x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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__
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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13-3662955
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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One New York Plaza, New York, New York
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10004
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
¨
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Accelerated filer
x
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Non-accelerated filer
¨
(Do not check if a smaller reporting company)
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Smaller reporting company
¨
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||
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Emerging growth company
¨
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PART I - Financial Information
|
||
Item 1.
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Financial Statements
|
|
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Consolidated Balance Sheets as of March 31, 2018 (Unaudited) and December 31, 2017
|
|
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Unaudited Consolidated Statements of Operations and Comprehensive (Loss) Income for the Three Months Ended March 31, 2018 and 2017
|
|
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Unaudited Consolidated Statement of Stockholders' Deficiency for the Three Months Ended March 31, 2018
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|
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Unaudited Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2018 and 2017
|
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Notes to Unaudited Consolidated Financial Statements
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Item 2.
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Management's Discussion and Analysis of Financial Condition and Results of Operations
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Item 3.
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Quantitative and Qualitative Disclosures About Market Risk
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Item 4.
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Controls and Procedures
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PART II - Other Information
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||
Item 1.
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Legal Proceedings
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Item 1A.
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Risk Factors
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Item 5.
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Other Information
|
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Item 6.
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Exhibits
|
|
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Signatures
|
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March 31, 2018
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December 31, 2017
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||||
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(Unaudited)
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|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
55.7
|
|
|
$
|
87.1
|
|
Trade receivables, less allowance for doubtful accounts of $13.0 and $13.5 as of March 31, 2018 and December 31, 2017, respectively
|
381.1
|
|
|
444.8
|
|
||
Inventories
|
515.5
|
|
|
497.9
|
|
||
Prepaid expenses and other assets
|
162.0
|
|
|
113.4
|
|
||
Total current assets
|
1,114.3
|
|
|
1,143.2
|
|
||
Property, plant and equipment, net of accumulated depreciation of $394.2 and $385.5 as of March 31, 2018 and December 31, 2017, respectively
|
371.6
|
|
|
372.7
|
|
||
Deferred income taxes
|
156.8
|
|
|
138.0
|
|
||
Goodwill
|
692.8
|
|
|
692.5
|
|
||
Intangible assets, net of accumulated amortization of $141.7 and $130.9 as of March 31, 2018 and December 31, 2017, respectively
|
584.7
|
|
|
592.1
|
|
||
Other assets
|
121.9
|
|
|
118.4
|
|
||
Total assets
|
$
|
3,042.1
|
|
|
$
|
3,056.9
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Short-term borrowings
|
$
|
10.8
|
|
|
$
|
12.4
|
|
Current portion of long-term debt
|
254.3
|
|
|
170.2
|
|
||
Accounts payable
|
345.4
|
|
|
336.9
|
|
||
Accrued expenses and other current liabilities
|
398.5
|
|
|
412.8
|
|
||
Total current liabilities
|
1,009.0
|
|
|
932.3
|
|
||
Long-term debt
|
2,651.5
|
|
|
2,653.7
|
|
||
Long-term pension and other post-retirement plan liabilities
|
170.1
|
|
|
172.8
|
|
||
Other long-term liabilities
|
67.2
|
|
|
68.5
|
|
||
Stockholders’ deficiency:
|
|
|
|
||||
Class A Common Stock, par value $0.01 per share; 900,000,000 shares authorized; 54,625,867 and 54,556,100 shares issued as of March 31, 2018 and December 31, 2017, respectively
|
0.5
|
|
|
0.5
|
|
||
Additional paid-in capital
|
1,047.7
|
|
|
1,040.0
|
|
||
Treasury stock, at cost: 1,251,111 and 1,114,528 shares of Class A Common Stock as of March 31, 2018 and December 31, 2017, respectively
|
(24.6
|
)
|
|
(21.7
|
)
|
||
Accumulated deficit
|
(1,651.1
|
)
|
|
(1,560.8
|
)
|
||
Accumulated other comprehensive loss
|
(228.2
|
)
|
|
(228.4
|
)
|
||
Total stockholders’ deficiency
|
(855.7
|
)
|
|
(770.4
|
)
|
||
Total liabilities and stockholders’ deficiency
|
$
|
3,042.1
|
|
|
$
|
3,056.9
|
|
|
Three Months Ended March 31,
|
||||||
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2018
|
|
2017
|
||||
|
|
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(as adjusted)
(*)
|
|
|||
Net sales
|
$
|
560.7
|
|
|
$
|
594.9
|
|
Cost of sales
|
242.6
|
|
|
265.5
|
|
||
Gross profit
|
318.1
|
|
|
329.4
|
|
||
Selling, general and administrative expenses
|
371.7
|
|
|
353.8
|
|
||
Acquisition and integration costs
|
4.0
|
|
|
17.5
|
|
||
Restructuring charges and other, net
|
4.1
|
|
|
1.2
|
|
||
Operating loss
|
(61.7
|
)
|
|
(43.1
|
)
|
||
Other expenses:
|
|
|
|
||||
Interest expense
|
39.9
|
|
|
35.0
|
|
||
Amortization of debt issuance costs
|
2.3
|
|
|
2.2
|
|
||
Foreign currency gains
|
(10.6
|
)
|
|
(4.3
|
)
|
||
Miscellaneous, net
|
—
|
|
|
0.6
|
|
||
Other expenses
|
31.6
|
|
|
33.5
|
|
||
Loss from continuing operations before income taxes
|
(93.3
|
)
|
|
(76.6
|
)
|
||
Benefit from income taxes
|
(1.6
|
)
|
|
(38.9
|
)
|
||
Loss from continuing operations, net of taxes
|
(91.7
|
)
|
|
(37.7
|
)
|
||
Income from discontinued operations, net of taxes
|
1.4
|
|
|
0.3
|
|
||
Net loss
|
$
|
(90.3
|
)
|
|
$
|
(37.4
|
)
|
Other comprehensive income:
|
|
|
|
||||
Foreign currency translation adjustments, net of tax
(a)
|
(2.5
|
)
|
|
4.7
|
|
||
Amortization of pension related costs, net of tax
(b)(c)
|
2.1
|
|
|
2.0
|
|
||
Pension curtailment, net of tax
(d)
|
—
|
|
|
2.6
|
|
||
Reclassification into earnings of accumulated losses from the de-designated 2013 Interest Rate Swap, net of tax
(e)
|
0.6
|
|
|
0.6
|
|
||
Other comprehensive income, net
|
0.2
|
|
|
9.9
|
|
||
Total comprehensive loss
|
$
|
(90.1
|
)
|
|
$
|
(27.5
|
)
|
|
|
|
|
||||
Basic (loss) earnings per common share:
|
|
|
|
||||
Continuing operations
|
$
|
(1.74
|
)
|
|
$
|
(0.72
|
)
|
Discontinued operations
|
0.03
|
|
|
0.01
|
|
||
Net loss
|
$
|
(1.71
|
)
|
|
$
|
(0.71
|
)
|
|
|
|
|
||||
Diluted (loss) earnings per common share:
|
|
|
|
||||
Continuing operations
|
$
|
(1.74
|
)
|
|
$
|
(0.72
|
)
|
Discontinued operations
|
0.03
|
|
|
0.01
|
|
||
Net loss
|
$
|
(1.71
|
)
|
|
$
|
(0.71
|
)
|
|
|
|
|
||||
Weighted average number of common shares outstanding:
|
|
|
|
||||
Basic
|
52,673,672
|
|
|
52,529,826
|
|
||
Diluted
|
52,673,672
|
|
|
52,529,826
|
|
(*)
|
Adjusted as a result of the adoption of certain accounting pronouncements during the
three months ended March 31,
2018. See Note 1, "Description of Business and Summary of Significant Accounting Policies - Recently Adopted Accounting Pronouncements," for details of these adjustments.
|
(a)
|
Net of tax expense of
nil
and
$1.0 million
for the
three months ended March 31,
2018
and
2017
, respectively.
|
(b)
|
Net of tax expense of
$0.3 million
and
$0.4 million
for the
three months ended March 31,
2018
and
2017
, respectively.
|
(c)
|
This amount is included in the computation of net periodic benefit costs (income). See Note
10
, "Pension and Post-Retirement Benefits," for additional information regarding net periodic benefit costs (income).
|
(d)
|
Net of tax expense of
$0.3 million
for the
three months ended March 31,
2017
.
|
(e)
|
Net of tax benefit of
$0.2 million
and
$0.4 million
for the
three months ended March 31,
2018
and
2017
, respectively.
