Edgar Filing: PLAYTEX PRODUCTS INC

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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 SEPTEMBER 28, 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 November 11, 2002 61,211,522 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 - 18

Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations............................................. 19 - 30

Item 3. Quantitative and Qualitative Disclosure about Market Risk............. 31

Item 4. Controls and Procedures............................................... 31

PART II - OTHER INFORMATION

Item 1. Legal Proceedings..................................................... 32

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

(a) Exhibits.......................................................... 32

(b) Reports on Form 8-K............................................... 32

Signatures............................................................ 33

Certifications........................................................ 34 - 35

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

SEPTEMBER 28, DECEMBER 29,
2002 2001
-------------- -------------
(Unaudited)

ASSETS
Current assets:
Cash..................................................................... $ 38,483 $ 34,006
Receivables, less allowance for doubtful accounts........................ 31,993 32,491
Retained interest in receivables......................................... 81,918 51,238
Inventories.............................................................. 73,226 82,193
Deferred income taxes.................................................... 11,965 12,097
Other current assets..................................................... 4,270 6,793
-------------- -------------
Total current assets................................................. 241,855 218,818
Net property, plant and equipment............................................ 120,456 124,761
Intangible assets, net
Goodwill................................................................. 494,187 494,187
Trademarks, patents and other............................................ 139,775 159,516
Deferred financing costs..................................................... 13,954 17,931
Due from related party....................................................... 80,017 80,017
Other noncurrent assets...................................................... 9,885 9,942
-------------- -------------
Total assets......................................................... $ 1,100,129 $ 1,105,172
============== =============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable......................................................... $ 31,073 $ 43,603
Accrued expenses......................................................... 73,502 65,376
Income taxes payable..................................................... 9,480 2,059
Current maturities of long-term debt..................................... 2,250 --
-------------- -------------
Total current liabilities............................................ 116,305 111,038
Long-term debt............................................................... 845,500 888,800
Due to related party......................................................... 78,386 78,386
Other noncurrent liabilities................................................. 14,178 13,146
Deferred income taxes........................................................ 46,694 58,372
-------------- -------------
Total liabilities.................................................... 1,101,063 1,149,742
-------------- -------------
Stockholders' equity:
Common stock, $0.01 par value, authorized 100,000,000 shares,
issued 61,211,522 shares at September 28, 2002 and
61,044,199 shares at December 29, 2001................................. 612 610
Additional paid-in capital............................................... 525,985 524,384
Retained earnings (deficit).............................................. (523,934) (565,675)
Foreign currency translation adjustment.................................. (3,597) (3,889)
-------------- -------------
Total stockholders' equity........................................... (934) (44,570)
-------------- -------------
Total liabilities and stockholders' equity........................... $ 1,100,129 $ 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
-------------------------------
SEPTEMBER 28, SEPTEMBER 29,
2002 2001
-------------- -------------

Net sales.................................................................... $ 161,567 $ 158,800
Cost of sales................................................................ 76,072 75,514
-------------- -------------

Gross profit............................................................... 85,495 83,286

Operating expenses:
Selling, general and administrative........................................ 56,494 54,072
Amortization of intangibles................................................ 241 5,515
-------------- -------------

Total operating expenses................................................. 56,735 59,587

Operating earnings.................................................... 28,760 23,699

Interest expense, net of interest income, 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....................... 14,186 17,870
Other expense................................................................ 536 663
-------------- -------------

Earnings before income taxes........................................ 14,038 5,166

Income taxes................................................................. 5,152 2,810
-------------- -------------

Net earnings........................................................ $ 8,886 $ 2,356
============== =============
Earnings per share:
Basic...................................................................... $ 0.15 $ 0.04
============== =============
Diluted.................................................................... $ 0.14 $ 0.04
============== =============
Weighted average shares outstanding:
Basic...................................................................... 61,211 61,024
============== =============
Diluted.................................................................... 61,496 61,189
============== =============

See the accompanying notes to condensed consolidated financial statements.

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

NINE MONTHS ENDED
-------------------------------
SEPTEMBER 28, SEPTEMBER 29,
2002 2001
-------------- -------------

Net sales.................................................................... $ 559,870 $ 556,860
Cost of sales................................................................ 249,494 252,271
-------------- -------------
Gross profit............................................................... 310,376 304,589
Operating expenses:
Selling, general and administrative........................................ 185,377 178,700
Restructuring and asset impairment......................................... 7,599 --
Amortization of intangibles................................................ 692 16,545
-------------- -------------
Total operating expenses................................................. 193,668 195,245
Operating earnings..................................................... 116,708 109,344

Interest expense, net of interest income, including related party
interest expense of $9,112 for both periods presented, net of
related party interest income of $9,002 for both periods presented......... 45,540 59,125
Other expenses............................................................... 2,107 1,740
-------------- -------------
Earnings before income taxes, extraordinary loss and change in
accounting principles................................................ 69,061 48,479
Income taxes................................................................. 11,162 21,150
-------------- -------------
Earnings before extraordinary loss and change in accounting principles. 57,899 27,329
-------------- -------------
Extraordinary loss on early extinguishments of debt,
net of $2,147 tax benefit in 2002 and $12,829 tax benefit in 2001.......... (3,735) (19,336)
-------------- -------------
Earnings before change in accounting principles........................ 54,164 7,993
-------------- -------------
Cumulative effect of change in accounting principles, net of $7,141
tax benefit................................................................ (12,423) --
-------------- -------------

Net earnings........................................................... $ 41,741 $ 7,993
============== =============

Earnings per share--Basic:
Earnings before extraordinary loss......................................... $ 0.94 $ 0.45
Extraordinary loss......................................................... (0.06) (0.32)
Cumulative effect of change in accounting principles....................... (0.20) --
-------------- -------------
Earnings per share--Basic.................................................. $ 0.68 $ 0.13
============== =============

Earnings per share--Diluted:
Earnings before extraordinary loss ........................................ $ 0.92 $ 0.45
Extraordinary loss......................................................... (0.06) (0.31)
Cumulative effect of change in accounting principles....................... (0.19) --
-------------- -------------
Earnings per share--Diluted................................................ $ 0.67 $ 0.14
============== =============

Weighted average shares outstanding:
Basic...................................................................... 61,126 60,995
============== =============
Diluted.................................................................... 64,173 62,854
============== =============

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

Balance, December 29, 2001................ 61,044 $ 610 $ 524,384 $ (565,675) $ (3,889) $ (44,570)
Net earnings.............................. -- -- -- 41,741 -- 41,741
Foreign currency translation
adjustment.............................. -- -- -- -- 292 292
----------
Comprehensive earnings............... 42,033
Stock issued to employees exercising
stock options........................... 168 2 1,601 -- -- 1,603
--------- ------ ----------- ----------- -------- ----------
Balance, September 28, 2002.......... 61,212 $ 612 $ 525,985 $ (523,934) $ (3,597) $ (934)
========= ====== =========== =========== ======== ==========

See the accompanying notes to condensed consolidated financial statements.

