . . 6
2.5 Preparation; Reasonable Investigation. . . . . . . . . . . . . . 6
2.6 Intentionally Omitted. . . . . . . . . . . . . . . . . . . . . . 7
2.7 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . 7
3. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4. Rule 144 and Rule 144A. . . . . . . . . . . . . . . . . . . . . . . . . 12
5. Amendments and Waivers. . . . . . . . . . . . . . . . . . . . . . . . . 12
6. Nominees for Beneficial Owners. . . . . . . . . . . . . . . . . . . . . 12
7. Appointment of Representative . . . . . . . . . . . . . . . . . . . . . 13
8. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
9. Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
10. Calculation of Percentage Interests in Registrable Securities . . . . . 14
11. No Inconsistent Agreements. . . . . . . . . . . . . . . . . . . . . . . 14
12. Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
13. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
14. Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
15. Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
16. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
17. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
i
<PAGE>
FIRST AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (the
"Agreement"), dated as of January 28, 1998, as amended and restated as of
June 1, 1998, between PLAYTEX PRODUCTS, INC., a Delaware corporation (the
"Company") and J.W. CHILDS EQUITY PARTNERS, L.P., a Delaware limited partnership
(the "Principal Stockholder") and the other persons who are set forth in
Schedule A thereto (collectively with the Principal Stockholder, the "Childs
Holders").
The parties hereby agree as follows:
1. BACKGROUND.
(a) The Principal Stockholder is a party to a Stock
Purchase Agreement dated as of June 1, 1998 (the "Purchase Agreement") between
the Principal Stockholder and RCBA Playtex, L.P. (the "Buyer"), pursuant to
which the Principal Stockholder has agreed to sell 6,000,000 shares of Common
Stock, par value $.01 ("Common Stock") to the Buyer. The shares of Common Stock
received by the Childs Holders in the merger of PCG Acquisition Corp. and
Personal Care Holdings, Inc. which are held by the Childs Holders immediately
after the Closing (as defined in the Purchase Agreement) (the "Closing") shall
be referred to in this Agreement as the "Shares."
(b) This First Amended and Restated Agreement, as
amended and restated herein, shall become effective upon (and only upon) the
Closing. In the event the Purchase Agreement is terminated, the Agreement shall
be deemed not to have been so amended and restated and shall remain in full
force and effect in the form it existed immediately prior to its amendment and
restatement on the date hereof.
2. REGISTRATION UNDER SECURITIES ACT.
2.1 Intentionally Omitted.
2.2 INCIDENTAL REGISTRATION.
(a) RIGHT TO INCLUDE REGISTRABLE SECURITIES. If the
Company at any time proposes to register any of its Common Stock under the
Securities Act by registration on any form other than Forms S-4 or S-8, whether
or not for sale for its own account and any Securityholder is requesting
Registrable Securities (as defined in the Other Registration Rights Agreements,
referred to herein as "Third Party Securities") be included in such
registration, the Company will each such time give prompt written notice to all
registered holders of Registrable Securities of its intention to do so and of
such holders' rights under this Section 2.2. Upon the written
<PAGE>
2
request of any such holder (a "Requesting Holder") (which request (i) should
specify the Registrable Securities intended to be disposed of by such Requesting
Holder and (ii) when aggregated with all other requests from Requesting Holders
under this Agreement, must include at least 250,000 shares of Registrable
Securities (including at least 50,000 shares of Registrable Securities owned by
the Principal Stockholder or any transferee thereof pursuant to Section 9
hereof)), made as promptly as practicable and in any event within 30 days after
the receipt of any such notice from the Company (15 days if the Company states
in such written notice or gives telephonic or telecopied notice to all
registered holders of Registrable Securities, with written confirmation to
follow promptly thereafter, that (i) such registration will be on Form S-3 and
(ii) such shorter period of time is required because of a planned filing date),
the Company will use its best efforts to effect the registration under the
Securities Act of all Registrable Securities which the Company has been so
requested to register by the Requesting Holders thereof; PROVIDED, that prior to
the effective date of the registration statement filed in connection with such
registration, promptly upon notification to the Company from the managing
underwriter of the price at which such securities are to be sold, if such price
is below the price which any Requesting Holder shall have indicated to be
acceptable to such Requesting Holder, the Company shall so advise such
Requesting Holder of such price, and such Requesting Holder shall then have the
right to withdraw promptly its request to have its Registrable Securities
included in such registration statement; PROVIDED, FURTHER, HOWEVER, that if, at
any time after giving written notice of its intention to register any securities
and prior to the effective date of the registration statement filed in
connection with such registration, the Company shall determine for any reason
not to register or to delay registration of such securities, the Company may, at
its election, give written notice of such determination to each Requesting
Holder of Registrable Securities and (x) in the case of a determination not to
register, shall be relieved of its obligation to register any Registrable
Securities in connection with such registration (but not from any obligation of
the Company to pay the Registration Expenses in connection therewith), and (y)
in the case of a determination to delay registering, shall be permitted to delay
registering any Registrable Securities, for the same period as the delay in
registering such other securities.
