================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------------
FORM 10-Q
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
or
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarter Ended April 1, 2000
Commission File No. 1-12620
PLAYTEX PRODUCTS, INC.
(Exact name of registrant as specified in its charter)
Delaware 51-0312772
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
300 Nyala Farms Road
Westport, Connecticut 06880
----------------------------------------
(Address of principal executive offices)
Telephone number: (203) 341-4000
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
Yes |X| No |_|
At May 11, 2000 60,785,497 shares of Playtex Products, Inc. common stock,
par value $.01 per share, were outstanding.
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<PAGE>
PLAYTEX PRODUCTS, INC.
INDEX
PAGE
----
PART I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements.................... 3 - 13
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations...................................... 14 - 19
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.............................................. 20
Item 6. Exhibits and Reports on Form 8-K:
(a) Exhibits................................................... 20
(b) Reports on Form 8-K........................................ 20
Signatures..................................................... 21
Exhibit Index 22
<PAGE>
PLAYTEX PRODUCTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
April 1, December 25,
2000 1999
-------- ------------
ASSETS (Unaudited)
<S> <C> <C>
Current assets:
Cash............................................................. $ 9,467 $ 7,526
Receivables, less allowance for doubtful accounts................ 153,404 130,256
Inventories...................................................... 89,036 85,496
Deferred income taxes............................................ 13,591 14,937
Other current assets............................................. 2,128 5,639
---------- ----------
Total current assets.......................................... 267,626 243,854
Net property, plant and equipment................................... 111,558 107,193
Intangible assets, net.............................................. 691,622 697,214
Deferred financing costs............................................ 14,593 15,530
Due from related party.............................................. 80,017 80,017
Other noncurrent assets............................................. 4,626 4,844
---------- ----------
Total assets.................................................. $1,170,042 $1,148,652
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable................................................. $ 35,025 $ 45,107
Accrued expenses................................................. 65,252 73,994
Income taxes payable............................................. 13,675 8,934
Current maturities of long-term debt............................. 30,594 23,813
---------- ----------
Total current liabilities..................................... 144,546 151,848
Long-term debt...................................................... 972,219 964,063
Due to related party................................................ 78,386 78,386
Other noncurrent liabilities........................................ 11,859 12,267
Deferred income taxes............................................... 40,923 36,956
---------- ----------
Total liabilities............................................. 1,247,933 1,243,520
---------- ----------
Stockholders' equity:
Common stock, $0.01 par value, authorized 100,000,000 shares,
issued 60,776,163 shares at April 1, 2000 and
60,562,327 shares at December 25, 1999.......................... 607 605
Additional paid-in capital....................................... 521,503 519,811
Retained earnings (deficit)...................................... (597,495) (612,764)
Foreign currency translation adjustment.......................... (2,506) (2,520)
---------- ----------
Total stockholders' equity.................................... (77,891) (94,868)
---------- ----------
Total liabilities and stockholders' equity.................... $1,170,042 $1,148,652
========== ==========
</TABLE>
See the accompanying notes to condensed consolidated financial statements.
3
<PAGE>
PLAYTEX PRODUCTS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited, in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
--------------------
April 1, March 27,
2000 1999
-------- --------
<S> <C> <C>
Net sales .................................................................. $223,507 $190,452
Cost of sales .............................................................. 93,805 80,907
-------- --------
Gross profit ............................................................ 129,702 109,545
Operating expenses:
Advertising and sales promotion ......................................... 45,694 37,282
Selling, distribution and research ...................................... 22,693 18,814
Administrative .......................................................... 7,491 6,224
Amortization of intangibles ............................................. 5,592 4,846
-------- --------
Total operating expenses ............................................. 81,470 67,166
Operating earnings ................................................. 48,232 42,379
Interest expense including related party interest expense of $3,037 for both
periods presented, net of related party interest income of $3,001 for
both periods presented .................................................. 22,042 18,838
-------- --------
Earnings before income taxes ....................................... 26,190 23,541
Income taxes ............................................................... 10,921 9,970
-------- --------
Net earnings ....................................................... $ 15,269 $ 13,571
======== ========
Earnings per share:
Basic ................................................................... $ 0.25 $ 0.22
======== ========
Diluted ................................................................. $ 0.25 $ 0.22
======== ========
Weighted average shares outstanding:
Basic ................................................................... 60,684 60,413
======== ========
Diluted ................................................................. 64,007 63,205
======== ========
</TABLE>
See the accompanying notes to condensed consolidated financial statements.
4
<PAGE>
PLAYTEX PRODUCTS, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited, in thousands)
<TABLE>
<CAPTION>
Foreign
Common Additional Retained Currency
Shares Common Paid-In Earnings Translation
Outstanding Stock Capital (Deficit) Adjustment Total
----------- ----- ------- --------- ---------- -----
<S> <C> <C> <C> <C> <C> <C>
Balance, December 25, 1999 .... 60,562 $605 $ 519,811 $(612,764) $(2,520) $(94,868)
Net earnings .................. -- -- -- 15,269 -- 15,269
Foreign currency translation
adjustment .................. -- -- -- -- 14 14
--------
Comprehensive earnings .... 15,283
Stock issued to employees
exercising stock options ...... 214 2 1,692 -- -- 1,694
--------- ---- --------- --------- ------- --------
Balance, April 1, 2000 .... 60,776 $607 $ 521,503 $(597,495) $(2,506) $(77,891)
========= ==== ========= ========= ======= ========
</TABLE>
See the accompanying notes to condensed consolidated financial statements.
