Edgar Filing: PLAYTEX PRODUCTS INC

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

--------------------------------

FORM 10-Q

(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

FOR THE QUARTER ENDED MARCH 30, 2002

COMMISSION FILE NO. 1-12620

PLAYTEX PRODUCTS, INC.
(Exact name of registrant as specified in its charter)

Delaware 51-0312772
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

300 Nyala Farms Road
WESTPORT, CONNECTICUT 06880
(Address of principal executive offices)

TELEPHONE NUMBER: (203) 341-4000
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.

Yes /X/ No / /

At May 09, 2002 61,106,792 shares of Playtex Products, Inc. common
stock, par value $.01 per share, were outstanding.

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PLAYTEX PRODUCTS, INC

INDEX

PAGE

PART I - FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements.................................................... 3 - 16

Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations...................................................................... 17 - 25

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.............................................................................. 26

Item 6. Exhibits and Reports on Form 8-K:

(a) Exhibits................................................................................... 26

(b) Reports on Form 8-K........................................................................ 26

Item 7A. Quantitative and Qualitative Disclosure about Market Risk...................................... 26

Signatures..................................................................................... 27

PLAYTEX PRODUCTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)

MARCH 30, DECEMBER 29,
2002 2001
----------- -----------
ASSETS (Unaudited)

Current assets:
Cash ........................................................ $ 28,804 $ 34,006
Receivables, less allowance for doubtful accounts ........... 29,684 32,491
Retained interest in receivables ............................ 74,965 51,238
Inventories ................................................. 87,270 82,193
Deferred income taxes ....................................... 12,104 12,097
Other current assets ........................................ 3,955 6,793
----------- -----------
Total current assets .................................... 236,782 218,818
Net property, plant and equipment ................................ 119,955 124,761
Intangible assets, net
Goodwill .................................................... 494,187 494,187
Trademarks, patents and other ............................... 139,726 159,516
Deferred financing costs ......................................... 17,343 17,931
Due from related party ........................................... 80,017 80,017
Other noncurrent assets .......................................... 9,892 9,942
----------- -----------
Total assets ............................................ $ 1,097,902 $ 1,105,172
=========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ............................................ $ 39,341 $ 43,603
Accrued expenses ............................................ 66,129 65,376
Income taxes payable ........................................ 11,154 2,059
----------- -----------
Total current liabilities ............................... 116,624 111,038
Long-term debt ................................................... 876,800 888,800
Due to related party ............................................. 78,386 78,386
Other noncurrent liabilities ..................................... 13,475 13,146
Deferred income taxes ............................................ 40,847 58,372
----------- -----------
Total liabilities ....................................... 1,126,132 1,149,742
----------- -----------
Stockholders' equity:
Common stock, $0.01 par value, authorized 100,000,000 shares,
issued 61,061,165 shares at March 30, 2002 and 61,044,199
shares at December 29, 2001 ............................... 610 610
Additional paid-in capital .................................. 524,500 524,384
Retained earnings (deficit) ................................. (549,558) (565,675)
Accumulated other comprehensive earnings .................... (3,782) (3,889)
----------- -----------
Total stockholders' equity .............................. (28,230) (44,570)
----------- -----------
Total liabilities and stockholders' equity .............. $ 1,097,902 $ 1,105,172
=========== ===========

See the accompanying notes to condensed consolidated financial statements.

PLAYTEX PRODUCTS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited, in thousands, except per share data)

THREE MONTHS ENDED
------------------------
MARCH 30, MARCH 31,
2002 2001
--------- ---------

Net sales .................................................................... $ 196,751 $ 199,616
Cost of sales ................................................................ 85,711 88,903
--------- ---------
Gross profit ............................................................. 111,040 110,713

Operating expenses:
Selling, general and administrative ...................................... 63,734 61,814
Restructuring and asset impairment ....................................... 7,599 --
Amortization of intangibles .............................................. 226 5,515
--------- ---------
Total operating expenses ............................................. 71,559 67,329

Operating earnings ................................................ 39,481 43,384

Interest expense including related party interest expense
of $3,037 for both periods presented, net of related party
interest income of $3,001 for both periods presented ..................... 16,106 21,103
Other expense ................................................................ 890 --
--------- ---------

Earnings before income taxes and cumulative effect
of change in accounting principles ........................... 22,485 22,281

Income tax (benefit) expense ................................................. (6,055) 9,437
--------- ---------

Earnings before cumulative effect of change
in accounting principles ..................................... 28,540 12,844
--------- ---------

Cumulative effect of change in accounting principle, net of $7,141 tax benefit (12,423) --
--------- ---------

Net earnings ...................................................... $ 16,117 $ 12,844
========= =========

Earnings per share--Basic:
Earnings before cumulative effect of change in accounting principles .... $ 0.47 $ 0.21
Cumulative effect of change in accounting principles .................... (0.20) --
--------- ---------
Earnings per share--Basic ............................................... $ 0.26 $ 0.21
========= =========

Earnings per share--Diluted:
Earnings before cumulative effect of change in accounting principles .... $ 0.45 $ 0.21
Cumulative effect of change in accounting principles .................... (0.20) --
--------- ---------
Earnings per share--Diluted ............................................. $ 0.26 $ 0.21
========= =========

Weighted average shares outstanding:
Basic .................................................................... 61,049 60,971
========= =========
Diluted .................................................................. 63,849 63,663
========= =========

See the accompanying notes to condensed consolidated financial statements.

PLAYTEX PRODUCTS, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
AND ACCUMULATED OTHER COMPREHENSIVE EARNINGS
(Unaudited, in thousands)

ACCUMULATED
COMMON ADDITIONAL RETAINED OTHER
SHARES COMMON PAID-IN EARNINGS COMPREHENSIVE
OUTSTANDING STOCK CAPITAL (DEFICIT) EARNINGS TOTAL
--------- --------- --------- --------- --------- ---------

Balance, December 29, 2001 ......... 61,044 $ 610 $ 524,384 $(565,675) $ (3,889) $ (44,570)

Net earnings ....................... -- -- -- 16,117 -- 16,117
Other comprehensive earnings ....... -- -- -- -- 107 107
---------
Comprehensive earnings ....... 16,224
Stock issued to employees exercising
stock options ................... 17 -- 116 -- -- 116
--------- --------- --------- --------- --------- ---------
Balance, March 30, 2002 ...... 61,061 $ 610 $ 524,500 $(549,558) $ (3,782) (28,230)
========= ========= ========= ========= ========= =========

See the accompanying notes to condensed consolidated financial statements.

PLAYTEX PRODUCTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)

THREE MONTHS ENDED
----------------------
MARCH 30, MARCH 31,
2002 2001
-------- --------

Cash flows from operations:
Net earnings .................................................... $ 16,117 $ 12,844
Non-cash items included in earnings:
Asset impairment charge ...................................... 4,222 --
Cumulative effect of change in accounting principle .......... 12,423 --
Depreciation ................................................. 3,495 3,111
Amortization of deferred financing costs ..................... 588 1,016
Amortization of intangibles .................................. 226 5,515
Deferred income taxes ........................................ (10,388) 4,193
Other, net ................................................... 567 (410)
Net increase in working capital accounts ........................ (17,594) (35,090)
-------- --------

Net cash flows from (used for) operations ................ 9,656 (8,821)

Cash flows used for investing activities:
Purchases of property, plant and equipment ...................... (2,974) (5,151)
Purchase of patent rights ....................................... -- (500)
-------- --------

Net cash flows used for investing activities ............. (2,974) (5,651)

Cash flows (used for) provided by financing activities:
Net (repayments) borrowings under credit facilities ............ (12,000) 21,800
Long-term debt repayments ....................................... -- (9,344)
Issuance of shares of common stock .............................. 116 --
-------- --------

Net cash flows (used for) provided by financing activities (11,884) 12,456

Decrease in cash .................................................... (5,202) (2,016)
Cash at beginning of period ......................................... 34,006 10,282
-------- --------

Cash at end of period ............................................... $ 28,804 8,266
======== ========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Cash paid during the periods for:
Interest ...................................................... $ 8,171 $ 16,116
Income taxes, net of refunds .................................. $ (4,761) $ 1,184

See the accompanying notes to condensed consolidated financial statements.

PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. CONSOLIDATED FINANCIAL STATEMENTS

The quarterly condensed consolidated financial statements, which are a
part of our Quarterly Report on Form 10-Q, are unaudited. In preparing our
financial statements, we make certain adjustments (consisting of normal
recurring adjustments) considered necessary in our opinion for a fair
presentation of our financial position and results of operations. The results of
the three month period ended March 30, 2002 are not necessarily indicative of
the results that you may expect for the full year. Certain reclassifications
have been made to prior-year amounts to conform to the current-year
presentation.

We presume you have access to the audited financial statements
contained in our Annual Report on Form 10-K for the year ended December 29,
2001. As a result, we have not included footnote disclosures that would
substantially duplicate the disclosures contained in the 10-K. If you do not
have a copy of our Annual Report on Form 10-K you can obtain one by contacting
our Investor Relations department at (203) 341-4000 or view it on-line at the
SEC's web site WWW.SEC.GOV.

2. IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS

In May 2000, the Emerging Issues Task Force ("EITF") of the Financial
Accounting Standards Board ("FASB") reached a consensus on Issue No. 00-14,
"Accounting for Certain Sales Incentives." In April of 2001, the EITF of the
FASB reached a consensus on Issue No. 00-25, "Vendor Income Statement
Characterization of Consideration from a Vendor to a Reseller." We adopted the
requirements of these Issues effective December 30, 2001, the start of our
fiscal year 2002. These issues address the recognition, measurement, and income
statement classification for certain advertising, promotional and cooperative
spending activities. As a result of the adoption of these issues, we
reclassified certain previously reported advertising and promotion expenses to
offset net sales for the three months ended March 31, 2001 to conform to our
current year presentation. These reclassifications reduced both our net sales
and advertising and promotion expenses by equal and offsetting amounts and had
no impact on our reported operating earnings, net income, or earnings per share.

Effective December 30, 2001, the beginning of our 2002 fiscal year, we
adopted the provisions of Statement of Financial Accounting Standards ("SFAS")
No. 142, "Goodwill and Other Intangible Assets." This standard changes the
accounting for goodwill and certain other intangible assets from an amortization
method to an impairment only approach. As such, we stopped the amortization of
goodwill on December 29, 2001. The standard also requires a reassessment of the
useful lives of identifiable intangible assets other than goodwill and at least
an annual test for impairment of goodwill and intangibles with indefinite lives.

In accordance with the requirements of SFAS No. 142, we tested the
goodwill attributable to each of our reporting units for impairment and based on
our preliminary determinations we do not believe any of our goodwill is
impaired, at December 30, 2001. We expect to complete the transitional
impairment testing during the second quarter of fiscal 2002. We will perform
additional testing for impairment of our goodwill, based on the methodologies as
outlined in SFAS No. 142, on an annual basis and more frequently if events or
circumstances indicate a likelihood of impairment.

In addition, we reassessed the useful lives of our identifiable
intangible assets and determined that our trademarks have indefinite lives. As
required by SFAS No. 142, we stopped the amortization of our trademarks on
December 29, 2001. We will continue to amortize our patents, which are
identifiable intangible assets with definite useful lives. Also, in accordance
with the requirements of SFAS No. 142, we tested each of our trademarks for
impairment by comparing the fair value of each trademark to its carrying value
at December 30, 2001. Fair value was estimated using the relief from royalty
method (a discounted cash flow methodology). Based on these impairment tests, we
recorded a charge, reported as a cumulative effect of change in accounting
principles, of $19.6 million ($12.4 million or $0.20 per share, net of tax) in
the first quarter of 2002. This charge was to reduce the trademark carrying
value of certain non-core brands, primarily CHUBS and DIAPARENE, to their
estimated fair value. We will test the carrying value of trademarks for
impairment at least annually and more frequently if events or circumstances
indicate a likelihood of impairment. Patents will continue to be tested for
impairment under SFAS No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets."

PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS (CONTINUED)

Had we accounted for goodwill and other intangible assets under SFAS
No. 142 for all periods presented, our net earnings and earnings per share would
have been as follows for the three months ended March 31, 2001 (unaudited, in
thousands except per share amounts):

Net earnings:
Reported net earnings ........................................... $ 12,844
Add back goodwill and trademark amortization expense, net of tax 4,320
----------
Adjusted net earnings ....................................... $ 17,164
==========

Earnings per share--Basic and Diluted:
Reported earnings ............................................... $ 0.21
Impact of goodwill and trademark amortization expense, net of tax 0.07
----------
Adjusted earnings per share--Basic and Diluted .............. $ 0.28
==========

3. IMPACT OF NEW TAX REGULATIONS

On March 7, 2002, the U.S. Treasury issued new regulations that
replace the loss disallowance rules applicable to the sale of stock of a
subsidiary member of a consolidated tax group. These regulations permit us to
utilize a previously disallowed $135.1 million tax capital loss that resulted
from the sale of Playtex Beauty Care Inc., during fiscal 1999. We can utilize
the tax capital loss associated with the sale of Playtex Beauty Care Inc., to
offset capital gains during the statutory five-year carry forward period. We
anticipate utilizing $40.0 million of the capital loss to off set a capital
gain, in fiscal 2003, related to the retirement of our related party notes,
which come due on December 15, 2003. Accordingly, we recorded a tax benefit
of $14.3 million, or $.23 per diluted share, in the three month period ended
March 30, 2002. The remaining capital loss carryover will expire on December
25, 2004, if not utilized. The remaining tax benefit associated with the
capital loss carryforward has been reduced by a valuation allowance as we do
not currently expect to realize it. We expect our effective tax rate, for the
remaining three quarters of fiscal 2002, to be approximately 37% of earnings
before income taxes and cumulative effect of change in accounting principles.

4. RESTRUCTURING AND IMPAIRMENT COSTS

In the first quarter of 2002, we recorded a pre-tax restructuring
and asset impairment charge of $7.6 million, or $.08 per diluted share, as a
result of our decision to close our Watervliet, New York plastic molding
facility. The Watervliet facility manufactures component parts primarily for
our infant feeding category and employs approximately 160 people. Severance
and other exit costs related to the termination of employees approximate $3.4
million and are included as a component of accrued expenses and the write-off
of assets associated with the closure of the facility is approximately $4.2
million and is accounted as reserves against our fixed asset accounts. We
have not incurred any cash expenses related to severance and other exit costs
as of March 30, 2002. The net cash outflow associated with this plant closing
will be approximately $1.5 million.

PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. COMPREHENSIVE EARNINGS

For the three months ended March 30, 2002 foreign currency translation
adjustment was the only reconciling item between net earnings and comprehensive
earnings. For the three months ended March 31, 2001, foreign currency
translation adjustment and the unrealized loss on our interest rate hedging
instruments were the only reconciling items between net earnings and
comprehensive earnings. Our comprehensive earnings were (unaudited, in
thousands):

THREE MONTHS ENDED
-----------------------
MARCH 30, MARCH 31,
2002 2001
-------- --------

Net earnings ................................... $ 16,117 $ 12,844
Unrealized loss on hedging instruments(1) ...... -- (4,872)
Foreign currency translation adjustment ........ 107 (562)
-------- --------
Comprehensive earnings ..................... $ 16,224 $ 7,410
======== ========

-----------
(1) In connection with our refinancing transaction, on May 22, 2001, our
interest rate swap agreements related to our prior credit facility were
cancelled by the counterparty.

6. BALANCE SHEET COMPONENTS

The components of certain balance sheet accounts are as follows (in
thousands):

MARCH 30, DECEMBER 29,
2002 2001
------- -------
(Unaudited)

Cash ................................... $ 16,289 $ 27,103
Cash--lock box (1) ..................... 12,515 6,903
-------- --------
Net .............................. $ 28,804 $ 34,006
======== ========

-----------

(1) Cash held in lock box pending weekly settlement procedure for
Receivables Facility (see Note 8).

