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
|
Delaware
|
13-3662955
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
|
|
One New York Plaza, New York, New York
|
10004
|
(Address of principal executive offices)
|
(Zip Code)
|
Large accelerated filer
¨
|
|
Accelerated filer
x
|
|
Non-accelerated filer
¨
|
|
Smaller reporting company
¨
|
|
|
|
|
(Do not check if a smaller reporting company)
|
|
September 30, 2016
|
|
December 31, 2015
|
||||
|
(Unaudited)
|
|
(as adjusted)
(a)
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
99.2
|
|
|
$
|
326.9
|
|
Trade receivables, less allowance for doubtful accounts of $11.0 and $10.5 as of September 30, 2016 and December 31, 2015, respectively
|
484.2
|
|
|
244.9
|
|
||
Inventories
|
519.1
|
|
|
183.8
|
|
||
Prepaid expenses and other
|
102.8
|
|
|
53.3
|
|
||
Total current assets
|
1,205.3
|
|
|
808.9
|
|
||
Property, plant and equipment, net of accumulated depreciation of $294.8 and $271.7 as of September 30, 2016 and December 31, 2015, respectively
|
312.0
|
|
|
215.3
|
|
||
Deferred income taxes
|
142.1
|
|
|
71.3
|
|
||
Goodwill
|
684.9
|
|
|
469.7
|
|
||
Intangible assets, net of accumulated amortization of $79.0 and $61.1 as of September 30, 2016 and December 31, 2015, respectively
|
657.4
|
|
|
318.0
|
|
||
Other assets
|
112.0
|
|
|
84.1
|
|
||
Total assets
|
$
|
3,113.7
|
|
|
$
|
1,967.3
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Short-term borrowings
|
$
|
11.7
|
|
|
$
|
11.3
|
|
Current portion of long-term debt
|
83.5
|
|
|
30.0
|
|
||
Accounts payable
|
307.9
|
|
|
201.3
|
|
||
Accrued expenses and other
|
344.8
|
|
|
272.4
|
|
||
Total current liabilities
|
747.9
|
|
|
515.0
|
|
||
Long-term debt
|
2,666.1
|
|
|
1,783.7
|
|
||
Long-term pension and other post-retirement plan liabilities
|
174.8
|
|
|
185.3
|
|
||
Other long-term liabilities
|
84.5
|
|
|
70.8
|
|
||
Stockholders’ deficiency:
|
|
|
|
||||
Class A Common Stock, par value $0.01 per share; 900,000,000 shares authorized; 53,862,615 and 54,088,174 shares issued as of September 30, 2016 and December 31, 2015, respectively
|
0.5
|
|
|
0.5
|
|
||
Additional paid-in capital
|
1,031.2
|
|
|
1,026.3
|
|
||
Treasury stock, at cost: 1,006,808 and 859,921 shares of Class A Common Stock as of September 30, 2016 and December 31, 2015, respectively
|
(18.6
|
)
|
|
(13.3
|
)
|
||
Accumulated deficit
|
(1,341.1
|
)
|
|
(1,355.7
|
)
|
||
Accumulated other comprehensive loss
|
(231.6
|
)
|
|
(245.3
|
)
|
||
Total stockholders’ deficiency
|
(559.6
|
)
|
|
(587.5
|
)
|
||
Total liabilities and stockholders’ deficiency
|
$
|
3,113.7
|
|
|
$
|
1,967.3
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Net sales
|
$
|
604.8
|
|
|
$
|
471.5
|
|
|
$
|
1,533.3
|
|
|
$
|
1,392.4
|
|
Cost of sales
|
243.4
|
|
|
167.8
|
|
|
568.8
|
|
|
471.4
|
|
||||
Gross profit
|
361.4
|
|
|
303.7
|
|
|
964.5
|
|
|
921.0
|
|
||||
Selling, general and administrative expenses
|
285.7
|
|
|
244.1
|
|
|
792.8
|
|
|
752.7
|
|
||||
Acquisition and integration costs
|
33.5
|
|
|
0.6
|
|
|
39.5
|
|
|
6.5
|
|
||||
Restructuring charges and other, net
|
0.5
|
|
|
4.0
|
|
|
2.3
|
|
|
0.9
|
|
||||
Operating income
|
41.7
|
|
|
55.0
|
|
|
129.9
|
|
|
160.9
|
|
||||
Other expenses, net:
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
27.4
|
|
|
21.5
|
|
|
69.3
|
|
|
62.0
|
|
||||
Amortization of debt issuance costs
|
1.7
|
|
|
1.4
|
|
|
4.6
|
|
|
4.2
|
|
||||
Loss on early extinguishment of debt
|
16.9
|
|
|
—
|
|
|
16.9
|
|
|
—
|
|
||||
Foreign currency losses (gains), net
|
1.2
|
|
|
(0.7
|
)
|
|
6.3
|
|
|
7.3
|
|
||||
Miscellaneous, net
|
(0.6
|
)
|
|
0.3
|
|
|
(0.1
|
)
|
|
0.5
|
|
||||
Other expenses, net
|
46.6
|
|
|
22.5
|
|
|
97.0
|
|
|
74.0
|
|
||||
(Loss) income from continuing operations before income taxes
|
(4.9
|
)
|
|
32.5
|
|
|
32.9
|
|
|
86.9
|
|
||||
(Benefit from) provision for income taxes
|
(0.4
|
)
|
|
24.6
|
|
|
16.0
|
|
|
53.8
|
|
||||
(Loss) income from continuing operations, net of taxes
|
(4.5
|
)
|
|
7.9
|
|
|
16.9
|
|
|
33.1
|
|
||||
Loss from discontinued operations, net of taxes
|
(0.2
|
)
|
|
(1.7
|
)
|
|
(2.3
|
)
|
|
(1.8
|
)
|
||||
Net (loss) income
|
$
|
(4.7
|
)
|
|
$
|
6.2
|
|
|
$
|
14.6
|
|
|
$
|
31.3
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
||||||
Foreign currency translation adjustments, net of tax
(a)
|
2.7
|
|
|
(2.5
|
)
|
|
8.0
|
|
|
(15.1
|
)
|
||||
Amortization of pension related costs, net of tax
(b)(d)
|
1.8
|
|
|
1.9
|
|
|
5.6
|
|
|
5.4
|
|
||||
Revaluation of derivative financial instruments, net of reclassifications into earnings
(c)
|
0.8
|
|
|
(0.7
|
)
|
|
0.1
|
|
|
(2.7
|
)
|
||||
Other comprehensive income (loss)
|
5.3
|
|
|
(1.3
|
)
|
|
13.7
|
|
|
(12.4
|
)
|
||||
Total comprehensive income
|
$
|
0.6
|
|
|
$
|
4.9
|
|
|
$
|
28.3
|
|
|
$
|
18.9
|
|
|
|
|
|
|
|
|
|
||||||||
Basic (loss) earnings per common share:
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
(0.09
|
)
|
|
$
|
0.15
|
|
|
$
|
0.32
|
|
|
$
|
0.63
|
|
Discontinued operations
|
—
|
|
|
(0.03
|
)
|
|
(0.04
|
)
|
|
(0.03
|
)
|
||||
Net (loss) income
|
$
|
(0.09
|
)
|
|
$
|
0.12
|
|
|
$
|
0.28
|
|
|
$
|
0.60
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted (loss) earnings per common share:
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
(0.09
|
)
|
|
$
|
0.15
|
|
|
$
|
0.32
|
|
|
$
|
0.63
|
|
Discontinued operations
|
—
|
|
|
(0.03
|
)
|
|
(0.04
|
)
|
|
(0.03
|
)
|
||||
Net (loss) income
|
$
|
(0.09
|
)
|
|
$
|
0.12
|
|
|
$
|
0.28
|
|
|
$
|
0.60
|
|
|
|
|
|
|
|
|
|
|
|||||||
Weighted average number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|||||||
Basic
|
52,498,246
|
|
|
52,440,580
|
|
|
52,498,840
|
|
|
52,422,660
|
|
||||
Diluted
|
52,498,246
|
|
|
52,603,711
|
|
|
52,617,740
|
|
|
52,593,207
|
|
(a)
|
Net of expense (benefit) of
$0.7 million
and (
$3.5 million
) for the
three months ended September 30, 2016
and
2015
, respectively, and
$1.3 million
and (
$6.3 million
) for the
nine months ended September 30, 2016
and
2015
, respectively.
|
(b)
|
Net of tax expense of
$0.4 million
and
$0.3 million
for each of the
three months ended September 30, 2016
and
2015
, respectively, and
$1.1 million
and
$1.0 million
for each of the
nine months ended September 30, 2016
and
2015
.
|
(c)
|
Net of tax expense (benefit) of
$0.5 million
and (
$0.5 million
) for the
three months ended September 30, 2016
and
2015
, respectively, and
$0.1 million
and (
$1.7 million
) for the
nine months ended September 30, 2016
and
2015
, respectively.
|
(d)
|
This other comprehensive income component is included in the computation of net periodic benefit (income) costs. See Note 11, “Pension and Post-Retirement Benefits,” for additional information regarding net periodic benefit (income) costs.
|
|
Common Stock
|
|
Additional Paid-In-Capital
|
|
Treasury Stock
|
|
Accumulated Deficit
|
|
Accumulated Other Comprehensive Loss
|
|
Total Stockholders’ Deficiency
|
||||||||||||
Balance, January 1, 2016
|
$
|
0.5
|
|
|
$
|
1,026.3
|
|
|
$
|
(13.3
|
)
|
|
$
|
(1,355.7
|
)
|
|
$
|
(245.3
|
)
|
|
$
|
(587.5
|
)
|
Treasury stock acquired, at cost
(a)
|
|
|
|
|
(2.6
|
)
|
|
|
|
|
|
(2.6
|
)
|
||||||||||
Repurchase of common stock
(b)
|
|
|
|
|
(2.7
|
)
|
|
|
|
|
|
(2.7
|
)
|
||||||||||
Stock-based compensation amortization
|
|
|
4.8
|
|
|
|
|
|
|
|
|
4.8
|
|
||||||||||
Excess tax benefits from stock-based compensation
|
|
|
0.1
|
|
|
|
|
|
|
|
|
0.1
|
|
||||||||||
Net income
|
|
|
|
|
|
|
14.6
|
|
|
|
|
14.6
|
|
||||||||||
Other comprehensive income, net
(c)
|
|
|
|
|
|
|
|
|
13.7
|
|
|
13.7
|
|
||||||||||
Balance, September 30, 2016
|
$
|
0.5
|
|
|
$
|
1,031.2
|
|
|
$
|
(18.6
|
)
|
|
$
|
(1,341.1
|
)
|
|
$
|
(231.6
|
)
|
|
$
|
(559.6
|
)
|
(a)
|
Pursuant to the share withholding provisions of the Fourth Amended and Restated Revlon, Inc. Stock Plan (the “Stock Plan”), certain senior executives, in lieu of paying certain withholding taxes on the vesting of restricted stock, authorized the withholding of an aggregate
73,992
shares of Revlon, Inc. Class A Common Stock during the nine months ended September 30, 2016, to satisfy certain minimum statutory tax withholding requirements related to the vesting of such shares. These withheld shares were recorded as treasury stock using the cost method, at a price per share of
$35.00
during the nine months ended September 30, 2016, based on the closing price of Revlon, Inc. Class A Common Stock as reported on the NYSE consolidated tape on the vesting date, for a total of
$2.6 million
. See Note 15, "Stock Compensation Plan" to the Consolidated Financial Statements in Revlon, Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 2015, filed with the SEC on February 26, 2016 (the "2015 Form 10-K") for details regarding restricted stock awards under the Stock Plan.
|
(b)
|
On April 21, 2016, in connection with his separation from the Company, the Company repurchased
72,895
shares of Revlon, Inc. Class A Common Stock (representing vested shares of restricted stock) from Lorenzo Delpani, the Company's former President and Chief Executive Officer, at a price of
$36.83
per share based upon the NYSE closing price of Revlon, Inc. Class A Common Stock on April 20, 2016, for a total purchase price of
$2.7 million
.
|
(c)
|
See Note 13, “Accumulated Other Comprehensive Loss,” regarding the changes in the accumulated balances for each component of other comprehensive income during the nine months ended September 30, 2016.
|
|
Nine Months Ended September 30,
|
||||||
|
2016
|
|
2015
(as adjusted)
(a)
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
||||
Net income
|
$
|
14.6
|
|
|
$
|
31.3
|
|
Adjustments to reconcile net income to net cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization
|
81.0
|
|
|
76.8
|
|
||
Foreign currency losses from re-measurement
|
5.5
|
|
|
10.5
|
|
||
Amortization of debt discount
|
1.1
|
|
|
1.1
|
|
||
Stock-based compensation amortization
|
4.8
|
|
|
3.8
|
|
||
Provision for deferred income taxes
|
6.9
|
|
|
34.6
|
|
||
Loss on early extinguishment of debt, net
|
16.9
|
|
|
—
|
|
||
Amortization of debt issuance costs
|
4.6
|
|
|
4.2
|
|
||
Loss (gain) on sale of certain assets
|
0.2
|
|
|
(6.5
|
)
|
||
Pension and other post-retirement income
|
(0.5
|
)
|
|
(1.6
|
)
|
||
Change in assets and liabilities:
|
|
|
|
|
|||
Increase in trade receivables
|
(112.0
|
)
|
|
(27.9
|
)
|
||
Decrease (increase) in inventories
|
5.0
|
|
|
(62.4
|
)
|
||
Increase in prepaid expenses and other current assets
|
(20.0
|
)
|
|
(20.5
|
)
|
||
(Decrease) increase in accounts payable
|
(3.5
|
)
|
|
30.0
|
|
||
Decrease in accrued expenses and other current liabilities
|
(39.5
|
)
|
|
(16.5
|
)
|
||
Pension and other post-retirement plan contributions
|
(6.0
|
)
|
|
(15.5
|
)
|
||
Purchases of permanent displays
|
(25.9
|
)
|
|
(32.5
|
)
|
||
Other, net
|
(4.0
|
)
|
|
(11.5
|
)
|
||
Net cash used in operating activities
|
(70.8
|
)
|
|
(2.6
|
)
|
||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
||||
Capital expenditures
|
(33.1
|
)
|
|
(27.0
|
)
|
||
Business acquisitions, net of cash acquired
|
(1,028.7
|
)
|
|
(34.2
|
)
|
||
Proceeds from the sale of certain assets
|
0.5
|
|
|
5.8
|
|
||
Net cash used in investing activities
|
(1,061.3
|
)
|
|
(55.4
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
||||
Net (decrease) increase in short-term borrowings and overdraft
|
(2.6
|
)
|
|
4.3
|
|
||
Repayments under the Acquisition Term Loan
|
(15.1
|
)
|
|
(17.6
|
)
|
||
Prepayments under the 2011 Term Loan
|
(11.5
|
)
|
|
(12.1
|
)
|
||
Repayment of Acquisition Term Loan
|
(658.6
|
)
|
|
—
|
|
||
Repayment of 2011 Term Loan
|
(651.4
|
)
|
|
—
|
|
||
Borrowings under the 2016 Term Loan Facility
|
1,791.0
|
|
|
—
|
|
||
Borrowings under the 2016 Revolving Credit Facility
|
65.4
|
|
|
—
|
|
||
Proceeds from the issuance of 6.25% Senior Notes
|
450.0
|
|
|
—
|
|
||
Payment of financing costs
|
(61.5
|
)
|
|
—
|
|
||
Treasury stock purchased
|
(2.7
|
)
|
|
—
|
|
||
Other financing activities
|
(2.2
|
)
|
|
(3.0
|
)
|
||
Net cash provided by (used in) financing activities
|
900.8
|
|
|
(28.4
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
3.6
|
|
|
(7.7
|
)
|
||
Net decrease in cash and cash equivalents
|
(227.7
|
)
|
|
(94.1
|
)
|
||
Cash and cash equivalents at beginning of period
|
326.9
|
|
|
275.3
|
|
||
Cash and cash equivalents at end of period
|
$
|
99.2
|
|
|
$
|
181.2
|
|
Supplemental schedule of cash flow information:
|
|
|
|
||||
Cash paid during the period for:
|
|
|
|
||||
Interest
|
$
|
68.4
|
|
|
$
|
66.1
|
|
Income taxes, net of refunds
|
19.4
|
|
|
21.3
|
|
||
Supplemental schedule of non-cash investing and financing activities:
|
|
|
|
||||
Treasury stock received to satisfy certain minimum tax withholding liabilities
|
$
|
2.6
|
|
|
$
|
2.0
|
|
Consolidated Balance Sheets
|
|
Total as reported at 12/31/2015
|
|
Adjustment
|
|
Total as adjusted at 12/31/2015
|
||||||
Deferred income taxes - current
|
|
$
|
58.0
|
|
|
$
|
(58.0
|
)
|
|
$
|
—
|
|
Deferred income taxes - noncurrent
|
|
40.3
|
|
|
31.0
|
|
|
71.3
|
|
|||
Other long-term liabilities
|
|
97.8
|
|
|
(27.0
|
)
|
|
70.8
|
|
|||
|
|
|
|
|
|
|
||||||
Consolidated Statements of Cash Flows
|
|
Total as reported at 9/30/2015
|
|
Adjustment
|
|
Total as adjusted at 9/30/2015
|
||||||
Increase in prepaid expense and other current assets
|
|
$
|
(20.3
|
)
|
|
$
|
(0.2
|
)
|
|
$
|
(20.5
|
)
|
Decrease in accrued expenses and other current liabilities
|
|
(16.4
|
)
|
|
(0.1
|
)
|
|
(16.5
|
)
|
|||
Increase in other, net
|
|
(11.8
|
)
|
|
0.3
|
|
|
(11.5
|
)
|
Consolidated Balance Sheets
|
|
Total as reported at 12/31/2015
|
|
Adjustment
|
|
Total as adjusted at 12/31/2015
|
||||||
Long-Term Debt
|
|
$
|
1,803.7
|
|
|
$
|
(20.0
|
)
|
|
$
|
1,783.7
|
|
Other Assets
|
|
104.1
|
|
|
(20.0
|
)
|
|
84.1
|
|
|
As of
September 7, 2016
|
||
Purchase price of Elizabeth Arden common stock
(1)
|
$
|
431.5
|
|
Repayment of Existing Elizabeth Arden senior notes
(2)
|
350.0
|
|
|
Repayment of Elizabeth Arden revolving credit facility, including accrued interest
(3)
|
142.5
|
|
|
Repayment of Elizabeth Arden Second lien credit facility, including accrued interest
(3)
|
25.0
|
|
|
Repurchase of Elizabeth Arden preferred stock
(4)
|
55.0
|
|
|
Payment of accrued interest and call premium on Elizabeth Arden Existing Senior Notes
(5)
|
27.4
|
|
|
Payment of Elizabeth Arden dividends payable at Acquisition Date
(6)
|
2.9
|
|
|
Total Purchase Price
|
$
|
1,034.3
|
|
(1)
|
All of Elizabeth Arden’s issued and outstanding common stock was canceled and extinguished on the Acquisition Date and converted into the right to receive
$14.00
in cash, without interest, less any required withholding taxes, and was paid by Products Corporation upon the completion of the Acquisition. The
$431.5 million
purchase price for Elizabeth Arden common stock includes the settlement of all outstanding Elizabeth Arden stock options and all outstanding Elizabeth Arden restricted share units at the Acquisition Date for a total cash payment of
$11.1 million
.