(b) PRIORITY IN INCIDENTAL REGISTRATIONS. If the
managing underwriter of any underwritten offering shall inform the Company by
letter of its opinion that the number or type of Registrable Securities and the
Third Party Securities requested to be included in such registration would
materially adversely affect such offering, and the Company has so advised the
Requesting Holders, then the Company will include in such registration, to the
extent of the number and type which the Company is so advised can be sold in (or
during the time of) such offering, FIRST, (x) if such registration is being
effected pursuant to the request of Securityholders under the demand
registration provisions of one of the Other Registration Rights Agreements, all
Third Party Securities so requested by such Securityholders under such
<PAGE>
3
Other Registration Rights Agreement, or (y) if such registration is not being so
effected, all securities of the Company to be sold for its own account, and
SECOND, such Registrable Securities requested to be included in such
registration pursuant to this Agreement and such Third Party Securities
requested to be included in such registration pursuant to the provisions of the
Other Registration Rights Agreements comparable to this Section 2.2, PRO RATA
(based on the number of Registrable Securities requested to be included therein
by each Requesting Holder and the number of Third Party Securities requested to
be included therein by each Securityholder) among such Requesting Holders and
the Securityholders and THIRD, if clause (x) of this Section 2.2(b) applies, all
securities proposed by the Company to be sold for its own account.
(c) EXPENSES. The Company will pay all Registration
Expenses in connection with any registration contemplated pursuant to this
Section 2.2.
2.3 REGISTRATION PROCEDURES. If and whenever the Company is
required to use its best efforts to effect the registration of any Registrable
Securities under the Securities Act as provided in Section 2.2, the Company
will, as expeditiously as possible:
(i) prepare and (within 90 days after the end of the
period within which requests for registration may be given to the Company)
file with the Commission the requisite registration statement to effect
such registration and thereafter use its best efforts to cause such
registration statement to become effective; PROVIDED, HOWEVER, that the
Company may discontinue any registration of its securities which are not
Registrable Securities (and, under the circumstances specified in
Section 2.2(a), Registrable Securities) at any time prior to the effective
date of the registration statement relating thereto;
(ii) Intentionally Omitted;
(iii) furnish to each seller of Registrable Securities
covered by such registration statement, such number of conformed copies of
such registration statement and of each such amendment and supplement
thereto (in each case including all exhibits), such number of copies of the
prospectus contained in such registration statement (including each
preliminary prospectus and any summary prospectus) and any other prospectus
filed under Rule 424 under the Securities Act, in conformity with the
requirements of the Securities Act, and such other documents, as such
seller may reasonably request;
(iv) use its reasonable best efforts (x) to register or
qualify all Registrable Securities and other securities covered by such
registration statement under such other securities or blue sky laws of such
States
<PAGE>
4
of the United States of America where an exemption is not available and as
the sellers of Registrable Securities covered by such registration
statement shall reasonably request, (y) to keep such registration or
qualification in effect for so long as such registration statement remains
in effect and (z) to take any other action which may be reasonably
necessary or advisable to enable such sellers to consummate the disposition
in such jurisdictions of the securities to be sold by such sellers, except
that the Company shall not for any such purpose be required to qualify
generally to do business as a foreign corporation in any jurisdiction
wherein it would not but for the requirements of this subdivision (iv) be
obligated to be so qualified or to consent to general service of process in
any such jurisdiction;
(v) use its best efforts to cause all Registrable
Securities covered by such registration statement to be registered with or
approved by such other federal or state governmental agencies or
authorities as may be necessary in the reasonable opinion of counsel to the
Company and counsel to the seller or sellers of Registrable Securities to
enable the seller or sellers thereof to consummate the disposition of such
Registrable Securities;
(vi) furnish at the effective date of such registration
statement to each seller of Registrable Securities, and each such seller's
underwriters, if any, a signed counterpart of:
(x) an opinion of counsel for the Company, dated
the effective date of such registration statement and, if applicable,
the date of the closing under the underwriting agreement; and
(y) a "comfort" letter signed by the independent
public accountants who have certified the Company's financial
statements included or incorporated by reference in such registration
statement,
covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of the
accountants' comfort letter, with respect to events subsequent to the date
of such financial statements, as are customarily covered in opinions of
issuer's counsel and in accountants' comfort letters delivered to the
underwriters in underwritten public offerings of securities and, in the
case of the accountants' comfort letter, such other financial matters, and,
in the case of the legal opinion, such other legal matters, as the
underwriters may reasonably request;
<PAGE>
5
(vii) notify each seller of Registrable Securities
covered by such registration statement at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, upon
discovery that, or upon the happening of any event as a result of which,
the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, in the light of the circumstances under
which they were made, and at the request of any such seller promptly
prepare and furnish to it a reasonable number of copies of a supplement to
or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such securities, such prospectus
shall not include 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 in the light of the circumstances under
which they were made;
(viii) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available to
its security holders, as soon as reasonably practicable (but not more than
eighteen months after the effective date of such registration statement),
an earnings statement covering the period of at least twelve months
beginning with the first full calendar month after the effective date of
such registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 promulgated
thereunder;
(ix) provide and cause to be maintained a transfer agent
and registrar (which, in each case, may be the Company) for all Registrable
Securities covered by such registration statement from and after a date not
later than the effective date of such registration; and
(x) use its best efforts to list all Registrable
Securities covered by such registration statement on any national
securities exchange on which Registrable Securities of the same class
covered by such registration statement are then listed and, if no such
Registrable Securities are so listed, on any national securities exchange
on which the Common Stock is then listed.