|
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Treasury Stock
|
|
Accumulated Deficit
|
|
Accumulated Other Comprehensive Loss
|
|
Total Stockholders’ Deficiency
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance, January 1, 2018
|
$
|
0.5
|
|
|
$
|
1,040.0
|
|
|
$
|
(21.7
|
)
|
|
$
|
(1,560.8
|
)
|
|
$
|
(228.4
|
)
|
|
$
|
(770.4
|
)
|
Treasury stock acquired, at cost
(a)
|
—
|
|
|
—
|
|
|
(2.9
|
)
|
|
—
|
|
|
—
|
|
|
(2.9
|
)
|
||||||
Stock-based compensation amortization
|
—
|
|
|
7.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7.7
|
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(90.3
|
)
|
|
—
|
|
|
(90.3
|
)
|
||||||
Other comprehensive income, net
(b)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|
0.2
|
|
||||||
Balance, March 31, 2018
|
$
|
0.5
|
|
|
$
|
1,047.7
|
|
|
$
|
(24.6
|
)
|
|
$
|
(1,651.1
|
)
|
|
$
|
(228.2
|
)
|
|
$
|
(855.7
|
)
|
(a)
|
Pursuant to the share withholding provisions of the Fourth Amended and Restated Revlon, Inc. Stock Plan (the "Stock Plan"), the Company withheld an aggregate of
136,583
shares of Revlon Class A Common Stock during the
three months ended March 31,
2018
to satisfy certain minimum statutory tax withholding requirements related to the vesting of restricted shares for certain senior executives. These withheld shares were recorded as treasury stock using the cost method, at a weighted-average price per share of
$21.30
during the
three months ended March 31,
2018
, based on the closing price of Revlon Class A Common Stock as reported on the New York Stock Exchange (the "NYSE") consolidated tape on each respective vesting date, for a total of
$2.9 million
. See Note 15, "Stock Compensation Plan" to the Consolidated Financial Statements in Revlon's Annual Report on Form 10-K for the fiscal year ended December 31, 2017, filed with the SEC on March 15, 2018 (the "2017 Form 10-K"), for details regarding restricted stock awards under the Stock Plan.
|
(b)
|
See Note
12
, "Accumulated Other Comprehensive Loss," regarding the changes in the accumulated balances for each component of other comprehensive loss during the
three months ended March 31,
2018
.
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
||||
Net loss
|
$
|
(90.3
|
)
|
|
$
|
(37.4
|
)
|
Adjustments to reconcile net (loss) income to net cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization
|
38.7
|
|
|
37.1
|
|
||
Foreign currency gains from re-measurement
|
(10.5
|
)
|
|
(4.7
|
)
|
||
Amortization of debt discount
|
0.3
|
|
|
0.3
|
|
||
Stock-based compensation amortization
|
7.7
|
|
|
1.7
|
|
||
Benefit from deferred income taxes
|
(18.5
|
)
|
|
(38.1
|
)
|
||
Amortization of debt issuance costs
|
2.3
|
|
|
2.2
|
|
||
Loss on sale of certain assets
|
0.1
|
|
|
0.4
|
|
||
Pension and other post-retirement cost (income)
|
0.6
|
|
|
(0.1
|
)
|
||
Change in assets and liabilities:
|
|
|
|
||||
Decrease in trade receivables
|
67.6
|
|
|
52.0
|
|
||
Increase in inventories
|
(14.6
|
)
|
|
(24.9
|
)
|
||
Increase in prepaid expenses and other current assets
|
(46.3
|
)
|
|
(19.9
|
)
|
||
Increase in accounts payable
|
2.3
|
|
|
5.6
|
|
||
Decrease in accrued expenses and other current liabilities
|
(24.1
|
)
|
|
(45.9
|
)
|
||
Pension and other post-retirement plan contributions
|
(1.8
|
)
|
|
(1.9
|
)
|
||
Purchases of permanent displays
|
(14.2
|
)
|
|
(10.2
|
)
|
||
Other, net
|
3.4
|
|
|
(1.8
|
)
|
||
Net cash used in operating activities
|
(97.3
|
)
|
|
(85.6
|
)
|
||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
||||
Capital expenditures
|
(13.7
|
)
|
|
(15.4
|
)
|
||
Net cash used in investing activities
|
(13.7
|
)
|
|
(15.4
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
||||
Net increase (decrease) in short-term borrowings and overdraft
|
1.0
|
|
|
(3.4
|
)
|
||
Net borrowings under the 2016 Revolving Credit Facility
|
83.8
|
|
|
40.9
|
|
||
Repayments under the 2016 Term Loan Facility
|
(4.5
|
)
|
|
(4.5
|
)
|
||
Payment of financing costs
|
—
|
|
|
(0.8
|
)
|
||
Tax withholdings related to net share settlements of restricted stock units and awards
|
(2.9
|
)
|
|
(1.4
|
)
|
||
Other financing activities
|
(0.2
|
)
|
|
(0.4
|
)
|
||
Net cash provided by financing activities
|
77.2
|
|
|
30.4
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
2.9
|
|
|
5.3
|
|
||
Net decrease in cash, cash equivalents and restricted cash
|
(30.9
|
)
|
|
(65.3
|
)
|
||
Cash, cash equivalents and restricted cash at beginning of period
(1)
|
87.4
|
|
|
186.8
|
|
||
Cash, cash equivalents and restricted cash at end of period
(1)
|
$
|
56.5
|
|
|
$
|
121.5
|
|
Supplemental schedule of cash flow information:
|
|
|
|
||||
Cash paid during the period for:
|
|
|
|
||||
Interest
|
$
|
53.6
|
|
|
$
|
49.4
|
|
Income taxes, net of refunds
|
2.6
|
|
|
2.4
|
|
|
Restructuring Charges and Other, Net
|
|
|
|
|
|
|
|||||||||||||||||
|
Employee Severance and Other Personnel Benefits
|
|
Lease Termination and Other Costs
(a)
|
|
Total Restructuring Charges
|
|
Inventory Adjustments
(b)
|
|
Other Related Charges
(c)
|
|
Total Restructuring and Related Charges
|
|||||||||||||
Charges incurred through December 31, 2017
|
$
|
62.8
|
|
|
$
|
5.0
|
|
|
$
|
67.8
|
|
|
$
|
1.4
|
|
|
$
|
3.0
|
|
|
$
|
72.2
|
|
|
Charges incurred during the three months ended March 31, 2018
|
5.2
|
|
—
|
|
(1.8
|
)
|
|
3.4
|
|
|
1.1
|
|
|
—
|
|
|
4.5
|
|
||||||
Cumulative charges incurred through March 31, 2018
|
$
|
68.0
|
|
|
$
|
3.2
|
|
|
$
|
71.2
|
|
|
$
|
2.5
|
|
|
$
|
3.0
|
|
|
$
|
76.7
|
|
|
|
Charges incurred during the three months ended March 31, 2018
|
|
Cumulative charges incurred through March 31, 2018
|
||||
Revlon
|
|
$
|
4.2
|
|
|
$
|
28.8
|
|
Elizabeth Arden
|
|
(1.2
|
)
|
|
11.6
|
|
||
Portfolio
|
|
0.7
|
|
|
14.1
|
|
||
Fragrances
|
|
(0.3
|
)
|
|
16.7
|
|
||
Total
|
|
$
|
3.4
|
|
|
$
|
71.2
|
|
|
|
|
|
|
|
|
Utilized, Net
|
|
|
||||||||||||||
Liability
Balance at January 1, 2018
|
|
Expense (Income), Net
|
|
Foreign Currency Translation
|
|
Cash
|
|
Non-cash
|
|
Liability Balance at March 31, 2018
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
EA Integration Restructuring Program:
(a)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Employee severance and other personnel benefits
|
$
|
25.8
|
|
|
$
|
5.2
|
|
|
$
|
0.2
|
|
|
$
|
(5.5
|
)
|
|
$
|
—
|
|
|
$
|
25.7
|
|
Other
|
3.9
|
|
|
(0.7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3.2
|
|
||||||
December 2013 Program:
(b)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Employee severance and other personnel benefits
|
1.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.1
|
|
||||||
Other individually immaterial actions:
(c)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Employee severance and other personnel benefits
|
1.4
|
|
|
0.7
|
|
|
—
|
|
|
(0.8
|
)
|
|
—
|
|
|
1.3
|
|
||||||
Other
|
1.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.7
|
|
||||||
Total restructuring reserve
|
$
|
33.9
|
|
|
$
|
5.2
|
|
|
$
|
0.2
|
|
|
$
|
(6.3
|
)
|
|
$
|
—
|
|
|
$
|
33.0
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Net sales
