x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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__
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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13-3662953
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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237 Park Avenue, New York, New York
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10017
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
¨
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Accelerated filer
¨
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Non-accelerated filer
x
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Smaller reporting company
¨
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(Do not check if a smaller reporting company)
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PART I
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Item 1.
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Business
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Item 1A.
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Risk Factors
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Item 1B.
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Unresolved Staff Comments
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Item 2.
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Properties
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Item 3.
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Legal Proceedings
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Item 4.
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Mine and Safety Disclosures. Not applicable.
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PART II
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Item 5.
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Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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Item 6.
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Selected Financial Data
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Item 7.
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Management's Discussion and Analysis of Financial Condition and Results of Operations
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Item 7A.
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Quantitative and Qualitative Disclosures About Market Risk
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Item 8.
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Financial Statements and Supplementary Data
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Item 9.
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Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
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Item 9A.
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Controls and Procedures
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Item 9B.
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Other Information
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PART III
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Item 10.
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Directors, Executive Officers and Corporate Governance (intentionally omitted pursuant to General Instruction I(2)(c) of Form 10-K)
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Item 11.
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Executive Compensation (intentionally omitted pursuant to General Instruction I(2)(c) of Form 10-K)
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Item 12.
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters (intentionally omitted pursuant to General Instruction I(2)(c) of Form 10-K)
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Item 13.
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Certain Relationships and Related Transactions, and Director Independence (intentionally omitted pursuant to General Instruction I(2)(c) of Form 10-K)
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Item 14.
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Principal Accountant Fees and Services
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PART IV
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Item 15.
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Exhibits and Financial Statement Schedules
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Index to Consolidated Financial Statements and Schedules
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Report of Independent Registered Public Accounting Firm
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Financial Statements
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Financial Statement Schedule: Schedule II - Valuation and Qualifying Accounts
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Signatures
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Certifications
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Exhibits
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1.
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Manage financial drivers for value creation.
We are focused on gross profit margin expansion, which includes optimizing price, as well as allocating sales allowances to maximize our return on trade spending. We also continue to focus on reducing costs across our global supply chain. In addition, we are focused on eliminating non-value added general and administrative costs in order to fund reinvestment to facilitate growth.
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2.
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Grow our global brands through exceptional innovation and effective brand support
. We are focused on creating fewer, bigger and better innovations across our brands that are relevant, unique, impactful and distinctive. We want to continue to build strong brands by focusing on high-quality, consumer-preferred offerings; effective consumer communication; increased levels of effective advertising and promotion; and superb execution and collaboration with our customers.
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3.
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Pursue growth opportunities.
We are focused on pursuing organic growth opportunities within our existing brand portfolio and existing channels, as well as seeking acquisition opportunities that complement our portfolio. We are also focused on exploring opportunities to expand our geographical presence in key markets, as appropriate.
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4.
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Improve cash flow.
We are focused on improving our cash flows through, among other things, continued effective management of our working capital and by focusing on appropriate return on capital spending.
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•
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5¾% Senior Notes
: In February 2013, Products Corporation issued $500.0 million aggregate principal amount of 5¾% Senior Notes due February 15, 2021 (the “5¾% Senior Notes”) to investors at par. Products Corporation used $491.2 million of net proceeds (net of underwriters' fees) from the issuance of the 5¾% Senior Notes to repay and redeem all of the $330 million outstanding aggregate principal amount of its 9¾% Senior Secured Notes due November 2015 (the “9¾% Senior Secured Notes” and such transaction being the “2013 Senior Notes Refinancing”), as well as to pay an aggregate of $28.0 million for the applicable redemption and tender offer premiums, accrued interest and related fees and expenses. Products Corporation used a portion of the remaining proceeds, together with existing cash, to pay approximately $113.0 million of principal on its 2011 Term Loan Facility in conjunction with the consummation of the February 2013 Term Loan Amendments, as discussed below. Products Corporation used the remaining balance available from the issuance of the 5¾% Senior Notes for general corporate purposes, including, without limitation, debt reduction transactions, such as repaying to Revlon, Inc. at maturity on October 8, 2013 the Contributed Loan (as hereinafter defined).
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•
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February 2013 Term Loan Amendments and February 2014 Term Loan Amendments
: In February 2013, Products Corporation consummated an amendment (the "February 2013 Term Loan Amendments") to its third amended and restated term loan agreement, dated as of May 19, 2011 (as amended, the "2011 Term Loan Agreement" or the “2011 Term Loan Facility”), for its 6.5-year term loan facility due November 19, 2017 (the “2011 Term Loan”), to among other things: (i) reduce the total aggregate principal amount outstanding under the 2011 Term Loan from $788.0 million to $675.0 million; (ii) reduce the minimum Eurodollar Rate on Eurodollar Loans from 1.25% to 1.00%; and (iii) reduce the Applicable Margin on Eurodollar Loans from 3.50% to 3.00%. In February 2014, Products Corporation entered into an amendment (the “February 2014 Term Loan Amendment”) to the Amended Term Loan Agreement which reduced the interest rates applicable to the $675 million 2011 Term Loan under the Amended Term Loan Agreement (the “Amended Tranche”). After giving effect to such amendment, Eurodollar Loans under the Amended Tranche bear interest at the Eurodollar Rate plus 2.5% per annum, with the Eurodollar Rate not to be less than 0.75% (compared to 3.0% and 1.0%, respectively, prior to the February 2014 Term Loan Amendment), while Alternate Base Rate Loans under the Amended Tranche bear interest at the Alternate Base Rate plus 1.5%, with the Alternate Base Rate not to be less than 1.75% (compared to 2.0% in each case prior to the February 2014 Term Loan Amendment) (and as each such term is defined in the Amended Term Loan Agreement).
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•
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August 2013 Term Loan Amendments
:
In August 2013, in connection with the Colomer Acquisition, Products Corporation consummated an amendment (the "August 2013 Term Loan Amendments") to the 2011 Term Loan Agreement (as amended by the August 2013 Term Loan Amendments and the Incremental Amendment (as defined below), and collectively referred to herein as the "Amended Term Loan Agreement" or the "Amended Term Loan Facility") permitting, among other things: (i) Products Corporation's consummation of the Colomer Acquisition; and
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•
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Incremental Amendment
: In August 2013, in connection with the Colomer Acquisition, Products Corporation entered into an incremental amendment (the "Incremental Amendment") resulting in the Amended Term Loan Agreement with Citibank, N.A., JPMorgan Chase Bank, N.A., Bank of America, N.A, Credit Suisse AG, Cayman Islands Branch, Wells Fargo Bank, N.A. and Deutsche Bank AG New York Branch (collectively, the "Initial Acquisition Lenders") and Citicorp USA, Inc. as administrative agent and collateral agent, pursuant to which the Initial Acquisition Lenders provided Products Corporation with a $700 million term loan under the Amended Term Loan Agreement on October 8, 2013 (the “Acquisition Term Loan”), which Products Corporation used as a source of funds to consummate the Colomer Acquisition and pay related fees and expenses.
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Amended Revolving Credit Facility
:
In August 2013, in connection with the Colomer Acquisition, Products Corporation consummated an amendment (the "August 2013 Revolver Amendment") to its third amended and restated revolving credit agreement dated June 16, 2011 to permit, among other things: (a) Products Corporation's consummation of the Colomer Acquisition; and (b) Products Corporation's incurring the Acquisition Term Loan that Products Corporation used as a source of funds to consummate the Colomer Acquisition. Additionally, the August 2013 Revolver Amendment reduced Products Corporation's interest rate spread, reduced the commitment fee on unused availability under the facility and extended the maturity of the facility.
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Repayment of the Contributed Loan:
Products Corporation is party to the Amended and Restated Senior Subordinated Term Loan Agreement, consisting of (i) the $58.4 million portion of the $107.0 million aggregate principal amount of the Amended and Restated Senior Subordinated Term Loan (the "Non-Contributed Loan"), which as of December 31, 2013 remained owing from Products Corporation to various third parties, and which matures on October 8, 2014, and (ii) prior to its October 2013 maturity, the $48.6 million portion of the aggregate $107.0 million principal amount of the Amended and Restated Senior Subordinated Term Loan that MacAndrews & Forbes contributed to Revlon, Inc. in connection with the October 2009 consummation of Revlon, Inc.'s exchange offer (the "Contributed Loan"), which Products Corporation repaid in full to Revlon, Inc. at its October 2013 maturity.
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Segment
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COSMETICS
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HAIR
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MEN'S GROOMING
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BEAUTY TOOLS
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FRAGRANCE
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ANTI-PERSPIRANT DEODORANTS
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SKINCARE / BODYCARE
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Consumer
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Revlon
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Revlon ColorSilk
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Revlon
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Charlie
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Mitchum
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Gatineau
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Almay
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Jean Naté
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Ultima II
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SinfulColors
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Pure Ice
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Professional
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CND
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Revlon Professional
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American Crew
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Natural Honey
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Intercosmo
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d:fi
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Orofluido
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UniqOne
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Llongueras*
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Crème of Nature
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•
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Revlon
: The Company sells a broad range of cosmetics under its flagship brand designed to fulfill consumer wants and needs, principally priced in the upper range of the mass retail channel. The
Revlon
brand is comprised of face makeup, including foundation, powder, blush and concealers; lip makeup, including lipstick, lip gloss and lip liner; eye makeup, including mascaras, eyeliners, eye shadows and brow products; and nail color and nail care lines.
Revlon
products include innovative formulas and attractive colors that appeal to wide range of consumers. Key franchises within the
Revlon
brand include:
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◦
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Revlon ColorStay
offers consumers a full range of products with long-wearing technology;
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Revlon PhotoReady
products are offered in face and eye and are designed with innovative photochromatic pigments that bend and reflect light to give a flawless, airbrushed appearance in any light;
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Revlon Age Defying
in face is targeted for women in the over-35 age bracket, incorporating the Company's patented
Botafirm
ingredients to help reduce the appearance of fine lines and wrinkles;
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Revlon Super Lustrous
is the Company's flagship wax-based lipcolor, offered in a wide variety of shades of lipstick and lip gloss;
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Revlon ColorBurst
in lip offers on-trend lip glosses and balms in vibrant colors that address consumers' needs for high-shine lipgloss and softening, smoothing and instantly hydrating balm; and
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Revlon Grow Luscious
includes both a lengthening and plumping mascara with a lash enhancing formula that improves the lashes' overall appearance and conditions with each use.
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Almay
: The Company’s
Almay
brand consists of hypo-allergenic, dermatologist-tested, fragrance-free cosmetics and skincare products. The
Almay
brand is comprised of face makeup, including foundation, pressed powder, primer and concealer; eye makeup, including eye shadows, mascaras and eyeliners; lip makeup; and makeup removers. Key franchises within the
Almay
brand include
Almay Smart Shade
in face;
Almay Intense i-Color
in eye; and
Almay Color + Care
in lip.
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•
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SinfulColors
and
Pure Ice
:
The Company’s
SinfulColors
and
Pure Ice
brands consist primarily of value-priced nail enamels, available in many bold, vivid and on-trend colors.
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Revlon
Professional:
The Company’s
Revlon Professional
brand includes hair color, hair care and hair treatment products, which are distributed exclusively in the professional channel to salons, salon professionals and salon distributors and sold in more than 80 countries.
Revlon Professional
is synonymous with innovation, fashion and technology to service the most creative salon professionals and their clients.
Revlon Professional
salon products include
Revlonissimo NMT
,
Nutri Color Creme
,
Sensor Perm
and
Revlon Professional Equave
.
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American Crew and d:fi
: The
Company sells men's shampoos, conditioners, gels and other hair care and grooming products for use and sale by professional salons under the
American Crew
brand name.
American Crew
is the “Official Supplier to Men” of quality grooming products that provide the ultimate usage experience and enhance a man's personal image. American Crew is the leading salon brand created specifically for men. The Company also sells men's hair products under the
d:fi
brand.
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CND
: The Company sells nail enhancement systems and nail color and treatment products and services for use by the professional salon industry under the
CND
brand name.
CND
is the global leader in professional nail, hand and foot care products, and CND-branded products are sold in more than 80 countries. CND nail products include:
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◦
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CND Shellac
, the original
Power Polish
that requires UV curing, delivers more than 14 days of flawless wear, superior color and mirror shine with zero dry-time and no nail damage.
CND Shellac
is a true innovation of chip-free, extended-wear nail color; and
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◦
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CND Vinylux,
a breakthrough polish system that uses a patent-pending technology to provide an enduring, long-lasting polish that lasts a week. While ordinary polishes become brittle and deteriorate over time,
CND Vinylux
dries with exposure to natural light to a flawless finish and strengthens its resistance to chips over time.
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•
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The Company also sells professional hair products under brand names such as
Orofluido
,
UniqOne
and
Intercosmo
.
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developing quality products with innovative performance features, shades, finishes, components and packaging;
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educating consumers and salon professionals about the benefits of the Company’s products;
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anticipating and responding to changing consumer and salon professional demands in a timely manner, including the timing of new product introductions and line extensions;
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offering attractively priced products relative to the product benefits provided;
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maintaining favorable brand recognition;
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generating competitive margins and inventory turns for its customers in both the Consumer and Professional segments by providing relevant products and executing effective pricing, incentive and promotion programs;
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•
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ensuring product availability through effective planning and replenishment collaboration with retailers and salons;
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providing strong and effective advertising, marketing, promotion and merchandising support;
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maintaining an effective sales force and distributor network; and
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obtaining and retaining sufficient retail floor space, optimal in-store positioning and effective presentation of its products at retail and in salons.
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limiting the Company’s ability to fund (including by obtaining additional financing) the costs and expenses of the execution of the Company’s business strategy (including activities related to the integration of the Colomer business into the Company’s business), future working capital, capital expenditures, advertising, promotional or marketing expenses, new product development costs, purchases and reconfigurations of wall displays, acquisitions, acquisition integration costs, investments, restructuring programs and other general corporate requirements;
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•
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requiring the Company to dedicate a substantial portion of its cash flow from operations to payments on Products Corporation’s indebtedness, thereby reducing the availability of the Company’s cash flow for the execution of the Company’s business strategy and for other general corporate purposes;
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•
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placing the Company at a competitive disadvantage compared to its competitors that have less debt;
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exposing the Company to potential events of default (if not cured or waived) under the financial and operating covenants contained in Products Corporation’s debt instruments;
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limiting the Company’s flexibility in responding to changes in its business and the industry in which it operates; and
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making the Company more vulnerable in the event of adverse economic conditions or a downturn in its business.
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borrow money;
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use assets as security in other borrowings or transactions;
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pay dividends on stock or purchase stock;
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sell assets and use the proceeds from such sales;
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enter into certain transactions with affiliates;
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make certain investments;
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prepay, redeem or repurchase specified indebtedness; and
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permit restrictions on the payment of dividends to Products Corporation by its subsidiaries.