5
<PAGE>
PLAYTEX PRODUCTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
<TABLE>
<CAPTION>
Three Months Ended
--------------------
April 1, March 27,
2000 1999
-------- --------
<S> <C> <C>
Cash flows from operations:
Net earnings .................................................... $ 15,269 $ 13,571
Non-cash items included in earnings:
Amortization of intangibles ................................... 5,592 4,846
Amortization of deferred financing costs ...................... 937 783
Depreciation .................................................. 2,708 2,159
Deferred income taxes ......................................... 5,319 4,731
Other, net .................................................... 228 30
Net increase in working capital accounts, net of acquisitions . (37,668) (21,692)
-------- --------
Net cash flows (used for) from operations .................. (7,615) 4,428
Cash flows used for investing activities:
Purchases of property, plant and equipment ...................... (7,075) (6,737)
Businesses acquired, net ........................................ -- (120,849)
-------- --------
Net cash flows used for investing activities ............... (7,075) (127,586)
Cash flows provided by (used for) financing activities:
Net borrowings under credit facilities .......................... 17,500 80,001
Long-term debt borrowings ....................................... -- 50,000
Long-term debt repayments ....................................... (2,563) (625)
Issuance of shares of common stock .............................. 1,694 132
-------- --------
Net cash flows provided by financing activities ............ 16,631 129,508
Increase in cash ................................................... 1,941 6,350
Cash at beginning of period ........................................ 7,526 6,871
-------- --------
Cash at end of period .............................................. $ 9,467 $ 13,221
======== ========
Supplemental disclosures of cash flow information
Cash paid during the periods for:
Interest ....................................................... $ 16,150 $ 13,731
Income taxes, net of refunds ................................... $ 865 $ 2,066
</TABLE>
See the accompanying notes to condensed consolidated financial statements.
6
<PAGE>
PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Consolidated Financial Statements
The quarterly condensed consolidated financial statements, which are a
part of our Quarterly Report on Form 10-Q, are unaudited. In preparing our
financial statements, we make certain adjustments (consisting of normal
recurring adjustments) considered necessary in our opinion for a fair
presentation of our financial position and results of operations. The results of
our first quarter ended April 1, 2000 are not necessarily indicative of the
results that you may expect for the full year.
Our results for the first quarter of 2000 are for the 14-week period ended
April 1, 2000 and our results for the first quarter of 1999 are for the 13-week
period ended March 27, 1999. Our fiscal year end is on the last Saturday nearest
to December 31 and, as a result, a fifty-third week is added every 5 or 6 years.
Our fiscal year ending December 30, 2000 includes the extra week.
We presume you have access to the audited financial statements contained
in our Annual Report on Form 10-K for the year ended December 25, 1999. As a
result, we have not included footnote disclosures that would substantially
duplicate the disclosures contained in the 10-K. If you do not have a copy of
our Annual Report on Form 10-K you can obtain one by contacting our Director of
Investor Relations at (203) 341-4000 or view it on-line at the SEC's web site
WWW.SEC.GOV.
2. Acquisitions
1999 Acquisitions
On January 29, 1999, we acquired the Diaper Genie business, the leading
diaper disposal system in the U.S., for $72.0 million in cash and the issuance
of $50.0 million of Convertible Notes (see Note 5). We borrowed the cash portion
of the purchase price from our revolving credit facility. The Convertible Notes
have an interest rate of 6% and are convertible after January 29, 2000, at the
holders' option, into approximately 2.6 million shares of our common stock. The
conversion price is approximately $19.15 per share. The notes will mature in
2004 and are callable by us after January 29, 2002.
On June 30, 1999, we acquired the Baby Magic brand of infant-related bath,
lotion, shampoo, oil and powder products for $90.0 million in cash. We borrowed
$100.0 million in cash from our Term A Loan at variable rates of interest to pay
for the acquisition and related fees.
The acquisitions of Baby Magic and Diaper Genie were accounted for as
purchases, and our consolidated results of operations included the operating
results of these businesses from the dates of acquisition. In addition, these
acquisitions added $113.7 million to goodwill and $75.1 million to trademarks in
1999.
1998 Acquisition
On January 28, 1998, we acquired Personal Care Holdings, Inc. ("PCH") for
approximately $91.0 million in cash and 9,257,345 shares of our common stock. We
borrowed money from our Term Loan for the cash portion of the deal (see Note 5).
On January 6, 1998, we acquired Carewell Industries, Inc. ("Carewell") for
approximately $9.2 million in cash. On January 26, 1998, we acquired the Binky
pacifier business ("Binky") for approximately $1.2 million in cash and $0.5
million in notes, which were later repaid in 1998. The acquisitions of PCH,
Carewell, and Binky were accounted for as purchases.
7
<PAGE>
PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. Acquisitions (continued)
In connection with the 1999 and 1998 acquisitions, we reserved amounts on
our balance sheet for certain direct costs likely to be incurred as a result of
the acquisitions. These costs include at April 1, 2000 (unaudited, in
thousands):
<TABLE>
<CAPTION>
Reserved Amount Balance
Amount Spent Remaining
------ ------ ---------
<S> <C> <C> <C>
Exit costs.............................................. $3,653 $2,600 $1,053
Involuntary terminations................................ 3,116 2,620 496
Relocation costs........................................ 135 135 --
------ ------ ------
Total................................................ $6,904 $5,355 $1,549
====== ====== ======
</TABLE>
The remaining balance is primarily for building lease commitments and severance
costs. The amount remaining for involuntary terminations at April 1, 2000,
represents severance payments to be made through the first quarter of 2002.
The following pro forma results of operations for the three months ended
March 27, 1999, assumes the acquisitions of Diaper Genie and Baby Magic had
occurred on December 27, 1998. We did not adjust for any consolidation savings
or other changes in revenues or expenses that we feel could occur as a result of
our acquiring these businesses. As a result, the following pro forma financial
information may not represent our operating results or future operating results
if we had acquired these businesses on December 27, 1998.
Three Months
Ended
March 27,
(unaudited, in thousands, except per share data) 1999
------------
Net sales........................................................ $206,654
Net earnings..................................................... $ 14,886
Earnings per share:
Basic......................................................... $ .25
Diluted....................................................... $ .24
Weighted average shares outstanding:
Basic......................................................... 60,413
Diluted....................................................... 63,205
Our results for the three months ended April 1, 2000 include the operating
results of the Diaper Genie and Baby Magic acquisitions.
1999 Divestiture
On May 12, 1999, we sold for cash and future guaranteed minimum royalty
payments, our U.S. and International Jhirmack hair care business. We retained
the Canadian Jhirmack business. No gain or loss resulted from this transaction.