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

NINE MONTHS ENDED
-------------------------------
SEPTEMBER 28, SEPTEMBER 29,
2002 2001
-------------- -------------

Cash flows from operations:
Net earnings............................................................... $ 41,741 $ 7,993
Adjustments to reconcile net earnings to net cash flows from operations:
Cumulative effect of change in accounting principles, net of tax benefit. 12,423 --
Asset impairment charge.................................................. 4,222 --
Extraordinary loss on early extinguishment of debt, net of tax benefits.. 3,735 19,336
Depreciation............................................................. 10,521 9,647
Amortization of deferred financing costs................................. 1,617 2,334
Amortization of intangibles.............................................. 692 16,545
Deferred income taxes.................................................... (4,402) 7,459
Other, net............................................................... 1,727 (219)
Net (increase) decrease in working capital accounts........................ (13,734) 66,582
-------------- -------------

Net cash flows from operations...................................... 58,542 129,677

Cash flows used for investing activities:
Purchases of property, plant and equipment................................. (10,581) (15,861)
Intangible assets acquired, net............................................ (515) (500)
-------------- -------------

Net cash flows used for investing activities........................ (11,096) (16,361)

Cash flows (used for) provided by financing activities:
Net borrowings under credit facilities..................................... (17,000) --
Long-term debt borrowings.................................................. 450,000 850,000
Long-term debt repayments.................................................. (474,050) (900,263)
Payment of financing costs................................................. (3,522) (19,500)
Payment of debt extinguishment fees and related expenses................... -- (21,177)
Issuance of shares of common stock......................................... 1,603 613
-------------- -------------

Net cash flows used for financing activities........................ (42,969) (90,327)

Increase in cash............................................................. 4,477 22,989
Cash at beginning of period.................................................. 34,006 10,282
-------------- -------------

Cash at end of period........................................................ $ 38,483 $ 33,271
============== =============

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Cash paid during the periods for:
Interest................................................................. $ 34,296 $ 51,665
Income taxes, net of refunds............................................. $ 5,997 $ (267)

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 and nine
month periods ended September 28, 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 Form 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 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 selling, general and administrative
expenses to offset net sales for the three and nine month periods ended
September 29, 2001 to conform to our current year presentation. These
reclassifications reduced both our net sales and selling, general and
administrative 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 as of December 29,
2001, the first day of fiscal 2002, and determined that none of our goodwill was
impaired. We are required to test our goodwill for impairment, 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. We
performed an additional test, as part of the required annual goodwill impairment
testing, at the end of the first quarter of 2002. The results of this test, like
the test performed at December 29, 2001, confirmed that none of our goodwill was
impaired. At November 8, 2002, we are not aware of any events or circumstances
that would 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 $0.19 per diluted share) in the first quarter of
2002. This charge was to reduce the trademark carrying value of certain

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

2. IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS (CONTINUED)

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."

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 and nine month periods ended September 29,
2001 (unaudited, in thousands except per share amounts):

THREE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 29, SEPTEMBER 29,
2001 2001
-------------- -------------

Net earnings:
Reported net earnings..................................................... $ 2,356 $ 7,993
Add back goodwill and trademark amortization expense, net of tax.......... 4,321 12,962
-------------- -------------
Adjusted net earnings.................................................. $ 6,677 $ 20,955
============== =============

Earnings per share--Basic:
Reported earnings per share............................................... $ 0.04 $ 0.13
Impact of goodwill and trademark amortization expense, net of tax......... 0.07 0.21
-------------- -------------
Adjusted earnings per share--Basic..................................... $ 0.11 $ 0.34
============== =============

Earnings per share--Diluted:
Reported earnings per share............................................... $ 0.04 $ 0.14
Impact of goodwill and trademark amortization expense, net of tax......... 0.07 0.21
-------------- -------------
Adjusted earnings per share--Diluted................................... $ 0.11 $ 0.35
============== =============

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 offset 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 $.22 per
diluted share for the nine months ended September 28, 2002, in the first quarter
of 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. The tax benefit related to the new regulations, recorded
in the first quarter, does not impact our effective tax rate for the remainder
of the year. We expect our effective tax rate for the fourth quarter of fiscal
2002 to be between 36% - 37% of earnings before income taxes.

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 $.07 per diluted share for the nine months
ended September 28, 2002, 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 employed
approximately 160 people at the time of the announcement. Severance and other
exit costs related to the termination of employees approximate $3.4 million and
are included as a component of accrued

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

4. RESTRUCTURING AND IMPAIRMENT COSTS (CONTINUED)

expenses. The write-off of assets associated with the closure of the facility is
approximately $4.2 million, which reduced our total property, plant and
equipment. Our expenditures were $0.8 million related to severance and other
exit costs as of September 28, 2002. The net after tax cash outflow associated
with this plant closing is estimated to be approximately $1.5 million.

5. COMPREHENSIVE EARNINGS

For the three and nine months ended September 28, 2002 and September 29,
2001 foreign currency translation adjustment was the only reconciling item
between net earnings and comprehensive earnings. Our comprehensive earnings were
(unaudited, in thousands):

THREE MONTHS ENDED NINE MONTHS ENDED
----------------------------- -----------------------------
SEPTEMBER 28, SEPTEMBER 29, SEPTEMBER 28, SEPTEMBER 29,
2002 2001 2002 2001
------------- ------------- ------------- -------------

Net earnings.................................................. $ 8,886 $ 2,356 $ 41,741 $ 7,993
Foreign currency translation adjustment....................... (337) (55) 292 (415)
------------- ------------- ------------- -------------
Comprehensive earnings..................................... $ 8,549 $ 2,301 $ 42,033 $ 7,578
============= ============= ============= =============

6. BALANCE SHEET COMPONENTS

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

SEPTEMBER 28, DECEMBER 29,
2002 2001
-------------- -------------
(Unaudited)

Cash................................................................................ $ 27,329 $ 27,103
Cash--lock box(1)................................................................... 11,154 6,903
-------------- -------------
Net............................................................................. $ 38,483 $ 34,006
============== =============

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

Receivables......................................................................... $ 33,484 $ 33,767
Less allowance for doubtful accounts................................................ (1,491) (1,276)
-------------- -------------
Net............................................................................. $ 31,993 $ 32,491
============== =============

Inventories:
Raw materials..................................................................... $ 17,887 $ 23,715
Work in process................................................................... 2,112 1,934
Finished goods.................................................................... 53,227 56,544
-------------- -------------
Total........................................................................... $ 73,226 $ 82,193
============== =============

Net property, plant and equipment:
Land............................................................................ $ 2,326 $ 2,376
Buildings....................................................................... 39,818 41,047
Machinery and equipment......................................................... 186,862 186,557
-------------- -------------
229,006 229,980
Less accumulated depreciation................................................... (108,550) (105,219)
-------------- -------------
Net........................................................................... $ 120,456 $ 124,761
============== =============

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

6. BALANCE SHEET COMPONENTS (CONTINUED)

SEPTEMBER 28, DECEMBER 29,
2002 2001
-------------- -------------
(Unaudited)

Accrued expenses:
Advertising and sales promotion................................................... $ 11,683 $ 20,687
Employee compensation and benefits................................................ 13,920 14,743
Interest.......................................................................... 16,024 6,398
Insurance......................................................................... 2,280 3,238
Restructuring charge.............................................................. 2,576 --
Other............................................................................. 27,019 20,310
-------------- -------------
Total........................................................................... $ 73,502 $ 65,376
============== =============

7. LONG-TERM DEBT

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

SEPTEMBER 28, DECEMBER 29,
2002 2001
-------------- -------------
(Unaudited)

Variable rate indebtedness:
Term A Loan....................................................................... $ -- $ 76,000
Term B Loan....................................................................... -- 395,800
Term C Loan....................................................................... 447,750 --
Revolving Credit Facility......................................................... -- 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
-------------- -------------
847,750 888,800
Less current maturities........................................................... (2,250) --
-------------- -------------
Total long-term debt............................................................ $ 845,500 $ 888,800
============== =============