|
(2)
|
The purchase price includes the repurchase of the entire $
350.0 million
aggregate principal amount outstanding of Elizabeth Arden’s
7.375%
senior notes due 2021 (the “Elizabeth Arden Existing Senior Notes”).
|
(3)
|
The purchase price includes the repayment of the entire
$142.0 million
aggregate principal amount of borrowings outstanding as of the Acquisition Date under Elizabeth Arden’s
$300.0 million
revolving credit facility and the entire
$25.0 million
aggregate principal amount of borrowings outstanding as of the Acquisition Date under Elizabeth Arden's second lien credit facility;
|
(4)
|
The purchase price includes
$55.0 million
that was paid to retire the
$55.0 million
liquidation preference of all of the issued and outstanding
50,000
shares of Elizabeth Arden preferred stock, par value
$0.01
per share (the “Elizabeth Arden Preferred Stock”), which amount includes a
$5.0 million
change of control premium.
|
(5)
|
Interest on the Elizabeth Arden Existing Senior Notes accrued at a rate of
7.375%
per annum and was payable semi-annually on March 15 and September 15 of every year. The approximately
$12.3 million
of accrued and unpaid interest was calculated based on
176 days
of accrued interest as of the Acquisition Date. Pursuant to the terms of the indenture governing the Elizabeth Arden Existing Senior Notes, upon a change in control, such notes were subject to repurchase at a price equal to
103.69%
of their principal amount, plus accrued and unpaid interest and additional interest, if any, to the date of such repurchase. The repurchase of the Elizabeth Arden Existing Senior Notes was consummated on October 7, 2016.
|
(6)
|
The purchase price includes the payment of approximately
$2.9 million
in accrued dividends payable at the Acquisition Date to the holders of Elizabeth Arden Preferred Stock.
|
|
Amounts Recognized at September 7, 2016
|
||
Cash
|
$
|
41.1
|
|
Accounts Receivable
|
132.6
|
|
|
Inventories
(a)
|
342.5
|
|
|
Prepaid expenses and other current assets
|
30.7
|
|
|
Property and equipment
|
91.2
|
|
|
Deferred taxes, net
(b)
|
68.7
|
|
|
Intangible assets
|
332.8
|
|
|
Goodwill
|
202.0
|
|
|
Other assets
|
21.1
|
|
|
Total assets acquired
|
1,262.7
|
|
|
Accounts payable
|
(116.0
|
)
|
|
Accrued expenses
|
(109.3
|
)
|
|
Other long-term liabilities
|
(3.1
|
)
|
|
Total liabilities acquired
|
(228.4
|
)
|
|
Total consideration transferred
|
$
|
1,034.3
|
|
|
Amounts Recognized at September, 7 2016
|
|
Remaining Useful Life
(in years)
|
||
Trademarks, indefinite-lived
|
$
|
142.0
|
|
|
Indefinite
|
Trademarks, finite lived
|
15.0
|
|
|
15.0
|
|
Technology
|
2.5
|
|
|
10.0
|
|
Customer relationships
|
117.0
|
|
|
16.0
|
|
License agreements
|
24.0
|
|
|
19.0
|
|
Distribution rights
|
31.0
|
|
|
18.0
|
|
Favorable lease commitments
|
1.3
|
|
|
3.0
|
|
Total acquired intangible assets
|
$
|
332.8
|
|
|
|
|
Unaudited Pro Forma Results
|
||||||||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net sales
|
$
|
745.1
|
|
|
$
|
737.5
|
|
|
$
|
2,058.2
|
|
|
$
|
2,025.5
|
|
Income (loss) from continuing operations, before income taxes
|
(4.3
|
)
|
|
9.2
|
|
|
(22.4
|
)
|
|
(86.3
|
)
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
($ in millions)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Interest Expense
|
|
|
|
|
|
|
|
||||||||
Pro forma interest on New Senior Facilities and 6.25% Senior Notes
|
$
|
26.7
|
|
|
$
|
26.9
|
|
|
$
|
79.4
|
|
|
$
|
79.9
|
|
Reversal of Elizabeth Arden’s historical interest expense
|
(5.2
|
)
|
|
(6.5
|
)
|
|
(18.2
|
)
|
|
(19.2
|
)
|
||||
Company historical interest expense, as reflected in the historical consolidated financial statements
|
(12.5
|
)
|
|
(12.8
|
)
|
|
(37.6
|
)
|
|
(38.2
|
)
|
||||
Total Adjustment for Pro Forma Interest Expense
|
$
|
9.0
|
|
|
$
|
7.6
|
|
|
$
|
23.6
|
|
|
$
|
22.5
|
|
Debt issuance costs
|
|
|
|
|
|
|
|
||||||||
Pro forma amortization of debt issuance costs
|
$
|
1.8
|
|
|
$
|
1.8
|
|
|
$
|
5.3
|
|
|
$
|
5.3
|
|
Company historical amortization of debt issuance costs, as reflected in the historical consolidated financial statements
|
(1.1
|
)
|
|
(1.3
|
)
|
|
(3.3
|
)
|
|
(3.3
|
)
|
||||
Reversal of Elizabeth Arden’s historical amortization of debt issuance costs
|
(0.4
|
)
|
|
(0.4
|
)
|
|
(1.3
|
)
|
|
(1.1
|
)
|
||||
Total Adjustment for Pro Forma Amortization of Debt Issuance Costs
|
$
|
0.3
|
|
|
$
|
0.1
|
|
|
$
|
0.7
|
|
|
$
|
0.9
|
|
|
Amounts Recognized at May 31, 2016 (Provisional)
(a)
|
|
Adjustments
|
|
Amounts Recognized at May 31, 2016 (Adjusted)
|
||||||
Inventory
|
$
|
0.8
|
|
|
$
|
—
|
|
|
$
|
0.8
|
|
Purchased Intangible Assets
(b)
|
19.7
|
|
|
(0.2
|
)
|
|
19.5
|
|
|||
Goodwill
|
8.6
|
|
|
0.2
|
|
|
8.8
|
|
|||
Total consideration transferred
|
$
|
29.1
|
|
|
$
|
—
|
|
|
$
|
29.1
|
|
|
Restructuring Charges and Other, Net
|
||||||||||
|
Employee Severance and Other Personnel Benefits
|
|
Other
|
|
Total Restructuring Charges
|
||||||
Charges incurred through December 31, 2015
|
$
|
9.4
|
|
|
$
|
0.1
|
|
|
$
|
9.5
|
|
Charges incurred in the nine months ended September 30, 2016
|
0.9
|
|
|
0.6
|
|
|
1.5
|
|
|||
Cumulative charges incurred through September 30, 2016
|
$
|
10.3
|
|
|
$
|
0.7
|
|
|
$
|
11.0
|
|
Total expected charges
|
$
|
10.3
|
|
|
$
|
1.7
|
|
|
$
|
12.0
|
|
|
|
|
|
|
|
|
Utilized, Net
|
|
|
||||||||||||||
Balance
Beginning of Year
|
|
(Income) Expense, Net
|
|
Foreign Currency Translation
|
|
Cash
|
|
Non-cash
|
|
Balance
End of Period
|
|||||||||||||
2015 Efficiency Program:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Employee severance and other personnel benefits
|
$
|
6.6
|
|
|
$
|
0.9
|
|
|
$
|
—
|
|
|
$
|
(2.3
|
)
|
|
$
|
—
|
|
|
$
|
5.2
|
|
Other
|
0.1
|
|
|
0.6
|
|
|
—
|
|
|
(0.4
|
)
|
|
(0.1
|
)
|
|
0.2
|
|
||||||
Integration Program:
(a)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Employee severance and other personnel benefits
|
0.8
|
|
|
—
|
|
|
—
|
|
|
(0.8
|
)
|
|
—
|
|
|
—
|
|
||||||
Other
|
0.1
|
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
||||||
December 2013 Program:
(b)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Employee severance and other personnel benefits
|
1.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.2
|
|
||||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Other immaterial actions:
(c)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Employee severance and other personnel benefits
|
2.3
|
|
|
2.0
|
|
|
—
|
|
|
(2.8
|
)
|
|
—
|
|
|
1.5
|
|
||||||
Other
|
0.7
|
|
|
0.6
|
|
|
—
|
|
|
(0.6
|
)
|
|
—
|
|
|
0.7
|
|
||||||
Total restructuring reserve
|
$
|
11.8
|
|
|
$
|
4.1
|
|
|
$
|
—
|
|
|
$
|
(7.0
|
)
|
|
$
|
(0.1
|
)
|
|
$
|
8.8
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net sales
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Loss from discontinued operations, before taxes
|
(0.2
|
)
|
|
(1.7
|
)
|
|
(2.3
|
)
|
|
(1.8
|
)
|
||||
Provision for income taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Loss from discontinued operations, net of taxes
|
(0.2
|
)
|
|
(1.7
|
)
|
|
(2.3
|
)
|
|
(1.8
|
)
|
|
September 30, 2016
|
|
December 31, 2015
|
||||
Cash and cash equivalents
|
$
|
1.7
|
|
|
$
|
2.0
|
|
Trade receivables, net
|
0.2
|
|
|
0.2
|
|
||
Total current assets
|
1.9
|
|
|
2.2
|
|
||
Total assets
|
$
|
1.9
|
|
|
$
|
2.2
|
|
|
|
|
|
||||
Accounts payable
|
$
|
0.6
|
|
|
$
|
0.7
|
|
Accrued expenses and other
|
3.4
|
|
|
3.6
|
|
||
Total current liabilities
|
4.0
|
|
|
4.3
|
|
||
Total liabilities
|
$
|
4.0
|
|
|
$
|
4.3
|
|
|
September 30, 2016
|
|
December 31, 2015
|
||||
Raw materials and supplies
|
$
|
90.6
|
|
|
$
|
58.2
|
|
Work-in-process
|
33.2
|
|
|
8.3
|
|
||
Finished goods
|
395.3
|
|
|
117.3
|
|
||
|
$
|
519.1
|
|
|
$
|
183.8
|
|
|
Consumer
|
|
Professional
|
|
Elizabeth Arden
|
|
Other
|
|
Total
|
||||||||||
Balance at January 1, 2016
|
$
|
210.1
|
|
|
$
|
240.7
|
|
|
$
|
—
|
|
|
$
|
18.9
|
|
|
$
|
469.7
|
|
Goodwill acquired
(a)
|
15.1
|
|
|
—
|
|
|
202.0
|
|
|
—
|
|
|
217.1
|
|
|||||
Foreign currency translation adjustment
|
—
|
|
|
0.3
|
|
|
—
|
|
|
(2.2
|
)
|
|
(1.9
|
)
|
|||||
Balance at September 30, 2016
|
$
|
225.2
|
|
|
$
|
241.0
|
|
|
$
|
202.0
|
|
|
$
|
16.7
|
|
|
$
|
684.9
|
|
|
September 30, 2016
|
||||||||||
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
||||||
Finite-lived intangible assets:
|
|
|
|
|
|
||||||
Trademarks and Licenses
|
$
|
187.6
|
|
|
$
|
(46.1
|
)
|
|
$
|
141.5
|
|
Customer relationships
|
249.1
|
|
|
(26.2
|
)
|
|
222.9
|
|
|||
Patents and Internally-Developed IP
|
20.4
|
|
|
(5.7
|
)
|
|
14.7
|
|
|||
Distribution rights
|
34.0
|
|
|
(1.0
|
)
|
|
33.0
|
|
|||
Other
|
1.3
|
|
|
—
|
|
|
1.3
|
|
|||
Total finite-lived intangible assets
|
$
|
492.4
|
|
|
$
|
(79.0
|
)
|
|
$
|
413.4
|
|
|
|
|
|
|
|
||||||
Indefinite-lived intangible assets:
|
|
|
|
|
|
||||||
Trade Names
|
$
|
244.0
|
|
|
$
|
—
|
|
|
$
|
244.0
|
|
Total indefinite-lived intangible assets
|
$
|
244.0
|
|
|
$
|
—
|
|
|
$
|
244.0
|
|
|
|
|
|
|
|
||||||
Total intangible assets
|
$
|
736.4
|
|
|
$
|
(79.0
|
)
|
|
$
|
657.4
|
|
|
|
|
|
|
|
||||||
|
December 31, 2015
|
||||||||||
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
||||||
Finite-lived intangible assets:
|
|
|
|
|
|
||||||
Trademarks and Licenses
|
$
|
145.0
|
|
|
$
|
(36.0
|
)
|
|
$
|
109.0
|
|
Customer relationships
|
118.8
|
|
|
(20.5
|
)
|
|
98.3
|
|
|||
Patents and Internally-Developed IP
|
16.8
|
|
|
(4.0
|
)
|
|
12.8
|
|
|||
Distribution rights
|
3.5
|
|
|
(0.6
|
)
|
|
2.9
|
|
|||
Total finite-lived intangible assets
|
$
|
284.1
|
|
|
$
|
(61.1
|
)
|
|
$
|
223.0
|
|
|
|
|
|
|
|
||||||
Indefinite-lived intangible assets:
|
|
|
|
|
|
||||||
Trade Names
|
$
|
95.0
|
|
|
$
|
—
|
|
|
$
|
95.0
|
|
Total indefinite-lived intangible assets
|
$
|
95.0
|
|
|
$
|
—
|
|
|
$
|
95.0
|
|
|
|
|
|
|
|
||||||
Total intangible assets
|
$
|
379.1
|
|
|
$
|
(61.1
|
)
|
|
$
|
318.0
|
|
|
Estimated Amortization Expense
|
||
2016
|
$
|
8.6
|
|
2017
|
36.1
|
|
|
2018
|
35.3
|
|
|
2019
|
32.2
|
|
|
2020
|
31.2
|
|
|
Thereafter
|
270.0
|
|
|
Total
|
$
|
413.4
|
|
|
September 30, 2016
|
|
December 31, 2015
|
||||
Sales returns and allowances
|
$
|
47.2
|
|
|
$
|
61.1
|
|
Compensation and related benefits
|
68.0
|
|
|
75.6
|
|
||
Advertising and promotional costs
|
65.1
|
|
|
38.4
|
|
||
Taxes
|
35.3
|
|
|
20.8
|
|
||
Interest
|
12.2
|
|
|
12.4
|
|
||
Restructuring reserve
|
8.8
|
|
|
11.8
|
|
||
Other
|
108.2
|
|
|
52.3
|
|
||
|
$
|
344.8
|
|
|
$
|
272.4
|
|
|
September 30, 2016
|
|
December 31, 2015
|
||||
2016 Term Loan Facility: 2016 Term Loan due 2023, net of discounts and debt issuance costs (see (i) below)
|
$
|
1,750.9
|
|
|
$
|
—
|
|
Amended Term Loan Facility: Acquisition Term Loan due 2019, net of discounts and debt issuance costs
(a)
|
—
|
|
|
662.1
|
|
||
Amended Term Loan Facility: 2011 Term Loan due 2017, net of discounts and debt issuance costs
(a)
|
—
|
|
|
658.5
|
|
||
2016 Revolving Credit Facility, due 2021 (see (ii) below)
|
65.4
|
|
|
—
|
|
||
6.25% Senior Notes due 2024, net of debt issuance costs (see (iii) below)
|
439.2
|
|
|
—
|
|
||
5.75% Senior Notes due 2021, net of debt issuance costs
(b)
|
493.5
|
|
|
492.5
|
|
||
Spanish Government Loan due 2025
(c)
|
0.6
|
|
|
0.6
|
|
||
|
2,749.6
|
|
|
1,813.7
|
|
||
Less current portion (*)
|
(83.5
|
)
|
|
(30.0
|
)
|
||
|
$
|
2,666.1
|
|
|
$
|
1,783.7
|
|
(a)
|
See Note 11, "Long-Term Debt," to the Consolidated Financial Statements in Revlon, Inc.'s 2015 Form 10-K for certain details regarding Products Corporation's Amended Term Loan Agreement as of December 31, 2015, which facility was comprised of: (i) the term loan due November 19, 2017 in the original aggregate amount of
$675.0 million
(the "2011 Term Loan"); and (ii) the term loan due October 8, 2019 in the original aggregate amount of
$700.0 million
(the "Acquisition Term Loan") which, respectively, had
$651.4 million
and
$658.6 million
in aggregate principal balance outstanding upon their complete refinancing on the September 7, 2016 Elizabeth Arden Acquisition Date (together, the "Amended Term Loan Facility" and the "Amended Term Loan Agreement," respectively). In connection with the Elizabeth Arden Acquisition and related financing transactions, the 2011 Term Loan and Acquisition Term Loan were completely refinanced on the Elizabeth Arden Acquisition Date. See below for 2016 debt related transactions.