|
$
|
—
|
|
|
$
|
—
|
|
Income from discontinued operations, before taxes
|
1.4
|
|
|
0.3
|
|
||
Provision for income taxes
|
—
|
|
|
—
|
|
||
Income from discontinued operations, net of taxes
|
1.4
|
|
|
0.3
|
|
|
March 31,
|
|
December 31,
|
||||
|
2018
|
|
2017
|
||||
Cash and cash equivalents
|
$
|
1.3
|
|
|
$
|
1.3
|
|
Trade receivables, net
|
0.2
|
|
|
0.2
|
|
||
Total current assets
|
1.5
|
|
|
1.5
|
|
||
Total assets
|
$
|
1.5
|
|
|
$
|
1.5
|
|
|
|
|
|
||||
Accounts payable
|
$
|
0.5
|
|
|
$
|
0.5
|
|
Accrued expenses and other
|
3.6
|
|
|
3.5
|
|
||
Total current liabilities
|
4.1
|
|
|
4.0
|
|
||
Total liabilities
|
$
|
4.1
|
|
|
$
|
4.0
|
|
|
March 31,
|
|
December 31,
|
||||
|
2018
|
|
2017
|
||||
Raw materials and supplies
|
$
|
134.4
|
|
|
$
|
123.4
|
|
Work-in-process
|
26.9
|
|
|
22.0
|
|
||
Finished goods
|
354.2
|
|
|
352.5
|
|
||
|
$
|
515.5
|
|
|
$
|
497.9
|
|
|
Revlon
|
|
Portfolio
|
|
Elizabeth Arden
|
|
Fragrances
|
|
Total
|
||||||||||
Balance at December 31, 2017
|
$
|
265.3
|
|
|
$
|
189.5
|
|
|
$
|
116.9
|
|
|
$
|
120.8
|
|
|
$
|
692.5
|
|
Foreign currency translation adjustment
|
0.2
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
|||||
Balance at March 31, 2018
|
$
|
265.5
|
|
|
$
|
189.6
|
|
|
$
|
116.9
|
|
|
$
|
120.8
|
|
|
$
|
692.8
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cumulative goodwill impairment charges
(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
37.2
|
|
|
March 31, 2018
|
||||||||||||
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
|
Weighted-Average Useful Life (in Years)
|
||||||
Finite-lived intangible assets:
|
|
|
|
|
|
|
|
||||||
Trademarks and licenses
|
$
|
272.5
|
|
|
$
|
(77.0
|
)
|
|
$
|
195.5
|
|
|
13
|
Customer relationships
|
251.2
|
|
|
(52.6
|
)
|
|
198.6
|
|
|
13
|
|||
Patents and internally-developed IP
|
20.8
|
|
|
(8.7
|
)
|
|
12.1
|
|
|
6
|
|||
Distribution rights
|
31.0
|
|
|
(2.7
|
)
|
|
28.3
|
|
|
16
|
|||
Other
|
1.3
|
|
|
(0.7
|
)
|
|
0.6
|
|
|
1
|
|||
Total finite-lived intangible assets
|
$
|
576.8
|
|
|
$
|
(141.7
|
)
|
|
$
|
435.1
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Indefinite-lived intangible assets:
|
|
|
|
|
|
|
|
||||||
Trade names
|
$
|
149.6
|
|
|
N/A
|
|
|
$
|
149.6
|
|
|
|
|
Total indefinite-lived intangible assets
|
$
|
149.6
|
|
|
N/A
|
|
|
$
|
149.6
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total intangible assets
|
$
|
726.4
|
|
|
$
|
(141.7
|
)
|
|
$
|
584.7
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
December 31, 2017
|
||||||||||||
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
|
Weighted-Average Useful Life (in Years)
|
||||||
Finite-lived intangible assets:
|
|
|
|
|
|
|
|
||||||
Trademarks and licenses
|
$
|
271.4
|
|
|
$
|
(72.8
|
)
|
|
$
|
198.6
|
|
|
13
|
Customer relationships
|
250.6
|
|
|
(46.8
|
)
|
|
203.8
|
|
|
13
|
|||
Patents and internally-developed IP
|
20.8
|
|
|
(8.4
|
)
|
|
12.4
|
|
|
7
|
|||
Distribution rights
|
31.0
|
|
|
(2.3
|
)
|
|
28.7
|
|
|
17
|
|||
Other
|
1.3
|
|
|
(0.6
|
)
|
|
0.7
|
|
|
2
|
|||
Total finite-lived intangible assets
|
$
|
575.1
|
|
|
$
|
(130.9
|
)
|
|
$
|
444.2
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Indefinite-lived intangible assets:
|
|
|
|
|
|
|
|
||||||
Trade names
|
$
|
147.9
|
|
|
N/A
|
|
|
$
|
147.9
|
|
|
|
|
Total indefinite-lived intangible assets
|
$
|
147.9
|
|
|
N/A
|
|
|
$
|
147.9
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total intangible assets
|
$
|
723.0
|
|
|
$
|
(130.9
|
)
|
|
$
|
592.1
|
|
|
|
|
Estimated Amortization Expense
|
||
2018
|
$
|
30.7
|
|
2019
|
37.9
|
|
|
2020
|
37.1
|
|
|
2021
|
36.1
|
|
|
2022
|
34.7
|
|
|
Thereafter
|
258.6
|
|
|
Total
|
$
|
435.1
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Compensation and related benefits
|
$
|
48.5
|
|
|
$
|
59.6
|
|
Advertising and promotional costs
|
86.4
|
|
|
84.0
|
|
||
Sales returns and allowances
|
73.3
|
|
|
61.7
|
|
||
Taxes
|
46.1
|
|
|
48.4
|
|
||
Restructuring reserve
|
31.5
|
|
|
33.3
|
|
||
Interest
|
9.6
|
|
|
23.8
|
|
||
Other
|
103.1
|
|
|
102.0
|
|
||
|
$
|
398.5
|
|
|
$
|
412.8
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
2016 Term Loan Facility: 2016 Term Loan due 2023, net of discounts and debt issuance costs
(a)
|
$
|
1,733.0
|
|
|
$
|
1,735.9
|
|
2016 Revolving Credit Facility due 2021, net of debt issuance costs
(b)
|
236.2
|
|
|
152.1
|
|
||
5.75% Senior Notes due 2021, net of debt issuance costs
(c)
|
495.5
|
|
|
495.1
|
|
||
6.25% Senior Notes due 2024, net of debt issuance costs
(d)
|
440.5
|
|
|
440.3
|
|
||
Spanish Government Loan due 2025
|
0.6
|
|
|
0.5
|
|
||
|
$
|
2,905.8
|
|
|
$
|
2,823.9
|
|
Less current portion
(*)
|
(254.3
|
)
|
|
(170.2
|
)
|
||
|
$
|
2,651.5
|
|
|
$
|
2,653.7
|
|
•
|
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 liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active; and
|
•
|
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)
|
$
|
0.6
|
|
|
$
|
—
|
|
|
$
|
0.6
|
|
|
$
|
—
|
|
Total assets at fair value
|
$
|
0.6
|
|
|
$
|
—
|
|
|
$
|
0.6
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Derivatives:
|
|
|
|
|
|
|
|
||||||||
FX Contracts
(a)
|
$
|
1.1
|
|
|
$
|
—
|
|
|
$
|
1.1
|
|
|
$
|
—
|
|
2013 Interest Rate Swap
(b)
|
0.1
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
||||
Total liabilities at fair value
|
$
|
1.2
|
|
|
$
|
—
|
|
|
$
|
1.2
|
|
|
$
|
—
|
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Derivatives:
|
|
|
|
|
|
|
|
||||||||
FX Contracts
(a)
|
$
|
0.6
|
|
|
$
|
—
|
|
|
$
|
0.6
|
|
|
$
|
—
|
|
Total assets at fair value
|
$
|
0.6
|
|
|
$
|
—
|
|
|
$
|
0.6
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Derivatives:
|
|
|
|
|
|
|
|
||||||||
FX Contracts
(a)
|
$
|
1.9
|
|
|
$
|
—
|
|
|
$
|
1.9
|
|
|
$
|
—
|
|
2013 Interest Rate Swap
(b)
|
0.9
|
|
|
—
|
|
|
0.9
|
|
|
—
|
|
||||
Total liabilities at fair value
|
$
|
2.8
|
|
|
$
|
—
|
|
|
$
|
2.8
|
|
|
$
|
—
|
|
|
Fair Value
|
|
|
||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Carrying Value
|
||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Long-term debt, including current portion
|
$
|
—
|
|
|
$
|
2,281.3
|
|
|
$
|
—
|
|
|
$
|
2,281.3
|
|
|
$
|
2,905.8
|
|
|
Fair Value
|
|
|
||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Carrying Value
|
||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Long-term debt, including current portion
|
$
|
—
|
|
|
$
|
2,131.5
|
|
|
$
|
—
|
|
|
$
|
2,131.5
|
|
|
$
|
2,823.9
|
|
|
Fair Values of Derivative Instruments
|
||||||||||||||||||
|
Assets
|
|
Liabilities
|
||||||||||||||||
|
Balance Sheet
|
|
March 31,
2018 |
|
December 31,
2017 |
|
Balance Sheet
|
|
March 31,
2018 |
|
December 31,
2017 |
||||||||
|
Classification
|
|
Fair Value
|
|
Fair Value
|
|
Classification
|
|
Fair Value
|
|
Fair Value
|
||||||||
Derivative financial instruments:
|
|
|
|
|
|
|
|
|
|||||||||||
FX Contracts
(a)
|
Prepaid expenses and other
|
|
$
|
0.6
|
|
|
$
|
0.6
|
|
|
Accrued Expenses and other
|
|
$
|
1.1
|
|
|
$
|
1.9
|
|
2013 Interest Rate Swap
(b)
|
Prepaid expenses and other