Receivables .................................. $ 32,562 $ 33,767
Less allowance for doubtful accounts ......... (2,878) (1,276)
-------- --------
Net .................................... $ 29,684 $ 32,491
======== ========

Inventories:
Raw materials ............................ $ 18,555 $ 23,715
Work in process .......................... 4,009 1,934
Finished goods ........................... 64,706 56,544
-------- --------
Total .................................. $ 87,270 $ 82,193
======== ========

Net property, plant and equipment:
Land ..................................... $ 1,894 $ 2,376
Buildings ................................ 40,538 41,047
Machinery and equipment .................. 185,956 186,557
-------- --------
228,388 229,980
Less accumulated depreciation ............ (108,433) (105,219)
-------- --------
Net .................................... $119,955 $124,761
======== ========

PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6. BALANCE SHEET COMPONENTS (CONTINUED)

MARCH 30, DECEMBER 29,
2002 2001
------- -------
(Unaudited)

Accrued expenses:
Advertising and sales promotion ............ $17,902 $20,687
Employee compensation and benefits ......... 6,602 14,743
Interest ................................... 13,745 6,398
Insurance .................................. 2,185 3,238
Restructuring charge ....................... 3,377 --
Other ...................................... 22,318 20,310
------- -------
Total .................................... $66,129 $65,376
======= =======

7. LONG-TERM DEBT

Long-term debt consists of the following (in thousands):

MARCH 30, DECEMBER 29,
2002 2001
-------- --------
(Unaudited)

Variable rate indebtedness:
'07-Term A Loan ................................ $ 76,000 $ 76,000
'09-Term B Loan ................................ 395,800 395,800
Revolving Credit Facility ...................... 5,000 17,000

Fixed rate indebtedness:
9 3/8% Senior Subordinated Notes due 2011 ...... 350,000 350,000
6% Convertible Subordinated Notes due 2004 ..... 50,000 50,000
-------- --------
876,800 888,800

Less current maturities ........................ -- --
-------- --------
Total long-term debt ........................ $876,800 888,800
======== ========

On May 22, 2001, we completed a refinancing of our senior indebtedness
(the "Refinancing Transaction"). As part of the Refinancing Transaction we
issued:

o $350.0 million principal amount of 9 3/8% Senior Subordinated
Notes due June 1, 2011 (the "9 3/8% Notes").

o A new senior secured credit facility (the "Senior Secured
Credit Facility") consisting of:

- a new six-year $100.0 million term A loan facility (the "'07-Term
A Loan"),
- a new eight-year $400.0 million term B loan facility (the
"'09-Term B Loan"), and
- a new six-year $125.0 million revolving credit facility (the
"Revolving Credit Facility").

In addition, we entered into a receivables purchase agreement (the "Receivables
Facility") with a third party through a newly formed wholly-owned consolidated
special purpose bankruptcy remote subsidiary of ours, Playtex A/R LLC. The total
amount available to us under the Receivables Facility is up to $100.0 million,
depending primarily on the amount of receivables generated by us, the rate of
collection on those receivables, and other characteristics of the receivables
pool which affects their eligibility (see Note 8).

The net proceeds from the Refinancing Transaction and the Receivables
Facility were used to pay-off all of our outstanding indebtedness, except for
the Convertible Notes. The result of these transactions enabled us to
significantly extend our near term principal debt repayment obligations.

Our indebtedness at March 30, 2002 consists of $400.0 million in fixed
rate debt and $476.8 million of variable rate debt. Our fixed rate debt consists
of the 9 3/8% Notes and the Convertible Notes and our variable rate debt
consists of the amounts borrowed under the '07-Term A Loan, '09-Term B Loan, and
the Revolving Credit Facility.

PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7. LONG-TERM DEBT (CONTINUED)

We pay interest on the 9 3/8% Notes semi-annually on June 1 and
December 1 of each year. At any time prior to June 1, 2004, we may redeem up to
35% of the principal amount of the 9 3/8% Notes with the proceeds of one or more
equity offerings at a redemption price of 109.375% of the principal amount, plus
accrued and unpaid interest to the redemption date. We do not have the option to
redeem the 9 3/8% Notes from June 1, 2004 through May 31, 2006. At our option,
we may redeem the notes on or after June 1, 2006 at the redemption prices
(expressed as a percentage of principal amount) listed below plus accrued and
unpaid interest to the redemption date.

Year Percentage
---- ----------

2006............................................... 104.688

2007............................................... 103.125

2008............................................... 101.563

2009 and thereafter................................ 100.000

The Convertible Notes are currently redeemable by us, in whole or in
part, at our option at a redemption price equal to 100% of the principal amount,
together with accrued and unpaid interest to the redemption date. The
Convertible Notes are convertible into approximately 2.6 million shares of our
common stock. The conversion price is approximately $19.15 per common share. The
Convertible Notes mature on January 31, 2004.

The '07-Term A Loan matures on May 31, 2007. We prepaid $21.0 million
of scheduled semi-annual principal payments on the '07-Term A Loan during fiscal
2001. Our next scheduled semi-annual principal payment on the '07-Term A Loan is
the May 31, 2004 payment. The remaining scheduled semi-annual payments amount
to: $17.0 million in 2004, $23.0 million in 2005, $24.0 million in 2006, and
$12.0 million in 2007.

The '09-Term B Loan matures on May 31, 2009. We prepaid $3.5 million of
scheduled semi-annual principal payments on the '09-Term B Loan during fiscal
2001. Our next scheduled semi-annual principal payment on the '09-Term B Loan is
the November 30, 2004 payment. The remaining scheduled semi-annual payments
amount to $0.7 million in 2004, $1.4 million in 2005, $1.4 million in 2006, $1.4
million in 2007, $195.8 million in 2008, and $195.1 million in 2009.

Loans made under the Revolving Credit Facility will mature on May 22,
2007. At March 30, 2002, we had $117.8 million of unused borrowings available to
us under the Revolving Credit Facility.

We periodically use financial instruments, such as derivatives, to
manage the impact of interest rate changes on our variable rate debt. At March
30, 2002, we were not a party to any derivative or other type of financial
instrument that hedged the impact of interest rate changes on our variable rate
debt. Based on our interest rate exposure at March 30, 2002, a 1% increase in
interest rates would result in an estimated $4.8 million of additional interest
expense on an annualized basis.

The rates of interest we pay on our variable rate debt are, at our
option, a function of various alternative short term borrowing rates.

o Our weighted average variable interest rate was 5.17% for the
three months ended March 30, 2002 compared to 7.89% for the
three months ended March 31, 2001.

o At March 30, 2002, our variable interest rate was 5.14%
compared to 7.32% at March 31, 2001.

The provisions of the credit agreement for our Senior Secured Credit
Facility (the "Credit Agreement") require us to meet certain financial covenants
and ratios and include limitations and restrictions, including:

o indebtedness and liens, o certain dividends and other distributions,

o major acquisitions or mergers, o the application of excess cash flow, and

o capital expenditures and asset sales, o prepayment and modification of all indebtedness or
equity capitalization.

PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7. LONG-TERM DEBT (CONTINUED)

The 9 3/8% Notes also contain certain restrictions and requirements. Under the
terms of each of these agreements, payment of cash dividends on our common stock
is restricted.

Our required principal repayments are (excluding balances outstanding
under the Revolving Credit Facility and due to related party):

o $67.7 million in 2004, o $13.4 million in 2007,
o $24.4 million in 2005, o $195.8 million in 2008, and
o $25.4 million in 2006, o $545.1 million thereafter.

We do not have any debt obligations due prior to fiscal 2004. However at the end
of this fiscal year and each subsequent fiscal year, we may be required to make
mandatory principal repayments on the '07-Term A Loan and '09-Term B Loan per
the excess cash flow calculation as defined in our Credit Agreement.

8. RECEIVABLES FACILITY

On May 22, 2001, we entered into the Receivables Facility through a
wholly-owned, special purpose bankruptcy remote subsidiary of ours; Playtex A/R
LLC. Through the Receivables Facility, we sell on a continuous basis to Playtex
A/R LLC substantially all of our domestic customers' trade invoices that we
generate. Playtex A/R LLC sells to a third-party commercial paper conduit (the
"Conduit") an undivided fractional ownership interest in these trade accounts
receivable. The Conduit issues short-term commercial paper to finance the
purchase of the undivided fractional interest in the receivables. The total
funding available to us on a revolving basis under the Receivables Facility is
up to $100.0 million, depending primarily on: the amount of receivables
generated by us and sold to Playtex A/R LLC, the rate of collection on those
receivables, and other characteristics of the receivables pool which affects
their eligibility. Our Retained Interest in Receivables represents our
subordinated fractional undivided interest in receivables sold to Playtex A/R
LLC and the net unamortized deferred financing costs incurred by Playtex A/R
LLC.