|
(b)
|
See Note 11, "Long-Term Debt," to the Consolidated Financial Statements in Revlon, Inc.'s 2015 Form 10-K for certain details regarding Products Corporation's
5.75%
Senior Notes that mature on February 15, 2021. The aggregate principal amount outstanding at September 30, 2016 was
$500 million
. Such notes remain outstanding following the Elizabeth Arden Acquisition and related financing transactions.
|
(d)
|
See Note 11, "Long-Term Debt," to the Consolidated Financial Statements in Revlon, Inc.'s 2015 Form 10-K for certain details regarding the euro-denominated loan payable to the Spanish government that matures on June 30, 2025.
|
Period
|
|
Optimal Redemption Premium Percentage
|
|
2019
|
|
104.688
|
%
|
2020
|
|
103.125
|
%
|
2021
|
|
101.563
|
%
|
2022 and thereafter
|
|
100.000
|
%
|
•
|
Level 1: Fair valuing the asset or liability using observable inputs, such as quoted prices in active markets for identical assets or liabilities;
|
•
|
Level 2: Fair valuing the asset or liability using inputs other than quoted prices that are observable for the applicable asset or liability, either directly or indirectly, such as quoted prices for similar (as opposed to identical) assets or
|
•
|
Level 3: Fair valuing the asset or liability using unobservable inputs that reflect the Company’s own assumptions regarding the applicable asset or liability.
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Derivatives:
|
|
|
|
|
|
|
|
||||||||
FX Contracts
(a)
|
$
|
1.4
|
|
|
$
|
—
|
|
|
$
|
1.4
|
|
|
$
|
—
|
|
Total assets at fair value
|
$
|
1.4
|
|
|
$
|
—
|
|
|
$
|
1.4
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Derivatives:
|
|
|
|
|
|
|
|
||||||||
FX Contracts
(a)
|
$
|
3.1
|
|
|
$
|
—
|
|
|
$
|
3.1
|
|
|
$
|
—
|
|
2013 Interest Rate Swap
(b)
|
6.3
|
|
|
—
|
|
|
6.3
|
|
|
—
|
|
||||
Total liabilities at fair value
|
$
|
9.4
|
|
|
$
|
—
|
|
|
$
|
9.4
|
|
|
$
|
—
|
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Derivatives:
|
|
|
|
|
|
|
|
||||||||
FX Contracts
(a)
|
$
|
2.0
|
|
|
$
|
—
|
|
|
$
|
2.0
|
|
|
$
|
—
|
|
Total assets at fair value
|
$
|
2.0
|
|
|
$
|
—
|
|
|
$
|
2.0
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Derivatives:
|
|
|
|
|
|
|
|
||||||||
FX Contracts
(a)
|
$
|
0.6
|
|
|
$
|
—
|
|
|
$
|
0.6
|
|
|
$
|
—
|
|
2013 Interest Rate Swap
(b)
|
$
|
6.5
|
|
|
$
|
—
|
|
|
$
|
6.5
|
|
|
$
|
—
|
|
Total liabilities at fair value
|
$
|
7.1
|
|
|
$
|
—
|
|
|
$
|
7.1
|
|
|
$
|
—
|
|
(a)
|
The fair value of the Company’s foreign currency forward exchange contracts ("FX Contracts") was measured based on observable market transactions for similar transactions in actively quoted markets of spot and forward rates on the respective dates. See Note 10, “Financial Instruments," to the Unaudited Consolidated Financial Statements in this Form 10-Q.
|
(b)
|
The fair value of Products Corporation's 2013 Interest Rate Swap (as hereinafter defined) was measured based on the implied forward rates from the U.S. Dollar three-month LIBOR yield curve on the respective dates. See Note 10, “Financial Instruments.”
|
|
Fair Value
|
|
|
||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Carrying Value
|
||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Long-term debt, including current portion
|
$
|
—
|
|
|
$
|
2,842.9
|
|
|
$
|
—
|
|
|
$
|
2,842.9
|
|
|
$
|
2,749.6
|
|
|
Fair Value
|
|
|
||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Carrying Value
|
||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Long-term debt, including current portion
|
$
|
—
|
|
|
$
|
1,818.0
|
|
|
$
|
—
|
|
|
$
|
1,818.0
|
|
|
$
|
1,813.7
|
|
(a)
|
Fair Values of Derivative Financial Instruments in the Consolidated Balance Sheets:
|
|
Fair Values of Derivative Instruments
|
||||||||||||||||||
|
Assets
|
|
Liabilities
|
||||||||||||||||
|
Balance Sheet
|
|
September 30,
2016 |
|
December 31,
2015 |
|
Balance Sheet
|
|
September 30,
2016 |
|
December 31,
2015 |
||||||||
|
Classification
|
|
Fair Value
|
|
Fair Value
|
|
Classification
|
|
Fair Value
|
|
Fair Value
|
||||||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|||||||||||
2013 Interest Rate Swap
(i)
|
Prepaid expenses and other
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Accrued expenses and other
|
|
$
|
—
|
|
|
$
|
4.0
|
|
|
Other assets
|
|
—
|
|
|
—
|
|
|
Other long-term liabilities
|
|
—
|
|
|
2.5
|
|
||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|||||||||||
FX Contracts
(ii)
|
Prepaid expenses and other
|
|
$
|
1.4
|
|
|
$
|
2.0
|
|
|
Accrued Expenses
|
|
$
|
3.1
|
|
|
$
|
0.6
|
|
2013 Interest Rate Swap
(i)
|
Prepaid expenses and other
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Accrued expenses and other
|
|
$
|
4.0
|
|
|
$
|
—
|
|
|
Other assets
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Other long-term liabilities
|
|
$
|
2.3
|
|
|
$
|
—
|
|
(a)
|
Net of tax expense (benefit) of
$0.5 million
and (
$0.5 million
) for the
three months ended September 30,
2016 and 2015, respectively, and
$0.1 million
and (
$1.7 million
) for the
nine months ended September 30,
2016 and 2015, respectively.
|
|
Income Statement Classification
|
|
Amount of Gain (Loss) Recognized in Net Income
|
|||||||||||||||
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|||||||||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
|
||||||||||
2013 Interest Rate Swap
|
Interest Expense
|
|
$
|
(1.0
|
)
|
|
$
|
(1.0
|
)
|
|
$
|
(3.2
|
)
|
|
$
|
(1.5
|
)
|
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
||||||||||
FX Contracts
|
Foreign currency gain (loss), net
|
|
$
|
(0.3
|
)
|
|
$
|
2.3
|
|
|
$
|
(0.8
|
)
|
|
$
|
3.2
|
|
|
2013 Interest Rate Swap
|
Miscellaneous, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Pension Plans |
Other
Post-Retirement Benefit Plans |
|||||||||||||
|
Three Months Ended September 30,
|
||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net periodic benefit (income) costs:
|
|
||||||||||||||
Service cost
|
$
|
0.1
|
|
|
$
|
0.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
|
5.2
|
|
|
7.2
|
|
|
0.1
|
|
|
0.1
|
|
||||
Expected return on plan assets
|
(7.7
|
)
|
|
(10.0
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization of actuarial loss
|
2.2
|
|
|
2.2
|
|
|
—
|
|
|
—
|
|
||||
|
(0.2
|
)
|
|
(0.4
|
)
|
|
0.1
|
|
|
0.1
|
|
||||
Portion allocated to Revlon Holdings
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
|
$
|
(0.2
|
)
|
|
$
|
(0.4
|
)
|
|
$
|
0.1
|
|
|
$
|
0.1
|
|
|
Pension Plans |
Other
Post-Retirement Benefit Plans |
|||||||||||||
|
Nine Months Ended September 30,
|
||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net periodic benefit (income) costs:
|
|
||||||||||||||
Service cost
|
$
|
0.4
|
|
|
$
|
0.6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
|
15.5
|
|
|
21.5
|
|
|
0.3
|
|
|
0.3
|
|
||||
Expected return on plan assets
|
(23.3
|
)
|
|
(30.3
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization of actuarial loss
|
6.6
|
|
|
6.3
|
|
|
0.1
|
|
|
0.1
|
|
||||
|
(0.8
|
)
|
|
(1.9
|
)
|
|
0.4
|
|
|
0.4
|
|
||||
Portion allocated to Revlon Holdings
|
(0.1
|
)
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
||||
|
$
|
(0.9
|
)
|
|
$
|
(2.0
|
)
|
|
$
|
0.4
|
|
|
$
|
0.4
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net periodic benefit (income) costs:
|
|
|
|
|
|
|
|
||||||||
Cost of sales
|
$
|
(0.6
|
)
|
|
$
|
(1.0
|
)
|
|
$
|
(1.9
|
)
|
|
$
|
(3.0
|
)
|
Selling, general and administrative expense
|
0.5
|
|
|
0.7
|
|
|
1.4
|
|
|
1.4
|
|
||||
|
$
|
(0.1
|
)
|
|
$
|
(0.3
|
)
|
|
$
|
(0.5
|
)
|
|
$
|
(1.6
|
)
|
|
Foreign Currency Translation
|
|
Actuarial (Loss) Gain on Post-retirement Benefits
|
|
Deferred Gain (Loss) - Hedging
|
|
Other
|
|
Accumulated Other Comprehensive Loss
|
||||||||||
Balance at January 1, 2016
|
$
|
(23.5
|
)
|
|
$
|
(217.7
|
)
|
|
$
|
(3.8
|
)
|
|
$
|
(0.3
|
)
|
|
$
|
(245.3
|
)
|
Currency translation adjustment, net of tax of $1.3 million
|
8.0
|
|
|
|
|
|
|
|
|
|
|
|
8.0
|
|
|||||
Amortization of pension related costs, net of tax of $1.1 million
(a)
|
|
|
|
5.6
|
|
|
|
|
|
|
|
|
5.6
|
|
|||||
Revaluation of derivative financial instrument, net of amounts reclassified into earnings and tax of $0.1 million
(b)
|
|
|
|
|
|
|
$
|
0.1
|
|
|
|
|
|
0.1
|
|
||||
Other comprehensive income
|
8.0
|
|
|
5.6
|
|
|
0.1
|
|
|
—
|
|
|
13.7
|
|
|||||
Balance at September 30, 2016
|
$
|
(15.5
|
)
|
|
$
|
(212.1
|
)
|
|
$
|
(3.7
|
)
|
|
$
|
(0.3
|
)
|
|
$
|
(231.6
|
)
|
(a)
|
Amounts represent the change in accumulated other comprehensive loss as a result of the amortization of actuarial losses (gains) arising during each year related to the Company’s pension and other post-retirement plans. See Note 11, “Pension and Post-retirement Benefits,” for further discussion of the Company’s pension and other post-retirement plans.
|
(b)
|
Represents the after-tax effective portion of the changes in fair value of the Company’s 2013 Interest Rate Swap, net of amounts reclassified into earnings for the nine months ended September 30, 2016
.