|
|
—
|
|
|
—
|
|
|
Accrued expenses and other
|
|
0.1
|
|
|
0.9
|
|
|
Amount of Gain (Loss) Recognized in Other Comprehensive (Loss) Income
|
||||||
Three Months Ended March 31,
|
|||||||
2018
|
|
2017
|
|||||
Derivatives previously designated as hedging instruments:
|
|
|
|
||||
2013 Interest Rate Swap, net of tax
(a)
|
$
|
0.6
|
|
|
$
|
0.6
|
|
|
Pension Plans |
|
Other
Post-Retirement Benefit Plans |
||||||||||||
|
Three months ended March 31,
|
||||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net periodic benefit costs (income):
|
|
|
|
|
|
|
|
||||||||
Service cost
|
$
|
0.5
|
|
|
$
|
0.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
|
4.6
|
|
|
4.8
|
|
|
0.1
|
|
|
0.1
|
|
||||
Expected return on plan assets
|
(7.0
|
)
|
|
(7.1
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization of actuarial loss
|
2.3
|
|
|
2.4
|
|
|
0.1
|
|
|
0.1
|
|
||||
Curtailment gain
(a)
|
—
|
|
|
(0.8
|
)
|
|
—
|
|
|
—
|
|
||||
Total net periodic benefit costs (income) prior to allocation
|
$
|
0.4
|
|
|
$
|
(0.2
|
)
|
|
$
|
0.2
|
|
|
$
|
0.2
|
|
Portion allocated to Revlon Holdings
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
||||
Total net periodic benefit costs (income)
|
$
|
0.4
|
|
|
$
|
(0.3
|
)
|
|
$
|
0.2
|
|
|
$
|
0.2
|
|
|
Three months ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Net periodic benefit costs (income):
|
|
|
|
||||
Cost of sales
|
$
|
—
|
|
|
$
|
—
|
|
Selling, general and administrative expense
|
0.5
|
|
|
0.5
|
|
||
Miscellaneous, net
|
0.1
|
|
|
0.6
|
|
||
Total net periodic benefit costs (income)
(a)
|
$
|
0.6
|
|
|
$
|
(0.1
|
)
|
•
|
reducing the U.S. federal corporate tax rate;
|
•
|
requiring a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries;
|
•
|
imposing a new limitation on the deductibility of interest;
|
•
|
a general elimination of U.S. federal income taxes on dividends from foreign subsidiaries;
|
•
|
a new provision designed to tax global intangible low-taxed income ("GILTI");
|
•
|
increased limitations on the deductibility of certain executive compensation; and
|
•
|
changes to net operating loss carry-forward periods and annual utilization.
|
•
|
interest income plus 30% of taxable income before interest, tax, depreciation and amortization for years through 2021; and
|
|
Foreign Currency Translation
|
|
Actuarial (Loss) Gain on Post-retirement Benefits
|
|
Deferred Gain (Loss) - Hedging
|
|
Other
|
|
Accumulated Other Comprehensive Loss
|
||||||||||
Balance at January 1, 2018
|
$
|
(15.0
|
)
|
|
$
|
(212.4
|
)
|
|
$
|
(0.7
|
)
|
|
$
|
(0.3
|
)
|
|
$
|
(228.4
|
)
|
Currency translation adjustment
|
(2.5
|
)
|
|
|
|
|
|
|
|
(2.5
|
)
|
||||||||
Amortization of pension related costs, net of tax of $(0.3) million
(a)
|
|
|
2.1
|
|
|
|
|
|
|
2.1
|
|
||||||||
Amortization of deferred losses related to the de-designated 2013 Interest Rate Swap, net of tax of $0.2 million
(b)
|
|
|
|
|
0.6
|
|
|
|
|
0.6
|
|
||||||||
Other comprehensive (loss) income
|
$
|
(2.5
|
)
|
|
$
|
2.1
|
|
|
$
|
0.6
|
|
|
$
|
—
|
|
|
$
|
0.2
|
|
Balance at March 31, 2018
|
$
|
(17.5
|
)
|
|
$
|
(210.3
|
)
|
|
$
|
(0.1
|
)
|
|
$
|
(0.3
|
)
|
|
$
|
(228.2
|
)
|
|
|
2013
Interest Rate Swap
|
||
Beginning accumulated losses at December 31, 2017
|
|
$
|
(0.7
|
)
|
Reclassifications into earnings (net of $0.2 million tax benefit)
(a)
|
|
0.6
|
|
|
Ending accumulated losses at March 31, 2018
|
|
$
|
(0.1
|
)
|
|
|
2013
Interest Rate Swap
|
||
Beginning accumulated losses at December 31, 2016
|
|
$
|
(3.0
|
)
|
Reclassifications into earnings (net of $0.4 million tax benefit)
(a)
|
|
0.6
|
|
|
Ending accumulated losses at March 31, 2017
|
|
$
|
(2.4
|
)
|
•
|
Revlon
- The Revlon segment is comprised of the Company's flagship Revlon brands. Revlon segment products are primarily marketed, distributed and sold in the mass retail channel, large volume retailers, chain drug and food stores, chemist shops, hypermarkets, general merchandise stores, e-commerce sites, television shopping, department stores, professional hair and nail salons, one-stop shopping beauty retailers, specialty cosmetic stores and perfumeries in the U.S. and internationally under brands such as
Revlon
in color cosmetics;
Revlon ColorSilk
and
Revlon Professional
in hair color;
Revlon
in beauty tools; and
Revlon
in nail color.
|
•
|
Elizabeth Arden
- The Elizabeth Arden segment is comprised of the Company's Elizabeth Arden branded products. The Elizabeth Arden segment markets, distributes and sells fragrances, skin care and color cosmetics primarily to prestige retailers, department and specialty stores, perfumeries, boutiques, e-commerce sites, the mass retail channel, travel retailers and distributors, as well as direct sales to consumers via its Elizabeth Arden branded retail stores and ElizabethArden.com e-commerce business, in the U.S. and internationally, under brands such as
Elizabeth Arden Ceramide, Prevage, Eight Hour, SUPERSTART, Visible Difference
and
Skin Illuminating
in the Elizabeth Arden skin care brands; and
Elizabeth Arden White Tea, Elizabeth Arden Red Door, Elizabeth Arden 5th Avenue
and
Elizabeth Arden Green Tea
in Elizabeth Arden fragrances.
|
•
|
Portfolio
- The Company’s Portfolio segment markets, distributes and sells a comprehensive line of premium, specialty and mass products primarily to the mass retail channel, hair and nail salons and professional salon distributors in the U.S. and internationally and large volume retailers, specialty and department stores under brands such as
Almay
and
SinfulColors
in color cosmetics;
CND
in nail polishes and nail enhancements, including
CND Shellac
and
CND Vinylux
nail polishes;
Cutex
nail care products;
Pure Ice
in nail polishes;
American Crew
in men’s grooming products; and
Mitchum
in anti-perspirant deodorants. The Portfolio segment also includes a multi-cultural hair care line consisting of
Creme of Nature
hair care products, which are sold in both professional salons and in large volume retailers and other retailers, primarily in the U.S.; and a body care line under the
Natural Honey
brand and hair color line under the
Llongueras
brand (licensed from a third party) that are both sold in the mass retail channel, large volume retailers and other retailers, primarily in Spain.
|
•
|
Fragrances
- The Fragrances segment includes the development, marketing and distribution of certain owned and licensed fragrances as well as the distribution of prestige fragrance brands owned by third parties. These products are typically sold to retailers in the U.S. and internationally, including prestige retailers, specialty stores, e-commerce sites, the mass retail channel, travel retailers and other international retailers. The owned and licensed fragrances include brands such as
Juicy Couture, John Varvatos, All Saints, La Perla, Wildfox, Charlie, Curve, Elizabeth Taylor
,
Britney Spears
,
Christina Aguilera
,
Shawn
Mendes
,
Halston,
Ed Hardy
,
Geoffrey Beene
,
Alfred Sung
,
Giorgio Beverly Hills
,
Lucky Brand
,
Paul Sebastian
,
White Shoulders
and
Jennifer Aniston
.
