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Securities and Exchange Commission
Washington, D.C. 20549
____________
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 30, 1995
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Transition Period from _______ to _______.
Commission File No. 33-25485-01
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 06880
Westport, Connecticut (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code (203) 341-4000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------- ------------------------
Common Stock, par value $.01 per share New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
FORM 10-K
(Facing Sheet Continuation)
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
--- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendments to
this Form 10-K [X].
The aggregate market value of the voting stock held by non-affiliates of
the registrant as of March 18, 1996 was $197,908,035. (For this computation,
the registrant has excluded the market value of all shares of its Common Stock
reported as beneficially owned by officers and directors of the registrant; such
exclusion shall not be deemed to constitute an admission that any such person is
an "affiliate" of the registrant.)
At March 18, 1996, 50,879,701 shares of Playtex Products, Inc. common
stock, par value $.01 per share, were outstanding.
Documents incorporated by reference:
Document Part of Form 10-K
-------- -----------------
Portions of the registrant's Annual Report to Stockholders II, IV
for the fiscal year ended December 30, 1995 (the "Annual
Report") (inside front cover and pages 8 through 24).
Registrant's definitive Proxy Statement (the "Proxy Statement") III
for the Annual Meeting of Stockholders to be held on May 22, 1996,
which will be filed with the Securities and Exchange Commission
within 120 days after the end of the registrant's fiscal year ended
December 30, 1995 pursuant to Regulation 14A.
- - - - - - - - - -
2
TABLE OF CONTENTS
Page
----
PART I
------
Item 1. Business 4
Item 2. Properties 15
Item 3. Legal Proceedings 16
Item 4. Submission of Matters to a Vote of Security Holders 18
PART II
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Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters 19
Item 6. Selected Financial Data 19
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 19
Item 8. Financial Statements and Supplementary Data 19
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 19
PART III
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Item 10. Directors and Executive Officers of the Registrant 20
Item 11. Executive Compensation 20
Item 12. Security Ownership of Certain Beneficial Owners and
Management 20
Item 13. Certain Relationships and Related Transactions 20
PART IV
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Item 14. Exhibits, Financial Statement Schedule and Reports on
Form 8-K 21
Signatures 25
3
PART I
------
Item 1. Business
A. History
The Playtex businesses were founded in 1932 under the name
International Latex Company and operated for many years prior to 1986 under
the name International Playtex, Inc. ("IPI"). In the mid-1950's, using the
latex technology developed for the manufacture of girdles, Playtex began to
market household gloves, the first of many products to constitute its
Family Products division. Through the marketing of gloves, the addition of
disposable nursers in the mid-1960's, and the acquisition in 1967 and
subsequent expansion of its tampon manufacturing business, Playtex
established a major presence in the drug store, supermarket and mass
merchandise classes of trade. In 1979, Playtex acquired the Jhirmack
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(registered trademark) line of salon quality hair care products. In
May 1989, Playtex acquired the Cherubs(registered trademark) Collection,
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providing an established entry into the hard baby bottle market. In
July 1994, Playtex acquired the SmileTote(registered trademark) line of
---------
infant/toddler cups and bottles. In February 1995, Playtex purchased
the assets of the Woolite(registered trademark) Rug and Upholstery
cleaning business ("Woolite"). In October 1995, Playtex acquired the
remaining 78% of common stock, not previously owned by Playtex, of Banana
Boat Holding Corporation, the manufacturer of Banana Boat sun and skin
care products.
In late 1986, Playtex Holdings, Inc. ("Holdings") and certain of its
subsidiaries were organized by an investor group to effect a management
leveraged buyout of the businesses of IPI. Playtex Products, Inc.
(including, as the context requires, its subsidiaries, the "Company") was
organized in 1988 by an investor group consisting of certain senior
executives of Holdings, the ML-Lee Acquisition Fund, L.P., a Delaware
limited partnership, the Thomas H. Lee Company and certain senior
executives of the Thomas H. Lee Company and certain other investors, to
effect the acquisition of the Playtex Family Products and Jhirmack
--------
businesses from Holdings (the "1988 Acquisition").
On December 28, 1988, the Company consummated the 1988 Acquisition.
Concurrently, Playtex Apparel, Inc. ("Apparel"), an indirect wholly owned
subsidiary of Holdings, after the repayment of $340 million of intercompany
indebtedness, was divested to Playtex Apparel Partners, L.P. (the "Apparel
Partnership"), a limited partnership owned by Joel E. Smilow and the
operating management of Apparel, for a $40 million subordinated debenture.
On November 19, 1991, Apparel was sold by the Apparel Partnership to
and became a wholly owned subsidiary of Sara Lee Corporation ("Sara Lee").
On December 20, 1991, the Company and its stockholders (the "Playtex
Stockholders") completed a transaction with Sara Lee (the "Sara Lee
Transaction") which included, among other things, (i) the acquisition by
Sara Lee of convertible preferred stock of the Company (the "Series C
Preferred Stock"), that together with shares of the Company's common stock
(the "Common Stock") purchased from the Playtex Stockholders, gave Sara Lee
25% of the voting and dividend rights in the Company; and (ii) the sale of
an option in favor of Sara Lee to acquire all of the remaining outstanding
shares of Common Stock (the "Sara Lee Option"). In connection with the
1994 Recapitalization (as defined and discussed below), the Sara Lee Option
was terminated and the Series C Preferred Stock was redeemed.
4
In December 1992, the Company acquired, for $5 million, a 22% common
equity interest (17.5% on a fully diluted basis) in Banana Boat Holding
Corporation ("BBH") in conjunction with the acquisition by BBH's wholly-
owned subsidiary, Sun Pharmaceuticals Corp. ("Sun"), of the assets and
certain liabilities of Sun Pharmaceuticals, Ltd. BBH was controlled by
Thomas H. Lee Equity Partners, L.P. and other employees and affiliates of
Thomas H. Lee Company. Sun manufactured and marketed a line of sun and
skin care products in the United States and abroad under the
Banana Boat(registered trademark) and other trademarks. Concurrent with
-----------
its acquisition of the equity interest in BBH, the Company entered into a
distribution agreement with Sun under which it began to distribute
Banana Boat sun and skin care products for Sun from November 1993 to
-----------
October 1995 (see "the BBH Acquisition"). Sun also has distribution
agreements with unrelated third parties.
The 1994 Recapitalization
During the first quarter of fiscal 1994, the Company issued 20 million
shares of Common Stock, par value $.01 per share (the "Common Stock"), at a
price of $13.00 per share as part of a recapitalization plan (the "1994
Recapitalization") designed to reduce indebtedness, interest expense and
preferred stock dividend requirements and to improve Playtex's cash flow
and operating and financial flexibility. The 1994 Recapitalization
included transactions effected by the Company and its subsidiary Playtex
Family Products Corporation ("Family Products"), which was merged into the
Company on March 8, 1994. Therefore, all references to the Company include
the activities of the merged companies. In addition to the issuance of
shares of Common Stock, the principal elements of the Recapitalization
included: (a) borrowings from banks of $500.0 million under a new term
loan facility (the "1994 Term Loan") and of approximately $40.0 million
under a $75.0 million new working capital facility (the "1994 Revolving
Credit Facility" and, together with the 1994 Term Loan, the "1994 Credit
Agreement") and (b) the issuance of $360.0 million aggregate principal
amount of 9% Senior Subordinated Notes due 2003 (the "Senior Subordinated
Notes").
The net proceeds from the 1994 Recapitalization were used to retire
substantially all of the Company's outstanding indebtedness (including
premiums and accrued interest) and preferred stocks (including accrued
dividends). In addition, the Company paid a consent fee to Sara Lee in
consideration for the early termination of the Sara Lee Option.
The Woolite (registered trademark) Rug and Upholstery Cleaning
Business Acquisition
On February 24, 1995, the Company acquired the assets of Woolite from
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Reckitt & Colman PLC for sale under an exclusive, royalty-free trademark
license in perpetuity in the United States and Canada. The purchase price
was approximately $21.7 million, which was financed by borrowings under
existing working capital facilities.
The 1995 Transaction
On June 6, 1995, the Company consummated the sale, for an aggregate
purchase price of $180.0 million, of 20 million shares of Common Stock at a
price of $9.00 per share (the "Investment") to HWH Capital Partners, L.P.,
HWH Valentine Partners, L.P., and HWH Surplus Valentine Partners, L.P.
(collectively, the "Investors"), each a Delaware limited partnership
managed by Haas Wheat & Partners Incorporated, pursuant to a Stock Purchase
Agreement, dated as of March 17, 1995, between the Company and the
Investors (the "Stock Purchase Agreement"). The Investors' shares
constitute approximately 40% of the Company's outstanding Common Stock.