See Note 10, "Financial Instruments," for further discussion of the 2013 Interest Rate Swap.
|
|
|
2013
Interest Rate Swap
|
||
Beginning accumulated losses at June 30, 2016
|
|
$
|
(4.5
|
)
|
Reclassifications into earnings (net of $0.4 million tax expense)
(a)
|
|
0.7
|
|
|
Change in fair value (net of $0.1 million tax expense)
|
|
0.1
|
|
|
Ending accumulated losses at September 30, 2016
|
|
$
|
(3.7
|
)
|
|
|
2013
Interest Rate Swap
|
||
Beginning accumulated losses at December 31, 2015
|
|
$
|
(3.8
|
)
|
Reclassifications into earnings (net of $1.2 million tax expense)
(a)
|
|
2.0
|
|
|
Change in fair value (net of $1.1 million tax benefit)
|
|
(1.9
|
)
|
|
Ending accumulated losses at September 30, 2016
|
|
$
|
(3.7
|
)
|
(a)
|
Reclassified to interest expense.
|
|
|
2013
Interest Rate Swap
|
||
Beginning accumulated losses at June 30, 2015
|
|
$
|
(4.2
|
)
|
Reclassifications into earnings (net of $0.4 million tax expense)
(a)
|
|
0.7
|
|
|
Change in fair value (net of $0.9 million tax benefit)
|
|
(1.4
|
)
|
|
Ending accumulated losses at September 30, 2015
|
|
$
|
(4.9
|
)
|
|
|
2013
Interest Rate Swap
|
||
Beginning accumulated losses at December 31, 2014
|
|
$
|
(2.2
|
)
|
Reclassifications into earnings (net of $0.6 million tax expense)
(a)
|
|
0.9
|
|
|
Change in fair value (net of $2.3 million tax benefit)
|
|
(3.6
|
)
|
|
Ending accumulated losses at September 30, 2015
|
|
$
|
(4.9
|
)
|
(a)
|
Reclassified to interest expense.
|
•
|
Consumer
- The Consumer segment is comprised of the Company's consumer brands other than those operated under the Elizabeth Arden segment, which primarily include
Revlon
,
Almay
,
SinfulColors
and
Pure Ice
in color cosmetics;
Revlon ColorSilk
in women’s hair color;
Revlon
in beauty tools; and
Mitchum
in anti-perspirant deodorants. The Company’s principal customers for its consumer products include large volume retailers, chain drug and food stores, chemist shops, hypermarkets, general merchandise stores, the Internet/e-commerce, television shopping, department stores, one-stop shopping beauty retailers, specialty cosmetics stores and perfumeries in the U.S. and internationally. The Consumer segment also includes a skincare line under the
Natural Honey
brand and a hair color line under the
Llongueras
brand sold to large volume retailers and other retailers, primarily in Spain, which were acquired as part of the Colomer Acquisition. In October 2015 and in May 2016, the Company acquired the U.S. Cutex business and Cutex International business and related assets, respectively. The results of operations relating to the sales of
Cutex
nail care products are included within the Consumer segment.
|
•
|
Professional
- The Professional segment is comprised primarily of the brands which the Company acquired in the Colomer Acquisition, which include
Revlon Professional
in hair color and hair care;
CND
-branded products
in nail polishes and nail enhancements; and
American Crew
in men’s grooming products, all of which are sold worldwide to professional salons. The Company’s principal customers for its professional products include hair and nail salons and distributors to professional salons in the U.S. and internationally. The Professional segment also includes a multi-cultural line consisting of
Creme of Nature
hair care products sold to large volume retailers, other retailers and professional salons, primarily in the U.S.
|
•
|
Elizabeth Arden
- The Elizabeth Arden segment includes the operating results of the Elizabeth Arden business and related purchase accounting for the Company's September 2016 Elizabeth Arden Acquisition. Elizabeth Arden is a global prestige beauty products company with an iconic portfolio of prestige fragrance, skincare and cosmetic brands, including the
Elizabeth Arden
skin care brands, color cosmetics and fragrances; designer fragrances such as
Juicy Couture
and
John Varvatos
;
heritage fragrances such as
Curve
,
Elizabeth Taylor
,
Britney Spears
and
Christina Aguilera
; and various celebrity fragrances.
|
•
|
Other
- The Other segment primarily includes the operating results of the CBB business and related purchase accounting for the CBB Acquisition. CBB develops, manufactures, markets and distributes fragrances and other beauty products under various celebrity, lifestyle and fashion brands licensed from third parties, principally through department stores and selective distribution in international territories.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|||||||||
Segment Net Sales:
|
|
|
|
|
|
|
|
|||||||||
Consumer
|
$
|
342.8
|
|
|
$
|
348.1
|
|
|
$
|
1,022.3
|
|
|
$
|
1,027.1
|
|
|
Professional
|
118.8
|
|
|
114.5
|
|
|
357.2
|
|
|
352.1
|
|
|||||
Elizabeth Arden
|
135.2
|
|
|
—
|
|
|
135.2
|
|
|
—
|
|
|||||
Other
|
8.0
|
|
|
8.9
|
|
|
18.6
|
|
|
13.2
|
|
|||||
Total
|
$
|
604.8
|
|
|
$
|
471.5
|
|
|
$
|
1,533.3
|
|
|
$
|
1,392.4
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Segment Profit:
|
|
|
|
|
|
|
|
|||||||||
Consumer
|
$
|
81.0
|
|
|
$
|
86.0
|
|
|
$
|
220.4
|
|
|
$
|
232.0
|
|
|
Professional
|
23.7
|
|
|
23.4
|
|
|
73.4
|
|
|
76.9
|
|
|||||
Elizabeth Arden
|
32.5
|
|
|
—
|
|
|
32.5
|
|
|
—
|
|
|||||
Other
|
(0.1
|
)
|
|
(1.4
|
)
|
|
(0.9
|
)
|
|
(1.2
|
)
|
|||||
Total
|
$
|
137.1
|
|
|
$
|
108.0
|
|
|
$
|
325.4
|
|
|
$
|
307.7
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Reconciliation:
|
|
|
|
|
|
|
|
|||||||||
Segment Profit
|
$
|
137.1
|
|
|
$
|
108.0
|
|
|
$
|
325.4
|
|
|
$
|
307.7
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|||||||
Unallocated corporate expenses
|
24.2
|
|
|
20.4
|
|
|
59.1
|
|
|
55.7
|
|
|||||
Depreciation and amortization
|
28.8
|
|
|
26.0
|
|
|
81.0
|
|
|
76.8
|
|
|||||
Non-cash stock compensation expense
|
1.5
|
|
|
1.0
|
|
|
4.8
|
|
|
3.8
|
|
|||||
Non-Operating items:
|
|
|
|
|
|
|
|
|||||||||
Restructuring and related charges
|
0.5
|
|
|
4.2
|
|
|
2.3
|
|
|
1.9
|
|
|||||
Acquisition and integration costs
|
33.5
|
|
|
0.6
|
|
|
39.5
|
|
|
6.5
|
|
|||||
Deferred compensation related to CBB acquisition
|
0.8
|
|
|
0.9
|
|
|
2.6
|
|
—
|
|
1.6
|
|
||||
Cutex International inventory purchase accounting adjustment, cost of sales
|
0.2
|
|
|
(0.1
|
)
|
|
0.3
|
|
|
0.5
|
|
|||||
Elizabeth Arden 2016 Business Transformation Program
|
1.7
|
|
|
—
|
|
|
1.7
|
|
|
—
|
|
|||||
Elizabeth Arden inventory purchase accounting adjustment, cost of sales
|
4.2
|
|
|
—
|
|
|
4.2
|
|
|
—
|
|
|||||
Operating Income
|
41.7
|
|
|
55.0
|
|
|
129.9
|
|
|
160.9
|
|
|||||
Less:
|
|
|
|
|
|
|
|
|||||||||
Interest Expense
|
27.4
|
|
|
21.5
|
|
|
69.3
|
|
|
62.0
|
|
|||||
Amortization of debt issuance costs
|
1.7
|
|
|
1.4
|
|
|
4.6
|
|
|
4.2
|
|
|||||
Loss on early extinguishment of debt
|
16.9
|
|
|
—
|
|
|
16.9
|
|
|
—
|
|
|||||
Foreign currency losses (gains), net
|
1.2
|
|
|
(0.7
|
)
|
|
6.3
|
|
|
7.3
|
|
|||||
Miscellaneous, net
|
(0.6
|
)
|
|
0.3
|
|
|
(0.1
|
)
|
|
0.5
|
|
|||||
Income from continuing operations before income taxes
|
$
|
(4.9
|
)
|
|
$
|
32.5
|
|
|
$
|
32.9
|
|
|
$
|
86.9
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||||||||||
Geographic area:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
United States
|
$
|
326.1
|
|
|
54%
|
|
$
|
255.0
|
|
|
54%
|
|
$
|
836.8
|
|
|
55%
|
|
$
|
766.4
|
|
|
55%
|
International
|
278.7
|
|
|
46%
|
|
216.5
|
|
|
46%
|
|
696.5
|
|
|
45%
|
|
626.0
|
|
|
45%
|
||||
|
$
|
604.8
|
|
|
|
|
$
|
471.5
|
|
|
|
|
$
|
1,533.3
|
|
|
|
|
$
|
1,392.4
|
|
|
|
|
September 30, 2016
|
|
December 31, 2015
|
||||||||
Long-lived assets, net:
|
|
|
|
|
|
|
|||||
United States
|
$
|
1,464.5
|
|
|
83%
|
|
$
|
854.7
|
|
|
79%
|
International
|
289.6
|
|
|
17%
|
|
232.4
|
|
|
21%
|
||
|
$
|
1,754.1
|
|
|
|
$
|
1,087.1
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||||||||||
Classes of similar products:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Color cosmetics
|
$
|
245.5
|
|
|
41%
|
|
$
|
242.5
|
|
|
51%
|
|
$
|
731.7
|
|
|
48%
|
|
$
|
746.4
|
|
|
54%
|
Hair care
|
135.3
|
|
|
22%
|
|
131.3
|
|
|
28%
|
|
402.1
|
|
|
26%
|
|
388.1
|
|
|
28%
|
||||
Beauty care
|
96.2
|
|
|
16%
|
|
74.8
|
|
|
16%
|
|
244.6
|
|
|
16%
|
|
209.9
|
|
|
15%
|
||||
Fragrance
|
127.8
|
|
|
21%
|
|
22.9
|
|
|
5%
|
|
154.9
|
|
|
10%
|
|
48.0
|
|
|
3%
|
||||
|
$
|
604.8
|
|
|
|
|
$
|
471.5
|
|
|
|
|
$
|
1,533.3
|
|
|
|
|
$
|
1,392.4
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
(Loss) Income from continuing operations, net of taxes
|
$
|
(4.5
|
)
|
|
$
|
7.9
|
|
|
$
|
16.9
|
|
|
$
|
33.1
|
|
Loss from discontinued operations, net of taxes
|
(0.2
|
)
|
|
(1.7
|
)
|
|
(2.3
|
)
|
|
(1.8
|
)
|
||||
Net (loss) income
|
$
|
(4.7
|
)
|
|
$
|
6.2
|
|
|
$
|
14.6
|
|
|
$
|
31.3
|
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding – Basic
|
52,498,246
|
|
|
52,440,580
|
|
|
52,498,840
|
|
|
52,422,660
|
|
||||
Effect of dilutive restricted stock
|
—
|
|
|
163,131
|
|
|
118,900
|
|
|
170,547
|
|
||||
Weighted average common shares outstanding – Diluted
|
52,498,246
|
|
|
52,603,711
|
|
|
52,617,740
|
|
|
52,593,207
|
|
||||
Basic (loss) earnings per common share:
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
(0.09
|
)
|
|
$
|
0.15
|
|
|
$
|
0.32
|
|
|
$
|
0.63
|
|
Discontinued operations
|
—
|
|
|
(0.03
|
)
|
|
(0.04
|
)
|
|
(0.03
|
)
|
||||
Net (loss) income
|
$
|
(0.09
|
)
|
|
$
|
0.12
|
|
|
$
|
0.28
|
|
|
$
|
0.60
|
|
Diluted (loss) earnings per common share:
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
(0.09
|
)
|
|
$
|
0.15
|
|
|
$
|
0.32
|
|
|
$
|
0.63
|
|
Discontinued operations
|
—
|
|
|
(0.03
|
)
|
|
(0.04
|
)
|
|
(0.03
|
)
|
||||
Net (loss) income
|
$
|
(0.09
|
)
|
|
$
|
0.12
|
|
|
$
|
0.28
|
|
|
$
|
0.60
|
|
•
|
Expanded Category Mix:
The Company’s strength and expertise in color cosmetics, hair care, men’s grooming, anti-perspirants, deodorants and beauty tools are complemented by the addition of Elizabeth Arden’s world-class portfolio of licensed prestige fragrances and the internationally recognized line of Elizabeth Arden-branded prestige fragrance, skin care and color cosmetics products, which are highly profitable categories that the Company believes are key to future industry growth;
|
•
|
Channel Diversification:
Elizabeth Arden’s strong global reach in prestige distribution and travel retail complement Revlon’s strength in mass and salons, strongly positioning the combined company in all key beauty channels; and
|
•
|
Broader Geographic Footprint:
Post-acquisition the combined company now markets and distributes its products in approximately 150 countries. With Elizabeth Arden’s presence in important international growth regions, including Asia Pacific, the combined company will be better positioned to compete globally.
|
•
|
Build a Foundation for Sustainable Growth that Outpaces the Industry
.
The Company will compete in large and fast growing beauty segments and build its portfolio of product offerings in all strategic categories. The Company will further strengthen and diversify our channels of distribution, especially direct to consumer. The Company will strengthen its U.S. business and expand into faster growing territories, with a special focus on Asia.
|
•
|
Harness the Power of our Iconic Brand Portfolio to Delight Consumers Wherever and However They Shop for Beauty.
The Company will continue to focus on restoring the appeal and aspiration of its flagship brands and invest in them. The Company is advancing its digital and omni-channel capabilities, and is focused on high growth channels, especially E-commerce. The Company intends to continue to win in traditional channels, while expanding its combined reach in to travel retail.
|
•
|
Develop a Cost Structure to Deliver World Class Profitability
.
The Company will continue to improve its operating performance by strategically allocating investments behind key brands, categories and regions. The Company intends to further improve its category mix and, with the acquisition of Elizabeth Arden, is now capable of shifting toward higher gross margin categories. The Company will continue to rationalize its product portfolio and seek to reduce its product returns, sales markdowns and inventory levels. Through an enhanced new product development processes, the Company will increase its speed to shelf, optimize its resource allocation and shorten new product launch timing.
|
•
|
$41.6 million
of higher selling, general and administrative ("SG&A") expenses, primarily driven by the inclusion of the SG&A expenses as a result of the Elizabeth Arden Acquisition, commencing on and after the Acquisition Date;
|
•
|
$32.9 million
increase in acquisition and integration costs, primarily related to the Elizabeth Arden Acquisition;
|
•
|
a
$16.9 million
aggregate loss on the early extinguishment of debt recognized in the third quarter of 2016 as a result of the complete refinancing of the 2011 Term Loan and Acquisition Term Loan in connection with the Elizabeth Arden Acquisition; and
|
•
|
a
$5.9 million
increase in interest expense during the third quarter of 2016 as a result of the debt related transactions completed in connection with the Elizabeth Arden Acquisition, as discussed in Recent Events below;
|
•
|
$57.7 million
of higher gross profit in the third quarter of 2016, primarily due to the inclusion of gross profit as a result of the Elizabeth Arden Acquisition, commencing on the Acquisition Date; and
|
•
|
a
$25.0 million
decrease in the provision for income taxes recognized in the third quarter of 2016, primarily due to lower pretax income, the phasing of the recognition of income taxes and the relatively favorable impact of certain discrete items that did not reoccur in the third quarter of 2016.
|
•
|
$40.1 million
of higher SG&A expenses, primarily driven by the inclusion of the SG&A expenses as a result of the Elizabeth Arden Acquisition, commencing on and after the Acquisition Date;
|
•
|
$33.0 million
increase in acquisition and integration costs, primarily related to the Elizabeth Arden Acquisition;
|
•
|
a
$16.9 million
aggregate loss on the early extinguishment of debt recognized in the third quarter of 2016 as a result of the complete refinancing of the 2011 Term Loan and Acquisition Term Loan in connection with the Elizabeth Arden Acquisition; and
|
•
|
a
$7.3 million
increase in interest expense during the first nine months of 2016 primarily as a result of the debt related transactions completed during the third quarter of 2016 in connection with the Elizabeth Arden Acquisition, as discussed below;
|
•
|
$43.5 million
of higher gross profit in the first nine months of 2016, primarily due to the inclusion of gross profit as a result of the Elizabeth Arden Acquisition, commencing on and after the Acquisition Date, partially offset by lower gross profit within the Consumer segment; and
|
•
|
a $37.8 million decrease in the provision for income taxes recognized in the first nine months of 2016, primarily due to lower pretax income, the phasing of the recognition of income taxes and the relatively favorable impact of certain discrete items that did not reoccur in the first nine months of 2016.