The Company may require each seller of Registrable Securities as to
which any registration is being effected to furnish the Company such information
regarding such seller and the distribution of such securities as the Company may
from time to time reasonably request in writing.
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
<PAGE>
6
happening of any event of the kind described in subdivision (vii) of this
Section 2.3, such holder will forthwith discontinue such holder's disposition of
Registrable Securities pursuant to the registration statement relating to such
Registrable Securities until such holder's receipt of the copies of the
supplemented or amended prospectus contemplated by subdivision (vii) of this
Section 2.3 and, if so directed by the Company, will deliver to the Company (at
the Company's expense) all copies, other than permanent file copies, then in
such holder's possession of the prospectus relating to such Registrable
Securities current at the time of receipt of such notice.
2.4 UNDERWRITTEN OFFERINGS.
(a) Intentionally Omitted.
(b) INCIDENTAL UNDERWRITTEN OFFERINGS. If the Company
proposes to register any of its securities under the Securities Act as
contemplated by Section 2.2 and such securities are to be distributed by or
through one or more underwriters, the Company will, if requested by any
Requesting Holder of Registrable Securities, use its reasonable best efforts to
arrange for such underwriters to include all the Registrable Securities to be
offered and sold by such Requesting Holder among the securities of the Company
to be distributed by such underwriters, subject to the provisions of
Section 2.2(b). The holders of Registrable Securities to be distributed by such
underwriters shall be parties to the underwriting agreement between the Company
and such underwriters and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of, the
Company to and for the benefit of such underwriters shall also be made to and
for the benefit of such holders of Registrable Securities and that any or all of
the conditions precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of such
holders of Registrable Securities. Any such Requesting Holder of Registrable
Securities shall not be required to make any representations or warranties to or
agreements with the Company or the underwriters other than representations,
warranties or agreements regarding such Requesting Holder, such Requesting
Holder's Registrable Securities and such Requesting Holder's intended method of
distribution or any other representations required by applicable law.
2.5 PREPARATION; REASONABLE INVESTIGATION. In connection with
the preparation and filing of each registration statement under the Securities
Act pursuant to this Agreement, the Company will give the Childs Representative
on behalf of the holders of Registrable Securities to be registered under such
registration statement, their underwriters, if any, and their respective counsel
the opportunity to participate in the preparation of such registration
statement, each prospectus included therein or filed with the Commission, and
each amendment thereof or supplement thereto, and will give each of them such
reasonable access to its books and records and
<PAGE>
7
such opportunities to discuss the business of the Company with its officers and
the independent public accountants who have certified its financial statements
as shall be necessary, in the opinion of such holders' and such underwriters'
respective counsel, to conduct a reasonable investigation within the meaning of
the Securities Act.
