-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WzOU19Chn0B4NAOraAEa3X7gn4TNF1PVSAP75wid/A6iYaG6ATOKfGUjTJej1WYT Di2z/U13euU8Kn5Y5hQa1g== 0001047469-98-014742.txt : 19980414 0001047469-98-014742.hdr.sgml : 19980414 ACCESSION NUMBER: 0001047469-98-014742 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19980128 ITEM INFORMATION: FILED AS OF DATE: 19980413 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PLAYTEX PRODUCTS INC CENTRAL INDEX KEY: 0000842699 STANDARD INDUSTRIAL CLASSIFICATION: APPAREL & OTHER FINISHED PRODS OF FABRICS & SIMILAR MATERIAL [2300] IRS NUMBER: 510312772 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 001-12620 FILM NUMBER: 98592629 BUSINESS ADDRESS: STREET 1: 300 NYALA FARMS RD CITY: WESTPORT STATE: CT ZIP: 06880 BUSINESS PHONE: 2033414000 MAIL ADDRESS: STREET 1: 300 NYALA FARMS ROAD CITY: WESTPORT STATE: CT ZIP: 06880 FORMER COMPANY: FORMER CONFORMED NAME: PLAYTEX FP GROUP INC DATE OF NAME CHANGE: 19920703 8-K/A 1 8-K/A SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------------- FORM 8-K/A AMENDMENT NO. 1 TO CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): January 28, 1998 PLAYTEX PRODUCTS, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) Delaware 33-25485-01 51-0312772 - -------------------------------------------------------------------------------- (State or other (Commission (IRS Employer jurisdiction of File Number) Identification No.) incorporation) 300 Nyala Farms Road, Westport, CT 06880 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (203) 341-4000 ------------------------------ N/A - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report) The Registrant hereby amends its current report on Form 8-K filed with the Securities and Exchange Commission on February 12, 1998. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits (a) Financial Statements The audited financial statements are filed as Exhibit 99.1 to this report. The unaudited condensed financial statements are filed as Exhibit 99.2 to this report. (b) Pro Forma Financial Information The pro forma unaudited condensed combined financial information are filed as Exhibit 99.3 to this report. (c) Exhibits Exhibit Numbers Description ------- ----------- 99.1 Personal Holding Corporation, Inc., audited financial statements, as of and for the year ended March 29, 1997 (with the Independent Auditor's Report thereon). 99.2 Personal Holding Corporation, Inc., unaudited condensed financial statements, as of and for the nine month periods ended December 27, 1997 and December 28, 1996. 99.3 Playtex Products, Inc., Personal Care Holdings, Inc., Carewell Industries, Inc., and certain assets from Binky-Griptight Inc. unaudited pro forma condensed combined financial information. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on behalf by the undersigned hereunto duly authorized. PLAYTEX PRODUCTS, INC. Date: April 13, 1998 By: /s/ Michael F. Gross ---------------------------------- Michael F. Goss Executive Vice President Chief Financial Officer EX-99.1 2 AUDITED FINANCIAL STATEMENTS Exhibit 99.1 PERSONAL CARE HOLDINGS, INC. AND SUBSIDIARIES Consolidated Financial Statements March 29, 1997 (With Independent Auditors' Report Thereon) INDEPENDENT AUDITORS' REPORT The Board of Directors Personal Care Holdings, Inc. We have audited the accompanying consolidated balance sheet of Personal Care Holdings, Inc. and subsidiaries as of March 29, 1997, and the related consolidated statements of operations, changes in stockholders' equity and cash flows for the year then ended. 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 audit. We conducted our audit 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 audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Personal Care Holdings, Inc. and subsidiaries as of March 29, 1997, and the results of their operations and their cash flows for the year then ended, in conformity with generally accepted accounting principles. /s/ KPMG Peat Marwick LLP May 30, 1997, except for footnote 15 which is as of January 28, 1998 PERSONAL CARE HOLDINGS, INC. AND SUBSIDIARIES Consolidated Balance Sheet March 29, 1997 ASSETS Current assets: Cash and cash equivalents $ 3,187,205 Accounts receivable, net of allowances of $406,268 15,997,425 Inventories (note 3) 10,321,244 Prepaid expenses and other current assets 314,894 Deferred tax assets (note 8) 1,316,300 ------------ Total current assets 31,137,068 Property and equipment, net (notes 4 and 6) 18,760,581 Other assets, net of accumulated amortization of $267,803 1,805,241 Goodwill, net of accumulated amortization of $1,995,689 77,857,828 ------------ Total assets $129,560,718 ------------ ------------ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt (note 6) 10,640,500 Accounts payable 4,217,446 Accrued promotional expenses 4,406,960 Other accrued expenses 8,178,792 ------------ Total current liabilities 27,443,698 Long-term debt, excluding current portion (note 6) 61,354,136 Deferred tax liabilities (note 8) 1,003,300 ------------ Total liabilities 89,801,134 ------------ Commitments (note 10) Stockholders' equity (note 11): Common stock, $.01 par value. Authorized 1,300,000 shares; issued and outstanding 1,001,737 shares 10,017 Additional paid-in capital 40,359,985 Accumulated deficit (610,418) ------------ Total stockholders' equity 39,759,584 ------------ Total