|
•
|
The Consumer segment is comprised of the Company's consumer brands, which primarily include
Revlon
,
Almay
,
SinfulColors
and
Pure Ice
in color cosmetics;
Revlon ColorSilk
in women’s hair color;
Revlon
in beauty tools; and
Mitchum
in anti-perspirant deodorants. The Company’s principal customers for its consumer products include large volume retailers, chain drug and food stores, chemist shops, hypermarkets, general merchandise stores, the Internet/e-commerce, television shopping, department stores, one-stop shopping beauty retailers, specialty cosmetics stores and perfumeries in the U.S. and internationally. The Consumer segment also includes a skincare line under the
Natural Honey
brand and a hair color line under the
Llongueras
brand sold to large volume retailers and other retailers, primarily in Spain, which were acquired as part of the Colomer Acquisition. In October 2015 and in May 2016, the Company acquired
Cutex
businesses in the U.S. and in certain international territories and related assets, respectively. The results of operations relating to the sales of
Cutex
nail care products are included within the Consumer segment.
|
•
|
The Professional segment is comprised primarily of the Company's professional brands, which include
Revlon Professional
in hair color and hair care;
CND
-
branded products
in nail polishes and nail enhancements; and
American Crew
in men’s grooming products, all of which are sold worldwide to professional salons. The Company’s principal customers for its professional products include hair and nail salons and distributors to professional salons in the U.S. and internationally. The Professional segment also includes a multi-cultural hair care line consisting of
Creme of Nature
hair care products sold to professional salons, large volume retailers and other retailers, primarily in the U.S.
|
•
|
The Elizabeth Arden segment includes the operating results of the Elizabeth Arden business and related purchase accounting for the Company's September 2016 Elizabeth Arden Acquisition. Elizabeth Arden is a global prestige beauty products company with an iconic portfolio of prestige fragrance, skincare and cosmetic brands, which includes the
Elizabeth Arden
skin care brands, color cosmetics and fragrances; designer fragrances such as
Juicy Couture
and
John Varvatos;
heritage fragrances such as
Curve
,
Elizabeth Taylor
,
Britney Spears
and
Christina Aguilera
; and various celebrity fragrances.
|
•
|
The Other segment primarily includes the operating results of the CBBeauty Group and certain of its related entities, which the Company acquired in April 2015 (collectively "CBB" and such transaction, the "CBB Acquisition"). CBB develops, manufactures, markets and distributes fragrances and other beauty products under various celebrity, lifestyle and fashion brands licensed from third parties, principally through department stores and selective distribution in international territories.
|
|
Net Sales
|
|
Segment Profit
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||
|
Three Months Ended September 30,
|
|
Change
|
|
XFX Change
(a)
|
|
Three Months Ended September 30,
|
|
Change
|
|
XFX Change
(a)
|
|||||||||||||||||||||||||||||||||
|
2016
|
|
2015
|
|
$
|
|
%
|
|
$
|
|
%
|
|
2016
|
|
2015
|
|
$
|
|
%
|
|
$
|
|
%
|
|||||||||||||||||||||
Consumer
|
$
|
342.8
|
|
|
$
|
348.1
|
|
|
$
|
(5.3
|
)
|
|
(1.5
|
)%
|
|
$
|
0.5
|
|
|
0.1
|
%
|
|
$
|
81.0
|
|
|
$
|
86.0
|
|
|
$
|
(5.0
|
)
|
|
(5.8
|
)%
|
|
$
|
(5.0
|
)
|
|
(5.8
|
)%
|
|
Professional
|
118.8
|
|
|
114.5
|
|
|
4.3
|
|
|
3.8
|
%
|
|
5.1
|
|
|
4.5
|
%
|
|
23.7
|
|
|
23.4
|
|
|
0.3
|
|
|
1.3
|
%
|
|
0.3
|
|
|
1.3
|
%
|
|||||||||
Elizabeth Arden
|
135.2
|
|
—
|
|
—
|
|
|
135.2
|
|
|
N.M.
|
|
|
135.2
|
|
|
N.M.
|
|
|
32.5
|
|
|
—
|
|
|
32.5
|
|
|
N.M.
|
|
|
32.5
|
|
|
N.M.
|
|
||||||||
Other
|
8.0
|
|
|
8.9
|
|
|
(0.9
|
)
|
|
(10.1
|
)%
|
|
0.6
|
|
|
6.7
|
%
|
|
(0.1
|
)
|
|
(1.4
|
)
|
|
1.3
|
|
|
92.9
|
%
|
|
1.3
|
|
|
92.9
|
%
|
|||||||||
Total
|
$
|
604.8
|
|
|
$
|
471.5
|
|
|
$
|
133.3
|
|
|
28.3
|
%
|
|
$
|
141.4
|
|
|
30.0
|
%
|
|
$
|
137.1
|
|
|
$
|
108.0
|
|
|
$
|
29.1
|
|
|
26.9
|
%
|
|
$
|
29.1
|
|
|
26.9
|
%
|
|
Net Sales
|
|
Segment Profit
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||
|
Nine Months Ended September 30,
|
|
Change
|
|
XFX Change
(a)
|
|
Nine Months Ended September 30,
|
|
Change
|
|
XFX Change
(a)
|
|||||||||||||||||||||||||||||||||
|
2016
|
|
2015
|
|
$
|
|
%
|
|
$
|
|
%
|
|
2016
|
|
2015
|
|
$
|
|
%
|
|
$
|
|
%
|
|||||||||||||||||||||
Consumer
|
$
|
1,022.3
|
|
|
$
|
1,027.1
|
|
|
$
|
(4.8
|
)
|
|
(0.5
|
)%
|
|
$
|
22.6
|
|
|
2.2
|
%
|
|
$
|
220.4
|
|
|
$
|
232.0
|
|
|
$
|
(11.6
|
)
|
|
(5.0
|
)%
|
|
$
|
(10.0
|
)
|
|
(4.3
|
)%
|
|
Professional
|
357.2
|
|
|
352.1
|
|
|
5.1
|
|
|
1.4
|
%
|
|
8.9
|
|
|
2.5
|
%
|
|
73.4
|
|
|
76.9
|
|
|
(3.5
|
)
|
|
(4.6
|
)%
|
|
(3.5
|
)
|
|
(4.6
|
)%
|
|||||||||
Elizabeth Arden
|
135.2
|
|
—
|
|
—
|
|
|
135.2
|
|
|
N.M.
|
|
|
135.2
|
|
|
N.M.
|
|
|
32.5
|
|
|
—
|
|
|
32.5
|
|
|
N.M.
|
|
|
32.5
|
|
|
N.M.
|
|
||||||||
Other
|
18.6
|
|
|
13.2
|
|
|
5.4
|
|
|
40.9
|
%
|
|
7.2
|
|
|
54.5
|
%
|
|
$
|
(0.9
|
)
|
|
$
|
(1.2
|
)
|
|
0.3
|
|
|
25.0
|
%
|
|
0.4
|
|
|
33.3
|
%
|
|||||||
Total
|
$
|
1,533.3
|
|
|
$
|
1,392.4
|
|
|
$
|
140.9
|
|
|
10.1
|
%
|
|
$
|
173.9
|
|
|
12.5
|
%
|
|
$
|
325.4
|
|
|
$
|
307.7
|
|
|
$
|
17.7
|
|
|
5.8
|
%
|
|
$
|
19.4
|
|
|
6.3
|
%
|
|
Three Months Ended September 30,
|
|
Change
|
|
XFX Change
(a)
|
||||||||||||||||
|
2016
|
|
2015
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||
Consumer
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
North America
|
$
|
210.8
|
|
|
$
|
222.5
|
|
|
$
|
(11.7
|
)
|
|
(5.3
|
)%
|
|
$
|
(11.7
|
)
|
|
(5.3
|
)%
|
International
|
132.0
|
|
|
125.6
|
|
|
6.4
|
|
|
5.1
|
%
|
|
12.2
|
|
|
9.7
|
%
|
||||
Professional
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
North America
|
$
|
51.9
|
|
|
$
|
50.8
|
|
|
$
|
1.1
|
|
|
2.2
|
%
|
|
$
|
1.1
|
|
|
2.2
|
%
|
International
|
66.9
|
|
|
63.7
|
|
|
3.2
|
|
|
5.0
|
%
|
|
4.0
|
|
|
6.3
|
%
|
||||
Elizabeth Arden
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
North America
|
$
|
87.6
|
|
|
$
|
—
|
|
|
$
|
87.6
|
|
|
N.M.
|
|
|
$
|
87.6
|
|
|
N.M.
|
|
International
|
$
|
47.6
|
|
|
$
|
—
|
|
|
$
|
47.6
|
|
|
N.M.
|
|
|
$
|
47.6
|
|
|
N.M.
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
North America
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
%
|
|
$
|
—
|
|
|
—
|
%
|
International
|
8.0
|
|
|
8.9
|
|
|
(0.9
|
)
|
|
(10.1
|
)%
|
|
0.6
|
|
|
6.7
|
%
|
||||
Total Net Sales
|
$
|
604.8
|
|
|
$
|
471.5
|
|
|
$
|
133.3
|
|
|
28.3
|
%
|
|
$
|
141.4
|
|
|
30.0
|
%
|
|
Nine Months Ended September 30,
|
|
Change
|
|
XFX Change
(a)
|
||||||||||||||||
|
2016
|
|
2015
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||
Consumer
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
North America
|
$
|
656.7
|
|
|
$
|
673.4
|
|
|
$
|
(16.7
|
)
|
|
(2.5
|
)%
|
|
$
|
(14.7
|
)
|
|
(2.2
|
)%
|
International
|
365.6
|
|
|
353.7
|
|
|
11.9
|
|
|
3.4
|
%
|
|
37.3
|
|
|
10.5
|
%
|
||||
Professional
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
North America
|
$
|
154.3
|
|
|
$
|
152.4
|
|
|
$
|
1.9
|
|
|
1.2
|
%
|
|
$
|
2.7
|
|
|
1.8
|
%
|
International
|
202.9
|
|
|
199.7
|
|
|
3.2
|
|
|
1.6
|
%
|
|
6.2
|
|
|
3.1
|
%
|
||||
Elizabeth Arden
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
North America
|
$
|
87.6
|
|
|
$
|
—
|
|
|
$
|
87.6
|
|
|
N.M.
|
|
|
$
|
87.6
|
|
|
N.M.
|
|
International
|
47.6
|
|
|
—
|
|
|
$
|
47.6
|
|
|
N.M.
|
|
|
$
|
47.6
|
|
|
N.M.
|
|
||
Other
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
North America
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
%
|
|
$
|
—
|
|
|
—
|
%
|
International
|
18.6
|
|
|
13.2
|
|
|
5.4
|
|
|
40.9
|
%
|
|
7.2
|
|
|
54.5
|
%
|
||||
Total Net Sales
|
$
|
1,533.3
|
|
|
$
|
1,392.4
|
|
|
$
|
140.9
|
|
|
10.1
|
%
|
|
$
|
173.9
|
|
|
12.5
|
%
|
|
Three Months Ended September 30,
|
|
|
|
Nine Months Ended September 30,
|
|
|
||||||||||||||||
|
2016
|
|
2015
|
|
Change
|
|
2016
|
|
2015
|
|
Change
|
||||||||||||
Gross profit
|
$
|
361.4
|
|
|
$
|
303.7
|
|
|
$
|
57.7
|
|
|
$
|
964.5
|
|
|
$
|
921.0
|
|
|
$
|
43.5
|
|
Percentage of net sales
|
59.8
|
%
|
|
64.4
|
%
|
|
(4.7
|
)%
|
|
62.9
|
%
|
|
66.1
|
%
|
|
(3.2
|
)%
|
•
|
the inclusion of gross profit from the Elizabeth Arden Acquisition, which increased gross profit by $64.7 million, however decreased gross profit as a percentage of net sales by 3.4 percentage points; and
|
•
|
favorable volume, which increased gross profit by $4.3 million, with no impact on gross profit as a percentage of net sales;
|
•
|
unfavorable foreign currency fluctuations, which decreased gross profit by $7.3 million and decreased gross profit as a percentage of net sales by 0.8 percentage points;
|
•
|
unfavorable product mix, which decreased gross profit by $6.5 million and decreased gross profit as a percentage of net sales by 0.7 percentage points; and
|
•
|
higher promotional allowances, which decreased gross profit by $2.5 million and decreased gross profit as a percentage of net sales by 0.3 percentage points.
|
•
|
the inclusion of gross profit from the Elizabeth Arden Acquisition, which increased gross profit by $64.7 million, however decreased gross profit as a percentage of net sales by 1.5 percentage points; and
|
•
|
favorable volume, which increased gross profit by $31.9 million, with no impact on gross profit as a percentage of net sales;
|
•
|
unfavorable foreign currency fluctuations, which decreased gross profit by $26.8 million and decreased gross profit as a percentage of net sales by 0.9 percentage points;
|
•
|
higher promotional allowances, which decreased gross profit by $14.8 million and decreased gross profit as a percentage of net sales by 0.5 percentage points; and
|
•
|
unfavorable product mix, which decreased gross profit by $11.4 million and decreased gross profit as a percentage of net sales by 0.4 percentage points.
|
|
Three Months Ended September 30,
|
|
|
|
Nine Months Ended September 30,
|
|
|
||||||||||||||||
|
2016
|
|
2015
|
|
Change
|
|
2016
|
|
2015
|
|
Change
|
||||||||||||
SG&A expenses
|
$
|
285.7
|
|
|
$
|
244.1
|
|
|
$
|
41.6
|
|
|
$
|
792.8
|
|
|
$
|
752.7
|
|
|
$
|
40.1
|
|
•
|
the inclusion of SG&A expenses in the Elizabeth Arden segment as a result of the Elizabeth Arden Acquisition, commencing on and after the Acquisition Date, which contributed
$36.6 million
to the increase in SG&A expenses; and
|
•
|
a $3.5 million gain related to the sale of certain non-core assets that was recognized in the third quarter of 2015;
|
•
|
$3.2 million of favorable FX impacts.
|
•
|
the inclusion of SG&A expenses in the Elizabeth Arden segment as a result of the Elizabeth Arden Acquisition, commencing on and after the Acquisition Date, which contributed
$36.6 million
to the increase in SG&A expenses; and
|
•
|
$21.0 million of higher general and administrative expenses in 2016, primarily due to higher compensation due to changes in senior executive management, higher professional and legal fees and a total of $6.5 million in gains recognized in the first nine months of 2015 related to the sales of certain non-core assets, partially offset by lower severance;
|
•
|
$15.3 million of favorable FX impacts; and
|
•
|
a $10.8 million decrease in brand support expenses for lower performing brands, primarily within the Consumer segment.