|
|
Three months ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Segment Net Sales:
|
|
|
|
||||
Revlon
|
$
|
229.1
|
|
|
$
|
243.8
|
|
Elizabeth Arden
|
105.7
|
|
|
95.7
|
|
||
Portfolio
|
134.5
|
|
|
146.6
|
|
||
Fragrances
|
91.4
|
|
|
108.8
|
|
||
Total
|
$
|
560.7
|
|
|
$
|
594.9
|
|
|
|
|
|
||||
Segment Profit:
|
|
|
|
||||
Revlon
|
$
|
2.3
|
|
|
$
|
21.8
|
|
Elizabeth Arden
|
1.5
|
|
|
(0.4
|
)
|
||
Portfolio
|
(2.8
|
)
|
|
1.5
|
|
||
Fragrances
|
3.2
|
|
|
8.7
|
|
||
Total
|
$
|
4.2
|
|
|
$
|
31.6
|
|
|
|
|
|
||||
Reconciliation:
|
|
|
|
||||
Total Segment Profit
|
$
|
4.2
|
|
|
$
|
31.6
|
|
Less:
|
|
|
|
||||
Depreciation and amortization
|
38.7
|
|
|
37.1
|
|
||
Non-cash stock compensation expense
|
7.7
|
|
|
1.7
|
|
||
Non-Operating items:
|
|
|
|
||||
Restructuring and related charges
|
5.5
|
|
|
1.1
|
|
||
Acquisition and integration costs
|
4.0
|
|
|
17.5
|
|
||
Overhead under-absorption
|
10.0
|
|
|
—
|
|
||
Elizabeth Arden 2016 Business Transformation Program
|
—
|
|
|
0.4
|
|
||
Elizabeth Arden inventory purchase accounting adjustment, cost of sales
|
—
|
|
|
16.0
|
|
||
Deferred compensation
|
—
|
|
|
0.9
|
|
||
Operating loss
|
(61.7
|
)
|
|
(43.1
|
)
|
||
Less:
|
|
|
|
||||
Interest Expense
|
39.9
|
|
|
35.0
|
|
||
Amortization of debt issuance costs
|
2.3
|
|
|
2.2
|
|
||
Foreign currency gains, net
|
(10.6
|
)
|
|
(4.3
|
)
|
||
Miscellaneous, net
|
—
|
|
|
0.6
|
|
||
Loss from continuing operations before income taxes
|
$
|
(93.3
|
)
|
|
$
|
(76.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
Three Months Ended March 31, 2018
|
||||||||||||||||||
|
|
Revlon
|
|
Elizabeth Arden
|
|
Portfolio
|
|
Fragrances
|
|
Total
|
|||||||||||
Geographic Area:
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net Sales
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
North America
|
|
$
|
116.2
|
|
|
$
|
28.9
|
|
|
$
|
81.9
|
|
|
$
|
56.4
|
|
|
$
|
283.4
|
|
|
EMEA *
|
|
54.0
|
|
|
46.3
|
|
|
43.2
|
|
|
24.7
|
|
|
168.2
|
|
||||||
Asia
|
|
25.6
|
|
|
23.3
|
|
|
1.0
|
|
|
2.8
|
|
|
52.7
|
|
||||||
Latin America *
|
|
13.9
|
|
|
2.2
|
|
|
5.3
|
|
|
4.1
|
|
|
25.5
|
|
||||||
Pacific *
|
|
19.4
|
|
|
5.0
|
|
|
3.1
|
|
|
3.4
|
|
|
30.9
|
|
||||||
|
|
$
|
229.1
|
|
|
$
|
105.7
|
|
|
$
|
134.5
|
|
|
$
|
91.4
|
|
|
$
|
560.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
Three Months Ended March 31, 2017
|
||||||||||||||||||
|
|
Revlon
|
|
Elizabeth Arden
|
|
Portfolio
|
|
Fragrances
|
|
Total
|
|||||||||||
Geographic Area:
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net Sales
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
North America
|
|
$
|
134.2
|
|
|
$
|
33.5
|
|
|
$
|
86.7
|
|
|
$
|
67.2
|
|
|
$
|
321.6
|
|
|
EMEA
|
|
50.4
|
|
|
38.5
|
|
|
47.6
|
|
|
30.6
|
|
|
167.1
|
|
||||||
Asia
|
|
25.4
|
|
|
17.1
|
|
|
1.9
|
|
|
4.1
|
|
|
48.5
|
|
||||||
Latin America
|
|
15.4
|
|
|
2.2
|
|
|
7.6
|
|
|
3.7
|
|
|
28.9
|
|
||||||
Pacific
|
|
18.4
|
|
|
4.4
|
|
|
2.8
|
|
|
3.2
|
|
|
28.8
|
|
||||||
|
|
$
|
243.8
|
|
|
$
|
95.7
|
|
|
$
|
146.6
|
|
|
$
|
108.8
|
|
|
$
|
594.9
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31,
|
||||||||||
|
2018
|
|
2017
|
||||||||
Classes of similar products:
|
|
|
|
|
|
|
|
||||
Net sales:
|
|
|
|
|
|
|
|
||||
Color cosmetics
|
$
|
199.1
|
|
|
36%
|
|
$
|
224.3
|
|
|
38%
|
Fragrance
|
124.3
|
|
|
22%
|
|
142.3
|
|
|
24%
|
||
Hair care
|
125.7
|
|
|
22%
|
|
127.2
|
|
|
21%
|
||
Beauty care
|
44.7
|
|
|
8%
|
|
48.0
|
|
|
8%
|
||
Skin care
|
66.9
|
|
|
12%
|
|
53.1
|
|
|
9%
|
||
|
$
|
560.7
|
|
|
|
|
$
|
594.9
|
|
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||||||
Long-lived assets, net:
|
|
|
|
|
|
|
|||||
United States
|
$
|
1,470.9
|
|
|
83%
|
|
$
|
1,480.1
|
|
|
83%
|
International
|
300.1
|
|
|
17%
|
|
295.6
|
|
|
17%
|
||
|
$
|
1,771.0
|
|
|
|
$
|
1,775.7
|
|
|
|
|
Three months ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Numerator:
|
|
|
|
||||
Loss from continuing operations, net of taxes
|
$
|
(91.7
|
)
|
|
$
|
(37.7
|
)
|
Income from discontinued operations, net of taxes
|
1.4
|
|
|
0.3
|
|
||
Net loss
|
$
|
(90.3
|
)
|
|
$
|
(37.4
|
)
|
Denominator:
|
|
|
|
||||
Weighted-average common shares outstanding – Basic
|
52,673,672
|
|
|
52,529,826
|
|
||
Effect of dilutive restricted stock
|
—
|
|
|
—
|
|
||
Weighted-average common shares outstanding – Diluted
|
52,673,672
|
|
|
52,529,826
|
|
||
Basic (loss) earnings per common share:
|
|
|
|
||||
Continuing operations
|
$
|
(1.74
|
)
|
|
$
|
(0.72
|
)
|
Discontinued operations
|
0.03
|
|
|
0.01
|
|
||
Net loss per common share
|
$
|
(1.71
|
)
|
|
$
|
(0.71
|
)
|
Diluted (loss) earnings per common share:
|
|
|
|
||||
Continuing operations
|
$
|
(1.74
|
)
|
|
$
|
(0.72
|
)
|
Discontinued operations
|
0.03
|
|
|
0.01
|
|
||
Net loss per common share
|
$
|
(1.71
|
)
|
|
$
|
(0.71
|
)
|
|
|
|
|
||||
Unvested restricted stock awards under the Stock Plan
(a)
|
104,411
|
|
|
111,136
|
|
(a)
|
These are outstanding common stock equivalents that were not included in the computation of diluted earnings per common share because their inclusion would have had an anti-dilutive effect.
|
•
|
a
$37.3 million
reduction in the benefit from income taxes that was primarily due to the mix and level of earnings, as well as changes resulting from the Tax Act, including the reduction of the U.S. federal income tax rate (which provided for less of a tax benefit on the Company's year to date loss), the limitation on interest deductions (which resulted in a deferred deduction on which the Company has a full valuation allowance), the U.S. tax on the Company's foreign earnings under the GILTI provisions of the Tax Act, and a reduced deduction for executive compensation under Section 162(m), partially offset by the impact of reducing the Company's liability under Accounting Principles Board 23, "Indefinite Reinvestment Assertion" ("APB 23");
|
•
|
$17.9 million
of higher SG&A expenses, primarily driven by unfavorable currency translation, increased brand support, higher investment in product displays, higher compensation due to changes in senior executive management and higher professional service fees related to the Company's digital transformation initiatives, partially offset by lower incentive compensation and lower legal fees;
|
•
|
$11.3 million
of lower gross profit, primarily due to lower net sales; and
|
•
|
a
$4.9 million
increase in interest expense, primarily due to higher borrowings under the 2016 Revolving Credit Facility;
|
•
|
a
$13.5 million
decrease in acquisition and integration costs.
|
•
|
Revlon
- The Revlon segment is comprised of the Company's flagship Revlon brands. Revlon segment products are primarily marketed, distributed and sold in the mass retail channel, large volume retailers, chain drug and food stores, chemist shops, hypermarkets, general merchandise stores, e-commerce sites, television shopping, department stores, professional hair and nail salons, one-stop shopping beauty retailers, specialty cosmetic stores and perfumeries in the U.S. and internationally under brands such as
Revlon
in color cosmetics;
Revlon ColorSilk
and
Revlon Professional
in hair color;
Revlon
in beauty tools; and
Revlon
in nail color.