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Excess Availability
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Alternate Base Rate Loans
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Eurodollar Loans, Eurocurrency Loan or Local Rate Loans
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Greater than or equal to $92,000,000
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0.50%
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1.50%
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Less than $92,000,000 but greater than or equal to $46,000,000
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0.75%
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1.75%
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Less than $46,000,000
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1.00%
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2.00%
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•
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the acceptance of the new product launches by, and sales of such new products to, the Company's customers may not be as high as the Company anticipates;
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•
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the Company's advertising, promotional and marketing strategies for its new products may be less effective than planned and may fail to effectively reach the targeted consumer base or engender the desired consumption
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the rate of purchases by the Company's consumers may not be as high as the Company anticipates;
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the Company's wall displays to showcase its new products may fail to achieve their intended effects;
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the Company may experience out-of-stocks and/or product returns exceeding its expectations as a result of its new product launches or space reconfigurations or reductions in retail display space by its customers or the Company's net sales may be impacted by inventory management by its customers or changes in pricing or promotional strategies by its customers;
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•
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the Company may incur costs exceeding its expectations as a result of the continued development and launch of new products, including, for example, advertising, promotional and marketing expenses, sales return expenses or other costs related to launching new products;
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the Company may experience a decrease in sales of certain of the Company's existing products as a result of newly-launched products, the impact of which could be exacerbated by shelf space limitations and/or any shelf space loss. (See Item 1A. Risk Factors-"Competition in the cosmetics, hair and beauty care products business could have a material adverse effect on the Company's business, financial condition and/or results of operations");
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the Company's product pricing strategies for new product launches may not be accepted by its customers and/or its consumers, which may result in the Company's sales being less than it anticipates; and
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any delays or difficulties impacting the Company's ability, or the ability of the Company's suppliers, to timely manufacture, distribute and ship products, displays or display walls in connection with launching new products, such as due to inclement weather conditions or those delays or difficulties discussed under “- The Company depends on its Oxford, North Carolina facility for production of a substantial portion of the Company's products within the Consumer segment. Disruptions at this facility, and/or at other Company or third party facilities at which the Company's products are manufactured for both its Consumer and Professional segments, could affect the Company's business, financial condition and/or results of operations,” could affect the Company's ability to ship and deliver products to meet its customers’ reset deadlines.
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•
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delaying the implementation of or revising certain aspects of the Company's business strategy (including activities related to the integration of the Colomer business into the Company’s business);
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reducing or delaying purchases of wall displays or advertising, promotional or marketing expenses;
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reducing or delaying capital spending;
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implementing new restructuring programs;
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refinancing Products Corporation's indebtedness;
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selling assets or operations;
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seeking additional capital contributions and/or loans from MacAndrews & Forbes, Revlon, Inc., the Company's other affiliates and/or third parties;
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selling additional debt securities of Products Corporation; or
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reducing other discretionary spending.
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•
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developing quality products with innovative performance features, shades, finishes and packaging;
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•
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educating consumers and salon professionals about the benefits of the Company’s products;
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•
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anticipating and responding to changing consumer and salon professional demands in a timely manner, including the timing of new product introductions and line extensions;
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•
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offering attractively priced products, relative to the product benefits provided;
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•
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maintaining favorable brand recognition;
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•
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generating competitive margins and inventory turns for the Company’s customers by providing relevant products and executing effective pricing, incentive and promotion programs;
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•
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ensuring product availability through effective planning and replenishment collaboration with the Company's customers;
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•
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providing strong and effective advertising, promotion, marketing and merchandising support;
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•
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maintaining an effective sales force and distribution network; and
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•
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obtaining and retaining sufficient display space, optimal in-store positioning and effective presentation of the Company’s products on-shelf.
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•
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inability to fill customer orders accurately or on a timely basis, or at all;
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•
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inability to process payments to vendors accurately or in a timely manner;
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•
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disruption of our internal control structure;
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•
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inability to fulfill our SEC or other governmental reporting requirements in a timely or accurate manner;
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•
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inability to fulfill federal, state and local tax filing requirements in a timely or accurate manner;
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•
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increased demands on management and staff time to the detriment of other corporate initiatives; and
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•
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significant capital and operating expenditures.
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•
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difficulties or complications in combining the companies' operations;
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•
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differences in controls, procedures and policies, regulatory standards and business cultures among the combined companies;
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•
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the diversion of management's attention from the Company's ongoing core business operations;
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•
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difficulties or delays in consolidating Colomer’s information technology platforms, including implementing systems designed to continue to ensure that the Company maintains effective disclosure controls and procedures and internal control over financial reporting for the combined company and enable the Company to continue to comply with U.S. GAAP and applicable U.S. securities laws and regulations;
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•
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possible disruptions that could result from efforts to consolidate the combined Company’s manufacturing facilities or changes in the combined Company’s supply chain, including work stoppages;
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•
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unanticipated costs and other assumed contingent liabilities; and/or
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•
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possible tax costs or inefficiencies associated with integrating the operations of the combined company.
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Location
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Segment
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Use
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Approximate Floor Space Sq. Ft.
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Oxford, North Carolina
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Consumer
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Manufacturing, warehousing, distribution and office
(a)
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1,012,000
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Jacksonville, Florida
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Professional
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Manufacturing, warehousing, distribution and office
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725,000
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Tarragona, Spain
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Professional
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Manufacturing, warehousing, distribution and office
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300,000
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Mississauga, Canada
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Consumer
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Warehousing, distribution and office (leased)
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195,000
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Queretaro, Mexico
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Professional
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Manufacturing, warehousing, distribution and office
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128,000
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Canberra, Australia
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Consumer
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Warehousing and distribution
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125,000
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Edison, New Jersey
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Consumer
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Research and office (leased)
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123,000
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Rietfontein, South Africa
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|
Consumer
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Warehousing, distribution and office (leased)
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120,000
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|
Isando, South Africa
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Consumer
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Manufacturing, warehousing, distribution and office
|
|
94,000
|
|
Stone, United Kingdom
|
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Consumer
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Warehousing and distribution (leased)
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92,000
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Bologna, Italy
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Professional
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Manufacturing, warehousing, distribution and office
|
|
80,000
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|
(a)
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Property subject to liens under the Amended Credit Agreements.
|
|
|
Year Ended December 31,
|
||||||||||||||||||
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(in millions)
|
||||||||||||||||||
Statement of Income Data:
|
|
2013
(a)
|
|
2012
(b)
|
|
2011
(c)
|
|
2010
(d)
|
|
2009
(e)
|
||||||||||
Net sales
|
|
$
|
1,494.7
|
|
|
$
|
1,396.4
|
|
|
$
|
1,347.5
|
|
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$
|
1,295.8
|
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$
|
1,272.5
|
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Gross profit
|
|
949.6
|
|
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902.6
|
|
|
866.3
|
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848.5
|
|
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805.3
|
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|||||
Selling, general and administrative expenses
|
|
723.6
|
|
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663.3
|
|
|
652.8
|
|
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642.7
|
|
|
605.2
|
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|||||
Acquisition and integration costs
|
|
25.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Restructuring charges and other, net
|
|
3.5
|
|
|
20.5
|
|
|
—
|
|
|
(0.3
|
)
|
|
21.2
|
|
|||||
Operating income
|
|
197.1
|
|
|
218.8
|
|
|
213.5
|
|
|
206.1
|
|
|
178.9
|
|
|||||
Interest expense
|
|
78.6
|
|
|
85.3
|
|
|
91.1
|
|
|
96.7
|
|
|
93.0
|
|
|||||
Amortization of debt issuance costs
|
|
3.5
|
|
|
3.4
|
|
|
3.7
|
|
|
4.5
|
|
|
5.5
|
|
|||||
Loss on early extinguishment of debt, net
|
|
29.7
|
|
|
—
|
|
|
11.2
|
|
|
9.7
|
|
|
5.8
|
|
|||||
Foreign currency losses, net
|
|
3.7
|
|
|
2.8
|
|
|
4.7
|
|
|
6.4
|
|
|
8.9
|
|
|||||
Provision for (benefit from) income taxes
|
|
48.6
|
|
|
44.8
|
|
|
35.4
|
|
|
(235.3
|
)
|
|
8.1
|
|
|||||
Income from continuing operations, net of taxes
|
|
32.0
|
|
|
81.3
|
|
|
65.8
|
|
|
322.9
|
|
|
57.1
|
|
|||||
(Loss) income from discontinued operations, net of taxes
|
|
(30.4
|
)
|
|
(10.1
|
)
|
|
(1.8
|
)
|
|
1.4
|
|
|
1.7
|
|
|||||
Net income
|
|
1.6
|
|
|
71.2
|
|
|
64.0
|
|
|
324.3
|
|
|
58.8
|
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
|
(in millions, except per share amounts)
|
||||||||||||||||||
Balance Sheet Data:
|
|
2013
(a)
|
|
2012
(b)
|
|
2011
(c)
|
|
2010
(d)
|
|
2009
(e)
|
||||||||||
Total current assets
|
|
$
|
893.8
|
|
|
$
|
616.0
|
|
|
$
|
581.9
|
|
|
$
|
527.6
|
|
|
$
|
446.3
|
|
Total non-current assets
|
|
1,310.0
|
|
|
681.7
|
|
|
624.2
|
|
|
592.8
|
|
|
384.2
|
|
|||||
Total assets
|
|
$
|
2,203.8
|
|
|
$
|
1,297.7
|
|
|
$
|
1,206.1
|
|
|
$
|
1,120.4
|
|
|
$
|
830.5
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total current liabilities
(g)
|
|
552.6
|
|
|
441.6
|
|
|
332.9
|
|
|
312.4
|
|
|
305.2
|
|
|||||
Total other non-current liabilities
|
|
2,167.7
|
|
|
1,432.8
|
|
|
1,514.8
|
|
|
1,465.1
|
|
|
1,519.1
|
|
|||||
Total liabilities
|
|
$
|
2,720.3
|
|
|
$
|
1,874.4
|
|
|
$
|
1,847.7
|
|
|
$
|
1,777.5
|
|
|
$
|
1,824.3
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total indebtedness
|
|
$
|
1,935.6
|
|
|
$
|
1,220.9
|
|
|
$
|
1,227.9
|
|
|
$
|
1,219.6
|
|
|
$
|
1,248.7
|
|
Total stockholder's deficiency
|
|
(516.5
|
)
|
|
(576.7
|
)
|
|
(641.6
|
)
|
|
(657.1
|
)
|
|
(993.8
|
)
|
(a)
|
Results for 2013 include: (1) a $29.7 million aggregate loss on the early extinguishment of debt primarily in connection with the 2013 Senior Notes Refinancing; (2) a $26.4 million gain from insurance proceeds due to the settlement of the Company's claims for business interruption and property losses as a result of the June 2011 fire at the Company's facility in Venezuela; (3) $25.4 million of acquisition and integration costs related to the Colomer Acquisition; and (4) $21.4 million in restructuring and related charges related to the December 2013 Program (as hereinafter defined), of which $20.0 million relates to the Company's exit of its business operations in China and is reflected in loss from discontinued operations, net of taxes for the year ended December 31, 2013. (See Note 3, “Restructuring Charges” and Note 4, "Discontinued Operations" to the Consolidated Financial Statements in this Form 10-K.)
|
(b)
|
Results for 2012 include: (1) $24.1 million in restructuring and related charges recorded as a result of the September 2012 Program (See Note 3, “Restructuring Charges” of the Consolidated Financial Statements in this Form 10-K); and (2) an increase in net income driven by a non-cash benefit of $15.8 million related to the reduction of the Company’s deferred tax valuation allowance on its net deferred tax assets for certain jurisdictions in the U.S. at December 31, 2012, as a result of the Company’s improved earnings trends and cumulative taxable income in those jurisdictions, which is reflected in the provision for income taxes.
|
(c)
|
Results for 2011 include: (1) an increase in net income driven by a non-cash benefit of $16.9 million related to the reduction of the Company’s deferred tax valuation allowance on its net deferred tax assets for certain jurisdictions outside the U.S. at December 31, 2011 as a result of the Company’s improved earnings trends and cumulative taxable income in those jurisdictions, which is reflected in the provision for income taxes; and (2) an $11.2 million loss on the early extinguishment of debt in connection with the 2011 Refinancings (as hereinafter defined) of Products Corporation’s 2010 Term Loan Facility and 2010 Revolving Credit Facility.
|
(d)
|
Results for 2010 include: (1) an increase in net income driven by a non-cash benefit of $248.5 million related to the reduction of the Company’s deferred tax valuation allowance on its net U.S. deferred tax assets at December 31, 2010 as a result of the Company achieving three cumulative years, as well as its third consecutive year, of positive U.S. GAAP pre-tax income and taxable income in the U.S., and based upon the Company’s then current expectations as of December 31, 2010 for the realization of such deferred tax benefits in the U.S., which is reflected in the provision for income taxes; (2) a $9.7 million loss on the early extinguishment of debt in connection with the 2010 refinancing of the Company’s 2006 bank term loan facility and revolving credit facility; and (3) a $2.8 million one-time foreign currency loss related to the required re-measurement of the balance sheet of the Company’s subsidiary in Venezuela to reflect the impact of the devaluation of Venezuela’s local currency relative to the U.S. dollar, as Venezuela was designated as a highly inflationary economy effective January 1, 2010.
|
(e)
|
Results for 2009 include: (1) a $20.8 million charge related to the worldwide organizational restructuring announced in May 2009 (the “May 2009 Program”), which involved consolidating certain functions; reducing layers of management, where appropriate, to increase accountability and effectiveness; streamlining support functions to reflect the new organizational structure; and further consolidating the Company’s office facilities in New Jersey; and (2) a $5.8 million net loss on early extinguishment of debt in 2009 primarily due to a $13.5 million loss resulting from applicable redemption and tender premiums and the net write-off of unamortized debt discounts and deferred financing fees in connection with the complete refinancing of Products Corporation's 9½% Senior Notes in November 2009, partially offset by a $7.7 million gain on repurchases of an aggregate principal amount of $49.5 million of the 9½% Senior Notes prior to their complete refinancing in November 2009 at an aggregate purchase price of $41.0 million, which is net of the write-off of the ratable portion of unamortized debt discounts and deferred financing fees resulting from such repurchases.
|
•
|
Overview;
|
•
|
Operating Segments;
|
•
|
Results of Operations;
|
•
|
Financial Condition, Liquidity and Capital Resources;
|
•
|
Disclosures about Contractual Obligations and Commercial Commitments;
|
•
|
Off-Balance Sheet Transactions (there are none);
|
•
|
Discussion of Critical Accounting Policies;
|
•
|
Recent Accounting Pronouncements; and
|
•
|
Inflation.