We have agreed to continue servicing the sold receivables at market
rates; accordingly, no servicing asset or liability has been recorded. Playtex
A/R LLC shares credit risk with the Conduit as the undivided fractional interest
in the receivables are sold without recourse. We believe, however, that Playtex
A/R LLC has most of the credit risk associated with customers that do not pay,
as the Conduit has preferential treatment with regard to cash settlement
procedures and other conditions that limit their credit exposure. Our retained
interest in receivables will be negatively impacted if Playtex A/R LLC
writes-off any receivable balances as uncollectible. We believe the Receivables
Facility is beneficial to us as: (1) we convert trade receivables to cash
faster, and (2) although we sell our invoices to Playtex A/R LLC at a discount
and pay fees to the Conduit, these expenses are lower than our borrowing costs
under the Senior Secured Credit Facility.

At March 30, 2002, Playtex A/R LLC had approximately $150.0 million of
receivables, of which $75.0 million of undivided fractional interest therein was
sold to the Conduit. Since the beginning of fiscal 2002, we sold in aggregate
approximately $206.0 million of accounts receivable to Playtex A/R LLC. In
return, we've received from Playtex A/R LLC approximately $164.0 million of
cash.

PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. RECEIVABLES FACILITY (CONTINUED)

We sell receivables at a discount, which is included in Other Expenses
in the Consolidated Statements of Earnings. This discount, which was $0.9
million in the three month period ended March 30, 2002, reflects the estimated
fees required by the Conduit to purchase a fractional undivided interest in the
receivables. The fees are based on the payment characteristics of the
receivables, most notably their average life, interest rates in the commercial
paper market and historical credit losses. Also included in Other Expenses is
the impact of the amortization of deferred financing costs incurred by Playtex
A/R LLC to establish the Receivables Facility.

We account for the sale of accounts receivable to Playtex A/R LLC and
related transactions with the Conduit in accordance with SFAS No. 140,
"Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities." At the time the receivables are sold, the balances are removed
from our balance sheet. Playtex A/R LLC pays fees on the value of the undivided
interest of the receivables sold to the conduit equal to the 30 day LIBOR rate,
which is reset weekly. In addition, Playtex A/R LLC pays a 0.25% per annum fee
on the utilized portion of the Receivables Facility and a 0.45% per annum
liquidity fee on the entire committed amount of the Receivables Facility.
Because of the short-term nature, generally less than 60 days, of our trade
accounts receivable sold to Playtex A/R LLC and the historically low credit risk
associated with these receivables, the carrying value of our Retained Interest
in Receivables approximates the fair value.

Commitments under the Receivables Facility have terms of 364 days,
which may be renewed annually at the option of the Conduit for up to three years
upon satisfaction of certain conditions. The Receivables Facility may be
terminated prior to its term in the event of:

o nonpayment of fees or o bankruptcy events,
other amounts when due, o material judgments,
o violation of covenants, o defaults under the Receivables Facility,
o failure of any representation or warranty to o a servicing default, and
be true in all material respects when made, o a downgrade in the Senior Secured Credit
Facility to less than B- by S&P and less
than B3 by Moody's.

9. BUSINESS SEGMENTS

We are organized in three divisions:

Our PERSONAL PRODUCTS DIVISION includes Infant Care and Feminine Care
products sold in the United States primarily to mass merchandisers, grocery and
drug classes of trade. The Infant Care product category includes the following
brands:

Infant Feeding Products Other Infant Care Products
----------------------- --------------------------

o PLAYTEX disposable nurser system o DIAPER GENIE diaper disposal system
o PLAYTEX cups and mealtime products o WET ONES hand and face towelettes
o PLAYTEX reusable hard bottles o BABY MAGIC infant toiletries
o PLAYTEX pacifiers o BABY MAGIC baby wipes, and
o MR. BUBBLE children's bubble bath

The Feminine Care product category includes a wide range of plastic and
cardboard applicator tampons marketed under such brand names as PLAYTEX: GENTLE
GLIDE, SILK GLIDE and SLIMFITS. In addition, the Feminine Care product category
includes a personal cleansing wipe for use in feminine hygiene. This product was
introduced in the first quarter of 2001.

PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. BUSINESS SEGMENTS (CONTINUED)

Our CONSUMER PRODUCTS DIVISION includes Sun Care, Household Products,
and Personal Grooming products sold in the United States primarily to mass
merchandisers, grocery and drug classes of trade.

Sun Care Household Products
-------- ------------------

o BANANA BOAT o PLAYTEX gloves
o WOOLITE rug and upholstery cleaning products

Personal Grooming
-----------------

o OGILVIE home permanent products o DENTAX oral care products
o BINACA breath freshener products o TEK toothbrushes
o TUSSY deodorants o DOROTHY GRAY skin care products, and
o BETTER OFF depilatories

Our INTERNATIONAL/CORPORATE SALES DIVISION includes:

o Sales to specialty classes of trade in o export sales
the United States including: warehouse o sales in Puerto Rico
clubs, military, convenience stores, o results from our Canadian and Australian
specialty stores, and telemarketing subsidiaries, and
o sales of private label tampons

The International/Corporate Sales Division sells the same products as available
to our U.S. customers.

We evaluate division performance based on their product contribution
excluding general corporate allocations. Product contribution is defined as
gross profit less advertising and sales promotion expenses. All other operating
expenses are managed at a corporate level and are not used by us to evaluate
division results. We do not segregate assets, amortization, capital
expenditures, or interest income and interest expense to divisions.

PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. BUSINESS SEGMENTS (CONTINUED)

The results of our divisions for the three months ended March 30, 2002
and March 31, 2001 are as follows (dollars in thousands):

THREE MONTHS ENDED
------------------------------------------------
MARCH 30, 2002 MARCH 31, 2001(1)
--------------------- ---------------------
NET PRODUCT NET PRODUCT
SALES CONTRIB. SALES CONTRIB.
-------- -------- -------- --------

Personal Products ................................ $103,462 $ 49,425 $105,119 $ 43,889
Consumer Products ................................ 58,529 20,614 62,094 27,159
International and Other .......................... 34,760 16,431 32,403 14,978
Unallocated Charges (2) .......................... -- (131) -- (353)
-------- -------- -------- --------
Total Consolidated ........................... $196,751 86,339 $199,616 85,673
======== ========
RECONCILIATION TO OPERATING EARNINGS:
-------------------------------------
Selling, distribution, research and administrative 39,033 36,774
Restructuring and asset impairment ............... 7,599 --
Amortization of intangibles ...................... 226 5,515
-------- --------
Operating earnings ........................... $ 39,481 $ 43,384
======== ========

-----------

(1) To conform with our current year presentation, we reclassified certain
previously reported advertising and promotion expenses to offset net
sales (see Note 2) and certain costs from product contribution to
selling, distribution, research and administrative.

(2) Certain unallocated corporate charges such as business license taxes,
pension expense and product liability insurance are included in
consolidated gross margin, but not included in the evaluation of
division performance.

PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10. EARNINGS PER SHARE

The following table explains how our basic and diluted Earnings Per
Share ("EPS") were calculated for the three months ended March 30, 2002 and
March 31, 2001 (unaudited, in thousands, except per share amounts):

THREE MONTHS ENDED
-------------------
MARCH 30, MARCH 31,
2002 2001
------- -------

Numerator:
Earnings before cumulative effect of change in
accounting principles--as reported ............................. $28,540 $12,844
Adjustment for interest on Convertible Note ........................ 473 473
------- -------
Earnings before cumulative effect of change in
accounting principles--as adjusted ............................. $29,013 $13,317
======= =======

Net earnings--as reported .......................................... $16,117 $12,844
Adjustment for interest on Convertible Note ........................ 473 473
------- -------
Net earnings--as adjusted .......................................... $16,590 $13,317
======= =======

Denominator:
Weighted average shares outstanding--as reported ................... 61,049 60,971
Adjustment for dilutive effect of employee stock options ........... 189 81
Adjustment for dilutive effect of Convertible Notes ................ 2,611 2,611
------- -------
Weighted average shares outstanding--as adjusted ................... 63,849 63,663
======= =======

Earnings per share--Basic:
Earnings before cumulative effect of change in accounting principles $ .47 $ .21
Net Earnings ....................................................... $ .26 $ .21

Earnings per share--Diluted:
Earnings before cumulative effect of change in accounting principles $ .45 $ .21
Net Earnings ....................................................... $ .26 $ .21

Basic EPS excludes all potentially dilutive securities. Basic EPS is
computed by dividing net earnings by the weighted average number of common
shares outstanding for the period. Diluted EPS includes all potentially dilutive
securities. Diluted securities include stock options granted to our employees
and shares that may be exchanged for the Convertible Notes, if determined to be
dilutive. Diluted EPS is computed by dividing net earnings, adjusted by the if -
converted method for convertible securities, by the weighted average number of
common shares outstanding for the period plus the number of additional common
shares that would have been outstanding if the dilutive securities were issued.
In the event the dilutive securities are anti-dilutive (have the affect of
increasing EPS), the impact of the dilutive securities is not included in the
computation.

