|
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
For the quarterly period ended September 30, 2019
|
|
|
OR
|
|
|
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
For the transition period from__________________ to _______________
|
|
Revlon, Inc.
|
Yes x
|
No ¨
|
Revlon Consumer Products Corporation
|
Yes ¨
|
No x
|
|
Large accelerated filer
|
|
Accelerated filer
|
|
Non-accelerated filer
|
|
Smaller Reporting Company
|
|
Emerging Growth Company
|
Revlon, Inc.
|
Yes ¨ No x
|
|
Yes x No ¨
|
|
Yes ¨ No x
|
|
Yes x No ¨
|
|
Yes ¨ No x
|
Revlon Consumer Products Corporation
|
Yes ¨ No x
|
|
Yes ¨ No x
|
|
Yes x No ¨
|
|
Yes x No ¨
|
|
Yes ¨ No x
|
Revlon, Inc.
|
Yes ¨
|
No x
|
Revlon Consumer Products Corporation
|
Yes ¨
|
No x
|
Revlon, Inc. Class A Common Stock:
|
53,035,412
|
Revlon Consumer Products Corporation Common Stock:
|
5,260
|
PART I - Financial Information
|
||
Item 1.
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
|
|
|
PART II - Other Information
|
||
Item 1.
|
||
Item 1A.
|
||
Item 5.
|
||
Item 6.
|
||
|
|
|
|
|
|
|
September 30, 2019
|
|
December 31, 2018
|
||||
|
(Unaudited)
|
|
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
60.7
|
|
|
$
|
87.3
|
|
Trade receivables, less allowance for doubtful accounts of $12.4 and $15.6 as of September 30, 2019 and December 31, 2018, respectively
|
454.9
|
|
|
431.3
|
|
||
Inventories
|
522.0
|
|
|
523.2
|
|
||
Prepaid expenses and other assets
|
155.9
|
|
|
152.0
|
|
||
Total current assets
|
1,193.5
|
|
|
1,193.8
|
|
||
Property, plant and equipment, net of accumulated depreciation of $474.9 and $425.2 as of September 30, 2019 and December 31, 2018, respectively
|
413.7
|
|
|
354.5
|
|
||
Deferred income taxes
|
159.3
|
|
|
131.8
|
|
||
Goodwill
|
673.4
|
|
|
673.9
|
|
||
Intangible assets, net of accumulated amortization of $217.7 and $187.3 as of September 30, 2019 and December 31, 2018, respectively
|
496.7
|
|
|
532.0
|
|
||
Other assets
|
122.9
|
|
|
130.8
|
|
||
Total assets
|
$
|
3,059.5
|
|
|
$
|
3,016.8
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Short-term borrowings
|
$
|
5.1
|
|
|
$
|
9.3
|
|
Current portion of long-term debt
|
363.5
|
|
|
348.1
|
|
||
Accounts payable
|
322.3
|
|
|
332.1
|
|
||
Accrued expenses and other current liabilities
|
368.3
|
|
|
430.9
|
|
||
Total current liabilities
|
1,059.2
|
|
|
1,120.4
|
|
||
Long-term debt
|
2,906.6
|
|
|
2,727.7
|
|
||
Long-term pension and other post-retirement plan liabilities
|
162.0
|
|
|
169.0
|
|
||
Other long-term liabilities
|
159.2
|
|
|
56.5
|
|
||
Stockholders’ deficiency:
|
|
|
|
||||
Class A Common Stock, par value $0.01 per share: 900,000,000 shares authorized; 56,800,236 and 55,556,466 shares issued as of September 30, 2019 and December 31, 2018, respectively
|
0.5
|
|
|
0.5
|
|
||
Additional paid-in capital
|
1,071.5
|
|
|
1,063.8
|
|
||
Treasury stock, at cost: 1,624,719 and 1,533,320 shares of Class A Common Stock as of September 30, 2019 and December 31, 2018, respectively
|
(33.5
|
)
|
|
(31.9
|
)
|
||
Accumulated deficit
|
(2,038.5
|
)
|
|
(1,855.0
|
)
|
||
Accumulated other comprehensive loss
|
(227.5
|
)
|
|
(234.2
|
)
|
||
Total stockholders’ deficiency
|
(1,227.5
|
)
|
|
(1,056.8
|
)
|
||
Total liabilities and stockholders’ deficiency
|
$
|
3,059.5
|
|
|
$
|
3,016.8
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Net sales
|
$
|
596.8
|
|
|
$
|
655.4
|
|
|
$
|
1,720.2
|
|
|
$
|
1,822.9
|
|
Cost of sales
|
269.0
|
|
|
305.0
|
|
|
750.7
|
|
|
807.2
|
|
||||
Gross profit
|
327.8
|
|
|
350.4
|
|
|
969.5
|
|
|
1,015.7
|
|
||||
Selling, general and administrative expenses
|
308.1
|
|
|
340.8
|
|
|
973.2
|
|
|
1,087.1
|
|
||||
Acquisition and integration costs
|
0.1
|
|
|
3.4
|
|
|
0.7
|
|
|
12.0
|
|
||||
Restructuring charges and other, net
|
2.9
|
|
|
3.9
|
|
|
11.6
|
|
|
13.9
|
|
||||
Loss on disposal of minority investment
|
—
|
|
|
—
|
|
|
—
|
|
|
20.1
|
|
||||
Operating income (loss)
|
16.7
|
|
|
2.3
|
|
|
(16.0
|
)
|
|
(117.4
|
)
|
||||
Other expenses:
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
50.2
|
|
|
46.4
|
|
|
145.7
|
|
|
129.1
|
|
||||
Amortization of debt issuance costs
|
3.7
|
|
|
3.8
|
|
|
10.4
|
|
|
9.1
|
|
||||
Foreign currency losses, net
|
7.6
|
|
|
1.1
|
|
|
9.0
|
|
|
10.7
|
|
||||
Miscellaneous, net
|
1.7
|
|
|
0.4
|
|
|
7.6
|
|
|
0.6
|
|
||||
Other expenses
|
63.2
|
|
|
51.7
|
|
|
172.7
|
|
|
149.5
|
|
||||
Loss from continuing operations before income taxes
|
(46.5
|
)
|
|
(49.4
|
)
|
|
(188.7
|
)
|
|
(266.9
|
)
|
||||
Benefit from income taxes
|
(2.1
|
)
|
|
(38.7
|
)
|
|
(3.2
|
)
|
|
(43.1
|
)
|
||||
Loss from continuing operations, net of taxes
|
(44.4
|
)
|
|
(10.7
|
)
|
|
(185.5
|
)
|
|
(223.8
|
)
|
||||
(Loss) income from discontinued operations, net of taxes
|
(0.3
|
)
|
|
(0.4
|
)
|
|
2.0
|
|
|
(0.1
|
)
|
||||
Net loss
|
$
|
(44.7
|
)
|
|
$
|
(11.1
|
)
|
|
$
|
(183.5
|
)
|
|
$
|
(223.9
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
(1.8
|
)
|
|
(4.9
|
)
|
|
(0.5
|
)
|
|
(12.3
|
)
|
||||
Amortization of pension related costs, net of tax(a)(b)
|
2.3
|
|
|
2.3
|
|
|
7.2
|
|
|
6.5
|
|
||||
Reclassification into earnings of accumulated losses from the de-designated 2013 Interest Rate Swap, net of tax(c)
|
—
|
|
|
—
|
|
|
—
|
|
|
0.7
|
|
||||
Other comprehensive income (loss), net
|
0.5
|
|
|
(2.6
|
)
|
|
6.7
|
|
|
(5.1
|
)
|
||||
Total comprehensive loss
|
$
|
(44.2
|
)
|
|
$
|
(13.7
|
)
|
|
$
|
(176.8
|
)
|
|
$
|
(229.0
|
)
|
|
|
|
|
|
|
|
|
||||||||
Basic (loss) earnings per common share:
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
(0.84
|
)
|
|
$
|
(0.20
|
)
|
|
$
|
(3.50
|
)
|
|
$
|
(4.24
|
)
|
Discontinued operations
|
—
|
|
|
(0.01
|
)
|
|
0.04
|
|
|
—
|
|
||||
Net loss
|
$
|
(0.84
|
)
|
|
$
|
(0.21
|
)
|
|
$
|
(3.46
|
)
|
|
$
|
(4.24
|
)
|
|
|
|
|
|
|
|
|
||||||||
Diluted (loss) earnings per common share:
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
(0.84
|
)
|
|
$
|
(0.20
|
)
|
|
$
|
(3.50
|
)
|
|
$
|
(4.24
|
)
|
Discontinued operations
|
—
|
|
|
(0.01
|
)
|
|
0.04
|
|
|
—
|
|
||||
Net loss
|
$
|
(0.84
|
)
|
|
$
|
(0.21
|
)
|
|
$
|
(3.46
|
)
|
|
$
|
(4.24
|
)
|
|
|
|
|
|
|
|
|
||||||||
Weighted average number of common shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
53,129,004
|
|
|
52,834,879
|
|
|
53,057,154
|
|
|
52,777,883
|
|
||||
Diluted
|
53,129,004
|
|
|
52,834,879
|
|
|
53,057,154
|
|
|
52,777,883
|
|
(a)
|
Net of tax expense of $0.3 million and $0.3 million for the three months ended September 30, 2019 and 2018, respectively, and net of tax expense of $0.9 million and $0.8 million for the nine months ended September 30, 2019 and 2018, respectively.
|
(b)
|
This amount is included in the computation of net periodic benefit costs (income). See Note 11, "Pension and Post-Retirement Benefits," for additional information regarding net periodic benefit costs (income).
|
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Treasury Stock
|
|
Accumulated Deficit
|
|
Accumulated Other Comprehensive Loss
|
|
Total Stockholders’ Deficiency
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance, January 1, 2019
|
$
|
0.5
|
|
|
$
|
1,063.8
|
|
|
$
|
(31.9
|
)
|
|
$
|
(1,855.0
|
)
|
|
$
|
(234.2
|
)
|
|
$
|
(1,056.8
|
)
|
Treasury stock acquired, at cost (a)
|
—
|
|
|
—
|
|
|
(1.6
|
)
|
|
—
|
|
|
—
|
|
|
(1.6
|
)
|
||||||
Stock-based compensation amortization
|
—
|
|
|
0.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(75.1
|
)
|
|
—
|
|
|
(75.1
|
)
|
||||||
Other comprehensive income, net (b)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.9
|
|
|
0.9
|
|
||||||
Balance, March 31, 2019
|
0.5
|
|
|
1,064.2
|
|
|
(33.5
|
)
|
|
(1,930.1
|
)
|
|
(233.3
|
)
|
|
(1,132.2
|
)
|
||||||
Treasury stock acquired, at cost (a)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Stock-based compensation amortization
|
—
|
|
|
3.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3.4
|
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(63.7
|
)
|
|
—
|
|
|
(63.7
|
)
|
||||||
Other comprehensive income, net (b)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5.3
|
|
|
5.3
|
|
||||||
Balance, June 30, 2019
|
0.5
|
|
|
1,067.6
|
|
|
(33.5
|
)
|
|
(1,993.8
|
)
|
|
(228.0
|
)
|
|
(1,187.2
|
)
|
||||||
Treasury stock acquired, at cost (a)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Stock-based compensation amortization
|
—
|
|
|
3.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3.9
|
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(44.7
|
)
|
|
—
|
|
|
(44.7
|
)
|
||||||
Other comprehensive income, net (b)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.5
|
|
|
0.5
|
|
||||||
Balance, September 30, 2019
|
$
|
0.5
|
|
|
$
|
1,071.5
|
|
|
$
|
(33.5
|
)
|
|
$
|
(2,038.5
|
)
|
|
$
|
(227.5
|
)
|
|
$
|
(1,227.5
|
)
|
|
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
|
)
|
||||||
Treasury stock acquired, at cost (a)
|
—
|
|
|
—
|
|
|
(0.6
|
)
|
|
—
|
|
|
—
|
|
|
(0.6
|
)
|
||||||
Stock-based compensation amortization
|
—
|
|
|
0.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.8
|
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(122.5
|
)
|
|
—
|
|
|
(122.5
|
)
|
||||||
Other comprehensive loss, net (b)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.7
|
)
|
|
(2.7
|
)
|
||||||
Balance, June 30, 2018
|
0.5
|
|
|
1,048.5
|
|
|
(25.2
|
)
|
|
(1,773.6
|
)
|
|
(230.9
|
)
|
|
(980.7
|
)
|
||||||
Treasury stock acquired, at cost (a)
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
||||||
Stock-based compensation amortization
|
—
|
|
|
6.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6.3
|
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(11.1
|
)
|
|
—
|
|
|
(11.1
|
)
|
||||||
Other comprehensive loss, net (b)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.6
|
)
|
|
(2.6
|
)
|
||||||
Balance, September 30, 2018
|
$
|
0.5
|
|
|
$
|
1,054.8
|
|
|
$
|
(25.3
|
)
|
|
$
|
(1,784.7
|
)
|
|
$
|
(233.5
|
)
|
|
$
|
(988.2
|
)
|
(a)
|
Pursuant to the share withholding provisions of the Fourth Amended and Restated Revlon, Inc. Stock Plan (as amended, the "Stock Plan"), the Company withheld an aggregate of nil and 5,493 shares of Revlon Class A Common Stock during the three months ended September 30, 2019 and 2018, respectively, and 85,607 and 167,297 shares of Revlon Class A Common Stock during the nine months ended September 30, 2019 and 2018, respectively, to satisfy certain minimum statutory tax withholding requirements related to the vesting of restricted shares and restricted stock units for certain senior executives and employees. These withheld shares were recorded as treasury stock using the cost method, at a weighted-average price per share of nil and $15.60 during the three months ended September 30, 2019 and 2018, respectively, and $18.86 and $21.42 during the nine months ended September 30, 2019 and 2018, respectively, 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 nil and $0.1 million during the three months ended September 30, 2019 and 2018, respectively, and $1.6 million and $3.6 million during the nine months ended September 30, 2019 and 2018, respectively.
|
(b)
|
See Note 14, "Accumulated Other Comprehensive Loss," regarding the changes in the accumulated balances for each component of other comprehensive loss during the three and nine months ended September 30, 2019 and 2018, respectively.
|
|
Nine Months Ended September 30,
|
||||||
|
2019
|
|
2018
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
||||
Net loss
|
$
|
(183.5
|
)
|
|
$
|
(223.9
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization
|
124.6
|
|
|
119.4
|
|
||
Foreign currency losses from re-measurement
|
9.0
|
|
|
10.7
|
|
||
Amortization of debt discount
|
1.2
|
|
|
0.9
|
|
||
Stock-based compensation amortization
|
7.7
|
|
|
14.8
|
|
||
Benefit from deferred income taxes
|
(19.0
|
)
|
|
(61.5
|
)
|
||
Amortization of debt issuance costs
|
10.4
|
|
|
9.1
|
|
||
Non-cash loss on disposal of minority investment
|
—
|
|
|
18.6
|
|
||
Loss on sale of certain assets
|
0.2
|
|
|
0.6
|
|
||
Pension and other post-retirement cost
|
6.3
|
|
|
2.0
|
|
||
Change in assets and liabilities:
|
|
|
|
||||
Increase in trade receivables
|
(30.5
|
)
|
|
(7.0
|
)
|
||
Increase in inventories
|
(4.9
|
)
|
|
(100.3
|
)
|
||
Increase in prepaid expenses and other current assets
|
(5.5
|
)
|
|
(60.5
|
)
|
||
Increase in accounts payable
|
9.1
|
|
|
39.3
|
|
||
Decrease in accrued expenses and other current liabilities
|
(81.0
|
)
|
|
(1.6
|
)
|
||
Pension and other post-retirement plan contributions
|
(7.8
|
)
|
|
(6.1
|
)
|
||
Purchases of permanent displays
|
(28.4
|
)
|
|
(57.0
|
)
|
||
Other, net
|
25.3
|
|
|
5.8
|
|
||
Net cash used in operating activities
|
(166.8
|
)
|
|
(296.7
|
)
|
||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
||||
Capital expenditures
|
(20.0
|
)
|
|
(41.6
|
)
|
||
Net cash used in investing activities
|
(20.0
|
)
|
|
(41.6
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
||||
Net (decrease) increase in short-term borrowings and overdraft
|
(22.4
|
)
|
|
2.3
|
|
||
Net borrowings under the Amended 2016 Revolving Credit Facility
|
13.4
|
|
|
251.3
|
|
||
Net borrowings under the 2019 Term Loan Facility
|
200.0
|
|
|
—
|
|
||
Net borrowings under the 2018 Foreign Asset-Based Term Loan
|
—
|
|
|
89.4
|
|
||
Repayments under the 2016 Term Loan Facility
|
(13.5
|
)
|
|
(13.5
|
)
|
||
Payment of financing costs
|
(13.4
|
)
|
|
(9.4
|
)
|
||
Tax withholdings related to net share settlements of restricted stock units and awards
|
(1.6
|
)
|
|
(3.6
|
)
|
||
Other financing activities
|
(0.9
|
)
|
|
0.1
|
|
||
Net cash provided by financing activities
|
161.6
|
|
|
316.6
|
|
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
(1.4
|
)
|
|
(3.2
|
)
|
||
Net decrease in cash, cash equivalents and restricted cash
|
(26.6
|
)
|
|
(24.9
|
)
|
||
Cash, cash equivalents and restricted cash at beginning of period (a)
|
87.5
|
|
|
87.4
|
|
||
Cash, cash equivalents and restricted cash at end of period (a)
|
$
|
60.9
|
|
|
$
|
62.5
|
|
Supplemental schedule of cash flow information:(b)
|
|
|
|
||||
Cash paid during the period for:
|
|
|
|
||||
Interest
|
$
|
157.9
|
|
|
$
|
131.4
|
|
Income taxes, net of refunds
|
6.9
|
|
|
11.7
|
|
|
September 30, 2019
|
|
December 31, 2018
|
||||
|
(Unaudited)
|
|
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
60.7
|
|
|
$
|
87.3
|
|
Trade receivables, less allowance for doubtful accounts of $12.4 and $15.6 as of September 30, 2019 and December 31, 2018, respectively
|
454.9
|
|
|
431.3
|
|
||
Inventories
|
522.0
|
|
|
523.2
|
|
||
Prepaid expenses and other assets
|
151.9
|
|
|
148.0
|
|
||
Receivable from Revlon, Inc.