The Investment and related matters were approved by the stockholders of the
Company at the Annual Meeting of Stockholders on June 6, 1995 (the "Annual
Meeting"). At the Annual Meeting, designees of the Investors were elected
by the Company's stockholders as a simple majority of the Board of
Directors.
5
Contemporaneously with the Investment, the Company entered into a new
bank credit agreement with Chemical Bank, as agent (the "1995 Credit
Agreement"and, together with the Investment, the "1995 Transaction").
Borrowings under the 1995 Credit Agreement, together with the net proceeds
of the Investment, were used by the Company to refinance all outstanding
borrowings under the Company's 1994 Credit Agreement. The 1995 Credit
Agreement provides for a new credit facility in the aggregate amount of
$500.0 million, consisting of (i) $387.5 million in term loans (the "1995
Term Loan Facility"), all of which was borrowed at closing and of which
$37.5 million was cash collateralized in order to reduce interest rates on
the 1995 Term Loan Facility, (ii) a $75.0 million revolving credit facility
for general corporate purposes and (iii) a $37.5 million acquisition
revolving credit facility which is available to make permitted business
acquisitions and investments and for general corporate purposes.
The BBH Acquisition
On October 31, 1995, the Company and BBA Acquisition, Inc., a Delaware
corporation and wholly owned subsidiary of the Company, acquired all issued
and outstanding common shares, not previously owned by the Company, of BBH
(the "BBH Acquisition"). The BBH Acquisition was pursuant to an agreement
and plan of merger dated October 17, 1995.
Since November 1993, the Company had recognized 42.5% of the operating
profits from the sale of Banana Boat products, in accordance with the terms
of a distribution agreement between BBH and the Company. Following the BBH
Acquisition, the Company's equity ownership of BBH increased from 22% to
100% and the Company's interest in the operating profits from the sale of
Banana Boat products increased to 100%. Concurrent with the BBH
-----------
Acquisition, the distribution agreement between the Company and BBH was
terminated.
The net consideration expended in connection with the BBH Acquisition
included cash of approximately $40.4 million, the retirement of $27.1
million of BBH's long-term debt, the assumption of BBH's working capital
facility and the payment of accrued interest and transaction fees of
approximately $4.3 million. The BBH Acquisition was financed with
approximately $34.3 million of existing cash balances and advances under
the Company's acquisition revolving credit facility of $37.5 million.
On March 22, 1996, BBH was merged with and into Sun, with Sun being
the surviving corporation.
B. Management Changes
In June 1995, concurrent with the completion of the 1995 Transaction,
Robert B. Haas was named Chairman of the Board of the Company. In July
1995, Michael R. Gallagher was named Chief Executive Officer.
C. Executive Officers of Registrant
Listed below are the executive officers of the Company as of March 18,
1996. There are no family relationships between any of the executive
officers, and there is no arrangement or understanding between any
executive officer and any other person pursuant to which the executive
officer was selected. At the annual meeting of the Board of Directors
which follows the Annual Meeting of Stockholders, executive officers are
elected by the Board to hold office for one year and until their respective
successors are elected and qualified, or until earlier resignation or
removal.
6
Name Age Position
---- --- --------
Michael R. Gallagher 50 Chief Executive Officer and
Director
Michael F. Goss 36 Executive Vice President, Chief
Financial Officer and Director
James S. Cook 44 Senior Vice President, Operations
Max R. Recone 40 President, Consumer Products
Division
Paul E. Yestrumskas 44 Vice President, General Counsel and
Secretary
Michael R. Gallagher has been the Chief Executive Officer and a
Director of the Company since June 1995. Prior to joining the Company, Mr.
Gallagher was Chief Executive Officer of North America for Reckitt & Colman
PLC (1994-1995). Mr. Gallagher was President and Executive Officer of
Eastman Kodak's L&F Products subsidiary from 1988 until the subsidiary was
sold to Reckitt & Colman PLC in 1994. Mr. Gallagher was President of the
Lehn & Fink Consumer Products Division at Sterling Drug from 1984 until the
Division was sold to Eastman Kodak in 1988.
Michael F. Goss has been Executive Vice President and Chief Financial
Officer of the Company since December 1994. He has served as a Director of
the Company since September 1995. From 1992 to 1994, Mr. Goss was
Treasurer and Vice President - Corporate Development of Oak Industries,
Inc. ("Oak"). From 1990 to 1992, he was Director of Financial Planning for
Oak.
James S. Cook has been Senior Vice President, Operations of the
Company since August 1991. From August 1990 to August 1991, he was Vice
President, Dover Operations of the Company. From December 1988 to August
1990, he was Vice President of Distribution, Logistics & MIS of the
Company.
Max R. Recone has been the President of the Consumer Products Division
of the Company since March 1996. From June 1995 to March 1996, he was Vice
President and Business Manager for Sun Care, Hair Care and Household
Products. From August 1993 to June 1995, he served as Vice President -
Banana Boat. From February 1992 to July 1993, he was Vice President -
Sales of the Company. From January 1990 to February 1992, Mr. Recone
served as Vice President/General Manager of Playtex Limited, the Company's
Canadian subsidiary.
Paul E. Yestrumskas has been the Vice President, General Counsel and
Secretary of the Company since December 1995. Prior to joining the
Company, Mr. Yestrumskas was Senior Counsel of Rhone-Poulenc, Inc. from
1991 to 1995. Mr. Yestrumskas was Assistant General Counsel of Hubbell,
Inc. from 1988 to 1991 and Senior Counsel and Manager of Government
Relations at Timex Corporation from 1981 to 1988.
7
D. General
The Company is a leading manufacturer and distributor of an extensive
line of personal care products marketed under such brand names as
Playtex Gentle Glide(registered trademark), Soft Comfort(trademark) and
------- ------------ ---- -------
Silk Glide (registered trademark) feminine care products, Playtex nursery
---- ----- ------- -------
disposable feeding systems for infants, Playtex Spill-Proof(registered
------- -----------
trademark) cups, Cherubs(registered trademark) baby products, Banana Boat
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sun and skin care products, Playtex Living(registered trademark),
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Handsaver(registered trademark) and Wearshield (registered trademark)
--------- ----------
household and industrial gloves, Woolite(registered trademark) rug and
-------
upholstery cleaning products, Jhirmack(registered trademark) hair care
--------
products, and Tek(registered trademark) toothbrushes.
---
Playtex feminine care products have the second largest market share in the
United States tampon market and the leading position in the plastic
applicator segment of the market. Playtex nurser is the market leader in
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the United States in disposable feeding systems for infants. Additionally,
the success of the Spill-Proof cup, introduced in the fourth quarter of
-----------
1993, has increased the Company's leading market share for infant cups in
1995. Playtex gloves are the market leader in the branded domestic
-------
household rubber gloves market. Woolite rug and upholstery cleaning
-------
products are the number two brand in its domestic market. Banana Boat has
-----------
the number two market position in the United States sun care market.
Net sales by classes of similar products to unaffiliated customers for
the five most recent fiscal years are as follows (in millions):
Twelve Months Ended December
------------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ----- -----
Feminine Care $243.6 $257.1 $244.5 $214.0 $213.3
Infant Care 87.6 77.9 74.7 74.1 74.8
Household Products 57.3 32.5 28.8 27.6 28.6
Sun Care 50.3 48.9 1.9 -- --
Hair Care 39.7 51.4 54.5 61.9 71.0
Toothbrushes 5.1 5.5 5.5 6.9 6.2
------ ------ ------ ------ ------
Total $483.6 $473.3 $409.9 $384.5 $393.9
====== ====== ====== ====== ======
U.S. $445.9 $436.1 $369.2 $343.8 $351.5
Canada 37.7 37.2 40.7 40.7 42.4
------ ------ ------ ------ ------
Total $483.6 $473.3 $409.9 $384.5 $393.9
====== ====== ====== ====== ======
In 1995, the composition of net sales by product category ranked in
order by sales volume was approximately 50.4% Feminine Care Products,
18.1% Infant Care Products, 11.8% Household Products (Gloves and Woolite),
-------
10.4% Sun and Skin Care Products, 8.2% Hair Care Products, and 1.1%
Toothbrushes. The United States operations accounted for 92.2% of the
Company's net sales in 1995.
