UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
(X) Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the fiscal year ended MARCH 31, 2001
Commission File Number 1-5910
CARTER-WALLACE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-4986583
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1345 AVENUE OF THE AMERICAS, NEW YORK, NY 10105
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 212-339-5000
Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
Common Stock
Par value $1.00 per share New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
Class B Common Stock, par value $1.00 per share
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K of any amendment to this
Form 10-K. (X)
The number of shares of the registrant's Common Stock and Class B Common Stock
outstanding at June 4, 2001 was 33,468,339 and 12,222,207 respectively.
The aggregate market value of voting stock held by non-affiliates of the
registrant as of June 4, 2001 was approximately $416,599,000.
DOCUMENTS INCORPORATED BY REFERENCE
Annual Report to Stockholders for the fiscal
year ended March 31, 2001 Parts I & II
Proxy Statement for the Annual Meeting of
Stockholders to be held July 17, 2001 Parts III & IV
PART I
ITEM 1. BUSINESS
Carter-Wallace, Inc. (the "Company") is engaged in the manufacture and sale of a
diversified line of products. Additional information is presented on page 11
"Description of Business" of the 2001 Annual Report to Stockholders and is
herein expressly incorporated by reference.
PENDING SALE OF THE COMPANY
In May 2001 the Company announced that it had entered into agreements for the
sale of the Company in a two-step transaction in which stockholders will receive
$20.30 per share, subject to certain closing adjustments. This transaction is
pending at this time and subject to approval by stockholders and other
conditions. Full details will be included in a proxy statement regarding this
transaction which will be sent to all stockholders.
In this two-step transaction, the consumer business, consisting of the Carter,
Lambert Kay and International Divisions will be sold by the Company immediately
prior to the merger of the remainder of the Company. Accordingly, the consumer
business is included as a discontinued operation for all periods presented in
the March 31, 2001 financial statements.
BUSINESS SEGMENTS
The Company's continuing operations are accounted for as one business segment,
health care. As a result of the pending sale of the consumer business, the
consumer business is included as a discontinued operation for all periods
presented in the March 31, 2001 financial statements. Financial information
about the Company's continuing and discontinued operations for the three years
ended March 31, 2001 is presented on pages 8 and 9 under the caption
"Management's Discussion and Analysis of Results of Operations and Financial
Condition" and also on pages 28 and 29, note 15, "Discontinued Consumer
Operations Held for Sale" of the Notes to Consolidated Financial Statements,
both included in the 2001 Annual Report to Stockholders and herein expressly
incorporated by reference.
FOREIGN OPERATIONS
Foreign operations (which are included in discontinued operations) are generally
subject to certain political and economic risks that are not present in domestic
operations. Such risks may include expropriation of assets, restrictions on
earnings remittances and fluctuating exchange rates. Changes in foreign exchange
rates had the effect of decreasing sales in discontinued operations by
approximately $22,000,000 in the fiscal year ended March 31, 2001 in comparison
to the prior year.
COMPETITION
The markets in which the Company operates are extremely competitive and include
larger corporations with greater resources for research, product development and
promotion. The Company competes on the basis of price, advertising, promotion,
quality of product and other methods relevant to the business. In fiscal 2001,
the
1
Company's Arrid line of anti-perspirants and deodorants is believed to have
accounted for an estimated 5.8% share of the domestic anti-perspirant and
deodorant market. The Company's worldwide anti-perspirant and deodorant sales
were approximately $100,400,000, $105,900,000, and $101,600,000 in the fiscal
years ended March 31, 2001, 2000 and 1999, respectively. The Trojan, Class Act
and Naturalamb condom brands are estimated to have accounted for over 68% of
total domestic retail condom sales. The Company's worldwide condom sales were
approximately $135,900,000, $123,600,000 and $114,100,000 in the fiscal years
ended March 31, 2001, 2000 and 1999, respectively. Anti-perspirant and deodorant
and condom sales are included in discontinued operations for all periods
presented. Additional information is presented on page 8 under the caption
"Management's Discussion and Analysis of Results of Operations and Financial
Condition" in the 2001 Annual Report to Stockholders and is herein expressly
incorporated by reference.
RAW MATERIALS
The Company's major raw materials are chemicals, plastics, latex, steel cans and
packaging materials. These materials are generally available from several
sources and the Company has had no significant supply problems to date. The
Company generally has two or more approved suppliers for production materials
and issues purchase commitments to provide its suppliers with adequate lead
time.
PATENTS AND LICENSES
The Company owns or is licensed under a number of patents and patent
applications covering certain of its products. The expiration or any other
change in any of these patents or patent applications will not materially affect
the Company's business. Royalty income does not constitute a material portion of
total revenue.