liabilities and stockholders' equity $129,560,718 ------------ ------------ See accompanying notes to consolidated financial statements. PERSONAL CARE HOLDINGS, INC. AND SUBSIDIARIES Consolidated Statement of Operations Year ended March 29, 1997 Net sales (note 12) $110,988,652 Cost of goods sold 75,509,050 ------------ Gross profit 35,479,602 Selling, general and administrative expenses (note 12) 29,654,798 ------------ Operating profit 5,824,804 Other (income) expense: Interest expense 6,670,303 Interest income (56,431) Other expense, net 134,350 ------------ Loss from operations before income taxes (923,418) Income tax benefit (note 8) 313,000 ------------ Net loss $ (610,418) ------------ ------------ See accompanying notes to consolidated financial statements. PERSONAL CARE HOLDINGS, INC. AND SUBSIDIARIES Consolidated Statement of Changes in Stockholders' Equity Year ended March 29, 1997 Additional Common paid-in Accumulated Stock Capital Deficit Total -------- ----------- --------- ----------- Balance, April 1, 1996 $ 9,944 $40,065,056 $ - $40,075,000 Issuance of shares of common stock 73 294,929 - 295,002 Net loss - - (610,418) (610,418) -------- ----------- --------- ----------- Balance, March 29, 1997 $ 10,017 $40,359,985 $(610,418) $39,759,584 -------- ----------- --------- ----------- -------- ----------- --------- ----------- See accompanying notes to consolidated financial statements. PERSONAL CARE HOLDINGS, INC. AND SUBSIDIARIES Consolidated Statement of Cash Flows Year ended March 29, 1997 Cash flows from operating activities: Net loss $ (610,418) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 4,120,130 Deferred income taxes (313,000) Loss on disposal of fixed assets 145,851 Changes in operating assets and liabilities: Increase in accounts receivable (3,705,425) Decrease in inventories 11,177,756 Decrease in prepaid expenses and other current assets 28,106 Increase in other assets (480,273) Increase in accounts payable and accrued expenses 8,310,197 ------------ Net cash provided by operating activities 18,672,924 ------------ Cash flows from investing activities: Purchase of property and equipment (2,521,267) Proceeds from sale of property and equipment 68,910 ------------ Net cash used in investing activities (2,452,357) ------------ Cash flows from financing activities: Repayment of long-term debt (13,505,364) Proceeds from issuance of common stock 295,002 ------------ (13,210,362) Net increase in cash and cash equivalents 3,010,205 Cash and cash equivalents at beginning of year 177,000 ------------ Cash and cash equivalents at end of year $ 3,187,205 ------------ ------------ Supplemental disclosure of cash flow information: Cash paid during the year for interest $ 4,882,096 ------------ ------------ See accompanying notes to consolidated financial statements. PERSONAL CARE HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements March 29, 1997 (1) ORGANIZATION AND BUSINESS Personal Care Holdings, Inc. (the "Company") is a manufacturer, marketer and distributor of personal care product lines, including Chubs, Wet Ones, Diaparene, Binaca, Mr. Bubble, Ogilvie, Dorothy Gray, Satura, Better Off and Tussy. The Company has operations in Australia, to market and distribute Chubs to the Australian and New Zealand markets. The Company was formed on April 1, 1996 as a result of the purchase of the Personal Products Division of Reckitt & Colman by the Company. Although the Company sells its products in thirty countries worldwide, approximately 90% of the Company's sales are to customers in the United States. The Company operates in the consumer products segment. (2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION The accompanying consolidated financial statements include the accounts of Personal Care Holdings, Inc. and its subsidiaries. All intercompany transactions and balances have been eliminated. INVENTORIES Inventories are stated at the lower of cost or market. Cost is principally determined by the first-in, first-out method. PROPERTY AND EQUIPMENT Property and equipment are stated at cost. Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets, which range from three to forty years. Leasehold improvements are amortized utilizing the straight-line method over the shorter of the life of the lease or the estimated useful lives of the assets. Maintenance and repairs are charged to operations as incurred, and replacements and betterments are capitalized. INTANGIBLE ASSETS Goodwill is related to the acquisition of the business and is being amortized on a straight-line basis over forty years, the estimated future period to be benefited. Included in other assets are deferred financing fees and patents. These costs are being amortized over seven years (the term of the loan agreement) and ten years, respectively. PERSONAL CARE HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (2) CONTINUED The Company evaluates, when circumstances warrant, the recoverability of its intangible assets on the basis of undiscounted cash flow projections and through the use of various other measures, which include market share and business plans. REVENUE RECOGNITION The Company recognizes sales upon shipment of merchandise. Net sales consist of gross revenue less expected returns, trade discounts and customer allowances. INCOME TAXES Deferred tax assets and