2.6 Intentionally Omitted.
2.7 INDEMNIFICATION.
(a) INDEMNIFICATION BY THE COMPANY. The Company will,
and hereby does, indemnify and hold harmless, in the case of any registration
statement filed pursuant to Section 2.2, each seller of any Registrable
Securities covered by such registration statement and each other Person who
participates as an underwriter in the offering or sale of such securities and
each other Person, if any, who controls such seller or any such underwriter
within the meaning of the Securities Act or the Exchange Act, and their
respective directors, officers, partners, agents and affiliates, against any
losses, claims, damages or liabilities, joint or several, to which such seller
or underwriter or any such director, officer, partner, agent, affiliate or
controlling person may become subject under the Securities Act or otherwise,
including, without limitation, the reasonable fees and expenses of legal
counsel, insofar as such losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which such
securities were registered under the Securities Act, any preliminary prospectus,
final prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and the Company will reimburse such seller or
underwriter and each such director, officer, partner, agent, affiliate and
controlling Person for any reasonable legal or any other expenses incurred by
them in connection with investigating or defending any such loss, claim,
liability, action or proceeding; PROVIDED, HOWEVER, that the Company shall not
be liable in any such case to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expense arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of such seller or underwriter, as the case may be,
specifically stating that it is for use in the preparation thereof; PROVIDED,
FURTHER, that the Company shall not be liable in any such case to the extent
that any such loss, claim, damage, liability or expense arises out of or is
based upon an untrue statement or alleged untrue statement of any material fact
contained in any such registration
<PAGE>
8
statement, preliminary prospectus, final prospectus or summary prospectus
contained therein or any omission to state therein a material fact required to
be stated therein or necessary to make the statements therein in light of the
circumstances in which they were made not misleading in a prospectus or
prospectus supplement, if such untrue statement or omission is completely
corrected in an amendment or supplement to such prospectus or prospectus
supplement, the seller of the Registrable Securities has an obligation under the
Securities Act to deliver a prospectus or prospectus supplement in connection
with such sale of Registrable Securities and the seller of Registrable
Securities thereafter fails to deliver such prospectus or prospectus supplement
as so amended or supplemented prior to or concurrently with the sale of
Registrable Securities to the person asserting such loss, claim, damage or
liability after the Company has furnished such seller with a sufficient number
of copies of the same. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such seller or
underwriter or any such director, officer, partner, agent, affiliate or
controlling person and shall survive the transfer of such securities by such
seller or underwriter.
(b) INDEMNIFICATION BY THE SELLERS. As a condition to
including any Registrable Securities in any registration statement, the Company
shall have received an undertaking reasonably satisfactory to it from the
prospective seller of such Registrable Securities, to indemnify and hold
harmless (in the same manner and to the same extent as set forth in
Section 2.7(a)) the Company, and each director of the Company, each officer of
the Company and each other Person, if any, who participates as an underwriter in
the offering or sale of such securities and each other Person who controls the
Company or any such underwriter within the meaning of the Securities Act or the
Exchange Act, with respect to any statement or alleged statement in or omission
or alleged omission from such registration statement, any preliminary
prospectus, final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, if such statement or alleged statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by such seller specifically stating
that it is for use in the preparation of such registration statement,
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement; PROVIDED, HOWEVER, that the liability of such indemnifying party
under this Section 2.7(b) shall be limited to the amount of proceeds received by
such indemnifying party in the offering giving rise to such liability. Such
indemnity shall remain in full force and effect, regardless of any investigation
made by or on behalf of the Company or any such director, officer or controlling
person and shall survive the transfer of such securities by such seller.
(c) NOTICES OF CLAIMS, ETC. Promptly after receipt by
an indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in Section 2.7(a) or (b), such indemnified party
will, if a
<PAGE>
9
claim in respect thereof is to be made against an indemnifying party, give
written notice to the latter of the commencement of such action; PROVIDED,
HOWEVER, that the failure of any indemnified party to give notice as provided
herein shall not relieve the indemnifying party of its obligations under the
preceding subdivisions of this Section 2.7, except to the extent that the
indemnifying party is actually and materially prejudiced by such failure to give
notice. In case any such action shall be brought against any indemnified party
and it shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it may wish, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; PROVIDED, HOWEVER, that any indemnified
party may, at its own expense, retain separate counsel to participate in such
defense. Notwithstanding the foregoing, in any action or proceeding in which
both the Company and an indemnified party is, or is reasonably likely to become,
a party, such indemnified party shall have the right to employ separate counsel
at the Company's expense and to control its own defense of such action or
proceeding if, in the reasonable opinion of counsel to such indemnified party,
(a) there are or may be legal defenses available to such indemnified party or to
other indemnified parties that are different from or additional to those
available to the Company or (b) any conflict or potential conflict exists
between the Company and such indemnified party that would make such separate
representation advisable; PROVIDED, HOWEVER, that in no event shall the Company
be required to pay fees and expenses under this Section 2.7 for more than one
firm of attorneys representing the indemnified parties (together, if
appropriate, with one firm of local counsel per jurisdiction) in any one legal
action or group of related legal actions. No indemnifying party shall be liable
for any settlement of any action or proceeding effected without its written
consent, which consent shall not be unreasonably withheld. No indemnifying
party shall, without the consent of the indemnified party, which consent shall
not be unreasonably withheld, consent to entry of any judgment or enter into any
settlement which does not include as a term thereof the giving by the claimant
or plaintiff to such indemnified party of a release from all liability in
respect to such claim or litigation or which requires action other than the
payment of money by the indemnifying party.