FELBATOL (FELBAMATE)
Information regarding the effect of Felbatol matters on the Company's business
is presented on page 10 under the caption "Management's Discussion and Analysis
of Results of Operations and Financial Condition - Felbatol (felbamate), and on
page 28 in note 14 Felbatol (felbamate) of the Notes to Consolidated Financial
Statements, both included in the 2001 Annual Report to Stockholders and herein
expressly incorporated by reference.
ENVIRONMENTAL MATTERS
Information regarding environmental matters is presented on page 26 in note 11,
"Litigation Including Environmental Matters" of the Notes to Consolidated
Financial Statements, included in the 2001 Annual Report to Stockholders and
herein expressly incorporated by reference.
RESEARCH AND DEVELOPMENT
Research and development expenses for continuing health care operations in
fiscal 2001 increased by $2,445,000 or 14.6% due to higher spending in the
Wallace pharmaceutical division, including spending for taurolidine, a compound
being tested to determine if it has clinically important antineoplastic
activity. In fiscal 2000, research and development expenses increased by
$2,006,000 or 13.6%, also due in part to spending for taurolidine. Research and
development expenses
2
for discontinued consumer operations in fiscal 2001 decreased by $340,000 or
2.9% due to lower spending in the International Division. In fiscal 2000,
research and development expenses increased by $656,000 or 5.9%.
Research at independent facilities determined that taurolidine induced cell
death in numerous human cancer cells in vitro. These developments prompted the
Company to initiate an R&D program directed at multiple cancer cell lines to
determine if taurolidine has clinically important antineoplastic activity. An
Investigational New Drug Application (IND) was filed with and accepted by the
FDA. Clinical trials in patients with brain, ovarian and mesothelioma cancer are
in progress.
Two multicenter clinical studies showed that Astelin Nasal Spray is effective
for treating vasomotor (nonallergic) rhinitis. A Supplemental New Drug
Application was approved by the FDA for use in vasomotor rhinitis in September,
2000. Astelin Nasal Spray is now indicated for both allergic and nonallergic
vasomotor rhinitis in adults and for use in children five years of age and older
for seasonal allergic rhinitis. The Astelin tablet NDA for allergic rhinitis is
pending at the FDA. The Company has not decided whether to seek final approval
for this NDA.
Approximately 120 employees are employed in research and development activities.
EMPLOYEES
The Company, together with its subsidiaries, employed approximately 3,340 people
worldwide at March 31, 2001.
ITEM 2. PROPERTIES
The executive offices of the Company are located at 1345 Avenue of the Americas,
New York, New York, in space leased until May, 2011. A portion of this space has
been subleased. The following are the other principal facilities of the Company,
all of which, except for Decatur, Illinois are accounted for as part of
discontinued consumer operations.
AREA
LOCATION PRODUCTS MANUFACTURED (SQ. FEET)
OWNED IN FEE:
MANUFACTURING FACILITIES
AND OFFICES:
Cranbury, New Jersey Pharmaceuticals, toiletries
and pet products 734,000
Colonial Heights,
Virginia Condoms 220,000
Decatur, Illinois Pharmaceuticals and pet products 108,000
Winsted, Connecticut Pet products 45,000
Montreal, Canada OTC pharmaceuticals and toiletries 157,000
Folkestone, England Toiletries 76,000
Milan, Italy OTC pharmaceuticals and toiletries 60,000
Mexico City, Mexico Pharmaceuticals 94,400
New Plymouth, New Zealand Condom processing 31,000
3
WAREHOUSE AND OFFICES:
Toronto, Canada 52,000
LEASED:
MANUFACTURING FACILITIES AND OFFICES:
Barcelona, Spain Toiletries 58,400
Milan, Italy Diagnostics and toiletries 49,100
Folkestone, England Toiletries 21,500
WAREHOUSE AND OFFICES:
Dayton, New Jersey 200,000
Momence, Illinois 43,000
Plainsboro, New Jersey * 23,300
Mexico City, Mexico 27,500
Sydney, Australia 24,900
Folkestone, England 37,500
Levallois, France * 22,500
Revel, France 35,500
* OFFICES ONLY
The Company has agreements with several companies throughout the world for the
manufacture of certain products to its specifications. The Company has several
other short-term leases for manufacturing plants, warehousing space and sales
offices. With minor exceptions, all facilities are operating at normal capacity.
In June 2000, Carter-Wallace, Inc. entered into an agreement to sell two parcels
of vacant land adjacent to its Cranbury, New Jersey facility totaling
approximately 210 acres. The closings of these transactions are contingent upon
certain approvals being obtained and the satisfactory resolution of other
conditions. No assurance can be given that the closings will take place. The
total proceeds from these land sales would be approximately $22,050,000, less
commissions and other expenses. The cost basis for the land subject to sale is
approximately $1,000,000.