|
•
|
$60.3 million
of higher selling general and administrative ("SG&A") expenses primarily driven by the inclusion of the SG&A expenses in the Professional segment as a result of the Colomer Acquisition, commencing on the Acquisition Date (as hereinafter defined), partially offset by a net favorable impact related to the settlement of the insurance claims and other related costs as a result of the June 2011 fire at the Company's Venezuela facility;
|
•
|
a
$29.7 million
aggregate loss on the early extinguishment of debt recognized in 2013 primarily due to the 2013 Senior Notes Refinancing; and
|
•
|
$25.4 million
of acquisition and integration costs related to the Colomer Acquisition in October 2013;
|
•
|
$47.0 million
of higher gross profit due to a
$98.3 million
increase in consolidated net sales, partially offset by a
$51.3 million
increase in cost of sales in 2013; and
|
•
|
$17.0 million
of lower restructuring charges related to continuing operations incurred in 2013, as compared to 2012.
|
•
|
The Consumer segment is comprised of the Company's consumer brands, which primarily include
Revlon
,
Almay
,
SinfulColors
and
Pure Ice
in color cosmetics;
Revlon ColorSilk
in women’s hair color;
Revlon
in beauty tools; and
Mitchum
in anti-perspirant deodorants. The Company’s principal customers for its consumer products include the mass retail channel in the U.S. and internationally, consisting of large mass volume retailers and chain drug and food stores in the U.S., as well as certain department stores and other specialty stores, such as perfumeries, outside the U.S.
|
•
|
The Professional segment is comprised of the brands which the Company recently acquired in the Colomer Acquisition, which primarily include
Revlon Professional
in hair color and hair care;
CND
-branded products
in nail polishes and nail enhancements
; and
American Crew
in men’s
grooming products; all of which are sold worldwide in the
professional salon channel. The Professional segment also includes a skincare line sold in the mass retail channel, primarily in Spain, and a multi-cultural hair care line sold in the mass retail channel and in professional salons, primarily in the U.S. The Company’s principal customers for its professional products include hair and nail salons and distributors in the U.S. and internationally.
|
|
Year Ended December 31,
|
|
Change
|
||||||||||||||||
|
2013
|
|
2012
|
|
2011
|
|
2013 vs. 2012
|
|
2012 vs. 2011
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Consumer
|
$
|
1,377.9
|
|
|
$
|
1,396.4
|
|
|
$
|
1,347.5
|
|
|
$
|
(18.5
|
)
|
|
$
|
48.9
|
|
Professional
|
116.8
|
|
|
—
|
|
|
—
|
|
|
116.8
|
|
|
—
|
|
|||||
Total Net Sales
|
$
|
1,494.7
|
|
|
$
|
1,396.4
|
|
|
$
|
1,347.5
|
|
|
$
|
98.3
|
|
|
$
|
48.9
|
|
|
Year Ended December 31,
|
|
Change
|
|
XFX Change
(a)
|
||||||||||||||||
|
2013
|
|
2012
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||
United States
|
$
|
800.4
|
|
|
$
|
799.8
|
|
|
$
|
0.6
|
|
|
0.1
|
%
|
|
$
|
0.6
|
|
|
0.1
|
%
|
Asia Pacific
|
204.5
|
|
|
209.2
|
|
|
(4.7
|
)
|
|
(2.2
|
)%
|
|
9.1
|
|
|
4.3
|
%
|
||||
Europe, Middle East and Africa
|
180.2
|
|
|
184.4
|
|
|
(4.2
|
)
|
|
(2.3
|
)%
|
|
9.6
|
|
|
5.2
|
%
|
||||
Latin America and Canada
|
192.8
|
|
|
203.0
|
|
|
(10.2
|
)
|
|
(5.0
|
)%
|
|
(1.6
|
)
|
|
(0.8
|
)%
|
||||
Total Net Sales
|
$
|
1,377.9
|
|
|
$
|
1,396.4
|
|
|
$
|
(18.5
|
)
|
|
(1.3
|
)%
|
|
$
|
17.7
|
|
|
1.3
|
%
|
|
Year Ended December 31,
|
|
Change
|
|
XFX Change
(a)
|
||||||||||||||||
|
2012
|
|
2011
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||
United States
|
$
|
799.8
|
|
|
$
|
757.4
|
|
|
$
|
42.4
|
|
|
5.6
|
%
|
|
$
|
42.4
|
|
|
5.6
|
%
|
Asia Pacific
|
209.2
|
|
|
199.5
|
|
|
9.7
|
|
|
4.9
|
%
|
|
9.3
|
|
|
4.7
|
%
|
||||
Europe, Middle East and Africa
|
184.4
|
|
|
208.7
|
|
|
(24.3
|
)
|
|
(11.6
|
)%
|
|
(8.9
|
)
|
|
(4.3
|
)%
|
||||
Latin America and Canada
|
203.0
|
|
|
181.9
|
|
|
21.1
|
|
|
11.6
|
%
|
|
28.0
|
|
|
15.4
|
%
|
||||
Total Net Sales
|
$
|
1,396.4
|
|
|
$
|
1,347.5
|
|
|
$
|
48.9
|
|
|
3.6
|
%
|
|
$
|
70.8
|
|
|
5.3
|
%
|
|
Year Ended December 31,
|
|
Change
|
||||||||||||||||
|
2013
|
|
2012
|
|
2011
|
|
2013 vs. 2012
|
|
2012 vs. 2011
|
||||||||||
Segment Profit:
|
|
|
|
|
|
|
|
|
|
||||||||||
Consumer
|
$
|
347.1
|
|
|
$
|
363.1
|
|
|
$
|
323.4
|
|
|
$
|
(16.0
|
)
|
|
$
|
39.7
|
|
Professional
|
5.2
|
|
|
—
|
|
|
—
|
|
|
5.2
|
|
|
—
|
|
|||||
Total
|
$
|
352.3
|
|
|
$
|
363.1
|
|
|
$
|
323.4
|
|
|
$
|
(10.8
|
)
|
|
$
|
39.7
|
|
|
Year Ended December 31,
|
|
Change
|
||||||||||||||||
|
2013
|
|
2012
|
|
2011
|
|
2013 vs. 2012
|
|
2012 vs. 2011
|
||||||||||
Gross profit
|
$
|
949.6
|
|
|
$
|
902.6
|
|
|
$
|
866.3
|
|
|
$
|
47.0
|
|
|
$
|
36.3
|
|
Percentage of net sales
|
63.5
|
%
|
|
64.6
|
%
|
|
64.3
|
%
|
|
(1.1
|
)%
|
|
0.3
|
%
|
•
|
the inclusion of gross profit from the October 2013 Colomer Acquisition, which increased gross profit by $70.7 million and reduced gross profit as a percentage of net sales by 0.3 percentage points;
|
•
|
favorable volume, which increased gross profit by $22.6 million, with no impact on gross profit as a percentage of net sales; and
|
•
|
lower manufacturing and freight costs, as a result of supply chain cost reduction initiatives and restructuring savings, which increased gross profit by $5.7 million and increased gross profit as a percentage of net sales by 0.4 percentage points;
|
•
|
additional inventory costs as a result of the recognition of an increase in the fair value of inventory acquired in the Colomer Acquisition, which reduced gross profit by $8.4 million and reduced gross profit as a percentage of net sales by 0.6 percentage points;
|
•
|
unfavorable foreign currency fluctuations, which reduced gross profit by $28.5 million and reduced gross profit as a percentage of net sales by 0.4 percentage points; and
|
•
|
higher sales returns and markdowns, which reduced gross profit by $13.8 million and reduced gross profit as a percentage of net sales by 0.4 percentage points.
|
•
|
favorable volume, which increased gross profit by $28.8 million, with no impact on gross profit as a percentage of net sales;
|
•
|
lower allowances which increased gross profit by $19.7 million and increased gross profit as a percentage of net sales by 0.4 percentage points; and
|
•
|
lower manufacturing costs, including materials and freight costs, as a result of supply chain cost reduction initiatives, which increased gross profit by $8.5 million and increased gross profit as a percentage of net sales by 0.6 percentage points;
|
•
|
unfavorable foreign currency fluctuations, which reduced gross profit by $13.7 million, with no impact on gross profit as a percentage of net sales;
|
•
|
the impact of product mix, which reduced gross profit by $5.1 million and reduced gross profit as a percentage of net sales by 0.4 percentage points;
|
•
|
higher costs related to inventory obsolescence, which reduced gross profit by $4.1 million and reduced gross profit as a percentage of net sales by 0.3 percentage points; and
|
•
|
restructuring related charges recognized in connection with the September 2012 Program, which reduced gross profit by $2.8 million and reduced gross profit as a percentage of net sales by 0.2 percentage points.
|
|
Year Ended December 31,
|
|
Change
|
||||||||||||||||
|
2013
|
|
2012
|
|
2011
|
|
2013 vs. 2012
|
|
2012 vs. 2011
|
||||||||||
SG&A expenses
|
$
|
723.6
|
|
|
$
|
663.3
|
|
|
$
|
652.8
|
|
|
$
|
(60.3
|
)
|
|
$
|
(10.5
|
)
|
•
|
the inclusion of SG&A expenses in the Professional segment as a result of the Colomer Acquisition, commencing on the Acquisition Date, which contributed $74.8 million to the increase in SG&A expenses; and
|
•
|
$5.1 million of increased permanent display amortization costs;
|
•
|
a net decrease of $16.0 million related to the fire that destroyed the Company's facility in Venezuela in June 2011, comprised of:
|
◦
|
a $
26.4 million
gain from insurance proceeds recognized in 2013 as a result of the settlement of the Company’s insurance claims for the loss of inventory, business interruption losses and property losses;
|
◦
|
partially offset by: (i) an accrual of $7.6 million for estimated clean-up costs related to the destroyed facility in Venezuela, which was recognized in 2013; and (ii) $2.8 million of income from insurance proceeds recognized in 2012 related to business interruption losses incurred.
|
•
|
$14.4 million of favorable impact of foreign currency fluctuations.
|
•
|
$9.2 million of higher general and administrative expenses, principally due to higher insurance expense and higher compensation expense; and
|
•
|
$6.9 million lower benefit from insurance proceeds related to the Venezuela fire recognized in SG&A expenses in 2012, as compared to 2011;
|
•
|
$9.4 million of favorable impact of foreign currency fluctuations.
|
|
Year Ended December 31,
|
|
Change
|
||||||||||||||||
|
2013
|
|
2012
|
|
2011
|
|
2013 vs. 2012
|
|
2012 vs. 2011
|
||||||||||
Acquisition and integration costs
|
$
|
25.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(25.4
|
)
|
|
$
|
—
|
|
|
Year Ended December 31,
|
|
Change
|
||||||||||||||||
|
2013
|
|
2012
|
|
2011
|
|
2013 vs. 2012
|
|
2012 vs. 2011
|
||||||||||
Restructuring charges and other, net
|
$
|
3.5
|
|
|
$
|
20.5
|
|
|
$
|
—
|
|
|
$
|
17.0
|
|
|
$
|
(20.5
|
)
|
|
Year Ended December 31,
|
|
Change
|
||||||||||||||||
|
2013
|
|
2012
|
|
2011
|
|
2013 vs. 2012
|
|
2012 vs. 2011
|
||||||||||
Interest expense
|
$
|
78.6
|
|
|
$
|
85.3
|
|
|
$
|
91.1
|
|
|
$
|
6.7
|
|
|
$
|
5.8
|
|
|
Year Ended December 31,
|
|
Change
|
||||||||||||||||
|
2013
|
|
2012
|
|
2011
|
|
2013 vs. 2012
|
|
2012 vs. 2011
|
||||||||||
Loss on early extinguishment of debt
|
$
|
29.7
|
|
|
$
|
—
|
|
|
$
|
11.2
|
|
|
$
|
(29.7
|
)
|
|
$
|
11.2
|
|
|
Year Ended December 31,
|
|
Change
|
||||||||||||||||
|
2013
|
|
2012
|
|
2011
|
|
2013 vs. 2012
|
|
2012 vs. 2011
|
||||||||||
Foreign currency losses, net
|
$
|
3.7
|
|
|
$
|
2.8
|
|
|
$
|
4.7
|
|
|
$
|
(0.9
|
)
|
|
$
|
1.9
|
|
•
|
the unfavorable impact of the revaluation of certain foreign currency denominated intercompany receivables and U.S. dollar denominated payables from the Company’s foreign subsidiaries during 2013 as compared to 2012; and
|
•
|
a $0.6 million foreign currency loss related to the required re-measurement of the balance sheet of the Company's subsidiary in Venezuela (Revlon Venezuela) during the first quarter of 2013 to reflect the impact of the devaluation of Venezuela’s local currency relative to the U.S. Dollar. See “Financial Condition, Liquidity, and Capital Resources – Impact of Foreign Currency Translation - Venezuela” for further discussion. As Venezuela was designated as a highly inflationary economy effective January 1, 2010, this foreign currency loss was reflected in earnings;
|
•
|
a $2.2 million foreign currency gain for 2013 compared to a $1.9 million foreign currency loss for 2012 related to the Company’s foreign currency forward exchange contracts ("FX Contracts").
|
•
|
lower losses as a result of the revaluation of certain U.S. Dollar denominated intercompany payables and foreign currency denominated intercompany receivables from the Company’s foreign subsidiaries during 2012 as compared to 2011; and
|
•
|
a foreign currency loss of $1.7 million recorded in 2011 related to the re-measurement of Revlon Venezuela’s balance sheet that did not recur in 2012. See “Financial Condition, Liquidity and Capital Resources - Impact of Foreign Currency Translation - Venezuela” for further discussion;
|
•
|
$0.8 million of higher foreign currency losses related to the Company’s FX Contracts during 2012 compared to 2011.
|
|
Year Ended December 31,
|
|
Change
|
||||||||||||||||
|
2013
|
|
2012
|
|
2011
|
|
2013 vs. 2012
|
|
2012 vs. 2011
|
||||||||||
Provision for income taxes
|
$
|
48.6
|
|
|
$
|
44.8
|
|
|
$
|
35.4
|
|
|
$
|
(3.8
|
)
|
|
$
|
(9.4
|
)
|
|
Year Ended December 31,
|
|
Change
|
||||||||||||||||
|
2013
|
|
2012
|
|
2011
|
|
2013 vs. 2012
|
|
2012 vs. 2011
|
||||||||||
Loss from discontinued operations, net of taxes
|
$
|
(30.4
|
)
|
|
$
|
(10.1
|
)
|
|
$
|
(1.8
|
)
|
|
$
|
(20.3
|
)
|
|
$
|
(8.3
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Net cash provided by operating activities
|
$
|
123.3
|
|
|
$
|
104.1
|
|
|
$
|
88.0
|
|
Net cash used in investing activities
|
(639.4
|
)
|
|
(86.3
|
)
|
|
(52.6
|
)
|
|||
Net cash provided by (used in) financing activities
|
649.0
|
|
|
(3.4
|
)
|
|
(7.5
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
(5.1
|
)
|
|
0.2
|
|
|
(2.9
|
)
|
•
|
a cash payment of $664.5 million for the Colomer Acquisition, offset by
$36.9 million
of cash and cash equivalents acquired, for a net cash position of $627.6 million; and
|
•
|
$28.6 million
of cash used for capital expenditures;
|
•
|
$13.1 million of insurance proceeds received in July 2013 for the Company's property claim related to the June 2011 fire at the Company's facility in Venezuela.