8
E. Products
Feminine Care Products. The Company's largest brand is Playtex
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tampons. In 1995, the brand accounted for 50.4% of the Company's total
net sales. Playtex tampons is the second largest selling tampon brand in
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the United States. The Company's market share of tampon sales (by dollar
volume) for the five most recent fiscal years, as reported by Nielsen
Marketing Research, was as follows:
Twelve Months Ended December
--------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
27% 29% 30% 30% 29%
Total United States retail sales of tampons in 1995 were approximately
$780 million. Sales have increased at a compound annual growth rate of
approximately 3.3% (in dollar volume) from 1991 through 1995. During
fiscal 1995, the market decreased approximately 1.0% (in dollar volume)
versus 1994. This decrease was primarily due to a significant increase in
promotional price discounting during the year.
In June 1991, the Company introduced Ultimates(registered trademark),
---------
a line of cardboard applicator tampons. The product features a rounded
tip cardboard applicator with a rolled pledget design that provides the
consumer with a quality product in the cardboard segment of the tampon
market. In 1994, the Company introduced Ultimates Silk Glide tampons into
--------- ----------
the cardboard applicator segment. Silk Glide, which replaced the original
----------
Ultimates tampons, has a rounded-tip applicator with a new surface coating.
---------
Silk Glide was also introduced in a Super Plus absorbency. In 1995, Playtex
---- -----
renamed the product Playtex Silk Glide to position the product under the
------------------
Playtex product umbrella. Also in 1995, Playtex introduced Soft Comfort
------------
tampons, a soft, new plastic material designed to improve comfort.
In October 1994, the Company entered into an agreement with a
subsidiary of Johnson & Johnson ("J&J") to manufacture plastic applicator
tampons for J&J to sell under its trademarks in many international markets
outside of North America.
Infant Care. The Company's second largest product category is infant
care, which is comprised of the Playtex disposable nurser system, the
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Cherubs collection of reusable, hard bottles, Playtex infant/toddler cups
-------
and pacifiers. The Playtex disposable nurser system includes disposable
-------
bottles (the largest segment of the business), nurser kits, rubber nipples
and component parts. In 1995, Infant Care products accounted for
approximately 18.1% of the Company's total net sales; the disposable nurser
system represented approximately 60.0% of this category.
The Company is the market leader in disposable feeding systems for
infants. The Cherubs Collection was acquired in May 1989. Cherubs
------- -------
provided the Company with an established entry into the reusable bottle
category featuring a number of different designs. In addition, the Company
offers other baby-related products such as trainer cups, juice cups and
pacifiers.
9
In July 1994, the Company completed the purchase of SmileTote, Inc.
("SmileTote"), a manufacturer and marketer of infant/toddler cups and
bottles, which use a patented snap top closure. Due in part to the success
of Playtex Spill-Proof cups, SmileTote(registered trademark) has not
----------- ---------
yielded the results anticipated. During the fourth quarter of 1995 and in
connection with certain strategic decisions regarding the SmileTote
---------
product, the Company wrote off the remaining $6.4 million of intangible
assets associated with SmileTote.
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Household Products. Household products consist of Playtex gloves and
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the Woolite(registered trademark) rug and upholstery cleaning products.
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Since the Company introduced the first household latex glove in 1954,
Playtex gloves have continued to be the leader in this category. In 1995,
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this product line accounted for approximately 6.9% of the Company's total
net sales. The Company competes primarily with manufacturers of various
lower priced, latex gloves which are generally manufactured overseas and
marketed as private label gloves. Private label gloves, in the aggregate,
have the second largest market share behind Playtex.
As noted previously, the Company acquired certain assets of the
Woolite rug and upholstery cleaning business ("Woolite") in February 1995.
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Woolite is the second leading brand in this domestic business.
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Banana Boat. Since their introduction in the 1980's, sales of Banana
------
Boat products have grown steadily. In 1995, these products accounted for
----
approximately 10.4% of the Company's total net sales.
Banana Boat has achieved the second largest share of the sun care
-----------
market (by unit volume). For the 1995 selling season, Banana Boat had
-----------
approximately a 16% share of the market, compared to approximately a 14%
share in 1994 and a 13% share in 1993. For the 1995 selling season, the
sun care market grew approximately 8% (in unit volume) versus the same
period in 1994.
Banana Boat offers an extensive line of sun care products designed for
-----------
specific uses, such as sun protection in SPFs from 4 to 50, waterproof and
sweatproof formulas and infant and children's products. Banana Boat also
-----------
sells a variety of skin care products, including sunless tanning
lotion, after-sun products, moisturizers and skin treatment formulas
containing additives such as Vitamin E and Aloe Vera.
For further discussion of Banana Boat, see "History - BBH
-----------
Acquisition".
Hair Care Products. In 1995, hair care products contributed
approximately 8.2% of the Company's total net sales.
In the fourth quarter of 1995, the Company terminated its license
arrangement for the manufacturing and sale of LaCoupe(registered trademark)
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hair care products. This product line contributed $0.7 million in net
sales during 1995.
10
As a result of management's evaluation of the erosion of Jhirmack's
----------
market share and net sales, the Company effected a write-off of all of the
goodwill associated with the Jhirmack business in the third quarter of
--------
1993. The decline in net sales continued in 1995 and the Company is
evaluating strategic alternatives for this business. Hair Care is not
considered one of the Company's core businesses.
Toothbrushes. The Company manufactures and distributes regular,
angled and child toothbrushes under the Tek brand name and produces private
---
label toothbrushes. In 1995, this line contributed approximately $5.1
million in total net sales. Tek's share in the total toothbrush market in
---
1995 was approximately 1.0%. In 1994, the Company introduced an improved,
contemporary-styled toothbrush under the name
Tek Excel(registered trademark).
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F. Marketing
The Company allocates a significant portion of its revenues to the
advertising and promotion of its products. Expenditures for these purposes
were 24.3%, 20.9%, and 21.4%, respectively, as a percentage of net sales
during each of the last three fiscal years. These expenditures are an
integral component of the overall marketing effort for the Company's direct
customers and the ultimate consumer.
G. Competition
The markets for the Company's products are highly competitive. They
are characterized by the frequent introduction of new products, often
accompanied by major advertising and promotional programs. The Company
competes primarily on the basis of product quality, product differentiation
and brand name recognition supported by advertising and promotion.
Tambrands, Inc. has the leading market share and is the Company's principal
competitor in the tampon market. In its remaining businesses, the
Company's competitors consist of a large number of domestic and foreign
companies, a number of which have significantly greater financial resources
and less leverage than the Company.
The Company believes that the market for consumer products will
continue to be highly competitive. In fact, the level of competitiveness
may intensify in the future, including higher spending for advertising and
promotion, new product initiatives and continued activity in the private
label sector.
H. Regulation
Government regulation has not materially restricted or impeded the
Company's operations. Certain of the Company's products are subject to
regulation under the Federal Food, Drug and Cosmetic Act and the Fair
Packaging and Labeling Act. The Company is also subject to regulation by
the Federal Trade Commission with respect to the content of its
advertising, its trade practices and other matters. The Company is subject
to regulation by the United States Food and Drug Administration in
connection with its manufacture and sale of tampons.
11
I. Distribution
The Company's sales are generated by its sales organization of
approximately 245 people and by exclusive distributors. Unlike many of its
competitors, substantially all members of the Company's sales force are
employees of the Company. In 1995, products were sold through supermarkets
(40.0%), drug stores (20.0%) and mass merchandising and other outlets
(40.0%). In recent years, sales through mass merchandisers and price
clubs, as a percentage of total sales, have experienced gains at the
expense of drug stores, while sales through supermarkets have remained
generally constant.
The field sales force makes sales presentations at the headquarters or
home offices of its customers, where applicable, as well as to individual
retail outlets. The sales representatives focus their efforts on selling
the Company's products, providing services to its direct customers and
executing programs to ensure sales to the ultimate consumer. Consumer-
directed programs include arranging for on-shelf and separate displays,
obtaining feature price reductions, and coordinating cooperative
advertising participation.
J. Research and Development
The Company maintains ongoing research and development programs in
Paramus, New Jersey. Approximately 50 employees are engaged in these
programs, for which expenditures were $6.5 million, $5.8 million, and $5.5
million, respectively, during each of the last three fiscal years. For
those same periods, Feminine Care research and development accounted for
approximately 51%, 52%, and 52% of the total expenditures, respectively;
and Infant Care research and development accounted for approximately 26%,
25%, and 22%, respectively. The balance of such expenditures supported
research and development in the Company's other product lines. The
acquisition in 1995 of a 100% ownership interest in BBH will increase
research and development costs for sun care products in the future.