ITEM 3. LEGAL PROCEEDINGS
Information regarding Legal Proceedings involving the Company is presented on
pages 26 and 27 in note 11, "Litigation Including Environmental Matters" of the
Notes to Consolidated Financial Statements included in the 2001 Annual Report to
Stockholders and herein expressly incorporated by reference.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
4
EXECUTIVE OFFICERS OF THE REGISTRANT *
Executive Officers of the Registrant are as follows:
HELD PRESENT
NAME AGE OFFICE OFFICE SINCE
- ---- --- ------ ------------
Ralph Levine 65 Chairman of the Board and
Chief Executive Officer 2001
Paul A. Veteri 59 President and Chief Operating
Officer 2001
Peter J. Griffin 58 Vice President, Finance and Controller
Chief Financial Officer 2001
T. Rosie Albright 54 Vice President, Consumer Products, U.S. 1995
John Bridgen, Ph.D. 54 Vice President, Diagnostics, U.S. 1984
James C. Costin, M.D. 57 Vice President, Medical and
Scientific Affairs 1999
Donald R. Daoust, Ph.D. 65 Vice President, Quality Control 1978
Thomas G. Gerstmyer 58 Vice President, Pharmaceuticals, U.S. 1999
Adrian J. L. Huns 53 Vice President, International 1996
Michael J. Kopec 61 Vice President, Manufacturing 1978
Stephen R. Lang 66 Vice President, Secretary and
General Counsel 1997
Thomas B. Moorhead 67 Vice President, Human Resources 1987
C. Richard Stafford 65 Vice President, Corporate Development 1977
James L. Wagar 66 Vice President and Treasurer 1981
Mark Wertlieb 45 Vice President, Taxes 1996
Each officer holds office until the first meeting of the Board of Directors
following each Annual Meeting of the Stockholders and until his successor has
been duly elected and qualified (except that the Board of Directors may at any
meeting elect additional officers), unless his term is earlier terminated
through death, resignation, removal or otherwise. The next Annual Meeting of the
Stockholders is scheduled to be held July 17, 2001.
5
All executive officers have held their present office for the last five years
except those noted below:
Ralph Levine was appointed Chairman of the Board and Chief Executive Officer in
January, 2001. Mr. Levine was previously President and Chief Operating Officer
since April 1997. Prior to April 1997, Mr. Levine was Vice President, Secretary
and General Counsel since prior to 1996.
Paul A. Veteri was appointed President and Chief Operating Officer in January,
2001. Mr. Veteri was previously Executive Vice President and Chief Financial
Officer since April 1997. Prior to April 1997, Mr. Veteri was Vice President and
Chief Financial Officer since prior to 1996.
Peter J. Griffin was appointed Vice President, Finance and Controller and Chief
Financial Officer in January, 2001. Mr. Griffin was previously Vice President
and Controller since prior to 1996.
Thomas G. Gerstmyer was appointed Corporate Vice President, Pharmaceuticals,
U.S. in January, 1999. He was appointed President, Wallace Laboratories Division
in August, 1998. Mr. Gerstmyer was previously Vice President of Marketing,
Wallace Laboratories since prior to 1996.
James C. Costin, M.D., was appointed Corporate Vice President, Medical and
Scientific Affairs in January, 1999. Dr. Costin continues to be responsible for
the Wallace Laboratories' Research and Development department, where he was
previously Vice President, Research and Development, a position he held since
prior to 1996.
Stephen R. Lang was appointed Corporate Vice President in March, 1997 and
Secretary and General Counsel in April, 1997. Mr. Lang was previously a Partner
and Chairman of the Litigation Department of Whitman Breed Abbott & Morgan LLP
since prior to 1996.
Mark Wertlieb was appointed Corporate Vice President, Taxes in August, 1996. Mr.
Wertlieb was previously a Tax Partner at KPMG LLP since prior to 1996.
Adrian J. L. Huns was appointed Corporate Vice President, International and
President, International Division in May, 1996. Mr. Huns was Managing Director
of Carter-Wallace Ltd., a subsidiary of Carter-Wallace, Inc., since prior to
1996.
6
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Information required by this item is presented on pages 1 and 7 of the 2001
Annual Report to Stockholders and is herein expressly incorporated by reference.
ITEM 6. SELECTED FINANCIAL DATA
Information required by this item is incorporated herein by reference to page 7
of the 2001 Annual Report to Stockholders.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
Information required by this item is incorporated herein by reference to pages 8
through 10 of the 2001 Annual Report to Stockholders.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT FINANCIAL MARKET RISK
A portion of the Company's discontinued revenues and earnings are exposed to
changes in foreign exchange rates. Where practical, the Company seeks to relate
expected local currency revenues with local currency costs and local currency
assets with local currency liabilities.