|
•
|
Elizabeth Arden
- The Elizabeth Arden segment is comprised of the Company's Elizabeth Arden branded products. The Elizabeth Arden segment markets, distributes and sells fragrances, skin care and color cosmetics primarily to prestige retailers, department and specialty stores, perfumeries, boutiques, e-commerce sites, the mass retail channel, travel retailers and distributors, as well as direct sales to consumers via its Elizabeth Arden branded retail stores and ElizabethArden.com e-commerce business under brands such as
Elizabeth Arden Ceramide, Prevage, Eight Hour, SUPERSTART, Visible Difference
and
Skin Illuminating
in the Elizabeth Arden skin care brands; and
Elizabeth Arden White Tea, Elizabeth Arden Red Door, Elizabeth Arden 5th Avenue
and
Elizabeth Arden Green Tea
in Elizabeth Arden fragrances.
|
•
|
Portfolio
- The Company’s Portfolio segment markets, distributes and sells a comprehensive line of premium, specialty and mass products primarily to the mass retail channel, hair and nail salons and professional salon distributors in the U.S. and internationally and large volume retailers, specialty and department stores under brands such as
Almay
and
SinfulColors
in color cosmetics;
CND
in nail polishes and nail enhancements, including
CND Shellac
and
CND Vinylux
nail polishes;
Cutex
nail care products;
Pure Ice
in nail polishes;
American Crew
in men’s grooming products; and
Mitchum
in anti-perspirant deodorants. The Portfolio segment also includes a multi-cultural hair care line consisting of
Creme of Nature
hair care products, which are sold in both professional salons and in large volume retailers and other retailers, primarily in the U.S.; and a body care line under the
Natural Honey
brand and hair color line under the
Llongueras
brand (licensed from a third party) that are both sold in the mass retail channel, large volume retailers and other retailers, primarily in Spain.
|
•
|
Fragrances
- The Fragrances segment includes the development, marketing and distribution of certain owned and licensed fragrances as well as the distribution of prestige fragrance brands owned by third parties. These products are typically sold to retailers in the U.S. and internationally, including prestige retailers, specialty stores, e-commerce
|
|
Net Sales
|
|
Segment Profit
|
||||||||||||||||||||||||||||||||||||||||
|
Three Months Ended March 31
|
|
Change
|
|
XFX Change
(a)
|
|
Three Months Ended March 31
|
|
Change
|
|
XFX Change
(a)
|
||||||||||||||||||||||||||||||||
|
2018
|
|
2017
|
|
$
|
|
%
|
|
$
|
|
%
|
|
2018
|
|
2017
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||||||||||
Revlon
|
$
|
229.1
|
|
|
$
|
243.8
|
|
|
$
|
(14.7
|
)
|
|
(6.0
|
)%
|
|
$
|
(22.8
|
)
|
|
(9.4
|
)%
|
|
$
|
2.3
|
|
|
$
|
21.8
|
|
|
$
|
(19.5
|
)
|
|
(89.4
|
)%
|
|
$
|
(20.0
|
)
|
|
(91.7
|
)%
|
Elizabeth Arden
|
105.7
|
|
|
95.7
|
|
|
10.0
|
|
|
10.4
|
%
|
|
4.9
|
|
|
5.1
|
%
|
|
1.5
|
|
|
(0.4
|
)
|
|
1.9
|
|
|
N.M
|
|
|
1.4
|
|
|
N.M
|
|
||||||||
Portfolio
|
134.5
|
|
|
146.6
|
|
|
(12.1
|
)
|
|
(8.3
|
)%
|
|
(16.2
|
)
|
|
(11.1
|
)%
|
|
(2.8
|
)
|
|
1.5
|
|
|
(4.3
|
)
|
|
N.M
|
|
|
(4.7
|
)
|
|
N.M
|
|
||||||||
Fragrance
|
91.4
|
|
|
108.8
|
|
|
(17.4
|
)
|
|
(16.0
|
)%
|
|
(20.1
|
)
|
|
(18.5
|
)%
|
|
3.2
|
|
|
8.7
|
|
|
(5.5
|
)
|
|
(63.2
|
)%
|
|
(5.6
|
)
|
|
(64.4
|
)%
|
||||||||
Total
|
$
|
560.7
|
|
|
$
|
594.9
|
|
|
$
|
(34.2
|
)
|
|
(5.7
|
)%
|
|
$
|
(54.2
|
)
|
|
(9.1
|
)%
|
|
$
|
4.2
|
|
|
$
|
31.6
|
|
|
$
|
(27.4
|
)
|
|
(86.7
|
)%
|
|
$
|
(28.9
|
)
|
|
(91.5
|
)%
|
|
Three Months Ended March 31,
|
|
Change
|
|
XFX Change
(a)
|
||||||||||||||||
|
2018
|
|
2017
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||
Revlon
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
North America
|
$
|
116.2
|
|
|
$
|
134.2
|
|
|
$
|
(18.0
|
)
|
|
(13.4
|
)%
|
|
$
|
(18.4
|
)
|
|
(13.7
|
)%
|
International
|
112.9
|
|
|
109.6
|
|
|
3.3
|
|
|
3.0
|
%
|
|
(4.4
|
)
|
|
(4.0
|
)%
|
||||
Elizabeth Arden
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
North America
|
$
|
28.9
|
|
|
$
|
33.5
|
|
|
$
|
(4.6
|
)
|
|
(13.7
|
)%
|
|
$
|
(4.9
|
)
|
|
(14.6
|
)%
|
International
|
76.8
|
|
|
62.2
|
|
|
14.6
|
|
|
23.5
|
%
|
|
9.8
|
|
|
15.8
|
%
|
||||
Portfolio
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
North America
|
$
|
81.9
|
|
|
$
|
86.7
|
|
|
$
|
(4.8
|
)
|
|
(5.5
|
)%
|
|
$
|
(5.4
|
)
|
|
(6.2
|
)%
|
International
|
52.6
|
|
|
59.9
|
|
|
(7.3
|
)
|
|
(12.2
|
)%
|
|
(10.8
|
)
|
|
(18.0
|
)%
|
||||
Fragrance
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
North America
|
$
|
56.4
|
|
|
$
|
67.2
|
|
|
$
|
(10.8
|
)
|
|
(16.1
|
)%
|
|
$
|
(11.0
|
)
|
|
(16.4
|
)%
|
International
|
35.0
|
|
|
41.6
|
|
|
(6.6
|
)
|
|
(15.9
|
)%
|
|
(9.1
|
)
|
|
(21.9
|
)%
|
||||
Total Net Sales
|
$
|
560.7
|
|
|
$
|
594.9
|
|
|
$
|
(34.2
|
)
|
|
(5.7
|
)%
|
|
$
|
(54.2
|
)
|
|
(9.1
|
)%
|
|
Three Months Ended March 31,
|
|
|
||||||||
|
2018
|
|
2017
|
|
Change
|
||||||
Gross profit
|
$
|
318.1
|
|
|
$
|
329.4
|
|
|
$
|
(11.3
|
)
|
Percentage of net sales
|
56.7
|
%
|
|
55.4
|
%
|
|
1.3
|
%
|
•
|
additional inventory costs in the first quarter of 2017 related to the increase in the fair value of inventory acquired in the Elizabeth Arden Acquisition, that did not recur in the first quarter of 2018, resulting in an increase in gross margin of 0.7 percentage points;
|
•
|
favorable foreign currency fluctuations, which increased gross margin by 0.6 percentage points; and
|
•
|
supply chain synergies, which increased gross profit by 0.3 percentage points;
|
•
|
the impact of additional costs related to the service level disruptions at the Company's Oxford, N.C. manufacturing facility, which decreased gross margin by 0.4 percentage points; and
|
•
|
higher inventory obsolescence reserves, which decreased gross margin by 0.2 percentage points.
|
|
Three Months Ended March 31,
|
|
|
||||||||
|
2018
|
|
2017
|
|
Change
|
||||||
SG&A expenses
|
$
|
371.7
|
|
|
$
|
353.8
|
|
|
$
|
17.9
|
|
•
|
$12.2 million of unfavorable FX impacts;
|
•
|
higher brand support expenses within the Elizabeth Arden and Revlon segments; and
|
•
|
higher general and administrative expenses in
the first quarter of 2018
of $2.9 million, primarily driven by higher severance due to changes in senior executive management and higher professional and legal fees, partially offset by lower incentive compensation.