On May 29, 2002, we amended our senior secured credit facility (the "Credit
Facility") and issued a new $450.0 million Term C Loan and, together with $21.8
million of cash, we repaid in full our outstanding obligations under our Term A
Loan and Term B Loan, which collectively totaled $471.8 million. Borrowings
under the Term C Loan are less costly to us than borrowings under either the
Term A Loan or Term B Loan. Under the Term C Loan, at our option, we pay LIBOR
plus 2.25% for borrowings compared to LIBOR plus 2.75% for the Term A Loan and
LIBOR plus 3.0% for the Term B Loan. The Term C Loan matures May 31, 2009.
Scheduled principal payments on the Term C Loan are made semi-annually and
amount to: approximately $4.5 million per year in fiscal years 2003 through
2007, approximately $213.7 million in 2008, and $211.5 million in 2009. In
September 2002, we paid our first semi-annual payment on the Term C Loan. This
payment of approximately $2.3 million was due in November 2002. We recorded an
extraordinary loss associated with the write-off of unamortized deferred
financing costs relating to our Term A Loan and Term B Loan during the second
quarter of 2002 of $3.7 million, net of income tax benefits of $2.2 million. We
paid the administrative agent for the term loans $3.5 million to amend the
Credit Facility. This amount has been deferred and is being amortized over the
remaining life of the Term C Loan.

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

7. LONG-TERM DEBT (CONTINUED)

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

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

- a Credit Facility consisting of:

- a six-year $100.0 million Term A Loan, subsequently repaid on May
29, 2002,
- an eight-year $400.0 million Term B Loan, subsequently repaid on May
29, 2002, and
- a 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 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). Proceeds from the draw down
on the Receivables Facility of amounts greater than $75.0 million must be used
to repay the term loan, the first time such amounts are utilized.

The net proceeds from the Refinancing Transaction and the Receivables
Facility were used to pay-off all of our then outstanding indebtedness, except
for the 6% Convertible Subordinated Notes (the "Convertible Notes"). The results
of the Refinancing Transaction, the Receivables Facility, and the subsequent
amendment to the Credit Facility on May 29, 2002, enabled us to significantly
extend our principal debt repayment obligations and reduce our borrowing costs.

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. On November 6, 2002, we redeemed,
$20.0 million principal amount of our Convertible Notes for an aggregate
consideration of approximately $20.3 million, including accrued and unpaid
interest to the redemption date (see Subsequent Event Note 12).

The rates of interest we pay under the Credit Facility vary over time
depending on short-term interest rates and the credit rating assigned to the
Credit Facility. We also pay fees on our Revolving Credit Facility commitments,
which vary depending on our credit rating. Loans made under the Revolving Credit
Facility will mature on May 22, 2007. At September 28, 2002, we had $122.8
million of unused borrowings available to us under the Revolving Credit
Facility, net of outstanding letters of credit.

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

7. LONG-TERM DEBT (CONTINUED)

Our indebtedness at September 28, 2002 consists of $400.0 million in fixed
rate debt and $447.7 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 Term C Loan. We periodically use
financial instruments, such as derivatives, to manage the impact of interest
rate changes on our variable rate debt. At September 28, 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 September 28, 2002, a 1% increase in interest rates would
result in an estimated $4.5 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.

- Our weighted average variable interest rate was 4.11% for the three
months ended September 28, 2002 compared to 6.62% for the three months
ended September 29, 2001.

- At September 28, 2002, our variable interest rate was 4.11% compared to
6.22% at September 29, 2001.

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

- indebtedness and liens,
- major acquisitions or mergers,
- capital expenditures and asset sales,
- certain dividends and other distributions,
- the application of excess cash flow, and
- prepayment and modification of all indebtedness or equity
capitalization.

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.

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. Proceeds from the draw down on the
Receivables Facility of amounts greater than $75.0 million must be used to
repay the term loan, the first time such amounts are utilized. 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.

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

8. RECEIVABLES FACILITY (CONTINUED)

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 Credit
Facility.

At September 28, 2002, Playtex A/R LLC had $86.5 million of receivables, of
which $5.0 million of undivided fractional interest therein was sold to the
Conduit. Since the beginning of fiscal 2002, we sold in aggregate approximately
$594.1 million of accounts receivable to Playtex A/R LLC. In return, we've
received from Playtex A/R LLC approximately $557.9 million of cash.

We sell receivables at a discount, which is included in Other Expenses in
the Consolidated Statements of Earnings. This discount, which was $0.5 million
for the third quarter of 2002 and $2.1 million for the nine months ended
September 28, 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. In May 2002, the
Receivables Facility was extended through May 2003. The Receivables Facility may
be terminated prior to its term in the event of:

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

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

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:

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

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 and a new heat
therapy patch, introduced in the second quarter of 2002, for menstrual cramps.

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
- BANANA BOAT

HOUSEHOLD PRODUCTS
- PLAYTEX Gloves
- WOOLITE rug and upholstery cleaning products

PERSONAL GROOMING
- BINACA breath spray and drops
- OGILVIE at-home permanents
- TUSSY deodorant
- DENTAX oral care products, and
- TEK toothbrushes

Our INTERNATIONAL/CORPORATE SALES DIVISION includes:

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

The International/Corporate Sales Division sells the same products as are
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 and nine months ended September
28, 2002 and September 29, 2001 are as follows (dollars in thousands):

THREE MONTHS ENDED
------------------------------------------------------------
SEPTEMBER 28, 2002 SEPTEMBER 29, 2001(1)
---------------------------- -------------------------
NET PRODUCT NET PRODUCT
SALES CONTRIB. SALES CONTRIB.
----------- ---------- ----------- ----------

Personal Products................................................. $ 106,148 $ 49,436 $ 105,446 $ 48,686
Consumer Products................................................. 20,639 3,038 21,959 2,595
International/Corporate Sales..................................... 34,780 16,537 31,395 14,510
Unallocated Charges(2)............................................ -- (207) -- (138)
----------- ---------- ----------- ----------
Total Consolidated.............................................. $ 161,567 68,804 $ 158,800 65,653
=========== ===========
RECONCILIATION TO OPERATING EARNINGS:
Selling, distribution, research and administrative................ 39,803 36,439
Amortization of intangibles....................................... 241 5,515
---------- ----------
Operating earnings.............................................. $ 28,760 $ 23,699
========== ==========

NINE MONTHS ENDED
------------------------------------------------------------
SEPTEMBER 28, 2002 SEPTEMBER 29, 2001(1)
---------------------------- -------------------------
NET PRODUCT NET PRODUCT
SALES CONTRIB. SALES CONTRIB.
----------- ---------- ----------- ----------

Personal Products................................................. $ 324,652 $ 156,758 $ 318,011 $ 141,188
Consumer Products................................................. 129,778 38,698 139,651 50,223
International/Corporate Sales..................................... 105,440 49,256 99,198 45,113
Unallocated Charges(2)............................................ -- (457) -- (638)
----------- ---------- ----------- ----------
Total Consolidated............................................ $ 559,870 244,255 $ 556,860 235,886
=========== ===========
RECONCILIATION TO OPERATING EARNINGS:
Selling, distribution, research and administrative................ 119,256 109,997
Restructuring and asset impairment................................ 7,599 --
Amortization of intangibles....................................... 692 16,545
---------- ----------
Operating earnings............................................ $ 116,708 $ 109,344
========== ==========

-----------
(1) To conform with our current year presentation, we reclassified certain
previously reported selling, general and administrative 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 and nine months ended September 28, 2002
and September 29, 2001 (unaudited, in thousands, except per share amounts):