The Company's interest bearing investments and a portion of its debt in
discontinued operations are subject to interest rate risk. Changes in interest
rates could affect interest income and expense in future periods. The Company
invests on a short-term basis.
There has been no material impact on operations from financial market risk
exposure during the year ended March 31, 2001.
PART III
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information required by this item is incorporated herein by reference to pages
12 through 31 of the 2001 Annual Report to Stockholders.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information with respect to Directors of the Company is incorporated by
reference to the Company's Proxy Statement, dated June 20, 2001, for the Annual
Meeting of Stockholders to be held July 17, 2001, under the captions "Stock
Ownership", "Election of Directors" and "Board of Directors and Committees".
Information with respect to Executive Officers of the Registrant is set forth
under the heading "Executive Officers of the Registrant" in Part I on pages 5
and 6 of this Form 10-K.
7
ITEM 11. EXECUTIVE COMPENSATION
Information required by this item is incorporated herein by reference to the
Company's Proxy Statement, dated June 20, 2001, for the Annual Meeting of
Stockholders to be held July 17, 2001, under the caption "Executive Compensation
and Other Information".
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information pertaining to the security ownership of certain beneficial owners
and management is incorporated herein by reference to the Company's Proxy
Statement, dated June 20, 2001, for the Annual Meeting of Stockholders to be
held July 17, 2001, under the captions "Voting Rights" and "Stock Ownership".
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required by this item is incorporated herein by reference to the
Company's Proxy Statement, dated June 20, 2001, for the Annual Meeting of
Stockholders to be held July 17, 2001, under the caption "Election of
Directors".
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K
(A)(1),(A)(2) FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
The financial statements and financial statement schedule filed as part of this
report are listed or incorporated by reference in the "Index of Financial
Statements and Financial Statement Schedule" on page 15 of this Form.
(A)(3) EXHIBITS
2.1 Asset Purchase Agreement, dated as of May 7, 2001, by and between
Armkel,LLC and Carter-Wallace, Inc. (incorporated herein by
reference to Item 7 of the Company's Form 8-K dated May 7, 2001).
2.2 Agreement and Plan of Merger, dated as of May 7, 2001, among the
Company, CPI Development Corporation, MCC Acquisition Holdings
Corporation, MCC Merger Sub Corporation and MCC Acquisition Sub
Corporation. (incorporated herein by reference to Item 7 of the
Company's Form 8-K dated May 7, 2001).
3.1 Certificate of Incorporation, as amended, of the Company
(incorporated herein by reference to Exhibit 3.1 of the Company's
Annual Report on Form 10-K for the fiscal year ended March 31,
1992).
3.2 By-Laws of the Company, as amended through 5/15/97 (incorporated
herein by reference to Exhibit 3.2 of the Company's Annual Report
on Form 10K for the fiscal year ended March 31, 1998).
(CONTINUED)
8
(A) 3) EXHIBITS (CONT'D)
4.1 Instruments defining the rights of security holders, including
indentures -- The Company agrees to furnish to the Commission
upon request a copy of each instrument pursuant to which long-
term debt of the Company and its subsidiaries not exceeding 10%
of total assets of the Company and its consolidated subsidiaries
is authorized.
10.2 1977 Restricted Stock Award Plan, as amended (incorporated herein
by reference to Exhibit 10.2 of the Company's Annual Report on
Form 10-K for the fiscal year ended March 31, 1990).
10.3 Employees' Retirement Plan, as amended (incorporated herein by
reference to Exhibit 10.3 of the Company's Annual Report on Form
10-K for the fiscal year ended March 31, 1993).
10.4 Description of Profit Sharing Plan (incorporated herein by
reference to Exhibit 10.4 of the Company's Annual Report on Form
10-K for the fiscal year ended March 31, 2000).
10.5 Executives' Additional Compensation Plan (incorporated herein by
reference to the description of such plan set forth in the
Company's Proxy Statement dated June 18, 1993, for the Annual
Meeting of Stockholders to be held July 20, 1993, under the
caption "Executive Compensation and Other Information").
10.6 Employment Agreement, dated June 4, 1998, between the Company and
Ralph Levine (incorporated herein by reference to Exhibit 10.6 of
the Company's Annual Report on Form 10-K for the fiscal year
ended March 31, 1998).
10.6(A) Amendment, dated January 27, 2000, to the Employment Agreement
dated June 4, 1998 between the Company and Ralph Levine
(incorporated herein by reference to Exhibit 10.6(a) of the
Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 2000).
10.6(B) Amendment, dated January 25, 2001, to the Employment Agreement
dated June 4, 1998 between the Company and Ralph Levine.