|
|
Three Months Ended September 30,
|
|
|
|
Nine Months Ended September 30,
|
|
|
||||||||||||||||
|
2016
|
|
2015
|
|
Change
|
|
2016
|
|
2015
|
|
Change
|
||||||||||||
Acquisition and integration costs
|
$
|
33.5
|
|
|
$
|
0.6
|
|
|
$
|
32.9
|
|
|
$
|
39.5
|
|
|
$
|
6.5
|
|
|
$
|
33.0
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Acquisition Costs
|
$
|
13.4
|
|
|
$
|
0.3
|
|
|
$
|
19.4
|
|
|
$
|
5.0
|
|
Integration Costs
|
20.1
|
|
|
0.3
|
|
|
20.1
|
|
|
1.5
|
|
||||
Total acquisition and integration costs
|
$
|
33.5
|
|
|
$
|
0.6
|
|
|
$
|
39.5
|
|
|
$
|
6.5
|
|
|
Three Months Ended September 30,
|
|
|
|
Nine Months Ended September 30,
|
|
|
||||||||||||||||
|
2016
|
|
2015
|
|
Change
|
|
2016
|
|
2015
|
|
Change
|
||||||||||||
Restructuring charges and other, net
|
$
|
0.5
|
|
|
$
|
4.0
|
|
|
$
|
(3.5
|
)
|
|
$
|
2.3
|
|
|
$
|
0.9
|
|
|
$
|
1.4
|
|
|
Three Months Ended September 30,
|
|
|
|
Nine Months Ended September 30,
|
|
|
||||||||||||||||
|
2016
|
|
2015
|
|
Change
|
|
2016
|
|
2015
|
|
Change
|
||||||||||||
Interest expense
|
$
|
27.4
|
|
|
$
|
21.5
|
|
|
$
|
5.9
|
|
|
$
|
69.3
|
|
|
$
|
62.0
|
|
|
$
|
7.3
|
|
|
Three Months Ended September 30,
|
|
|
|
Nine Months Ended September 30,
|
|
|
||||||||||||||||
|
2016
|
|
2015
|
|
Change
|
|
2016
|
|
2015
|
|
Change
|
||||||||||||
Loss on early extinguishment of debt
|
$
|
16.9
|
|
|
$
|
—
|
|
|
$
|
16.9
|
|
|
$
|
16.9
|
|
|
$
|
—
|
|
|
$
|
16.9
|
|
|
Three Months Ended September 30,
|
|
|
|
Nine Months Ended September 30,
|
|
|
||||||||||||||||
|
2016
|
|
2015
|
|
Change
|
|
2016
|
|
2015
|
|
Change
|
||||||||||||
Foreign currency losses (gains), net
|
$
|
1.2
|
|
|
$
|
(0.7
|
)
|
|
$
|
1.9
|
|
|
$
|
6.3
|
|
|
$
|
7.3
|
|
|
$
|
(1.0
|
)
|
|
Three Months Ended September 30,
|
|
|
|
Nine Months Ended September 30,
|
|
|
||||||||||||||||
|
2016
|
|
2015
|
|
Change
|
|
2016
|
|
2015
|
|
Change
|
||||||||||||
(Benefit from) provision for income taxes
|
$
|
(0.4
|
)
|
|
$
|
24.6
|
|
|
$
|
(25.0
|
)
|
|
$
|
16.0
|
|
|
$
|
53.8
|
|
|
$
|
(37.8
|
)
|
|
Nine Months Ended September 30,
|
||||||
|
2016
|
|
2015
|
||||
Net cash used in operating activities
|
$
|
(70.8
|
)
|
|
$
|
(2.6
|
)
|
Net cash used in investing activities
|
(1,061.3
|
)
|
|
(55.4
|
)
|
||
Net cash provided by (used in) financing activities
|
900.8
|
|
|
(28.4
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
3.6
|
|
|
(7.7
|
)
|
•
|
cash proceeds received in connection with the 2016 Term Loan Facility, in the aggregate principal amount of $1,800.0 million, or $1,791.0 million, net of discounts;
|
•
|
cash proceeds received in connection with issuance of the 6.25% Senior Notes, in the aggregate principal amount of $450.0 million; and
|
•
|
borrowings under the 2016 Revolving Credit Facility of $65.4 million;
|
•
|
$658.6 million of cash used to repay all of the aggregate principal balance outstanding under Products Corporation’s 2011 Term Loan;
|
•
|
$651.4 million of cash used to repay all of the aggregate principal balance outstanding under Products Corporation’s Acquisition Term Loan;
|
•
|
(i) $45.0 million of fees incurred in connection with the 2016 Term Loan Facility; (ii) $5.7 million of fees incurred in connection with the 2016 Revolving Credit Facility; and (iii) $10.9 million of fees incurred in connection with Products Corporation's issuance of the 6.25% Senior Notes;
|
•
|
a
$23.2 million
required excess cash flow prepayment made under the Amended Term Loan Facility, as discussed below;
|
•
|
$3.4 million of scheduled amortization payments on the Acquisition Term Loan;
|
•
|
$2.7 million utilized for the repurchase of shares from a former executive; and
|
•
|
a
$2.6 million
decrease in short-term borrowings and overdraft.
|
•
|
a $24.6 million required excess cash flow prepayment made under the Amended Term Loan Facility; and
|
•
|
$5.1 million of scheduled amortization payments on the Acquisition Term Loan;
|
•
|
$4.3 million of short-term borrowings and overdraft.
|
Period
|
|
Optional Redemption Premium Percentage
|
|
2019
|
|
104.688
|
%
|
2020
|
|
103.125
|
%
|
2021
|
|
101.563
|
%
|
2022 and thereafter
|
|
100.000
|
%
|
|
|
Payments Due by Period
(dollars in millions) |
||||||||||||||||||
Contractual Obligations
|
|
Total
|
|
Less than 1 year
|
|
1-3 years
|
|
4-5 years
|
|
After 5 years
|
||||||||||
Long-term debt, including current portion
(a)
|
|
$
|
2,816.0
|
|
|
$
|
69.9
|
|
|
$
|
36.2
|
|
|
$
|
36.2
|
|
|
$
|
2,673.7
|
|
Interest on long-term debt
(b)
|
|
893.7
|
|
|
25.2
|
|
|
276.2
|
|
|
267.4
|
|
|
324.9
|
|
|||||
Capital lease obligations
|
|
4.2
|
|
|
0.8
|
|
|
2.8
|
|
|
0.6
|
|
|
—
|
|
|||||
Operating leases
(c)
|
|
212.3
|
|
|
11.8
|
|
|
67.7
|
|
|
44.9
|
|
|
87.9
|
|
|||||
Purchase obligations
(d)
|
|
306.0
|
|
|
217.1
|
|
|
69.5
|
|
|
13.8
|
|
|
5.6
|
|
|||||
Other long-term obligations
(e)
|
|
62.2
|
|
|
17.7
|
|
|
33.3
|
|
|
6.0
|
|
|
5.2
|
|
|||||
Total contractual obligations
|
|
$
|
4,294.4
|
|
|
$
|
342.5
|
|
|
$
|
485.7
|
|
|
$
|
368.9
|
|
|
$
|
3,097.3
|
|
(a)
|
Consists primarily of (i) the $1,800.0 million aggregate principal amount outstanding under the 2016 Term Loan as of September 30, 2016; (ii) the $450.0 million aggregate principal amount outstanding under the 6.25% Senior Notes as of September 30, 2016; and (iii) the $500.0 million aggregate principal amount outstanding under the 5.75% Senior Notes as of September 30, 2016.
|
(b)
|
Consists of interest through the respective maturity dates on the outstanding debt discussed in (a) above; based on interest rates under such debt agreements as of September 30, 2016.
|
(c)
|
Included in the obligations for operating leases as of September 30, 2016 is the lease for the Company's headquarters in New York City, which includes minimum lease payments in the aggregate of approximately $70 million over the 15-year term, a leased distribution and office facility in Roanoke, Virginia and a leased warehouse and returns processing facility in Salem, Virginia, which facilities in Virginia were acquired in the Elizabeth Arden Acquisition.
|
(d)
|
Consists of purchase commitments for finished goods, raw materials, components, minimum royalty guarantees and services pursuant to enforceable and legally binding obligations which include all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transactions.
|
(e)
|
Consists primarily of media and advertising contracts, pension funding obligations (amount due within one year only, as subsequent pension funding obligation amounts cannot be reasonably estimated since the return on pension assets in future periods, as well as future pension assumptions, are not known), software licensing agreements and obligations related to third-party warehousing and distribution services. Such amounts exclude employment agreements, severance and other immaterial contractual commitments, which severance and other contractual commitments related to restructuring activities are discussed in Note 3, “Restructuring Charges,” to the Consolidated Financial Statements in this Form 10-Q.
|
|
Expected Maturity Date for the period ended December 31,
|
|
|
|||||||||||||||||||||||||||||
|
(dollars in millions, except for rate information)
|
|
|
|||||||||||||||||||||||||||||
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
Thereafter
|
|
Total
|
|
Fair Value September 30, 2016
|
||||||||||||||||
Debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Short-term variable rate (various currencies)
|
|
$
|
9.9
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
9.9
|
|
|
$
|
9.9
|
|
||||||||||
Average interest rate
(a)
|
|
3.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Short-term fixed rate (third party - EUR)
|
|
1.8
|
|
|
|
|
|
|
|
|
|
|
|
|
1.8
|
|
|
1.8
|
|
|||||||||||||
Average interest rate
|
|
11.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Long-term fixed rate – third party (USD)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
950.0
|
|
|
950.0
|
|
|
974.6
|
|
||||||||||||
Average interest rate
|
|
|
|
|
|
|
|
|
|
|
|
5.99
|
%
|
|
|
|
|
|||||||||||||||
Long-term fixed rate – third party (EUR)
|
|
|
|
$
|
0.1
|
|
|
$
|
0.1
|
|
|
$
|
0.1
|
|
|
$
|
0.1
|
|
|
0.2
|
|
|
0.6
|
|
|
0.6
|
|
|||||
Average interest rate
|
|
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
|
|
|
|||||||||||
Long-term variable rate – third party (USD)
(b)
|
|
69.9
|
|
|
$
|
18.0
|
|
|
18.0
|
|
|
18.0
|
|
|
18.0
|
|
|
1,723.5
|
|
|
1,865.4
|
|
|
$
|
1,867.7
|
|
||||||
Average interest rate
(a)(c)
|
|
3.3
|
%
|
|
4.4
|
%
|
|
4.8
|
%
|
|
4.8
|
%
|
|
4.8
|
%
|
|
4.9
|
%
|
|
|
|
|
||||||||||
Total debt
|
|
$
|
81.6
|
|
|
$
|
18.1
|
|
|
$
|
18.1
|
|
|
$
|
18.1
|
|
|
$
|
18.1
|
|
|
$
|
2,673.7
|
|
|
$
|
2,827.7
|
|
|
$
|
2,854.6
|
|
(a)
|
Weighted average variable rates are based upon implied forward rates from the U.S. Dollar LIBOR and Euribor yield curves at
September 30, 2016
.
|
(b)
|
Includes total quarterly amortization payments required within each year under the 2016 Term Loan Facility.
|
(c)
|
At
September 30, 2016
, the 2016 Term Loan Facility bears interest at the Eurodollar Rate (as defined in the 2016 Term Loan Agreement) plus 3.50% per annum (with the Eurodollar Rate not to be less than 0.75%).
|
Forward Contracts (“FC”)
|
|
Average Contractual Rate
$/FC
|
|
U.S. Dollar Equivalent Notional Amount
|
|
Contract Value
September 30, 2016
|
|
Asset (Liability) Fair Value September 30, 2016
|
||||||
Sell Canadian Dollars/Buy USD
|
|
0.7531
|
|
27.2
|
|
|
26.9
|
|
|
(0.3
|
)
|
|||
Sell Australian Dollars/Buy USD
|
|
0.7315
|
|
24.0
|
|
|
23.1
|
|
|
(0.9
|
)
|
|||
Sell British Pound/Buy USD
|
|
1.3645
|
|
21.8
|
|
|
22.9
|
|
|
1.1
|
|
|||
Sell Euro/Buy USD
|
|
1.1049
|
|
12.3
|
|
|
12.1
|
|
|
(0.2
|
)
|
|||
Buy Mexican Peso/Sell USD
|
|
0.0534
|
|
11.4
|
|
|
10.9
|
|
|
(0.5
|
)
|
|||
Sell USD/Buy Swiss Franc
|
|
1.0175
|
|
9.9
|
|
|
10.1
|
|
|
0.2
|
|
|||
Sell Japanese Yen/Buy USD
|
|
0.0095
|
|
5.8
|
|
|
5.5
|
|
|
(0.3
|
)
|
|||
Sell South African Rand/Buy USD
|
|
0.0633
|
|
5.7
|
|
|
4.9
|
|
|
(0.8
|
)
|
|||
Buy Australian Dollars/Sell NZ dollars
|
|
1.0669
|
|
4.1
|
|
|
4.1
|
|
|
—
|
|
|||
Sell New Zealand Dollars/Buy USD
|
|
0.7260
|
|
0.6
|
|
|
0.6
|
|
|
—
|
|
|||
Total forward contracts
|
|
|
|
$
|
122.8
|
|
|
$
|
121.1
|
|
|
$
|
(1.7
|
)
|
(i)
|
the Company's future financial performance;
|
(ii)
|
the effect on sales of decreased consumer spending in response to weak economic conditions or weakness in the consumption of beauty care products in the Consumer, Elizabeth Arden, Professional and/or Other segments; adverse changes in foreign currency exchange rates, foreign currency controls and/or government-mandated pricing controls; decreased sales of the Company’s products as a result of increased competitive activities by the Company’s competitors and/or decreased performance by third party suppliers, changes in consumer purchasing habits, including with respect to retailer preferences and/or among sales channels; inventory management by the Company's customers; space reconfigurations or reductions in display space by the Company's customers; changes in pricing, marketing, advertising and/or promotional strategies by the Company's customers; less than anticipated results from the Company’s existing or new products or from its advertising, promotional, pricing and/or marketing plans; or if the Company’s expenses, including, without limitation, for pension expense under its benefit plans, acquisition-related integration costs, costs related to the Company’s synergy and integration programs in connection with the Elizabeth Arden Acquisition, restructuring costs, acquisition and integration costs, costs related to litigation, advertising, promotional and marketing activities, or for sales returns related to any reduction of space by the Company's customers, product discontinuances or otherwise, exceed the anticipated level of expenses;
|
(iii)
|
the Company's belief that the continued execution of its business strategy could include taking advantage of additional opportunities to reposition, repackage or reformulate one or more brands or product lines, launching additional new products, acquiring businesses or brands, (including through licensing transactions, if any), divesting or discontinuing non-core business lines (which may include exiting certain territories), further refining its approach to retail merchandising and/or taking further actions to optimize its manufacturing, sourcing and organizational size and structure, including optimizing the Colomer Acquisition, the CBB Acquisition, the Cutex International Acquisition (including the Company's belief that such acquisition enhances and complements the Company's existing brand portfolio of nail care products) and/or the Elizabeth Arden Acquisition and related synergy, integration and other related costs, any of which, the intended purpose of which would be to create value through improving the Company's financial performance, could result in the Company making investments and/or recognizing charges related to executing against such opportunities, which activities may be funded with cash on hand, funds available under the 2016 Revolving Credit Facility and/or other permitted additional sources of capital, which actions could increase the Company’s total debt;
|
(iv)
|
the Company’s belief that it is building a combined organization that is entrepreneurial, agile and boldly creative, with a passion for beauty, that it has strategic brand builders developing a diverse portfolio of iconic brands that delight consumers around the world wherever and however they shop for beauty and that it strives to be an ethical company that values inclusive leadership and is committed to sustainable and responsible growth and the Company’s belief in its strategy that is based on three key pillars: (a) building a foundation for sustainable growth that outpaces the industry; competing in large and fast growing beauty segments and building our portfolio of product offerings in all strategic categories; further strengthening and diversifying our channels of distribution, especially direct to consumer; strengthening our U.S. business and expanding into faster growing territories, with a special focus on Asia; (b) harnessing the power of our iconic brand portfolio to delight consumers wherever and however they shop for beauty; continuing to focus on restoring the appeal and aspiration of our flagship brands and investing in them; advancing our digital and omni-channel capabilities, and focusing on high-growth channels, especially e-commerce; continuing to win in traditional channels, while expanding our combined reach into travel retail; and (c) developing a cost structure to deliver world class profitability; continuing to improve our operating performance by strategically allocating investments behind key brands, categories and regions; further improving our category mix and, with the acquisition of Elizabeth Arden, shifting toward higher gross margin categories; continuing to reduce the complexity of our product lineup and seeking to reduce our product returns, sales markdowns and inventory levels; and, through enhanced new product development processes, increasing our speed to shelf, optimizing our resource allocation and shortening new product launch timing;
|
(v)
|
the effect of restructuring activities, restructuring costs and charges, the timing of restructuring payments and the benefits from such activities; including, without limitation, the Company’s expectation (a) that the 2015 Efficiency Program will drive certain organizational efficiencies across the Company's Consumer and Professional segments and reduce general and administrative expenses within the Consumer and Professional segments; (b) that the Company will recognize a total of approximately
$12.0 million
of restructuring and related charges for the 2015 Efficiency Program by the end of 2017; (c) that cash payments related to the 2015 Efficiency Program will total approximately
$12 million
, including
$0.2 million
for capital expenditures (which capital expenditures are excluded from total restructuring and related charges expected to be recognized for the 2015 Efficiency Program), of which
$4.2 million
is expected to be paid during the remainder of 2016, with the remaining balance expected to be paid in 2017; and (d) that approximately
$9 million
of cost reductions from the 2015 Efficiency Program are expected to benefit 2016 results and that annualized cost reductions thereafter are expected to be approximately $10 million to $15 million by the end of 2018;
|
(vi)
|
the Company’s expectation that operating revenues, cash on hand and funds available for borrowing under Products Corporation's 2016 Revolving Credit Facility and other permitted lines of credit will be sufficient to enable the Company to cover its operating expenses for 2016, including the cash requirements referred to in item (viii) below, and the Company's beliefs that (a) the cash generated by its domestic operations and availability under the 2016 Revolving Credit Facility and other permitted lines of credit should be sufficient to meet its domestic liquidity needs for at least the next 12 months, and (b) restrictions or taxes on repatriation of foreign earnings will not have a material effect on the Company's liquidity during such period;
|
(vii)
|
the Company’s expected principal sources of funds, including operating revenues, cash on hand and funds available for borrowing under Products Corporation's 2016 Revolving Credit Facility and other permitted lines of credit, as well as the availability of funds from the Company taking certain measures, including, among other things, reducing discretionary spending;
|
(viii)
|
the Company's expected principal uses of funds, including amounts required for the payment of operating expenses, including expenses in connection with the continued execution of the Company’s business strategy; payments in connection with the Company’s synergy and integration programs related to the Elizabeth Arden Acquisition; payments in connection with the Company's purchases of permanent wall displays; capital expenditure requirements; debt service payments and costs; cash tax payments; pension and other post-retirement benefit plan contributions; payments in connection with the Company's restructuring programs; business and/or brand acquisitions (including through licensing transactions, if any); severance not otherwise included in the Company’s restructuring programs; debt and/or equity repurchases, if any; costs related to litigation; and payments in connection with discontinuing non-core business lines and/or exiting and/or entering certain territories and/or channels of trade (including, without limitation, that the Company may also, from time to time, seek to retire or purchase its outstanding debt obligations and/or equity in open market purchases, in privately negotiated transactions or otherwise and may seek to refinance some or all of its indebtedness based upon market conditions and that any retirement or purchase of debt and/or equity may be funded with operating cash flows of the business or other sources and will depend upon prevailing market conditions, liquidity requirements, contractual restrictions and other factors, and the amounts involved may be material); and its estimates of the amount and timing of such operating and other expenses;