K. Trademarks and Patents
The Company has proprietary rights to a number of trademarks important
to its businesses, such as Playtex, Gentle Glide, Silk Glide, Soft Comfort,
------- ------------ ---------- ------------
Living, HandSaver, Spill-Proof, Most Like Mother, Natural Actions, Cherubs,
------ --------- ----------- ---------------- --------------- -------
Look & Learn, Jhirmack, Banana Boat, and Tek. The Playtex and Living
------------ -------- ----------- --- ------- ------
trademarks in the United States and Canada are owned by Playtex Marketing
Corporation ("Marketing Corporation"), a corporation owned equally by the
Company and Apparel. Marketing Corporation is responsible for protecting,
exercising quality control over and enforcing the trademarks. The Company
and Apparel each have licenses from Marketing Corporation for the use
of such trademarks in the United States and Canada on a perpetual, royalty-
free basis; Apparel's license is for apparel and apparel-related products,
and the Company's license is for all other products. In all other
countries, Apparel retains title to the Playtex and Living trademarks,
------- ------
subject to a perpetual, royalty-free license to the Company to use such
trademarks for all products other than apparel products.
12
The Company also owns various patents related to certain products and
their method of manufacture, including patents for the tampon wrap
material, the assembly of the compact tampon, the tampon inserter, the baby
nurser holder, the configuration of certain baby pacifiers, nipples, caps,
and formulations for certain hair care products. The patents expire at
varying times, ranging from 1997 to 2012. The Company also has pending
patent applications for various products and methods of manufacture
relating to its tampon, nurser and toothbrush businesses. While the
Company considers its patents to be important to its business, it believes
that the success of its products is more dependent upon the quality of
these products and the effectiveness of its marketing programs. No single
patent is material to the business of the Company.
L. Raw Materials and Suppliers
The principal raw materials used by the Company in the manufacture of
its products are synthetic fibers, resin-based plastics and other chemicals
and certain natural materials, all of which are normally readily available.
While all raw materials are purchased from outside sources, the Company is
not dependent upon a single supplier in any of its operations for any
material essential to its business or not otherwise commercially available
to the Company. The Company has been able to obtain an adequate supply of
raw materials, and no shortage of such materials is currently anticipated.
M. Customers and Backlog
No single customer or affiliated group of customers represents 10% or
more of the Company's sales, except for Wal-Mart Stores, Inc., including
Sam's Club ("Wal-Mart") (approximately 17% in 1995, 15% in 1994, and 13% in
1993). For each of such periods, net sales to the Company's next three
largest customers represented in the aggregate approximately 12% in 1995,
11% in 1994 and 10% in 1993 of the total net sales of the Company. The
loss of sales to Wal-Mart could have a material adverse effect on the
business and operations of the Company. In accordance with industry
practice, the Company grants credit to its customers at the time of
purchase. In addition, the Company grants extended payment terms to new
customers and for the initial sales of introductory products and product
line extensions, and it grants extended terms on its Banana Boat products
-----------
due to the seasonal nature of this business. While the extension of credit
carries risk, the bad debt experience of the Company has not been material
in recent years.
The Company's policy is not to accept returned goods, except for
certain Sun Care products, which are seasonal in nature. Exceptions to
this policy are authorized by management of the sales organization.
Returns result primarily from Sun Care seasonal products, damage and
shipping discrepancies and generally are not material to the total net
sales of the Company.
Because of the short period between order and shipment dates
(generally less than one month) for most of the Company's sales (more than
80% in 1995), the dollar amount of current backlog is not considered to be
a reliable indication of future sales volume.
13
N. Employees and Labor Relations
The Company's worldwide workforce consisted of approximately 1,600
employees as of December 30, 1995, of whom 184 were located outside the
United States, primarily in Canada. Of the United States facilities, only
the Tek operation at Watervliet, New York, has union representation; it is
organized by The Brush Workers Union Local No. 20466 I.U.E. A.F.L.-C.I.O.
The collective bargaining agreement covered 159 workers at December 30,
1995 and expires on June 28, 1997. The Company believes that its labor
relations are satisfactory and no material labor cost increases, other than
those in the ordinary course of business, are anticipated.
O. Environmental
The Company believes that it is in substantial compliance with
federal, state and local provisions enacted or adopted regulating the
discharge of materials hazardous to the environment. There are no
significant capital expenditures for environmental control in the current
year or expected in the near future. See "Legal Proceedings."
P. Internal Restructuring
On May 23, 1995, the Company formed as wholly-owned subsidiaries
Playtex Sales & Service, Inc. ("PSSI") and Playtex Manufacturing, Inc.
("PMI").
PSSI was formed to provide sales solicitation services to the Company
and Playtex Beauty Care, Inc., a wholly-owned subsidiary. In addition,
PSSI will provide corporate administration services to the Company and all
of its U.S. subsidiaries. On December 30, 1995, the Company transferred its
sales and certain corporate administration related office facilities,
furniture, fixtures and equipment, and vehicles to PSSI as a capital
contribution. The Company also transferred all related personnel to PSSI
as of the first day of fiscal 1996. PSSI had no operations prior to
December 31, 1995, and will bear all direct and indirect costs related to
sales representation and corporate administration effective the beginning
of fiscal 1996. The Company and PSSI have entered into inter-company
agreements for the provision of U.S. administrative services and sales
solicitation services. Prior to December 30, 1995, there was no
predecessor business to PSSI as there was no comparable sales
representation or corporate administrative agreement in effect.
PMI was formed to provide purchasing, manufacturing and assembly
services to meet the inventory requirements of the Company. In addition,
PMI will also provide the Company with distribution and research and
development ("R&D") services. On December 30, 1995, the Company
transferred all of its purchasing, manufacturing, assembly, distribution
and R&D facilities, and machinery and equipment to PMI as a capital
contribution. The Company also transferred all related personnel to PMI as
of the first day of fiscal 1996. PMI had no operations prior to December
31, 1995, and it will bear all direct and indirect costs of purchasing,
manufacturing, assembly, distribution and R&D operations effective the
beginning of 1996 fiscal year. The Company and PMI have entered into
inter-company agreements for the provision of manufacturing and R&D
services to the Company by PMI. Prior to December 30, 1995, there was no
predecessor business of PMI as there was no comparable manufacturing and
R&D agreements in effect.
BBH was acquired by the Company on October 31, 1995 pursuant to an
agreement and plan of merger dated October 17, 1995. (See discussion of
the BBH Acquisition on page 6 of this report.)
14
As of December 30, 1995, all of Sun's operating assets were
transferred to the Company. Sun's only assets at December 30, 1995 are
identifiable intangible assets, excess of cost over net assets of acquired
businesses, and tax benefits. Substantially all of Sun's income will come
from royalty income from the license of its intangible assets to the
Company. Sun also has royalty arrangements with third parties that are
unrelated to the Company or its subsidiaries.
PMI, PSSI, and BBH and its wholly-owned subsidiary Sun are guarantors
of the Company's Senior Subordinated Notes and the Company's 1995 Credit
Agreement. On March 22, 1996, BBH was merged with and into Sun, with Sun
being the surviving corporation. See audited financial statements for
these subsidiaries included in the Annual Report as exhibits 13(b), 13(c),
and 13(d), respectively.
Q. Board of Directors Set Record Date and Date, Time and Place of Annual
Meeting of Stockholders
At its meeting on March 5, 1996, the Board of Directors set the close
of business on April 3, 1996 as the record date for determining
stockholders entitled to notice of and to vote at the 1996 Annual Meeting
of Stockholders. This meeting will be held at Chemical Bank, 270 Park
Avenue, New York, New York on Wednesday, May 22, 1996 at 11:00 a.m. local
time.
R. Special Factors Regarding Forward-Looking Statements
Certain statements in this Annual Report on Form 10-K or others made
hereafter (including orally) may constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of the Company to be materially different from
any future results, performance or achievements expressed or implied by
such forward-looking statements. Such factors include, but are not limited
to: intensified competition, higher spending for advertising and promotion,
new product initiatives, and continued activity in the private label sector
(See "Business-Competition"); the loss of a significant customer (See
"Business-Customers and Backlog"); product liability litigation and changes
in governmental regulation (See "Legal Proceedings").
Item 2. Properties
The Company operates manufacturing and distribution facilities in
Dover, Delaware; Watervliet, New York; and Arnprior and Malton, Canada.
Currently, the Company's plastic tampon manufacturing facility is leased
from Apparel. The Company is building a new 175,000 square feet facility
adjacent to one of its current manufacturing locations in Dover, Delaware,
which, when completed, will be the new plastic tampon manufacturing site.
Construction and occupation of this new facility is expected to be
completed by mid-1996. At that time, the month-to-month lease with Apparel
will be terminated. The Company maintains a research and development
facility in Paramus, New Jersey, which is leased from Apparel on a month-
to-month basis. The principal executive offices of the Company are located
at 300 Nyala Farms Road, Westport, Connecticut 06880 and are occupied
pursuant to a lease which expires in 2004. The Company operates two
facilities in Canada.