(d) CONTRIBUTION. If the indemnification provided for
in this Section 2.7 shall for any reason be held by a court to be unavailable to
an indemnified party under Section 2.7(a) or (b) hereof in respect of any loss,
claim, damage or liability, or any action in respect thereof, then, in lieu of
the amount paid or payable under Section 2.7(a) or (b), the indemnified party
and the indemnifying party under Section 2.7(a) or (b) shall contribute to the
aggregate losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating the same), (i) in
such proportion as is appropriate to reflect the relative fault of the Company
and the prospective sellers of Registrable Securities covered by the
registration statement which resulted in such loss, claim, damage or liability,
or action or proceeding in respect thereof, with respect to the statements or
omissions which resulted in such loss, claim, damage or liability, or
<PAGE>
10
action or proceeding in respect thereof, as well as any other relevant equitable
considerations or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as shall be appropriate to
reflect the relative benefits received by the Company and such prospective
sellers from the offering of the securities covered by such registration
statement, PROVIDED, that for purposes of this clause (ii), the relative
benefits received by the prospective sellers shall be deemed not to exceed the
amount of proceeds received by such prospective sellers. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation. Such prospective sellers'
obligations to contribute as provided in this Section 2.7(d) are several in
proportion to the relative value of their respective Registrable Securities
covered by such registration statement and not joint. In addition, no Person
shall be obligated to contribute hereunder any amounts in payment for any
settlement of any action or claim effected without such Person's consent, which
consent shall not be unreasonably withheld.
(e) OTHER INDEMNIFICATION. Indemnification and
contribution similar to that specified in the preceding subdivisions of this
Section 2.7 (with appropriate modifications) shall be given by the Company and
each seller of Registrable Securities with respect to any required registration
or other qualification of securities under any federal or state law or
regulation of any governmental authority other than the Securities Act.
(f) INDEMNIFICATION PAYMENTS. The indemnification and
contribution required by this Section 2.7 shall be made by periodic payments of
the amount thereof during the course of the investigation or defense, as and
when bills are received or expense, loss, damage or liability is incurred.
3. DEFINITIONS. As used herein, unless the context otherwise
requires, the following terms have the following respective meanings:
"BLUM AGREEMENT" means the Registration Rights Agreement dated as of
June 1, 1998, between RCBA PLAYTEX, L.P. and the Company.
"COMMISSION" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
"COMMON STOCK" shall mean and include the Common Stock, par value $.01
per share, of the Company and each other class of capital stock of the Company
that does not have a preference over any other class of capital stock of the
Company as
<PAGE>
11
to dividends or upon liquidation, dissolution or winding up of the Company and,
in each case, shall include any other class of capital stock of the Company into
which such stock is reclassified or reconstituted.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
or any superseding Federal statute, and the rules and regulations promulgated
thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Securities Exchange Act of 1934, as amended, shall
include a reference to the comparable section, if any, of any such superseding
Federal statute.
"HWH AGREEMENT" means the Registration Rights Agreement dated as of
March 17, 1995, as amended, among the Company, HWH Capital Partners, L.P.,
HWH Valentine Partners, L.P., and HWH Surplus Valentine Partners, L.P.
"OTHER REGISTRATION RIGHTS AGREEMENTS" means each of the Blum
Agreement and the HWH Agreement.
"PERSON" means any individual, firm, corporation, partnership, limited
liability company or partnership, trust, incorporated or unincorporated
association, joint venture, joint stock company, government (or an agency or
political subdivision thereof) or other entity of any kind and shall include any
successor (by merger or otherwise) of such entity.
"REGISTRABLE SECURITIES" means any Shares and any Related Registrable
Securities. As to any particular Registrable Securities, once issued, such
securities shall cease to be Registrable Securities when (a) a registration
statement with respect to the sale of such securities shall have become
effective under the Securities Act and such securities shall have been disposed
of in accordance with such registration statement, (b) they may be sold as
permitted by Rule 144 (or any successor provision) under the Securities Act
without reference, for this purpose, to any volume limitation thereunder, (c)
they shall have been otherwise transferred, new certificates for them not
bearing a legend restricting further transfer shall have been delivered by the
Company and subsequent public distribution of them shall not require
registration of such distribution under the Securities Act, (d) they shall have
been transferred or distributed to any limited partner, general partner, member
or holder of interests (however called) of any Principal Stockholder or (e) they
shall have ceased to be outstanding.