8
<PAGE>
PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. Comprehensive Earnings
Foreign currency translation adjustments are the only reconciling item
between net earnings and comprehensive earnings. For the three months ended
April 1, 2000 and March 27, 1999, there were no material differences between net
earnings and comprehensive earnings. For the three months ended April 1, 2000
and March 27, 1999, our comprehensive earnings were (in thousands):
<TABLE>
<CAPTION>
Three Months Ended
------------------
April 1, March 27,
2000 1999
------- --------
<S> <C> <C>
Net earnings........................................................ $ 15,269 $ 13,571
Foreign currency translation adjustment............................. 14 48
-------- --------
Comprehensive earnings.......................................... $ 15,283 $ 13,619
======== ========
4. Balance Sheet Components
April 1, December 25,
The components of certain balance sheet accounts are as follows (in thousands): 2000 1999
-------- ------------
(Unaudited)
Receivables......................................................... $155,908 $132,548
Less allowance for doubtful accounts................................ (2,504) (2,292)
-------- --------
Net............................................................. $153,404 $130,256
======== ========
Inventories:
Raw materials.................................................... $ 27,905 $ 27,974
Work in process.................................................. 345 532
Finished goods................................................... 60,786 56,990
-------- --------
Total........................................................... $ 89,036 $ 85,496
======== ========
Net property, plant and equipment:
Land............................................................. $ 2,376 $ 2,376
Buildings........................................................ 37,282 37,165
Machinery and equipment.......................................... 161,581 154,848
-------- --------
201,239 194,389
Less accumulated depreciation.................................... (89,681) (87,196)
-------- --------
Net............................................................. $111,558 $107,193
======== ========
Accrued expenses:
Advertising and sales promotion.................................. $ 20,157 $ 29,011
Employee compensation and benefits............................... 7,324 13,894
Interest......................................................... 16,033 11,078
Insurance........................................................ 3,229 3,189
Other............................................................ 18,509 16,822
-------- --------
Total........................................................... $ 65,252 $ 73,994
======== ========
</TABLE>
9
<PAGE>
PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
5. Long-Term Debt
<TABLE>
<CAPTION>
Long-term debt consists of the following (in thousands): April 1, December 25,
2000 1999
----------- -----------
(Unaudited)
<S> <C> <C>
1997 Credit Agreement:
Term A Loan ............................................. $ 149,188 $151,126
Revolving Credit Facility ............................... 50,000 32,500
Term Loan ............................................... 243,625 244,250
6% Convertible Subordinated Notes due 2004 ................. 50,000 50,000
8 7/8% Senior Notes due 2004 ............................... 150,000 150,000
9% Senior Subordinated Notes due 2003 ...................... 360,000 360,000
---------- --------
1,002,813 987,876
Less current maturities ................................. (30,594) (23,813)
---------- --------
Total long-term debt .................................. $ 972,219 $964,063
========== ========
</TABLE>
On July 21, 1997, we completed a refinancing of our senior indebtedness,
which included:
o the issuance of $150.0 million principal amount of 8 7/8% senior
notes due July 15, 2004,
o a $150.0 million senior secured term loan due September 15, 2003
(the "Term Loan"), and
o senior secured credit facilities of $170.0 million comprised of:
> $115.0 million revolving credit facility (the "Revolving
Credit Facility") and
> $55.0 million term loan facility (the "Term A Loan").
In connection with the 1998 acquisitions (see Note 2), we increased our
indebtedness by:
o $100.0 million under the Term Loan for the PCH acquisition,
o $10.4 million under the Revolving Credit Facility and
o $0.5 million by issuing a note for the acquisitions of Carewell and
Binky. This note was repaid in July 1998.
In connection with the 1999 acquisitions (see Note 2), we increased our
indebtedness by:
o $100.0 million under the Term A Loan for the Baby Magic acquisition,
o $72.0 million under the Revolving Credit Facility and
o $50.0 million by issuing the Convertible Notes for the Diaper Genie
acquisition.
The Term Loan provides for quarterly repayment of principal of $625,000
from March 15, 1998 through June 15, 2003. The final payment of $235.5 million
is due on September 15, 2003.
Principal repayments on the Term A Loan are made quarterly, and amount to:
o $21.3 million in fiscal 2000, o $56.2 million in fiscal 2002, and
o $42.6 million in fiscal 2001, o $31.0 million in fiscal 2003.
10
<PAGE>
PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
5. Long-Term Debt (continued)
The Revolving Credit Facility matures on June 15, 2003. The amounts we are
able to borrow under this facility decrease by:
o $5.0 million on December 15, 2000 and June 15, 2001,
o $7.0 million on December 15, 2001 and June 15, 2002, and
o $8.0 million on December 15, 2002 and June 15, 2003.
We periodically use financial instruments to manage the impact of interest
rate changes on our variable rate debt. At April 1, 2000 our total indebtedness
consisted of $560.0 million in fixed rate debt and $442.8 million in variable
rate debt. In July 1998, we entered into an interest rate swap agreement, which
effectively fixed the LIBOR rate on $100.0 million of our variable rate debt at
5.455%. This swap agreement is for a four-year period and may be cancelled by
the other party after July 23, 2000 upon two days written notice to us. Given
the current interest rate environment, we anticipate the other party will cancel
the swap agreement after July 23, 2000. Based on our interest rate exposure at
April 1, 2000, a 1% increase in interest rates would result in an estimated $3.4
million of additional interest expense on an annualized basis.
The interest rate on our Term Loan, Term A Loan, and Revolving Credit
facility varies over time depending on short term interest rates. At April 1,
2000 and March 27, 1999, the weighted average interest rate on our floating rate
debt was 7.39% and 6.43%, respectively. The weighted average interest rate on
our floating rate debt for the quarters ended April 1, 2000 and March 27, 1999
was 7.36% and 6.59%, respectively. We also pay fees equal to three-eighths of 1%
on the unused portion of the Revolving Credit Facility. At April 1, 2000, we had
$63.6 million of unused borrowings available to us under the Revolving Credit
Facility.