|
158.3
|
|
|
151.7
|
|
||
Total current assets
|
1,347.8
|
|
|
1,341.5
|
|
||
Property, plant and equipment, net of accumulated depreciation of $474.9 and $425.2 as of September 30, 2019 and December 31, 2018, respectively
|
413.7
|
|
|
354.5
|
|
||
Deferred income taxes
|
141.2
|
|
|
114.8
|
|
||
Goodwill
|
673.4
|
|
|
673.9
|
|
||
Intangible assets, net of accumulated amortization of $217.7 and $187.3 as of September 30, 2019 and December 31, 2018, respectively
|
496.7
|
|
|
532.0
|
|
||
Other assets
|
122.9
|
|
|
130.8
|
|
||
Total assets
|
$
|
3,195.7
|
|
|
$
|
3,147.5
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDER'S DEFICIENCY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Short-term borrowings
|
$
|
5.1
|
|
|
$
|
9.3
|
|
Current portion of long-term debt
|
363.5
|
|
|
348.1
|
|
||
Accounts payable
|
322.3
|
|
|
332.1
|
|
||
Accrued expenses and other current liabilities
|
371.6
|
|
|
434.7
|
|
||
Total current liabilities
|
1,062.5
|
|
|
1,124.2
|
|
||
Long-term debt
|
2,906.6
|
|
|
2,727.7
|
|
||
Long-term pension and other post-retirement plan liabilities
|
162.0
|
|
|
169.0
|
|
||
Other long-term liabilities
|
162.6
|
|
|
59.7
|
|
||
Stockholder's deficiency:
|
|
|
|
||||
Products Corporation Preferred stock, par value $1.00 per share; 1,000 shares authorized; 546 shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively
|
54.6
|
|
|
54.6
|
|
||
Products Corporation Common Stock, par value $1.00 per share; 10,000 shares authorized; 5,260 shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
996.0
|
|
|
988.4
|
|
||
Accumulated deficit
|
(1,921.1
|
)
|
|
(1,741.9
|
)
|
||
Accumulated other comprehensive loss
|
(227.5
|
)
|
|
(234.2
|
)
|
||
Total stockholder's deficiency
|
(1,098.0
|
)
|
|
(933.1
|
)
|
||
Total liabilities and stockholder's deficiency
|
$
|
3,195.7
|
|
|
$
|
3,147.5
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Net sales
|
$
|
596.8
|
|
|
$
|
655.4
|
|
|
$
|
1,720.2
|
|
|
$
|
1,822.9
|
|
Cost of sales
|
269.0
|
|
|
305.0
|
|
|
750.7
|
|
|
807.2
|
|
||||
Gross profit
|
327.8
|
|
|
350.4
|
|
|
969.5
|
|
|
1,015.7
|
|
||||
Selling, general and administrative expenses
|
306.3
|
|
|
339.1
|
|
|
968.1
|
|
|
1,082.1
|
|
||||
Acquisition and integration costs
|
0.1
|
|
|
3.4
|
|
|
0.7
|
|
|
12.0
|
|
||||
Restructuring charges and other, net
|
2.9
|
|
|
3.9
|
|
|
11.6
|
|
|
13.9
|
|
||||
Loss on disposal of minority investment
|
—
|
|
|
—
|
|
|
—
|
|
|
20.1
|
|
||||
Operating income (loss)
|
18.5
|
|
|
4.0
|
|
|
(10.9
|
)
|
|
(112.4
|
)
|
||||
Other expenses:
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
50.2
|
|
|
46.4
|
|
|
145.7
|
|
|
129.1
|
|
||||
Amortization of debt issuance costs
|
3.7
|
|
|
3.8
|
|
|
10.4
|
|
|
9.1
|
|
||||
Foreign currency losses, net
|
7.6
|
|
|
1.1
|
|
|
9.0
|
|
|
10.7
|
|
||||
Miscellaneous, net
|
1.7
|
|
|
0.4
|
|
|
7.6
|
|
|
0.6
|
|
||||
Other expenses
|
63.2
|
|
|
51.7
|
|
|
172.7
|
|
|
149.5
|
|
||||
Loss from continuing operations before income taxes
|
(44.7
|
)
|
|
(47.7
|
)
|
|
(183.6
|
)
|
|
(261.9
|
)
|
||||
Provision (benefit) from income taxes
|
(1.8
|
)
|
|
(38.2
|
)
|
|
(2.4
|
)
|
|
(42.0
|
)
|
||||
Loss from continuing operations, net of taxes
|
(42.9
|
)
|
|
(9.5
|
)
|
|
(181.2
|
)
|
|
(219.9
|
)
|
||||
(Loss) income from discontinued operations, net of taxes
|
(0.3
|
)
|
|
(0.4
|
)
|
|
2.0
|
|
|
(0.1
|
)
|
||||
Net loss
|
$
|
(43.2
|
)
|
|
$
|
(9.9
|
)
|
|
$
|
(179.2
|
)
|
|
$
|
(220.0
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
(1.8
|
)
|
|
(4.9
|
)
|
|
(0.5
|
)
|
|
(12.3
|
)
|
||||
Amortization of pension related costs, net of tax(a)(b)
|
2.3
|
|
|
2.3
|
|
|
7.2
|
|
|
6.5
|
|
||||
Reclassification into earnings of accumulated losses from the de-designated 2013 Interest Rate Swap, net of tax(c)
|
—
|
|
|
—
|
|
|
—
|
|
|
0.7
|
|
||||
Other comprehensive income (loss), net
|
0.5
|
|
|
(2.6
|
)
|
|
6.7
|
|
|
(5.1
|
)
|
||||
Total comprehensive loss
|
$
|
(42.7
|
)
|
|
$
|
(12.5
|
)
|
|
$
|
(172.5
|
)
|
|
$
|
(225.1
|
)
|
|
|
|
|
|
|
|
|
(a)
|
Net of tax expense of $0.3 million and $0.3 million for the three months ended September 30, 2019 and 2018, respectively, and net of tax expense of $0.9 million and $0.8 million for the nine months ended September 30, 2019 and 2018, respectively.
|
(b)
|
This amount is included in the computation of net periodic benefit costs (income). See Note 11, "Pension and Post-Retirement Benefits," for additional information regarding net periodic benefit costs (income).
|
|
Preferred Stock
|
|
Additional Paid-In Capital
|
|
Accumulated Deficit
|
|
Accumulated Other Comprehensive Loss
|
|
Total Stockholder's Deficiency
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance, January 1, 2019
|
$
|
54.6
|
|
|
$
|
988.4
|
|
|
$
|
(1,741.9
|
)
|
|
$
|
(234.2
|
)
|
|
$
|
(933.1
|
)
|
Stock-based compensation amortization
|
—
|
|
|
0.4
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
(73.5
|
)
|
|
—
|
|
|
(73.5
|
)
|
|||||
Other comprehensive income, net (a)
|
—
|
|
|
—
|
|
|
—
|
|
|
0.9
|
|
|
0.9
|
|
|||||
Balance, March 31, 2019
|
54.6
|
|
|
988.8
|
|
|
(1,815.4
|
)
|
|
(233.3
|
)
|
|
(1,005.3
|
)
|
|||||
Stock-based compensation amortization
|
—
|
|
|
3.4
|
|
|
—
|
|
|
—
|
|
|
3.4
|
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
(62.5
|
)
|
|
—
|
|
|
(62.5
|
)
|
|||||
Other comprehensive income, net (a)
|
—
|
|
|
—
|
|
|
—
|
|
|
5.3
|
|
|
5.3
|
|
|||||
Balance, June 30, 2019
|
54.6
|
|
|
992.2
|
|
|
(1,877.9
|
)
|
|
(228.0
|
)
|
|
(1,059.1
|
)
|
|||||
Stock-based compensation amortization
|
—
|
|
|
3.8
|
|
|
—
|
|
|
—
|
|
|
3.8
|
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
(43.2
|
)
|
|
—
|
|
|
(43.2
|
)
|
|||||
Other comprehensive income, net (a)
|
—
|
|
|
—
|
|
|
—
|
|
|
0.5
|
|
|
0.5
|
|
|||||
Balance, September 30, 2019
|
$
|
54.6
|
|
|
$
|
996.0
|
|
|
$
|
(1,921.1
|
)
|
|
$
|
(227.5
|
)
|
|
$
|
(1,098.0
|
)
|
|
Preferred Stock
|
|
Additional Paid-In Capital
|
|
Accumulated Deficit
|
|
Accumulated Other Comprehensive Loss
|
|
Total Stockholder's Deficiency
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance, January 1, 2018
|
$
|
54.6
|
|
|
$
|
971.2
|
|
|
$
|
(1,452.8
|
)
|
|
$
|
(228.4
|
)
|
|
$
|
(655.4
|
)
|
Stock-based compensation amortization
|
—
|
|
|
7.7
|
|
|
—
|
|
|
—
|
|
|
7.7
|
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
(89.0
|
)
|
|
—
|
|
|
(89.0
|
)
|
|||||
Other comprehensive income, net (a)
|
—
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|
0.2
|
|
|||||
Balance, March 31, 2018
|
54.6
|
|
|
978.9
|
|
|
(1,541.8
|
)
|
|
(228.2
|
)
|
|
(736.5
|
)
|
|||||
Stock-based compensation amortization
|
—
|
|
|
0.8
|
|
|
—
|
|
|
—
|
|
|
0.8
|
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
(121.1
|
)
|
|
—
|
|
|
(121.1
|
)
|
|||||
Other comprehensive loss, net (a)
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.7
|
)
|
|
(2.7
|
)
|
|||||
Balance, June 30, 2018
|
54.6
|
|
|
979.7
|
|
|
(1,662.9
|
)
|
|
(230.9
|
)
|
|
(859.5
|
)
|
|||||
Stock-based compensation amortization
|
—
|
|
|
6.3
|
|
|
—
|
|
|
—
|
|
|
6.3
|
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
(9.9
|
)
|
|
—
|
|
|
(9.9
|
)
|
|||||
Other comprehensive loss, net (a)
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.6
|
)
|
|
(2.6
|
)
|
|||||
Balance, September 30, 2018
|
$
|
54.6
|
|
|
$
|
986.0
|
|
|
$
|
(1,672.8
|
)
|
|
$
|
(233.5
|
)
|
|
$
|
(865.7
|
)
|
(a)
|
See Note 14, "Accumulated Other Comprehensive Loss," regarding the changes in the accumulated balances for each component of other comprehensive loss during the three and nine months ended September 30, 2019 and 2018, respectively.
|
|
Nine Months Ended September 30,
|
||||||
|
2019
|
|
2018
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
||||
Net loss
|
$
|
(179.2
|
)
|
|
$
|
(220.0
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization
|
124.6
|
|
|
119.4
|
|
||
Foreign currency losses from re-measurement
|
9.0
|
|
|
10.7
|
|
||
Amortization of debt discount
|
1.2
|
|
|
0.9
|
|
||
Stock-based compensation amortization
|
7.7
|
|
|
14.8
|
|
||
Benefit from deferred income taxes
|
(17.8
|
)
|
|
(60.3
|
)
|
||
Amortization of debt issuance costs
|
10.4
|
|
|
9.1
|
|
||
Non-cash loss on disposal of minority investment
|
—
|
|
|
18.6
|
|
||
Loss on sale of certain assets
|
0.2
|
|
|
0.6
|
|
||
Pension and other post-retirement cost
|
6.3
|
|
|
2.0
|
|
||
Change in assets and liabilities:
|
|
|
|
||||
Increase in trade receivables
|
(30.5
|
)
|
|
(7.0
|
)
|
||
Increase in inventories
|
(4.9
|
)
|
|
(100.3
|
)
|
||
Increase in prepaid expenses and other current assets
|
(12.2
|
)
|
|
(69.0
|
)
|
||
Increase in accounts payable
|
9.1
|
|
|
39.3
|
|
||
(Decrease) increase in accrued expenses and other current liabilities
|
(79.8
|
)
|
|
1.8
|
|
||
Pension and other post-retirement plan contributions
|
(7.8
|
)
|
|
(6.1
|
)
|
||
Purchases of permanent displays
|
(28.4
|
)
|
|
(57.0
|
)
|
||
Other, net
|
25.3
|
|
|
5.8
|
|
||
Net cash used in operating activities
|
(166.8
|
)
|
|
(296.7
|
)
|
||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
||||
Capital expenditures
|
(20.0
|
)
|
|
(41.6
|
)
|
||
Net cash used in investing activities
|
(20.0
|
)
|
|
(41.6
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
||||
Net (decrease) increase in short-term borrowings and overdraft
|
(22.4
|
)
|
|
2.3
|
|
||
Net borrowings under the Amended 2016 Revolving Credit Facility
|
13.4
|
|
|
251.3
|
|
||
Net borrowings under the 2019 Term Loan Facility
|
200.0
|
|
|
—
|
|
||
Net borrowings under the 2018 Foreign Asset-Based Term Loan
|
—
|
|
|
89.4
|
|
||
Repayments under the 2016 Term Loan Facility
|
(13.5
|
)
|
|
(13.5
|
)
|
||
Payment of financing costs
|
(13.4
|
)
|
|
(9.4
|
)
|
||
Tax withholdings related to net share settlements of restricted stock units and awards
|
(1.6
|
)
|
|
(3.6
|
)
|
||
Other financing activities
|
(0.9
|
)
|
|
0.1
|
|
||
Net cash provided by financing activities
|
161.6
|
|
|
316.6
|
|
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
(1.4
|
)
|
|
(3.2
|
)
|
||
Net decrease in cash, cash equivalents and restricted cash
|
(26.6
|
)
|
|
(24.9
|
)
|
||
Cash, cash equivalents and restricted cash at beginning of period (a)
|
87.5
|
|
|
87.4
|
|
||
Cash, cash equivalents and restricted cash at end of period (a)
|
$
|
60.9
|
|
|
$
|
62.5
|
|
Supplemental schedule of cash flow information:(b)
|
|
|
|
||||
Cash paid during the period for:
|
|
|
|
||||
Interest
|
$
|
157.9
|
|
|
$
|
131.4
|
|
Income taxes, net of refunds
|
6.9
|
|
|
11.7
|
|
|
Restructuring Charges and Other, Net
|
|
|
|
|
|
|
||||||||||||||||
|
Employee Severance and Other Personnel Benefits
|
|
Other Costs
|
|
Total Restructuring Charges
|
|
Inventory Adjustments(a)
|
|
Other Related Charges(b)
|
|
Total Restructuring and Related Charges
|
||||||||||||
Charges incurred through December 31, 2018
|
$
|
4.5
|
|
|
$
|
—
|
|
|
$
|
4.5
|
|
|
$
|
—
|
|
|
$
|
1.2
|
|
|
$
|
5.7
|
|
Charges incurred during the nine months ended September 30, 2019
|
12.0
|
|
|
0.5
|
|
|
12.5
|
|
|
4.2
|
|
|
11.4
|
|
|
28.1
|
|
||||||
Cumulative charges incurred through September 30, 2019
|
$
|
16.5
|
|
|
$
|
0.5
|
|
|
$
|
17.0
|
|
|
$
|
4.2
|
|
|
$
|
12.6
|
|
|
$
|
33.8
|
|
|
|
Charges incurred during the nine months ended September 30, 2019
|
|
Cumulative charges incurred through September 30, 2019
|
||||
Revlon
|
|
$
|
5.7
|
|
|
$
|
7.6
|
|
Elizabeth Arden
|
|
2.5
|
|
|
3.4
|
|
||
Portfolio
|
|
2.3
|
|
|
3.3
|
|
||
Fragrances
|
|
2.0
|
|
|
2.7
|
|
||
Total
|
|
$
|
12.5
|
|
|
$
|
17.0
|
|
|
Restructuring Charges and Other, Net
|
|
|
|
|
|
|