liabilities are recognized for the future tax consequences attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. STOCK COMPENSATION The Company has adopted Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based Compensation." As permitted under SFAS No. 123, the Company elected not to adopt the fair value-based method of accounting for its stock-based compensation plans, but will account for such compensation under the provisions of Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations. The Company has, however, complied with the disclosure requirements of SFAS No. 123. CASH AND CASH EQUIVALENTS Cash and cash equivalents include cash on hand and short-term investments with original maturities of three months or less. FISCAL YEAR The Company's fiscal year includes the 52 or 53 weeks ending on the last Saturday in March. The year ended March 29, 1997 included 52 weeks. USE OF ESTIMATES The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect PERSONAL CARE HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (2) CONTINUED the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. ADVERTISING COSTS The Company generally expenses production costs of media advertising as of the first date the advertisements take place. Advertising expense included in selling, general and administrative expenses was $9,675,000 for the year ended March 29, 1997. (3) INVENTORIES Inventories at March 29, 1997 consist of the following: Raw materials and packaging $ 3,682,179 Work-in-process 262,196 Finished goods 6,376,869 ----------- $10,321,244 ----------- ----------- (4) PROPERTY AND EQUIPMENT Property and equipment consist of the following at March 29, 1997: Useful Lives ------------ Land and buildings $ 2,344,529 40 years (buildings) Machinery and equipment 17,159,434 3-15 years Furniture and fixtures 366,751 10 years Computer software 243,302 5 years Leasehold improvements 264,421 5 years Construction in progress 238,782 ------------ 20,617,219 Less accumulated depreciation and amortization 1,856,638 ------------ $ 18,760,581 ------------ ------------ Depreciation and amortization expense totaled $1,856,638 for the year ended March 29, 1997. PERSONAL CARE HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (5) SHORT-TERM BORROWINGS The Company has a commitment from Fleet Bank for a line of credit, expiring April 2002, of up to $5,000,000 which can be used to support letters of credit. At March_29, 1997, the Company has $5,000,000 available under this line of credit. Any actual borrowings under this arrangement are governed by the terms of the Fleet revolving credit line. (6) LONG-TERM DEBT Long-term debt at March 29, 1997 consists of the following: Reckitt & Colman ---------------- Term loan, with interest, payable semiannually in March and September, increasing from 11% in 1997 to 15% in 2001. Principal due September 30, 2003 (see note 11(b)) $ 15,000,000 Fleet Bank ---------- Revolving credit line of up to $20,000,000, with interest at LIBOR + 2.0% (7.6875% at March 29, 1997) and principal and interest due in quarterly installments through April 3, 2002 (a) 1,994,637 Term loan A - Tranche 1, with interest at LIBOR + 2.0% (7.6875% at March 29, 1997) and principal and interest due in quarterly installments through April 3, 2002 (a) 25,890,639 Term loan A - Tranche 2, with interest at LIBOR + 2.0% (7.6602% at March 29, 1997) and principal and interest due in quarterly installments through April 3, 2002 (a) 17,109,360 Term loan B, with interest at LIBOR + 2.5% (8.1875% at March 29, 1997) and principal and interest due in quarterly installments through April 3, 2003 (a) 12,000,000 ------------ Total long-term debt 71,994,636 Less current installments 10,640,500 ------------ Total long-term debt, excluding current installments $ 61,354,136 ------------ ------------ (a) The Fleet Bank agreement, which is secured by real property owned by the Company, provides for accelerated repayments based on specified levels of operating cash flows, as defined in the agreement. As of March_29, 1997, this prepayment amounted to approximately $4,490,500, which has been classified in the current portion of long-term debt. PERSONAL CARE HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (6) CONTINUED Maturities of long-term debt at March 29, 1997 are: $10,640,500 in fiscal 1998; $7,000,000 in fiscal 1999; $10,000,000 in fiscal 2000; $10,000,000 in fiscal 2001; $10,169,000 in fiscal 2002 and $24,185,136 thereafter. The Company's debt agreements contain certain covenants, including those relating to a minimum consolidated net worth, a minimum fixed charge coverage ratio and a maximum leverage ratio, as defined by the agreements. As of March 29, 1997, the Company is in compliance with all the terms and conditions of the agreements. (7) RETIREMENT AND SAVINGS PLAN The Company provides a defined contribution retirement plan covering all employees in the United States. The plan provides that employees can contribute from 1% to 15% of their annual earnings, as defined, subject to the maximum allowed under Section 401(k) of the Internal Revenue Code ($9,500 for 1996). Employee contributions are matched with a contribution by the Company of 75% of the employee's contribution up to 6% of eligible compensation. The sum of an employee's annual contribution and the Company's match is subject to the limit of the