6. Business Segments
We are organized in three divisions:
Our Personal Products Division includes Infant Care and Feminine Care
products sold in the United States primarily to mass merchandisers, grocery and
drug classes of trade. The Infant Care product category includes the following
brands:
<TABLE>
<S> <C>
o Playtex disposable nurser system, o Mr. Bubble children's bubble bath
cups and reusable hard bottles o Chubs baby wipes
o Wet Ones hand and face towelettes o Diaparene infant care products, and
o Baby Magic bath, oil, lotion and powders o Diaper Genie diaper disposal system.
o Binky pacifiers
</TABLE>
The Feminine Care product category includes a wide range of plastic and
cardboard applicator tampons marketed under such brand names as Playtex: Gentle
Glide, Silk Glide and Slimfits.
Our Consumer Products Division includes Sun Care, Household Products, and
Personal Grooming products sold in the United States primarily to mass
merchandisers, grocery and drug classes of trade.
<TABLE>
<CAPTION>
Sun Care Household Products
-------- ------------------
<S> <C>
o Banana Boat o Playtex Gloves
o BioSun o Woolite rug and upholstery cleaning products
</TABLE>
11
<PAGE>
PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6. Business Segments (continued)
Personal Grooming
<TABLE>
<S> <C>
o Binaca breath spray and drops o Ogilvie at-home permanents
o Tek toothbrushes o Dentax oral care products
o Better Off depilatories o Tussy deodorant
o Dorothy Gray skin care products o Jhirmack hair care products (through May 12, 1999)
</TABLE>
Our International and Other Division includes sales to:
<TABLE>
<S> <C>
o specialty classes of trade in the o results from our Canadian subsidiary
United States o sales of private label tampons
o export sales
o sales in Puerto Rico
</TABLE>
We evaluate division performance based on their product contribution
before allocating any general corporate overhead costs. Product contribution is
defined as gross profit less advertising and sales promotion expenses. All other
operating expenses are managed at a corporate level and are not used by our
management to evaluate the results of the divisions. We do not consider assets,
amortization, capital expenditures, or interest income and interest expense in
assessing division performance.
<TABLE>
<CAPTION>
Three Months Ended
----------------------------------------------
April 1, 2000 March 27, 1999
-------------------- ----------------------
(Unaudited, dollars in thousands) Net Product Net Product
Sales Contrib. Sales (1) Contrib. (1)
-------- ------- -------- ------------
<S> <C> <C> <C> <C>
Personal Products............................ $121,298 $50,686 $ 95,974 $41,359
Consumer Products............................ 68,353 21,866 63,297 22,716
International and Other...................... 33,856 12,814 31,181 10,143
Unallocated Charges (2)...................... -- (1,358) -- (1,955)
-------- ------- -------- ------
Total Consolidated........................ $223,507 84,008 $190,452 72,263
======== ========
Reconciliation to operating earnings:
- -------------------------------------
Selling, distribution and research........... 22,693 18,814
Administrative............................... 7,491 6,224
Amortization of intangibles.................. 5,592 4,846
------- -------
Operating earnings........................ $48,232 $42,379
======= =======
</TABLE>
- -----------
(1) In 2000, our divisional structures were reorganized. The International and
Other Division now include the U.S specialty classes of trade that
includes: clubs, convenience stores, telemarketing, e-commerce, military
and other specialty classes of trade. The net sales and product
contribution from the specialty classes of trade were previously reported
in the Personal and Consumer Products divisions. We reclassified our prior
year business segment disclosures to conform to the current year
presentation. The net sales of the specialty classes of trade represented
approximately 7% of consolidated sales.
(2) Certain unallocated corporate charges such as business license taxes and
product liability insurance are included in consolidated gross margin, but
not included in the evaluation of the division's performance.
12
<PAGE>
PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6. Earnings Per Share
The following table explains how our basic and diluted Earnings Per Share
("EPS") were calculated for the three months ended April 1, 2000 and March 27,
1999 (unaudited, in thousands, except per share amounts):
<TABLE>
<CAPTION>
Three Months Ended
------------------
April 1, March 27,
2000 1999
-------- --------
<S> <C> <C>
Numerator:
Net earnings--as reported...................................... $15,269 $13,571
Adjustment for interest on Convertible Notes.................. 473 315
------- -------
Net earnings--as adjusted................................... $15,742 $13,886
======= =======
Denominator:
Weighted average shares outstanding--as reported............... 60,684 60,413
Adjustment for dilutive effect of employee stock options...... 712 1,128
Adjustment for dilutive effect of Convertible Notes........... 2,611 1,664
------- -------
Weighted average shares outstanding--as adjusted............ 64,007 63,205
======= =======
Basic Earnings Per Share............................................ $ 0.25 $ 0.22
Diluted Earnings Per Share.......................................... $ 0.25 $ 0.22
</TABLE>
Basic EPS excludes all potentially dilutive securities. Basic EPS is
computed by dividing net earnings by the weighted average number of common
shares outstanding for the period. Diluted EPS includes all potentially dilutive
securities. Diluted EPS is computed by dividing net earnings, adjusted by the
if-converted method for convertible securities, by the weighted average number
of common shares outstanding for the period plus the number of additional common
shares that would have been outstanding if the dilutive securities were issued.
In the event the dilutive securities are anti-dilutive (have the affect of
increasing EPS), the impact of the dilutive securities is not included in the
computation.
7. Contingent Liabilities
In our opinion, there are no claims, commitments, guarantees or litigation
pending to which we or any of our subsidiaries is a party which would have a
material adverse effect on the consolidated financial position, results of
operations or cash flows of the Company.