THREE MONTHS ENDED NINE MONTHS ENDED
--------------------------------- ------------------------------
SEPTEMBER 28, SEPTEMBER 29, SEPTEMBER 28, SEPTEMBER 29,
2002 2001 2002 2001
---------------- --------------- -------------- -------------

NUMERATOR:
----------
Earnings before extraordinary loss and change
in accounting principles--as reported........................ $ 8,886 $ 2,356 $ 57,899 $ 27,329
EFFECT OF DILUTIVE SECURITIES:
------------------------------
Adjustment for interest on Convertible Notes................. -- -- 1,419 946
-------- --------- ---------- ----------
Earnings before extraordinary loss and change in
accounting principles adjusted for assumed dilutive
conversions.................................................. 8,886 2,356 59,318 28,275
Extraordinary loss............................................ -- -- (3,735) (19,336)
Cumulative effect of change in accounting principles.......... -- -- (12,423) --
-------- --------- ---------- ----------
Net earnings--as adjusted.................................. $ 8,886 $ 2,356 $ 43,160 $ 8,939
======== ========= ========== ==========

DENOMINATOR:
------------
Weighted average shares outstanding--Basic.................... 61,211 61,024 61,126 60,995
EFFECT OF DILUTIVE SECURITIES:
------------------------------
Adjustment for dilutive effect of employee stock
options..................................................... 285 165 436 118
Adjustment for dilutive effect of Convertible Notes.......... -- -- 2,611 1,741
-------- --------- ---------- ----------
Weighted average shares outstanding--Diluted............... 61,496 61,189 64,173 62,854
======== ========= ========== ==========

EARNINGS PER SHARE--BASIC:
--------------------------
Earnings before extraordinary loss and change
in accounting principles..................................... $ 0.15 $ 0.04 $ 0.94 $ 0.45
Extraordinary loss............................................ -- -- (0.06) (0.32)
Cumulative effect of change in accounting principles.......... -- -- (0.20) --
-------- --------- ---------- ----------
Earnings per share......................................... $ 0.15 $ 0.04 $ 0.68 $ 0.13
======== ========= ========== ==========

EARNINGS PER SHARE--DILUTED:
----------------------------
Earnings before extraordinary loss and change
in accounting principles..................................... $ 0.14 $ 0.04 $ 0.92 $ 0.45
Extraordinary loss............................................ -- -- (0.06) (0.31)
Cumulative effect of change in accounting principles.......... -- -- (0.19) --
-------- --------- ---------- ----------
Earnings per share........................................ $ 0.14 $ 0.04 $ 0.67 $ 0.14
======== ========= ========== ==========

Basic EPS excludes all potentially dilutive securities. Basic EPS is
computed by dividing net earnings by the weighted average number of common
shares outstanding for the period. Diluted EPS includes all potentially dilutive
securities. Diluted EPS is computed by dividing net earnings, adjusted by the
if-converted method for convertible securities, by the weighted average number
of common shares outstanding for the period plus the number of additional common
shares that would have been outstanding if the dilutive securities were issued.
In the event the dilutive securities are anti-dilutive on earnings before
extraordinary loss (have the affect of increasing EPS), the impact of the
dilutive securities is not included in the computation.

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

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.

12. SUBSEQUENT EVENT

On November 6, 2002, we redeemed $20.0 million principal amount of our
Convertible Notes for an aggregate consideration of approximately $20.3
million, including accrued and unpaid interest to the redemption date. The
remaining $30.0 million principal of Convertible Notes mature on January 31,
2004 and are convertible into approximately 1.6 million shares of our common
stock. The conversion price is approximately $19.15 per common share (see
Note 7).

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:

- the condensed financial statements and notes included in this report and
- 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:

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

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

Actual results may 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). As part of our customary review and reconciliation
process, we periodically record adjustments to our accounting estimates. During
the second quarter ended June 29, 2002, we recorded additional expenses of $2.0
million to cover higher than expected Sun Care returns from the 2001 Sun Care
season. Also, we reduced our reserves for certain advertising and sales
promotion programs conducted prior to 2002 by $1.7 million based on the actual
costs of these programs versus our original estimates.

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 third quarter of 2002 are for the 13-week period ended
September 28, 2002 and our results for the third quarter of 2001 are for the
13-week period ended September 29, 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 certain retailers including
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.

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 selling, general and administrative expenses to offset net sales for
the three and nine months ended September 29, 2001 to conform to our current
year presentation. These reclassifications reduced both our net sales and
selling, general and administrative 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 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.

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
No. 142, we ceased the amortization of: (a) all of our remaining goodwill
balance and (b) trademarks that are determined to have indefinite lives. Had
we accounted for goodwill and other intangible assets under SFAS No. 142 for
fiscal 2001, our reported net earnings and earnings per share would have
increased $4.3 million or $.07 per diluted share for the third quarter of
2001 and $13.0 million or $.21 per diluted share for the nine month period
ended September 29, 2001 (see Note 2). Also in connection with the new
requirements set forth in SFAS No. 142, we performed impairment tests on our
indefinite-lived intangible assets based on a fair value concept. As a result
of this testing, in the first quarter of 2002, we recorded an after tax
impairment in trademarks for certain non-core businesses of $12.4 million.
For the nine-month period ended September 28, 2002, the impact on a diluted
per share basis was $.19 (see Note 2). The adoption of SFAS No. 141 had no
impact on our earnings.

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

RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 28, 2002 COMPARED TO
THREE MONTHS ENDED SEPTEMBER 29, 2001

CONSOLIDATED NET SALES--Our consolidated net sales increased $2.8 million, or
2%, to $161.6 million in the third quarter of 2002.

PERSONAL PRODUCTS DIVISION--Net sales increased $0.7 million, or 1%, to
$106.1 million in the third quarter of 2002.

Net sales of INFANT CARE products decreased $1.4 million, or 2%,
to $53.9 million in the third quarter of 2002. The decrease in net
sales was due primarily to softness in the disposable feeding category
likely due, in part, to the cost differential between disposable
feeding systems and hard bottles in a weakened economy, a continued
decline in our non-core baby wipes business and softness in Mr. Bubble
due to competitive activity. Our Infant Care businesses have been very
competitive in recent periods, especially in our Infant Feeding and
Baby Toiletries categories. During 2002, we introduced a number of new
products in these categories such as our new INSULATOR spill-proof Cup
and BABY MAGIC Calming Milk products. Over the past four quarters, our
market shares have stabilized in Infant Feeding and Baby Toiletries at
approximately 35.0% and 8.4%, respectively. We believe these
categories will remain highly competitive in the future and we will
continue to defend our market share positions with new products
supported with targeted advertising and promotional activity.

Net sales of FEMININE CARE products increased $2.1 million, or
4%, to $52.2 million in the third quarter of 2002. Our dollar market
share in Tampons increased 0.4 percentage points in the third quarter
of 2002, to 30.3%, from 29.9% in the third quarter of 2001. Our retail
consumption of Tampons declined 0.8% while the category declined 2.2%.
Our Tampon business remains strong as retail consumption of our
products continue to outpace the category. This strength provides a
solid base from which to aggressively defend against the recent
competitive launch in the plastic applicator segment. We anticipate an
increase in our promotional spending in upcoming periods as part of
that defense. Additionally, our net sales results benefited from
PLAYTEX HEAT THERAPY, a new product that we introduced late in the
second quarter of 2002, and PLAYTEX Personal Cleansing Cloths, which
were introduced in the first quarter of 2001. PLAYTEX HEAT THERAPY
provides women suffering from menstrual pain a discrete method to
soothe pain with a comforting heat patch that lasts for hours. The
patch can be used anywhere on the body and is effectively merchandised
as a complementary product in the feminine care aisle. PLAYTEX
Personal Cleansing Cloths continues to grow as the number one brand in
a small but growing complementary segment for our feminine care line.