11 CONTINGENT LIABILITIES

In our opinion, there are no claims, commitments, guarantees or
litigation pending to which we or any of our subsidiaries is a party which would
have a material adverse effect on the consolidated financial position, results
of operations or cash flows of the Company.

PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

The following discussion and analysis of our financial condition and
results of operations should be read in conjunction with:

o the condensed financial statements and notes included in this
report and
o audited consolidated financial statements and notes to
consolidated financial statements included in our report on Form
10-K for the year ended December 29, 2001.

CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995

This document includes forward-looking statements. We have based these
forward-looking statements on our current expectations and projections about
future results. When we use words in this document such as "anticipates,"
"intends," "plans," "believes," "estimates," "expects," and similar expressions
we do so to identify forward-looking statements. Our actual results may differ
materially from those anticipated in these forward-looking statements. These
forward-looking statements are affected by risks, uncertainties, and assumptions
that we make, including, among other things, the Risk Factors that are listed in
Item I. of our Annual Report on Form 10-K for the year ended December 29, 2001,
and:

o price and product changes, o impact of weather conditions, especially
o promotional activity by competitors, on Sun Care product sales,
o the loss or bankruptcy of a significant customer, o our level of debt,
o capacity limitations, o interest rate fluctuations,
o the difficulties of integrating acquisitions, o future cash flows,
o raw material and manufacturing costs, o dependence on key employees, and
o adverse publicity and product liability claims, o highly competitive nature of consumer products
business.

You should keep in mind that any forward-looking statement made by us
in this document, or elsewhere, speaks only as of the date on which we make it.
New risks and uncertainties come up from time to time, and it's impossible for
us to predict these events or how they may affect us. In light of these risks
and uncertainties, you should keep in mind that any forward-looking statements
made in this report or elsewhere might not occur. In addition, the preparation
of financial statements in accordance with generally accepted accounting
principles requires us to make estimates and assumptions. These estimates and
assumptions affect:

o the reported amounts and timing of revenue and expenses,
o the reported amounts and classification of assets and liabilities,
and
o the disclosure of contingent liabilities.

Actual results could vary from our estimates and assumptions. These estimates
and assumptions are based on historical results, assumptions that we make as
well as assumptions by third parties. The level of reserves for Sun Care product
returns, bad debts and advertising and promotional costs are three areas of
which you should be aware (see Management's Discussion and Analysis-Critical
Accounting Policies).

PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)

TRADEMARKS

We have proprietary rights to a number of trademarks important to our
business, such as: ACTIVE SPORT, BABY MAGIC, BANANA BOAT, BINACA, BLASTERS, BIG
SIPSTER, COOL COLORZ, COOLSTRAW, DIAPER GENIE, DENTAX, DROP-INS, FAST BLAST,
GENTLE GLIDE, GET ON THE BOAT, GRIPSTER, HANDSAVER, HEAVY TRAFFIC, INSULATOR,
LIPPOPS, MOST LIKE MOTHER, MR. BUBBLE, NATURAL ACTION, OGILVIE, POWER SHOT,
PRECISELY RIGHT, QUICKSTRAW, QUIK BLOK, SAFE'N SURE, SILK GLIDE, SIPEASE,
SLIMFITS, SOOTH-A-CAINE, TUB MATE, TEK, TUSSY, VENTAIRE, VITASKIN, and WET ONES.
We also own a royalty free license in perpetuity to the PLAYTEX and LIVING
trademarks, and to the WOOLITE trademark for rug and upholstery cleaning
products in the United States and Canada.

ITEMS AFFECTING COMPARABILITY

Our results for the first quarter of 2002 are for the 13-week period
ended March 30, 2002 and our results for the first quarter of 2001 are for the
13-week period ended March 31, 2001. All references to market share and market
share data are for comparable 13 week periods and represent our percentage of
the total U.S. dollar volume of products purchased by consumers in the
applicable category (dollar market share, or retail consumption). This
information is provided to us from the ACNielsen Company and is subject to
revisions. The market share data provided in this Quarterly Report on Form 10-Q
does not include scanner/consumption data from Wal-Mart Stores, Inc.
("Wal-Mart"), as they ceased providing this information to third parties. All
prior period market share data has been revised to reflect the elimination of
data from Wal-Mart. There were no meaningful changes in market share trends or
comparatives from the elimination of Wal-Mart data, when compared to prior
dollar market share data provided by ACNielsen Company.

Effective December 30, 2001, the start of our fiscal year 2002, we
adopted the Emerging Issues Task Force ("EITF") Issue No. 00-14, "Accounting for
Certain Sales Incentives." and Issue No. 00-25, "Vendor Income Statement
Characterization of Consideration from a Vendor to a Reseller." As a result of
the adoption of EITF's 00-14 and 00-25, we reclassified certain previously
reported advertising and promotion expenses to offset net sales for the three
months ended March 31, 2001 to conform to our current year presentation. These
reclassifications reduced both our net sales and advertising and promotion
expenses by equal and offsetting amounts and had no impact on our reported
operating earnings, net income, or earnings per share (see Note 2).

We also adopted, on December 30, 2001, Statement of Financial
Accounting Standards ("SFAS") No. 141, "Business Combinations," and SFAS No.
142, "Goodwill and Other Intangible Assets." As a result of the adoption of SFAS
142, we ceased the amortization of: (a) all of our remaining goodwill balance
and (b) trademarks that are determined to have indefinite lives. This change
favorably affected our reported net income in the first quarter of 2002 by $4.3
million, or $.07 per diluted share. Also in connection with the new requirements
set forth in SFAS 142, we performed impairment tests on our indefinite-lived
intangible assets based on a fair value concept. As a result of this testing, we
recorded an after tax impairment of $12.4 million as a cumulative effect of
change in accounting principles in the first quarter of 2002 (see Note 2). The
adoption of SFAS 141 had no impact on us.

We also reclassified certain expenses from the cost of sales line item
to the selling, general and administrative line item to better reflect the
nature of these expenses.

PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 30, 2002 COMPARED TO
THREE MONTHS ENDED MARCH 31, 2001

CONSOLIDATED NET SALES--Our consolidated net sales decreased $2.9 million, or
1%, to $196.8 million in the first quarter of 2002. Our comparative first
quarter results were negatively impacted by competitive activities in most of
our categories, and in particular in Infant Care throughout fiscal 2001 and into
the first quarter of 2002. On a worldwide basis, net sales in Feminine Care and
Sun Care were strong in the first quarter of 2002, up 7% and 6%, respectively
versus the comparable quarter in 2001. Infant Care net sales were down 9% versus
the first quarter of 2001, due to competitive activities. We have a number of
new products in the Infant Care segment, which we believe should begin to
improve net sales comparatives for the rest of 2002.

PERSONAL PRODUCTS DIVISION--Net sales decreased $1.7 million, or 2%, to
$103.5 million in the first quarter of 2002.

Net sales of INFANT CARE products decreased $5.4 million,
or 9%, to $55.8 million in the first quarter of 2002. The sales
decline was primarily the result of the highly competitive
environment we experienced throughout fiscal 2001 and into the
first quarter of 2002, primarily in our Infant Feeding and Baby
Toiletries businesses. We continue to defend our market share
positions with new products supported with targeted advertising
and promotional activity.

In INFANT FEEDING, our dollar market share decreased
3.0 percentage points in the first quarter of 2002, to 36.7%,
from 39.7% in the first quarter of 2001. The dollar market
share decline was primarily the result of increased
competitive activity in our Cups business and category
weakness in disposables.