|
|
Three Months Ended March 31,
|
|
|
||||||||
|
2018
|
|
2017
|
|
Change
|
||||||
Acquisition Costs
|
$
|
0.1
|
|
|
$
|
0.6
|
|
|
$
|
(0.5
|
)
|
Integration Costs
|
3.9
|
|
|
16.9
|
|
|
(13.0
|
)
|
|||
Total acquisition and integration costs
|
$
|
4.0
|
|
|
$
|
17.5
|
|
|
$
|
(13.5
|
)
|
|
Three Months Ended March 31,
|
|
|
||||||||
|
2018
|
|
2017
|
|
Change
|
||||||
Restructuring charges and other, net
|
$
|
4.1
|
|
|
$
|
1.2
|
|
|
$
|
2.9
|
|
|
Three Months Ended March 31,
|
|
|
||||||||
|
2018
|
|
2017
|
|
Change
|
||||||
Interest expense
|
$
|
39.9
|
|
|
$
|
35.0
|
|
|
$
|
4.9
|
|
|
Three Months Ended March 31,
|
|
|
||||||||
|
2018
|
|
2017
|
|
Change
|
||||||
Foreign currency (gains) losses, net
|
$
|
(10.6
|
)
|
|
$
|
(4.3
|
)
|
|
$
|
(6.3
|
)
|
|
Three Months Ended March 31,
|
|
|
||||||||
|
2018
|
|
2017
|
|
Change
|
||||||
Benefit from income taxes
|
$
|
(1.6
|
)
|
|
$
|
(38.9
|
)
|
|
$
|
37.3
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Net cash used in operating activities
|
$
|
(97.3
|
)
|
|
$
|
(85.6
|
)
|
Net cash used in investing activities
|
(13.7
|
)
|
|
(15.4
|
)
|
||
Net cash provided by financing activities
|
77.2
|
|
|
30.4
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
2.9
|
|
|
5.3
|
|
||
Net decrease in cash, cash equivalents and restricted cash
|
(30.9
|
)
|
|
(65.3
|
)
|
||
Cash, cash equivalents and restricted cash at beginning of period
|
87.4
|
|
|
186.8
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
$
|
56.5
|
|
|
$
|
121.5
|
|
•
|
$83.8 million
of borrowings under the 2016 Revolving Credit Facility;
|
•
|
$4.5 million
of repayments under the 2016 Term Loan Facility.
|
•
|
$40.9 million of borrowings under the 2016 Revolving Credit Facility;
|
•
|
$4.5 million of repayments under the 2016 Term Loan facility; and
|
•
|
$3.4 million decrease in short-term borrowings and overdraft.
|
|
Expected Maturity Date for the Year Ended December 31,
|
|
|
|||||||||||||||||||||||||||||
|
(dollars in millions, except for rate information)
|
|
|
|||||||||||||||||||||||||||||
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
Thereafter
|
|
Total
|
|
Fair Value March 31, 2018
|
||||||||||||||||
Debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Short-term variable rate (third party - various currencies)
|
|
$
|
8.9
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
8.9
|
|
|
$
|
8.9
|
|
||||||||||
Average interest rate
(a)
|
|
4.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Short-term fixed rate (third party - EUR)
|
|
$
|
1.9
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1.9
|
|
|
$
|
1.9
|
|
||||||||||
Average interest rate
|
|
11.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Long-term fixed rate (third party - USD)
|
|
|
|
|
|
|
|
$
|
500.0
|
|
|
|
|
$
|
450.0
|
|
|
$
|
950.0
|
|
|
$
|
657.0
|
|
||||||||
Average interest rate
|
|
|
|
|
|
|
|
5.75
|
%
|
|
|
|
6.25
|
%
|
|
|
|
|
||||||||||||||
Long-term fixed rate (third party - EUR)
|
|
$
|
0.1
|
|
|
$
|
0.1
|
|
|
$
|
0.1
|
|
|
$
|
0.1
|
|
|
$
|
0.1
|
|
|
$
|
0.1
|
|
|
$
|
0.6
|
|
|
$
|
0.6
|
|
Average interest rate
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
|
|
|
||||||||||
Long-term variable rate (third party - USD)
(b)
|
|
$
|
254.3
|
|
|
$
|
18.0
|
|
|
$
|
18.0
|
|
|
$
|
18.0
|
|
|
$
|
18.0
|
|
|
$
|
1,687.5
|
|
|
$
|
2,013.8
|
|
|
$
|
1,623.7
|
|
Average interest rate
(a)(c)
|
|
4.4
|
%
|
|
6.0
|
%
|
|
6.1
|
%
|
|
6.1
|
%
|
|
6.2
|
%
|
|
6.2
|
%
|
|
|
|
|
||||||||||
Total debt
|
|
$
|
265.2
|
|
|
$
|
18.1
|
|
|
$
|
18.1
|
|
|
$
|
518.1
|
|
|
$
|
18.1
|
|
|
$
|
2,137.6
|
|
|
$
|
2,975.2
|
|
|
$
|
2,292.1
|
|
(a)
|
Weighted average variable rates are based upon implied forward rates from the U.S. Dollar LIBOR and Euribor yield curves at
March 31, 2018
.
|
(b)
|
Includes total quarterly amortization payments required for each year under the 2016 Term Loan Facility and borrowings under the 2016 Revolving Credit Facility.
|
(c)
|
At
March 31, 2018
, the interest rate for the 2016 Term Loan Facility was the Eurodollar Rate (as defined in the 2016 Term Loan Agreement) plus 3.5% per annum (with the Eurodollar Rate not to be less than 0.75%). At
March 31, 2018
, the interest rate for the 2016 Revolving Credit Facility was 3.8% per annum, which is based primarily on the Eurodollar Rate plus the applicable margin, as described in the Revlon's 2017 Form 10-K. See Note 17, “Subsequent Events” for information regarding the April 2018 Revolver Amendment to the 2016 Revolving Credit Facility.
|
(i)
|
the Company's future financial performance and/or sales growth;
|
(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 one or more of the Company's 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, such as due to the continuing consumption declines in core beauty categories in the mass retail channel in North America; inventory management by the Company's customers; inventory de-stocking by certain retail customers; space reconfigurations or reductions in display space by the Company's customers; store closures in the brick-and-mortar channels where the Company sells its products, as consumers continue to shift purchases to online and e-commerce channels; 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 and acquisition-related integration costs, capital expenditures, costs related to the Company’s synergy and integration programs in connection with the Elizabeth Arden Acquisition, restructuring and severance 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 continuing to execute its business initiatives 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 Elizabeth Arden Acquisition, any of which, the intended purpose 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 operating revenues, 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 its new operating structure, built around four global brand teams: Revlon; Elizabeth Arden; Portfolio; and Fragrances, is designed to improve financial performance, build brand equity and successfully compete in a digitally-driven landscape;
|
(v)
|
certain beliefs and expectations regarding actions that the Company is pursuing to implement a robust service recovery plan and that it is making significant progress in resolving the customer service level disruptions resulting from the launch of its new ERP system;
|
(vi)
|
the effect of restructuring activities, restructuring costs and charges, the timing of restructuring payments and the benefits from such activities, including, without limitation: in connection with implementing the EA Integration Restructuring Program: (1) consolidating offices, eliminating certain duplicative activities and streamlining back-office support (which are designed to reduce the Company’s SG&A expenses) and (2) recognizing approximately
$90 million
to
$95 million
of the EA Integration Restructuring Charges (all of which are expected to be cash payments), consisting of: (i) approximately
$65 million
to
$70 million
of employee-related costs, including severance, retention and other contractual termination benefits; (ii) approximately
$15 million
of lease termination costs; and (iii) approximately
$10 million
of other related charges;
|
(vii)
|
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 2018, including the cash requirements referred to in item (ix) below, and the Company's belief that (a) the cash generated by its domestic operations, cash on hand, availability under the 2016 Revolving Credit Facility and other permitted lines of credit, as well as the option to further settle intercompany loans and payables with certain foreign subsidiaries, should be sufficient to meet its domestic liquidity needs for at least the next 12 months and (b) restrictions and/or taxes on repatriation of foreign earnings will not have a material effect on the Company's liquidity during such period;
|
(viii)
|
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;
|
(ix)
|
the Company's expected principal uses of funds, including amounts required for payments in connection with the Company’s synergy and integration programs related to the Elizabeth Arden Acquisition (including, without limitation, for the EA Integration Restructuring Program); 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, without limitation, 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, block trades, privately negotiated purchase transactions or otherwise and may seek to refinance some or all of its indebtedness based upon market conditions and that any such 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;
|
(x)
|
matters concerning the Company's market-risk sensitive instruments, including that any risk of loss under its derivative instruments arising from any non-performance by any of the counterparties is remote;
|
(xi)
|
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, accounts payable and controls on general and administrative spending; the effects of service level disruptions to the Company’s manufacturing operations as a result of the launch of its new ERP system and actions that the Company is taking to implement a service recovery plan; 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;
|
(xii)
|
the Company’s expectations regarding its future net periodic benefit cost for its U.S. and international defined benefit plans;
|
(xiii)
|
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 and, with respect to the Tax Act, the Company’s expectation that it will not have a transition tax liability due to its deficit in foreign earnings as of the applicable measurement dates, that the Tax Act’s limitation on interest deductibility will not impact the Company’s 2018 federal cash taxes due to its net operating loss position, and that the Tax Act will not have a material impact on its cash taxes or liquidity in 2018;
|
(xiv)
|
the Company's belief that the allegations contained in the Third Consolidated Amended Class Action Complaint are without merit and its plans to continue 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 in valuing other assets and liabilities; and
|
(xvi)
|
the Company's expected benefits and other impacts from the Elizabeth Arden Acquisition.