||||||||||||||||
|
Employee Severance and Other Personnel Benefits(a)
|
|
Lease Termination and Other Costs(b)
|
|
Total Restructuring Charges
|
|
Inventory Adjustments(c)
|
|
Other Related Charges(d)
|
|
Total Restructuring and Related Charges
|
||||||||||||
Charges incurred through December 31, 2018
|
$
|
72.2
|
|
|
$
|
5.1
|
|
|
$
|
77.3
|
|
|
$
|
1.9
|
|
|
$
|
3.0
|
|
|
$
|
82.2
|
|
Charges incurred during the nine months ended September 30, 2019
|
0.4
|
|
|
—
|
|
|
0.4
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
||||||
Cumulative charges incurred through September 30, 2019
|
$
|
72.6
|
|
|
$
|
5.1
|
|
|
$
|
77.7
|
|
|
$
|
1.9
|
|
|
$
|
3.0
|
|
|
$
|
82.6
|
|
|
|
Charges incurred during the nine months ended September 30, 2019
|
|
Cumulative charges incurred through September 30, 2019
|
||||
Revlon
|
|
$
|
—
|
|
|
$
|
32.9
|
|
Elizabeth Arden
|
|
0.4
|
|
|
13.7
|
|
||
Portfolio
|
|
—
|
|
|
13.1
|
|
||
Fragrances
|
|
—
|
|
|
18.0
|
|
||
Total
|
|
$
|
0.4
|
|
|
$
|
77.7
|
|
|
|
|
|
|
|
|
Utilized, Net
|
|
|
||||||||||||||
Liability
Balance at January 1, 2019
|
|
Expense, Net
|
|
Foreign Currency Translation
|
|
Cash
|
|
Non-cash
|
|
Liability Balance at September 30, 2019
|
|||||||||||||
2018 Optimization Program:(a)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Employee severance and other personnel benefits
|
$
|
3.7
|
|
|
$
|
12.0
|
|
|
$
|
—
|
|
|
$
|
(6.8
|
)
|
|
$
|
—
|
|
|
$
|
8.9
|
|
Other
|
1.2
|
|
|
16.1
|
|
|
—
|
|
|
(8.2
|
)
|
|
—
|
|
|
9.1
|
|
||||||
Total 2018 Optimization Program
|
4.9
|
|
|
28.1
|
|
|
—
|
|
|
(15.0
|
)
|
|
—
|
|
|
18.0
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
EA Integration Restructuring Program:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Employee severance and other personnel benefits
|
13.8
|
|
|
0.4
|
|
|
(0.4
|
)
|
|
(7.7
|
)
|
|
—
|
|
|
6.1
|
|
||||||
Other(b)
|
4.2
|
|
|
—
|
|
|
—
|
|
|
(0.4
|
)
|
|
(3.5
|
)
|
|
0.3
|
|
||||||
Total EA Integration Restructuring Program
|
18.0
|
|
|
0.4
|
|
|
(0.4
|
)
|
|
(8.1
|
)
|
|
(3.5
|
)
|
|
6.4
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other individually immaterial actions:(c)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Employee severance and other personnel benefits
|
4.6
|
|
|
(1.4
|
)
|
|
—
|
|
|
(1.8
|
)
|
|
(1.1
|
)
|
|
0.3
|
|
||||||
Other
|
0.8
|
|
|
0.3
|
|
|
—
|
|
|
(0.4
|
)
|
|
|
|
|
0.7
|
|
||||||
Total other individually immaterial actions
|
5.4
|
|
|
(1.1
|
)
|
|
—
|
|
|
(2.2
|
)
|
|
(1.1
|
)
|
|
1.0
|
|
||||||
Total restructuring reserve
|
$
|
28.3
|
|
|
$
|
27.4
|
|
|
$
|
(0.4
|
)
|
|
$
|
(25.3
|
)
|
|
$
|
(4.6
|
)
|
|
$
|
25.4
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net sales
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(Loss) income from discontinued operations, before taxes
|
(0.3
|
)
|
|
(0.4
|
)
|
|
2.0
|
|
|
(0.1
|
)
|
||||
Provision for income taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
(Loss) income from discontinued operations, net of taxes
|
(0.3
|
)
|
|
(0.4
|
)
|
|
2.0
|
|
|
(0.1
|
)
|
|
September 30,
|
|
December 31,
|
||||
|
2019
|
|
2018
|
||||
Cash and cash equivalents
|
$
|
1.0
|
|
|
$
|
1.1
|
|
Trade receivables, net
|
—
|
|
|
0.2
|
|
||
Total current assets
|
1.0
|
|
|
1.3
|
|
||
Total assets
|
$
|
1.0
|
|
|
$
|
1.3
|
|
|
|
|
|
||||
Accounts payable
|
$
|
—
|
|
|
$
|
0.5
|
|
Accrued expenses and other
|
1.2
|
|
|
3.3
|
|
||
Total current liabilities
|
1.2
|
|
|
3.8
|
|
||
Total liabilities
|
$
|
1.2
|
|
|
$
|
3.8
|
|
|
September 30,
|
|
December 31,
|
||||
|
2019
|
|
2018
|
||||
Raw materials and supplies
|
$
|
130.0
|
|
|
$
|
143.5
|
|
Work-in-process
|
8.8
|
|
|
5.6
|
|
||
Finished goods
|
383.2
|
|
|
374.1
|
|
||
|
$
|
522.0
|
|
|
$
|
523.2
|
|
•
|
the recognition of ROU assets for operating leases and finance leases of approximately $109.3 million and $1.5 million, respectively;
|
•
|
the recognition of lease liabilities for operating leases and finance leases of approximately $123.4 million and $1.4 million, respectively; and
|
•
|
a decrease of approximately $11.3 million in accrued rent (of which $10.7 million was recorded in other long-term liabilities and $0.6 million was recorded in accrued expenses and other current liabilities), a decrease of approximately $3.5 million in lease termination liabilities and a decrease of approximately $0.7 million in prepaid rent, due to adjustments to balances previously recorded on the unaudited condensed consolidated balance sheets upon transition from the legacy ASC 840 to ASC 842.
|
•
|
ASC 842-10-15-37, by not separating lease components from non-lease components and instead accounting for all components as a single lease component for all of its classes of underlying assets, i.e., for any type of equipment leases and real estate leases; and
|
•
|
ASC 842-10-65-1, by not reassessing at the transition date: (i) whether any expired or existing contracts are or contain leases; (ii) lease classification for any expired or existing leases; and (iii) initial direct costs for any existing leases.
|
|
|
Nine Months Ended
|
||
|
|
September 30, 2019
|
||
Lease Cost:
|
|
|
||
Finance Lease Cost:
|
|
|
||
Amortization of ROU assets
|
|
$
|
0.2
|
|
Interest on lease liabilities
|
|
0.1
|
|
|
Operating Lease Cost
|
|
31.4
|
|
|
Total Lease Cost
|
|
31.7
|
|
|
|
|
|
||
Other Information:
|
|
|
||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
||
Operating cash flows from finance leases
|
|
0.1
|
|
|
Operating cash flows from operating leases
|
|
30.6
|
|
|
Financing cash flows from finance leases
|
|
0.7
|
|
|
|
|
|
||
ROU assets for finance leases
|
|
$
|
1.2
|
|
ROU assets for operating leases
|
|
93.9
|
|
|
Amortization on ROU assets for finance leases
|
|
0.2
|
|
|
Amortization on ROU assets for operating leases
|
|
16.7
|
|
|
|
|
|
||
Weighted-average remaining lease term - finance leases
|
|
3.2 years
|
|
|
Weighted-average remaining lease term - operating leases
|
|
6.3 years
|
|
|
|
|
|
||
Weighted-average discount rate - finance leases
|
|
16.0
|
%
|
|
Weighted-average discount rate - operating leases
|
|
15.8
|
%
|
|
Operating Leases
|
|
Finance Leases
|
||||
October 2019 through December 2019
|
$
|
9.3
|
|
|
$
|
0.2
|
|
2020
|
33.1
|
|
|
0.6
|
|
||
2021
|
29.6
|
|
|
0.5
|
|
||
2022
|
23.1
|
|
|
0.3
|
|
||
2023
|
18.9
|
|
|
—
|
|
||
Thereafter
|
60.3
|
|
|
—
|
|
||
Total undiscounted cash flows
|
$
|
174.3
|
|
|
$
|
1.6
|
|
|
|
|
|
||||
Present value:
|
|
|
|
|
|
||
Short-term lease liability
|
$
|
13.9
|
|
|
$
|
0.7
|
|
Long-term lease liability
|
92.3
|
|
|
0.5
|
|
||
Total lease liability
|
$
|
106.2
|
|
|
$
|
1.2
|
|
Difference between undiscounted cash flows and discounted cash flows
|
$
|
68.1
|
|
|
$
|
0.4
|
|
|
Revlon
|
|
Portfolio
|
|
Elizabeth Arden
|
|
Fragrances
|
|
Total
|
||||||||||
Balance at January 1, 2019
|
$
|
265.0
|
|
|
$
|
171.2
|
|
|
$
|
116.9
|
|
|
$
|
120.8
|
|
|
$
|
673.9
|
|
Foreign currency translation adjustment
|
(0.3
|
)
|
|
(0.2
|
)
|
|
—
|
|
|
—
|
|
|
(0.5
|
)
|
|||||
Balance at September 30, 2019
|
$
|
264.7
|
|
|
$
|
171.0
|
|
|
$
|
116.9
|
|
|
$
|
120.8
|
|
|
$
|
673.4
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cumulative goodwill impairment charges(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(55.2
|
)
|
|
September 30, 2019
|
||||||||||||
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
|
Weighted-Average Useful Life (in Years)
|
||||||
Finite-lived intangible assets:
|
|
|
|
|
|
|
|
||||||
Trademarks and licenses
|
$
|
271.1
|
|
|
$
|
(106.6
|
)
|
|
$
|
164.5
|
|
|
13
|
Customer relationships
|
247.6
|
|
|
(93.0
|
)
|
|
154.6
|
|
|
12
|
|||
Patents and internally-developed intellectual property
|
21.1
|
|
|
(11.5
|
)
|
|
9.6
|
|
|
5
|
|||
Distribution rights
|
31.0
|
|
|
(5.3
|
)
|
|
25.7
|
|
|
15
|
|||
Other
|
1.3
|
|
|
(1.3
|
)
|
|
—
|
|
|
0
|
|||
Total finite-lived intangible assets
|
$
|
572.1
|
|
|
$
|
(217.7
|
)
|
|
$
|
354.4
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Indefinite-lived intangible assets:
|
|
|
|
|
|
|
|
||||||
Trade names
|
$
|
142.3
|
|
|
N/A
|
|
|
$
|
142.3
|
|
|
|
|
Total indefinite-lived intangible assets
|
$
|
142.3
|
|
|
N/A
|
|
|
$
|
142.3
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total intangible assets
|
$
|
714.4
|
|
|
$
|
(217.7
|
)
|
|
$
|
496.7
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
December 31, 2018
|
||||||||||||
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
|
Weighted-Average Useful Life (in Years)
|
||||||
Finite-lived intangible assets:
|
|
|
|
|
|
|
|
||||||
Trademarks and licenses
|
$
|
272.3
|
|
|
$
|
(94.3
|
)
|
|
$
|
178.0
|
|
|
13
|
Customer relationships
|
248.6
|
|
|
(77.9
|
)
|
|
170.7
|
|
|
12
|
|||
Patents and internally-developed intellectual property
|
20.9
|
|
|
(10.1
|
)
|
|
10.8
|
|
|
6
|
|||
Distribution rights
|
31.0
|
|
|
(4.0
|
)
|
|
27.0
|
|
|
16
|
|||
Other
|
1.3
|
|
|
(1.0
|
)
|
|
0.3
|
|
|
1
|
|||
Total finite-lived intangible assets
|
$
|
574.1
|
|
|
$
|
(187.3
|
)
|
|
$
|
386.8
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Indefinite-lived intangible assets:
|
|
|
|
|
|
|
|
||||||
Trade names
|
$
|
145.2
|
|
|
N/A
|
|
|
$
|
145.2
|
|
|
|
|
Total indefinite-lived intangible assets
|
$
|
145.2
|
|
|
N/A
|
|
|
$
|
145.2
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total intangible assets
|
$
|
719.3
|
|
|
$
|
(187.3
|
)
|
|
$
|
532.0
|
|
|
|
|
Estimated Amortization Expense
|
||
2019
|
$
|
8.7
|
|
2020
|
34.1
|
|
|
2021
|
33.2
|
|
|
2022
|
32.3
|
|
|
2023
|
30.7
|
|
|
Thereafter
|
215.4
|
|
|
Total
|
$
|
354.4
|
|
|
September 30,
|
|
December 31,
|
||||
|
2019
|
|
2018
|
||||
Sales returns and allowances
|
$
|
87.9
|
|
|
$
|
97.7
|
|
Advertising and promotional costs
|
76.8
|
|
|
76.2
|
|
||
Compensation and related benefits
|
32.7
|
|
|
55.9
|
|
||
Taxes (a)
|
24.4
|
|
|
30.9
|
|
||
Restructuring reserve
|
15.2
|
|
|
26.4
|
|
||
Interest
|
20.2
|
|
|
33.8
|
|
||
Other (b)
|
111.1
|
|
|
110.0
|
|
||
Total
|
$
|
368.3
|
|
|
$
|
430.9
|
|
|
September 30,
|
|
December 31,
|
||||
|
2019
|
|
2018
|
||||
2019 Term Loan Facility due 2023, net of discounts and debt issuance costs (a)
|
188.4
|
|
|
$
|
—
|
|
|
2018 Foreign Asset-Based Term Facility due 2021, net of discounts and debt issuance costs (b)
|
79.5
|
|
|
82.7
|
|
||
Amended 2016 Revolving Credit Facility due 2021, net of debt issuance costs (c)
|
345.4
|
|
|
330.0
|
|
||
2016 Term Loan Facility: 2016 Term Loan due 2023, net of discounts and debt issuance costs (d)
|
1,716.3
|
|
|
1,724.6
|
|
||
5.75% Senior Notes due 2021, net of debt issuance costs (e)
|
497.7
|
|
|
496.6
|
|
||
6.25% Senior Notes due 2024, net of debt issuance costs (f)
|
442.4
|
|
|
441.4
|
|
||
Spanish Government Loan due 2025
|
0.4
|
|
|
0.5
|
|
||
|
$
|
3,270.1
|
|
|
$
|
3,075.8
|
|
Less current portion(*)
|
(363.5
|
)
|
|
(348.1
|
)
|
||
|
$
|
2,906.6
|
|
|
$
|
2,727.7
|
|
|
|
|
|
||||
Short-term borrowings (g)
|
$
|
5.1
|
|
|
$
|
9.3
|
|
|
Commitment
|
|
Borrowing Base
|
|
Aggregate principal amount outstanding at September 30, 2019
|
|
Availability at September 30, 2019 (a)
|
||||||||
Tranche A of the Amended 2016 Revolving Credit Facility
|
$
|
400.0
|
|
|
$
|
400.0
|
|
|
$
|
307.5
|
|
|
$
|
81.2
|
|
Tranche B of the Amended 2016 Revolving Credit Facility
|
41.5
|
|
|
40.9
|
|
|
40.9
|
|
|
—
|
|
||||
Total Tranche A & B of the Amended 2016 Revolving Credit Facility(a)
|
$
|
441.5
|
|
|
$
|
440.9
|
|
|
$
|
348.4
|
|
|
$
|
81.2
|
|
2019 Senior Line of Credit Facility
|
$
|
30.0
|
|
|
N/A
|
|
|
$
|
—
|
|
|
$
|
30.0
|
|
|
|
|
|
•
|
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.