15
The Arnprior facility, primarily a warehouse and assembly operation, is
owned by the Company. The Malton facility, a warehouse and office site, is
leased from Apparel. This lease extends to 2004. For 1995, the Company's
average utilization rate of manufacturing capacity was an estimated 85%.
Except for the completion of the new tampon manufacturing facility, the
Company does not anticipate any material acquisition of plant or any
significant increase in the capacity thereof in the near future.
The following table sets forth the principal properties of the
Company, which are located in four states and Canada:
# of Estimated
Facilities Square Footage
---------- --------------
Facilities Owned
----------------
Manufacturing
-------------
Dover, DE 3 701,000
Watervliet, NY 1 159,600
Office/Distribution/Warehouse
-----------------------------
Arnprior, Canada 1 91,800
Facilities Leased
-----------------
Manufacturing
-------------
Dover, DE 1 169,800
Office/Distribution/Warehouse
-----------------------------
Dover, DE 4 276,000
Westport, CT 1 41,700
Paramus, NJ 1 33,000
Malton, Canada 1 72,800
Item 3. Legal Proceedings
Beginning in 1980, studies were published leading to the hypothesis
that tampons are associated with Toxic Shock Syndrome ("TSS"). Since 1980,
numerous claims have been filed against manufacturers of tampons, a small
percentage of which have been litigated to conclusion. Nine cases relating
to Playtex tampons have been tried to date, the most recent in 1991; in
five of them the Company prevailed, and in four the plaintiffs prevailed,
with compensatory and punitive damages being awarded in three of such
cases. The largest damages award the Company experienced in connection
with TSS litigation occurred in 1985, in which the compensatory award
against the Company was approximately $1.2 million and the punitive damages
award was $10.0 million.
The number of TSS claims relating to Playtex tampons has declined
substantially over the years. During the mid-1980s, there were
approximately 200 pending claims at any one time relating to Playtex
tampons. As of the end of February 1996, there were approximately 15
pending claims, although additional claims may be asserted in the future.
For claims filed from October 1, 1985, until November 30, 1995, the Company
is self-insured for TSS claims, and bears the costs of defending those
claims, including settlements and trials. Effective December 1, 1995, the
Company obtained insurance coverage with certain limits in excess of the
self-insured retention of $1.0 million per occurrence/$4.0 million in the
aggregate, on claims occurring on or after December 1, 1995.
In 1985, a voluntary exchange program was initiated by the Company for
its tampons containing polyacrylate, a chemical substance which increases
absorbency. The Company currently makes no products with polyacrylate.
16
Various studies about TSS and tampons are reported from time to time.
A 1986-87 study reported an increased risk of TSS with Playtex tampons
compared with some other tampons. Since then, the Company has reduced the
absorbency of its regular and super tampons. The Company has also referred
to the 1986-87 study in the warning insert contained in each package of its
tampons. The 1986-87 study was published in early 1989.
The incidence rate of menstrually associated TSS among tampon users
has declined significantly over the years. In 1982, the rate was reported
to be between six and seventeen occurrences per 100,000 menstruating women
per year. The most recent reported information as of 1989 is that the rate
is approximately one occurrence per 100,000.
In mid-July 1994, the Company was served with a complaint in a product
liability action in the United States District Court for the District of
Kansas, captioned "Harding, Hayes et. al. v. Tambrands, Inc. and Playtex
Family Products Corp." Plaintiffs in the case purport to represent and
seek to certify a nationwide class of tampon users who allegedly contracted
TSS from the use of rayon fiber tampons manufactured by Playtex.
Tambrands, Inc. was named as a co-defendant in the case with respect to its
tampons. The plaintiffs seek to suspend the statute of limitations on
behalf of purported class members whose suits would otherwise be time
barred. The complaint seeks, among other things, unspecified damages,
equitable relief, creation of a medical monitoring fund for the benefit of
the purported class members, and punitive damages. The Company opposed
class certification. In March 1996, the Court denied class certification.
The plaintiff's time to appeal this ruling has not expired. As noted
above, the Company has been virtually self-insured for TSS claims since
1985 and therefore carries no third party insurance for the claims alleged
in the complaint. The Company believes that this case will not have a
materially adverse effect on its consolidated financial position, results
of operations or cash flows.
Based on the Company's experience with TSS cases, its evaluation of
the currently pending claims, the reported decline in the incidence of
menstrually associated TSS, the federally-mandated warning about TSS on and
in its tampon packages and the development of case law upholding the
adequacy of tampon warnings which comply with federally-mandated warnings,
the Company believes that there are no claims or litigation pending,
including the TSS cases, which would have a materially adverse effect on
the consolidated financial position, results of operations or cash flows of
the Company. The Company's belief with respect to the TSS cases is not
based on an opinion of counsel, however, and litigation is inherently
uncertain.
Several states, particularly in the Northeast, have in recent years
proposed legislation that would ban nondegradable plastic tampon
applicators as a means of reducing some portion of beach litter stemming
from inadequate sewage treatment facilities for reducing solid waste. No
such legislation has been passed to date. The United States Environmental
Protection Agency ("EPA") has also been studying national waste disposal in
general, which includes plastic tampon applicators. The Company now
produces a cardboard applicator tampon (Silk Glide) and is investigating
----------
other alternatives to its current plastic applicator should such
legislation be passed.
17
The Company, as successor to the Family Products businesses of IPI, is
presently participating as part of a group of several potentially
responsible corporate parties ("PRP Group") in the remediation of the
Wildcat Landfill in Dover, Delaware, which has been designated as a
"Superfund" site by the EPA. In June 1989, the PRP Group entered into a
settlement pursuant to which the Company (together with Apparel) assumed a
share of the remediation costs, which share, based on reasonable
engineering estimates, was $565,000 for both companies. The Company and
Apparel have each paid $257,000 (or a total of $514,000) to an escrow fund
under an agreement with other settling parties and site remediation has
been completed. Associated monitoring costs are not expected to be
material.
The Company has joined the PRP Group with respect to the Kent County
Landfill Site in Houston, Delaware, which has been designated a "Superfund"
site by the State of Delaware. A study of the site is being conducted to
formulate a remediation plan. The Company's allocated share of the costs
of the remediation study is not expected to exceed $70,000, which amount
will be shared equally with Apparel. Although the remedial costs
associated with the site will be difficult to assess until the study is
completed, based on the information currently available to the Company, the
nature and quantity of material deposited by the Company and the number of
other entities in the PRP group who are expected to share in the costs and
expenses, the Company does not believe that the costs to the Company will
be material. The Company and Apparel will share equally all expenses and
costs associated with IPI's involvement with this site.
The Company does not believe that its potential costs with respect to
environmental matters will, in the aggregate, have a materially adverse
effect on the consolidated financial position, results of operations or
cash flows of the Company.
The Company is subject to regulation by the United States Food and
Drug Administration in connection with its manufacture and sale of tampons.
Item 4. Submissions of Matters to Vote of Security Holders
Not applicable
18
PART II
-------
Item 5. Market for Registrant's Common Equity
and Related Stockholder Matters
The Company has two classes of authorized stock: (a) Common Stock and
(b) up to 50,000,000 shares of preferred stock, par value $.01 per share.
Of 100,000,000 shares of Common Stock authorized, 50,879,701 shares were
issued and outstanding as of March 18, 1996. There were 516 holders of
record of the Company's Common Stock on that date. The Common Stock is
traded on the New York Stock Exchange ("NYSE") under the symbol "PYX." As
of March 18, 1996, the Company had not issued any shares of preferred
stock. No cash dividends have ever been paid on the Common Stock, and the
Company is restricted from paying dividends on the Common Stock by the
terms of the 1995 Credit Agreement and the indenture governing the Senior
Subordinated Notes.
The following table sets forth the high and low sales price per share
of the Common Stock during the fiscal year ended December 30, 1995 as
reported by the NYSE:
Fiscal 1995 High Low
----------- ---- ---
First Quarter 8 5/8 6 3/4
Second Quarter 10 1/4 7 1/2
Third Quarter 12 1/2 8 3/8
Fourth Quarter 9 6 1/2
Item 6. Selected Financial Data
Information in the section entitled "Selected Financial Data" in the
Company's 1995 Annual Report to Stockholders (included as Exhibit 13(a) to
this Annual Report on Form 10-K) is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Information in the section entitled "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in the Company's
1995 Annual Report to Stockholders (included as Exhibit 13(a) to this
Annual Report on Form 10-K) is incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
The financial statements and related documents of the Company that are
incorporated by reference in this Annual Report on Form 10-K, and the
financial statement schedule of the Company and related documents that are
filed with this Annual Report, are listed in Part IV, Item 14, of this
Annual Report.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
19
PART III
Item 10. Directors and Executive Officers of the Registrant
The information with respect to the Company's Directors and nominees
for Director under the heading "Election of Directors" in the Proxy
Statement, is incorporated herein by reference.