|
•
|
a cash payment of $66.2 million in July 2012 to acquire certain assets, including trademarks and other intellectual property related to Pure Ice nail enamel and Bon Bons cosmetics brands (the "Pure Ice Acquisition"); and
|
•
|
$20.9 million of cash used for capital expenditures.
|
•
|
a cash payment of $39.0 million for the SinfulColors Acquisition (as hereinafter defined). On March 17, 2011, the Company acquired certain assets, including trademarks and other intellectual property, inventory, certain receivables and manufacturing equipment, related to SinfulColors cosmetics, Wild and Crazy cosmetics, freshMinerals cosmetics and freshcover cosmetics (the “SinfulColors Acquisition”); and
|
•
|
$13.9 million used for capital expenditures.
|
•
|
Cash proceeds received in connection with the Acquisition Term Loan, in the aggregate principal amount of $700.0 million, or $698.3 million, net of discounts; and
|
•
|
Products Corporation’s issuance of the $500.0 million aggregate principal amount of the 5¾% Senior Notes at par;
|
•
|
the repayment and redemption of all of the $330.0 million aggregate principal amount outstanding of the 9¾% Senior Secured Notes in connection with the 2013 Senior Notes Refinancing;
|
•
|
the repayment of $113.0 million in principal on the 2011 Term Loan Facility in connection with the consummation of the February 2013 Term Loan Amendments; and
|
•
|
the payment of $48.8 million of financing costs comprised of: (i) $17.5 million of redemption and tender offer premiums, as well as fees and expenses related to the repayment and redemption of all of the $330.0 million aggregate principal amount outstanding of the 9¾% Senior Secured Notes; (ii) $10.2 million of underwriters' fees and other fees in connection with the issuance of the 5¾% Senior Notes; (iii) $1.2 million of fees incurred in connection with the February 2013 Term Loan Amendments; (iv) $3.5 million of fees incurred in connection with the August 2013 Term Loan Amendments; (v) $15.9 million of fees incurred in connection with the Incremental Amendment; and (vi) $0.5 million of fees incurred in connection with the 2013 Revolver Amendments.
|
•
|
an aggregate $8.0 million of scheduled amortization payments of principal on the 2011 Term Loan Facility in 2012;
|
•
|
a $6.3 million increase in short term borrowings and overdraft.
|
•
|
payment of the $4.3 million of fees incurred in connection with the 2011 Refinancings; and
|
•
|
an aggregate $4.0 million of scheduled amortization payments of principal on the 2011 Term Loan Facility in 2011;
|
•
|
cash provided by Products Corporation’s issuance of the $800.0 million aggregate principal amount of the 2011 Term Loan Facility, or $796.0 million, net of discounts, partially offset by cash used for the repayment of $794.0 million remaining aggregate principal amount of Products Corporation’s 2010 Term Loan Facility.
|
Excess Availability
|
|
Alternate Base Rate Loans
|
|
Eurodollar Loans, Eurocurrency Loan or Local Rate Loans
|
Greater than or equal to $92,000,000
|
|
0.50%
|
|
1.50%
|
Less than $92,000,000 but greater than or equal to $46,000,000
|
|
0.75%
|
|
1.75%
|
Less than $46,000,000
|
|
1.00%
|
|
2.00%
|
Year
|
|
Percentage
|
|
2016
|
|
104.313
|
%
|
2017
|
|
102.875
|
%
|
2018
|
|
101.438
|
%
|
2019 and thereafter
|
|
100.000
|
%
|
•
|
incur or guarantee additional indebtedness (“Limitation on Debt”);
|
•
|
pay dividends, make repayments on indebtedness that is subordinated in right of payment to the 5¾% Senior Notes and make other “restricted payments” (“Limitation on Restricted Payments”);
|
•
|
make certain investments;
|
•
|
create liens on their assets to secure debt;
|
•
|
enter into transactions with affiliates;
|
•
|
merge, consolidate or amalgamate with another company (“Successor Company”);
|
•
|
transfer and sell assets (“Limitation on Asset Sales”); and
|
•
|
permit restrictions on the payment of dividends by Products Corporation’s subsidiaries (“Limitation on Dividends from Subsidiaries”).
|
•
|
modify the interest rate on the Non-Contributed Loan from its prior 12% fixed rate to a floating rate of LIBOR plus 7%, with a 1.5% LIBOR floor, resulting in an interest rate of approximately 8.5% per annum (or a 3.5% reduction per annum) upon the effectiveness of the Amended and Restated Senior Subordinated Term Loan Agreement. Interest under the Amended and Restated Senior Subordinated Term Loan Agreement is payable quarterly in arrears in cash;
|
•
|
insert prepayment premiums such that Products Corporation may optionally prepay the Non-Contributed Loan (i) from November 1, 2013 through April 30, 2014 with a 2% prepayment premium on the aggregate principal amount of the Non-Contributed Loan being prepaid, and (ii) from May 1, 2014 through maturity on October 8, 2014 with no prepayment premium; and
|
•
|
designate Citibank, N.A. as the administrative agent for the Non-Contributed Loan.
|
|
|
Payments Due by Period
(dollars in millions) |
||||||||||||||||||
Contractual Obligations
|
|
Total
|
|
Less than 1 year
|
|
1-3 years
|
|
3-5 years
|
|
After 5 years
|
||||||||||
Long-term debt, including current portion
(a)
|
|
$
|
1,934.3
|
|
|
$
|
65.4
|
|
|
$
|
14.1
|
|
|
$
|
689.2
|
|
|
$
|
1,165.6
|
|
Interest on long-term debt
(b)
|
|
497.2
|
|
|
90.8
|
|
|
175.0
|
|
|
142.5
|
|
|
88.9
|
|
|||||
Capital lease obligations
|
|
7.3
|
|
|
3.4
|
|
|
3.6
|
|
|
0.3
|
|
|
—
|
|
|||||
Operating leases
(c)
|
|
78.8
|
|
|
28.7
|
|
|
22.9
|
|
|
11.1
|
|
|
16.1
|
|
|||||
Purchase obligations
(d)
|
|
91.2
|
|
|
91.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other long-term obligations
(e)
|
|
144.2
|
|
|
93.2
|
|
|
38.3
|
|
|
12.7
|
|
|
—
|
|
|||||
Total contractual obligations
|
|
$
|
2,753.0
|
|
|
$
|
372.7
|
|
|
$
|
253.9
|
|
|
$
|
855.8
|
|
|
$
|
1,270.6
|
|
(a)
|
Consists primarily of (i) the $58.4 million aggregate principal amount outstanding of the Non-Contributed Loan (the portion of the Amended and Restated Senior Subordinated Term Loan that remains owing from Products Corporation to various third parties) as of
December 31, 2013
, which loan matures on October 8, 2014; (ii) the $675.0 million aggregate principal amount outstanding under the 2011 Term Loan as of
December 31, 2013
; (iii) the $700.0 million aggregate principal amount outstanding under the Acquisition Term Loan as of
December 31, 2013
; and (iv) the $500.0 million aggregate principal amount outstanding under the 5¾% Senior Notes as of
December 31, 2013
.
|
(b)
|
Consists of interest through the respective maturity dates on the outstanding debt discussed in (a) above; based on interest rates under such debt agreements as of
December 31, 2013
. For discussion of the February 2014 Term Loan Amendment, refer to Note, 23, "Subsequent Events - February 2014 Term Loan Amendment," to the Consolidated Financial Statements in this Form 10-K.
|
(c)
|
Excluded from the obligations for operating leases as of December 31, 2013 is the lease for the Company's new headquarters in New York, New York signed in February 2014, which includes minimum lease payments in the aggregate of approximately $70 million over the 15-year term.
|
(d)
|
Consists of purchase commitments for finished goods, raw materials, components and services pursuant to enforceable and legally binding obligations which include all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transactions.
|
(e)
|
Consists primarily of media and advertising contracts, pension funding obligations (amount due within one year only, as subsequent pension funding obligation amounts cannot be reasonably estimated since the return on pension assets in future periods, as well as future pension assumptions, are not known), software licensing agreements and obligations related to third-party warehousing and distribution services. Such amounts exclude employment agreements, severance and other immaterial contractual commitments, which severance and other contractual commitments related to restructuring activities are discussed in Note 3, “Restructuring Charges,” to the Consolidated Financial Statements in this Form 10-K.
|
|
|
Effect of
|
|
Effect of
|
||||||||||||
|
|
25 basis points increase
|
|
25 basis points decrease
|
||||||||||||
|
|
Net periodic benefit costs
|
|
Projected pension benefit obligation
|
|
Net periodic benefit costs
|
|
Projected pension benefit obligation
|
||||||||
Discount rate
|
|
$
|
0.2
|
|
|
$
|
(18.8
|
)
|
|
$
|
(0.1
|
)
|
|
$
|
19.4
|
|
Expected long-term rate of return
|
|
(1.2
|
)
|
|
—
|
|
|
1.3
|
|
|
—
|
|
|
Expected Maturity Date for the year ended December 31,
|
|
|
||||||||||||||||||||||||||||
|
(dollars in millions, except for rate information)
|
|
|
||||||||||||||||||||||||||||
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
Thereafter
|
|
Total
|
|
Fair Value December 31, 2013
|
||||||||||||||||
Debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Short-term variable rate (various currencies)
|
$
|
5.9
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
5.9
|
|
|
$
|
5.9
|
|
||||||||||
Average interest rate
(a)
|
4.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Short-term fixed rate (third party - EUR)
|
2.0
|
|
|
|
|
|
|
|
|
|
|
|
|
2.0
|
|
|
2.0
|
|
|||||||||||||
Average interest rate
|
9.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Long-term fixed rate – third party ($US)
|
|
|
|
|
|
|
|
|
|
|
$
|
500.0
|
|
|
500.0
|
|
|
491.3
|
|
||||||||||||
Average interest rate
|
|
|
|
|
|
|
|
|
|
|
5.75
|
%
|
|
|
|
|
|||||||||||||||
Long-term fixed rate – third party (EUR)
|
|
|
|
|
$
|
0.1
|
|
|
$
|
0.1
|
|
|
$
|
0.1
|
|
|
0.6
|
|
|
0.9
|
|
|
0.9
|
|
|||||||
Average interest rate
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
||||||||||||
Long-term variable rate – third party ($US)
|
65.4
|
|
(b)
|
$
|
7.0
|
|
|
7.0
|
|
|
682.0
|
|
|
7.0
|
|
|
665.0
|
|
|
1,433.4
|
|
|
1,439.7
|
|
|||||||
Average interest rate
(a)(c)
|
8.0
|
%
|
|
4.0
|
%
|
|
4.2
|
%
|
|
4.6
|
%
|
|
5.1
|
%
|
|
5.4
|
%
|
|
|
|
|
||||||||||
Total debt
|
$
|
73.3
|
|
|
$
|
7.0
|
|
|
$
|
7.1
|
|
|
$
|
682.1
|
|
|
$
|
7.1
|
|
|
$
|
1,165.6
|
|
|
$
|
1,942.2
|
|
|
$
|
1,939.8
|
|
(a)
|
Weighted average variable rates are based upon implied forward rates from the U.S. Dollar LIBOR yield curves at
December 31, 2013
.
|
(b)
|
Includes the $58.4 million aggregate principal amount outstanding for the Non-Contributed Loan (the portion of the Amended and Restated Senior Subordinated Term Loan that remains owing from Products Corporation to various third parties) as of
December 31, 2013
, which loan matures on October 8, 2014, and the quarterly amortization payments required under the Acquisition Term Loan.
|
(c)
|
At December 31, 2013, the Amended Term Loan Facility bears interest at the Eurodollar Rate (as defined in the Amended Term Loan Agreement) plus 3.00% per annum (with the Eurodollar Rate not to be less than 1.00%). The Non-Contributed Loan bears interest at a floating rate of LIBOR plus 7%, with a 1.5% LIBOR floor, which is payable quarterly in arrears in cash. For discussion of the February 2014 Term Loan Amendment, refer to Note 23, "Subsequent Events - 2014 Term Loan Amendment," to the Consolidated Financial Statements in this Form 10-K.
|
Forward Contracts (“FC”)
|
|
Average Contractual Rate
$/FC
|
|
Original US Dollar Notional Amount
|
|
Contract Value
December 31, 2013
|
|
Asset (Liability) Fair Value December 31, 2013
|
||||||
Sell Canadian Dollars/Buy USD
|
|
0.9505
|
|
$
|
20.6
|
|
|
$
|
20.9
|
|
|
$
|
0.3
|
|
Sell Australian Dollars/Buy USD
|
|
0.9049
|
|
15.0
|
|
|
15.4
|
|
|
0.4
|
|
|||
Sell Japanese Yen/Buy USD
|
|
0.0098
|
|
6.2
|
|
|
6.4
|
|
|
0.2
|
|
|||
Sell South African Rand/Buy USD
|
|
0.0959
|
|
4.7
|
|
|
4.8
|
|
|
0.1
|
|
|||
Buy Australian Dollars/Sell NZ Dollars
|
|
1.1463
|
|
4.6
|
|
|
4.4
|
|
|
(0.2
|
)
|
|||
Sell New Zealand Dollars/Buy USD
|
|
0.8200
|
|
1.0
|
|
|
1.0
|
|
|
—
|
|
|||
Sell Euros/Buy USD
|
|
1.3716
|
|
0.5
|
|
|
0.5
|
|
|
—
|
|
|||
Sell Danish Krone/Buy USD
|
|
0.1840
|
|
0.3
|
|
|
0.3
|
|
|
—
|
|
|||
Total forward contracts
|
|
|
|
$
|
52.9
|
|
|
$
|
53.7
|
|
|
$
|
0.8
|
|
•
|
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of its assets;
|
•
|
provide reasonable assurance that transactions are recorded as necessary to permit preparation of its financial statements in accordance with generally accepted accounting principles, and that its receipts and expenditures are being made only in accordance with authorizations of its management and directors; and
|
•
|
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on its financial statements.