In CUPS, our dollar market share decreased 4.5
percentage points in the first quarter of 2002, to 49.9%,
from 54.4% in the first quarter of 2001. The cups
category, based on total dollar volume of cups purchased
by consumers, decreased 0.9% in the first quarter of 2002
and our retail consumption decreased 9.0%. The decrease in
our market share and retail consumption reflects the very
competitive price promotion activity in the category and
new products introduced by competitors. We started
shipping a new cup, the PLAYTEX INSULATOR, broadly in
mid-February, 2002. This innovative cup, which keeps the
contents of the cup cooler and fresher longer than
non-insulated cups, performed well where it has been on
the shelf long enough to measure consumer interests. We
will begin advertising the INSULATOR during the second
quarter as we make consumers aware of this new innovation.

In DISPOSABLE FEEDING, our dollar market share
increased 1.2 percentage points in the first quarter of
2002, to 85.3%, from 84.1% in the first quarter of 2001.
Retail consumption in the category declined 11.9% in the
first quarter of 2002 consistent with recent category
trends. We believe the category has declined in recent
quarters due to the price differential between disposable
feeding and hard bottles in a more difficult economic
environment and innovative new products in the hard bottle
segment, most notably our VENTAIRE product. As the market
share leader we intend to initiate growth in the
disposable feeding category. We have new packaging
graphics and a new premium Nurser, which includes a
formula stirring disk, in the market now. New advertising,
which repositions our disposable nursing system as the
best supplement to breast-feeding, will start during the
second quarter.

PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)

In REUSABLE HARD BOTTLES, our dollar market share
decreased 2.1 percentage points in the first quarter of
2002, to 15.3%, from 17.4% in the first quarter of 2001.
Retail consumption in the category increased 3.1% in the
first quarter of 2002 and our consumption declined 9.5%.
We believe the category is benefiting from the current
economic environment, as Reusable Hard Bottles are
generally less costly than their disposable feeding
counterparts. Our results were weaker than the category as
we discontinued certain products in favor of our VENTAIRE
offering.

In PACIFIERS, our dollar market share increased
1.5 percentage points in the first quarter of 2002, to
8.7%, from 7.2% in the first quarter of 2001. Retail
consumption in the category increased 4.9% in the first
quarter of 2002 and our consumption increased 27.3%. We
voluntarily recalled two of our latex pacifier products in
2000 and re-launched them in mid 2001. While distribution
gains have been slow since our re-launch, it has grown
over time and contributed to our market share gains
versus the year ago quarter.

In DIAPER PAILS, our dollar market share increased
0.7 percentage points in the first quarter of 2002, to 94.1%,
from 93.4% in the first quarter of 2001. Retail consumption in
the category increased 7.5% in the first quarter of 2002 and
our consumption increased 8.3%. Our results benefited from
recent product improvements to our DIAPER GENIE diaper
disposal unit and a new toddler film refill liner that we
introduced during the first quarter of 2002, which should
extend the usage period of the DIAPER GENIE unit.

In WET ONES (hands and face), our dollar market share
decreased 8.7 percentage points in the first quarter of 2002,
to 52.7%, from 61.4% in the first quarter of 2001. Retail
consumption in the category increased 30.0% in the first
quarter of 2002 and our consumption increased 11.6%. There has
been a steady influx of new competitors to the category since
the beginning of 2000. The new competitors are making
significant investments in advertising and promotion to
generate trial of their product. This is negatively impacting
our market share levels but favorably impacting our
consumption levels as more consumers enter the hands and face
segment. We believe the influx of new consumers to the
category will be beneficial to us, despite lower market share.
To capitalize on the recent consumer attention in this
category, we expanded our offerings. We introduced ULTRA WET
ONES early in 2001 and in mid-February of 2002, we started
shipping WET ONES FLUSHABLES, a new product for use in the
bathroom.

In INFANT TOILETRIES, our dollar market share
decreased 1.3 percentage points in the first quarter of 2002,
to 8.4%, from 9.7% in the first quarter of 2001. Retail
consumption in the category increased 0.2% in the first
quarter of 2002 and our consumption decreased 13.5%. This
market share decline was the result of new products introduced
by the market share leader in fiscal 2001. We introduced a
number of new products in the fourth quarter of 2001,
including a foaming hair and body wash and foaming shampoo. In
addition, we revised our packaging graphics and
product-dispensing applications in order to enhance consumer
awareness and improve ease of use. We believe we have begun to
turn around the market share declines in the infant toiletries
category. Our market share and retail consumption has
increased compared to the third and fourth quarters of 2001.
In an effort to continue this momentum, we are introducing a
new BABY MAGIC milk bath line in the second quarter of 2002.

Our dollar market share for MR. BUBBLE (BATH
ADDITIVES) increased 0.9 percentage points in the first
quarter of 2002, to 26.1%, from 25.2% in the first quarter of
2001. Retail consumption in the category decreased 0.6% in the
first quarter of 2002 and our consumption increased 2.9%. This
is a continuation of the market share improvements for this
product in recent quarters.

Net sales of FEMININE CARE products increased $3.8
million, or 9%, to $47.7 million in the first quarter of 2002. Our
dollar market share increased 0.8 percentage points in the first
quarter of 2002, to 30.4%,

PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)

from 29.6% in the first quarter of 2001. Our retail consumption
grew 3.3% while the category grew 0.4%. Our Feminine Care business
remains strong as evidenced by our market share and consumption
growth. This is the result of proven product quality and well
executed marketing programs. During the first quarter of 2001, the
category experienced an increase in price promotional activity,
which has since subsided. We believe the category is not impacted
materially by price promotional activity over time due to the
consumer loyalty historically found in this category.

CONSUMER PRODUCTS DIVISION-- Net sales decreased $3.6 million, or 6%,
to $58.5 million in the first quarter of 2002.

Net sales of SUN CARE products decreased $0.2 million, to
$42.0 million in the first quarter of 2002. Our dollar market
share of the Sun Care category increased 1.6 percentage points in
the first quarter of 2002, to 19.0%, from 17.4% in the first
quarter of 2001. Our retail consumption grew 11.7% while the
category grew 2.4%. The first quarter is not a historically high
consumption period for Sun Care products. Our new products for
the 2002 season, especially VITASKIN and INDOOR TANNING, have
favorably contributed to our early results. We are optimistic
concerning our 2002 Sun Care season based on our early market
share and consumption results.

Net sales of HOUSEHOLD PRODUCTS decreased $1.4 million,
or 13%, to $9.0 million in the first quarter of 2002. The
decrease was due to competitive activities in gloves and the
initial volume impact from the introduction of WOOLITE Spot &
Stain Wipes in the first quarter of 2001. In Gloves, our dollar
market share decreased 2.9 percentage points in the first
quarter of 2002, to 32.7%, from 35.6% in the first quarter of
2001. Retail consumption of our gloves products decreased 10.9%,
while the category decreased 2.7%. The decreases in market share
and consumption were due to competitive activities. We have new
advertising starting in the second quarter, which will be the
first for Gloves in several years. Our market share for the
WOOLITE rug and upholstery cleaning business grew to 21.0% in
the first quarter of 2002, an increase of 1.3 percentage points
compared to the first quarter of 2001. Retail consumption of
WOOLITE increased 11.4%, while the category increased 3.7%. Our
net sales of WOOLITE were lower in the first quarter of 2002,
despite the market share and consumption gains, as we had the
initial volume impact from the introduction of WOOLITE Spot &
Stain Wipes in the first quarter of 2001.

Net sales of PERSONAL GROOMING products decreased $2.0
million, or 21%, to $7.6 million in the first quarter of 2002.
Our largest Personal Grooming brand, OGILVIE increased its dollar
market share to 70.9% of the home perms/straighteners category,
which was a gain of 0.6 percentage points compared to the first
quarter of 2001. Retail consumption of OGILVIE decreased 10.4%,
slightly better than the 11.1% decline in the category. We have
three new OGILVIE products that will reach the market in the
second quarter as well as updated packaging across the OGILVIE
line. The new products are a Body & Volume Booster, Defrizzer,
and a Foam Perm, all new items geared to expand the franchise
into styling type products and help the category grow. BINACA
increased its dollar market share to 48.7% of the breath
freshener (spray and drops) category, which was a gain of 1.7
percentage points compared to the first quarter of 2001. Retail
consumption in the category declined 12.1% and our consumption
declined 8.8%.