Item 11. Executive Compensation
The information under the heading "Executive Compensation" in the
Proxy Statement is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information under the heading "Security Ownership of Certain
Beneficial Owners and Management" in the Proxy Statement is incorporated
herein by reference.
Item 13. Certain Relationships and Related Transactions
The information under headings "Certain Transactions" and "Executive
Compensation - Arrangements with Former Executive Officers" in the Proxy
Statement is incorporated herein by reference.
20
PART IV
Item 14. Exhibits, Financial Statement Schedule and Reports on Form 8-K
(a) Financial Statements
(a)(1)(i) The following Consolidated Financial Statements and
related Notes of the Company are incorporated herein by reference to the
Company's 1995 Annual Report to Stockholders (included as Exhibit 13(a) to
this Annual Report on Form 10-K):
Independent Auditors' Report
Consolidated Balance Sheets as of December 30, 1995 and December 31,
1994
Consolidated Statements of Operations for the twelve months ended
December 30, 1995, December 31, 1994 and December 25, 1993
Consolidated Statements of Redeemable Preferred Stocks, Common Stock
and Other Stockholders' Equity for the twelve months ended
December 30, 1995, December 31, 1994 and December 25, 1993
Consolidated Statements of Cash Flows for the twelve months ended
December 30, 1995, December 31, 1994 and December 25, 1993
Notes to Consolidated Financial Statements
(a)(1)(ii) The following Balance Sheet and Related Notes of Playtex
Manufacturing, Inc. (a wholly owned subsidiary of the Company) (included
as Exhibit 13(b) to this Annual Report on Form 10-K) are incorporated
herein by reference:
Independent Auditors' Report
Balance Sheet as of December 30, 1995
Notes to Balance Sheet
(a)(1)(iii) The following Balance Sheet and Related Notes of Playtex
Sales & Services, Inc. (a wholly owned subsidiary of the Company) (included
as Exhibit 13(c) to this Annual Report on Form 10-K) are incorporated
herein by reference:
Independent Auditors' Report
Balance Sheet as of December 30, 1995
Notes to Balance Sheet
21
(a)(1)(iv) Consolidated Financial Statements and Related Notes of
Banana Boat Holding Corporation (a wholly owned subsidiary of the Company)
(included as Exhibit 13(d) to this Annual Report on Form 10-K) are
incorporated herein by reference:
Independent Auditors' Report
Consolidated Balance Sheet as of December 30, 1995
Consolidated Statement of Operations for the Two Month Period Ended
December 30, 1995
Consolidated Statement of Common Stock and Other Stockholder's Equity
for the Two Month Period Ended December 30, 1995
Consolidated Statement of Cash Flows for the Two Month Period Ended
December 30, 1995
Notes to Consolidated Financial Statements
(a) (2) Financial Statement Schedule
The following financial statement schedule of the Company as set forth
below is filed with this Annual Report on Form 10-K:
Page
----
Independent Auditors' Report on Schedule 23
Schedule VIII - Valuation and Qualifying Accounts 24
All other schedules are omitted as the required information is not
applicable or the information is presented in the consolidated financial
statements or related notes.
(a) (3) Exhibits
See Exhibit Index on Pages X-1 to X-9 for exhibits filed with this
Annual Report on Form 10-K.
(b) Reports on Form 8-K
On November 14, 1995, the Company filed with the Commission a Current
Report on Form 8-K dated November 14, 1995, pursuant to Items 2 and 7 of
Form 8-K, with respect to the BBH Acquisition, and amended such Current
Report on Form 8-K/A on January 11, 1996.
22
INDEPENDENT AUDITORS' REPORT ON SCHEDULE
The Board of Directors and Stockholders
Playtex Products, Inc.
Under date of February 6, 1996, we reported on the consolidated
balance sheets of Playtex Products, Inc. and subsidiaries as of December
30, 1995 and December 31, 1994, and the related consolidated statements of
operations, redeemable preferred stocks, common stock and other
stockholders' equity, and cash flows for the twelve months ended December
30, 1995, December 31, 1994, and December 25, 1993, as contained in the
1995 Annual Report to Stockholders. Our report refers to a change in
accounting for income taxes and post-retirement benefits other than
pensions in 1993. These consolidated financial statements and our report
thereon are incorporated by reference in the Annual Report on Form 10-K for
the fiscal year 1995. In connection with our audits of the aforementioned
consolidated financial statements, we also have audited the related
financial statement schedule for the twelve months ended December 30, 1995,
December 31, 1994, and December 25, 1993, as listed in Item 14(a)(2) of the
Annual Report on Form 10-K for the fiscal year 1995. This financial
statement schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion on this financial statement
schedule based on our audits.
In our opinion, such financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information set forth
therein.
/s/ KPMG Peat Marwick LLP
Stamford, Connecticut
February 6, 1996
23
PLAYTEX PRODUCTS, INC.
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
Periods Ended December 30, 1995, December 31, 1994, and December 25, 1993
(In Thousands)
Balance at Additions Balance
Beginning Charged to at End
of Period Income Deductions(1) of Period
----------- ----------- ------------- ---------
Receivables:
Allowance for doubtful
accounts
December 25, 1993 $(2,256) $ (120) $227 $(2,149)
December 31, 1994 $(2,149) $ (650) $453 $(2,346)
December 30, 1995 $(2,346) $ (449) $153 $(2,042)
---------------
(1) - Represents accounts written off.
24
SIGNATURES
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.
By: /s/Michael R. Gallagher
--------------------------------------
Michael R. Gallagher
Chief Executive Officer
March 28, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated this 28th day of March 1996.
Signatures Title
---------- -----
/s/Robert B. Haas Chairman of the Board
-------------------------- and
Robert B. Haas Director
/s/Michael R. Gallagher Chief Executive Officer and
--------------------------
Michael R. Gallagher Director
/s/Michael F. Goss Executive Vice President
-------------------------- and Director
Michael F. Goss (Principal Financial and
Accounting Officer)
/s/Joel E. Smilow
-------------------------- Director
Joel E. Smilow
-------------------------- Director
Thomas H. Lee
/s/Douglas D. Wheat
--------------------------
Douglas D. Wheat Director
--------------------------
Nancy S. Amer Director
--------------------------
Thomas Herskovits Director
--------------------------
Kenneth F. Yontz Director
25
INDEX TO EXHIBITS
-----------------
Exhibit No. Description
----------- -----------
3(a) Restated Certificate of Incorporation of Playtex
Products, Inc. (hereafter, "Playtex" or the "Company")
dated as of May 5, 1994. (Incorporated herein by
reference to Exhibit 4(a) of Playtex's Registration
Statement on Form S-8, No. 33-88806.)
3(a)(1) Restated Certificate of Incorporation, as amended
through June 6, 1995. (Incorporated herein by
reference to Exhibit 3.2 of Playtex's Form 8-K, dated
June 6, 1995, File No. 33-25485-01.)
3(b) Bylaws of Playtex. (Incorporated herein by reference
to Exhibit 3(b) of Playtex's Registration Statement on
Form S-1, No. 33-25485.)
3(c) Amendment to Bylaws of Playtex. (Incorporated herein
by reference to Exhibit 3(g) of Playtex's Registration
Statement on Form S-1, No. 33-43771.)
3(d) Amendment to Bylaws of Playtex. (Incorporated herein
by reference to Exhibit 3(g) of Playtex's Annual Report
on Form 10-K for the fiscal year ended December 25,
1993, File No. 33-25485-01.)
3(e) Amendment to Bylaws of Playtex. (Incorporated herein
by reference to Exhibit 4(e) of Playtex's Registration
Statement on Form S-8, No. 33-88806.)
3(f) By-laws of the Company, as amended through June 6,
1995. (Incorporated herein by reference to Exhibit 3.1
of Playtex's Form 8-K, dated June 6, 1995, File No. 33-
25485-01.)
3(g) Merger Certificate dated March 8, 1994 between Playtex
Family Products Corporation ("Family Products") and
Playtex. (Incorporated herein by reference to Exhibit
3(h) of Playtex's Annual Report on Form 10-K for the
fiscal year ended December 25, 1993, File No. 33-25485-
01.)
4(a) Specimen Common Stock Certificate. (Incorporated
herein by reference to Exhibit 4(a) of Playtex's
Registration Statement on Form S-1, No. 33-71512.)