CONSUMER PRODUCTS DIVISION--Net sales decreased $1.3 million, or 6%, to
$20.6 million in the third quarter of 2002.

Net sales of SUN CARE products decreased $1.3 million in the
third quarter of 2002. The sun care business is highly seasonal and
the third quarter is typically the lowest quarterly period for net
sales. By the end of the third quarter, the seasonal consumption of
Sun Care products is essentially complete. We had a strong 2002 season
as evidenced by a season to date increase in consumption of 5.1%.
Category consumption for this same period increased less than 1%. For
the third quarter, our dollar market share of the Sun Care category
increased 0.6 percentage points to 22.8%, from 22.2% in the third
quarter of 2001. Our retail consumption grew 6.1% while the category
increased 3.2%.

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

Net sales of HOUSEHOLD PRODUCTS increased $1.6 million, or 13%,
to $14.1 million in the third quarter of 2002. Our dollar market share
for the WOOLITE rug and upholstery cleaning business increased 2.5
percentage points in the third quarter of 2002, to 24.4%, from 21.9%
in the third quarter of 2001. Our retail consumption increased 5.7%
while the category declined 5.5%. Our success was the result of two
recently introduced products. We introduced WOOLITE POWER SHOT in the
fourth quarter of 2001 and WOOLITE OXY DEEP in the third quarter of
2002. WOOLITE POWER SHOT Is a deep penetrating carpet cleaner that has
consistently grown its retail consumption since its introduction.
WOOLITE OXY DEEP is a carpet cleaner formulated with an
oxygen-activated formula that removes the toughest spots and stains.
In Gloves, our dollar market share declined 1.4 percentage points in
the third quarter of 2002, to 30.4%, from 31.8% in the third quarter
of 2001. The decrease in market share was due to competitive
activities, and an increase in private label, which is not uncommon
during weaker economic climates. The overall Gloves category declined
6.1% versus the same quarter in 2001.

Net sales of PERSONAL GROOMING products decreased $1.6 million,
or 18%, to $7.1 million in the third quarter of 2002. Both the home
permanent and breath fresheners (spray and drops) categories have
continued to experience declines in retail consumption. We continue to
hold strong leadership positions in these categories. For the third
quarter, OGILVIE increased its dollar market share to 73.0% of the
home perms/straighteners category while BINACA increased its dollar
market share to 40.2% of the breath freshener (spray and drops)
category.

INTERNATIONAL/CORPORATE SALES DIVISION--Net sales increased $3.4 million,
or 11%, to $34.8 million in the third quarter of 2002. The increase was due
primarily to higher Tampon net sales to the specialty classes of trade,
primarily club stores. Net sales in the U.S. specialty classes of trade
increased 9% compared to the third 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 $2.2 million,
or 3%, to $85.5 million in the third quarter of 2002. As a percent of net sales,
gross profit increased 0.5 percentage points, to 52.9% in the third quarter of
2002. The increase in gross profit and gross profit as a percent of net sales
was due to the increase in net sales, the mix of products sold and favorable
product cost.

CONSOLIDATED PRODUCT CONTRIBUTION--Our consolidated product contribution
increased $3.2 million, or 5%, to $68.8 million in the third quarter of 2002. As
a percent of net sales, product contribution increased 1.3 percentage points to
42.6% in the third 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 lower overall advertising and sales promotion expenses.

PERSONAL PRODUCTS DIVISION--Product contribution increased $0.8 million, or
2%, to $49.4 million in the third quarter of 2002. As a percent of net
sales, product contribution increased 0.4 percentage points to 46.6% in the
third quarter of 2002. The increase in product contribution and product
contribution as a percent of net sales was due to higher net sales and
favorable mix of products sold.

CONSUMER PRODUCTS DIVISION--Product contribution increased $0.4 million, or
17%, to $3.0 million in the third quarter of 2002. As a percent of net
sales, product contribution increased 2.9 percentage points to 14.7% in the
third quarter of 2002. The increase in product contribution and product
contribution as a percent of net sales was due primarily to lower
advertising and sales promotion expenses, which more than offset lower net
sales.

INTERNATIONAL/CORPORATE SALES DIVISION--Product contribution increased $2.0
million, or 14%, to $16.5 million in the third quarter of 2002. As a
percent of net sales, product contribution increased 1.3 percentage points
to 47.5% in the third 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.

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

CONSOLIDATED OPERATING EARNINGS--Our consolidated operating earnings increased
$5.1 million, or 21%, to $28.8 million in the third quarter of 2002. The
increase in operating earnings was the result of a reduction in intangible
amortization expense of $5.3 million in the third quarter of 2002. This was the
result of our implementation of SFAS No. 142 (see Note 2). Assuming SFAS No. 142
was implemented on December 31, 2000, the start of our fiscal year 2001, our
operating earnings would have been essentially flat versus the prior year.

CONSOLIDATED INTEREST EXPENSE, NET--Our consolidated interest expense decreased
$3.7 million, or 21%, to $14.2 million in the third quarter of 2002. The
decrease in interest expense was due to the combined impact of:

- Lower average debt balances. Our average debt for the third quarter of 2002
was less than the comparable period by $43.3 million, or 5%, due to debt
repayments.
- Lower interest rates when compared to the prior year. Our weighted average
variable interest rate in the third quarter of 2002 was 4.11% compared to
6.62% in the third quarter of 2001.

CONSOLIDATED OTHER EXPENSES--Our consolidated other expenses decreased $0.1
million, or 19%, to $0.5 million in the third quarter of 2002. This decrease was
due primarily to lower LIBOR rates in the third quarter of 2002 coupled with
lower average Receivable Facility usage in the third quarter of 2002 compared to
the third quarter of 2001. 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 increased $2.3 million,
or 83%, to $5.2 million in the third quarter of 2002. As a percent of pre-tax
earnings, our effective tax rate decreased 17.7 percentage points to 36.7% of
earnings before income taxes and extraordinary loss. We expect our effective tax
rate, for the fourth quarter of 2002, to be approximately 37% of earnings before
income taxes. Our effective tax rate is below our historical average tax rate,
because 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, which drove
our effective rate up.

NINE MONTHS ENDED SEPTEMBER 28, 2002 COMPARED TO
NINE MONTHS ENDED SEPTEMBER 29, 2001

CONSOLIDATED NET SALES--Our consolidated net sales increased $3.0 million, or
approximately 1%, to $559.9 million for the nine months ended September 28,
2002.

PERSONAL PRODUCTS DIVISION--Net sales increased $6.6 million, or 2%, to
$324.7 million for the nine months ended September 28, 2002.