lesser of $30,000 or 25% of the employee's compensation. For the year ended March 29, 1997, the Company contributed approximately $257,426 to the plan. (8) INCOME TAXES Losses from operations before income taxes for the year ended March 29, 1997 are as follows: U.S. $ (784,978) Foreign (138,440) ----------- $ (923,418) ----------- ----------- The Company's income tax benefit for the year ended March 29, 1997 consists of the following: Deferred Federal $ 254,137 State 58,863 ----------- $ 313,000 ----------- ----------- PERSONAL CARE HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (8) CONTINUED A reconciliation of the differences between the Company's actual income tax benefit and the Federal income tax benefit computed at the statutory rate of 35% for the year ended March 29, 1997 is as follows: Expected federal income tax benefit at statutory rate $ (323,196) Foreign losses not tax effected 48,454 State tax benefit, net of federal income tax effect (38,258) ----------- Total tax benefit $ (313,000) ----------- ----------- The tax effect of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at March 29, 1997 are presented below: Deferred tax assets: Allowances on accounts receivable $ 154,400 Inventories 503,000 Promotional accruals 376,200 Compensation and benefits 282,700 Net operating loss carryforwards 575,000 ----------- Total gross deferred tax assets 1,891,300 Deferred tax liabilities: Property and equipment 300,300 Goodwill 1,265,600 Other 12,400 ----------- Total gross deferred tax liabilities 1,578,300 ----------- Net deferred tax asset $ 313,000 ----------- ----------- Management of the Company has determined, based upon expected income in the future, that it is more likely than not that operating income will be sufficient to fully realize the net deferred tax asset and, therefore, no valuation allowance is warranted at March 29, 1997. At March 29, 1997, the Company has net operating loss carryforwards of approximately $1,334,000, expiring in fiscal 2012, to offset against future taxable income for Federal income tax purposes. PERSONAL CARE HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (9) FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying amounts of financial instruments approximate their fair value as of March_29, 1997. The methods and assumptions used to estimate the fair value of the financial instruments vary among the types of instruments. For cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, the short maturity of the instruments and obligations supports their fair value at their respective carrying amounts. The carrying amount of the Company's debt approximates its fair value due to the variable interest rates which approximate current market rates. (10) COMMITMENTS The Company has several noncancellable operating leases, primarily for office and warehouse space and automobiles, expiring at various dates through 2002. Future minimum rental commitments under noncancelable operating leases as of March_29, 1997 are as follows: Year ending March 29 Amount ------------------- ------ 1998 $1,060,744 1999 1,048,470 2000 1,009,765 2001 987,468 2002 721,637 ---------- $4,828,084 ---------- ---------- Rent expense under all operating leases charged to selling, general and administrative expenses in the accompanying consolidated statement of operations for the year ended March_29, 1997 was approximately $377,074. (11) STOCKHOLDERS' EQUITY (a) STOCK OPTION PLAN The Company has adopted the Non-qualified Stock Option Plan (the "Plan") providing for the granting of options to purchase up to 151,619 shares of common stock to officers, directors, consultants and key employees. Any options granted generally become exercisable, commencing twelve months from the date of grant, at the rate of 20% per year for five years, subject to the attainment of certain financial targets by the Company. Each option granted under the Plan is generally exercisable for ten years. PERSONAL CARE HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (11) CONTINUED The following table summarizes information about stock options outstanding, of which none was exercisable, at March 29, 1997: Outstanding: Exercise price $ 40.30 Number outstanding 151,619 Remaining contractual life 9 years The Company applies APB No. 25 and related interpretations in accounting for its stock-based compensation plan. Accordingly, as the exercise price at the date of grant equaled the estimated fair value of a common share, no compensation cost has been recognized in connection with the Plan. The Company has adopted the disclosure-only option under SFAS No. 123. If the accounting provisions of SFAS_No. 123 had been adopted, the Company's net loss for the year ended March_29, 1997 would have been increased on a pro forma basis to $1,624,467. This effect was calculated using the minimum value method to value stock options at the date of grant. Zero dividends, a 6.72% risk-free interest rate, and a ten year life were assumed in the calculation. (b) WARRANTS In connection with the term loan agreement with Reckitt & Colman ("R&C"), on April_1, 1996, the Company issued 20,000 common stock purchase warrants to R&C. These warrants allow R&C to purchase 20,000 shares of the Company's common stock at an exercise price of $40.30, adjusted as defined in the agreement. In general, the warrants allow