10.7 Employment Agreement, dated June 4, 1998, between the Company and
Paul A. Veteri (incorporated herein by reference to Exhibit 10.7
of the Company's Annual Report on Form 10-K for the fiscal year
ended March 31, 1998).
10.7(A) Amendment, dated January 27, 2000, to the Employment Agreement
dated June 4, 1998 between the Company and Paul A. Veteri
(incorporated herein by reference to Exhibit 10.7(a) of the
Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 2000).
(CONTINUED)
9
(A)(3) EXHIBITS (CONT'D)
10.7(B) Amendment, dated January 25, 2001, to the Employment Agreement
dated June 4, 1998 between the Company and Paul A. Veteri.
10.10 Supplemental Death Benefit Agreement, as amended (incorporated
herein by reference to Exhibit 10.10 of the Company's Annual
Report on Form 10-K for the fiscal year ended March 31, 1993).
10.11 Lease Agreement, dated December 2, 1988, between the Company and
Fisher - Sixth Avenue Company and Hawaiian Sixth Avenue
Corporation (incorporated herein by reference to Exhibit 10.10 of
the Company's Annual Report on Form 10-K for the fiscal year
ended March 31, 1989).
10.12 Corporate Officer Medical Expense Reimbursement Plan
(incorporated herein by reference to Exhibit 10.12 of the
Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 1993).
10.13 Executive Medical Expense Reimbursement Plan, as amended
(incorporated herein by reference to Exhibit 10.13 to the
Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 1993).
10.14 Executive Pension Benefits Plan, as amended (incorporated herein
by reference to Exhibit 10.14 of the Company's Annual Report on
Form 10-K for the fiscal year ended March 31, 1995).
10.15 Executive Savings Plan (incorporated herein by reference to
Exhibit 10.15 of the Company's Annual Report on Form 10-K for the
fiscal year ended March 31, 1995).
10.18 1996 Long-Term Incentive Plan, as amended (incorporated herein by
reference to Exhibit 10.18 of the Company's Annual Report on Form
10-K for the fiscal year ended March 31, 1999)
10.19 Employment Agreement, dated October 2, 2000 between the
Company and T. Rosie Albright.
10.21 Letter Agreement, dated September 14, 1998, between the Company
and T. Rosie Albright (incorporated herein by reference to
Exhibit 10.21 of the Company's Annual Report on Form 10-K for the
fiscal year ended March 31, 1999).
10.21(A) Amendment, dated January 27, 2000, to the Letter Agreement, dated
September 14, 1998, between the Company and T. Rosie Albright
(incorporated herein by reference to Exhibit 10.21(a) of the
Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 2000).
(CONTINUED)
10
(A)(3) EXHIBITS (CONT'D)
10.22 Letter Agreement, dated June 4, 1998, between the Company and
Stephen R. Lang (incorporated herein by reference to Exhibit
10.22 of the Company's Annual Report on Form 10-K for the fiscal
year ended March 31, 1999).
10.22(A) Amendment, dated January 27, 2000, to the Letter Agreement,
dated June 4, 1998 between the Company and Stephen R. Lang.
(incorporated herein by reference to Exhibit 10.22(a) of the
Company's Annual Report on Form 10-K for the fiscal year
ended March 31, 2000).
10.23 Consulting Agreement dated July 21, 1999 between the Company and
Henry H. Hoyt, Jr.(incorporated herein by reference to Exhibit
10.23 of the Company's Annual Report on Form 10-K for the fiscal
year ended March 31, 2000).
10.23(A) Amendment, dated January 27, 2000, to the Consulting Agreement
dated July 21, 1999 between the Company and Henry H. Hoyt, Jr.
(incorporated herein by reference to Exhibit 10.23(a) of the
Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 2000).
10.24 Letter Agreement, dated January 1, 1999 between the Company and
Thomas G. Gerstmyer (incorporated herein by reference to Exhibit
10.24 of the Company's Annual Report on Form 10-K for the fiscal
year ended March 31, 2000).
10.24(A) Amendment, dated January 27, 2000, to the Letter Agreement dated
January 1, 1999, between the Company and Thomas G. Gerstmyer
(incorporated herein by reference to Exhibit 10.24(a) of the
Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 2000).
13 Annual Report to Stockholders for the fiscal year ended March
31, 2001
21 Subsidiaries.
23 KPMG LLP Independent Auditors' Consent
11
(A) REPORTS ON FORM 8-K
On May 7, 2001, the Company filed a report on Form 8-K stating that it
had entered into definitive agreements for the sale of the Company in a
two-step transaction in which stockholders will receive $20.30 per
share on a fully diluted basis, subject to certain tax adjustments.
Pursuant to the Asset Purchase Agreement, dated as of May 7, 2001, by
and between Armkel, LLC and the Company, the Company proposes to sell
for $739 million in cash, less certain debt outstanding at closing, the
Company's consumer products business.