4(b) Indenture dated as of February 2, 1994 relating to the
9% Senior Subordinated Notes due 2003 (the "Senior
Subordinated Notes") among Family Products, Playtex and
IBJ Schroder Bank & Trust Company, as trustee,
including form of Note. (Incorporated herein by
reference to Exhibit 4(b) of Playtex's Annual Report on
Form 10-K for the fiscal year ended December 25, 1993,
File No. 33-25485-01.)
X-1
Exhibit No. Description
----------- -----------
4(b)(1) First Supplemental Indenture dated as of March 8, 1994.
(Incorporated herein by reference to Exhibit 4(b)(1) of
Playtex's Annual Report on Form 10-K for the fiscal
year ended December 25, 1993, File No. 33-25485-01.)
4(b)(2) Second Supplemental Indenture, dated as of June 6, 1995
among the Company, Playtex Sales & Service, Inc. and
IBJ Schroder Bank and Trust Company, as Trustee.
(Incorporated herein by reference to Exhibit 4.1 of
Playtex's Form 8-K, dated June 6, 1995, File No. 33-
25485-01.)
4(b)(3) Third Supplemental Indenture, dated as of June 6, 1995
among the Company, Playtex Manufacturing Inc. and IBJ
Schroder Bank and Trust Company, as Trustee.
(Incorporated herein by reference to Exhibit 4.2 of
Playtex's Form 8-K, dated June 6, 1995, File No. 33-
25485-01.)
*4(b)(4) Fourth Supplemental Indenture among Playtex Products,
Inc., as Issuer, BBA Acquisition, Inc., as Guarantor
and IBJ Schroder Bank & Trust Company, as Trustee,
dated as of October 31, 1995.
*4(b)(5) Fifth Supplemental Indenture among Playtex Products,
Inc., as Issuer, BBA Acquisition, Inc., as Guarantor
and IBJ Schroder Bank & Trust Company, as Trustee,
dated as of October 31, 1995.
*4(b)(6) Sixth Supplemental Indenture among Playtex Products,
Inc., as Issuer, BBA Acquisition, Inc., as Guarantor
and IBJ Schroder Bank & Trust Company, as Trustee,
dated as of October 31, 1995.
*4(b)(7) Seventh Supplemental Indenture among Playtex Products,
Inc., as Issuer, BBA Acquisition, Inc., as Guarantor
and IBJ Schroder Bank & Trust Company, as Trustee,
dated as of October 31, 1995.
4(c)(1) Amended and Restated Stockholders Agreement.
(Incorporated herein by reference to Exhibit 4 to
Playtex's Current Report on Form 8-K dated November 5,
1991.)
*4(c)(2) Amendment No. 1, dated as of March 17, 1995, to Amended
and Restated Stockholders Agreement.
4(d) Form of Junior Subordinated Note of Playtex.
(Incorporated herein by reference to Exhibit 4(i) of
Playtex's Registration Statement on Form S-1, No. 33-
25485.)
4(d)(1) Form of Junior Subordinated Note of Playtex dated
December 15, 1989. (Incorporated herein by reference
to Exhibit 4(f)(1) to Playtex's Annual Report on Form
10-K for the year ended December 30, 1989, No. 33-
25485.)
X-2
Exhibit No. Description
----------- -----------
4(d)(2) Junior Subordinated Note of Playtex dated December 15,
1990. (Incorporated herein by reference to Exhibit
4(f) (2) to Playtex's Annual Report on Form 10-K for
the year ended December 29, 1990, No. 33-25485.)
4(d)(3) Junior Subordinated Note of Playtex dated December 15,
1991. (Incorporated herein by reference to Exhibit
4(h)(3) of Playtex's Registration Statement on Form S-
1, No. 33-43771.)
4(d)(4) Junior Subordinated Note of Playtex dated December 15,
1992. (Incorporated herein by reference to Exhibit
4(h)(4) of Playtex's Annual Report on Form 10-K for the
year ended December 26, 1992.)
4(d)(5) Junior Subordinated Note of Playtex dated December 15,
1993. (Incorporated herein by reference to Exhibit
4(j)(5) of Playtex's Registration Statement on Form S-
1, No. 33-71512.)
4(d)(6) Agreement between Playtex and Playtex Apparel Partners,
L.P. dated November 30, 1994 relating to Junior
Subordinated Notes. (Incorporated herein by reference
to Exhibit 4(d)(6) of Playtex's Annual Report on Form
10-K for the fiscal year ended December 31, 1994, File
No. 33-25485-01.)
10(a) Bank Credit Agreement, dated as of February 2, 1994,
among Playtex, Family Products, Chemical Bank, as
Agent, and the lenders party thereto (the "Bank Credit
Agreement") and the forms of notes, security documents
and guarantees attached as exhibits thereto.
(Incorporated herein by reference to Exhibit 10(a) of
Playtex's Annual Report on Form 10-K for the fiscal
year ended December 25, 1993, File No. 33-25485-01.)
10(a)(1) First Amendment to the Bank Credit Agreement dated
December 14, 1994. (Incorporated herein by reference to
Exhibit 10(a)(1) of Playtex's Annual Report on Form 10-
K for the fiscal year ended December 31, 1994, File No.
33-25485-01.)
10(a)(2) Credit Agreement, dated as of June 6, 1995, among the
Company, Chemical Bank, as Agent, and the Lenders
thereto and forms of notes, security documents and
guarantees attached as exhibits thereto. (Incorporated
herein by reference to Exhibit 10.1 of Playtex's Form
8-K, dated June 6, 1995, File No. 33-25485-01.)
*10(a)(3) First Amendment, dated October 5, 1995, to the Credit
Agreement, dated as of June 6, 1995, among the Company,
Chemical Bank, as Agent, and the Lenders thereto.
X-3
Exhibit No. Description
----------- -----------
*10(a)(4) Supplement No. 1, dated as of October 31, 1995, to the
Subsidiaries Guarantee dated June 6, 1995, made by the
Subsidiaries of Playtex signatories thereto in favor of
Chemical Bank as Agent.
*10(a)(5) Supplement No. 1, dated October 31, 1995, to Borrower
Pledge Agreement dated as of June 6, 1995, made by
Playtex in favor of Chemical Bank as Agent.
*10(a)(6) Supplement No. 2, dated October 31, 1995, to Borrower
Pledge Agreement dated as of June 6, 1995, made by
Playtex in favor of Chemical Bank as Agent.
10(b) Agreement between Playtex and Chemical Bank for
currency swap and interest rate hedging. (Incorporated
herein by reference to Exhibit 10(b) of Playtex's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1994, File No. 33-25485-01.)
10(b)(1) Interest Protection Agreement effective July 6, 1995
between Playtex and Chemical Bank. (Incorporated
herein by reference to Exhibit 10(b)(1) of Playtex's
Form 10-Q for the quarter ended July 1, 1995, No. 33-
25485-01.)
10(b)(2) Interest Protection Agreement effective July 25, 1995
between Playtex and Chemical Bank. (Incorporated
herein by reference to Exhibit 10(b)(1) of Playtex's
Form 10-Q for the quarter ended July 1, 1995, No. 33-
25485-01.)
10(c) Stock Purchase Agreement, dated as of December 28,
1988, among Playtex Holdings, Inc., Playtex Investment
Corp., Playtex Apparel, Inc. and Playtex Apparel
Partners, L.P. (Incorporated herein by reference to
Exhibit 10(b) of Playtex's Annual Report on Form 10-K
for the year ended December 31, 1988, No. 33-25485.)
10(d) Stock Purchase Agreement, dated as of November 26,
1986, among Playtex Holdings, Inc., Playtex, Inc., and
BCI Consumer Products Corporation. (Incorporated
herein by reference to Exhibit 10(c) of Playtex's
Annual Report on Form 10-K for the year ended December
31, 1988, No. 33-25485.)
X-4
Exhibit No. Description
----------- -----------
10(e) Stock Purchase Agreement, dated November 13, 1986,
between Playtex Holdings, Inc. and Revlon Group
Incorporated. (Incorporated herein by reference to
Exhibit 10(d) of Playtex's Annual Report on Form 10-K
for the year ended December 31, 1988, No. 33-25485.)
10(f) Playtex Park Profit-Sharing Retirement Plan and Savings
Plan dated December 12, 1986, as amended January 1,
1989. (Incorporated herein by reference to Exhibit
10(e) of Playtex's Annual Report on Form 10-K for the
year ended December 30, 1989, No. 33-25485.)
10(g) Deferred Benefit Equalization Plan dated August 15,
1977, as amended April 15, 1987. (Incorporated herein
by reference to Exhibit 10(e) of Playtex Holding's
Annual Report on Form 10-K for the year ended December
28, 1987, File No. 33-15607.)