R&C to purchase 6,666 shares on July 31, 1998; an additional 6,666 shares on August_31, 1999; and an additional 6,667 shares on August_31, 2000. The warrants are canceled if the term loan payable to R&C (see note 6) is paid in full prior to the July 1998 exercise date. (c) COMMON STOCK During the year ended March 29, 1997, the Company sold 7,320 shares of common stock to certain key employees at a price of $40.30 per share. (12) BUSINESS CONCENTRATION Most of the Company's customers are located in the United States. One customer accounted for approximately 20% of the Company's net sales in the year ended March_29, 1997. The Company's top five customers accounted for approximately 30% of total net sales in the same period. PERSONAL CARE HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (13) RELATED PARTY TRANSACTION The Company pays a management fee to its principal shareholder of $20,000 per month, plus expenses incurred. (14) INFORMATION BY MAJOR GEOGRAPHIC SEGMENT Net sales by geographic area represent sales to unaffiliated customers only for the year ended March 29, 1997: Sales: United States $100,430,589 Canada 8,135,126 Australia/New Zealand 2,422,937 ------------ $110,988,652 ------------ ------------ Operating profit (loss) is defined as total revenue less operating expenses, exclusive of other miscellaneous expense, interest and income taxes, for the year ended March 29, 1997: Operating profit (loss): United States $ 4,120,479 Canada 1,842,763 Australia/New Zealand (138,438) ------------ $ 5,824,804 ------------ ------------ Identifiable assets by geographic area represent those assets that are used in operations in each area as of March 29, 1997: Identifiable assets: United States $123,712,327 Canada 4,235,735 Australia/New Zealand 1,612,656 ------------ $129,560,718 ------------ ------------ (15) SUBSEQUENT EVENTS In November 1997, using borrowings under the Fleet Bank credit facilities, the Company repaid the term loan of $15.0 million due to Reckitt & Colman. PERSONAL CARE HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (15) CONTINUED On January 28, 1998, all of the common stock of the Company was acquired by Playtex Products, Inc. (Playtex) for approximately $91,000,000 in cash and 9,257,345 shares of Playtex common stock. In connection with the acquisition by Playtex, the borrowings under the Fleet Bank credit facilities were repaid and the agreement terminated. EX-99.2 3 UNAUDITED CONDENSED FINANCIAL STATEMENTS Exhibit 99.2 PERSONAL CARE HOLDINGS, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 27, 1997 PERSONAL CARE HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited, in thousands) ASSETS December 27, 1997 -------- Current Assets: Cash and cash equivalents $ 551 Accounts receivable, net 13,970 Inventories 15,702 Prepaid expenses and other current assets 335 Deferred tax assets 1,059 -------- Total current assets 31,617 Property and equipment 18,917 Other assets 2,916 Goodwill 75,466 -------- Total assets $128,916 -------- -------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 5,000 Accounts payable and accrued expenses 17,318 -------- Total current liabilities 22,318 Long-term debt, excluding current portion 60,500 Deferred tax liabilities 2,602 -------- Total liabilities 85,420 Stockholders' equity: Common Stock, $0.01 par value, authorized 1,300,000 shares; issued and outstanding 1,003,123 shares 10 Additional paid-in capital 40,450 Retained earnings 3,036 -------- Total stockholders' equity 43,496 -------- Total liabilities and stockholders' equity $128,916 -------- -------- See accompanying condensed notes to consolidated financial statements. PERSONAL CARE HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited, in thousands) Nine Month Period Ended --------------------------- December 27, December 26, 1997 1996 -------- -------- Net sales $90,987 $ 80,443 Cost of goods sold 66,681 52,937 -------- -------- Gross profit 24,306 27,506 Selling, general and administrative expenses 15,380 24,939 -------- -------- Operating profit 8,926 2,567 Other expenses: Interest expense, net 4,364 4,904 Other (income) and expense 36 (10) -------- -------- Earnings (loss) from operations before income taxes and extraordinary gain 4,526 (2,327) Income tax expense (benefit) 1,795 (848) -------- -------- Earnings (loss) before extraordinary gain 2,731 (1,479) Extraordinary gain on early extinguishment of debt, net of $585 of tax expense 915 -- -------- -------- Net earnings (loss) $ 3,646 $ (1,479) -------- -------- -------- -------- See accompanying condensed notes to consolidated financial statements. PERSONAL CARE HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY NINE MONTH PERIOD ENDED DECEMBER 27, 1997 (Unaudited, in thousands) Additional Common Paid-in Accumulated Stock Capital Deficit Total ----- ------- ------- ----- Balance, March 29, 1997 $10 $40,360 $ (610) $39,760 Issuance of shares of common stock -- 90 -- 90 Net earnings -- -- 3,646 3,646 --- ------- ------ ------- Balance, December 27, 1997 $10 $40,450 $3,036 $43,496 --- ------- ------ ------- --- ------- ------ ------- See accompanying condensed notes to consolidated financial statements. PERSONAL CARE HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited, in thousands) Nine Month Period Ended ----------------------- December 27, December 26, 1997 1996 ------- ------- Cash flows provided by operating activities: Net earnings (loss) $3,646 $(1,479) Non-cash items included in earnings: Depreciation and amortization 3,174 3,055 Deferred income taxes 1,856 1,197 Loss on disposal of fixed assets -- 145 (Increase) Decrease in working capital items (3,220) 10,118 ------- ------- Net cash flows provided by operations 5,456 13,036 ------- ------- Cash flows used in investing activities: Purchase of property and equipment (1,687) (1,930) ------- ------- Net cash flows used in investing activities (1,687) (1,930) ------- ------- Cash flows used in financing activities: Repayment of Reckitt & Colman term loan (15,000) -- Net borrowings (repayments) under credit facilities 8,505 (9,172) Proceed from issuance of common stock 90 295 ------- ------- Net cash flows used in financing activities (6,405) (8,877) ------- ------- Net decrease in cash and cash equivalents (2,636) 2,229 Cash and cash equivalents at beginning of period 3,187 177 ------- ------- Cash and cash equivalents at end of period $ 551 $ 2,406 ------- ------- ------- ------- Supplemental disclosure of cash flow information: Cash paid during the period for : Interest $ 5,130 $ 2,406 ------- ------- ------- ------- Income taxes $ -- $ -- ------- ------- ------- ------- See accompanying condensed notes to consolidated financial statements. PERSONAL CARE HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. LONG-TERM DEBT In November 1997, using borrowings under the Fleet Bank Credit Facilities, the Company repaid the term loan of $15.0 million due to Reckitt & Colman for $13.5 million and recognized an extraordinary gain on early extinguishment of debt of $0.9 million, net of $0.6 million of income tax expense. Concurrent with the repayment of the Term Loan, the Company amended the terms of the Fleet Bank Credit Facilities. Long-term debt consists of the following (in thousands):
December 27, 1997 --------- Fleet Bank Credit Facilities - ---------------------------- Revolving credit line of up to $20 million, with interest at LIBOR +1.50% (7.1875% at December 27, 1997) interest due quarterly and principal and installments through December 31, 2003 4,000 Term Loan A - Tranche 1, with interest at LIBOR +1.50% (7.34375% at December 27,1997) interest due quarterly and principal and installments through December 31, 2003 35,204 Term Loan A - Tranche 2, with interest at LIBOR +1.50% (7.21875% at December 27, 1997) interest due quarterly and principal and installments through December 31, 2003 1,204 Term Loan A - Tranche 3, with interest at LIBOR +1.50% (7.25000% at December 27, 1997) interest due quarterly and principal and installments through December 31, 2003 46 Term Loan A - Tranche 4, with interest at LIBOR +1.50% (7.21875% at December 27, 1997) interest due quarterly and principal and installments through December 31, 2003 25,046 ------- 65,500 Less current maturities (5,000) ------- Total long-term debt $60,500 ------- -------
2. SUBSEQUENT EVENT On January 28, 1998, Personal Care Holdings, Inc. Merged with a wholly-owned subsidiary of Playtex Products, Inc. (Playtex) for approximately $91.0 million in cash and 9,257,345 shares of Playtex common stock. EX-99.3 4 UNAUDITED PRO FORMA FINANCIAL STATEMENTS Exhibit 99.3 PLAYTEX PRODUCTS, INC. PRO FORMA UNAUDITED CONDENSED COMBINED FINANCIAL INFORMATION PLAYTEX PRODUCTS, INC. INDEX TO THE PRO FORMA UNAUDITED CONDENSED COMBINED FINANCIAL INFORMATION Pages Basis of Presentation of Pro Forma Information 3 Pro Forma Condensed Combined Balance Sheet as of December 27, 1997 5 Notes to Pro Forma Condensed Combined Balance Sheet as of December 27, 1997 6 Pro Forma Condensed Combined Statement of Operations for the twelve month period ended December 27, 1997 7 Notes to Pro Forma Condensed Combined Statement of Operations for the twelve month period ended December 27, 1997 8 PLAYTEX PRODUCTS, INC. PRO FORMA CONDENSED COMBINED BALANCE SHEET AND PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS BASIS OF PRESENTATION OF PRO FORMA INFORMATION On July 21, 1997, Playtex Products, Inc. (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 87/8% 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 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. 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. Fees and expenses associated with the 1997 Refinancing of approximately $10.0 million are amortized over the term of the associated indebtness. 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 under the Company's 1997 Revolving Credit Facility, was accounted for as a purchase. On January 26, 1998, the Company acquired certain tangible and intangible assets related to the Binky-Registered Trademark- pacifier business ("Binky') from Binky-Griptight, Inc. for approximately $1.2 million in cash and $0.5 million in notes payable due July 27,1998. The acquisition, which was financed under the Company's 1997 Revolving Credit Facility, was accounted for as a purchase. On January 28, 1998, the Company acquired Personal Care Holdings, Inc. ("PCH") for approximately $91.0 million in cash and 9,257,345 shares valued at $9.875 per share 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. The acquisition was accounted for as a purchase. The pro forma condensed combined balance sheet gives effect to the acquisitions of Carewell, Binky, and PCH (the "Acquired Companies") as if they had occurred on December 27, 1997. PLAYTEX PRODUCTS, INC. PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS AND PRO FORMA CONDENSED COMBINED BALANCE SHEET BASIS OF PRESENTATION OF PRO FORMA INFORMATION (continued) The pro forma condensed combined statement of operations for the twelve month period ended December 27, 1997 gives effect to the acquisitions of the Acquired Companies and the 1997 Refinancing as if they had occurred on December 29, 1996, the first day of the Company's fiscal year ended December 27, 1997. The pro forma condensed combined balance sheet and pro forma condensed combined statement of operations are unaudited and were derived by adjusting the historical consolidated financial statements of the Company for the impact of the events listed above and as described in the respective notes hereto. These pro forma condensed combined financial statements are provided for informational purposes only and should not be construed to be indicative of the financial condition or results of operations of the Company had such transactions been consummated on the dates indicated and are not intended to be predictive of the financial condition or results of operations of the Company at any future date or future period. The pro forma adjustments are based upon available information and upon certain assumptions that the Company believes are reasonable under the circumstances. The pro forma financial information and accompanying notes should be read in conjunction with the historical consolidated financial statements of the Company, including the notes thereto, and any other information pertaining to the Company, previously provided to stockholders. The pro forma adjustments for the Acquired Companies 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 unaudited pro forma information includes financial information for Carewell at and for the twelve month period ended December 31, 1997, Binky at and for the twelve month period ended December 31, 1997, and PCH at and for the twelve month period ended December 27, 1997. For ease of reference, all column headings used in the unaudited pro forma information refer to December 27, 1997 or the twelve month period ended December 27, 1997, which is the Company's fiscal year end date. PLAYTEX PRODUCTS, INC. PRO FORMA CONDENSED COMBINED BALANCE SHEET DECEMBER 27, 1997
Historical Pro Forma ------------------------ --------------------------- Playtex Products, Acquired ASSETS Inc. Companies Adjustments Combined --------- --------- --------- --------- (1) (2) (3) (4) Cash..................................... $ 3,231 $ 625 $ -- $ 3,856 Receivables, less allowances............. 66,876 15,120 -- 81,996 Inventories.............................. 42,500 16,064 2,535 (a) 61,099 Other current assets..................... 12,755 1,861 6,142 (b) 20,758 --------- --------- --------- --------- Current assets ..................... 125,362 33,670 8,677 167,709 Net property, plant and equipment............................. 54,810 19,319 (1,423) (a) 72,706 Intangible assets........................ 388,743 77,049 91,228 (c) 557,020 Due from related party................... 80,017 127 (127) (d) 80,017 Other noncurrent assets.................. 3,626 1,356 2,542 (e) 7,524 --------- --------- --------- --------- Total assets $ 652,558 $ 131,521 $ 100,897 $884,976 --------- --------- --------- --------- --------- --------- --------- --------- LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable and accrued expenses.................... $ 63,339 $ 19,837 $ 8,958 (f) $ 92,134 Other current liabilities................ 5,621 5,000 (3,500)(g) 7,121 --------- --------- --------- --------- Current liabilities................. 68,960 24,837 5,458 99,255 Long-term debt........................... 736,300 60,500 47,604 (h) 844,404 Due to related party..................... 78,386 3,780 (3,780)(i) 78,386 Other noncurrent liabilities............. 36,975 2,602 -- 39,577 --------- --------- --------- --------- Total liabilities................... 920,621 91,719 49,282 1,061,622 Stockholders' equity..................... (268,063) 39,802 51,615 (j) (176,646) --------- --------- --------- --------- Total liabilities and stockholders' equity............ $ 652,558 $ 131,521 $ 100,897 $ 884,976 --------- --------- --------- --------- --------- --------- --------- ---------
- -------------------------------- (1) Represents the historical financial position of Playtex Products, Inc. at December 27, 1997. (2) Represents the combined historical financial position of the Acquired Companies at December 27, 1997. (3) See Note II of the notes to pro forma condensed combined balance sheet. (4) Reflects the financial position of Playtex Products, Inc. on a pro forma basis assuming the acquisitions of the Acquired Companies had occurred on December 27, 1997. See notes to pro forma condensed combined balance sheet. PLAYTEX PRODUCTS, INC. NOTES TO PRO FORMA CONDENSED COMBINED BALANCE SHEET DECEMBER 27, 1997 (UNAUDITED) I. BASIS OF PRESENTATION The pro forma condensed combined balance sheet gives effect to the acquisitions of the Acquired Companies as if they had occurred on December 27, 1997. II. PRO FORMA ADJUSTMENTS (a) To adjust the carrying value of inventory and net property, plant and equipment acquired to fair value in conformity with