|
|
September 30, 2019
|
||||||||||||||||||
|
Fair Value
|
|
|
||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Carrying Value
|
||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Long-term debt, including current portion(a)
|
$
|
—
|
|
|
$
|
2,633.7
|
|
|
$
|
—
|
|
|
$
|
2,633.7
|
|
|
$
|
3,270.1
|
|
|
December 31, 2018
|
||||||||||||||||||
|
Fair Value
|
|
|
||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Carrying Value
|
||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Long-term debt, including current portion(a)
|
$
|
—
|
|
|
$
|
2,259.5
|
|
|
$
|
—
|
|
|
$
|
2,259.5
|
|
|
$
|
3,075.8
|
|
|
|
|
|
|
|
|
|
|
|
Derivative Instruments
|
|
Statement of Operations Classification
|
|
Amount of Gain (Loss) Recognized in Net (Loss) Income
|
|||||||||||||||
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|||||||||||||||||
2019
|
|
2018
|
|
2019
|
|
2018
|
|||||||||||||
Derivative financial instruments:
|
|
|
|
|
|
|
|
|
|||||||||||
2013 Interest Rate Swap
|
|
Interest Expense
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1.2
|
)
|
|
FX Contracts
|
|
Foreign currency gain, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|||||
2013 Interest Rate Swap
|
|
Miscellaneous, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|
Amount of Gain Recognized in Other Comprehensive Loss
|
||||||||||||||
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Derivatives previously designated as hedging instruments:
|
|
|
|
|
|
|
|
||||||||
2013 Interest Rate Swap, net of tax (a)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.7
|
|
|
Pension Plans |
|
Other
Post-Retirement Benefit Plans
|
||||||||||||
|
Three Months Ended September 30,
|
||||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net periodic benefit costs:
|
|
|
|
|
|
|
|
||||||||
Service cost
|
$
|
0.4
|
|
|
$
|
0.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
|
5.1
|
|
|
4.6
|
|
|
0.1
|
|
|
0.1
|
|
||||
Expected return on plan assets
|
(6.0
|
)
|
|
(6.9
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization of actuarial loss
|
2.5
|
|
|
2.4
|
|
|
0.1
|
|
|
0.1
|
|
||||
Curtailment gain
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total net periodic benefit costs prior to allocation
|
$
|
2.0
|
|
|
$
|
0.6
|
|
|
$
|
0.2
|
|
|
$
|
0.2
|
|
Portion allocated to Revlon Holdings
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total net periodic benefit costs
|
$
|
2.0
|
|
|
$
|
0.6
|
|
|
$
|
0.2
|
|
|
$
|
0.2
|
|
|
Pension Plans
|
|
Other
Post-Retirement Benefit Plans |
||||||||||||
|
Nine Months Ended September 30,
|
||||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net periodic benefit costs:
|
|
|
|
|
|
|
|
||||||||
Service cost
|
$
|
1.4
|
|
|
$
|
1.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
|
15.0
|
|
|
13.9
|
|
|
0.3
|
|
|
0.3
|
|
||||
Expected return on plan assets
|
(18.0
|
)
|
|
(20.8
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization of actuarial loss
|
7.5
|
|
|
6.9
|
|
|
0.2
|
|
|
0.3
|
|
||||
Total net periodic benefit costs prior to allocation
|
$
|
5.9
|
|
|
$
|
1.5
|
|
|
$
|
0.5
|
|
|
$
|
0.6
|
|
Portion allocated to Revlon Holdings
|
(0.1
|
)
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
||||
Total net periodic benefit costs
|
$
|
5.8
|
|
|
$
|
1.4
|
|
|
$
|
0.5
|
|
|
$
|
0.6
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net periodic benefit costs:
|
|
|
|
|
|
|
|
||||||||
Selling, general and administrative expense
|
$
|
0.5
|
|
|
$
|
0.5
|
|
|
$
|
1.4
|
|
|
$
|
1.5
|
|
Miscellaneous, net
|
1.7
|
|
|
0.3
|
|
|
4.9
|
|
|
0.5
|
|
||||
Total net periodic benefit costs
|
$
|
2.2
|
|
|
$
|
0.8
|
|
|
$
|
6.3
|
|
|
$
|
2.0
|
|
|
Time-Based LTIP
|
|
Performance-Based LTIP
|
||||||||||
|
RSUs (000's)
|
|
Weighted-Average Grant Date Fair Value per RSU
|
|
RSUs (000's)
|
|
Weighted-Average Grant Date Fair Value per RSU
|
||||||
Outstanding as of December 31, 2018
|
|
|
|
|
|
|
|
||||||
LTIP RSUs:
|
|
|
|
|
|
|
|
||||||
2018
|
434.7
|
|
|
$
|
19.11
|
|
|
434.7
|
|
|
$
|
19.11
|
|
2017 (a)
|
156.4
|
|
|
19.70
|
|
|
156.4
|
|
|
19.70
|
|
||
Total LTIP RSUs Outstanding as of December 31, 2018
|
591.1
|
|
|
|
|
591.1
|
|
|
|
||||
Granted
|
|
|
|
|
|
|
|
||||||
2019 TIP RSUs Granted (b)
|
206.8
|
|
|
16.44
|
|
|
n/a
|
|
|
||||
LTIP RSUs Granted:
|
|
|
|
|
|
|
|
||||||
2019
|
446.0
|
|
|
22.55
|
|
|
446.1
|
|
|
22.55
|
|
||
Total LTIP RSUs Granted
|
446.0
|
|
|
|
|
446.1
|
|
|
|
||||
Vested
|
|
|
|
|
|
|
|
||||||
2019 TIP RSUs Vested (b)
|
—
|
|
|
—
|
|
|
n/a
|
|
|
||||
LTIP RSUs Vested:
|
|
|
|
|
|
|
|
||||||
2019
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
2018
|
(132.8
|
)
|
|
19.06
|
|
|
—
|
|
|
—
|
|
||
2017 (a)
|
(67.4
|
)
|
|
19.70
|
|
|
—
|
|
|
—
|
|
||
Total LTIP RSUs Vested
|
(200.2
|
)
|
|
|
|
—
|
|
|
|
||||
Forfeited/Canceled
|
|
|
|
|
|
|
|
||||||
2019 TIP RSUs Forfeited/Canceled (b)
|
—
|
|
|
|
|
n/a
|
|
|
|||||
LTIP RSUs Forfeited/Canceled:
|
|
|
|
|
|
|
|
||||||
2019
|
(2.2
|
)
|
|
22.55
|
|
|
(2.2
|
)
|
|
22.55
|
|
||
2018
|
(45.5
|
)
|
|
19.70
|
|
|
(51.4
|
)
|
|
19.70
|
|
||
2017 (a)
|
(28.1
|
)
|
|
19.70
|
|
|
(34.6
|
)
|
|
19.70
|
|
||
Total LTIP RSUs Forfeited/Canceled
|
(75.8
|
)
|
|
|
|
(88.2
|
)
|
|
|
||||
Outstanding as of September 30, 2019
|
|
|
|
|
|
|
|
||||||
2019 TIP RSUs (b)
|
206.8
|
|
|
16.44
|
|
|
n/a
|
|
|
||||
LTIP RSUs:
|
|
|
|
|
|
|
|
||||||
2019
|
443.8
|
|
|
22.55
|
|
|
443.9
|
|
|
22.55
|
|
||
2018
|
256.4
|
|
|
19.04
|
|
|
383.3
|
|
|
19.04
|
|
||
2017 (a)
|
60.9
|
|
|
19.70
|
|
|
121.8
|
|
|
19.70
|
|
||
Total LTIP RSUs
|
761.1
|
|
|
|
|
949.0
|
|
|
|
||||
Total LTIP and TIP RSUs Outstanding as of September 30, 2019
|
967.9
|
|
|
|
|
949.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign Currency Translation
|
|
Actuarial (Loss) Gain on Post-retirement Benefits
|
|
Other
|
|
Accumulated Other Comprehensive Loss
|
||||||||
Balance at January 1, 2019
|
$
|
(24.4
|
)
|
|
$
|
(209.5
|
)
|
|
$
|
(0.3
|
)
|
|
$
|
(234.2
|
)
|
Foreign currency translation adjustment
|
(0.5
|
)
|
|
—
|
|
|
—
|
|
|
(0.5
|
)
|
||||
Amortization of pension related costs, net of tax of $(0.9) million(a)
|
—
|
|
|
7.2
|
|
|
—
|
|
|
7.2
|
|
||||
Other comprehensive (loss) income
|
$
|
(0.5
|
)
|
|
$
|
7.2
|
|
|
$
|
—
|
|
|
$
|
6.7
|
|
Balance at September 30, 2019
|
$
|
(24.9
|
)
|
|
$
|
(202.3
|
)
|
|
$
|
(0.3
|
)
|
|
$
|
(227.5
|
)
|
|
|
2013
Interest Rate Swap
|
||
Beginning accumulated losses at December 31, 2017
|
|
$
|
(0.7
|
)
|
Reclassifications into earnings (net of $0.5 million tax benefit)(a)
|
|
0.7
|
|
|
Ending accumulated losses at September 30, 2018
|
|
$
|
—
|
|
•
|
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 and specialty cosmetic stores in the U.S. and internationally under brands such as Revlon in color cosmetics; Revlon ColorSilk and Revlon Professional in hair color; and Revlon in beauty tools.
|
•
|
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 website, 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; American Crew in men's grooming products (which are also sold direct-to-consumer on its americancrew.com website); CND in nail polishes, gel nail color and nail enhancements; Cutex nail care products; Pure Ice in nail polishes; 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 (which are also sold direct-to-consumer on its juicycouturebeauty.com website), Britney Spears, Elizabeth Taylor, Curve, John Varvatos, Christina Aguilera, Giorgio Beverly Hills, Ed Hardy, Charlie, Lucky Brand, Paul Sebastian, Alfred Sung, Jennifer Aniston, Mariah Carey, Halston, Geoffrey Beene, La Perla, White Shoulders, AllSaints and Wildfox.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Segment Net Sales:
|
|
|
|
|
|
|
|
||||||||
Revlon
|
$
|
217.3
|
|
|
$
|
249.5
|
|
|
$
|
716.1
|
|
|
$
|
736.9
|
|
Elizabeth Arden
|
123.2
|
|
|
122.1
|
|
|
352.0
|
|
|
333.9
|
|
||||
Portfolio
|
118.2
|
|
|
138.4
|
|
|
354.1
|
|
|
420.5
|
|
||||
Fragrances
|
138.1
|
|
|
145.4
|
|
|
298.0
|
|
|
331.6
|
|
||||
Total
|
$
|
596.8
|
|
|
$
|
655.4
|
|
|
$
|
1,720.2
|
|
|
$
|
1,822.9
|
|
|
|
|
|
|
|
|
|
||||||||
Segment Profit:
|
|
|
|
|
|
|
|
||||||||
Revlon
|
$
|
7.3
|
|
|
$
|
36.8
|
|
|
$
|
58.5
|
|
|
$
|
75.6
|
|
Elizabeth Arden
|
12.5
|
|
|
6.6
|
|
|
17.1
|
|
|
2.3
|
|
||||
Portfolio
|
14.4
|
|
|
2.1
|
|
|
25.0
|
|
|
(5.8
|
)
|
||||
Fragrances
|
34.2
|
|
|
26.9
|
|
|
53.6
|
|
|
41.2
|
|
||||
Total
|
$
|
68.4
|
|
|
$
|
72.4
|
|
|
$
|
154.2
|
|
|
$
|
113.3
|
|
|
|
|
|
|
|
|
|
||||||||
Reconciliation:
|
|
|
|
|
|
|
|
||||||||
Total Segment Profit
|
$
|
68.4
|
|
|
$
|
72.4
|
|
|
$
|
154.2
|
|
|
$
|
113.3
|
|
Less:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
38.9
|
|
|
40.1
|
|
|
124.6
|
|
|
119.4
|
|
||||
Non-cash stock compensation expense
|
3.9
|
|
|
6.3
|
|
|
7.7
|
|
|
14.8
|
|
||||
Non-Operating items:
|
|
|
|
|
|
|
|
|
|
|
|||||
Restructuring and related charges
|
5.4
|
|
|
3.8
|
|
|
27.4
|
|
|
14.8
|
|
||||
Acquisition and integration costs
|
0.1
|
|
|
3.4
|
|
|
0.7
|
|
|
12.0
|
|
||||
Loss on disposal of minority investment
|
—
|
|
|
—
|
|
|
—
|
|
|
20.1
|
|
||||
Oxford ERP system disruption-related charges
|
—
|
|
|
16.5
|
|
|
—
|
|
|
49.6
|
|
||||
Financial control remediation actions and related charges
|
3.4
|
|
|
—
|
|
|
9.8
|
|
|
—
|
|
||||
Operating income (loss)
|
16.7
|
|
|
2.3
|
|
|
(16.0
|
)
|
|
(117.4
|
)
|
||||
Less:
|
|
|
|
|
|
|
|
|
|||||||
Interest Expense
|
50.2
|
|
|
46.4
|
|
|
145.7
|
|
|
129.1
|
|
||||
Amortization of debt issuance costs
|
3.7
|
|
|
3.8
|
|
|
10.4
|
|
|
9.1
|
|
||||
Foreign currency losses, net
|
7.6
|
|
|
1.1
|
|
|
9.0
|
|
|
10.7
|
|
||||
Miscellaneous, net
|
1.7
|
|
|
0.4
|
|
|
7.6
|
|
|
0.6
|
|
||||
Loss from continuing operations before income taxes
|
$
|
(46.5
|
)
|
|
$
|
(49.4
|
)
|
|
$
|
(188.7
|
)
|
|
$
|
(266.9
|
)
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Segment Net Sales:
|
|
|
|
|
|
|
|
||||||||
Revlon
|
$
|
217.3
|
|
|
$
|
249.5
|
|
|
$
|
716.1
|
|
|
$
|
736.9
|
|
Elizabeth Arden
|
123.2
|
|
|
122.1
|
|
|
352.0
|
|
|
333.9
|
|
||||
Portfolio
|
118.2
|
|
|
138.4
|
|
|
354.1
|
|
|
420.5
|
|
||||
Fragrances
|
138.1
|
|
|
145.4
|
|
|
298.0
|
|
|
331.6
|
|
||||
Total
|
$
|
596.8
|
|
|
$
|
655.4
|
|
|
$
|
1,720.2
|
|
|
$
|
1,822.9
|
|
|
|
|
|
|
|
|
|
||||||||
Segment Profit:
|
|
|
|
|
|
|
|
||||||||
Revlon
|
$
|
7.9
|
|
|
$
|
37.4
|
|
|
$
|
60.6
|
|
|
$
|
77.6
|
|
Elizabeth Arden
|
13.0
|
|
|
6.9
|
|
|
18.2
|
|
|
3.2
|
|
||||
Portfolio
|
14.7
|
|
|
2.5
|
|
|
26.0
|
|
|
(4.6
|
)
|
||||
Fragrances
|
34.6
|
|
|
27.3
|
|
|
54.5
|
|
|
42.1
|
|
||||
Total
|
$
|
70.2
|
|
|
$
|
74.1
|
|
|
$
|
159.3
|
|
|
$
|
118.3
|
|
|
|
|
|
|
|
|
|
||||||||
Reconciliation:
|
|
|
|
|
|
|
|
||||||||
Total Segment Profit
|
$
|
70.2
|
|
|
$
|
74.1
|
|
|
$
|
159.3
|
|
|
$
|
118.3
|
|
Less:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
38.9
|
|
|
40.1
|
|
|
124.6
|
|
|
119.4
|
|
||||
Non-cash stock compensation expense
|
3.9
|
|
|
6.3
|
|
|
7.7
|
|
|
14.8
|
|
||||
Non-Operating items:
|
|
|
|
|
|
|
|
||||||||
Restructuring and related charges
|
5.4
|
|
|
3.8
|
|
|
27.4
|
|
|
14.8
|
|
||||
Acquisition and integration costs
|
0.1
|
|
|
3.4
|
|
|
0.7
|
|
|
12.0
|
|
||||
Loss on disposal of minority investment
|
—
|
|
|
—
|
|
|
—
|
|
|
20.1
|
|
||||
Oxford ERP system disruption-related charges
|
—
|
|
|
16.5
|
|
|
—
|
|
|
49.6
|
|
||||
Financial control remediation actions and related charges
|
3.4
|
|
|
—
|
|
|
9.8
|
|
|
—
|
|
||||
Operating loss
|
18.5
|
|
|
4.0
|
|
|
(10.9
|
)
|
|
(112.4
|
)
|
||||
Less:
|
|
|
|
|
|
|
|
||||||||
Interest Expense
|
50.2
|
|
|
46.4
|
|
|
145.7
|
|
|
129.1
|
|
||||
Amortization of debt issuance costs
|
3.7
|
|
|
3.8
|
|
|
10.4
|
|
|
9.1
|
|
||||
Foreign currency losses, net
|
7.6
|
|
|
1.1
|
|
|
9.0
|
|
|
10.7
|
|
||||
Miscellaneous, net
|
1.7
|
|
|
0.4
|
|
|
7.6
|
|
|
0.6
|
|
||||
Loss from continuing operations before income taxes
|
$
|
(44.7
|
)
|
|
$
|
(47.7
|
)
|
|
$
|
(183.6
|
)
|
|
$
|
(261.9
|
)
|
|
|
Three Months Ended September 30, 2019
|
|
Nine Months Ended September 30, 2019
|
||||||||||||||||||||||||||||||||||||
|
Revlon
|
|
Elizabeth Arden
|
|
Portfolio
|
|
Fragrances
|
|
Total
|
|
Revlon
|
|
Elizabeth Arden
|
|
Portfolio
|
|
Fragrances
|
|
Total
|
|||||||||||||||||||||
Geographic Area:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Net Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
North America
|
$
|
100.0
|
|
|
$
|
29.5
|
|
|
$
|
71.4
|
|
|
$
|
98.6
|
|
|
$
|
299.5
|
|
|
$
|