Pursuant to the Agreement and Plan of Merger, dated as of May 7, 2001,
among the Company, CPI Development Corporation, MCC Acquisition
Holdings Corporation, MCC Merger Sub Corporation and MCC Acquisition
Sub Corporation, the Company proposes to sell for $408 million in cash
its remaining healthcare business, by means of a merger.
Upon consummation of the merger, the aggregate consideration estimated
to be $1.121 billion, less the corporate taxes to be paid on the sale
of the consumer products business and the cash-out of options, would be
received by the holders of the Company's outstanding Common Stock and
Class B Common Stock. Each transaction is conditioned on the other, so
one transaction will not be consummated without the other.
12
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.
CARTER-WALLACE, INC.
(Registrant)
DATED: June 21, 2001 BY: /s/ Paul A. Veteri
Paul A. Veteri
President and Chief
Operating Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the respective dates indicated:
SIGNATURE TITLE DATE
- --------- ----- ----
/s/ Ralph Levine Chairman of the Board and June 21, 2001
Ralph Levine Chief Executive Officer,
Director (Principal Execu-
tive Officer)
/s/ David M. Baldwin Director June 21, 2001
David M. Baldwin
/s/ Dr.Richard L. Cruess Director June 21, 2001
Dr. Richard L. Cruess
/s/Suzanne H. Garcia Director June 21, 2001
Suzanne H. Garcia
13
SIGNATURE TITLE DATE
- --------- ----- ----
/s/ Henry H. Hoyt, Jr. Director June 21, 2001
Henry H. Hoyt, Jr.
/s/ Scott C. Hoyt Director June 21, 2001
Scott C. Hoyt
/s/ Herbert M. Rinaldi Director June 21, 2001
Herbert M. Rinaldi
/s/ Donald J. Stack Director June 21, 2001
Donald J. Stack
/s/ Paul A. Veteri President and Chief June 21, 2001
Paul A. Veteri Operating Officer,
Director
/s/ Peter J. Griffin Vice President, Finance and June 21, 2001
Peter J. Griffin Controller, Chief Financial
Officer
14
CARTER-WALLACE, INC. AND SUBSIDIARIES
INDEX OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
The consolidated financial statements and the related report of KPMG LLP dated
May 18, 2001 appearing on pages 12 through 31 of the 2001 Annual Report to
Stockholders are incorporated herein by reference in this Form 10-K Annual
Report.
The following are set forth in this Annual Report on Form 10-K:
PAGE
INDEPENDENT AUDITORS' REPORT ON FINANCIAL
STATEMENT SCHEDULE 16
SCHEDULE II - Valuation and qualifying accounts for each
of the three years ended March 31, 2001 17
All other financial statement schedules are omitted because they are not
applicable or not required or because the information is included in the
consolidated financial statements or related notes.
15
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Carter-Wallace, Inc.:
Under date of May 18, 2001, we reported on the consolidated balance sheets of
Carter-Wallace, Inc. and subsidiaries as of March 31, 2001 and 2000, and the
related consolidated statements of earnings, retained earnings and comprehensive
earnings, and cash flows, for each of the years in the three-year period ended
March 31, 2001, as contained in the 2001 Annual Report to Stockholders. These
consolidated financial statements and our report thereon are incorporated by
reference in the Annual Report on Form 10-K for the year ended March 31, 2001.
In connection with our audits of the aforementioned consolidated financial
statements, we also audited the related financial statement schedule as listed
in the accompanying index. This financial statement schedule is the
responsibility of the Company's management. Our responsibility is to express an
opinion on this financial statement schedule based on our audits.
In our opinion, such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.