8. Subsequent Event
On May 1, 2000, we announced our intent to commence an exchange offer with
the holders of our common stock. Shareholders will be offered the opportunity to
exchange up to 10,000,000 shares for a cash payment of $3.00 per share and an
equal number of newly created shares of Class B common stock. The Class B shares
are callable by the Company, at any time through the end of 2001, in whole or in
part, for an additional $15.00 per share. During 2000, if all or substantially
all of the Company is sold to a third party for an amount greater than $18.00
per share, shareholders of Class B common stock will receive an amount equal to
the amount paid to shareholders of common stock, less the cash payment of $3.00
per share. If the Class B shares are not called for redemption by the end of
2001, each Class B share will automatically convert into one share of common
stock. In all other respects, including voting rights, the shares of Class B
common stock will be identical to the shares of common stock. The exchange offer
is subject to certain conditions including: shareholder approval, the ability to
list Class B shares on a national securities exchange, the tendering of at least
3,000,000 shares, and obtaining any required bank consents on terms acceptable
to us.
13
<PAGE>
PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
The following discussion and analysis of our financial condition and
results of operations should be read in conjunction with:
o the condensed financial statements and notes included in this
report and
o audited consolidated financial statements and notes to consolidated
financial statements included in our report on Form 10-K for the
year ended December 25, 1999.
Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the Private
Securities Litigation Reform Act of 1995
This document includes forward-looking statements. We have based these
forward-looking statements on our current expectations and projections about
future results. When we use words in this document such as "anticipates,"
"intends," "plans," "believes," "estimates," "expects," and similar expressions
we do so to identify forward-looking statements. Our actual results could differ
materially from those anticipated in these forward-looking statements. These
forward-looking statements are affected by risks, uncertainties, and assumptions
that we make, including, among other things:
<TABLE>
<S> <C>
o price and product changes, o adverse publicity and product liability claims,
o promotional activity by competitors, o our level of debt,
o the loss of a significant customer, o interest rate fluctuations,
o capacity limitations, o future cash flows,
o the difficulties of integrating acquisitions, o dependence on key employees.
o completion of the exchange transaction,
</TABLE>
You should keep in mind that any forward-looking statement made by us in
this document, or elsewhere, speaks only as of the date on which we make it. New
risks and uncertainties come up from time to time, and it's impossible for us to
predict these events or how they may affect us. In light of these risks and
uncertainties, you should keep in mind that any forward-looking statement made
in this report or elsewhere might not occur.
Trademarks
We have proprietary rights to a number of trademarks important to our
businesses, such as: Baby Magic, Banana Boat, Binaca, Binky, BioSun, Chubs, Cool
Colorz, CoolStraw, Diaparene, Diaper Genie, Dentax, Dorothy Gray, Drop-Ins,
Gentle Glide, HandSaver, Most Like Mother, Mr. Bubble, Natural Action, Ogilvie,
QuickStraw, Quik Blok, Safe'N Sure, Silk Glide, SipEase, Slimfits, Tan Express,
Tek, Tussy, and Wet Ones. We also own a royalty free license in perpetuity to
the Playtex and Living trademarks, and to the Woolite trademark for rug and
upholstery cleaning products in the United States and Canada.
Items Affecting Comparability
Our results for the three months ended April 1, 2000 are for the 14-week
period ended April 1, 2000 and our results for the three month interim period
ended March 27, 1999 are for the 13-week period ended March 27, 1999. We do not
believe the extra week in the three month period ended April 1, 2000 contributed
materially to our net sales or earnings due to our shipment patterns. All
references to market share and market share data are for comparable 13-week
periods and represent our percentage of the total dollar volume of products
purchased by consumers in the applicable category (dollar market share). This
information is provided to us from the ACNielsen Company.
14
<PAGE>
PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
In 2000, our divisional structures were reorganized. The International and
Other Division now include the U.S specialty classes of trade that includes:
clubs, convenience stores, telemarketing, e-commerce, military and other
specialty classes of trade. The net sales and product contribution from the
specialty classes of trade were previously reported in the Personal and Consumer
Products divisions. We reclassified our prior year business segment disclosures
to conform to the current year presentation. The net sales from the specialty
classes of trade represented approximately 7% of consolidated net sales.
Results of Operations
Three Months Ended April 1, 2000 Compared To
Three Months Ended March 27, 1999
Consolidated Net Sales--Our consolidated net sales increased 17% to $223.5
million in the first quarter of 2000 compared to the first quarter of 1999.
Excluding the impact of the acquisitions of Diaper Genie and Baby Magic and the
divested portion of our Jhirmack business, our consolidated net sales grew by
$15.9 million, or 9%, compared to the first quarter of 1999. We do not believe
the extra week in the three months ended April 1, 2000 contributed materially to
our net sales due to our shipment patterns.
Personal Products Division--Net sales increased 26% to $121.3 million in
the first quarter of 2000. Excluding the impact of the acquisitions of
Diaper Genie and Baby Magic, the net sales of the division grew by $10.1
million, or 11%, compared to the first quarter of 1999.
Net sales of Infant Care products increased 27% to $68.9 million
in the first quarter of 2000. Excluding the impact of the acquisitions
of Diaper Genie and Baby Magic, our Infant Care net sales decreased by
$0.7 million, or 1%, compared to the first quarter of 1999. Our dollar
market share of the infant feeding category decreased 1.8 percentage
points to 40.9% in the first quarter of 2000. Our dollar market share
in cups, disposable feeding, and pacifiers each experienced declines
offsetting modest dollar market share gains in hard bottles and
nipples. The decline in market share was due primarily to competitive
activity in disposable feeding and cups. A new competitor in disposable
feeding launched new products that were heavily supported with trade
spending during the initial launch. We have initiated counter-measures
to combat the competition and regain market share. The infant feeding
category grew 6.9% in dollars in the first quarter of 2000 versus the
first quarter of 1999, and the retail consumption of our products grew
2.3%.
Net sales of Feminine Care products increased 26% to $52.4
million in the first quarter of 2000. We experienced dollar market
share gains of 1.7 percentage points to 30.3% of the tampon category.
The tampon category, in dollars, grew 1.8% versus the first quarter of
1999, and the retail consumption of our products grew 8.0%. This was
our eleventh consecutive quarter of market share gains and consumption
growth in excess of category growth. This level of growth is
attributable to our innovative product development efforts and strong
consumer marketing initiatives. The growth of our Feminine Care
business has created the need for additional manufacturing capacity. We
anticipate adding three new machines during 2000. This will increase
capacity by an estimated 23% on an annual basis. Also, we expect to add
two additional machines in 2001.