367.9
|
|
|
$
|
83.9
|
|
|
$
|
214.5
|
|
|
$
|
198.4
|
|
|
$
|
864.7
|
|
|
EMEA*
|
49.8
|
|
|
53.5
|
|
|
38.5
|
|
|
28.3
|
|
|
170.1
|
|
|
157.8
|
|
|
148.1
|
|
|
111.4
|
|
|
73.1
|
|
|
490.4
|
|
|||||||||||
Asia
|
29.8
|
|
|
30.7
|
|
|
1.0
|
|
|
2.9
|
|
|
64.4
|
|
|
77.8
|
|
|
97.0
|
|
|
3.2
|
|
|
9.6
|
|
|
187.6
|
|
|||||||||||
Latin America*
|
17.4
|
|
|
1.8
|
|
|
4.4
|
|
|
2.7
|
|
|
26.3
|
|
|
52.3
|
|
|
6.0
|
|
|
15.8
|
|
|
6.1
|
|
|
80.2
|
|
|||||||||||
Pacific*
|
20.3
|
|
|
7.7
|
|
|
2.9
|
|
|
5.6
|
|
|
36.5
|
|
|
60.3
|
|
|
17.0
|
|
|
9.2
|
|
|
10.8
|
|
|
97.3
|
|
|||||||||||
|
$
|
217.3
|
|
|
$
|
123.2
|
|
|
$
|
118.2
|
|
|
$
|
138.1
|
|
|
$
|
596.8
|
|
|
$
|
716.1
|
|
|
$
|
352.0
|
|
|
$
|
354.1
|
|
|
$
|
298.0
|
|
|
$
|
1,720.2
|
|
|
|
Three Months Ended September 30, 2018
|
|
Nine Months Ended September 30, 2018
|
||||||||||||||||||||||||||||||||||||
|
Revlon
|
|
Elizabeth Arden
|
|
Portfolio
|
|
Fragrances
|
|
Total
|
|
Revlon
|
|
Elizabeth Arden
|
|
Portfolio
|
|
Fragrances
|
|
Total
|
|||||||||||||||||||||
Geographic Area:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Net Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
North America
|
$
|
123.1
|
|
|
$
|
40.3
|
|
|
$
|
88.1
|
|
|
$
|
99.3
|
|
|
$
|
350.8
|
|
|
$
|
388.2
|
|
|
$
|
96.2
|
|
|
$
|
264.8
|
|
|
$
|
216.9
|
|
|
$
|
966.1
|
|
|
EMEA*
|
57.9
|
|
|
48.3
|
|
|
40.5
|
|
|
33.2
|
|
|
179.9
|
|
|
166.5
|
|
|
141.4
|
|
|
126.0
|
|
|
81.6
|
|
|
515.5
|
|
|||||||||||
Asia
|
28.6
|
|
|
23.2
|
|
|
1.1
|
|
|
3.4
|
|
|
56.3
|
|
|
78.5
|
|
|
71.6
|
|
|
3.1
|
|
|
9.9
|
|
|
163.1
|
|
|||||||||||
Latin America*
|
19.9
|
|
|
3.2
|
|
|
6.0
|
|
|
3.4
|
|
|
32.5
|
|
|
49.3
|
|
|
7.9
|
|
|
16.8
|
|
|
10.5
|
|
|
84.5
|
|
|||||||||||
Pacific*
|
20.0
|
|
|
7.1
|
|
|
2.7
|
|
|
6.1
|
|
|
35.9
|
|
|
54.4
|
|
|
16.8
|
|
|
9.8
|
|
|
12.7
|
|
|
93.7
|
|
|||||||||||
|
$
|
249.5
|
|
|
$
|
122.1
|
|
|
$
|
138.4
|
|
|
$
|
145.4
|
|
|
$
|
655.4
|
|
|
$
|
736.9
|
|
|
$
|
333.9
|
|
|
$
|
420.5
|
|
|
$
|
331.6
|
|
|
$
|
1,822.9
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||||||
Classes of similar products:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Color cosmetics
|
$
|
173.6
|
|
|
29%
|
|
$
|
216.4
|
|
|
33%
|
|
$
|
569.9
|
|
|
33%
|
|
$
|
631.1
|
|
|
35%
|
Fragrance
|
183.7
|
|
|
31%
|
|
191.7
|
|
|
29%
|
|
411.1
|
|
|
24%
|
|
448.5
|
|
|
25%
|
||||
Hair care
|
120.5
|
|
|
20%
|
|
129.6
|
|
|
20%
|
|
379.0
|
|
|
22%
|
|
391.0
|
|
|
21%
|
||||
Beauty care
|
43.6
|
|
|
7%
|
|
49.7
|
|
|
8%
|
|
132.7
|
|
|
8%
|
|
147.5
|
|
|
8%
|
||||
Skin care
|
75.4
|
|
|
13%
|
|
68.0
|
|
|
10%
|
|
227.5
|
|
|
13%
|
|
204.8
|
|
|
11%
|
||||
|
$
|
596.8
|
|
|
|
|
$
|
655.4
|
|
|
|
|
$
|
1,720.2
|
|
|
|
|
$
|
1,822.9
|
|
|
|
|
September 30, 2019
|
|
December 31, 2018
|
||||||||
Long-lived assets, net:
|
|
|
|
|
|
|
|
||||
United States
|
$
|
1,430.8
|
|
|
84%
|
|
$
|
1,416.2
|
|
|
84%
|
International
|
275.9
|
|
|
16%
|
|
275.0
|
|
|
16%
|
||
|
$
|
1,706.7
|
|
|
|
$
|
1,691.2
|
|
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Loss from continuing operations, net of taxes
|
$
|
(44.4
|
)
|
|
$
|
(10.7
|
)
|
|
$
|
(185.5
|
)
|
|
$
|
(223.8
|
)
|
(Loss) income from discontinued operations, net of taxes
|
(0.3
|
)
|
|
(0.4
|
)
|
|
2.0
|
|
|
(0.1
|
)
|
||||
Net loss
|
$
|
(44.7
|
)
|
|
$
|
(11.1
|
)
|
|
$
|
(183.5
|
)
|
|
$
|
(223.9
|
)
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Weighted-average common shares outstanding – Basic
|
53,129,004
|
|
|
52,834,879
|
|
|
53,057,154
|
|
|
52,777,883
|
|
||||
Effect of dilutive restricted stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Weighted-average common shares outstanding – Diluted
|
53,129,004
|
|
|
52,834,879
|
|
|
53,057,154
|
|
|
52,777,883
|
|
||||
Basic loss per common share:
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
(0.84
|
)
|
|
$
|
(0.20
|
)
|
|
$
|
(3.50
|
)
|
|
$
|
(4.24
|
)
|
Discontinued operations
|
—
|
|
|
(0.01
|
)
|
|
0.04
|
|
|
—
|
|
||||
Net loss per common share
|
$
|
(0.84
|
)
|
|
$
|
(0.21
|
)
|
|
$
|
(3.46
|
)
|
|
$
|
(4.24
|
)
|
Diluted loss per common share:
|
|
|
|
|
|
|
|
|
|||||||
Continuing operations
|
$
|
(0.84
|
)
|
|
$
|
(0.20
|
)
|
|
$
|
(3.50
|
)
|
|
$
|
(4.24
|
)
|
Discontinued operations
|
—
|
|
|
(0.01
|
)
|
|
0.04
|
|
|
—
|
|
||||
Net loss per common share
|
$
|
(0.84
|
)
|
|
$
|
(0.21
|
)
|
|
$
|
(3.46
|
)
|
|
$
|
(4.24
|
)
|
|
|
|
|
|
|
|
|
||||||||
Unvested restricted stock and RSUs under the Stock Plan(a)
|
314,478
|
|
|
197,667
|
|
|
406,854
|
|
|
165,961
|
|
(a)
|
These are outstanding common stock equivalents that were not included in the computation of Revlon's diluted earnings per common share because their inclusion would have had an anti-dilutive effect.
|
Products Corporation and Subsidiaries Condensed Consolidating Balance Sheets
|
|||||||||||||||||||
As of December 31, 2018
|
|||||||||||||||||||
|
Products Corporation
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
7.3
|
|
|
$
|
6.6
|
|
|
$
|
73.4
|
|
|
$
|
—
|
|
|
$
|
87.3
|
|
Trade receivables, less allowances for doubtful accounts
|
89.7
|
|
|
103.5
|
|
|
238.1
|
|
|
—
|
|
|
431.3
|
|
|||||
Inventories
|
150.7
|
|
|
196.5
|
|
|
176.0
|
|
|
—
|
|
|
523.2
|
|
|||||
Prepaid expenses and other
|
214.7
|
|
|
25.0
|
|
|
60.0
|
|
|
—
|
|
|
299.7
|
|
|||||
Intercompany receivables
|
2,225.4
|
|
|
2,177.2
|
|
|
266.1
|
|
|
(4,668.7
|
)
|
|
—
|
|
|||||
Investment in subsidiaries
|
1,627.4
|
|
|
30.4
|
|
|
—
|
|
|
(1,657.8
|
)
|
|
—
|
|
|||||
Property, plant and equipment, net
|
197.1
|
|
|
57.5
|
|
|
99.9
|
|
|
—
|
|
|
354.5
|
|
|||||
Deferred income taxes
|
105.9
|
|
|
(6.9
|
)
|
|
15.8
|
|
|
—
|
|
|
114.8
|
|
|||||
Goodwill
|
159.9
|
|
|
263.9
|
|
|
250.1
|
|
|
—
|
|
|
673.9
|
|
|||||
Intangible assets, net
|
21.2
|
|
|
412.2
|
|
|
98.6
|
|
|
—
|
|
|
532.0
|
|
|||||
Other assets
|
71.8
|
|
|
23.4
|
|
|
35.6
|
|
|
—
|
|
|
130.8
|
|
|||||
Total assets
|
$
|
4,871.1
|
|
|
$
|
3,289.3
|
|
|
$
|
1,313.6
|
|
|
$
|
(6,326.5
|
)
|
|
$
|
3,147.5
|
|
LIABILITIES AND STOCKHOLDER’S DEFICIENCY
|
|||||||||||||||||||
Short-term borrowings
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9.3
|
|
|
$
|
—
|
|
|
$
|
9.3
|
|
Current portion of long-term debt
|
348.0
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
348.1
|
|
|||||
Accounts payable
|
148.8
|
|
|
88.6
|
|
|
94.7
|
|
|
—
|
|
|
332.1
|
|
|||||
Accrued expenses and other
|
152.6
|
|
|
87.0
|
|
|
195.1
|
|
|
—
|
|
|
434.7
|
|
|||||
Intercompany payables
|
2,226.8
|
|
|
2,028.9
|
|
|
413.0
|
|
|
(4,668.7
|
)
|
|
—
|
|
|||||
Long-term debt
|
2,644.6
|
|
|
—
|
|
|
83.1
|
|
|
—
|
|
|
2,727.7
|
|
|||||
Other long-term liabilities
|
153.4
|
|
|
11.2
|
|
|
64.1
|
|
|
—
|
|
|
228.7
|
|
|||||
Total liabilities
|
5,674.2
|
|
|
2,215.7
|
|
|
859.4
|
|
|
(4,668.7
|
)
|
|
4,080.6
|
|
|||||
Stockholder’s deficiency
|
(803.1
|
)
|
|
1,073.6
|
|
|
454.2
|
|
|
(1,657.8
|
)
|
|
(933.1
|
)
|
|||||
Total liabilities and stockholder’s deficiency
|
$
|
4,871.1
|
|
|
$
|
3,289.3
|
|
|
$
|
1,313.6
|
|
|
$
|
(6,326.5
|
)
|
|
$
|
3,147.5
|
|
Products Corporation and Subsidiaries Condensed Consolidating Statement of Operations and Comprehensive (Loss) Income
|
|||||||||||||||||||
Three Months Ended September 30, 2019
|
|||||||||||||||||||
|
Products Corporation
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net Sales
|
$
|
118.4
|
|
|
$
|
174.8
|
|
|
$
|
303.9
|
|
|
$
|
(0.3
|
)
|
|
$
|
596.8
|
|
Cost of sales
|
64.9
|
|
|
88.1
|
|
|
116.3
|
|
|
(0.3
|
)
|
|
269.0
|
|
|||||
Gross profit
|
53.5
|
|
|
86.7
|
|
|
187.6
|
|
|
—
|
|
|
327.8
|
|
|||||
Selling, general and administrative expenses
|
90.5
|
|
|
82.1
|
|
|
133.7
|
|
|
—
|
|
|
306.3
|
|
|||||
Acquisition and integration costs
|
0.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|||||
Restructuring charges and other, net
|
1.0
|
|
|
0.5
|
|
|
1.4
|
|
|
—
|
|
|
2.9
|
|
|||||
Operating (loss) income
|
(38.1
|
)
|
|
4.1
|
|
|
52.5
|
|
|
—
|
|
|
18.5
|
|
|||||
Other (income) expense:
|
|
|
|
|
|
|
|
|
|
||||||||||
Intercompany interest, net
|
(1.1
|
)
|
|
0.6
|
|
|
0.5
|
|
|
—
|
|
|
—
|
|
|||||
Interest expense
|
48.5
|
|
|
—
|
|
|
1.7
|
|
|
—
|
|
|
50.2
|
|
|||||
Amortization of debt issuance costs
|
3.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3.7
|
|
|||||
Foreign currency losses (gains), net
|
0.9
|
|
|
(0.1
|
)
|
|
6.8
|
|
|
—
|
|
|
7.6
|
|
|||||
Miscellaneous, net
|
(8.4
|
)
|
|
(10.0
|
)
|
|
20.1
|
|
|
—
|
|
|
1.7
|
|
|||||
Other expense (income), net
|
43.6
|
|
|
(9.5
|
)
|
|
29.1
|
|
|
—
|
|
|
63.2
|
|
|||||
(Loss) income from continuing operations before income taxes
|
(81.7
|
)
|
|
13.6
|
|
|
23.4
|
|
|
—
|
|
|
(44.7
|
)
|
|||||
(Benefit from) provision for income taxes
|
(31.4
|
)
|
|
18.9
|
|
|
10.7
|
|
|
—
|
|
|
(1.8
|
)
|
|||||
(Loss) income from continuing operations, net of taxes
|
(50.3
|
)
|
|
(5.3
|
)
|
|
12.7
|
|
|
—
|
|
|
(42.9
|
)
|
|||||
Loss from discontinued operations, net of taxes
|
—
|
|
|
—
|
|
|
(0.3
|
)
|
|
—
|
|
|
(0.3
|
)
|
|||||
Equity in income (loss) of subsidiaries
|
30.8
|
|
|
0.1
|
|
|
—
|
|
|
(30.9
|
)
|
|
—
|
|
|||||
Net (loss) income
|
$
|
(19.5
|
)
|
|
$
|
(5.2
|
)
|
|
$
|
12.4
|
|
|
$
|
(30.9
|
)
|
|
$
|
(43.2
|
)
|
Other comprehensive income (loss)
|
0.5
|
|
|
3.9
|
|
|
(1.9
|
)
|
|
(2.0
|
)
|
|
0.5
|
|
|||||
Total comprehensive (loss) income
|
$
|
(19.0
|
)
|
|
$
|
(1.3
|
)
|
|
$
|
10.5
|
|
|
$
|
(32.9
|
)
|
|
$
|
(42.7
|
)
|
Products Corporation and Subsidiaries Condensed Consolidating Statement of Operations and Comprehensive (Loss) Income
|
|||||||||||||||||||
Three Months Ended September 30, 2018
|
|||||||||||||||||||
|
Products Corporation
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net Sales
|
$
|
149.3
|
|
|
$
|
196.5
|
|
|
$
|
308.5
|
|
|
$
|
1.1
|
|
|
$
|
655.4
|
|
Cost of sales
|
77.2
|
|
|
104.4
|
|
|
122.3
|
|
|
1.1
|
|
|
305.0
|
|
|||||
Gross profit
|
72.1
|
|
|
92.1
|
|
|
186.2
|
|
|
—
|
|
|
350.4
|
|
|||||
Selling, general and administrative expenses
|
99.6
|
|
|
98.0
|
|
|
141.5
|
|
|
—
|
|
|
339.1
|
|
|||||
Acquisition and integration costs
|
2.2
|
|
|
0.4
|
|
|
0.8
|
|
|
—
|
|
|
3.4
|
|
|||||
Restructuring charges and other, net
|
0.7
|
|
|
2.0
|
|
|
1.2
|
|
|
—
|
|
|
3.9
|
|
|||||
Operating (loss) income
|
(30.4
|
)
|
|
(8.3
|
)
|
|
42.7
|
|
|
—
|
|
|
4.0
|
|
|||||
Other (income) expense:
|
|
|
|
|
|
|
|
|
|
||||||||||
Intercompany interest, net
|
(0.8
|
)
|
|
0.6
|
|
|
0.2
|
|
|
—
|
|
|
—
|
|
|||||
Interest expense
|
44.7
|
|
|
—
|
|
|
1.7
|
|
|
—
|
|
|
46.4
|
|
|||||
Amortization of debt issuance costs
|
3.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3.8
|
|
|||||
Foreign currency losses, net
|
0.5
|
|
|
—
|
|
|
0.6
|
|
|
—
|
|
|
1.1
|
|
|||||
Miscellaneous, net
|
(4.7
|
)
|
|
(16.1
|
)
|
|
21.2
|
|
|
—
|
|
|
0.4
|
|
|||||
Other expense (income), net
|
43.5
|
|
|
(15.5
|
)
|
|
23.7
|
|
|
—
|
|
|
51.7
|
|
|||||
(Loss) income from continuing operations before income taxes
|
(73.9
|
)
|
|
7.2
|
|
|
19.0
|
|
|
—
|
|
|
(47.7
|
)
|
|||||
(Benefit from) provision for income taxes
|
(41.5
|
)
|
|
1.4
|
|
|
1.9
|
|
|
—
|
|
|
(38.2
|
)
|
|||||
Loss from continuing operations, net of taxes
|
(32.4
|
)
|
|
5.8
|
|
|
17.1
|
|
|
—
|
|
|
(9.5
|
)
|
|||||
Loss from discontinued operations, net of taxes
|
—
|
|
|
—
|
|
|
(0.4
|
)
|
|
—
|
|
|
(0.4
|
)
|
|||||
Equity in (loss) income of subsidiaries
|
22.5
|
|
|
6.4
|
|
|
—
|
|
|
(28.9
|
)
|
|
—
|
|
|||||
Net (loss) income
|
$
|
(9.9
|
)
|
|
$
|
12.2
|
|
|
$
|
16.7
|
|
|
$
|
(28.9
|
)
|
|
$
|
(9.9
|
)
|
Other comprehensive (loss) income
|
(2.6
|
)
|
|
(0.5
|
)
|
|
(0.3
|
)
|
|
0.8
|
|
|
(2.6
|
)
|
|||||
Total comprehensive (loss) income
|
$
|
(12.5
|
)
|
|
$
|
11.7
|
|
|
$
|
16.4
|
|
|
$
|
(28.1
|
)
|
|
$
|
(12.5
|
)
|
Products Corporation and Subsidiaries Condensed Consolidating Statement of Operations and Comprehensive (Loss) Income
|
|||||||||||||||||||
Nine Months Ended September 30, 2019
|
|||||||||||||||||||
|
Products Corporation
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net Sales
|
$
|
429.4
|
|
|
$
|
428.9
|
|
|
$
|
865.4
|
|
|
$
|
(3.5
|
)
|
|
$
|
1,720.2
|
|
Cost of sales
|
205.1
|
|
|
217.3
|
|
|
331.8
|
|
|
(3.5
|
)
|
|
750.7
|
|
|||||
Gross profit
|
224.3
|
|
|
211.6
|
|
|
533.6
|
|
|
—
|
|
|
969.5
|
|
|||||
Selling, general and administrative expenses
|
329.5
|
|
|
238.7
|
|
|
399.9
|
|
|
—
|
|
|
968.1
|
|
|||||
Acquisition and integration costs
|
0.6
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
0.7
|