INTERNATIONAL/CORPORATE SALES DIVISION--Net sales increased $2.4
million, or 7%, to $34.8 million in the first quarter of 2002. The
increase was due primarily to higher Sun Care net sales to the
specialty classes of trade, primarily club stores. Net sales in the
U.S. specialty classes of trade increased 24% compared to the first
quarter of 2001. We believe this growth was due primarily to the
increased focus on these distribution channels.

CONSOLIDATED GROSS PROFIT--Our consolidated gross profit increased $0.3 million,
to $111.0 million in the first quarter of 2002. As a percent of net sales, gross
profit increased 0.9 percentage points, to 56.4% in the first quarter of 2002.
The

PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)

increase in gross profit and gross profit as a percent of net sales was due
primarily to the mix of products sold and favorable product cost.

CONSOLIDATED PRODUCT CONTRIBUTION--Our consolidated product contribution
increased $0.7 million, or 1%, to $86.3 million in the first quarter of 2002. As
a percent of net sales, product contribution increased 1.0 percentage point to
43.9% in the first quarter of 2002. The increase in product contribution and
product contribution as a percent of net sales was due primarily to higher gross
profit and slightly lower overall advertising and sales promotion expenses.

PERSONAL PRODUCTS DIVISION--Product contribution increased $5.5
million, or 13%, to $49.4 million in the first quarter of 2002. As a
percent of net sales, product contribution increased 6.0 percentage
points to 47.8% in the first quarter of 2002. The increase in product
contribution and product contribution as a percent of net sales was due
to product mix, favorable product cost, and lower advertising and sales
promotion expenses.

CONSUMER PRODUCTS DIVISION--Product contribution decreased $6.5
million, or 24%, to $20.6 million in the first quarter of 2002. As a
percent of net sales, product contribution decreased 8.5 percentage
points to 35.2% in the first quarter of 2002. The decrease in product
contribution and product contribution as a percent of net sales was due
primarily to lower net sales, lower gross profit and higher advertising
and sales promotion expenses in our Sun Care, WOOLITE and BINACA
businesses.

INTERNATIONAL/CORPORATE SALES DIVISION--Product contribution increased
$1.5 million, or 10%, to $16.4 million in the first quarter of 2002. As
a percent of net sales, product contribution increased 1.1 percentage
points to 47.3% in the first quarter of 2002. The increase in product
contribution and product contribution as a percent of net sales was due
to higher net sales and higher gross profit offset, in part, by higher
advertising and sales promotion expenses.

CONSOLIDATED OPERATING EARNINGS--Our consolidated operating earnings
decreased $3.9 million, or 9%, to $39.5 million in the first quarter of 2002.
The decrease in operating earnings was the result of our decision to close
our plastic molding facility in Watervliet, New York. We incurred a one-time
restructuring and asset impairment charge of $7.6 million, or $.08 per
diluted share, related to the closure (see Note 4). Excluding the
restructuring and asset impairment charge our operating earnings would have
increased $3.7 million, or 8.5%, compared to the first quarter of 2001. Our
operating earnings benefited from a reduction in intangible amortization
expense of $5.3 million in the first quarter of 2002. This was the result of
our implementation of SFAS 142 (see Note 2). Excluding the restructuring and
asset impairment charge and assuming SFAS 142 was implemented on December 31,
2000, the start of our fiscal year 2001, our operating earnings would have
decreased $1.6 million, or 3%, compared to the first quarter of 2001. This
decrease is the result of lower net sales and higher selling, general and
administrative costs offset, in part, by higher gross margins.

CONSOLIDATED INTEREST EXPENSE--Our consolidated interest expense decreased $5.0
million, or 24%, to $16.1 million in the first quarter of 2002. The decrease in
interest expense was due to the combined impact of:

o Lower average debt balances. Our average debt for the first
quarter of 2002 was less than the comparable period by $67.3
million, or 7%, due primarily to the establishment of the
Receivables Facility (see Note 8) and the prepayment of scheduled
principal payments on our term A loan and our term B loan;
o Lower interest rates when compared to the prior year. Our weighted
average variable interest rate in the first quarter of 2002 was
5.17% compared to 7.89% in the first quarter of 2001; and
o A change in our debt portfolio as a result of our May 2001
refinancing, resulting in a higher ratio of variable rate debt to
fixed rate debt. At March 30, 2002, 54.4% of our indebtedness was
at variable interest rates compared to 40.7% at March 31, 2001.
This created additional savings due to the favorable short-term
interest rate environment, as noted above, in the first quarter of
2002.

PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)

CONSOLIDATED OTHER EXPENSES--Our consolidated other expenses were $0.9 million
in the first quarter of 2002. During the second quarter of 2001, we entered into
a receivables purchase agreement with a third party as part of the refinancing
transaction (see Notes 7 and 8). The amount charged to other expenses represents
the discount offered to the third party on the sale of receivables and the
amortization of deferred financing costs associated with the formation of the
Receivables Facility.

CONSOLIDATED INCOME TAXES--Our consolidated income taxes decreased
substantially in the first quarter of 2002 compared to the first quarter of
2001. We recorded a tax benefit of $6.1 million in the first quarter of 2002
compared to a tax expense of $9.4 million for the first quarter of 2001. The
tax benefit recorded in the first quarter of 2002 was the result of new
regulations issued by the U.S. Treasury on March 7, 2002 (see Note 3). The
new regulations permit us to partially utilize a previously disallowed
capital loss on the sale of Playtex Beauty Care Inc., which we sold during
fiscal 1999. The impact of the new regulations resulted in a tax benefit of
$14.3 million with a subsequent cash tax savings in 2003. We expect our
effective tax rate, for the remaining three quarters of fiscal 2002, to be
approximately 37% of earnings before income taxes and cumulative effect of
change in accounting principles. This effective tax rate is below our
historical average tax rate, as upon implementation of SFAS 142 we ceased the
amortization of goodwill and intangible assets with indefinite lives (see
Note 2). A portion of the goodwill amortization we recorded in previous
periods was non-deductible for tax purposes.

CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLES-- In connection with the
adoption of SFAS 142 (see Note 2), we performed impairment tests on our
indefinite-lived intangible assets based on a fair value concept as
prescribed by SFAS 142. We recorded an after tax impairment charge of $12.4
million, or $.20 per diluted share, as a cumulative effect of change in
accounting principles as a result of the new impairment testing methodology.
The impairment related to certain trademarks acquired in our acquisition of
Personal Care Holdings, Inc., which we acquired on January 28, 1998. We
determined the fair values of all of our trademarks at December 29, 2001 and
compared them with their carrying values. The trademarks impact by this
write-off included our non-core brands of: CHUBS, DIAPARENE, TUSSY, DOROTHY
GRAY, and BETTER OFF.

LIQUIDITY AND CAPITAL RESOURCES

On May 22, 2001, we completed a refinancing of our senior indebtedness
(the "Refinancing Transaction"). We issued $350.0 million principal amount of 9
3/8% Senior Subordinated Notes due 2011 (the "9 3/8% Notes"), entered into a new
senior secured credit facility consisting of a new six-year $100.0 million term
A loan facility (the "'07-Term A Loan"), a new eight-year $400.0 million term B
loan facility (the "'09-Term B Loan"), and a new six-year $125.0 million
revolving credit facility. In addition, we entered into a receivables purchase
agreement (the "Receivables Facility") with a third party through a newly
formed, wholly owned, special purpose bankruptcy remote subsidiary, Playtex A/R
LLC. The total amount available to us under the Receivables Facility is up to
$100.0 million, depending on: the amount of receivables generated by us and sold
to Playtex A/R LLC, the rate of collection on those receivables, and other
characteristics of the receivables pool which affects their eligibility (see
Note 8). The net proceeds from the Refinancing Transaction and the Receivables
Facility were used to pay-off all outstanding balances under our prior credit
agreement and costs associated with the Refinancing Transaction. In addition, we
extinguished our 9% Notes and our 8 7/8% Notes.