"REGISTRATION EXPENSES" means all expenses incident to the Company's
performance of or compliance with Section 2, including, without limitation, all
registration and filing fees, all fees of the New York Stock Exchange, other
national securities exchanges or the National Association of Securities Dealers,
Inc., all fees and expenses of complying with securities or blue sky laws, all
word processing,
<PAGE>
12
duplicating and printing expenses, messenger and delivery expenses, the fees and
disbursements of counsel for the Company and of its independent public
accountants, including the expenses of "comfort" letters required by or incident
to such performance and compliance, any fees and disbursements of underwriters
customarily paid by issuers or sellers of securities (excluding any underwriting
discounts or commissions with respect to the Registrable Securities) and the
reasonable fees and expenses of one counsel to the Requesting Holders (selected
by Requesting Holders representing at least 50% of the Registrable Securities
covered by such registration); PROVIDED, HOWEVER, that in the event the Company
shall determine, in accordance with Section 2.2(a), not to register any
securities with respect to which it had given written notice of its intention to
so register to holders of Registrable Securities, all of the costs of the type
(and subject to any limitation to the extent) set forth in this definition and
incurred by Requesting Holders in connection with such registration on or prior
to the date the Company notifies the Requesting Holders of such determination
shall be deemed Registration Expenses.
"RELATED REGISTRABLE SECURITIES" means with respect to the Shares any
securities of the Company issued or issuable with respect to any of the Shares
by way of a dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization or
otherwise.
"REQUESTING HOLDER" is defined in Section 2.2.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
superseding Federal statute, and the rules and regulations promulgated
thereunder, all as the same shall be in effect at the time. References to a
particular section of the Securities Act of 1933, as amended, shall include a
reference to the comparable section, if any, of any such superseding Federal
statute.
"SECURITYHOLDER" means any of the parties to the HWH Agreement and the
Blum Agreement, respectively, in each case other than the Company.
4. RULE 144 AND RULE 144A. The Company shall take all actions
reasonably necessary to enable holders of Registrable Securities to sell such
securities without registration under the Securities Act within the limitation
of the provisions of (a) Rule 144 under the Securities Act, as such Rule may be
amended from time to time, (b) Rule 144A under the Securities Act, as such Rule
may be amended from time to time, or (c) any similar rules or regulations
hereafter adopted by the Commission. Upon the request of any holder of
Registrable Securities, the Company will deliver to such holder a written
statement as to whether it has complied with such requirements.
<PAGE>
13
5. AMENDMENTS AND WAIVERS. This Agreement may be amended or
terminated with the consent of the Company and the Company may take any action
herein prohibited, or omit to perform any act herein required to be performed by
it, only if the Company shall have obtained the written consent to such
amendment, action or omission to act, of the holder or holders of at least 50%
of the Registrable Securities affected by such amendment, action or omission to
act. Each holder of any Registrable Securities at the time or thereafter
outstanding shall be bound by any consent authorized by this Section 5, whether
or not such Registrable Securities shall have been marked to indicate such
consent.
6. NOMINEES FOR BENEFICIAL OWNERS. In the event that any
Registrable Securities are held by a nominee for the beneficial owner thereof,
the beneficial owner thereof may, at its election in writing delivered to the
Company, be treated as the holder of such Registrable Securities for purposes of
any request or other action by any holder or holders of Registrable Securities
pursuant to this Agreement or any determination of any number or percentage of
shares of Registrable Securities held by any holder or holders of Registrable
Securities contemplated by this Agreement. If the beneficial owner of any
Registrable Securities so elects, the Company may require assurances reasonably
satisfactory to it of such owner's beneficial ownership of such Registrable
Securities.
7. APPOINTMENT OF REPRESENTATIVE. Each Childs Holder hereby
authorizes and appoints the Principal Stockholder as its representative and
agent for purposes of accepting and delivering notices and taking actions
hereunder on behalf of each such Childs Holder hereunder and the Company
acknowledges and consents thereto. The Principal Stockholder acting in such
capacity is sometimes referred to herein as the "Childs Representative."
8. NOTICES. All notices, demands and other communications provided
for or permitted hereunder shall be made in writing and shall be by registered
or certified first-class mail, return receipt requested, telecopier, courier
service or personal delivery:
(a) if to the Principal Stockholder, addressed to it in the
manner set forth in the Merger Agreement, or at such other address as it shall
have furnished to the Company in writing in the manner set forth herein; or
(b) if to the Company, addressed to it in the manner set forth
in the Merger Agreement, or at such other address as the Company shall have
furnished to each holder of Registrable Securities at the time outstanding in
the manner set forth herein.
<PAGE>
14
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; when delivered by a
courier, if delivered by overnight courier service; three business days after
being deposited in the mail, postage prepaid, if mailed; and when receipt is
acknowledged, if telecopied.