|
(i)
|
the Company's future financial performance;
|
(ii)
|
the effect on sales of decreased consumer spending in response to weak economic conditions or weakness in the consumption of beauty care products in either the Consumer or Professional segment; adverse changes in currency exchange rates, 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, changes in consumer purchasing habits, including with respect to shopping channels; inventory management by the Company's customers; space reconfigurations or reductions in display space by the Company's customers; changes in pricing 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 and/or marketing plans; or if the Company’s expenses, including, without limitation, for pension expense under its benefit plans, acquisition-related integration costs, costs related to litigation, advertising, promotional and marketing activities, or for sales returns related to any reduction of space by the Company's customers, product discontinuances or otherwise, exceed the anticipated level of expenses;
|
(iii)
|
the Company's belief that the continued execution of its business strategy could include taking advantage of additional opportunities to reposition, repackage or reformulate one or more brands or product lines, launching additional new products, acquiring businesses or brands, divesting or discontinuing non-core business lines (which may include exiting certain territories), further refining its approach to retail merchandising and/or taking further actions to optimize its manufacturing, sourcing and organizational size and structure, including optimizing the integration of the Colomer Acquisition (including the Company’s plans to integrate the operations of Colomer into the Company’s business and its expectations that the Integration Program will deliver cost reductions throughout the combined organization by generating cost synergies and operating efficiencies within the Company's global supply chain and consolidating offices and back office support, and other actions designed to reduce selling, general and administrative expenses, and achieve approximately $30 million to $35 million of annualized cost reductions by the end of 2015, with approximately $10 million to $15 million of these cost reductions expected to benefit 2014 results, at a cost of approximately $45 million to $50 million in the aggregate over 2013 through 2015), any of which, the intended purpose of which would be to create value through improving our financial performance, could result in the Company making investments and/or recognizing charges related to executing against such opportunities, which activities may be funded with cash on hand, funds available under the Amended Revolving Credit Facility and/or other permitted additional sources of capital, which actions could increase the Company’s total debt;
|
(iv)
|
the Company’s vision to establish Revlon as the quintessential and most innovative beauty company in the world by offering products that make consumers feel attractive and beautiful and to inspire its consumers to express themselves boldly and confidently; and the Company's expectations regarding its strategic goal to optimize the market and financial performance of its portfolio of brands and assets by: (a) managing financial drivers for value creation by being focused on gross profit margin expansion, which includes optimizing price, as well as allocating sales allowances to maximize our return on trade spending, continuing to focus on reducing costs across our global supply chain and focusing on eliminating non-value added general and administrative costs in order to fund reinvestment to facilitate growth; (b) growing our global brands through exceptional innovation and effective brand support by being focused on creating fewer, bigger and better innovations across our brands that are relevant, unique, impactful and distinctive, wanting to continue to build strong brands by focusing on high-quality, consumer-preferred offerings; effective consumer communication; increased levels of effective advertising and promotion; and superb execution and collaboration with our customers; (c) pursuing growth opportunities by being focused on pursuing organic growth opportunities within our existing brand portfolio and existing channels, as well as seeking acquisition opportunities that complement our portfolio and being focused on exploring opportunities to expand our geographical presence in key markets, as appropriate; and (d) improve cash flow by being focused on improving our cash flows through, among other things, continued effective management of our working capital and by focusing on appropriate return on capital spending;
|
(v)
|
the effect of restructuring activities, restructuring costs and charges, the timing of restructuring payments and the benefits from such activities; including, without limitation, the Company’s expectation (i) that annualized cost reductions associated with the September 2012 program are expected to be approximately $10 million; and the Company’s expectation that the total net cash paid related to the September 2012 Program will be approximately $25 million (which includes the cash proceeds of $2.7 million received in July 2013 related to the sale of the Company's manufacturing facility in France), of which $3.8 million was paid in 2012, $17.3 million was paid in 2013 and the remainder is expected to be paid in 2014; and (ii) to recognize approximately $1 million of additional charges in 2014 for a total of approximately $22 million related to the December 2013 Program, of which $0.1 million was paid in 2013 and the remainder is expected to be paid in 2014, and that approximately $8 million of cost reductions related to the December 2013 Program will benefit 2014 and that annualized cost reductions thereafter will be approximately $11 million;
|
(vi)
|
the Company’s expectation that operating revenues, cash on hand and funds available for borrowing under Products Corporation's Amended Revolving Credit Facility and other permitted lines of credit will be sufficient to enable the Company to cover its operating expenses for 2014, including the cash requirements referred to in item (viii) below;
|
(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 Revolving Credit Facility and other permitted lines of credit, as well as the availability of funds from the Company taking certain measures, including, among other things, reducing discretionary spending;
|
(viii)
|
the Company's expected principal uses of funds, including amounts required for the payment of operating expenses, including expenses in connection with the continued execution of the Company’s business strategy, integration costs related to the Colomer Acquisition, payments in connection with the Company's purchases of permanent wall displays, capital expenditure requirements, debt service payments and costs, tax payments, pension and post-retirement benefit plan contributions (including the Company's intent to fund at least the minimum contributions required to meet applicable federal employee benefits and local laws), payments in connection with the Company's restructuring
|
(ix)
|
matters concerning the Company's market-risk sensitive instruments, as well as the Company’s expectations as to the counterparty’s performance, including that any loss arising from any non-performance by the counterparty would not be material and that any risk of loss under its derivative instruments is remote;
|
(x)
|
the Company's expectation to efficiently manage its working capital, including, among other things, initiatives intended to optimize inventory levels over time; centralized procurement to secure discounts and efficiencies; prudent management of trade receivables and accounts payable; and controls on general and administrative spending; and the Company’s belief that in the ordinary course of business, its source or use of cash from operating activities may vary on a quarterly basis as a result of a number of factors, including the timing of working capital flows;
|
(xi)
|
the Company’s expectations regarding its future net periodic benefit cost for its U.S. and international defined benefit plans;
|
(xii)
|
the Company’s belief that it maintains comprehensive property insurance, as well as business interruption insurance;
|
(xiii)
|
the Company's expectation that its tax provision and effective tax rate in any individual quarter will vary and may not be indicative of the Company's tax provision and effective tax rate for the full year;
|
(xiv)
|
the Company's expectation that as new currency markets are developed in Venezuela, the Company will consider participating in exchanging Bolivars for U.S. Dollars to the extent permitted and the Company's belief that if the rate of exchange in any new currency market is higher than the Official Rate, it may have a negative impact on the Company's results of operations going forward;
|
(xv)
|
the Company’s belief that while 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, financial condition and/or its results of operations, 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;
|
(xvi)
|
the Company’s beliefs and expectations regarding certain benefits of the Colomer Acquisition, including that it (i) provides cost synergy opportunities; (ii) offers the Company opportunities to achieve additional growth by leveraging the combined Company’s enhanced innovation capability and know-how; and (iii) that its presence in the professional channel will provide benefits to its consumer products business as it will enable the Company to improve its anticipation of consumer trends in hair color and hair care, nail color and nail care, and skin care, as these trends often appear first in salons; and
|
(xvii)
|
the Company's plans in connection with integrating Colomer into the Company's business to implement a company-wide, SAP enterprise resource planning system.
|
(i)
|
unanticipated circumstances or results affecting the Company's financial performance, including decreased consumer spending in response to weak economic conditions or weakness in the consumption of beauty care products in either the Consumer or Professional segment; adverse changes in currency exchange rates, 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; 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 shopping channels; lower than expected customer acceptance or consumer acceptance of, or less than anticipated results from, the Company’s existing or new products; higher than expected restructuring costs, acquisition and integration costs related to the Colomer Acquisition; higher than expected pension expense and/or cash contributions under its benefit plans, costs related to litigation, advertising, promotional and/or marketing expenses or lower than expected results from the Company’s advertising, promotional and/or marketing plans; higher than expected sales returns related to any reduction of space by the Company's customers, product discontinuances or otherwise or decreased sales of the Company’s existing or new products; actions by the Company’s customers, such as inventory management and greater than anticipated space reconfigurations or reductions in display space and/or product discontinuances or a greater than expected impact from pricing or promotional strategies by the Company's customers; and changes in the competitive environment and actions by the Company's competitors, including business combinations, technological breakthroughs, new product offerings, increased advertising, promotional and marketing spending and advertising, promotional and/or marketing successes by competitors;
|
(ii)
|
in addition to the items discussed in (i) above, the effects of and changes in economic conditions (such as continued volatility in the financial markets, inflation, monetary conditions and foreign currency fluctuations, currency controls and/or government-mandated pricing controls, as well as in trade, monetary, fiscal and tax policies in international markets) and political conditions (such as military actions and terrorist activities);
|
(iii)
|
unanticipated costs or difficulties or delays in completing projects associated with the continued execution of the Company’s business strategy or lower than expected revenues or the inability to create value through improving our financial performance as a result of such strategy, including lower than expected sales, or higher than expected costs, including as may arise from any additional repositioning, repackaging or reformulating of one or more brands or product lines, launching of new product lines, including higher than expected expenses, including for sales returns, for launching its new products, acquiring businesses or brands, divesting or discontinuing non-core business lines (which may include exiting certain territories), further refining its approach to retail merchandising, and/or difficulties, delays or increased costs in connection with taking further actions to optimize the Company’s manufacturing, sourcing, supply chain or organizational size and structure, including optimizing the integration of the Colomer Acquisition (including difficulties or delays in and/or the Company’s inability to integrate the Colomer business which could result in less than expected cost reductions, more than expected costs to achieve the expected cost reductions or delays in achieving the expected cost reductions and/or less than expected benefits from the Integration Program, more than expected costs in implementing such program and/or difficulties or delays, in whole or in part, in executing the Integration Program), as well as the unavailability of cash on hand and/or funds under the Amended Revolving Credit Facility or from other permitted additional sources of capital to fund such potential activities;
|
(iv)
|
difficulties, delays or unanticipated costs in achieving the Company’s strategic goals and vision, including due to factors such as (a) difficulties, delays or the Company's inability to build its strong brands, such as due to less than effective product development, less than expected acceptance of its new or existing products by consumers, salon professional and/or customers in the Consumer or Professional segments, less than expected acceptance of its advertising, promotional and/or marketing plans and/or brand communication by consumers, salon professional and/or customers in the Consumer or Professional segments, less than expected investment in advertising, promotional and/or marketing activities or greater than expected competitive investment, less than expected levels of advertising, promotional and/or marketing activities for its new product launches and/or less than expected levels of execution with its customers in the Consumer or Professional segments or higher than expected costs and expenses; and (b) difficulties, delays in or less than expected results from the Company’s efforts to optimize the market and financial performance of its portfolio of brands and assets due to the reasons set forth in clause (a) above, as well as due to: (i) difficulties, delays in or less than expected results from the Company’s efforts to manage financial drivers for value creation, such as due to higher than expected costs; (ii) difficulties, delays in or less than expected results from the Company’s efforts to grow our global brands through exceptional innovation and effective brand support; (iii) difficulties, delays in or less than expected results from the Company’s efforts to pursue growth opportunities, as well as difficulties, delays in and/or the Company’s inability to complete acquisition opportunities that complement our portfolio, such as difficulties, delays in and/or unanticipated costs in consummating, or the Company’s inability
|
(v)
|
difficulties, delays or unanticipated costs or charges or less than expected savings and other benefits resulting from the Company's restructuring activities, such as greater than anticipated costs or charges or less than anticipated cost reductions or other benefits from the September 2012 Program, the December 2013 Program and/or the Integration Program and/or the risk that any of such programs may not satisfy the Company’s objectives;
|
(vi)
|
lower than expected operating revenues, cash on hand and/or funds available under the Amended Revolving Credit Facility and/or other permitted lines of credit or higher than anticipated operating expenses, such as referred to in clause (viii) below;
|
(vii)
|
the unavailability of funds under Products Corporation's Amended Revolving Credit Facility or other permitted lines of credit; or from difficulties, delays in or the Company's inability to take other measures, such as reducing discretionary spending;
|
(viii)
|
higher than expected operating expenses, sales returns, working capital expenses, permanent wall display costs, capital expenditures, debt service payments, tax payments, cash pension plan contributions, post-retirement benefit plan contributions and/or net periodic benefit costs for the pension and other post-retirement benefit plans, integration costs related to the Colomer Acquisition, restructuring costs, severance and discontinued operations not otherwise included in the Company’s restructuring programs, debt and/or equity repurchases and/or costs related to litigation;
|
(ix)
|
interest rate or foreign exchange rate changes affecting the Company and its market-risk sensitive financial instruments and/or difficulties, delays or the inability of the counterparty to perform such transactions;
|
(x)
|
difficulties, delays or the inability of the Company to efficiently manage its cash and working capital;
|
(xi)
|
lower than expected returns on pension plan assets and/or lower discount rates, which could result in higher than expected cash contributions and/or net periodic benefit costs;
|
(xii)
|
unanticipated events or circumstances that could cause the Company's property and/or business interruption insurance to provide less than adequate coverage;
|
(xiii)
|
unexpected significant variances in the Company's tax provision and effective tax rate;
|
(xiv)
|
difficulties, delays in or the Company's inability to exchange Bolivars for U.S. Dollars, whether due to the lack of a market developing for such exchange or otherwise and/or unanticipated adverse impacts to the Company's results of operations such as due to higher than expected exchange rates; and difficulties or delays in the Company's ability to import certain products through CADIVI, SICAD and/or NCFT;
|
(xv)
|
unexpected effects on the Company’s business, financial condition and/or its results of operations as a result of legal proceedings;
|
(xvi)
|
difficulties or delays in realizing, or less than anticipated, benefits from the Colomer Acquisition, such as (i) less than expected cost reductions, more than expected costs to achieve the expected cost reductions or delays in achieving the expected cost reductions, such as due to difficulties or delays in and/or the Company’s inability to integrate the Colomer business, in whole or in part, and/or changes in the timing of completing its expected integration actions; and/or (ii) less than expected growth from the Colomer brands, such as due to difficulties, delays, unanticipated costs or the Company’s inability to launch innovative new products within the Professional segment and/or difficulties or delays in and/or the Company’s inability to expand its distribution into new channels; and/or (iii) less than expected synergistic benefits to the Company's Consumer segment from having a presence in the professional channel; and/or
|
(xvii)
|
difficulties or delays in and/or less than expected benefits or cost reductions in connection with the Company's plans to implement a company-wide, SAP enterprise resource planning system.
|
Types of Fees
|
|
2013
|
|
2012
|
||||
Audit Fees
|
|
$
|
5.4
|
|
|
$
|
3.9
|
|
Audit-Related Fees
|
|
0.2
|
|
|
0.2
|
|
||
Tax Fees
|
|
0.2
|
|
|
0.2
|
|
||
All Other Fees
|
|
0.3
|
|
|
—
|
|
||
Total Fees
|
|
$
|
6.1
|
|
|
$
|
4.3
|
|
(a)
|
List of documents filed as part of this Report:
|
|
(1) Consolidated Financial Statements and Report of Independent Registered Public Accounting Firm included herein: See Index on page F-1.
|
|
(2) Financial Statement Schedule: See Index on page F-1.
|
|
All other schedules are omitted as they are inapplicable or the required information is furnished in the Company’s Consolidated Financial Statements or the Notes thereto.
|
|
(3) List of Exhibits:
|
2.
|
Plan of acquisition, reorganization, arrangement, liquidation or succession
|
2.1
|
Share Sale and Purchase Agreement, dated as of August 3, 2013, by and among Revlon Consumer Products Corporation (“Products Corporation”), Beauty Care Professional Products Participations, S.A., Romol Hair & Beauty Group, S.L., Norvo, S.L. and Staubinus España, S.L. (incorporated by reference to Exhibit 2.1 to Revlon, Inc.’s Current Report on Form 8-K filed with the SEC on August 5, 2013).