Net sales of INFANT CARE products decreased $4.2 million, or 2%,
to $172.8 million for the nine months ended September 28, 2002.
Excluding our non-core baby wipes business our net sales would have
been essentially flat compared to the nine months ended September 29,
2001. The Infant Care category has been extremely competitive,
especially in our Infant Feeding and Baby Toiletries businesses. In
Infant Feeding, our dollar market share decreased 2.3 percentage
points for the nine months ended September 28, 2002, to 35.0%, from
37.3% for the nine months ended September 29, 2001 and in Baby
Toiletries our dollar market share decreased 0.7 percentage points for
the nine months ended September 28, 2002, to 8.4%, from 9.1% for the
nine months ended September 29, 2001. Despite these market share
losses, we remain the number one and number two branded products,
based on dollar market share, in the Infant Feeding and Baby
Toiletries categories, respectively. We have recently introduced a
number of new products across many of the Infant Care categories in
which we compete. We introduced an innovative new cup product, the
PLAYTEX INSULATOR, which keeps the contents of the cup cooler and
fresher longer than non-insulated cups in mid-February of 2002. New
BABY MAGIC products, introduced in the fourth quarter of 2001, include
a foaming

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

hair and body wash and foaming shampoo. We also revised our packaging
graphics and product dispensing applications to enhance consumer
awareness and improve ease of use. In addition, in the second quarter
of 2002 we introduced a new line of BABY MAGIC Calming Milk products
including a foaming bath, bath lotion and massage lotion. In WET ONES
we introduced, late in the first quarter of 2002, WET ONES FLUSHABLES,
a new product for use in the bathroom. This is a new category for our
WET ONES product line. In Disposables we introduced a new premium
Nurser, which includes a formula stirring disk and new advertising and
revised packaging graphics. In Diaper Pails, we made improvements to
our DIAPER GENIE diaper disposal unit and introduced, during the first
quarter of 2002, a new toddler film refill liner. We believe product
innovation is a key driver of long-term success and we are committed,
as a leader in the Infant Care segment, to bring added value to
consumers.

Net sales of FEMININE CARE products increased $10.8 million, or
8%, to $151.9 million for the nine months ended September 28, 2002.
Our dollar market share in Tampons increased 0.5 percentage points for
the nine months ended September 28, 2002, to 30.4%, from 29.9% in the
comparable period of 2001. Our retail consumption of Tampons grew 0.2%
while the category declined 1.2%. Our comparative net sales results
benefited from two new products: PLAYTEX Personal Cleansing Cloths
were introduced early in 2001 and have grown to be a number one brand
in a small but growing complementary segment for us, and PLAYTEX HEAT
THERAPY, introduced late in the second quarter of 2002, provides women
suffering from menstrual pain a discrete method to soothe pain with a
comforting heat patch that lasts for hours. The patch can be used
anywhere on the body and is effectively merchandised as a
complementary product in the feminine care aisle. These two new
products extend our franchise in feminine care product offerings.

CONSUMER PRODUCTS DIVISION-- Net sales decreased $9.9 million, or 7%, to
$129.8 million for the nine months ended September 28, 2002.

Net sales of SUN CARE products decreased $6.3 million, or 8%, to
$73.0 million for the nine months ended September 28, 2002. Our dollar
market share of the Sun Care category increased 0.9 percentage points
for the nine months ended September 28, 2002, to 22.1%, from 21.2% for
the comparative period of 2001. Our retail consumption grew 5.1% while
the category increased 0.7%. Our results, at retail, benefited from
two new products for the 2002 Sun Care season, VITASKIN and INDOOR
TANNING. Our net sales decline was primarily due to a change in
estimates of our sales returns reserve of $3.3 million, which we
booked during the second quarter of 2002, relating to higher than
expected Sun Care returns from the 2001 Sun Care season. This
adjustment resulted from a few key accounts that unexpectedly returned
product. We initiated a more proactive approach to managing late
season shipments to retailers in the end of the second quarter of
2002, which continued into the third quarter. We expect this
initiative will also impact our fourth quarter shipments as well. We
believe this initiative will facilitate a reduction in product
returns, thus reducing the overall costs associated with Sun Care, as
we better align shipment patterns with consumption patterns for next
season.

Net sales of HOUSEHOLD PRODUCTS increased $0.3 million, or 1%, to
$33.9 million for the nine months ended September 28, 2002. Our market
share for the WOOLITE rug and upholstery cleaning business grew to
23.2% for the nine months ended September 28, 2002, an increase of 2.1
percentage points compared to the nine months ended September 29,
2001. Retail consumption of WOOLITE increased 9.4%, while the category
decreased 0.8%. Our market share results benefited from WOOLITE POWER
SHOT a deep penetrating carpet cleaner that we introduced late in
2001. Our net sales results also benefited from shipments of WOOLITE
OXY DEEP, an oxygenated deep cleaning spot and stain product
introduced in the third quarter. In Gloves, our dollar market share
decreased 2.2 percentage points for the nine months ended September
28, 2002, to 30.8%, from 33.0% for the comparable period of 2001. The
decrease in market share was due to competitive activities and an
increase in private label, which is not unusual during tough economic
times. The overall Glove market declined by 4% versus the same period
in 2001.

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

Net sales of PERSONAL GROOMING products decreased $3.8 million,
or 14%, to $22.9 million for the nine months ended September 28, 2002,
primarily due to weakness in the home perms/straighteners and breath
freshener (spray and drops) categories. Our largest Personal Grooming
brand, OGILVIE increased its dollar market share to 72.0% of the home
perms/straighteners category, which was a gain of 1.0 percentage point
compared to the nine months ended September 29, 2001. Retail
consumption in the home perms/straighteners category declined 14.4%.
BINACA increased its dollar market share to 38.1% of the breath
freshener (spray and drops) category, which was a gain of 2.9
percentage points compared to the comparable period of 2001 Retail
consumption in the breath fresheners (spray and drops) category
declined 20.5%. The decline experienced in the breath fresheners
(spray and drops) category is due to a competitor's successful launch
of a breath strip product.

INTERNATIONAL/CORPORATE SALES DIVISION-- Net sales increased $6.2 million,
or 6%, to $105.4 million for the nine months ended September 28, 2002. A
significant portion of this increase was due 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 13% for the nine months ended
September 28, 2002 compared to the comparable period 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 $5.8 million,
or 2%, to $310.4 million for the nine months ended September 28, 2002. As a
percent of net sales, gross profit increased 0.7 percentage points, to 55.4% for
the nine months ended September 28, 2002. The 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 $8.4 million, or 4%, to $244.3 million for the nine months ended
September 28 2002. As a percent of net sales, product contribution increased 1.2
percentage points to 43.6% for the nine months ended September 28, 2002. The
increase in product contribution and product contribution as a percent of net
sales was due primarily to higher gross profit and lower overall advertising and
sales promotion expenses.

PERSONAL PRODUCTS DIVISION--Product contribution increased $15.6 million,
or 11%, to $156.8 million for the nine months ended September 28, 2002. As
a percent of net sales, product contribution increased 3.9 percentage
points to 48.3% for the nine months ended September 28, 2002. The increase
in product contribution and product contribution as a percent of net sales
was due to higher net sales, product mix, favorable product cost, and lower
advertising and sales promotion expenses.

CONSUMER PRODUCTS DIVISION--Product contribution decreased $11.5 million,
or 23%, to $38.7 million for the nine months ended September 28, 2002. As a
percent of net sales, product contribution decreased 6.2 percentage points
to 29.8% for the nine months ended September 28, 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. Contributing to the decrease was a reduction
of our net sales for Sun Care due to higher than expected returns from the
2001 Sun Care season, which negatively impacted our reported product
contribution by $2.0 million.

INTERNATIONAL/CORPORATE SALES DIVISION--Product contribution increased $4.1
million, or 9%, to $49.3 million for the nine months ended September 28,
2002. As a percent of net sales, product contribution increased 1.2
percentage points to 46.7% for the nine months ended September 28, 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
slightly by increased promotion expenses.