|
(i)
|
unanticipated circumstances or results affecting the Company's financial performance and or sales growth, including decreased consumer spending in response to weak economic conditions or weakness in the consumption of beauty care products in one or more of the Company's 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; decreased performance by third-party suppliers; and/or supply disruptions at the Company’s manufacturing facilities; 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, such as due to the continuing consumption declines in core beauty categories in the mass retail channel in North America; 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 store closures in the brick-and-mortar channels where the Company sells its products, as consumers continue to shift purchases to online and e-commerce channels; higher than expected restructuring or severance costs, acquisition costs and/or acquisition-related integration costs and capital expenditures, including, without limitation, synergy and integration program costs and expenses related to the Elizabeth Arden Acquisition; 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 greater than expected inventory management and/or de-stocking, 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 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);
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(iii)
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unanticipated costs or difficulties or delays in completing projects associated with continuing to execute the Company’s business initiatives or lower than expected revenues or the inability to create value through improving our financial performance as a result of such initiatives, 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 or converting the Company's go-to-trade structure in certain countries to other business models), 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 Elizabeth Arden Acquisition (including difficulties or delays in and/or the Company’s inability to optimally integrate the Elizabeth Arden business which could result in less than expected synergies and/or cost reductions, more than expected costs to achieve the expected synergies and/or cost reductions or delays in achieving the expected synergies and/or cost reductions and/or less than expected benefits from the EA Integration Restructuring Program, more than expected costs in implementing such program and/or difficulties or delays, in whole or in part, in executing the EA Integration Restructuring Program), as well as the unavailability of cash generated by operations, 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;
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(iv)
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difficulties, delays in or less than expected results from the Company’s efforts to improve financial performance, build brand equity and successfully compete in a digitally-driven landscape, such as: (a) greater than anticipated levels of consumers choosing to purchase their beauty products through e-commerce and other social media channels and/or greater than anticipated declines in the brick-and-mortar retail channel, or either of those conditions occurring at a rate faster than anticipated; (b) the Company’s inability to address the pace and impact of this new commercial landscape, such as its inability to enhance its e-commerce and social media capabilities and/or increase its penetration of e-commerce and social media channels; (c) the Company’s inability to drive a successful long-term omni-channel strategy and significantly increase its e-commerce penetration; (d) difficulties, delays and/or the Company's inability to (in whole or in part): (1) develop and implement effective content to enhance its online retail position; (2) improve its consumer engagement across social media platforms; and/or (3) transform its technology and data to support efficient management of its digital infrastructure; and/or (e) the Company incurring greater than anticipated levels of expenses and/or debt to facilitate the foregoing objectives, which could result in, among other things, less than anticipated revenues and/or profitability;
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(v)
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difficulties, delays in and/or less than expected results from the Company’s efforts to resolve the customer service level disruptions resulting from the launch of its new ERP system, such as the Company’s inability to remedy the ERP systems issues in time to recover lost sales; the ERP implementation continuing to disrupt the Company's operations and its ability to fulfill customer orders; the Company incurring greater than expected expedited shipping fees and other unanticipated expenses in connection with the remedial actions; and/or greater than expected customer reaction to the service level disruptions that could lead to decreased shelf space or loss of sales;
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(vi)
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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 (a) difficulties, delays or the inability of the Company to successfully complete the EA Integration Restructuring Program, in whole or in part, which could result in less than expected operating and financial benefits from such actions; (b) difficulties, delays or the inability of the Company to realize, in whole or in part, the anticipated benefits from the EA Integration Restructuring Program, such as difficulties with, delays in or the Company’s inability to generate certain reductions in its SG&A and/or eliminate certain positions; (c) delays in completing the EA Integration Restructuring Program, which could reduce the benefits realized from such activities; (d) higher than anticipated restructuring charges and/or payments in connection with completing the EA Integration Restructuring Program and/or changes in the expected timing of such charges and/or payments; and/or (e) greater than anticipated costs or charges or less than anticipated cost reductions or other benefits from the EA Integration Restructuring Program; and/or (g) the risk that such program may not satisfy the Company’s objectives;
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(vii)
|
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 (ix) below, and/or less than anticipated cash generated by the Company's domestic operations or unanticipated restrictions or taxes on repatriation of foreign earnings;
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(viii)
|
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;
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(ix)
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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, (including, without limitation, in connection with implementing the EA Integration Restructuring Program), 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, without limitation, through licensing transactions, if any), and discontinuing non-core business lines and/or exiting and/or entering certain territories and/or channels of trade;
|
(x)
|
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;
|
(xi)
|
difficulties, delays or the inability of the Company to efficiently manage its cash and working capital;
|
(xii)
|
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;
|
(xiii)
|
unexpected significant variances in the Company's tax provision, effective tax rate and/or unrecognized tax benefits, whether due to the enactment of the Tax Act or otherwise, such as due to the issuance of unfavorable guidance, interpretations, technical clarifications and/or technical corrections legislation by the U.S. Congress, the U.S. Treasury Department or the IRS, unexpected changes in foreign, state or local tax regimes in response to the Tax Act, and/or changes in estimates that may impact the calculation of the Company's tax provisions;
|
(xiv)
|
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 the Company's legal proceedings;
|
(xv)
|
changes in the fair values of the assets acquired in the Elizabeth Arden Acquisition due to, among other things, unanticipated future performance of the acquired licenses and/or other brands; and/or
|
(xvi)
|
difficulties with, delays in and/or the Company’s inability to achieve, in whole or in part, or within the expected timeframe the 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 partners; (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 Elizabeth Arden Acquisition will not be realized or will not be realized within the expected time period.
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Revlon, Inc.
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(Registrant)
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By: /s/ Paul Meister
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By: /s/ Victoria Dolan
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By: /s/ Wendel F. Kralovich
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Paul Meister
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Victoria Dolan
|
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Wendel F. Kralovich
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Executive Vice Chairman & Director
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Chief Financial Officer
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Senior Vice President,
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Chief Accounting Officer
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& Corporate Controller
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1.
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Employment, Duties and Acceptance
.
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3.
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Compensation; Benefits
.
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4.
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Termination
.
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5.
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Protection of Confidential Information; Non-Competition; Non-Disparagement
.
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6.
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Inventions and Patents
.
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11.
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General
.
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(i)
|
any Person, other than one or more Permitted Holders, is or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that for purposes of this definition a Person will be deemed to have “beneficial ownership” of all shares that any such Person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 50% of the total voting power of the Voting Stock of the Company; provided that under such circumstances the Permitted Holders do not have the right or ability by voting power, contract or otherwise to elect or designate for election a majority of the Board of Directors of the Company (for the purposes of this clause (i) and clause (iii), such other Person will be deemed to beneficially own any Voting Stock of a specified corporation held by a parent corporation, if such other Person beneficially owns, directly or indirectly, more than 50% of the voting power of the Voting Stock of such parent corporation and the Permitted Holders do not have the right or ability by voting power, contract or otherwise to elect or designate for election a majority of the Board of Directors of such parent corporation);
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(ii)
|
during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors of the Company (together with any new directors whose election by such Board of Directors or whose nomination for election by the shareholders of the Company was approved by a vote of 66-2/3% of the directors of the Company then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors of the Company then in office;
|
(iii)
|
the shareholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets to an entity in which any Person, other than one or more Permitted Holders is or becomes the Beneficial Owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that for purposes of this definition a Person will be deemed to have “beneficial ownership” of all shares that any Person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of securities of such entity representing 50% or more of the combined voting power of such entity’s Voting Stock, and the Permitted Holders “beneficially own” (as so defined) directly or indirectly, in the aggregate a lesser percentage of the total voting power of the Voting Stock of such entity than such other Person and do not have the right or ability by voting power, contract or otherwise to elect or designate for election a majority of the Board of Directors of such entity; or
|
(iv)
|
“Change of Control” shall have occurred under, and as defined in, the indenture governing Revlon Consumer Products Corporation’s 8 5/8% Senior Subordinated Notes Due 2008 or any other Subordinated Obligations of Revlon Consumer Products Corporation so long as such 8 5/8% Senior Subordinated Notes Due 2008 or other Subordinated Obligations are outstanding.
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1.
|
I have reviewed this quarterly report on Form 10-Q (the "Report") of Revlon, Inc. (the "Registrant");
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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;
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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:
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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.
|
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):
|