Consumer Products Division--Net sales increased 8% to $68.4 million in the
first quarter of 2000. Excluding the impact of the divested portion of our
Jhirmack business, net sales of the division grew by $6.7 million, or 11%,
compared to the first quarter of 1999.
15
<PAGE>
PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
Net sales of Sun Care products increased 13% to $45.8 million in
the first quarter of 2000. Our dollar market share increased 0.7
percentage points to 18.1% in the first quarter of 2000. The sun care
category, in dollars, grew 10.4% and the retail consumption of our
products increased 15.1% compared to the first quarter of 1999. The
growth in our dollar market share and consumption was due largely to
demand for the Banana Boat product line, and increased consumer
awareness of the need for sunscreen protection. In addition, our array
of new products for the 2000 season has been favorably received by the
trade contributing to our first quarter growth.
Net sales of Household Products increased 9% to $12.3 million in
the first quarter of 2000. The increase was due to strength in our
gloves business, which increased its dollar market share 2.8
percentage points to 36.7% in the first quarter of 2000. The retail
consumption of our gloves increased 10.1% versus category growth of
1.9% during the same period. Net sales of Woolite were flat compared
to the first quarter of 1999 despite a 1.1 percentage point decline in
dollar market share to 18.7% of the rug and upholstery category.
Net sales of Personal Grooming decreased 10% to $10.2 million in
the first quarter of 2000. Personal Grooming net sales excluding the
divested U.S. Jhirmack line increased $0.5 million, or 5%, compared to
the first quarter of 1999. Contributing to this growth were dollar
market share gains in both Binaca and Ogilvie. The dollar market share
for Binaca grew 6.8 percentage points to 45.7% in the first quarter of
2000 as a result of the successful introduction of a new product
during 1999, Fast Blast, and efforts to secure front-end store
placement. First quarter dollar market share results now show Binaca
as the number one breath freshener in the spray & drops category. The
dollar market share for Ogilvie increased 12.4 percentage points to
64.4% of the home permanents/straightener category, due primarily to
new packaging and the introduction of a new product in 1999, Ogilvie
Straightener.
International and Other Division--Net sales increased 9% to $33.9 million
in the first quarter of 2000. Excluding the impact of the acquisitions of
Diaper Genie and Baby Magic, net sales of the division increased 1%
compared to the first quarter of 1999.
Consolidated Gross Profit--Our consolidated gross profit increased 18% to $129.7
million in the first quarter of 2000. As a percent of net sales, gross profit
increased 0.5 percentage points, to 58.0% in the first quarter of 2000. The
dollar increase in gross profit was due primarily to our higher net sales and
the margin increase was due primarily to product mix.
Consolidated Product Contribution--Our consolidated product contribution
increased 16% to $84.0 million in the first quarter of 2000. The increase was
due primarily to our higher net sales. As a percent of net sales, product
contribution decreased 0.4 percentage points to 37.6% in the first quarter of
2000. The decrease in product contribution as a percent of net sales was
primarily the result of higher overall advertising and sales promotion expenses
as a percentage of net sales, offsetting the higher gross margins.
Personal Products Division--Product contribution increased 23% to $50.7
million in the first quarter of 2000. As a percent of net sales, product
contribution decreased 1.3 percentage points to 41.8% in the first quarter
of 2000. The increase in product contribution was due primarily to higher
net sales. As a percent of net sales, product contribution decreased due
primarily to higher advertising and sales promotion expenses as a
percentage of net sales, offsetting favorable gross margins.
Consumer Products Division--Product contribution decreased 4% to $21.9
million in the first quarter of 2000. As a percent of net sales, product
contribution decreased 3.9 percentage points to 32.0% in the first quarter
of 2000. The decrease in product contribution was due primarily to lower
gross margins and higher advertising and
16
<PAGE>
PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
sales promotion expenses as a percentage of net sales. The gross margin
decrease was due primarily to product mix in our Sun Care and Household
Product businesses.
International and Other Division--Product contribution increased 26% to
$12.8 million in the first quarter of 2000. The increase in product
contribution was due primarily to higher net sales, most notably the
increase in our Canadian subsidiaries net sales. As a percent of net
sales, product contribution increased 5.3 percentage points to 37.8% in
the first quarter of 2000. This is due primarily to higher gross margins
and lower advertising and sales promotion expenses as a percentage of net
sales for our Canadian business.
Consolidated Operating Earnings--Our consolidated operating earnings increased
14% to $48.2 million in the first quarter of 2000. The increase in operating
earnings was the result of our higher net sales resulting from the acquisitions
of Diaper Genie and Baby Magic and higher net sales in our pre-acquisition
product lines, most notably our Feminine Care business.
Consolidated Interest Expense--Our consolidated interest expense increased 17%
to $22.0 million in the first quarter of 2000. Average debt for the first
quarter of 2000 exceeded the first quarter of 1999 by approximately $102.5
million, or 11%, due primarily to our purchases of the Diaper Genie business and
the Baby Magic business, both acquired in 1999. The impact of the additional
debt was further compounded by higher average interest rates in the first
quarter of 2000 compared to the same period in 1999.
Consolidated Income Taxes--Our consolidated income taxes increased 10% to $10.9
million in the first quarter of 2000. As a percent of pretax earnings, our
effective tax rate decreased 0.7 percentage points to 41.7% in the first quarter
of 2000. Our effective tax rate decreases as non-deductible goodwill
amortization becomes a smaller portion of operating earnings.
Financial Condition and Liquidity
At April 1, 2000, our working capital (current assets net of current
liabilities) increased $31.1 million to $123.1 million. The increase in working
capital resulted from higher total current assets and lower total current
liabilities.
o Total current assets increased $23.8 million at April 1, 2000 compared
to December 25, 1999. This occurred as a result of an increase of
$23.1 million in receivables, primarily as a result of higher net
sales compared to the fourth quarter of 1999, and the impact of
extended credit terms on the growing orders to support the new sun
care season. All other current assets increased by $0.7 million
compared to the end of our 1999 fiscal year.
o Total current liabilities decreased $7.3 million at April 1, 2000
compared to December 25, 1999. This occurred primarily as a result of
a decrease of $10.1 million in accounts payables which occurred
primarily as a result of our payment for our Sun Care inventory build
and a decrease of $8.7 million in accrued expenses due primarily to
the timing of cash payments for advertising and sales promotions and
employee compensation and benefit contributions.