|
|||||
Restructuring charges and other, net
|
3.4
|
|
|
3.4
|
|
|
4.8
|
|
|
—
|
|
|
11.6
|
|
|||||
Operating (loss) income
|
(109.2
|
)
|
|
(30.6
|
)
|
|
128.9
|
|
|
—
|
|
|
(10.9
|
)
|
|||||
Other (income) expense:
|
|
|
|
|
|
|
|
|
|
||||||||||
Intercompany interest, net
|
(3.5
|
)
|
|
2.0
|
|
|
1.5
|
|
|
—
|
|
|
—
|
|
|||||
Interest expense
|
140.5
|
|
|
—
|
|
|
5.2
|
|
|
—
|
|
|
145.7
|
|
|||||
Amortization of debt issuance costs
|
10.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10.4
|
|
|||||
Foreign currency losses, net
|
1.2
|
|
|
0.2
|
|
|
7.6
|
|
|
—
|
|
|
9.0
|
|
|||||
Miscellaneous, net
|
(26.4
|
)
|
|
(36.2
|
)
|
|
70.2
|
|
|
—
|
|
|
7.6
|
|
|||||
Other expense (income), net
|
122.2
|
|
|
(34.0
|
)
|
|
84.5
|
|
|
—
|
|
|
172.7
|
|
|||||
(Loss) income from continuing operations before income taxes
|
(231.4
|
)
|
|
3.4
|
|
|
44.4
|
|
|
—
|
|
|
(183.6
|
)
|
|||||
(Benefit from) provision for income taxes
|
(36.8
|
)
|
|
19.3
|
|
|
15.1
|
|
|
—
|
|
|
(2.4
|
)
|
|||||
(Loss) income from continuing operations, net of taxes
|
(194.6
|
)
|
|
(15.9
|
)
|
|
29.3
|
|
|
—
|
|
|
(181.2
|
)
|
|||||
Income from discontinued operations, net of taxes
|
—
|
|
|
—
|
|
|
2.0
|
|
|
—
|
|
|
2.0
|
|
|||||
Equity in income (loss) of subsidiaries
|
39.3
|
|
|
11.8
|
|
|
—
|
|
|
(51.1
|
)
|
|
—
|
|
|||||
Net (loss) income
|
$
|
(155.3
|
)
|
|
$
|
(4.1
|
)
|
|
$
|
31.3
|
|
|
$
|
(51.1
|
)
|
|
$
|
(179.2
|
)
|
Other comprehensive income (loss)
|
6.7
|
|
|
2.7
|
|
|
(1.8
|
)
|
|
(0.9
|
)
|
|
6.7
|
|
|||||
Total comprehensive (loss) income
|
$
|
(148.6
|
)
|
|
$
|
(1.4
|
)
|
|
$
|
29.5
|
|
|
$
|
(52.0
|
)
|
|
$
|
(172.5
|
)
|
Products Corporation and Subsidiaries Condensed Consolidating Statement of Operations and Comprehensive (Loss) Income
|
|||||||||||||||||||
Nine Months Ended September 30, 2018
|
|||||||||||||||||||
|
Products Corporation
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net Sales
|
$
|
478.3
|
|
|
$
|
485.3
|
|
|
$
|
860.8
|
|
|
$
|
(1.5
|
)
|
|
$
|
1,822.9
|
|
Cost of sales
|
231.9
|
|
|
239.4
|
|
|
337.4
|
|
|
(1.5
|
)
|
|
807.2
|
|
|||||
Gross profit
|
246.4
|
|
|
245.9
|
|
|
523.4
|
|
|
—
|
|
|
1,015.7
|
|
|||||
Selling, general and administrative expenses
|
326.6
|
|
|
314.0
|
|
|
441.5
|
|
|
—
|
|
|
1,082.1
|
|
|||||
Acquisition and integration costs
|
7.8
|
|
|
1.4
|
|
|
2.8
|
|
|
—
|
|
|
12.0
|
|
|||||
Restructuring charges and other, net
|
5.1
|
|
|
2.2
|
|
|
6.6
|
|
|
—
|
|
|
13.9
|
|
|||||
Loss on disposal of minority investment
|
20.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20.1
|
|
|||||
Operating income
|
(113.2
|
)
|
|
(71.7
|
)
|
|
72.5
|
|
|
—
|
|
|
(112.4
|
)
|
|||||
Other (income) expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Intercompany interest, net
|
(4.7
|
)
|
|
1.8
|
|
|
2.9
|
|
|
—
|
|
|
—
|
|
|||||
Interest expense
|
127.0
|
|
|
—
|
|
|
2.1
|
|
|
—
|
|
|
129.1
|
|
|||||
Amortization of debt issuance costs
|
9.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9.1
|
|
|||||
Foreign currency losses, net
|
2.5
|
|
|
0.4
|
|
|
7.8
|
|
|
—
|
|
|
10.7
|
|
|||||
Miscellaneous, net
|
(15.0
|
)
|
|
(41.8
|
)
|
|
57.4
|
|
|
—
|
|
|
0.6
|
|
|||||
Other expense (income), net
|
118.9
|
|
|
(39.6
|
)
|
|
70.2
|
|
|
—
|
|
|
149.5
|
|
|||||
(Loss) income from continuing operations before income taxes
|
(232.1
|
)
|
|
(32.1
|
)
|
|
2.3
|
|
|
—
|
|
|
(261.9
|
)
|
|||||
(Benefit from) provision for income taxes
|
(49.7
|
)
|
|
6.5
|
|
|
1.2
|
|
|
—
|
|
|
(42.0
|
)
|
|||||
(Loss) income from continuing operations, net of taxes
|
(182.4
|
)
|
|
(38.6
|
)
|
|
1.1
|
|
|
—
|
|
|
(219.9
|
)
|
|||||
Loss from discontinued operations, net of taxes
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
(0.1
|
)
|
|||||
Equity in (loss) income of subsidiaries
|
(37.6
|
)
|
|
1.6
|
|
|
—
|
|
|
36.0
|
|
|
—
|
|
|||||
Net (loss) income
|
$
|
(220.0
|
)
|
|
$
|
(37.0
|
)
|
|
$
|
1.0
|
|
|
$
|
36.0
|
|
|
$
|
(220.0
|
)
|
Other comprehensive (loss) income
|
(5.1
|
)
|
|
(3.3
|
)
|
|
(9.3
|
)
|
|
12.6
|
|
|
(5.1
|
)
|
|||||
Total comprehensive (loss) income
|
$
|
(225.1
|
)
|
|
$
|
(40.3
|
)
|
|
$
|
(8.3
|
)
|
|
$
|
48.6
|
|
|
$
|
(225.1
|
)
|
Products Corporation and Subsidiaries Condensed Consolidating Statements of Cash Flows
|
|||||||||||||||||||
Nine Months Ended September 30, 2019
|
|||||||||||||||||||
|
Products Corporation
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash (used in) provided by operating activities
|
$
|
(169.1
|
)
|
|
$
|
5.6
|
|
|
$
|
(3.3
|
)
|
|
$
|
—
|
|
|
$
|
(166.8
|
)
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash used in investing activities
|
(10.9
|
)
|
|
(2.0
|
)
|
|
(7.1
|
)
|
|
—
|
|
|
(20.0
|
)
|
|||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net decrease in short-term borrowings and overdraft
|
(11.5
|
)
|
|
(7.2
|
)
|
|
(3.7
|
)
|
|
—
|
|
|
(22.4
|
)
|
|||||
Net borrowings under the Amended 2016 Revolving Credit Facility
|
13.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13.4
|
|
|||||
Net borrowings under the 2019 Term Loan Facility
|
200.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
200.0
|
|
|||||
Repayments under the 2016 Term Loan Facility
|
(13.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13.5
|
)
|
|||||
Payment of financing costs
|
(12.2
|
)
|
|
—
|
|
|
(1.2
|
)
|
|
—
|
|
|
(13.4
|
)
|
|||||
Tax withholdings related to net share settlements of restricted stock units and awards
|
(1.6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.6
|
)
|
|||||
Other financing activities
|
(0.6
|
)
|
|
(0.1
|
)
|
|
(0.2
|
)
|
|
—
|
|
|
(0.9
|
)
|
|||||
Net cash provided by (used in) financing activities
|
174.0
|
|
|
(7.3
|
)
|
|
(5.1
|
)
|
|
—
|
|
|
161.6
|
|
|||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
—
|
|
|
0.4
|
|
|
(1.8
|
)
|
|
—
|
|
|
(1.4
|
)
|
|||||
Net decrease in cash, cash equivalents and restricted cash
|
(6.0
|
)
|
|
(3.3
|
)
|
|
(17.3
|
)
|
|
—
|
|
|
(26.6
|
)
|
|||||
Cash, cash equivalents and restricted cash at beginning of period
|
$
|
7.2
|
|
|
$
|
6.6
|
|
|
$
|
73.7
|
|
|
$
|
—
|
|
|
$
|
87.5
|
|
Cash, cash equivalents and restricted cash at end of period
|
$
|
1.2
|
|
|
$
|
3.3
|
|
|
$
|
56.4
|
|
|
$
|
—
|
|
|
$
|
60.9
|
|
Products Corporation and Subsidiaries Condensed Consolidating Statements of Cash Flows
|
|||||||||||||||||||
Nine Months Ended September 30, 2018
|
|||||||||||||||||||
|
Products Corporation
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash used in operating activities
|
$
|
(196.0
|
)
|
|
$
|
(0.5
|
)
|
|
$
|
(100.2
|
)
|
|
$
|
—
|
|
|
$
|
(296.7
|
)
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash used in investing activities
|
(24.4
|
)
|
|
(5.0
|
)
|
|
(12.2
|
)
|
|
—
|
|
|
(41.6
|
)
|
|||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net decrease (increase) in short-term borrowings and overdraft
|
(3.6
|
)
|
|
7.3
|
|
|
(1.4
|
)
|
|
—
|
|
|
2.3
|
|
|||||
Net borrowings under the Amended 2016 Revolving Credit Facility
|
251.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
251.3
|
|
|||||
Net borrowings under the 2018 Foreign Asset-Based Term Loan
|
—
|
|
|
—
|
|
|
89.4
|
|
|
—
|
|
|
89.4
|
|
|||||
Repayments under the 2016 Term Loan Facility
|
(13.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13.5
|
)
|
|||||
Payments of financing costs
|
(4.7
|
)
|
|
—
|
|
|
(4.7
|
)
|
|
—
|
|
|
(9.4
|
)
|
|||||
Tax withholdings related to net share settlements of restricted stock units and awards
|
(3.6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3.6
|
)
|
|||||
Other financing activities
|
0.3
|
|
|
—
|
|
|
(0.2
|
)
|
|
—
|
|
|
0.1
|
|
|||||
Net cash provided by financing activities
|
226.2
|
|
|
7.3
|
|
|
83.1
|
|
|
—
|
|
|
316.6
|
|
|||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
—
|
|
|
(0.1
|
)
|
|
(3.1
|
)
|
|
—
|
|
|
(3.2
|
)
|
|||||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
5.8
|
|
|
1.7
|
|
|
(32.4
|
)
|
|
—
|
|
|
(24.9
|
)
|
|||||
Cash, cash equivalents and restricted cash at beginning of period
|
$
|
0.3
|
|
|
$
|
5.3
|
|
|
$
|
81.8
|
|
|
$
|
—
|
|
|
87.4
|
|
|
Cash, cash equivalents and restricted cash at end of period
|
$
|
6.1
|
|
|
$
|
7.0
|
|
|
$
|
49.4
|
|
|
$
|
—
|
|
|
$
|
62.5
|
|
•
|
a $36.6 million decrease in the benefit from income taxes, of which $34.3 million was non-cash, primarily due to: (i) the decreased loss from continuing operations before income taxes; (ii) the mix and level of earnings; (iii) the impact of the 2017 Tax Act mainly due to an adjustment in the third quarter of 2018 related to a new U.S. Treasury regulation issued in September 2018;
|
•
|
$22.6 million of lower gross profit, primarily due to lower net sales;
|
•
|
$6.5 million of unfavorable variance in foreign currency, resulting from $7.6 million in foreign currency losses during the third quarter of 2019, compared to $1.1 million in foreign currency losses during the third quarter of 2018; and
|
•
|
a $3.8 million increase in interest expense, primarily due to higher average interest rates and higher debt balances primarily from the 2019 Term Loan Facility entered into in August 2019;
|
•
|
$32.7 million of lower SG&A expenses, primarily driven by cost reductions related to the Company's cost optimization initiatives and lower incentive compensation; and
|
•
|
$3.3 million of lower acquisition and integration costs.
|
•
|
$113.9 million of lower SG&A expenses, primarily driven by lower brand support expenses as a result of planned lower activity in the first nine months of 2019 and lower general and administrative expenses, primarily driven by cost reductions related to the Company's cost optimization initiatives and lower incentive compensation;
|
•
|
$20.1 million of lower loss on disposal of minority investment; and
|
•
|
$11.3 million of lower acquisition and integration costs;
|
•
|
$46.2 million of lower gross profit, primarily due to lower net sales;
|
•
|
a $39.9 million decrease in the benefit from income taxes, of which $34.3 million was non-cash, primarily due to: (i) the decreased loss from continuing operations before income taxes; (ii) the mix and level of earnings; (iii) the impact of the 2017 Tax Act mainly due to an adjustment in the third quarter of 2018 related to a new U.S. Treasury regulation issued in September 2018; and
|
•
|
a $16.6 million increase in interest expense, primarily due to higher average interest rates and higher borrowings under the Amended 2016 Revolving Credit Facility and higher indebtedness resulting from entering into the 2019 Term Loan Facility in August 2019 and the 2018 Foreign Asset-Based Term Facility in July 2018.
|
•
|
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 and specialty cosmetic stores in the U.S. and internationally under brands such as Revlon in color cosmetics; Revlon ColorSilk and Revlon Professional in hair color; and Revlon in beauty tools.
|
•
|
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; American Crew in men's grooming products (which are also sold direct-to-consumer on its americancrew.com website); CND in nail polishes, gel nail color and nail enhancements; Cutex in nail care products; Pure Ice in nail polishes; 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 (which are also sold direct-to-consumer on its juicycouturebeauty.com website), Britney Spears, Elizabeth Taylor, Curve, John Varvatos, Christina Aguilera, Giorgio Beverly Hills, Ed Hardy, Charlie, Lucky Brand, Paul Sebastian, Alfred Sung, Jennifer Aniston, Mariah Carey, Halston, Geoffrey Beene, La Perla, White Shoulders, AllSaints and Wildfox.
|
|
Net Sales
|
|
Segment Profit
|
||||||||||||||||||||||||||||||||||||||||
|
Three Months Ended September 30,
|
|
Change
|
|
XFX Change (a)
|
|
Three Months Ended September 30,
|
|
Change
|
|
XFX Change (a)
|
||||||||||||||||||||||||||||||||
|
2019
|
|
2018
|
|
$
|
|
%
|
|
$
|
|
%
|
|
2019
|
|
2018
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||||||||||
Revlon
|
$
|
217.3
|
|
|
$
|
249.5
|
|
|
$
|
(32.2
|
)
|
|
(12.9
|
)%
|
|
$
|
(27.8
|
)
|
|
(11.1
|
)%
|
|
$
|
7.3
|
|
|
$
|
36.8
|
|
|
$
|
(29.5
|
)
|
|
(80.2
|
)%
|
|
$
|
(29.0
|
)
|
|
(78.8
|
)%
|
Elizabeth Arden
|
123.2
|
|
|
122.1
|
|
|
1.1
|
|
|
0.9
|
%
|
|
4.1
|
|
|
3.4
|
%
|
|
12.5
|
|
|
6.6
|
|
|
5.9
|
|
|
89.4
|
%
|
|
6.5
|
|
|
98.5
|
%
|
||||||||
Portfolio
|
118.2
|
|
|
138.4
|
|
|
(20.2
|
)
|
|
(14.6
|
)%
|
|
(17.2
|
)
|
|
(12.4
|
)%
|
|
14.4
|
|
|
2.1
|
|
|
12.3
|
|
|
N.M.
|
|
|
12.8
|
|
|
N.M.