|
(ix)
|
matters concerning the Company's market-risk sensitive instruments, as well as the Company’s expectations as to the counterparty’s performance, including that any risk of loss under its derivative instruments arising from any non-performance by any of the counterparties is remote;
|
(x)
|
the Company's expectation to efficiently manage its working capital, including, among other things, initiatives intended to optimize inventory levels over time; centralized procurement to secure discounts and efficiencies; prudent management of trade receivables and accounts payable; and controls on general and administrative spending; and the Company’s belief that in the ordinary course of business, its source or use of cash from operating activities may vary on a quarterly basis as a result of a number of factors, including the timing of working capital flows;
|
(xi)
|
the Company’s expectations regarding its future net periodic benefit cost for its U.S. and international defined benefit plans;
|
(xii)
|
the Company's expectation that its tax provision and effective tax rate in any individual quarter and year-to-date period will vary and may not be indicative of the Company's tax provision and effective tax rate for the full year;
|
(xiii)
|
the Company' s belief that the ultimate outcome of Elizabeth Arden's protests, appeals and/or judicial processes with regards to the Elizabeth Arden IRS audit will not have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows;
|
(xiv)
|
the Company belief the allegations contained in the Consolidated Amended Class Action Complaint are without merit and its plans to vigorously defend against them and its belief that the outcome of all pending legal proceedings in the aggregate is not reasonably likely to have a material adverse effect on the Company’s business, prospects, results of operations, financial condition and/or cash flows, but that in light of the uncertainties involved in legal proceedings generally, the ultimate outcome of a particular matter could be material to the Company’s operating results for a particular period depending on, among other things, the size of the loss or the nature of the liability imposed and the level of the Company’s income for that particular period;
|
(xv)
|
certain estimates used by management in estimating the fair value of the assets acquired in the Elizabeth Arden Acquisition and the Cutex International Acquisition; and
|
(xvi)
|
the Company's expected benefits from the Elizabeth Arden Acquisition, including, without limitation: (a) benefiting from greater scale, an expanded global footprint and, with the addition of Elizabeth Arden’s growing prestige fragrances, skin care and color cosmetics, a significant presence across all major beauty channels and categories; (b) leveraging the Company’s scale across major vendors and manufacturing partners, improving distribution and procurement efficiencies; (c) achieving approximately $140 million of synergies and cost reductions over a multi-year period through the elimination of duplicative activities, leveraging purchasing scale and optimizing the manufacturing and distribution networks of the combined company; (d) achieving additional growth through opportunities presented by the combined company’s expanded sales channels and geographies; (e) expanding category mix, as the Company’s strength and expertise in color cosmetics, hair care, men’s grooming, anti-perspirants, deodorants and beauty tools are complemented by the addition of Elizabeth Arden’s world-class portfolio of licensed prestige fragrances and the internationally recognized line of Elizabeth Arden-branded prestige fragrance, skin care and color cosmetics products, which are highly profitable categories that the Company believes are key to future industry growth; (f) diversifying the Company’s channels, as Elizabeth Arden’s strong global reach in prestige distribution and travel retail complement Revlon’s strength in mass and salons, strongly positioning the combined company in all key beauty channels; (g) broadening the Company’s geographic footprint, as post-acquisition, the combined company now markets and distributes its products in approximately 150 countries and that with Elizabeth Arden’s presence in important international growth regions, including Asia Pacific, the combined company will be better positioned to compete globally.
|
(i)
|
unanticipated circumstances or results affecting the Company's financial performance, including decreased consumer spending in response to weak economic conditions or weakness in the consumption of beauty care products in the Consumer, Elizabeth Arden, Professional and/or Other segments; adverse changes in foreign currency exchange rates, foreign currency controls and/or government-mandated pricing controls; decreased sales of the Company's products as a result of increased competitive activities by the Company's competitors and/or decreased performance by third party suppliers; changes in consumer preferences, such as reduced consumer demand for the Company's color cosmetics and other current products, including new product launches; changes in consumer purchasing habits, including with respect to retailer preferences and/or among sales channels; lower than expected customer acceptance or consumer acceptance of, or less than anticipated results from, the Company’s existing or new products; higher than expected synergy and integration program costs and expenses related to the Elizabeth Arden Acquisition, restructuring costs and/or acquisition-related integration costs; higher than expected pension expense and/or cash contributions under its benefit plans, costs related to litigation, advertising, promotional and/or marketing expenses or lower than expected results from the Company’s advertising, promotional, pricing and/or marketing plans; higher than expected sales returns related to any reduction of space by the Company's customers, product discontinuances or otherwise or decreased sales of the Company’s existing or new products; actions by the Company’s customers, such as inventory management and greater than anticipated space reconfigurations or reductions in display space and/or product discontinuances or a greater than expected impact from pricing, marketing, advertising and/or promotional strategies by the Company's customers; and changes in the competitive environment and actions by the Company's competitors, including, among other things, business combinations, technological breakthroughs, implementation of new pricing strategies, new product offerings, increased advertising, promotional and marketing spending and advertising, promotional and/or marketing successes by competitors;
|
(ii)
|
in addition to the items discussed in (i) above, the effects of and changes in economic conditions (such as continued volatility in the financial markets, inflation, monetary conditions and foreign currency fluctuations, foreign currency controls and/or government-mandated pricing controls, as well as in trade, monetary, fiscal and tax policies in international markets) and political conditions (such as military actions and terrorist activities);
|
(iii)
|
unanticipated costs or difficulties or delays in completing projects associated with the continued execution of the Company’s business strategy or lower than expected revenues or the inability to create value through improving our financial performance as a result of such strategy, including lower than expected sales, or higher than expected costs, including as may arise from any additional repositioning, repackaging or reformulating of one or more brands or product lines, launching of new product lines, including higher than expected expenses, including for sales returns, for launching its new products, acquiring businesses or brands (including through licensing transactions, if any), divesting or discontinuing non-core business lines (which may include exiting certain territories), further refining its approach to retail merchandising and/or difficulties, delays or increased costs in connection with taking further actions to optimize the Company’s manufacturing, sourcing, supply chain or organizational size and structure, including optimizing the Colomer Acquisition, the CBB Acquisition, the Cutex International Acquisition and/or the Elizabeth Arden Acquisition, as well as the unavailability of cash on hand and/or funds under the 2016 Revolving Credit Facility or from other permitted additional sources of capital to fund such potential activities;
|
(iv)
|
(A) difficulties, delays in or less than expected results from the Company’s efforts to build a combined organization that is entrepreneurial, agile, and boldly creative with a passion for beauty, being strategic brand builders developing a diverse portfolio of iconic brands that delight consumers around the world wherever and however they shop for beauty and striving to be an ethical company that values inclusive leadership and is committed to sustainable and responsible growth, such as due to, among other things, less than effective product development, less than expected acceptance of its new or existing products by consumers, salon professionals and/or customers, less than expected acceptance of its advertising, promotional, pricing and/or marketing plans and/or brand communication by consumers, salon professionals and/or customers, less than expected investment in advertising, promotional and/or marketing activities or greater than expected competitive investment, less than expected levels of advertising, promotional and/or marketing activities for its new product launches and/or less than expected levels of execution with its customers or higher than expected costs and expenses; (B) difficulties, delays in or less than expected results from the Company’s efforts to build a foundation for sustainable growth that outpaces the industry, compete in large and fast growing beauty segments, build the Company’s portfolio of product offerings in all strategic categories, further strengthen and diversify the Company’s channels of distribution, especially direct to consumer; strengthen the Company’s U.S. business and expand into faster growing territories, with a special focus on Asia, such as due to, among other things, decreased sales of the Company’s existing or new products, less than effective product development across a range of product categories, less than expected acceptance of its new or existing products, less than expected acceptance of its advertising, promotional, pricing and/or marketing plans and/or brand communication, less than expected results from the Company’s efforts to create fewer and better new product launches across the Company’s brands, less than effective activities intended to develop multiple channels for the Company’s products, such as less than expected results from pursuing the Company’s e-commerce initiatives and/or less than effective efforts to develop relationships and/or acquire businesses that would be intended to facilitate geographic expansion; (C) difficulties, delays in or less than expected results from the Company’s efforts to restore the appeal and aspiration of our flagship brands and invest in them, advance our digital and omni-channel capabilities and/or focus on high-growth channels, such as e-commerce and travel retail, such as due to less than expected investment behind such activities and/or less than effective new product development and/or advertising, marketing or promotional programs; and/or (D) difficulties, delays in or less than expected results from the Company’s efforts to develop a cost structure to deliver world class profitability, improve our operating performance by strategically allocating investments behind key brands, categories and regions, improve our category mix and shift toward higher gross margin categories, reduce the complexity of our product lineup, reduce our product returns, sales markdowns and inventory levels, increase our speed to shelf, optimize our resource allocation and/or shorten new product launch timing, such as due to less than anticipated benefits from the Acquisition, higher than expected costs, including as may be due to less than expected results from the Company’s efforts to further drive margins by reducing costs across the supply chain, eliminating overhead redundancies and leveraging purchasing scale, less than effective new product development in key strategic product categories and/or higher than expected sales returns such as those that may be related to actions by the Company’s customers, such as inventory management or greater than anticipated space reconfigurations or reductions in display space
|
(v)
|
difficulties, delays or unanticipated costs or charges or less than expected cost reductions and other benefits resulting from the Company's restructuring activities, such as greater than anticipated costs or charges or less than anticipated cost reductions or other benefits from the 2015 Efficiency Program and/or the risk that such program may not satisfy the Company’s objectives;
|
(vi)
|
lower than expected operating revenues, cash on hand and/or funds available under the 2016 Revolving Credit Facility and/or other permitted lines of credit or higher than anticipated operating expenses, such as referred to in clause (viii) below, and/or less than anticipated cash generated by the Company's domestic operations or unanticipated restrictions or taxes on repatriation of foreign earnings;
|
(vii)
|
the unavailability of funds under Products Corporation's 2016 Revolving Credit Facility or other permitted lines of credit; or from difficulties, delays in or the Company's inability to take other measures, such as reducing discretionary spending;
|
(viii)
|
higher than expected operating expenses, sales returns, working capital expenses, integration and/or synergy costs related to the Elizabeth Arden Acquisition, permanent wall display costs, capital expenditures, debt service payments, cash tax payments, cash pension plan contributions, other post-retirement benefit plan contributions and/or net periodic benefit costs for the pension and other post-retirement benefit plans, restructuring costs, severance and discontinued operations not otherwise included in the Company’s restructuring programs, debt and/or equity repurchases, costs related to litigation and/or payments in connection with business and/or brand acquisitions (including through licensing transactions, if any), and discontinuing non-core business lines and/or exiting and/or entering certain territories and/or channels of trade;
|
(ix)
|
interest rate or foreign exchange rate changes affecting the Company and its market-risk sensitive financial instruments and/or difficulties, delays or the inability of the counterparty to perform such transactions;
|
(x)
|
difficulties, delays or the inability of the Company to efficiently manage its cash and working capital;
|
(xi)
|
lower than expected returns on pension plan assets and/or lower discount rates, which could result in higher than expected cash contributions, higher net periodic benefit costs and/or less than expected net periodic benefit income;
|
(xii)
|
unexpected significant variances in the Company's tax provision and effective tax rate;
|
(xiii)
|
unanticipated adverse effects on the Company's business, prospects, results of operations, financial condition and/or cash flows as a result of unexpected developments with respect to Elizabeth Arden's protests, appeals and/or judicial processes related to its IRS examinations;
|
(xiv)
|
unanticipated adverse effects on the Company’s business, financial condition and/or its results of operations as a result of unexpected developments with respect to the Company's legal proceedings;
|
(xv)
|
changes in the fair values of the assets acquired in the Cutex International Acquisition due to, among other things, unanticipated future performance of the acquired licenses; and/or
|
(xvi)
|
less than expected benefits from the Elizabeth Arden Acquisition, such as (a) the Company’s or the Elizabeth Arden’s respective businesses experiencing disruptions due to management’s focus on executing the business integration activities and/or due to employee uncertainty during the integration transition period or other factors making it more difficult to maintain relationships with customers, suppliers, employees and other business partner; (b) the Company being unable to successfully implement, in whole or in part, its integration strategies, including the possibility that the expected synergies and cost reductions from the Acquisition will not be realized or will not be realized within the expected time period.
|
2.1
|
Agreement and Plan of Merger, dated June 16, 2016, by and among Revlon, Inc., Revlon Consumer Products Corporation, RR Transaction Corp. and Elizabeth Arden, Inc. (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K of Revlon, Inc. filed with the SEC on June 17, 2016).
|
*3.1
|
Second Amended and Restated By-Laws of Revlon, Inc., dated November 3, 2016.
|
4.1
|
Escrow Agreement, dated as of August 4, 2016, by and among Revlon Escrow Corporation, U.S. Bank National Association, as trustee, and Citibank, N.A., as escrow agent (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K of Revlon, Inc. filed with the SEC on August 5, 2016).
|
4.2
|
Indenture, dated as of August 4, 2016, by and between Revlon Escrow Corporation and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K of Revlon, Inc. filed with the SEC on August 5, 2016).
|
4.3
|
Registration Rights Agreement, dated as of August 4, 2016, by and among Revlon Escrow Corporation, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Citigroup Global Markets Inc., as representatives of the initial purchasers (incorporated by reference to Exhibit 4.3 to the Current Report on Form 8-K of Revlon, Inc. filed with the SEC on August 5, 2016).
|
4.4
|
First Supplemental Indenture, dated as of September 7, 2016, by and among Revlon Consumer Products Corporation, the guarantors party thereto and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K of Revlon, Inc. filed with the SEC on September 9, 2016).
|
4.5
|
Joinder Agreement to the Registration Rights Agreement, dated as of September 7, 2016, by and among Revlon Consumer Products Corporation, the guarantors party thereto and Merrill Lynch, Pierce, Fenner & Smith Incorporated and Citigroup Global Markets Inc., as representatives of the initial purchasers (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K of Revlon, Inc. filed with the SEC on September 9, 2016).