|
3.
|
Certificate of Incorporation and By-laws.
|
3.1
|
Restated Certificate of Incorporation of Products Corporation, dated May 13, 2004 (incorporated by reference to Exhibit 3.1 to Products Corporation's Quarterly Report on Form 10-Q for the quarter ended March 31, 2004 filed with the SEC on May 17, 2004.)
|
3.2
|
Amended and Restated By-Laws of Products Corporation, dated as of May 1, 2009 (incorporated by reference to Exhibit 3.1 of Products Corporation’s Current Report on Form 8-K filed with the SEC on April 29, 2009).
|
4.
|
Instruments Defining the Rights of Security Holders, Including Indentures.
|
4.1
|
Third Amended and Restated Term Loan Agreement dated as of May 19, 2011 (the "2011 Term Loan Agreement"), among Products Corporation, as borrower, the lenders party thereto, Citigroup Global Markets Inc. ("CGMI"), J.P. Morgan Securities LLC ("JPM Securities"), Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), Credit Suisse Securities (USA) LLC ("Credit Suisse") and Wells Fargo Securities, LLC ("WFS"), as the joint lead arrangers; CGMI, JPM Securities, Merrill Lynch, Credit Suisse, WFS and Natixis, New York Branch ("Natixis"), as joint bookrunners; JPMorgan Chase Bank, N.A. and Bank of America, N.A., as co-syndication agents; Credit Suisse, Wells Fargo Bank, N.A. and Natixis, as co-documentation agents; and Citicorp USA, Inc. ("CUSA"), as administrative agent and collateral agent (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K of Products Corporation filed with the SEC on May 20, 2011 (the "Products Corporation May 20, 2011 Form 8-K")).
|
4.2
|
Amendment No. 1 to Credit Agreement, dated as of February 21, 2013, to the Third Amended and Restated Term Loan Agreement, dated as of May 19, 2011, among Products Corporation, as borrower, CUSA, as Administrative Agent and Collateral Agent, and each lender thereunder (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K of Products Corporation filed with the SEC on February 21, 2013).
|
4.3
|
Amendment No. 2 to Term Loan Agreement, dated as of August 19, 2013, among Products Corporation, CUSA, as Administrative Agent and Collateral Agent (each as defined therein), and the Lenders (as defined therein) (incorporated by reference to Exhibit 4.1 to Products Corporation's Form 8-K filed with the SEC on August 19, 2013 (the "Products Corporation August 19, 2013 Form 8-K")).
|
4.4
|
Incremental Amendment, dated as of August 19, 2013, to the Amended Term Loan Agreement, among Products Corporation, CUSA, as Administrative Agent and Collateral Agent (each as defined therein), and the Lenders (as defined therein) (incorporated by reference to Exhibit 4.2 to the Products Corporation August 19, 2013 Form 8-K).
|
4.5
|
Third Amended and Restated Revolving Credit Agreement, dated as of June 16, 2011 (the "2011 Revolving Credit Agreement"), among Products Corporation and certain of its foreign subsidiaries, as borrowers, and CGMI and Wells Fargo Capital Finance, LLC ("WFCF"), as the joint lead arrangers; CGMI, WFCF, Merrill Lynch, JPM Securities and Credit Suisse, as joint bookrunners; and CUSA, as administrative agent and collateral agent (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K of Products Corporation filed with the SEC on June 17, 2011 (the "Products Corporation June 17, 2011 Form 8-K")).
|
4.6
|
Amendment No. 1 to Revolving Credit Agreement, dated as of August 14, 2013 ("Amendment No. 1"), among Products Corporation, the Local Borrowing Subsidiaries (as defined therein) from time to time party thereto, CUSA, as Administrative Agent and Collateral Agent (as defined therein), and the Lenders and Issuing Lenders (each as defined therein) (incorporated by reference to Exhibit 4.1 to Products Corporation's Form 8-K filed with the SEC on August 15, 2013).
|
4.7
|
Incremental Amendment, dated as of December 24, 2013, to the 2011 Revolving Credit Agreement (as amended by Amendment No. 1), among Products Corporation, the Local Borrowing Subsidiaries (as defined therein) from time to time party thereto, CUSA, as Administrative Agent and Collateral Agent (as defined therein), and the Lenders and Issuing Lenders (each as defined therein) (incorporated by reference to Exhibit 4.1 to Products Corporation's Form 8-K filed with the SEC on December 24, 2013).
|
4.8
|
Third Amended and Restated Pledge and Security Agreement dated as of March 11, 2010 among Revlon, Inc., Products Corporation and certain domestic subsidiaries of Products Corporation in favor of CUSA, as collateral agent for the secured parties (incorporated by reference to Exhibit 4.3 to the Current Report on Form 8-K of Products Corporation filed with the SEC on March 16, 2010 (the “Products Corporation March 16, 2010 Form 8-K”)).
|
4.9
|
Third Amended and Restated Intercreditor and Collateral Agency Agreement, dated as of March 11, 2010, among CUSA, as administrative agent for certain bank lenders, U.S. Bank National Association, as trustee for certain noteholders, CUSA, as collateral agent for the secured parties, Revlon, Inc., Products Corporation and certain domestic subsidiaries of Products Corporation (incorporated by reference to Exhibit 4.4 to the Products Corporation March 16, 2010 Form 8-K).
|
4.10
|
Amended and Restated Guaranty, dated as of March 11, 2010, by and among Revlon, Inc., Products Corporation and certain domestic subsidiaries of Products Corporation, in favor of CUSA, as collateral agent for the secured parties (incorporated by reference to Exhibit 4.5 to the Products Corporation March 16, 2010 Form 8-K).
|
4.11
|
Form of Revolving Credit Note under the 2011 Revolving Credit Agreement (incorporated by reference to Exhibit 4.3 to the Products Corporation June 17, 2011 Form 8-K).
|
4.12
|
Third Amended and Restated Copyright Security Agreement, dated as of March 11, 2010, among Products Corporation and CUSA, as collateral agent for the secured parties (incorporated by reference to Exhibit 4.8 to the Products Corporation March 16, 2010 Form 8-K).
|
4.13
|
Third Amended and Restated Copyright Security Agreement, dated as of March 11, 2010, among Almay, Inc. and CUSA, as collateral agent for the secured parties (incorporated by reference to Exhibit 4.9 to the Products Corporation March 16, 2010 Form 8-K).
|
4.14
|
Third Amended and Restated Patent Security Agreement, dated as of March 11, 2010, among Products Corporation and CUSA, as collateral agent for the secured parties (incorporated by reference to Exhibit 4.10 to the Products Corporation March 16, 2010 Form 8-K).
|
4.15
|
Third Amended and Restated Trademark Security Agreement, dated as of March 11, 2010, among Products Corporation and CUSA, as collateral agent for the secured parties (incorporated by reference to Exhibit 4.11 to the Products Corporation March 16, 2010 Form 8-K).
|
4.16
|
Third Amended and Restated Trademark Security Agreement, dated as of March 11, 2010, among Charles Revson Inc. and CUSA, as collateral agent for the secured parties (incorporated by reference to Exhibit 4.12 to the Products Corporation March 16, 2010 Form 8-K).
|
4.17
|
Form of Term Loan Note under the 2011 Term Loan Agreement (incorporated by reference to Exhibit 4.4 to the Products Corporation May 20, 2011 Form 8-K).
|
4.18
|
Amended and Restated Term Loan Guaranty, dated as of March 11, 2010, by Revlon, Inc., Products Corporation and certain domestic subsidiaries of Products Corporation in favor of CUSA, as collateral agent for the secured parties (incorporated by reference to Exhibit 4.14 to the Products Corporation March 16, 2010 Form 8-K).
|
4.19
|
Reaffirmation Agreement, dated as of February 21, 2013, made by Revlon, Inc., Products Corporation and certain of its domestic subsidiaries and acknowledged by CUSA, as collateral agent for the secured parties (incorporated by reference to Exhibit 4.2 to the Quarterly Report on Form 10-Q of Products Corporation for the fiscal quarter ended March 31, 2013 filed with the SEC on April 25, 2013) (the “Products Corporation Q1 2013 Form 10-Q”).
|
4.20
|
Reaffirmation Agreement, dated as of August 19, 2013, among Products Corporation, Revlon, Inc., certain domestic subsidiaries of Products Corporation and CUSA, as Collateral Agent (as defined therein) in connection with the Amended Term Loan (incorporated by reference to Exhibit 4.4 to Products Corporation's Quarterly Report on Form 10-Q for the fiscal period ended September 30, 2013 filed with the SEC on October 24, 2013 (the "Products Corporation Q3 2013 Form 10-Q")).
|
4.21
|
Reaffirmation Agreement, dated as of August 14, 2013, among Products Corporation, Revlon, Inc., certain domestic subsidiaries of Products Corporation and CUSA, as Collateral Agent (as defined therein) in connection with the Amended Revolving Credit Agreement (incorporated by reference to Exhibit 4.5 to the Products Corporation Q3 2013 Form 10-Q).
|
*4.22
|
Reaffirmation Agreement, dated as of December 24, 2013, among Products Corporation, Revlon, Inc., certain domestic subsidiaries of Products Corporation and CUSA, as Collateral Agent (as defined therein) in connection with the Amended Revolving Credit Agreement.
|
4.23
|
Master Assignment and Acceptance, dated as of May 19, 2011 among certain lenders and Citibank, N.A. (incorporated by reference to Exhibit 4.3 to the Products Corporation May 20, 2011 Form 8-K).
|
4.24
|
Indenture, dated as of February 8, 2013, among Products Corporation, certain subsidiaries of Products Corporation as guarantors thereto, and U.S. Bank National Association, as trustee, relating to Products Corporation's 5.75% Senior Notes due 2021 (the “5.75% Senior Notes”) (incorporated by reference to Exhibit 4.3 to the Products Corporation Q1 2013 Form 10-Q).
|
4.25
|
Form of 5.75% Senior Notes (included in Exhibit 4.24) (incorporated by reference to Exhibit 4.4 to the Products Corporation Q1 2013 Form 10-Q).
|
4.26
|
Registration Rights Agreement, dated as of February 8, 2013, among Products Corporation, certain subsidiaries of Products Corporation and CGMI, as representative of the several initial purchasers of the 5.75% Senior Notes (incorporated by reference to Exhibit 4.5 to the Products Corporation Q1 2013 Form 10-Q).
|
4.26
|
Supplemental Indenture, dated as of February 8, 2013, among Products Corporation, Revlon, Inc. and certain subsidiaries of Products Corporation, as guarantors thereto, and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.6 to the Products Corporation Q1 2013 Form 10-Q).
|
*4.27
|
Supplemental Indenture, dated as of January 21, 2014, among Products Corporation, Revlon, Inc. and certain subsidiaries of Products Corporation, as guarantors thereto, and U.S. Bank National Association, as trustee.
|
10.
|
Material Contracts.
|
10.1
|
Amended and Restated Senior Subordinated Term Loan Agreement, dated as of April 30, 2012, by and between Products Corporation, as the borrower, and MacAndrews & Forbes, as the initial lender (incorporated by reference to Exhibit 10.1 to Products Corporation’s Current Report on Form 8-K filed with the SEC on May 1, 2012 (the "Products Corporation May 1, 2012 Form 8-K")).
|
10.2
|
Administrative Letter Agreement in connection with the Amended and Restated Senior Subordinated Term Loan Agreement, dated as of April 30, 2012, by and among Products Corporation, as the borrower, MacAndrews & Forbes, as the initial lender and Citibank, N.A., as the administrative agent for the Non-Contributed Loan (incorporated by reference to Exhibit 10.2 to the Products Corporation May 1, 2012 Form 8-K).
|
10.3
|
Tax Sharing Agreement, dated as of June 24, 1992, among MacAndrews & Forbes, Revlon, Inc., Products Corporation and certain subsidiaries of Products Corporation, as amended and restated as of January 1, 2001 (incorporated by reference to Exhibit 10.2 to Products Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2001 filed with the SEC on February 25, 2002).
|
10.4
|
Tax Sharing Agreement, dated as of March 26, 2004, by and among Revlon, Inc., Products Corporation and certain subsidiaries of Products Corporation (incorporated by reference to Exhibit 10.25 to Products Corporation’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2004 filed with the SEC on May 17, 2004).
|
10.5
|
Letter Agreement and Release, dated as of October 1, 2013, between Products Corporation and Alan T. Ennis (incorporated by reference to Exhibit 10.2 to Revlon, Inc.’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2013 filed with the SEC on October 24, 2013 (the "Revlon, Inc. Q3 2013 Form 10-Q")).
|
10.6
|
Employment Agreement, dated as of October 31, 2013, by and between Products Corporation and Lorenzo Delpani (incorporated by reference to Exhibit 10.19 to Products Corporation’s Amendment No. 3 to Form S-4 filed with the SEC on November 15, 2013).
|
10.7
|
Amended and Restated Employment Agreement, dated as of February 14, 2011, between Products Corporation and Robert K. Kretzman (incorporated by reference to Exhibit 10.5 to Revlon, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010 filed with the SEC on February 17, 2011).
|
10.8
|
Employment Agreement, dated as of July 30, 2013, between Products Corporation and Lawrence Alletto (incorporated by reference to Exhibit 10.1 to the Revlon, Inc. Q3 2013 Form 10-Q).
|
10.9
|
Amended and Restated Employment Agreement, dated as of May 1, 2009, between Products Corporation and Chris Elshaw (incorporated by reference to Exhibit 10.7 to Revlon, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009 filed with the SEC on February 25, 2010 (the “Revlon, Inc. 2009 Form 10-K”)).
|
10.10
|
Third Amended and Restated Revlon, Inc. Stock Plan (as amended, the "Stock Plan") (incorporated by reference to Exhibit 4.1 to Revlon, Inc.’s Registration Statement on Form S-8 filed with the SEC on December 10, 2007).
|
10.11
|
Revlon Executive Incentive Compensation Plan (incorporated by reference to Annex C to Revlon, Inc.’s Annual Proxy Statement on Schedule 14A filed with the SEC on April 21, 2010).
|
10.12
|
Amended and Restated Revlon Pension Equalization Plan, amended and restated as of December 14, 1998 (the “PEP”) (incorporated by reference to Exhibit 10.15 to Revlon, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 1998 filed with the SEC on March 3, 1999).
|
10.13
|
Amendment to the PEP, dated as of May 28, 2009 (incorporated by reference to Exhibit 10.13 to the Revlon, Inc. 2009 Form 10-K).
|
10.14
|
Executive Supplemental Medical Expense Plan Summary, dated July 2000 (incorporated by reference to Exhibit 10.10 to Revlon, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002 filed with the SEC on March 21, 2003).