|
|
||||||||
Fragrances
|
138.1
|
|
|
145.4
|
|
|
(7.3
|
)
|
|
(5.0
|
)%
|
|
(5.6
|
)
|
|
(3.9
|
)%
|
|
34.2
|
|
|
26.9
|
|
|
7.3
|
|
|
27.1
|
%
|
|
7.7
|
|
|
28.6
|
%
|
||||||||
Total
|
$
|
596.8
|
|
|
$
|
655.4
|
|
|
$
|
(58.6
|
)
|
|
(8.9
|
)%
|
|
$
|
(46.5
|
)
|
|
(7.1
|
)%
|
|
$
|
68.4
|
|
|
$
|
72.4
|
|
|
$
|
(4.0
|
)
|
|
(5.5
|
)%
|
|
$
|
(2.0
|
)
|
|
(2.8
|
)%
|
|
Net Sales
|
|
Segment Profit
|
||||||||||||||||||||||||||||||||||||||||
|
Nine Months Ended September 30,
|
|
Change
|
|
XFX Change (a)
|
|
Nine Months Ended September 30,
|
|
Change
|
|
XFX Change (a)
|
||||||||||||||||||||||||||||||||
|
2019
|
|
2018
|
|
$
|
|
%
|
|
$
|
|
%
|
|
2019
|
|
2018
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||||||||||
Revlon
|
$
|
716.1
|
|
|
$
|
736.9
|
|
|
$
|
(20.8
|
)
|
|
(2.8
|
)%
|
|
$
|
(1.3
|
)
|
|
(0.2
|
)%
|
|
$
|
58.5
|
|
|
$
|
75.6
|
|
|
$
|
(17.1
|
)
|
|
(22.6
|
)%
|
|
$
|
(14.4
|
)
|
|
(19.0
|
)%
|
Elizabeth Arden
|
352.0
|
|
|
333.9
|
|
|
18.1
|
|
|
5.4
|
%
|
|
29.8
|
|
|
8.9
|
%
|
|
17.1
|
|
|
2.3
|
|
|
14.8
|
|
|
N.M.
|
|
|
16.5
|
|
|
N.M.
|
|
||||||||
Portfolio
|
354.1
|
|
|
420.5
|
|
|
(66.4
|
)
|
|
(15.8
|
)%
|
|
(54.2
|
)
|
|
(12.9
|
)%
|
|
25.0
|
|
|
(5.8
|
)
|
|
30.8
|
|
|
N.M.
|
|
|
31.4
|
|
|
N.M.
|
|
||||||||
Fragrances
|
298.0
|
|
|
331.6
|
|
|
(33.6
|
)
|
|
(10.1
|
)%
|
|
(28.0
|
)
|
|
(8.4
|
)%
|
|
53.6
|
|
|
41.2
|
|
|
12.4
|
|
|
30.1
|
%
|
|
13.1
|
|
|
31.8
|
%
|
||||||||
Total
|
$
|
1,720.2
|
|
|
$
|
1,822.9
|
|
|
$
|
(102.7
|
)
|
|
(5.6
|
)%
|
|
$
|
(53.7
|
)
|
|
(2.9
|
)%
|
|
$
|
154.2
|
|
|
$
|
113.3
|
|
|
$
|
40.9
|
|
|
36.1
|
%
|
|
$
|
46.6
|
|
|
41.1
|
%
|
|
Three Months Ended September 30,
|
|
Change
|
|
XFX Change (a)
|
||||||||||||||||
|
2019
|
|
2018
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||
Revlon
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
North America
|
$
|
100.0
|
|
|
$
|
123.1
|
|
|
$
|
(23.1
|
)
|
|
(18.8
|
)%
|
|
$
|
(23.1
|
)
|
|
(18.8
|
)%
|
International
|
117.3
|
|
|
126.4
|
|
|
(9.1
|
)
|
|
(7.2
|
)%
|
|
(4.7
|
)
|
|
(3.7
|
)%
|
||||
Elizabeth Arden
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
North America
|
$
|
29.5
|
|
|
$
|
40.3
|
|
|
$
|
(10.8
|
)
|
|
(26.8
|
)%
|
|
$
|
(10.7
|
)
|
|
(26.6
|
)%
|
International
|
93.7
|
|
|
81.8
|
|
|
11.9
|
|
|
14.5
|
%
|
|
14.8
|
|
|
18.1
|
%
|
||||
Portfolio
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
North America
|
$
|
71.4
|
|
|
$
|
88.1
|
|
|
$
|
(16.7
|
)
|
|
(19.0
|
)%
|
|
$
|
(16.7
|
)
|
|
(19.0
|
)%
|
International
|
46.8
|
|
|
50.3
|
|
|
(3.5
|
)
|
|
(7.0
|
)%
|
|
(0.5
|
)
|
|
(1.0
|
)%
|
||||
Fragrance
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
North America
|
$
|
98.6
|
|
|
$
|
99.3
|
|
|
$
|
(0.7
|
)
|
|
(0.7
|
)%
|
|
$
|
(0.6
|
)
|
|
(0.6
|
)%
|
International
|
39.5
|
|
|
46.1
|
|
|
(6.6
|
)
|
|
(14.3
|
)%
|
|
(5.0
|
)
|
|
(10.8
|
)%
|
||||
Total Net Sales
|
$
|
596.8
|
|
|
$
|
655.4
|
|
|
$
|
(58.6
|
)
|
|
(8.9
|
)%
|
|
$
|
(46.5
|
)
|
|
(7.1
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Nine Months Ended September 30,
|
|
Change
|
|
XFX Change (a)
|
||||||||||||||||
|
2019
|
|
2018
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||
Revlon
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
North America
|
$
|
367.9
|
|
|
$
|
388.2
|
|
|
$
|
(20.3
|
)
|
|
(5.2
|
)%
|
|
$
|
(19.5
|
)
|
|
(5.0
|
)%
|
International
|
348.2
|
|
|
348.7
|
|
|
(0.5
|
)
|
|
(0.1
|
)%
|
|
18.2
|
|
|
5.2
|
%
|
||||
Elizabeth Arden
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
North America
|
$
|
83.9
|
|
|
$
|
96.2
|
|
|
$
|
(12.3
|
)
|
|
(12.8
|
)%
|
|
$
|
(11.5
|
)
|
|
(12.0
|
)%
|
International
|
268.1
|
|
|
237.7
|
|
|
30.4
|
|
|
12.8
|
%
|
|
41.3
|
|
|
17.4
|
%
|
||||
Portfolio
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
North America
|
$
|
214.5
|
|
|
$
|
264.8
|
|
|
$
|
(50.3
|
)
|
|
(19.0
|
)%
|
|
$
|
(49.9
|
)
|
|
(18.8
|
)%
|
International
|
139.6
|
|
|
155.7
|
|
|
(16.1
|
)
|
|
(10.3
|
)%
|
|
(4.3
|
)
|
|
(2.8
|
)%
|
||||
Fragrances
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
North America
|
$
|
198.4
|
|
|
$
|
216.9
|
|
|
$
|
(18.5
|
)
|
|
(8.5
|
)%
|
|
$
|
(18.3
|
)
|
|
(8.4
|
)%
|
International
|
99.6
|
|
|
114.7
|
|
|
(15.1
|
)
|
|
(13.2
|
)%
|
|
(9.7
|
)
|
|
(8.5
|
)%
|
||||
Total Net Sales
|
$
|
1,720.2
|
|
|
$
|
1,822.9
|
|
|
$
|
(102.7
|
)
|
|
(5.6
|
)%
|
|
$
|
(53.7
|
)
|
|
(2.9
|
)%
|
|
Three Months Ended September 30,
|
|
|
|
Nine Months Ended September 30,
|
|
|
||||||||||||||||
|
2019
|
|
2018
|
|
Change
|
|
2019
|
|
2018
|
|
Change
|
||||||||||||
Gross profit
|
$
|
327.8
|
|
|
$
|
350.4
|
|
|
$
|
(22.6
|
)
|
|
$
|
969.5
|
|
|
$
|
1,015.7
|
|
|
$
|
(46.2
|
)
|
Percentage of net sales
|
54.9
|
%
|
|
53.5
|
%
|
|
1.4
|
%
|
|
56.4
|
%
|
|
55.7
|
%
|
|
0.7
|
%
|
•
|
the impact of additional costs related to the service level disruptions at the Company's Oxford, N.C. manufacturing facility in the third quarter of 2018, which did not occur in the third quarter of 2019, resulting in increased gross margin by approximately 5 percentage points;
|
•
|
cost reductions and savings associated with the Company's cost optimization initiatives, which increased gross margin by approximately 3.2 percentage points; and
|
•
|
lower inventory obsolescence reserves, which increased gross margin by 1.2 percentage points;
|
•
|
the impact of additional costs related to the service level disruptions at the Company's Oxford, N.C. manufacturing facility in the first nine months of 2018, which did not occur in the first nine months of 2019, resulting in increased gross margin of 4.3 percentage points; and
|
•
|
lower inventory obsolescence reserves, which increased gross margin by 0.4 percentage points;
|
|
Three Months Ended September 30,
|
|
|
|
Nine Months Ended September 30,
|
|
|
||||||||||||||||
|
2019
|
|
2018
|
|
Change
|
|
2019
|
|
2018
|
|
Change
|
||||||||||||
SG&A expenses
|
$
|
308.1
|
|
|
$
|
340.8
|
|
|
$
|
(32.7
|
)
|
|
$
|
973.2
|
|
|
$
|
1,087.1
|
|
|
$
|
(113.9
|
)
|
•
|
lower general and administrative expenses of approximately $24 million, driven by lower costs in the third quarter of 2019 primarily associated with the Company's cost optimization initiatives and lower incentive compensation;
|
•
|
favorable FX impact of approximately $5 million; and
|
•
|
lower distribution expenses of approximately $3 million, driven by the net sales decline.
|
•
|
a decrease of approximately $48 million in brand support expenses, driven by planned lower activity in the first nine months of 2019, primarily in North America and within the Portfolio segment and, to a lesser extent, the Revlon and Fragrances segments;
|
•
|
lower general and administrative expenses of approximately $41 million, primarily associated with the Company's cost optimization initiatives and lower incentive compensation in the first nine months of 2019 and higher costs in the first nine months of 2018 associated with the departure of certain executives; and
|
•
|
favorable FX impact of approximately $23 million.
|
|
Three Months Ended September 30,
|
|
|
|
Nine Months Ended September 30,
|
|
|
||||||||||||||||
|
2019
|
|
2018
|
|
Change
|
|
2019
|
|
2018
|
|
Change
|
||||||||||||
Acquisition Costs
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.1
|
|
|
$
|
(0.1
|
)
|
Integration Costs
|
0.1
|
|
|
3.4
|
|
|
(3.3
|
)
|
|
0.7
|
|
|
11.9
|
|
|
(11.2
|
)
|
||||||
Total acquisition and integration costs
|
$
|
0.1
|
|
|
$
|
3.4
|
|
|
$
|
(3.3
|
)
|
|
$
|
0.7
|
|
|
$
|
12.0
|
|
|
$
|
(11.3
|
)
|
|
Three Months Ended September 30,
|
|
|
|
Nine Months Ended September 30,
|
|
|
||||||||||||||||
|
2019
|
|
2018
|
|
Change
|
|
2019
|
|
2018
|
|
Change
|
||||||||||||
Restructuring charges and other, net
|
$
|
2.9
|
|
|
$
|
3.9
|
|
|
$
|
(1.0
|
)
|
|
$
|
11.6
|
|
|
$
|
13.9
|
|
|
$
|
(2.3
|
)
|
|
Three Months Ended September 30,
|
|
|
|
Nine Months Ended September 30,
|
|
|
||||||||||||||||
|
2019
|
|
2018
|
|
Change
|
|
2019
|
|
2018
|
|
Change
|
||||||||||||
Interest expense
|
$
|
50.2
|
|
|
$
|
46.4
|
|
|
$
|
3.8
|
|
|
$
|
145.7
|
|
|
$
|
129.1
|
|
|
$
|
16.6
|
|
|
Three Months Ended September 30,
|
|
|
|
Nine Months Ended September 30,
|
|
|
||||||||||||||||
|
2019
|
|
2018
|
|
Change
|
|
2019
|
|
2018
|
|
Change
|
||||||||||||
Foreign currency losses, net
|
$
|
7.6
|
|
|
$
|
1.1
|
|
|
$
|
6.5
|
|
|
$
|
9.0
|
|
|
$
|
10.7
|
|
|
$
|
(1.7
|
)
|
|
Three Months Ended September 30,
|
|
|
|
Nine Months Ended September 30,
|
|
|
||||||||||||||||
|
2019
|
|
2018
|
|
Change
|
|
2019
|
|
2018
|
|
Change
|
||||||||||||
Benefit from income taxes
|
$
|
(2.1
|
)
|
|
$
|
(38.7
|
)
|
|
$
|
36.6
|
|
|
$
|
(3.2
|
)
|
|
$
|
(43.1
|
)
|
|
$
|
39.9
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net loss - Revlon, Inc.
|
$
|
(44.7
|
)
|
|
$
|
(11.1
|
)
|
|
$
|
(183.5
|
)
|
|
$
|
(223.9
|
)
|
Selling, general and administrative expenses - public company's costs
|
1.8
|
|
|
1.7
|
|
|
5.1
|
|
|
5.0
|
|
||||
Provision for income taxes
|
(0.3
|
)
|
|
(0.5
|
)
|
|
(0.8
|
)
|
|
(1.1
|
)
|
||||
Net loss - Products Corporation
|
$
|
(43.2
|
)
|
|
$
|
(9.9
|
)
|
|
$
|
(179.2
|
)
|
|
$
|
(220.0
|
)
|
|
Nine Months Ended September 30,
|
||||||
|
2019
|
|
2018
|
||||
Net cash used in operating activities
|
$
|
(166.8
|
)
|
|
$
|
(296.7
|
)
|
Net cash used in investing activities
|
(20.0
|
)
|
|
(41.6
|
)
|
||
Net cash provided by financing activities
|
161.6
|
|
|
316.6
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(1.4
|
)
|
|
(3.2
|
)
|
||
Net decrease in cash, cash equivalents and restricted cash
|
(26.6
|
)
|
|
(24.9
|
)
|
||
Cash, cash equivalents and restricted cash at beginning of period
|
87.5
|
|
|
87.4
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
$
|
60.9
|
|
|
$
|
62.5
|
|
•
|
$200 million of borrowings under the 2019 Term Loan Facility;
|
•
|
$13.4 million of borrowings under the Amended 2016 Revolving Credit Facility;
|
•
|
$22.4 million of decreases in short-term borrowings and overdraft;
|
•
|
$13.5 million of repayments under the 2016 Term Loan Facility; and
|
•
|
$13.4 million of payment of financing costs incurred in connection with consummating the 2019 Term Loan Facility in August 2019 and Amendment No. 2 to the Amended 2016 Revolving Credit Facility in March 2019.
|
•
|
$251.3 million of borrowings under the 2016 Revolving Credit Facility; and
|
•
|
$89.4 million of borrowings under the Asset-Based Term Facility;
|
•
|
$13.5 million of repayments under the 2016 Term Loan Facility.
|
|
Commitment
|
|
Borrowing Base
|
|
Aggregate principal amount outstanding at September 30, 2019
|
|
Availability at September 30, 2019 (a)
|
||||||||
Tranche A of the Amended 2016 Revolving Credit Facility
|
$
|
400.0
|
|
|
$
|
400.0
|
|
|
$
|
307.5
|
|
|
$
|
81.2
|
|
Tranche B of the Amended 2016 Revolving Credit Facility
|
41.5
|
|
|
40.9
|
|
|
40.9
|
|
|
—
|
|
||||
Total Tranche A & B of the Amended 2016 Revolving Credit Facility(a)
|
$
|
441.5
|
|
|
$
|
440.9
|
|
|
$
|
348.4
|
|
|
$
|
81.2
|
|
2019 Senior Line of Credit Facility
|
$
|
30.0
|
|
|
N/A
|
|
|
$
|
—
|
|
|
$
|
30.0
|
|
(i)
|
the Company did not perform an effective continuous risk assessment process that adequately identified and assessed risks affecting the Company's internal controls over financial reporting associated with the implementation of its new ERP system in the U.S.;
|
(ii)
|
the Company did not maintain a sufficient number of knowledgeable, trained personnel in the U.S. operations impacted by the ERP system implementation and in various other operations across the Company who understood and were held accountable for their assigned responsibilities for the design, implementation and operation of internal controls over financial reporting; and
|
(iii)
|
as a result, the Company did not design, implement and consistently operate effective process-level controls to ensure that it appropriately (a) recorded and accounted for inventory, accounts receivable, net sales and cost of goods sold, (b) reconciled balance sheet accounts, (c) reviewed and approved the complete population of manual journal entries and (d) used complete and accurate information in performing manual controls.