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

CONSOLIDATED OPERATING EARNINGS--Our consolidated operating earnings increased
$7.4 million, or 7%, to $116.7 million for the nine months ended September 28,
2002. The increase in operating earnings was the result of our higher gross
profit and product contribution, as discussed. Our operating earnings also
benefited from a reduction in intangible amortization expense of $15.9 million,
which was offset, in part, by a restructuring and asset impairment charge of
$7.6 million related to the closure of our Watervliet, New York plastic molding
facility (see Note 4). The reduction in amortization expense was the result of
our implementation of SFAS No. 142 (see Note 2). Assuming SFAS No. 142 was
implemented on December 31, 2000, the start of our fiscal year 2001, and
excluding the restructuring and asset impairment charge, our operating earnings
would have decreased $0.9 million compared to the comparable period of 2001.
This decrease is the result of higher selling, general and administrative
expenses offset, in part, by higher product contribution, as discussed.

CONSOLIDATED INTEREST EXPENSE, NET--Our consolidated interest expense decreased
$13.6 million, or 23%, to $45.5 million for the nine months ended September 28,
2002. The decrease in interest expense was due to the combined impact of:

- Lower average debt balances. Our average debt for the nine months ended
September 28, 2002 was less than the comparable period by $58.2 million,
or 6%, due to:
- the establishment of the Receivables Facility (see Note 8) in May 2001,
- the prepayment of scheduled principal payments on our Term A Loan and
our Term B Loan in the third and fourth quarters of 2001, and
- our repayment of the $471.8 million outstanding on the Term A and Term
B Loans, on May 29, 2002, with the issuance of a new $450.0 million
Term C Loan and $21.8 million of cash (see Note 7).
- Lower interest rates when compared to the prior year. Our weighted average
variable interest rate for the nine months ended September 28, 2002 was
4.64% compared to 7.24% for the nine months ended September 29, 2001.

CONSOLIDATED OTHER EXPENSES--Our consolidated other expenses increased $0.4
million, or 21%, to $2.1 million for the nine months ended September 28, 2002.
In late May 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 $10.0
million, or 47%, to $11.2 million for the nine months ended September 28, 2002.
As a percent of pre-tax earnings, our effective tax rate decreased 27.4
percentage points to 16.2% of earnings before income taxes, extraordinary loss
and cumulative effect of change in accounting principles. In the first quarter
of 2002, we recorded a tax benefit of $14.3 million due to 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. We expect our
effective tax rate, for the fourth quarter of 2002, to be approximately 37% of
earnings before income taxes. This effective tax rate is below our historical
average tax rate, because 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, which drove our effective rate up.

EXTRAORDINARY LOSS--On May 29, 2002, we amended our Credit Facility and issued a
new $450.0 million Term C Loan and, together with $21.8 million of cash, we
repaid in full our outstanding obligations under our Term A Loan and Term B
Loan, which collectively totaled $471.8 million (see Note 7). We recorded an
extraordinary loss during the second quarter ended June 29, 2002 of $3.7
million, net of income tax benefits of $2.2 million, associated with the
write-off of unamortized deferred financing costs relating to our Term A Loan
and Term B Loan.

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

In the second quarter of 2001, we recorded an extraordinary loss of $19.3
million, net of income tax benefits, as a result of the refinancing of our
senior indebtedness (see Note 7). This extraordinary loss included cash
provisions for call premiums on our retired fixed rate indebtedness, a non-cash
provision for the write-off of unamortized deferred financing costs, fees for
two interest rate swap agreements related to our prior credit facility and
duplicative net interest expense during the period between extinguishment and
redemption of the fixed rate indebtedness.

FINANCIAL CONDITION AND LIQUIDITY

One of our major corporate objectives has been to reduce our outstanding
indebtedness and lower our borrowing costs. We reduced our indebtedness by:
$56.3 million in fiscal 2000; $42.8 million in fiscal 2001; and $41.1 million
for the first nine months of 2002. Highlights of this strategy include:

- 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% Notes, entered into a new senior secured credit facility (the
"Credit Facility") consisting of a six-year $100.0 million Term A Loan, a
eight-year $400.0 million Term B Loan, and a six-year $125.0 million
Revolving Credit Facility. Also, as part of the Refinancing Transaction, we
entered into a Receivables Facility through a newly formed special purpose
bankruptcy remote subsidiary, Playtex A/R LLC. The net proceeds from the
Refinancing Transaction and the Receivables Facility were used to pay-off
all outstanding balances under our prior credit agreement. In addition, we
extinguished our 9% Senior Subordinated Notes due 2003 (the "9% Notes") and
our 8 7/8% Senior Notes due 2004 (the "8 7/8% Notes"). As mentioned above,
on May 29, 2002 we paid-off the Term A Loan and Term B Loan by amending the
Credit Facility and issuing a new $450.0 million Term C Loan.

- On May 29, 2002, we amended our Credit Facility and issued a new $450.0
million Term C Loan and, together with $21.8 million of cash, we repaid in
full our outstanding obligations under our Term A Loan and Term B Loan,
which collectively totaled $471.8 million. Borrowings under the Term C Loan
are less costly to us than borrowings under either the Term A Loan or Term
B Loan. The interest rate, at our option, is LIBOR plus 2.25% for the Term
C Loan compared to LIBOR plus 2.75% for the Term A Loan and LIBOR plus 3.0%
for the Term B Loan. The Term C Loan matures May 31, 2009.

- On November 6, 2002, subsequent to the balance sheet date of this quarterly
report on Form 10-Q (see Note 12), we redeemed $20.0 million principal
amount of our Convertible Notes, with an interest rate of 6%, for an
aggregate consideration of approximately $20.3 million, including accrued
and unpaid interest to the redemption date. The remaining $30.0 million
principal amount of Convertible Notes mature on January 31, 2004 and 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.

At September 28, 2002, long-term debt (including current portion but
excluding obligations due to related party) was $847.7 million compared to
$888.8 million at December 29, 2001. We reduced our variable rate indebtedness
by $41.1 million during the nine months ended September 28, 2002. We paid off
the $17.0 million that was outstanding on our Revolving Credit Facility at
December 29, 2001. We amended our Credit Facility and paid off $21.8 million of
our variable rate indebtedness. In addition, we paid early our first semi-annual
principal payment of $2.3 million on our Term C Loan.

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

Our remaining scheduled principal repayment obligations are (excluding
amounts due to related party and the $20.0 million redemption of the Convertible
Note, which happened subsequent to the balance sheet date):

- $4.5 million in 2003,
- $34.5 million in 2004,
- $4.5 million in 2005,
- $4.5 million in 2006, and
- $779.7 million thereafter.

In the event that we have excess cash flow, as defined in our credit agreement,
we may, within 90 days of each year-end, be required to: make either mandatory
debt repayments on the Term C Loan equal to the amount of the excess cash flow,
as defined, or make deposits into the excess cash flow account equal to the
amount of the excess cash flow.

Our Revolving Credit Facility provides for borrowings of up to $125.0
million and matures on May 22, 2007. At September 28, 2002, we had $122.8
million available to borrow under the Revolving Credit Facility. At September
28, 2002, the undivided fractional interest sold by Playtex A/R LLC to a third
party commercial paper conduit under the Receivables Facility was $5.0 million.

The terms of the Credit Facility require us to meet certain financial tests
and also include conditions or restrictions on:

- new indebtedness and liens,
- major acquisitions or mergers,
- capital expenditures and asset sales,
- dividends and other distributions, and
- the application of excess cash flow.

At September 28, 2002, our working capital (current assets net of current
liabilities) increased $17.8 million to $125.6 million compared to $107.8
million at December 29, 2001.