10(h) Revised Special Severance Plan dated August 27, 1990.
(Incorporated herein by reference to Exhibit 10(g)(2)
of Playtex's Annual Report on Form 10-K for the year
ended December 29, 1990, File No. 33-25485.)
10(i) Termination Policy for Management Compensation Plan
Participants. (Incorporated herein by reference to
Exhibit 10(h)(1) of Playtex's Annual Report on Form 10-
K for the year ended December 30, 1989, File No. 33-
25485.)
10(j) Playtex Pension Plan effective January 1, 1989.
(Incorporated herein by reference to Exhibit 10(j) of
Playtex's Registration Statement on Form S-1, No. 33-
71512.)
10(k) Retirement Plan for Hourly Employees of Tek effective
January 1, 1989. (Incorporated herein by reference to
Exhibit 10(k) of Playtex's Registration Statement on
Form S-1, No. 33-71512.)
10(l) Playtex Management Incentive Plan for 1995.
(Incorporated herein by reference to Exhibit 10(l)(1)
of Playtex's Annual Report on Form 10-K for the fiscal
year ended December 31, 1994, File No. 33-25485-01.)
*10(l)(1) Playtex Management Incentive Plan for 1996.
10(m) Consulting Agreement between Family Products and Joel
E. Smilow dated January 30, 1993. (Incorporated herein
by reference to Exhibit 10(m) of Playtex's Registration
Statement on Form S-1, No. 33-71512.)
X-5
Exhibit No. Description
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10(n) Form of Management Contribution and Subscription
Agreement. (Incorporated herein by reference to
Exhibit 4(d) of Playtex's Registration Statement on
Form S-1, No. 33-25485.)
10(n)(1) First Amendment to the Management Contribution and
Subscription Agreement dated February 23, 1989.
(Incorporated herein by reference to Exhibit 10(c)(1)
of Playtex's Annual Report on Form 10-K for the year
ended December 30, 1989, No. 33-25485.)
10(n)(2) Second Amendment to the Management Contribution and
Subscription Agreement dated November 15, 1989.
(Incorporated herein by reference to Exhibit 10(c)(2)
of Playtex's Annual Report on Form 10-K for the year
ended December 30, 1989, No. 33-25485.)
10(n)(3) Third Amendment to the Management Contribution and
Subscription Agreement dated August 1, 1990.
(Incorporated herein by reference to Exhibit 10(c)(3)
of Playtex's Annual Report on Form 10-K for the year
ended December 29, 1990, No. 33-25485.)
10(n)(4) Fourth Amendment to the Management and Contribution
Subscription Agreement dated January 1, 1992.
(Incorporated herein by reference to Exhibit 10(q)(4)
of Playtex's Registration Statement on Form S-1, No.
33-71512.)
10(o) Form of Playtex Stock Subscription Agreement.
(Incorporated herein by reference to Exhibit 10(o) of
Playtex's Registration Statement on Form S-1, No. 33-
25485.)
10(p) Amended Trademark License Agreement dated November 19,
1991 among Marketing Corporation, Apparel and Family
Products. (Incorporated herein by reference to Exhibit
10(r) of Playtex's Registration Statement on Form S-1,
No. 33-43771.)
10(q) Amended Trademark License Agreement dated November 19,
1991 by and between Apparel and Family Products.
(Incorporated herein by reference to Exhibit 10(s) of
Playtex's Registration Statement on Form S-1, No. 33-
43771.)
X-6
Exhibit No. Description
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10(r) Shareholders' Agreement, dated as of November 16, 1992,
among Sun Pharmaceuticals Corp. (formerly Banana Boat
Holding Corporation), those persons listed as the Lee
Investors on the signature pages thereof and Family
Products. (Incorporated herein by reference to Exhibit
10(ee) of Playtex's Registration Statement on Form S-1,
No. 33-71512.)
10(s) Distribution Agreement dated as of November 16, 1992,
between Banana Boat Acquisition Corp. and Family
Products. (Incorporated herein by reference to Exhibit
10(ff) of Playtex's Registration Statement on Form S-1,
No. 33-71512.)
10(t) Release Agreement, dated November 5, 1991, between
Playtex Investment Corp. and Playtex Apparel Partners,
L.P. (Incorporated herein by reference to Exhibit
10(gg) of Playtex's Registration Statement on Form S-1,
No. 33-71512.)
10(u) Playtex 1994 Stock Option Plan for Directors and
Executive and Key Employees. (Incorporated herein by
reference to Exhibit 10(hh) of Playtex's Registration
Statement on Form S-1, No. 33-71512.)
10(u)(1) Amendment No. 1 to the 1994 Stock Option Plan.
(Incorporated herein by reference to Exhibit 10.2 of
Playtex's Form 8-K, dated June 6, 1995, File No. 33-
25485-01.)
10(v) Agreement with the Personal Products Division of
McNeil-PPC, Inc., a subsidiary of Johnson & Johnson
dated as of October 17, 1994. (Incorporated herein by
reference to Exhibit 10(ii) of Playtex's Form 10-Q for
the quarter ended September 24, 1994, No. 33-25485-01.)
10(v)(1) Agreement between Playtex and the Personal Products
Division of McNeil-PPC, Inc., a subsidiary of Johnson &
Johnson dated as of November 15, 1994. (Incorporated
herein by reference to Exhibit 10(v)(1) of Playtex's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1994, File No. 33-25485-01.)
10(w) Agreement between Playtex and Reckitt & Colman, Inc.,
dated December 22, 1994. (Incorporated herein by
reference to Exhibit 10.1 of Playtex's Form 8-K dated
January 4, 1995, No. 33-25485-01.)
10(w)(1) Amendment dated February 16, 1995 to Agreement with
Reckitt & Colman, Inc. (Incorporated herein by
reference to Exhibit 10.2 of Playtex's Form 8-K/A,
dated March 6, 1995, No. 33-25485-1.)
X-7
Exhibit No. Description
----------- -----------
10(w)(2) Trademark License Agreements (U.S.) dated as of
February 24, 1995 between Playtex and Reckitt & Colman,
Inc. (Incorporated herein by reference to Exhibit 10.3
of Playtex's Form 8-K as amended, dated January 4,
1995, No. 33-25485-1.)
10(w)(3) Trademark License Agreements (Canada) dated as of
February 24, 1995 between Playtex and Reckitt & Colman,
Inc. (Incorporated herein by reference to Exhibit 10.4
of Playtex's Form 8-K as amended, dated January 4,
1995, No. 33-25485-1.)
10(x) Agreement between Playtex and Richard Green to acquire
SmileTote, Incorporated, dated as of July 15, 1994.
(Incorporated herein by reference to Exhibit 10(x) of
Playtex's Annual Report on Form 10-K for the fiscal
year ended December 31, 1994, File No. 33-25485-01.)
10(y) Lease Agreement between Playtex and Stauffer Management
Company dated as of June 3, 1994. (Incorporated herein
by reference to Exhibit 10(y) of Playtex's Annual
Report on Form 10-K for the fiscal year ended December
31, 1994, File No. 33-25485-01.)
10(z) Stock Purchase Agreement dated as of March 17, 1995
between Playtex and HWH Capital Partners, L.P., HWH
Valentine Partners, L.P. and HWH Surplus Valentine
Partners, L.P. (Incorporated herein by reference to
Exhibit 10.1 of Playtex's Form 8-K dated March 17,
1995.)
10(aa) Agreement and Plan of Merger between and among Playtex,
BBA Acquisition, Inc. and Banana Boat Holding
Corporation, dated as of October 17, 1995.
(Incorporated herein by reference to Exhibit 10.1 of
Playtex's Form 8-K dated October 31, 1995, File No. 33-
25485-01.)
*10(ab) Memorandum of Understanding, dated June 21, 1995 with
Michael R. Gallagher, Chief Executive Officer.
*12(a) Statement re-computation of ratios.
*13(a) Playtex's 1995 Annual Report to Stockholders
*13(b) Balance Sheet and Related Notes of Playtex
Manufacturing, Inc. (a wholly owned subsidiary of the
Company)
*13(c) Balance Sheet and Related Notes of Playtex Sales &
Services, Inc. (a wholly owned subsidiary of the
Company)
*13(d) Consolidated Financial Statements and Related Notes of
Banana Boat Holding Corporation (a wholly owned
subsidiary of the Company)
X-8
Exhibit No. Description
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*22(a) Subsidiaries of Playtex
*23 Consent of KPMG Peat Marwick LLP.
*27 Financial Data Schedule.
---------------
* Filed herewith
X-9