|
10.15
|
Benefit Plans Assumption Agreement, dated as of July 1, 1992, by and among Revlon Holdings, Revlon, Inc. and Products Corporation (incorporated by reference to Exhibit 10.25 to Products Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 1992 filed with the SEC on March 12, 1993).
|
10.16
|
Revlon Executive Severance Pay Plan (incorporated by reference to Exhibit 10.2 to Revlon, Inc.’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2009 filed with the SEC on April 30, 2009).
|
21.
|
Subsidiaries.
|
*21.1
|
Subsidiaries of Revlon Consumer Products Corporation
|
24.
|
Powers of Attorney.
|
*24.1
|
Power of Attorney executed by Ronald O. Perelman.
|
*24.2
|
Power of Attorney executed by Barry F. Schwartz.
|
*24.3
|
Power of Attorney executed by Alan S. Bernikow.
|
*24.4
|
Power of Attorney executed by Viet D. Dinh.
|
*24.5
|
Power of Attorney executed by David L. Kennedy.
|
*31.1
|
Certification of Lorenzo Delpani, Chief Executive Officer, dated March 5, 2014, pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange Act.
|
*31.2
|
Certification of Lawrence B. Alletto, Chief Financial Officer, dated March 5, 2014, pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange Act.
|
32.1 (furnished herewith)
|
Certification of Lorenzo Delpani, Chief Executive Officer, dated March 5, 2014, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
32.2 (furnished herewith)
|
Certification of Lawrence B. Alletto, Chief Financial Officer, dated March 5, 2014, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
*101.INS
|
XBRL Instance Document
|
*101.SCH
|
XBRL Taxonomy Extension Schema
|
*101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase
|
*101.DEF
|
XBRL Taxonomy Extension Definition Linkbase
|
*101.LAB
|
XBRL Taxonomy Extension Label Linkbase
|
*101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase
|
|
|
Page
|
Report of Independent Registered Public Accounting Firm
|
|
|
Audited Financial Statements:
|
|
|
Consolidated Balance Sheets as of December 31, 2013 and 2012
|
|
|
Consolidated Statements of Income and Comprehensive Income for each of the years in the three-year period ended December 31, 2013
|
|
|
Consolidated Statements of Stockholder's Deficiency for each of the years in the three-year period ended December 31, 2013
|
|
|
Consolidated Statements of Cash Flows for each of the years in the three-year period ended December 31, 2013
|
|
|
Notes to Consolidated Financial Statements
|
|
|
Financial Statement Schedule:
|
|
|
Schedule II - Valuation and Qualifying Accounts
|
|
|
December 31,
2013 |
|
December 31,
2012 |
||||
|
|
|
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
244.1
|
|
|
$
|
116.3
|
|
Trade receivables, less allowance for doubtful accounts of $4.2 and $3.5 as of December 31, 2013 and 2012, respectively
|
253.5
|
|
|
216.0
|
|
||
Inventories
|
175.0
|
|
|
114.7
|
|
||
Deferred income taxes – current
|
65.1
|
|
|
48.5
|
|
||
Receivable from Revlon, Inc.
|
94.7
|
|
|
75.1
|
|
||
Prepaid expenses and other
|
61.4
|
|
|
45.4
|
|
||
Total current assets
|
893.8
|
|
|
616.0
|
|
||
Property, plant and equipment, net of accumulated depreciation of $243.1 and $226.0 as of December 31, 2013 and 2012, respectively
|
195.9
|
|
|
99.5
|
|
||
Deferred income taxes – noncurrent
|
164.8
|
|
|
203.1
|
|
||
Goodwill
|
474.7
|
|
|
217.8
|
|
||
Intangible assets, net of accumulated amortization of $19.0 and $29.7 as of December 31, 2013 and 2012, respectively
|
354.7
|
|
|
68.8
|
|
||
Other assets
|
119.9
|
|
|
92.5
|
|
||
Total assets
|
$
|
2,203.8
|
|
|
$
|
1,297.7
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDER'S DEFICIENCY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Short-term borrowings
|
$
|
7.9
|
|
|
$
|
5.0
|
|
Current portion of long-term debt
|
65.4
|
|
|
21.5
|
|
||
Current portion of long-term debt - affiliates
|
—
|
|
|
48.6
|
|
||
Accounts payable
|
165.7
|
|
|
101.8
|
|
||
Accrued expenses and other
|
313.6
|
|
|
264.7
|
|
||
Total current liabilities
|
552.6
|
|
|
441.6
|
|
||
Long-term debt
|
1,862.3
|
|
|
1,145.8
|
|
||
Long-term pension and other post-retirement plan liabilities
|
118.3
|
|
|
233.7
|
|
||
Other long-term liabilities
|
187.1
|
|
|
53.3
|
|
||
Commitments and contingencies
|
|
|
|
|
|
||
Stockholder's deficiency:
|
|
|
|
||||
RCPC Preferred Stock, par value $1.00 per share; 1,000 shares authorized; 546 shares issued and outstanding as of December 31, 2013 and 2012
|
54.6
|
|
|
54.6
|
|
||
Common Stock, par value $1.00 per share; 10,000 shares authorized; 5,260 shares issued and outstanding as of December 31, 2013 and 2012
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
946.5
|
|
|
946.3
|
|
||
Accumulated deficit
|
(1,367.8
|
)
|
|
(1,369.4
|
)
|
||
Accumulated other comprehensive loss
|
(149.8
|
)
|
|
(208.2
|
)
|
||
Total stockholder's deficiency
|
(516.5
|
)
|
|
(576.7
|
)
|
||
Total liabilities and stockholder's deficiency
|
$
|
2,203.8
|
|
|
$
|
1,297.7
|
|
|
Year Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
|
|
|
|
|
|
||||||
Net sales
|
$
|
1,494.7
|
|
|
$
|
1,396.4
|
|
|
$
|
1,347.5
|
|
Cost of sales
|
545.1
|
|
|
493.8
|
|
|
481.2
|
|
|||
Gross profit
|
949.6
|
|
|
902.6
|
|
|
866.3
|
|
|||
Selling, general and administrative expenses
|
723.6
|
|
|
663.3
|
|
|
652.8
|
|
|||
Acquisition and integration costs
|
25.4
|
|
|
—
|
|
|
—
|
|
|||
Restructuring charges and other, net
|
3.5
|
|
|
20.5
|
|
|
—
|
|
|||
Operating income
|
197.1
|
|
|
218.8
|
|
|
213.5
|
|
|||
Other expenses, net:
|
|
|
|
|
|
||||||
Interest expense
|
78.6
|
|
|
85.3
|
|
|
91.1
|
|
|||
Amortization of debt issuance costs
|
3.5
|
|
|
3.4
|
|
|
3.7
|
|
|||
Loss on early extinguishment of debt
|
29.7
|
|
|
—
|
|
|
11.2
|
|
|||
Foreign currency losses, net
|
3.7
|
|
|
2.8
|
|
|
4.7
|
|
|||
Miscellaneous, net
|
1.0
|
|
|
1.2
|
|
|
1.6
|
|
|||
Other expenses, net
|
116.5
|
|
|
92.7
|
|
|
112.3
|
|
|||
Income from continuing operations before income taxes
|
80.6
|
|
|
126.1
|
|
|
101.2
|
|
|||
Provision for income taxes
|
48.6
|
|
|
44.8
|
|
|
35.4
|
|
|||
Income from continuing operations, net of taxes
|
32.0
|
|
|
81.3
|
|
|
65.8
|
|
|||
Loss from discontinued operations, net of taxes
|
(30.4
|
)
|
|
(10.1
|
)
|
|
(1.8
|
)
|
|||
Net income
|
$
|
1.6
|
|
|
$
|
71.2
|
|
|
$
|
64.0
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|||
Currency translation adjustment, net of tax
(a)
|
(4.1
|
)
|
|
(1.5
|
)
|
|
(8.3
|
)
|
|||
Amortization of pension related costs, net of tax
(b)(e)
|
7.7
|
|
|
9.4
|
|
|
3.6
|
|
|||
Pension re-measurement, net of tax
(c)
|
53.3
|
|
|
(15.4
|
)
|
|
(45.9
|
)
|
|||
Pension curtailment gain
|
—
|
|
|
0.2
|
|
|
—
|
|
|||
Revaluation of derivative financial instruments, net of tax
(d)
|
1.5
|
|
|
—
|
|
|
—
|
|
|||
Other comprehensive income (loss)
|
58.4
|
|
|
(7.3
|
)
|
|
(50.6
|
)
|
|||
Total comprehensive income
|
$
|
60.0
|
|
|
$
|
63.9
|
|
|
$
|
13.4
|
|
(a)
|
Net of tax expense of
$3.3 million
,
$1.0 million
and
$1.8 million
for each year ended
December 31, 2013
,
2012
and
2011
, respectively.
|
(b)
|
Net of tax benefit of
$(1.2) million
,
$(1.0) million
and
$(2.0) million
for each year ended
December 31, 2013
.
2012
and
2011
, respectively.
|
(c)
|
Net of tax (benefit) expense of
$(33.5) million
,
$7.2 million
and
$30.1 million
for each year ended
December 31, 2013
,
2012
and
2011
, respectively.
|
(d)
|
Net of tax benefit of
$(1.0) million
for the year ended
December 31, 2013
.
|
(e)
|
This other comprehensive income component is included in the computation of net periodic benefit (income) costs. See Note 15, “Savings Plan, Pension and Post-Retirement Benefits,” for additional information regarding net periodic benefit (income) costs.
|
|
RCPC Preferred Stock
|
|
Additional Paid-In-Capital
|
|
Accumulated Deficit
|
|
Accumulated Other Comprehensive Loss
|
|
Total Stockholder's Deficiency
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance, January 1, 2011
|
$
|
54.6
|
|
|
$
|
943.2
|
|
|
$
|
(1,504.6
|
)
|
|
$
|
(150.3
|
)
|
|
$
|
(657.1
|
)
|
Stock-based compensation amortization
|
|
|
|
1.9
|
|
|
|
|
|
|
|
|
1.9
|
|
|||||
Excess tax benefits from stock-based compensation
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
0.2
|
|
|||||
Net income
|
|
|
|
|
|
|
64.0
|
|
|
|
|
|
64.0
|
|
|||||
Other comprehensive loss, net
(a)
|
|
|
|
|
|
|
|
|
|
(50.6
|
)
|
|
(50.6
|
)
|
|||||
Balance, December 31, 2011
|
54.6
|
|
|
945.3
|
|
|
(1,440.6
|
)
|
|
(200.9
|
)
|
|
(641.6
|
)
|
|||||
Stock-based compensation amortization
|
|
|
|
0.3
|
|
|
|
|
|
|
|
|
0.3
|
|
|||||
Excess tax benefits from stock-based compensation
|
|
|
|
0.7
|
|
|
|
|
|
|
|
|
0.7
|
|
|||||
Net income
|
|
|
|
|
|
|
71.2
|
|
|
|
|
|
71.2
|
|
|||||
Other comprehensive loss, net
(a)
|
|
|
|
|
|
|
|
|
|
(7.3
|
)
|
|
(7.3
|
)
|
|||||
Balance, December 31, 2012
|
54.6
|
|
|
946.3
|
|
|
(1,369.4
|
)
|
|
(208.2
|
)
|
|
(576.7
|
)
|
|||||
Stock-based compensation amortization
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
0.2
|
|
|||||
Net income
|
|
|
|
|
|
|
1.6
|
|
|
|
|
|
1.6
|
|
|||||
Other comprehensive income, net
(a)
|
|
|
|
|
|
|
|
|
|
58.4
|
|
|
58.4
|
|
|||||
Balance, December 31, 2013
|
$
|
54.6
|
|
|
$
|
946.5
|
|
|
$
|
(1,367.8
|
)
|
|
$
|
(149.8
|
)
|
|
$
|
(516.5
|
)
|
(a)
|
See Note 17, “Accumulated Other Comprehensive Loss,” regarding the changes in the accumulated balances for each component of other comprehensive income during the years ended December 31,
2013
, 2012 and 2011.