9. ASSIGNMENT. This Agreement shall be binding upon and inure to
the benefit of and be enforceable by the parties hereto and (i) with respect to
the Company only, its respective successors and permitted assigns and (ii) with
respect to any Childs Holder, only if such Childs Holder is transferring at
least 250,000 shares of Registrable Securities to such assignee and, in such
case, subject to the provisions with respect to the minimum amount of
Registrable Securities required in order to be entitled to certain rights or
take certain actions contained herein, its assigns.
10. CALCULATION OF PERCENTAGE INTERESTS IN REGISTRABLE SECURITIES.
For purposes of this Agreement, all references to a percentage of the
Registrable Securities shall be calculated based upon the number of Registrable
Securities outstanding at the time such calculation is made.
11. NO INCONSISTENT AGREEMENTS. The Company will not hereafter enter
into any agreement with respect to its securities, or modify, amend, supplement
or extend any existing agreement with respect to its securities, which is or
will be inconsistent with the rights granted to the holders of Registrable
Securities in this Agreement.
12. REMEDIES. Each holder of Registrable Securities, in addition to
being entitled to exercise all rights granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of this Agreement and hereby agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.
13. SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any way
impaired thereby, it being intended that all of the rights and privileges of the
Principal Stockholder shall be enforceable to the fullest extent permitted by
law.
<PAGE>
15
14. ENTIRE AGREEMENT. This Agreement, together with the Merger
Agreement (including the exhibits and schedules thereto), is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein and therein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein and therein. This Agreement and the Merger Agreement
(including the exhibits and schedules thereto) supersede all prior agreements
and understandings between the parties with respect to such subject matter.
15. HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
16. GOVERNING LAW. This Agreement has been negotiated, executed and
delivered in the State of New York and shall be governed by and construed in
accordance with the laws of the State of New York, without regard to principles
of conflicts of law.
17. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed an original and all of which taken together
shall constitute one and the same instrument.
[Remainder of page intentionally left blank]
<PAGE>
16
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their respective representatives hereunto duly
authorized as of the date first above written.
PLAYTEX PRODUCTS, INC.
By:
-------------------------------------
Name:
Title:
J.W. CHILDS EQUITY PARTNERS, L.P.,
on behalf of itself and all Childs
Holders
By: J.W. CHILDS ADVISORS, L.P., its
general partner
By: J.W. Childs Associates, L.P., its
general partner
By: J.W. Childs Associates, Inc.
By:
----------------------------------
Name:
Title:
<PAGE>
Exhibit 10.7
Playtex Products, Inc.
June 1, 1998
J.W. Childs Equity Partners, L.P.
One Federal Street
Boston, MA 02110
Dear John:
I am writing on behalf of Playtex Products, Inc. (the "Company") to confirm
our recent discussions concerning the secondary offering of common stock of the
Company being made by J.W. Childs Equity Partners, L.P. (the "Fund") and certain
other selling stockholders (together, the "Selling Stockholders") pursuant to a
Registration Statement on Form S-3, No. 333-50099, which was declared effective
by the Securities and Exchange Commission (the "SEC") on May 19, 1998 (as
amended to the date hereof, the "Registration Statement").
This letter, when countersigned by you, will amend and supersede our letter
agreement of April 9, 1998. Contemporaneously with the execution of this
letter, (i) the Fund, Richard C. Blum & Associates, Inc. and RCBA Playtex, L.P.
(the "Purchaser") are entering into a Stock Purchase Agreement in the form of
Exhibit A hereto (the "Purchase Agreement"), (ii) the Company and the Selling
Stockholders and certain other stockholders of the Company are entering into a
First Amended and Restated Registration Rights Agreement in the form of Exhibit
B hereto, and (iii) the Company and the Purchaser are entering into a
Stockholders Agreement, in the form of Exhibit C hereto.
Promptly after the execution of this letter and the other agreements
referred to in the preceding paragraph, the Company will undertake to file with
the SEC a post-effective amendment to the Registration Statement to reflect the
change in the plan of distribution and other necessary and appropriate changes
occasioned by the execution of the Purchase Agreement and the other agreements
referred to in the preceding paragraph and the transactions contemplated
thereby, as well as to reflect any changes necessitated by the passage of time
since the effective date of the Registration Statement.
In all respects that may be relevant to (i) the preparation and filing of
any amendment or amendments to the Registration Statement pursuant hereto, (ii)
the disposition of shares of the Company's common stock by the Selling
Stockholders pursuant to the Purchase Agreement, and (iii) the conduct of the
parties in connection with this letter, the parties hereto shall be governed by
the procedures set forth in the certain Registration Rights Agreement between
the Company and the Fund dated as of January 28, 1998 (the "Registration Rights
Agreement").