At March 30, 2002, our working capital (current assets net of current
liabilities) increased $12.4 million to $120.2 million compared to $107.8
million at December 29, 2001.

o Total current assets increased $18.0 million at March 30, 2002 compared
to December 29, 2001. The increase was primarily the result of higher
receivables (accounts receivables and retained interest in receivables)
due to: (a) higher sales in the first quarter of 2002 versus the fourth
quarter of 2001, (b) the impact of seasonal dating and (c) the level of
Sun Care receivables. Inventories grew $5.1 million, to $87.3 million,
at March 30, 2002. The growth in inventories was, in part, due to our
inventory build related to our new product introductions. Cash balances

PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)

decreased $5.2 million, to $28.8 million, at March 30, 2002 and all
other current assets decreased by $2.8 million at March 30, 2002
compared to December 29, 2001.

o Total current liabilities increased $5.6 million at March 30, 2002
compared to December 29, 2001. The increase was primarily the result of
an increase of $9.1 million in our current income taxes payable.
Accounts payables decreased $4.3 million primarily due to the Sun Care
season inventory build in the fourth quarter of fiscal 2001 and the
subsequent payment, which is made during the first quarter. Accrued
expenses increased $0.8 million at March 30, 2002 and we have no
current debt obligations in either of the comparable quarters.

Capital expenditures for equipment and facility improvements were $3.0
million for the first quarter of 2002. These expenditures were used primarily to
support new products, expand capacity in key product areas, upgrade production
equipment, invest in new technologies, and improve our facilities. Capital
expenditures for 2002 are expected to be in the range of $20.0 to $23.0 million,
in line with recent full-year expenditure levels.

At March 30, 2002, long-term debt (including current portion but
excluding obligations due to related party) was $876.8 million compared to
$888.8 million at December 29, 2001. We paid down $12.0 million on our Revolving
Credit Facility during the first quarter of 2002. When we did the Refinancing
Transaction in May 2001, we significantly reduced our near term principal debt
repayment obligations. Since the Refinancing Transaction, we have prepaid $21.0
million of scheduled principal payments on the '07-Term A Loan and $3.5 million
of scheduled principal payments on the '09-Term B Loan. Our fixed principal debt
repayment obligations at March 30, 2002 are (excluding balances outstanding
under the Revolving Credit Facility and due to related party):

o $67.7 million in 2004, o $13.4 million in 2007,
o $24.4 million in 2005, o $195.8 million in 2008, and
o $25.4 million in 2006, o $545.1 million thereafter.

We do not have any debt obligations due prior to fiscal 2004. However, at the
end of our fiscal 2002 year end, we may be required to make mandatory principal
repayments in accordance with the excess cash flow calculation as defined in our
credit agreement.

We intend to fund our operating cash, capital expenditures and debt
service requirements through cash flow generated from operations, proceeds from
the Receivables Facility, and borrowings under the Revolving Credit Facility
through fiscal 2007. However, we do not expect to generate sufficient cash flow
from operations to make the scheduled principle payments on the '09-Term B Loan
due in fiscal 2008 and 2009, which collectively total $390.9 million. In
addition, we do not expect to generate sufficient cash flow from operations to
make the $350.0 million scheduled principal payment on the 9 3/8% Notes due in
fiscal 2011. Accordingly, we will have to either refinance our obligations, sell
assets or raise equity capital to repay the principal amounts of these
obligations. Historically, our cash flows from operations and refinancing
activities have enabled us to meet all of our obligations. However, we can not
guarantee that our operating results will continue to be sufficient or that
future borrowing facilities will be available for the payment or refinancing of
our debt on economically attractive terms.

The Revolving Credit Facility provides for borrowings of up to $125.0
million and matures on May 22, 2007. At March 30, 2002, we had $117.8 million
available to borrow under the Revolving Credit Facility. At March 30, 2002, the
undivided fractional interest sold by Playtex A/R LLC to a third party
commercial paper conduit under the Receivables Facility was $75.0 million.

Terms of the new senior secured credit facility require us to meet
certain financial tests and also include conditions or restrictions on:

o new indebtedness and liens, o dividends and other distributions, and

PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)

o major acquisitions or mergers, o the application of excess cash flow.
o capital expenditures and asset sales,

The terms of the 9 3/8% Notes contain similar restrictions.

We have made a number of acquisitions, in the past, and financed them
by borrowing additional money, issuing a convertible note and shares of our
Common Stock. We will continue to consider acquisitions of other companies or
businesses that may require us to seek additional debt or equity financing. As
we cannot assure you that such financing will be available to us, our ability to
expand our operations through acquisitions may be restricted.

Inflation in the United States and Canada has not had a significant
effect on our operations during recent periods.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in accordance with generally
accepted accounting principles requires us to make estimates and assumptions.
These estimates and assumptions affect:

o the reported amounts and timing of revenue and expenses,
o the reported amounts and classification of assets and liabilities,
and
o the disclosure of contingent liabilities.

Actual results could vary from our estimates and assumptions. These estimates
and assumptions are based on historical results, assumptions that we make as
well as assumptions by third parties.

The level of reserves for Sun Care product returns, bad debts and advertising
and promotional costs are three areas that you should be aware of.

o In accordance with industry practice, we allow our customers to
return unsold Sun Care products at the end of the sun care season.
We record sales at the time the products are shipped and title
transfers. Simultaneously, we reduce sales and cost of sales, and
reserve amounts on our balance sheet for anticipated returns based
upon an estimated return level, in accordance with generally
accepted accounting principles. The level of returns may fluctuate
from our estimates due to several factors including weather
conditions, customer inventory levels, and competitive conditions.
There are, however, a number of uncertainties associated with Sun
Care returns as noted above. Based on our fiscal 2001 Sun Care
results, a 1 % change in our return rates would have impacted our
reported net sales by $1.3 million and our reported operating
earnings by $1.1 million.

o The extension of trade credit carries with it the chance that the
customer may not pay for the goods when payment is due. We review
our receivables portfolio and provide reserves for potential bad
debts including those we know about and those that have not been
identified but may exist due to the risk associated with the
granting of credit. The estimated reserves required to cover
potential losses, which are unknown as of the balance sheet date,
are developed using historical experience. The adequacy of the
estimated reserve may be impacted by the deterioration of a large
customer and/or significant weakness in the economic environment
resulting in a higher level of customer bankruptcy filings.

o The nature of our advertising and promotional activities requires
the use of estimates to record certain expenses and liabilities.
These expenditures are primarily for television, radio and print
advertising and production as well as consumer and trade
incentives such as coupons and other price promotional activities.
Actual costs associated with the redemption of coupons and other
price promotional activities are not always known as of the
balance sheet date and are estimated based on historical
statistics and experience.

PLAYTEX PRODUCTS, INC.
PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The following should be read in conjunction with Part 1, Item 3.,
"Legal Proceedings" in our Annual Report on Form 10-K for the year ended
December 29, 2001.

As of the end of April 2002, there were approximately 7 pending toxic
shock syndrome claims relating to Playtex tampons, although additional claims
may be made in the future.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

a. Exhibits:

b. Reports on Form 8-K

On March 26, 2002, we filed a Current Report on Form 8-K with the
Securities and Exchange Commission pursuant to Item 5 of that Form. Pursuant to
Item 5, we announced our intent to close our Watervliet, New York plastic
molding facility.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

We periodically use financial instruments, such as derivatives, to
manage the impact of interest rate changes on our variable rate debt and its
effect on our earnings and cash flows. Our policies prohibit the use of
derivative instruments for the sole purpose of trading for profit on price
fluctuations or to enter into contracts, which intentionally increase our
underlying interest rate exposure. At March 30, 2002, our total indebtedness
consisted of $400.0 million in fixed rate debt and $476.8 million in variable
rate debt. We currently are not a party to any financial instruments, such as
derivatives, to manage the impact of interest rate changes on our variable rate
debt. Based on our interest rate exposure at March 30, 2002, a 1% increase in
interest rates would result in an estimated $4.8 million of additional interest
expense on an annualized basis.

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.

DATE: May 14, 2002 BY: /S/ MICHAEL R. GALLAGHER
--------------------------- -------------------------------------------------
Michael R. Gallagher
CHIEF EXECUTIVE OFFICER
(PRINCIPAL EXECUTIVE OFFICER)

DATE: May 14, 2002 BY: /S/ GLENN A. FORBES
--------------------------- -------------------------------------------------
Glenn A. Forbes
EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
(PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)