- Total current assets increased approximately $23.0 million at September 28,
2002 compared to December 29, 2001. The increase was primarily the result
of higher receivables (accounts receivables and retained interest in
receivables), which increased $30.2 million due to the decision to limit
the sale of an undivided fractional interest in our receivables under the
Receivables Facility since we had sufficient cash from operations to
support current needs. Inventories decreased $9.0 million, to $73.2
million, at September 28, 2002. The decline in inventories was due
primarily to the seasonal nature of our Sun Care business. Cash balances
increased $4.5 million, to $38.5 million, at September 28, 2002 and all
other current assets decreased by $2.7 million at September 28, 2002
compared to December 29, 2001.

- Total current liabilities increased approximately $5.2 million at September
28, 2002 compared to December 29, 2001. Accrued expenses increased $8.1
million at September 28, 2002 compared to December 29, 2001 due, in part,
to the timing of interest payments on our debt and Sun Care seasonal
returns, offset in part, by lower reserves for advertising and promotional
expenses. Reserves for income taxes increased $7.4 million and our current
debt obligations pertaining to the new Term C Loan increased $2.2 million
compared to December 29, 2001. Accounts payable declined $12.5 million due
primarily to the payment for our Sun Care inventory build. Our accounts
payable levels tend to be higher at the end of the fourth quarter due to
expanded production for the Sun Care season.

Our net cash flows from operations decreased $71.1 million, to $58.5
million for the first nine months of 2002 compared to the first nine months of
2001. The decrease in net cash flows from operations was due primarily to our
utilization of the Receivables Facility. For the nine months ended September 29,
2001, we increased our cash flow derived from working capital by $54.0 million
by selling a undivided fractional interest in our Accounts Receivable to a third
party via our Receivables Facility. For the nine months ended September 28,
2002, the sale of accounts receivable via our

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

Receivables Facility contributed only $5.0 million as we had sufficient cash
flow from other sources that met all of our cash needs. As a result, we have
retained ownership in all but $5.0 million of our Accounts Receivable as of
September 28, 2002. This increased investment in Accounts Receivable negatively
impacted the change in working capital for the nine months ended September 28,
2002 by $51.5 million. Our cash flows from operations were strong for the nine
months ended September 28, 2002. As a result, we were able to reduce debt by
$41.1 million and reduce our utilization of our Receivables Facility by $51.5
million.

Capital expenditures for equipment and facility improvements were $10.6
million for the first nine months 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 approximately $20.0 million, in
line with recent full-year expenditure levels. We anticipate 2003 capital
expenditures to be approximately $25.0 million.

We intend to fund our operating cash, capital expenditures and debt service
requirements through cash flow generated from operations, including 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 2008 and 2009 scheduled principal payments
on the Term C Loan, which collectively total $425.3 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.

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.

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:

- the reported amounts and timing of revenue and expenses,
- the reported amounts and classification of assets and liabilities, and
- 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.

- 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

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

noted above. Based on our 2002 season to date Sun Care results, each
percentage point change in our return rates would have impacted our
reported net sales by $1.4 million and our reported operating earnings
by $1.2 million.

- 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.

- 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.

RECENTLY ISSUED ACCOUNTING STANDARDS

In July 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations ("FAS 143"). FAS 143 requires that asset retirement obligations that
are identifiable upon acquisition and construction, and during the operating
life of a long-lived asset be recorded as a liability using the present value of
the estimated cash flows. A corresponding amount would be capitalized as part of
the assets carrying amount and amortized to expense over the assets useful life.
We are required to adopt the provisions of FAS 143 effective December 29, 2002,
the start of our fiscal year 2003. We are currently evaluating the impact of
adoption of this statement.

In April 2002, the FASB issued SFAS No. 145 ("FAS 145"), "Rescission of
FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and
Technical Corrections". This statement updates, clarifies and simplifies
existing accounting pronouncements and becomes effective for us starting in
fiscal 2003. In most instances, FAS 145 will require gains and losses on
extinguishments of debt to be classified as income or loss from continuing
operations rather than as extraordinary items as previously required under the
old accounting rules. Starting in 2003, any gain or loss on extinguishment of
debt previously classified, as an extraordinary item in prior periods presented
that does not meet the criteria of APB 30 for such classification will be
reclassified to conform to the provisions of FAS 145. We are currently reviewing
the impact of FAS 145 on our financial statements.

In July 2002, the FASB issued Statement No. 146, Accounting for Costs
Associated with Exit or Disposal Activities ("FAS 146") and nullifies EITF Issue
No. 94-3. FAS 146 requires that a liability for a cost associated with an exit
or disposal activity be recognized when the liability is incurred, whereas EITF
No 94-3 had recognized the liability at the commitment date to an exit plan. We
are required to adopt the provisions of FAS 146 effective for exit or disposal
activities initiated after December 28, 2002.

PLAYTEX PRODUCTS, INC.
PART I - FINANCIAL INFORMATION
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK AND QUALITY OF
CONTROLS AND PROCEDURES

ITEM 3. 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 September 28, 2002, we were not a party to any financial
instruments and our total indebtedness consisted of $400.0 million in fixed rate
debt and $447.7 million in variable rate debt. Based on our interest rate
exposure at September 28, 2002, a 1% increase in interest rates for our variable
rate debt would result in an estimated $4.5 million of additional interest
expense on an annualized basis.

ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of disclosure controls and procedures. Within 90 days prior
to the date of this report (the "Evaluation Date"), our Chief Executive
Officer and our Executive Vice President and Chief Financial Officer
carried out an evaluation of the effectiveness of our "disclosure
controls and procedures" (as defined in the Securities Exchange Act of
1934 Rules 13a-14(c) and 15d-14(c). Based on that evaluation, these
officers have concluded that as of the Evaluation Date, our disclosure
controls and procedures were adequate and effective to ensure that
material information relating to the Company would be made to known to
them, particularly during the period in which this report was being
prepared.

(b) Changes in internal controls. There have been no significant changes in
our internal controls or in other factors that could significantly
affect our internal controls after the date of their evaluation, nor any
significant deficiencies or material weaknesses in such internal
controls requiring corrective actions. As a result, no corrective
actions were taken.

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 October 2002, there were 6 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:

99.1 Certification by Chief Executive Officer Pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.

99.2 Certification by Chief Financial Officer Pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.

b. Reports on Form 8-K:

None

PLAYTEX PRODUCTS INC.
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: November 12, 2002 BY: /s/ MICHAEL R. GALLAGHER
----------------------------------
Michael R. Gallagher
CHIEF EXECUTIVE OFFICER
(PRINCIPAL EXECUTIVE OFFICER)

DATE: November 12, 2002 BY: /s/ GLENN A. FORBES
----------------------------------
Glenn A. Forbes
EXECUTIVE VICE PRESIDENT and
CHIEF FINANCIAL OFFICER
(PRINCIPAL FINANCIAL AND ACCOUNTING
OFFICER)

PLAYTEX PRODUCTS, INC.
CERTIFICATIONS

I, Michael R. Gallagher, Chief Executive Officer, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Playtex Products,
Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):

a. all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b. any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.

DATE: November 12, 2002 BY: /s/ MICHAEL R. GALLAGHER
------------------------
Michael R. Gallagher
CHIEF EXECUTIVE OFFICER
(PRINCIPAL EXECUTIVE OFFICER)

PLAYTEX PRODUCTS, INC.
CERTIFICATIONS

I, Glenn A. Forbes, Executive Vice President and Chief Financial Officer,
certify that:

1. I have reviewed this quarterly report on Form 10-Q of Playtex Products,
Inc.;

DATE: November 12, 2002 BY: /s/ GLENN A. FORBES
-------------------
Glenn A. Forbes
EXECUTIVE VICE PRESIDENT and
CHIEF FINANCIAL OFFICER
(PRINCIPAL FINANCIAL AND ACCOUNTING
OFFICER)