|
(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 products in one or more of the Company's segments; adverse changes in tariffs, 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, whether due to shortages of raw materials or otherwise, 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; retail 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 the purchase of permanent displays, capital expenditures, debt service payments and costs, cash tax payments, pension and other post-retirement plan contributions, payments in connection with the Company’s restructuring programs (such as the EA Integration Restructuring Program and the 2018 Optimization Program), severance not otherwise included in the Company’s restructuring programs, business and/or brand acquisitions (including, without limitation, through licensing transactions), if any, debt and/or equity repurchases, if any, costs related to litigation, discontinuing non-core business lines and/or entering and/or exiting certain territories and/or channels of trade, 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, 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 Amended 2016 Revolving Credit Facility, the Amended 2019 Senior Line of Credit Facility, other permissible borrowings and/or other permitted additional sources of capital, which actions could increase the Company's total debt;
|
(iv)
|
the Company’s plans to remain focused on its 3 key strategic pillars to drive its future success and growth, including (1) strengthening its iconic brands through innovation and relevant product portfolios; (2) building its capabilities to better communicate and connect with its consumers through media channels where they spend the most time; and (3) ensuring availability of its product where consumers shop, both in-store and increasingly online;
|
(v)
|
the effect of restructuring activities, restructuring costs and charges, the timing of restructuring payments and the benefits from such activities, including, without limitation: (A) 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 $82.6 million of the EA Integration Restructuring Charges (all of which are expected to be cash payments), consisting of: (x) $72.6 million of employee-related costs, including severance, retention and other contractual termination benefits; (y) $5.1 million of lease termination costs; and (z) $4.9 million of other related charges; (B) the Company's 2018 Optimization Program designed to streamline the Company’s operations, reporting structures and business processes, with the objective of maximizing productivity and improving profitability, cash flows and liquidity, with the major initiatives underlying such program including: (1) optimizing its global supply chain and realizing manufacturing efficiencies and rationalizing its global warehouse network and office locations to drive greater efficiency, lower its cost base and enhance its speed-to-market capabilities for new innovations; (2) enhancing in-market execution and optimizing its commercial and organizational structures to create more efficient global and regional capabilities; and (3) reducing overhead costs and streamlining functions and workflows by leveraging technology and shared services and standardizing and simplifying its business processes, leading to greater agility and faster decision-making; (C) the Company’s expectations regarding the amount and timing of the charges and payments related to the 2018 Optimization Program, including that: (1) it will recognize approximately $30 million to $40 million of total pre-tax restructuring and related charges, consisting of employee-related costs, such as severance, pension and other termination costs, as well as related third party expenses; (2) it will incur approximately $10 million of additional capital expenditures; (3) of the restructuring charges, it recorded pre-tax restructuring charges of $28.1 million in the nine months ended September 30, 2019, related to the 2018 Optimization Program, with substantially all of the balance to be recognized in 2019; and (4) approximately 85% of the restructuring charges are to be paid in cash, with approximately $15.8 million paid through September 30, 2019, and substantially all of the remaining balance is expected to be paid by the end of 2019, with any residual amount to be paid in 2020; (D) the Company’s expectation that the actions to be implemented under the 2018 Optimization Program will be substantially completed by December 31, 2019; and (E) the Company's projections that the 2018 Optimization Program will result in between $90 million and $95 million of in-year cost reductions during 2019, of which approximately $65 million had been realized as of September 30, 2019, that the annualized cost reductions will be in the range of approximately $125 million to $150 million by the end of 2019 and that approximately half of the annualized cost reductions are expected to be realized within cost of sales and the remainder in selling, general and administrative expenses;
|
(vi)
|
the Company’s expectation that operating revenues, cash on hand and funds that may be available from time to time for borrowing under Products Corporation's Amended 2016 Revolving Credit Facility, the Amended 2019 Senior Line of Credit Facility and other permissible borrowings will be sufficient to enable the Company to cover its operating expenses for 2019, including the cash requirements referred to in item (viii) below, and the Company's belief that (a) it has and will have sufficient liquidity to meet its cash needs for at least the next 12 months based upon the cash generated by its operations, cash on hand, availability under the Amended 2016 Revolving Credit Facility, the Amended 2019 Senior Line of Credit Facility and other permissible borrowings, along with the option to further settle intercompany loans and payables with certain foreign subsidiaries, and that such cash resources will be further enhanced as the Company implements its 2018 Optimization Program and cost reductions generated from other cost control initiatives 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;
|
(vii)
|
the Company’s expected principal sources of funds, including operating revenues, cash on hand and funds available for borrowing under Products Corporation's Amended 2016 Revolving Credit Facility, the Amended 2019 Senior Line of Credit Facility and other permissible borrowings, as well as the availability of funds from the Company taking certain measures, including, among other things, reducing discretionary spending and the Company’s expectation to generate additional liquidity from cost reductions resulting from the implementation of the 2018 Optimization Program and from other cost reduction initiatives;
|
(viii)
|
the Company's expected principal uses of funds, including amounts required for payment of operating expenses including in connection with the purchase 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, such as the EA Integration Restructuring Program and the 2018 Optimization Program; severance not otherwise included in the Company’s restructuring programs; business and/or brand acquisitions (including, without limitation, through licensing transactions), if any; 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;
|
(ix)
|
matters concerning the impact on the Company from changes in interest rates and foreign exchange rates;
|
(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, 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 and, with respect to the Tax Act, the Company’s expectation that the Tax Act’s limitation on interest deductibility will not impact the Company’s 2019 federal cash taxes due to its net operating loss carryover position, and that the Tax Act will not have a material impact on its cash taxes or liquidity in 2019, as well as the Company's expectations regarding whether it will be required to establish additional valuation allowances on its deferred tax assets;
|
(xiii)
|
the Company's 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;
|
(xiv)
|
the Company’s expectations regarding its implementation of the remediation plan to address the material weakness that it identified in its internal control over financial reporting, as described in Item 4. “Controls and Procedures” of this Form 10-Q; and
|
(xv)
|
the Company’s plans to explore strategic transactions pursuant to the Strategic Review.
|
(i)
|
unanticipated circumstances or results affecting the Company's financial performance and or sales growth, including: 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; the Company’s inability to address the pace and impact of the 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; the Company’s inability to drive a successful long-term omni-channel strategy and significantly increase its e-commerce penetration; difficulties, delays and/or the Company's inability to (in whole or in part) develop and implement effective content to enhance its online retail position, improve its consumer engagement across social media platforms and/or transform its technology and data to support efficient management of its digital infrastructure; 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; decreased consumer spending in response to weak economic conditions or weakness in the consumption of beauty products in one or more of the Company's segments; adverse changes in tariffs, 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, whether due to shortages of raw materials or otherwise; 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 retail 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 purchases of permanent displays, capital expenditures, debt service payments and costs, cash tax payments, pension and other post-retirement plan contributions, payments in connection with the Company’s restructuring programs (such as the EA Integration Restructuring Program and the 2018 Optimization Program), severance not otherwise included in the Company’s restructuring programs, business and/or brand acquisitions (including, without limitation, through licensing transactions), if any, debt and/or equity repurchases, if any, costs related to litigation, discontinuing non-core business lines and/or entering and/or exiting certain territories and/or channels of trade, advertising, promotional and marketing activities or for sales returns related to any reduction of space by the Company's customers, product discontinuances or otherwise or lower than expected results from the Company’s advertising, promotional, pricing and/or marketing plans; 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, increasing interest rates, monetary conditions and foreign currency fluctuations, tariffs, 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 continuing to execute the Company’s business initiatives or lower than expected revenues or the inability to create value through improving the Company's 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 difficulties or delays in and/or the Company’s inability to optimally implement the EA Integration Restructuring Program and/or the 2018 Optimization Program and/or less than expected benefits from such programs and/or more than expected costs in implementing such programs, which could cause the Company not to realize the projected cost reductions), as well as the unavailability of cash generated by operations, cash on hand and/or funds under the Amended 2016 Revolving Credit Facility, the Amended 2019 Senior Line of Credit Facility, other permissible borrowings and/or from other permissible additional sources of capital to fund such potential activities, as well as the unavailability of funds due to potential mandatory repayment obligations under the 2018 Foreign Asset-Based Term Facility;
|
(iv)
|
difficulties, delays in or less than expected results from the Company’s efforts to execute on its 3 key strategic pillars to drive its future success and growth, including, without limitation: (1) less than effective new product development and innovation, less than expected acceptance of its new products and innovations by the Company’s consumers and/or customers in one or more of its segments and/or less than expected levels of execution vis-à-vis its new product launches with its customers in one or more of its segments or regions; (2) less than expected levels of advertising, promotional and/or marketing activities for its new product launches, less than expected acceptance of its advertising, promotional, pricing and/or marketing plans and/or brand communication by consumers and/or customers in one or more of its segments, less than expected investment in advertising, promotional and/or marketing activities or greater than expected competitive investment; and/or (3) difficulties or disruptions impacting the Company’s ability to ensure availability of its product where consumers shop, both in-store and increasingly online;
|
(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 in connection with the 2018 Optimization Program: (1) difficulties with, delays in or the Company’s inability to successfully complete the actions underlying the 2018 Optimization Program, in whole or in part, which could result in less than expected operating and financial benefits from such actions, such as difficulties with, delays in or the Company’s inability to generate reductions in its cost base and/or overhead costs; (2) higher than anticipated restructuring charges and/or payments and/or changes in the expected timing of such charges and/or payments; (3) delays in completing the actions underlying the 2018 Optimization Program, which could reduce and/or defer the benefits expected to be realized from such activities, such as providing an additional source of liquidity; and/or (4) less than anticipated annualized cost reductions from the 2018 Optimization Program and/or changes in the timing of realizing such cost reductions, such as due to less than anticipated resources to fund such activities and/or more than expected costs to achieve the expected cost reductions;
|
(vi)
|
lower than expected operating revenues, cash on hand and/or funds available under the Amended 2016 Revolving Credit Facility, the Amended 2019 Senior Line of Credit Facility and/or other permissible borrowings or generated from cost reductions related to the 2018 Optimization Program and/or other cost control initiatives; higher than anticipated operating expenses, such as referred to in clause (viii) below; and/or less than anticipated cash generated by the Company's operations or unanticipated restrictions or taxes on repatriation of foreign earnings;
|
(vii)
|
the unavailability of funds under Products Corporation's Amended 2016 Revolving Credit Facility, the Amended 2019 Senior Line of Credit Facility and/or other permissible borrowings; the unavailability of funds under the 2018 Foreign Asset-Based Term Facility, such as due to reductions in the applicable borrowing base that could require certain mandatory prepayments; the unavailability of funds from difficulties, delays in or the Company's inability to take other measures, such as reducing discretionary spending and/or less than expected liquidity from cost reductions resulting from the implementation of the 2018 Optimization Program and from other cost reduction initiatives;
|
(viii)
|
higher than expected operating expenses, such as higher than expected purchases of permanent displays, capital expenditures, debt service payments and costs, cash tax payments, pension and other post-retirement plan contributions, payments in connection with the Company’s restructuring programs (such as the EA Integration Restructuring Program and the 2018 Optimization Program), severance not otherwise included in the Company’s restructuring programs, business and/or brand acquisitions (including, without limitation, through licensing transactions), if any, debt and/or equity repurchases, if any, costs related to litigation, discontinuing non-core business lines and/or entering and/or exiting certain territories and/or channels of trade, advertising, promotional and marketing activities or for sales returns related to any reduction of space by the Company's customers, product discontinuances or otherwise;
|
(ix)
|
unexpected significant impacts on the Company from changes in interest rates or foreign exchange rates;
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(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, 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, as well as changes in circumstances that could adversely impact the Company's expectations regarding the establishment of additional valuation allowances on its deferred tax assets;
|
(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 the Company's legal proceedings;
|
(xiv)
|
difficulties or delays that could affect the Company's ability to effectively implement the remediation plan, in whole or in part, to address the material weakness that it identified in its internal control over financial reporting, as described in Item 4. "Controls and Procedures" of this Form 10-Q; and/or
|
(xv)
|
difficulties or delays that could affect the Company's ability to consummate one or more transactions pursuant to the Strategic Review, such as due to the Company’s respective businesses experiencing disruptions due to transaction-related uncertainty or other factors.
|
4.1
|
Amended and Restated Senior Unsecured Line of Credit Agreement, dated as of November 7, 2019, between Products Corporation, as borrower, and MacAndrews & Forbes Group, LLC, as lender (incorporated by reference to Exhibit 4.1 to RCPC’s Current Report on Form 10-Q filed with the SEC on November 8, 2019).
|
4.2
|
|
4.3
|
|
4.4
|
|
4.5
|
|
4.6
|
|
4.7
|
|
*10.1
|
|
*10.2
|
|
*31.1
|
|
*31.2
|
|
**32.1
|
|
**32.2
|
|
|
|
*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)
|
||||
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|
|
|
By: /s/ Debra Perelman
|
|
By: /s/ Victoria Dolan
|
|
By: /s/ Pamela Bucher
|
Debra Perelman
|
|
Victoria Dolan
|
|
Pamela Bucher
|
President, Chief Executive Officer &
|
|
Chief Financial Officer
|
|
Vice President,
|
Director
|
|
|
|
Chief Accounting Officer
|
|
|
|
|
& Controller
|
|
|
|
|
|
Revlon Consumer Products Corporation
|
||||
(Registrant)
|
||||
|
|
|
|
|
By: /s/ Debra Perelman
|
|
By: /s/ Victoria Dolan
|
|
By: /s/ Pamela Bucher
|
Debra Perelman
|
|
Victoria Dolan
|
|
Pamela Bucher
|
President, Chief Executive Officer &
|
|
Chief Financial Officer
|
|
Vice President,
|
Director
|
|
|
|
Chief Accounting Officer
|
|
|
|
|
& Controller
|
(i)
|
December 31, 2020 (such period from the Effective Date, the “Term”);
|
(ii)
|
the date on which the Successor General Counsel notifies Ms. Hormozi upon at last 30 days’ advance written notice that the Company no longer requires Ms. Hormozi’s provision of the Legal Advisory Services for any reason other than for Cause (as defined below), or the date of Ms. Hormozi’s death or permanent and total disability;
|
(iii)
|
the date on which Ms. Hormozi notifies the Successor General Counsel upon at last 30 days’ advance written notice that she no longer wishes to provide the Legal Advisory Services for any or no reason; or
|
(iv)
|
the date on which the Company terminates the Legal Advisory Period as a result of Ms. Hormozi’s commission of any of the following act(s): (A) the wilful material failure by Ms. Hormozi to provide or perform the Legal Advisory Services; (B) Ms. Hormozi’s commission of any felony or any crime involving moral turpitude; or (C) a Restrictive Covenant Breach, as hereinafter defined (any such event under clause (A), (B) or (C), “Cause”). The Successor General Counsel shall provide written notice of the same to Ms. Hormozi (setting forth in reasonable detail the act(s) alleged to constitute Cause), who shall then have 15 days to cure such event of Cause, if and to the extent any occurrence of Cause is determined by the Successor General Counsel in good faith to be capable of cure.
|
a)
|
2019 BONUS PROGRAM. Ms. Hormozi will remain eligible for payment of her 2019 annual bonus award under the 2019 Bonus Program (which is targeted at 75% of her annual base salary), subject to being pro-rated for the actual number of days of active employment as the Company’s Executive Vice President and General Counsel during 2019, with such bonus being payable: (i) if and to the extent bonuses are payable to other Company executives under the 2019 Bonus Program based upon the achievement of the Company’s objectives set for that year, provided that her bonus for this purpose shall be calculated using no less than the corporate funding percentage used for other similarly situated members of the Company’s Executive Leadership Team for purposes of bonus funding level calculations; (ii) on the date bonuses under the 2019
|
b)
|
LONG-TERM INCENTIVE PROGRAM AWARDS (“LTIPs”). Ms. Hormozi will remain eligible for vesting and/or payment of her outstanding LTIP awards as identified on Exhibit A, which schedule reflects the pro-rated amount of Ms. Hormozi’s time-based and performance based RSU awards under the Company’s 2017 Restated LTIP, 2018 LTIP and 2019 LTIP, pro-rated for the actual number of days of active employment as the Company’s Executive Vice President and General Counsel during each LTIP’s respective performance period, with the performance-based portion of such LTIP awards being payable: (i) if and to the extent performance-based RSUs are vesting and/or payable to other Company executives under the respective LTIPs based upon the achievement of the Company’s objectives for the applicable performance periods, provided that Ms. Hormozi’s pro-rated LTIPs for this purpose shall be calculated using no less than the corporate funding percentage used for other similarly situated members of the Company’s Executive Leadership Team for purposes of LTIP funding level calculations; (ii) on the date time-based and performance based RSUs are otherwise settled for other members of the Company’s Executive Leadership Team; and (iii) otherwise subject to the terms and conditions of the Fourth Amended and Restated Revlon, Inc. Stock Plan.
|
REVLON CONSUMER
PRODUCTS CORPORATION
By /s/ Ely Bar-Ness
Ely Bar-Ness
Chief Human Resources Officer
|
REVLON, INC.
By /s/ Ely Bar-Ness
Ely Bar-Ness
Chief Human Resources Officer
|
|
Performance-based
|
|
Time-based
|
|
|||||
|
No. of PRSUs
|
Pro-rated Vesting %
|
No. of
Pro-rated Units to Vest
|
Vesting Date
|
No. of RSUs
|
Pro-rated Vesting %
|
No. of
Pro-rated Units to Vest
|
Vesting Date
|
|
Restated 2017 LTIP
|
12,690
|
77%*
|
9,822
|
March 2020
|
6,345
|
55%****
|
3,477
|
March 2020
|
|
2018 LTIP
|
12,690
|
52%**
|
6,548
|
March 2021
|
4,230
|
55%****
|
2,318
|
March 2020
|
|
2019 LTIP
|
11,086
|
18%***
|
2,025
|
March 2022
|
3,695
|
55%****
|
2,025
|
March 2020
|
|
|
|
|
18,395
|
|
|
|
7,820
|
|
|
* 77% represents 565 days of the 730 day (2-year) performance period
|
|
|
|
|
|||||
** 52% represents 565 days of the 1,095 day (3-year) performance period
|
|
|
|
|
|||||
*** 18% represents 200 days of the 1,095 day (3-year) performance period
|
|
|
|
||||||
**** 55% represents 200 days of the 365 day time period
|
|
|
|
|
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.
|
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):
|