Our product lines, with the exception of Sun Care, generally have not been
seasonal. However, sun care product sales are highly seasonal, with 80 to 90
percent of our sales to retailers occurring from December through June. This
seasonality requires increased inventory from December to June to support the
selling season. We experience higher receivables from February to September due
to extended credit terms on our Sun Care sales.
Capital expenditures for equipment and facility improvements were $7.1
million for the first quarter of 2000. These expenditures were used primarily to
expand capacity in key product areas, upgrade production equipment and maintain
our facilities. Capital expenditures for 2000 are expected to be between $23.0
million and $25.0 million.
17
<PAGE>
PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
At April 1, 2000, long-term debt (including current portion but excluding
obligations due to related party) was $1,002.8 million compared to $987.9
million at December 25, 1999. The increase of $14.9 million relates primarily to
our working capital needs that are impacted by seasonal factors associated with
our Sun Care business. At April 1, 2000, we had $63.6 million of unused credit
borrowings under our Revolving Credit Facility available to us. The amount of
money we are able to borrow from our Revolving Credit Facility reduces over
time, with the first reduction of $5.0 million occurring on December 15, 2000.
Terms of the Revolving Credit Facility, Term A Loan and the Term Loan
require us to meet certain financial tests and also include conditions or
restrictions on:
<TABLE>
<S> <C>
o new indebtedness and liens, o capital expenditures and asset sales, and
o major acquisitions or mergers, o dividends and other distributions.
</TABLE>
The 9% Senior Subordinated Notes due December 15, 2003 (the "9% Notes") and the
8 7/8% Senior Notes due July 15, 2004 (the "8 7/8% Senior Notes") also contain
similar restrictions and requirements.
We believe that we will generate sufficient cash flow from operations for:
<TABLE>
<S> <C>
o working capital, o interest payments on all of our debt, and
o capital expenditures, o scheduled principal payments under the Term A Loan
and the Revolving Credit Facility.
</TABLE>
However, we do not expect to generate sufficient cash flow from operations to
make the final principal payment due in 2003 on the Term Loan and the 9% Notes,
which collectively total $595.5 million, or the $150.0 million principal payment
due in 2004 on the 8 7/8% Senior Notes. Accordingly, we will have to either
refinance our obligations or raise equity capital to repay the principal amounts
of these obligations. Historically, our cash flows from operations and
refinancing activities have enabled us to meet all of our obligations. However,
we can't guarantee that our operating results will continue to be sufficient or
that future-borrowing facilities will be available for the payment or
refinancing of our debt on economically attractive terms.
Since the beginning of 1998 we made a number of acquisitions including
PCH, Carewell, Binky, Diaper Genie and Baby Magic. We financed these
transactions by borrowing more money on our Term Loan, Term A Loan, and
Revolving Credit Facility and we issued a Convertible Note and shares of our
Common Stock. In total, we borrowed $332.4 million, issued a $0.5 million note
that was later repaid and issued 9,257,345 shares of our Common Stock (see Note
2 and Note 5 of Notes to Condensed Consolidated Financial Statements). We will
continue to consider the acquisition of other companies or businesses that may
require us to seek additional debt or equity financing. As we cannot assure you
that such financing will be available to us, our ability to expand our
operations through acquisitions may be restricted. However, we believe that
capital will be available to achieve our acquisition objectives.
We have quarterly principal repayment obligations due on both the Term A
Loan and the Term Loan through the second and third quarters of the year 2003.
Our fixed principal debt repayment obligations are (excluding balances
outstanding under the Revolving Credit Facility and due to related party):
<TABLE>
<S> <C>
o $23.8 million in 2000, o $627.8 million in 2003, and
o $45.1 million in 2001, o $200.0 million in 2004.
o $58.7 million in 2002,
</TABLE>
We have no debt obligations due after June 15, 2004.
18
<PAGE>
PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
On May 1, 2000, we announced our intent to commence an exchange offer with
the holders of our common stock. Shareholders will be offered the opportunity to
exchange up to 10,000,000 shares for a cash payment of $3.00 per share and an
equal number of newly created shares of Class B common stock. The Class B shares
are callable by the Company, at any time through the end of 2001, in whole or in
part, for an additional $15.00 per share. During 2000, if all or substantially
all of the Company is sold to a third party for an amount greater than $18.00
per share, shareholders of Class B common stock will receive an amount equal to
the amount paid to shareholders of common stock, less the cash payment of $3.00
per share. If the Class B shares are not called for redemption by the end of
2001, each Class B share will automatically convert into one share of common
stock. In all other respects, including voting rights, the shares of Class B
common stock will be identical to the shares of common stock. The exchange offer
is subject to certain conditions including: shareholder approval, the ability to
list Class B shares on a national securities exchange, the tendering of at least
3,000,000 shares, and obtaining any required bank consents on terms acceptable
to us.
We expect to begin the exchange offer within the next 60 to 90 days upon
completion of a registration statement with the Securities and Exchange
Commission. At that time, we estimate that payments to shareholders may be as
much as $30.0 million for the exchange of their stock to the Class B shares. We
intend to fund the payment from cash on hand and borrowings under our Revolving
Credit Facility. In the event we call the Class B shares prior to the end of
2001 we may need to pay as much as $150.0 million for the purchase of the Class
B shares. It is likely, we will need to seek additional financing for the call
provision. This may include the refinancing of our debt obligations.
Inflation in the United States and Canada has not had a significant effect on
our operations during recent periods.
Recently Issued Accounting Standards
In June of 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" which, as amended, is effective for us
beginning in fiscal year 2001. The Statement requires the recognition of certain
derivative instruments on the balance sheet, with resulting transition
adjustments reported in other comprehensive earnings or net earnings as the
effect of a change in accounting principle, as appropriate. We are currently
evaluating the effect this Statement will have on our financial position and
results from operations.