The parties obligations hereunder and in connection with the transactions
hereby are conditioned on their compliance with all applicable securities laws.
The parties obligations hereunder shall terminate if the closing under the
Purchase Agreement shall not have occurred on or before July 31, 1998.
Notwithstanding anything to the contrary contained in the Registration
Rights Agreement, the parties hereto agree that all fees and expenses of counsel
for the Selling Stockholders in connection with this letter, the Purchase
Agreement, the First Amended and Restated Registration Rights Agreement and the
sale of the Company's common stock by the Selling Stockholders to the Purchaser
shall be the sole responsibility of the Selling Stockholders. In addition, at
the Closing
<PAGE>
2
(as defined in the Purchase Agreement) J.W. Childs Associates, LP shall pay the
Company $300,000 as reimbursement of expenses incurred by the Company associated
with the preparation and filing of the Registration Statement.
If you are in agreement with the foregoing, please so indicate by
countersigning a copy of this letter below and returning a fully signed copy to
me. This letter may be signed in one or more counterparts, each of which when
executed shall be deemed an original and all of which when taken together shall
constitute one agreement.
THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.
<PAGE>
3
Sincerely,
PLAYTEX PRODUCTS, INC.
By:
------------------------------
Name:
Title:
ACCEPTED and AGREED:
J.W. CHILDS EQUITY PARTNERS, L.P.,
on behalf of itself and all Childs Holders
By: J.W. CHILDS ADVISORS, L.P., its
general partner
By: J.W. Childs Associates, L.P., its
general partner
By: J.W. Childs Associates, Inc.
By:
------------------------------
Name:
Title:
<PAGE>
Exhibit 10.8
Playtex Products, Inc.
300 Nayala Farms Road
Westport, Connecticut 03880
Donaldson, Lufkin & Jenrette International
227 Park Avenue
New York, NY 10172
Ladies & Gentlemen:
Reference is made to the International Purchase Agreement, dated as of
May 27, 1998 ("Purchase Agreement"), by and among Donaldson, Lufkin & Jenrette
International (DLJ), Playtex Products, Inc. (Playtex) and the Selling
Stockholders listed on Schedule B thereto. (Capitalized terms used but not
defined herein shall have the meanings specified in the Purchase Agreement).
Pursuant to Section 3(j) of the Purchase Agreement, Playtex is
required to obtain the consent of DLJ, prior to filing any registration
statement to register shares of Playtex common stock (the "Common Stock") held
by the Childs Holders (as defined therein) within 180 days from the final
Prospectus. Section 1(vii) of the Purchase Agreement and separate letter
agreements between DLJ and each of Messrs. John W. Childs and Steven G. Segal
(the "Lock Up Agreements") also restrict the sale of securities by Messrs.
Childs and Segal for 90 days without the prior written consent of DLJ.
We have informed you that J. W. Childs Equity Partners, L.P. (the
"Fund") and certain other Childs Holders propose to sell an aggregate of
6,000,000 shares of Common Stock to RCBA Playtex, L.P., an affiliate of Richard
C. Blum & Associates, L.P. ("Blum") and possibly other persons identified in and
pursuant to a Stock Purchase Agreement to be dated as of June 1, 1998 a copy of
which is attached hereto (the "Blum Agreement"). Playtex hereby requests you
waive compliance with the restrictions in (a) Section 3(j) and 1(vii) of the
Purchase Agreement and (b) the Lock-Up Agreements in connection with the
transactions contemplated by the Blum Agreement, provided that the Company
continues to agree not to file a resale registration covering any sale of the
shares by Blum for the 180-day period in Section 3(j).
<PAGE>
2
If you agree, subject to the terms hereof, to waive these
requirements, please indicate your agreement by signing in the space provided
below and returning a signed copy to the undersigned.
PLAYTEX PRODUCTS, INC.
By:
-----------------------------
The undersigned hereby waives compliance with the provision of Article 3(j) and
1(vii) of the Purchase Agreement and Lock-Up Letters.
DONALDSON, LUFKIN & JENRETTE
INTERNATIONAL
By:
-----------------------------
<PAGE>
Exhibit 17
J.W. Childs
J.W. Childs Associates, L.P.
One Federal Street
Boston, MA 02110
June 1, 1998
Playtex Products, Inc.
300 Nyala Farms Road
Westport, CT 06880
Sir or Madam:
I hereby resign as a director of Playtex Products, Inc., effective as of
the date of the Closing, as defined in the Stock Purchase Agreement among RCBA
Playtex, L.P., J.W. Childs Equity Partners, L.P. and Richard C. Blum &
Associates, Inc.
Sincerely,
/s/ John W. Childs
-----------------------------------
John W. Childs