|
*10.1
|
Consulting Agreement between the Company and E. Scott Beattie, dated November 3, 2016.
|
*10.2
|
Restricted Stock Unit Agreement between the Company and E. Scott Beattie, dated November 3, 2016.
|
10.3
|
Term Loan Agreement, dated as of September 7, 2016, by and among Revlon Consumer Products Corporation, Revlon, Inc. (solely for the purposes set forth therein), certain lenders party thereto and Citibank, N.A., as administrative agent and collateral agent (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of Revlon, Inc. filed with the SEC on September 9, 2016).
|
10.4
|
Asset-Based Revolving Credit Agreement, dated as of September 7, 2016, by and among Revlon Consumer Products Corporation, certain local borrowing subsidiaries from time to time party thereto, Revlon, Inc. (solely for the purposes set forth therein), certain lenders and issuing lenders party thereto and Citibank, N.A., as administrative agent, collateral agent, issuing lender and swingline lender (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K of Revlon, Inc. filed with the SEC on September 9, 2016).
|
10.5
|
Term Loan Guarantee and Collateral Agreement, dated as of September 7, 2016, made by each of the signatories thereto in favor of Citibank, N.A., as collateral agent, for the benefit of the Secured Parties under the Term Loan Agreement (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K of Revlon, Inc. filed with the SEC on September 9, 2016).
|
10.6
|
Holdings Term Loan Guarantee and Pledge Agreement, dated as of September 7, 2016, made by Revlon, Inc. in favor of Citibank, N.A., as collateral agent, for the benefit of the Secured Parties under the Term Loan Agreement (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K of Revlon, Inc. filed with the SEC on September 9, 2016).
|
10.7
|
ABL Guarantee and Collateral Agreement, dated as of September 7, 2016, made by each of the signatories thereto in favor of Citibank, N.A., as collateral agent, for the benefit of the Secured Parties under the Asset-Based Revolving Credit Agreement (incorporated by reference to Exhibit 10.5 to the Current Report on Form 8-K of Revlon, Inc. filed with the SEC on September 9, 2016).
|
10.8
|
Holdings ABL Guarantee and Pledge Agreement, dated as of September 7, 2016, made by Revlon, Inc. in favor of Citibank, N.A., as collateral agent, for the benefit of the Secured Parties under the Asset-Based Revolving Credit Agreement (incorporated by reference to Exhibit 10.6 to the Current Report on Form 8-K of Revlon, Inc. filed with the SEC on September 9, 2016).
|
10.9
|
ABL Intercreditor Agreement, dated as of September 7, 2016, among Citibank, N.A., as ABL Agent, Citibank, N.A., as Initial Term Loan Agent, Revlon, Inc., Revlon Consumer Products Corporation, each subsidiary listed therein or that becomes a party thereto and each Other Term Loan Agent from time to time party thereto (incorporated by reference to Exhibit 10.7 to the Current Report on Form 8-K of Revlon, Inc. filed with the SEC on September 9, 2016).
|
10.10
|
Preferred Stock Repurchase and Warrant Cancellation Agreement, dated June 16, 2016, by and among Revlon, Inc., Revlon Consumer Products Corporation, RR Transaction Corp., Elizabeth Arden, Inc., Nightingale Onshore Holdings L.P. and Nightingale Offshore Holdings L.P. (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of Revlon, Inc. filed with the SEC on June 17, 2016).
|
*31.1
|
Certification of Fabian T. Garcia, Chief Executive Officer, dated November 4, 2016, pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange Act.
|
*31.2
|
Certification of Juan R. Figuereo, Chief Financial Officer, dated November 4, 2016, pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange Act.
|
32.1 (furnished herewith)
|
Certification of Fabian T. Garcia, Chief Executive Officer, dated November 4, 2016, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
32.2 (furnished herewith)
|
Certification of Juan R. Figuereo, Chief Financial Officer, dated November 4, 2016, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
*101.INS
|
XBRL Instance Document
|
*101.SCH
|
XBRL Taxonomy Extension Schema
|
*101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase
|
*101.DEF
|
XBRL Taxonomy Extension Definition Linkbase
|
*101.LAB
|
XBRL Taxonomy Extension Label Linkbase
|
*101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase
|
Revlon, Inc.
|
||||
(Registrant)
|
||||
|
|
|
|
|
By: /s/ Fabian T. Garcia
|
|
By: /s/ Juan R. Figuereo
|
|
By: /s/ Siobhan Anderson
|
Fabian T. Garcia
|
|
Juan R. Figuereo
|
|
Siobhan Anderson
|
President,
|
|
Executive Vice President and
|
|
Senior Vice President,
|
Chief Executive Officer and
|
|
Chief Financial Officer
|
|
Chief Accounting Officer,
|
Director
|
|
|
|
Corporate Controller, Treasurer
|
|
|
|
|
and Investor Relations
|
Section 1.
|
Registered Office 1
|
Section 2.
|
Other Offices 1
|
Section 1.
|
Place of Meetings 1
|
Section 2.
|
Annual Meetings 1
|
Section 3.
|
Nature of Business at Meetings of Stockholders 1
|
Section 4.
|
Special Meetings 2
|
Section 5.
|
Quorum 2
|
Section 6.
|
Proxies 3
|
Section 7.
|
Voting 3
|
Section 8.
|
Organization and Order of Business 2
|
Section 9.
|
Consent of Stockholders in Lieu of Meeting 3
|
Section 10.
|
List of Stockholders Entitled to Vote 4
|
Section 11.
|
Stock Ledger 4
|
Section 12.
|
Record Date 4
|
Section 13.
|
Inspectors of Election 5
|
Section 1.
|
Number and Election of Directors 5
|
Section 2.
|
Vacancies 5
|
Section 3.
|
Duties and Powers 5
|
Section 4.
|
Organization 6
|
Section 5.
|
Resignations and Removals of Directors 6
|
Section 6.
|
Meetings 6
|
Section 7.
|
First Yearly Meeting 6
|
Section 8.
|
Quorum and Manner of Acting 6
|
Section 9.
|
Action by Written Consent 7
|
Section 10.
|
Meetings by Means of Conference Telephone 7
|
Section 11.
|
Compensation 7
|
Section 12.
|
Interested Directors 7
|
Section 1.
|
How Constituted and Powers 8
|
Section 2.
|
Executive Committee 8
|
Section 3.
|
Organization 8
|
Section 4.
|
Meetings 8
|
Section 5.
|
Quorum and Manner of Acting 8
|
Section 6.
|
General 9
|
Section 1.
|
Officers 9
|
Section 2.
|
Term of Office and Qualifications 9
|
Section 3.
|
Subordinate Officers 9
|
Section 4.
|
Removal 9
|
Section 5.
|
Resignations 9
|
Section 6.
|
Vacancies 9
|
Section 7.
|
Compensation 9
|
Section 8.
|
Chairman of the Board of Directors 10
|
Section 9.
|
Executive Vice Chairman of the Board of Directors 10
|
Section 10.
|
President 10
|
Section 11.
|
Chief Operating Officer 11
|
Section 12.
|
Vice Presidents 11
|
Section 13.
|
Treasurer 11
|
Section 14.
|
Controller 12
|
Section 15.
|
Secretary 12
|
Section 16.
|
Duties of Assistant Treasurers, Assistant Secretaries and Other Subordinate Officers 13
|
Section 17.
|
Appointed Officers 13
|
Section 1.
|
Execution of Contracts 13
|
Section 2.
|
Loans and Loan Guarantees 14
|
Section 3.
|
Voting of Stock Held 14
|
Section 4.
|
Checks, Drafts, etc 14
|
Section 5.
|
Deposits 14
|
Section 1.
|
Form of Certificates 15
|
Section 2.
|
Signatures 15
|
Section 3.
|
Lost, Destroyed, Stolen or Mutilated Certificates 15
|
Section 4.
|
Transfers 16
|
Section 5.
|
Transfer and Registry Agents 16
|
Section 6.
|
Beneficial Owners 16
|
Section 7.
|
Dividends 16
|
Section 8.
|
Limitations on Transfer 16
|
Section 1.
|
Notices 17
|
Section 2.
|
Waivers of Notice 17
|
Section 1.
|
Books 17
|
Section 2.
|
Form of Books 18
|
Section 1.
|
Power to Indemnify in Actions, Suits or Proceedings other Than Those by or in the Right of the Corporation 18
|
Section 2.
|
Power to Indemnify in Actions, Suits or Proceedings by or in the Right of the Corporation 18
|
Section 3.
|
Authorization of Indemnification 19
|
Section 4.
|
Good Faith Defined 19
|
Section 5.
|
Indemnification by a Court 19
|
Section 6.
|
Expenses Payable in Advance 20
|
Section 7.
|
Non-exclusivity of Indemnification and Advancement of Expenses 20
|
Section 8.
|
Insurance 20
|
Section 9.
|
Certain Definitions 20
|
Section 10.
|
Survival of Indemnification and Advancement of Expenses 21
|
Section 11.
|
Limitation on Indemnification 21
|
Section 12.
|
Indemnification of Appointed Officers, Employees and Agents 21
|
Section 1.
|
Amendment of By-Laws 21
|
Section 2.
|
Entire Board of Directors 22
|
Section 1.
|
Seal 22
|
Section 2.
|
Fiscal Year 22
|
a.
|
During the Advisory Period (as defined below), Beattie shall serve as non-employee senior advisor (“
Senior Advisor
”) to Fabian Garcia, the Company’s President and Chief Executive Officer, or his successor (the “
CEO
”), reporting directly to the CEO. In his role as Senior Advisor, Beattie shall provide advice, assistance and cooperation to the Company if, as, when and to the extent requested by the CEO. Beattie’s services to the CEO shall include, without limitation, the following: (i) sharing with the CEO Beattie’s expertise, experience, knowledge of and insight with respect to Elizabeth Arden’s business and the beauty and fragrance industry in general; (ii) assisting the CEO in the procurement of new fragrances; (iii) working with the CEO to sustain key customer and other key stakeholder relations; (iv) assisting the CEO in the Company’s integration process in connection with the Acquisition (including assisting in the retention of key talent); and (v) representing the Company in industry forums, as agreed with and determined by the CEO (any and all of the foregoing, the “
Advisory Services
”). Beattie shall provide the Advisory Services to, and at the direction of, the CEO. Beattie shall be permitted to perform the Advisory Services from New York City or the State of Florida at any given time during the Advisory Period, and shall make best efforts to attend all in-person meetings of Revlon’s Board of Directors (the “
Board
”). In no event shall the Advisory Services exceed
|
b.
|
Beattie acknowledges and agrees that, unless expressly authorized by the CEO or the Board, or in connection with his services as a member of the Board in accordance with his fiduciary duties, he is not authorized to speak publicly, or to issue any other form of communication or disclosure to the public, on behalf of the Company, to enter into agreements on behalf of the Company or to otherwise bind the Company.
|
c.
|
Advisory Services Pay
. In consideration of Beattie’s agreement to provide the Advisory Services and his actually providing the Advisory Services as, when and to the extent requested by the CEO, the Company agrees to pay Beattie during the Advisory Period (and as provided in
Section 1(f)
, if applicable)) a fee at a rate of five-hundred thousand U.S. dollars ($500,000) per annum (the “
Advisory Services Pay
”), which will be payable in equal installments on a monthly basis starting on November 15, 2016, and on the 15
th
of every month thereafter during the applicable period (each such date, a “
Regular Payment Date
”). Beattie hereby acknowledges that the Advisory Services Pay shall be inclusive of, and in lieu of, any cash compensation he is or was otherwise entitled to receive for his service as a member of the Board.
|
d.
|
Business Expenses
. The Company shall promptly reimburse Beattie for reasonable and necessary expenses actually incurred by Beattie in connection with the business and affairs of the Company and the performance of Beattie’s duties hereunder, subject to and in accordance with the Revlon Travel and Entertainment Policy, as in effect from time to time.
|
e.
|
Restricted Stock Unit Grant
. As soon as reasonably practicable following the Effective Date (as defined below), Revlon will grant to Beattie a number of restricted stock units equal to $3 million divided by the NYSE closing price of Revlon Class A Common Stock on the Effective Date (the “
RSU Grant
”) pursuant to the restricted stock unit agreement evidencing the RSU Grant that is consistent with the terms of this Agreement, substantially in the form attached hereto as Exhibit A (the “
RSU Agreement
”). The RSU Grant will vest ratably on each of the first three anniversaries of the Effective Date (the “
Original Vesting Schedule
”), so long as Beattie (i) continues to provide Advisory Services, to the extent requested by the CEO; and (ii) has not committed a material breach of
Sections 4
,
5
,
6
or
7
of this Agreement (such sections collectively, the “
Restrictive Covenants
”) following written notice by the
|
(i)
|
If the Advisory Period is terminated pursuant to subsections (ii) or (iii) of
Section 1(f)
of this Agreement, Beattie will continue to vest in the RSU Grant in accordance with the Original Vesting Schedule, so long as Beattie has not committed a Restrictive Covenant Breach.
|
(ii)
|
Upon a “Change of Control” (as defined in the RSU Agreement), the unvested portion of the RSU Grant shall fully vest upon the consummation date of such Change of Control.
|
(iii)
|
In the event that Beattie commits a Restrictive Covenant Breach, Beattie shall pay to the Company the value of any RSU Grant which vested during the 12-month period prior to such breach first occurring, in cash, within 10 days of the Company’s delivery of notice of such breach, and the Company is hereby authorized to deduct such amount from any other amounts otherwise due to Beattie.
|
(iv)
|
Except as expressly set forth herein, the RSU Grant shall be governed by the terms and conditions of the RSU Agreement.
|
f.
|
The “
Advisory Period
” shall begin on the day following the Execution Date (the “
Effective Date
”) and shall continue until the earliest to occur of:
|
(i)
|
the third anniversary of the Effective Date (such three-year period from the Effective Date, the “
Complete Term
”);
|
(ii)
|
the date on which the Board and/or the CEO notifies Beattie that it no longer requires Beattie’s provision of the Advisory Services for any reason other than for Cause (as defined below), or the date of Beattie’s death or permanent and total disability;
|
(iii)
|
the date on which Beattie terminates the Advisory Period as a result of the Company’s failure to nominate him to the Board (other than in connection with the existence of Cause);
|
(iv)
|
the date on which Beattie notifies the Board and/or the CEO that he no longer wishes to provide the Advisory Services for any or no reason; or
|
(v)
|
the date on which Beattie is terminated by the Company as a result of his commission of any of the following act(s): (A) the willful material
|
#4821-2932-5881
|
|
|
2
|
|
|
3
|
|
|
4
|
|
|
|
Title:
|
SVP, Deputy General Counsel and Secretary
|
|
5
|
|
|
|
|
Notice of Grant of Restricted Stock Units
|
Revlon, Inc.
ID: 13-3662955
One New York Plaza
New York, New York 10004
New York, NY 10017
|
Restricted Stock Unit Grant No.
|
|
|
|
Date of Grant
|
November 3, 2016
|
|
|
Number of Restricted Stock Units
|
93,458
|
|
|
Except as otherwise provided in your Restricted Stock Unit Agreement (as defined below), One-third (1/3) of the total restricted stock units granted hereunder shall vest on November 3, 2017, one-third (1/3) of the total restricted stock units granted hereunder shall vest on November 3, 2018 and the remainder of the total restricted stock units granted hereunder shall vest on November 3, 2019.
|
|
/s/ Michael T. Sheehan
|
|
November 3, 2016
|
For Revlon, Inc.
|
|
Date
|
/s/ E. Scott Beattie
|
|
November 3, 2016
|
Grantee
|
|
Date
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q (the "Report") of Revlon, Inc. (the "Registrant");
|
2.
|
Based on my knowledge, this 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 Report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this 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 Report;
|
4.
|
The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
|
5.
|
The Registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the equivalent functions):
|
1.
|
I have reviewed this quarterly report on Form 10-Q (the "Report") of Revlon, Inc. (the "Registrant");
|
2.
|
Based on my knowledge, this 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 Report;
|
3.
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Based on my knowledge, the financial statements, and other financial information included in this 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 Report;
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4.
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The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
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5.
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The Registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the equivalent functions):
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