Year 2000
Historically, certain computer programs were written using two digits
rather than four to define the applicable year. As a result, there was concern
that certain software might recognize a date using "00" as 1900 rather than the
year 2000, which may have resulted in computer system failures or
miscalculations. This potential problem was commonly referred to as the Year
2000 ("Y2K") issue. We have not experienced any significant problems associated
with potential Y2K issues. Our efforts to prepare for Y2K cost us approximately
$3.9 million. We made modifications to our primary network and hardware/software
infrastructure, our core transaction processing and financial systems, and our
embedded chip technology in our manufacturing systems. We believe these
modifications as well as other modifications and replaced systems will provide
lasting benefits to the Company. We will continue to monitor our systems for Y2K
issues throughout the year 2000.
19
<PAGE>
SIGNATURES
Item 1. Legal Proceedings
The following should be read in conjunction with Part 1, Item 3., "Legal
Proceedings" in our Annual Report on Form 10-K for the year ended December 25,
1999.
As of the end of April 2000, there were approximately 7 pending toxic
shock syndrome claims relating to Playtex tampons, although additional claims
may be made in the future.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits:
(27) Financial Data Schedule
b. Reports on Form 8-K
None
20
<PAGE>
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
PLAYTEX PRODUCTS, INC.
Date: May 15, 2000 By: /S/ MICHAEL R. GALLAGHER
-------------- ------------------------
Michael R. Gallagher
Chief Executive Officer
(Principal Executive Officer)
Date: May 15, 2000 By: /S/ GLENN A. FORBES
-------------- ------------------------
Glenn A. Forbes
Executive Vice President and
Chief Financial Officer
(Principal Financial and Accounting Officer)
21
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description
- ----------- -----------
27 Financial Data Schedule
99 Press Release - Playtex Products
Announces Exchange Offer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-30-2000
<PERIOD-END> APR-01-2000
<CASH> 9,467
<SECURITIES> 0
<RECEIVABLES> 155,908
<ALLOWANCES> 2,504
<INVENTORY> 89,036
<CURRENT-ASSETS> 267,626
<PP&E> 201,239
<DEPRECIATION> 89,681
<TOTAL-ASSETS> 1,170,042
<CURRENT-LIABILITIES> 144,546
<BONDS> 1,002,813
0
0
<COMMON> 607
<OTHER-SE> (78,498)
<TOTAL-LIABILITY-AND-EQUITY> 1,170,042
<SALES> 223,507
<TOTAL-REVENUES> 223,507
<CGS> 93,805
<TOTAL-COSTS> 93,805
<OTHER-EXPENSES> 81,470
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 22,042
<INCOME-PRETAX> 26,190
<INCOME-TAX> 10,921
<INCOME-CONTINUING> 15,269
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,269
<EPS-BASIC> 0.25
<EPS-DILUTED> 0.25
</TABLE>
Exhibit 99
FOR IMMEDIATE RELEASE Press Release
For more information, contact:
Glenn A. Forbes Julie K. Gottlieb
Exec. VP & Chief Financial Officer Director of Investor Relations &
(203) 341-4264 Communications
(203) 341-4262
Playtex Products Announces Exchange Offer
WESTPORT, CT (May 1, 2000) - Playtex Products, Inc. (NYSE: PYX), a leading
diversified personal care and consumer products company, announced today that it
intends to commence an exchange offer to the holders of its outstanding Common
Stock. Shareholders will be offered the opportunity to exchange up to 10,000,000
shares for a cash payment of $3.00 per share and an equal number of newly
created shares of Class B Common Stock. These shares may be called for
redemption by the Company, at its option, at any time during 2001, in whole or
in part, for an additional $15.00 per share (for a total consideration of $18.00
per share inclusive of the original cash payment of $3.00 per share).
During 2000, if all or substantially all of the Company is sold to a third party
for consideration equal to or greater than $18.00 per share, shareholders of
Class B Common Stock will be redeemed for an amount equal to the consideration
to be received by the shareholders of Common Stock, less the cash payment amount
of $3.00 per share. If the shares are not called for redemption by the end of
2001, each Class B share will automatically convert into one share of Common
Stock. In all other respects, including voting rights, the shares of Class B
Common Stock will be identical to the shares of Common Stock.
A registration statement will be filed with the Securities and Exchange
Commission shortly. The Company expects to commence the exchange offer in
approximately 60 to 90 days and to complete the exchange (including the payment
of $3.00 per share) within approximately 30 days after the commencement of the
offer. The Company will distribute an offering circular describing the exchange
offer in detail at the time it commences the offering.
The exchange offer is subject to certain conditions, including shareholder
approval, the ability to list Class B shares on a national securities exchange,
the tendering of at least 3,000,000 shares, and obtaining any required bank
consents on terms acceptable to the Company. The Company does not believe that
any of the directors of Playtex Products currently intend to tender in the
exchange offer any shares which they beneficially own.
These securities may not be sold, nor may offers to buy, be accepted prior to
the time the registration statement becomes effective. This press release shall
not constitute an offer to sell, or the solicitation of an offer to buy, nor
shall there be any sale of the Class B Common Stock in any state in which such
offer, solicitation or sale would be unlawful prior to the registration or
qualification under the securities laws of any such state.
Playtex Products, Inc. is a leading manufacturer and distributor of a
diversified portfolio of consumer and personal products. Infant Care is the
largest business and market leader with Playtex infant feeding products, Binky
pacifiers, Chubs baby wipes, Wet Ones, Baby Magic infant toiletries, Diaper
Genie, and Mr. Bubble. Feminine Care offers a wide range of Playtex tampons and
leads the plastic applicator segment. Sun Care includes the #2-selling Banana
Boat and BioSun. Household Products includes Woolite rug and upholstery cleaning
products and Playtex Gloves, the leader in the household latex glove market.
Personal Grooming includes market leaders Binaca and Ogilvie.
# # #