Accounting Principles Board Opinion No. 16 "Business Combinations" ("APB 16"). (b) Primarily to record the net current deferred tax asset that arises as a result of purchase accounting adjustments. (c) To record intangible assets of $89.8 million associated with the acquisition of the Acquired Companies which was calculated as the excess of acquisition costs over the estimated fair value of net assets acquired in conformity with APB 16, the deferred financing costs of $3.0 million associated with obtaining funding to acquire the Acquired Companies, and the elimination of the unamortized balance of deferred financing costs recorded by PCH of $1.6 million. (d) To record the repayment of loans from Carewell shareholders at closing. (e) To record net long-term deferred tax assets arising as a result of purchase accounting adjustments, principally the anticipated benefit of net operating loss carryforwards associated with the acquisitions of PCH and Carewell. (f) To record net liabilities assumed as a result of the acquisition of the Acquired Companies. These liabilities are primarily associated with the costs to exit certain business activities of the Acquired Companies and to involuntarily terminate or relocate certain employees of the Acquired Companies. (g) To record the repayment of $5.0 million of current portion of long-term debt of PCH, the issuance of $0.5 million note payable associated with the acquisition of Binky, and the current portion of long-term debt of $1.0 million arising from additional borrowings under the 1997 Term Loan to fund the acquisition of PCH. (h) To record long-term bank borrowings under the 1997 Credit Agreement of $108.1 million to finance the acquisition of the Acquired Companies and to record the retirement of the Acquired Companies' long-term debt of $60.5 million at the closing of the PCH acquisition. (i) To record the repayment of the Acquired Companies' related party debt at closing. (j) To record the portion of the acquisition costs of PCH paid in the form of the issuance of 9,257,345 of the Company's Common Stock valued at $9.875 per share or $91.4 million and the elimination of stockholders' equity of the Acquired Companies of $39.8 million. PLAYTEX PRODUCTS, INC. PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS FOR THE TWELVE MONTHS ENDED DECEMBER 27, 1997 (In thousands)
Historical Pro Forma ----------------------- --------------------------------------------- Playtex Products Acquired 1997 Inc. Companies Refinancing Adjustments Combined --------- --------- -------- --------- --------- (1) (2) (3) (4) (5) 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 (e) 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)(f) Interest expense, net................... 64,470 6,415 32,612 (b) 8,540 (g) 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)(h) 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 (i) 60,180 Diluted............................ 51,006 9,257 (i) 60,263 Earnings per share (basis and diluted) from continuing operations............ $ 0.37 $ 0.29 Net earnings per share (6).............. $ 0.29 $ 0.23
- ----------------------------- (1) Represents the historical results of operations of Playtex Products, Inc. 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 the Acquired Companies 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 the $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 the Acquired Companies to conform with the historical presentation of Playtex Products, Inc. (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 Playtex Products, Inc. on a pro forma basis assuming the 1997 Refinancing and the acquisitions of the Acquired Companies had occurred on December 29, 1996. (6) Net earnings and Net earnings per share give effect to extraordinary loss (see note 1 above) and the extraordinary gain (see note 2 above). See notes to pro forma condensed combined statement of operations. 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 as if the 1997 Refinancing and the acquisitions of the Acquired Companies 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 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 be impacted 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 of the Acquired Companies. (e) To record amortization of intangible assets associated with the acquisition of the Acquired Companies over their estimated useful lives (up to 40 years) of these assets in conformity with APB 16. (f) To eliminate the Acquired Companies interest expense and amortization of deferred financing costs. PLAYTEX PRODUCTS, INC. NOTES TO PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS FOR THE TWELVE MONTHS ENDED DECEMBER 27, 1997 (UNAUDITED) III. ACQUISITION PRO FORMA ADJUSTMENTS (continued) (g) To record interest expense as if the borrowing under the Company's 1997 Credit Agreement used to finance the purchase of the Acquired Companies 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 be impacted by approximately $0.6 million. (h) To record the tax effect of the adjustments specified in notes (e), (f), and (g) at statutory rates. (i) To record the issuance of 9,257,345 shares of Playtex's common stock associated with the acquisition of PCH. The pro forma adjustments for the Acquired Companies 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. -----END PRIVACY-ENHANCED MESSAGE-----