KPMG LLP
New York, New York
May 18, 2001
16
SCHEDULE II
CARTER-WALLACE, INC. AND SUBSIDIARIES
Valuation and Qualifying Accounts
Three Years Ended March 31, 2001
(in thousands of dollars)
Charged to
Balance at costs and Charged Balance
beginning expenses or to other at end
Description of period revenues accounts Deductions of period
- ------------ --------- ------------ -------- ---------- ---------
YEAR ENDED MARCH 31, 2001
Deducted from assets
to which they apply:
Allowance for
doubtful accounts:
Continuing Oper. $1,044 $ 48 $ - $ 147 $ 945
Discontinued Oper. 5,628 1,267 - 673 6,222
------ ------- ----- ------- -------
6,672 1,315 - 820(a) 7,167
------ ------- ----- ------- -------
Allowance for cash
discounts:
Continuing Oper. 619 4,339 - 4,418 540
Discontinued Oper. 739 6,479 - 6,533 685
------ ------- ----- ------- -------
1,358 10,818 - 10,951(b) 1,225
------ ------- ----- ------- -------
Total Cont. Oper. 1,663 4,387 - 4,565 1,485
Total Discont. Oper. 6,367 7,746 - 7,206 6,907
------ ------- ----- ------- -------
$8,030 $12,133 $ - $11,771 $ 8,392
------ ------- ----- ------- -------
YEAR ENDED MARCH 31, 2000
Deducted from assets
to which they apply:
Allowance for
doubtful accounts:
Continuing Oper. $1,069 $ 87 $ - $ 112` $ 1,044
Discontinued Oper. 4,894 976 - 242 5,628
------ ------- ----- ------- -------
5,963 1,063 $ - 354(a) 6,672
------ ------- ----- ------- -------
Allowance for cash
discounts:
Continuing Oper. 805 3,960 - 4,146 619
Discontinued Oper. 647 6,023 - 5,931 739
------ ------- ----- ------- -------
1,452 9,983 - 10,077(b) 1,358
------ ------- ----- ------- -------
Total Cont. Oper. 1,874 4,047 - 4,258 1,663
Total Discont. Oper. 5,541 6,999 - 6,173 6,367
------ ------- ----- ------- -------
$7,415 $11,046 $ - $10,431 $ 8,030
------ ------- ----- ------- -------
(CONTINUED)
17
SCHEDULE II (CONTINUED)
YEAR ENDED MARCH 31, 1999:
Deducted from assets
to which they apply:
Allowance for
doubtful accounts:
Continuing Oper. $1,053 $ 189 $ - $ 173 $ 1,069
Discontinued Oper. 4,663 563 - 332 4,894
------ ------- ----- ------- -------
5,716 752 - 505(a) 5,963
------ ------- ----- ------- -------
Allowance for cash
discounts:
Continuing Oper. 784 3,178 - 3,157 805
Discontinued Oper. 806 5,559 - 5,718 647
------ ------- ----- ------- -------
1,590 8,737 - 8,875(b) 1,452
------ ------- ----- ------- -------
Total Cont. Oper. 1,837 3,367 - 3,330 1,874
Total Discont. Oper. 5,469 6,122 - 6,050 5,541
------ ------- ----- ------- -------
$7,306 $9,489 $ - $9,380 $ 7,415
------ ------- ----- ------- -------
NOTES:
(A) Accounts written off net of recoveries.
(B) Net discounts allowed to customers.
18
INDEX TO EXHIBITS
14 (A)(3) EXHIBITS
2.1 Asset Purchase Agreement, dated as of May 7, 2001, by and between
Armkel,LLC and Carter-Wallace, Inc.(incorporated herein by
reference to Item 7 of the Company's Form 8-K dated May 7, 2001).
2.2 Agreement and Plan of Merger, dated as of May 7, 2001, among the
Company, CPI Development Corporation, MCC Acquisition Holdings
Corporation, MCC Merger Sub Corporation and MCC Acquisition Sub
Corporation. (incorporated herein by reference to Item 7 of the
Company's Form 8-K dated May 7, 2001).
3.1 Certificate of Incorporation, as amended, of the Company
(incorporated herein by reference to Exhibit 3.1 of the Company's
Annual Report on Form 10-K for the fiscal year ended March 31,
1992).
3.2 By-Laws of the Company, as amended through 5/15/97 (incorporated
herein by reference to Exhibit 3.2 of the Company's Annual Report
on Form 10K for the fiscal year ended March 31, 1998).
4.1 Instruments defining the rights of security holders, including
indentures -- The Company agrees to furnish to the Commission upon
request a copy of each instrument pursuant to which long- term debt
of the Company and its subsidiaries not exceeding 10% of total
assets of the Company and its consolidated subsidiaries is
authorized.
10.2 1977 Restricted Stock Award Plan, as amended (incorporated herein
by reference to Exhibit 10.2 of the Company's Annual Report on Form
10-K for the fiscal year ended March 31, 1990).
10.3 Employees' Retirement Plan, as amended (incorporated herein by
reference to Exhibit 10.3 of the Company's Annual Report on Form
10-K for the fiscal year ended March 31, 1993).
10.4 Description of Profit Sharing Plan (incorporated herein by
reference to Exhibit 10.4 of the Company's Annual Report on Form
10-K for the fiscal year ended March 31, 2000).
10.5 Executives' Additional Compensation Plan (incorporated herein by
reference to the description of such plan set forth in the
Company's Proxy Statement dated June 18, 1993, for the Annual
Meeting of Stockholders to be held July 20, 1993, under the caption
"Executive Compensation and Other Information").
10.6 Employment Agreement, dated June 4, 1998, between the Company and
Ralph Levine (incorporated herein by reference to Exhibit 10.6 of
the Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 1998).
(CONTINUED)
19
(A)(3) EXHIBITS (CONT'D)
10.6(A) Amendment, dated January 27, 2000, to the Employment Agreement
dated June 4, 1998 between the Company and Ralph Levine
(incorporated herein by reference to Exhibit 10.6(a) of the
Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 2000).
10.6(B) Amendment, dated January 25, 2001, to the Employment Agreement
dated June 4, 1998 between the Company and Ralph Levine.
10.7 Employment Agreement, dated June 4, 1998, between the Company and
Paul A. Veteri (incorporated herein by reference to Exhibit 10.7
of the Company's Annual Report on Form 10-K for the fiscal year
ended March 31, 1998).
10.7(A) Amendment, dated January 27, 2000, to the Employment Agreement
dated June 4, 1998 between the Company and Paul A. Veteri
(incorporated herein by reference to Exhibit 10.7(a) of the
Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 2000).
10.7(B) Amendment, dated January 25, 2001, to the Employment Agreement
dated June 4, 1998 between the Company and Paul A. Veteri.
10.10 Supplemental Death Benefit Agreement, as amended (incorporated
herein by reference to Exhibit 10.10 of the Company's Annual
Report on Form 10-K for the fiscal year ended March 31, 1993).
10.11 Lease Agreement, dated December 2, 1988, between the Company and
Fisher - Sixth Avenue Company and Hawaiian Sixth Avenue
Corporation (incorporated herein by reference to Exhibit 10.10 of
the Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 1989).
10.12 Corporate Officer Medical Expense Reimbursement Plan (incorporated
herein by reference to Exhibit 10.12 of the Company's Annual
Report on Form 10-K for the fiscal year ended March 31, 1993).
10.13 Executive Medical Expense Reimbursement Plan, as amended
(incorporated herein by reference to Exhibit 10.13 to the
Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 1993).
10.14 Executive Pension Benefits Plan, as amended (incorporated herein
by reference to Exhibit 10.14 of the Company's Annual Report on
Form 10-K for the fiscal year ended March 31, 1995).
10.15 Executive Savings Plan (incorporated herein by reference to
Exhibit 10.15 of the Company's Annual Report on Form 10-K for the
fiscal year ended March 31, 1995).
(CONTINUED)
20
(A)(3) EXHIBITS (CONT'D)
10.18 1996 Long-Term Incentive Plan, as amended (incorporated herein
by reference to Exhibit 10.18 of the Company's Annual Report on
Form 10-K for the fiscal year ended March 31, 1999)
10.19 Employment Agreement, dated October 2, 2000 between the
Company and T. Rosie Albright.
10.21 Letter Agreement, dated September 14, 1998, between the Company
and T. Rosie Albright (incorporated herein by reference to
Exhibit 10.21 of the Company's Annual Report on Form 10-K for
the fiscal year ended March 31, 1999).
10.21(A) Amendment, dated January 27, 2000, to the Letter Agreement,
dated September 14, 1998, between the Company and T. Rosie
Albright (incorporated herein by reference to Exhibit 10.21(a)
of the Company's Annual Report on Form 10-K for the fiscal year
ended March 31, 2000).
10.22 Letter Agreement, dated June 4, 1998, between the Company and
Stephen R. Lang (incorporated herein by reference to Exhibit
10.22 of the Company's Annual Report on Form 10-K for the fiscal
year ended March 31, 1999).
10.22(A) Amendment, dated January 27, 2000, to the Letter Agreement,
dated June 4, 1998 between the Company and Stephen R. Lang.
(incorporated herein by reference to Exhibit 10.22(a) of the
Company's Annual Report on Form 10-K for the fiscal year
ended March 31, 2000).
10.23 Consulting Agreement dated July 21, 1999 between the Company and
Henry H. Hoyt, Jr.(incorporated herein by reference to Exhibit
10.23 of the Company's Annual Report on Form 10-K for the fiscal
year ended March 31, 2000).
10.23(A) Amendment, dated January 27, 2000, to the Consulting Agreement
dated July 21, 1999 between the Company and Henry H. Hoyt, Jr.
(incorporated herein by reference to Exhibit 10.23(a) of the
Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 2000).
10.24 Letter Agreement, dated January 1, 1999 between the Company and
Thomas G. Gerstmyer (incorporated herein by reference to Exhibit
10.24 of the Company's Annual Report on Form 10-K for the fiscal
year ended March 31, 2000).
(CONTINUED)
21
(A)(3) EXHIBITS (CONT'D)
10.24(A) Amendment, dated January 27, 2000, to the Letter Agreement dated
January 1,1999, between the Company and Thomas G. Gerstmyer
(incorporated herein by reference to Exhibit 10.24(a) of the
Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 2000).
13 Annual Report to Stockholders for the fiscal year ended March
31, 2001
21 Subsidiaries.
23 KPMG LLP Independent Auditors' Consent
22