|
|
Year Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
||||||
Net income
|
$
|
1.6
|
|
|
$
|
71.2
|
|
|
$
|
64.0
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
76.7
|
|
|
64.9
|
|
|
60.6
|
|
|||
Amortization of debt discount
|
1.3
|
|
|
1.9
|
|
|
2.3
|
|
|||
Stock compensation amortization
|
0.2
|
|
|
0.3
|
|
|
1.9
|
|
|||
Provision for deferred income taxes
|
33.4
|
|
|
29.6
|
|
|
12.2
|
|
|||
Loss on early extinguishment of debt
|
29.7
|
|
|
—
|
|
|
11.2
|
|
|||
Amortization of debt issuance costs
|
3.5
|
|
|
3.4
|
|
|
3.7
|
|
|||
Insurance proceeds for property, plant and equipment
|
(13.1
|
)
|
|
—
|
|
|
—
|
|
|||
(Gain) loss on sale of certain assets
|
(2.9
|
)
|
|
0.4
|
|
|
—
|
|
|||
Pension and other post-retirement (income) costs
|
(0.2
|
)
|
|
4.0
|
|
|
5.2
|
|
|||
Change in assets and liabilities:
|
|
|
|
|
|
||||||
Decrease (increase) in trade receivables
|
40.1
|
|
|
(4.7
|
)
|
|
(18.3
|
)
|
|||
Decrease (increase) in inventories
|
10.2
|
|
|
(4.4
|
)
|
|
3.6
|
|
|||
Increase in prepaid expenses and other current assets
|
(12.3
|
)
|
|
(14.4
|
)
|
|
(12.3
|
)
|
|||
Increase in accounts payable
|
19.1
|
|
|
5.3
|
|
|
8.0
|
|
|||
Increase in accrued expenses and other current liabilities
|
1.4
|
|
|
38.5
|
|
|
22.0
|
|
|||
Pension and other post-retirement plan contributions
|
(18.5
|
)
|
|
(29.8
|
)
|
|
(31.5
|
)
|
|||
Purchases of permanent displays
|
(44.5
|
)
|
|
(43.2
|
)
|
|
(41.3
|
)
|
|||
Other, net
|
(2.4
|
)
|
|
(18.9
|
)
|
|
(3.3
|
)
|
|||
Net cash provided by operating activities
|
123.3
|
|
|
104.1
|
|
|
88.0
|
|
|||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
||||||
Capital expenditures
|
(28.6
|
)
|
|
(20.9
|
)
|
|
(13.9
|
)
|
|||
Business acquisitions, net of cash and cash equivalents acquired
|
(627.6
|
)
|
|
(66.2
|
)
|
|
(39.0
|
)
|
|||
Insurance proceeds for property, plant and equipment
|
13.1
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from the sale of certain assets
|
3.7
|
|
|
0.8
|
|
|
0.3
|
|
|||
Net cash used in investing activities
|
(639.4
|
)
|
|
(86.3
|
)
|
|
(52.6
|
)
|
|||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
||||||
Net (decrease) increase in short-term borrowings and overdraft
|
(6.3
|
)
|
|
6.3
|
|
|
0.2
|
|
|||
Borrowings under the Acquisition Term Loan
|
698.3
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from the issuance of the 5¾% Senior Notes
|
500.0
|
|
|
—
|
|
|
—
|
|
|||
Borrowings under the 2011 Term Loan
|
—
|
|
|
—
|
|
|
796.0
|
|
|||
Repayments under the 2011 Term Loan
|
(113.0
|
)
|
|
(8.0
|
)
|
|
(4.0
|
)
|
|||
Repayment of the 9¾% Senior Secured Notes
|
(330.0
|
)
|
|
—
|
|
|
—
|
|
|||
Repayment of Contributed Loan
|
(48.6
|
)
|
|
—
|
|
|
—
|
|
|||
Repayments under the 2010 Term Loan Facility
|
—
|
|
|
—
|
|
|
(794.0
|
)
|
|||
Payment of financing costs
|
(48.8
|
)
|
|
(0.4
|
)
|
|
(4.3
|
)
|
|||
Other financing activities
|
(2.6
|
)
|
|
(1.3
|
)
|
|
(1.4
|
)
|
|||
Net cash provided by (used in) financing activities
|
649.0
|
|
|
(3.4
|
)
|
|
(7.5
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
(5.1
|
)
|
|
0.2
|
|
|
(2.9
|
)
|
|||
Net increase in cash and cash equivalents
|
127.8
|
|
|
14.6
|
|
|
25.0
|
|
|||
Cash and cash equivalents at beginning of period
|
116.3
|
|
|
101.7
|
|
|
76.7
|
|
|||
Cash and cash equivalents at end of period
|
$
|
244.1
|
|
|
$
|
116.3
|
|
|
$
|
101.7
|
|
Supplemental schedule of cash flow information:
|
|
|
|
|
|
||||||
Cash paid during the period for:
|
|
|
|
|
|
||||||
Interest
|
$
|
78.7
|
|
|
$
|
84.8
|
|
|
$
|
91.2
|
|
Income taxes, net of refunds
|
12.5
|
|
|
17.8
|
|
|
20.3
|
|
|
Inventory
|
|
Business Interruption and Property
|
|
Total
|
||||||
Insurance proceeds received in 2011
|
$
|
4.7
|
|
|
$
|
15.0
|
|
|
$
|
19.7
|
|
Insurance proceeds received in 2012
|
3.7
|
|
|
2.9
|
|
|
6.6
|
|
|||
Total proceeds received as of December 31, 2012
|
8.4
|
|
|
17.9
|
|
|
26.3
|
|
|||
Income from insurance recoveries recognized in 2011 and 2012
(a)
|
(3.5
|
)
|
|
(13.9
|
)
|
|
(17.4
|
)
|
|||
Deferred income balance as of December 31, 2012
|
4.9
|
|
|
4.0
|
|
|
8.9
|
|
|||
Insurance proceeds received in 2013
|
3.4
|
|
|
14.1
|
|
|
17.5
|
|
|||
Gain from insurance proceeds for the year ended December 31, 2013
(a)
|
(8.3
|
)
|
|
(18.1
|
)
|
|
(26.4
|
)
|
|||
Deferred income balance as of December 31, 2013
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
As of October 9, 2013
|
||
Share purchase price
(1)
|
$
|
545.6
|
|
Leakages
(2)
|
(3.8
|
)
|
|
Shareholder loans
(3)
|
122.7
|
|
|
Total purchase price
|
$
|
664.5
|
|
(2)
|
According to the Purchase Agreement, certain leakages, such as certain fees and other items incurred by Colomer between June 30, 2013 and the Acquisition Date, were reductions to the purchase price.
|
(3)
|
The purchase price included the payment of Colomer’s shareholder loans for
$122.7 million
, which included the principal and accrued interest owed as of the Acquisition Date. As such, this liability was settled on the Acquisition Date.
|
|
Fair Values at October 9, 2013
|
||
Cash and cash equivalents
|
$
|
36.9
|
|
Trade receivables
|
83.9
|
|
|
Inventories
|
75.1
|
|
|
Prepaid expenses and other
|
31.3
|
|
|
Property, plant and equipment
|
96.7
|
|
|
Intangible assets
|
292.7
|
|
|
Goodwill
|
255.7
|
|
|
Deferred tax asset - non-current
|
53.1
|
|
|
Other assets
|
1.9
|
|
|
Total assets acquired
|
927.3
|
|
|
Accounts payable
|
48.0
|
|
|
Accrued expenses and other
|
65.6
|
|
|
Long-term debt
|
0.9
|
|
|
Long-term pension and other benefit plan liabilities
|
4.5
|
|
|
Deferred tax liability
|
123.3
|
|
|
Other long-term liabilities
|
20.5
|
|
|
Total liabilities assumed
|
262.8
|
|
|
Total consideration
|
$
|
664.5
|
|
|
Fair Values at October 9, 2013
|
|
Weighted Average Remaining Useful Life (in years)
|
||
Trade names, indefinite-lived
|
$
|
108.6
|
|
|
Indefinite
|
Trade names, finite-lived
|
109.4
|
|
|
5 - 20
|
|
Customer relationships
|
57.0
|
|
|
10 - 15
|
|
License agreement
|
4.1
|
|
|
10
|
|
Internally-developed IP
|
13.6
|
|
|
10
|
|
Total acquired intangible assets
|
$
|
292.7
|
|
|
|
|
Unaudited Pro Forma Results
|
||||||
|
Year Ended December 31,
|
||||||
|
2013
|
|
2012
|
||||
Net sales
|
$
|
1,908.9
|
|
|
$
|
1,911.6
|
|
Income from continuing operations, before income taxes
|
135.2
|
|
|
127.2
|
|
|
Purchase Price
|
|
Total Net Assets Acquired
|
|
Purchased Intangible Assets
|
|
Goodwill
|
||||||||
2012
|
|
|
|
|
|
|
|
||||||||
Pure Ice
(1)
|
$
|
66.2
|
|
|
$
|
—
|
|
|
$
|
43.1
|
|
|
$
|
23.1
|
|
|
|
|
|
|
|
|
|
||||||||
2011
|
|
|
|
|
|
|
|
||||||||
SinfulColors
(2)
|
$
|
39.0
|
|
|
$
|
4.1
|
|
|
$
|
22.8
|
|
|
$
|
12.1
|
|
(1)
|
On
July 2, 2012
, the Company acquired certain assets of Bari Cosmetics, Ltd., including trademarks and other intellectual property related to Pure Ice nail enamel and Bon Bons cosmetics brands (the “Pure Ice Acquisition”). The Company paid
|
|
Restructuring Charges and Other, Net
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
Employee severance and other personnel benefits
|
|
Other
|
|
Total Restructuring Charges
|
|
Allowances and Returns
|
|
Inventory Write-offs
|
|
Other Charges
|
|
Total Restructuring and Related Charges
|
||||||||||||||
Charges incurred through December 31, 2013
|
$
|
9.1
|
|
|
$
|
0.5
|
|
|
$
|
9.6
|
|
|
$
|
7.4
|
|
|
$
|
4.0
|
|
|
$
|
0.4
|
|
|
$
|
21.4
|
|
Total expected charges
|
$
|
9.6
|
|
|
$
|
0.7
|
|
|
$
|
10.3
|
|
|
$
|
7.4
|
|
|
$
|
4.0
|
|
|
$
|
0.5
|
|
|
$
|
22.2
|
|
|
Restructuring Charges and Other, Net
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
Employee Severance and Other Personnel Benefits
|
|
Other
|
|
Total Restructuring Charges and Other, Net
|
|
Returns (a)
|
|
Inventory Write-offs (b)
|
|
Other Charges (c)
|
|
Total Restructuring and Related Charges
|
||||||||||||||
Charges incurred through December 31, 2012
(d)
|
$
|
18.4
|
|
|
$
|
2.3
|
|
|
$
|
20.7
|
|
|
$
|
1.6
|
|
|
$
|
1.2
|
|
|
$
|
0.6
|
|
|
$
|
24.1
|
|
Charges (benefits) incurred for the year ended December 31, 2013
(e)
|
2.9
|
|
|
(0.2
|
)
|
|
2.7
|
|
|
—
|
|
|
0.2
|
|
|
0.2
|
|
|
3.1
|
|
|||||||
Cumulative charges incurred through December 31, 2013
|
$
|
21.3
|
|
|
$
|
2.1
|
|
|
$
|
23.4
|
|
|
$
|
1.6
|
|
|
$
|
1.4
|
|
|
$
|
0.8
|
|
|
$
|
27.2
|
|
Total expected net charges
|
$
|
21.3
|
|
|
$
|
2.1
|
|
|
$
|
23.4
|
|
|
$
|
1.6
|
|
|
$
|
1.4
|
|
|
$
|
0.8
|
|
|
$
|
27.2
|
|
(a)
|
Returns are recorded as a reduction to net sales in the Company’s Consolidated Statements of Income and Comprehensive Income.
|
(b)
|
Inventory write-offs are recorded within cost of sales in the Company’s Consolidated Statements of Income and Comprehensive Income.
|
(c)
|
Other charges are recorded within SG&A expenses within the Company’s Consolidated Statements of Income and Comprehensive Income.
|
(d)
|
Included within the
$18.4 million
of employee severance and other personnel benefits is a net pension curtailment gain of
$1.5 million
recognized in the year ended December 31, 2012.
|
(e)
|
Included within the
$(0.2) million
of other is a
$2.5 million
gain on the July 2013 sale of the Company's manufacturing facility in France, which was recognized in the third quarter of 2013.
|
|
|
|
|
|
|
|
Utilized, Net
|
|
|
||||||||||||||
Balance
Beginning of Year
|
|
(Income)
Expense, Net
(a)
|
|
Foreign Currency Translation
|
|
Cash
|
|
Noncash
|
|
Balance End of Year
|
|||||||||||||
2013
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
December 2013 Program:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Employee severance and other personnel benefits
|
$
|
—
|
|
|
$
|
9.1
|
|
|
$
|
—
|
|
|
$
|
(0.1
|
)
|
|
$
|
—
|
|
|
$
|
9.0
|
|
Other
|
—
|
|
|
0.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.5
|
|
||||||
September 2012 Program:
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Employee severance and other personnel benefits
|
18.0
|
|
|
2.9
|
|
|
(0.1
|
)
|
|
(18.1
|
)
|
|
—
|
|
|
2.7
|
|
||||||
Other
|
0.9
|
|
|
2.3
|
|
|
—
|
|
|
(1.7
|
)
|
|
—
|
|
|
1.5
|
|
||||||
Lease exit
|
0.3
|
|
|
—
|
|
|
—
|
|
|
(0.3
|
)
|
|
—
|
|
|
—
|
|
||||||
Total restructuring reserve
|
$
|
19.2
|
|
|
14.8
|
|
|
$
|
(0.1
|
)
|
|
$
|
(20.2
|
)
|
|
$
|
—
|
|
|
$
|
13.7
|
|
|
Gain on sale of France facility
|
|
|
(2.5
|
)
|
|
|
|
|
|
|
|
|
|||||||||||
Portion of restructuring charges recorded within loss from discontinued operations
(b)
|
|
|
(8.8
|
)
|
|
|
|
|
|
|
|
|
|||||||||||
Total restructuring charges and other, net from continuing operations
|
|
|
$
|
3.5
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
2012
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
September 2012 Program:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Employee severance and other personnel benefits
|
$
|
—
|
|
|
$
|
18.4
|
|
|
$
|
0.4
|
|
|
$
|
(2.3
|
)
|
|
$
|
1.5
|
|
|
$
|
18.0
|
|
Other
|
—
|
|
|
2.3
|
|
|
—
|
|
|
(0.6
|
)
|
|
(0.8
|
)
|
|
0.9
|
|
||||||
Lease exit
|
1.0
|
|
|
—
|
|
|
—
|
|
|
(0.7
|
)
|
|
—
|
|
|
0.3
|
|
||||||
Total restructuring reserve
|
$
|
1.0
|
|
|
20.7
|
|
|
$
|
0.4
|
|
|
$
|
(3.6
|
)
|
|
$
|
0.7
|
|
|
$
|
19.2
|
|
|
Portion of restructuring charges recorded within loss from discontinued operations (b)
|
|
|
(0.2
|
)
|
|
|
|
|
|
|
|
|
|||||||||||
Total restructuring charges and other, net from continuing operations
|
|
|
$
|
20.5
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Net sales
|
$
|
13.8
|
|
|
$
|
29.7
|
|
|
$
|
33.9
|
|
Loss from discontinued operations, before taxes
(a)
|
(30.8
|
)
|
|
(10.5
|
)
|
|
(2.4
|
)
|
|||
Benefit from income taxes
|
(0.4
|
)
|
|
(0.4
|
)
|
|
(0.6
|
)
|
|||
Loss from discontinued operations, net of taxes
|
(30.4
|
)
|
|
(10.1
|
)
|
|
(1.8
|
)
|
|
December 31,
|
||||||
|
2013
|
|
2012
|
||||
Cash and cash equivalents
|
$
|
0.9
|
|
|
$
|
4.5
|
|
Trade receivables, net
|
1.9
|
|
|
4.6
|
|
||
Inventories
|
—
|
|
|
1.9
|
|
||
Other current assets
|
—
|
|
|
0.5
|
|
||
Total current assets
|
2.8
|
|
|
11.5
|
|
||
Other assets
|
—
|
|
|
0.1
|
|
||
Total assets
|
$
|
2.8
|
|
|
$
|
11.6
|
|
|
|
|
|
||||
Accounts payable
|
$
|
4.7
|
|
|
$
|
5.5
|
|
Accrued expenses and other
|
27.6
|
|
|
11.7
|
|
||
Total current liabilities
|
32.3
|
|
|
17.2
|
|
||
Other long-term liabilities
|
2.8
|
|
|
2.8
|
|
||
Total liabilities
|
$
|
35.1
|
|
|
$
|
20.0
|
|
|
December 31,
|
||||||
|
2013
|
|
2012
|
||||
Raw materials and supplies
|
$
|
50.8
|
|
|
$
|
36.6
|
|
Work-in-process
|
12.8
|
|
|
8.8
|
|
||
Finished goods
|
111.4
|
|
|
69.3
|
|
||
|
$
|
175.0
|
|
|
$
|
114.7
|
|
|
December 31,
|
||||||
|
2013
|
|
2012
|
||||
Prepaid expenses
|
$
|
22.5
|
|
|
$
|
20.7
|
|
Other
|
38.9
|
|
|
24.7
|
|
||
|
$
|
61.4
|
|
|
$
|
45.4
|
|
|
December 31,
|
||||||
|
2013
|
|
2012
|
||||
Land and improvements
|
$
|
12.9
|
|
|
$
|
1.9
|
|
Building and improvements
|
86.6
|
|
|
62.3
|
|
||
Machinery, equipment and capital leases
|
193.5
|
|
|
142.7
|
|
||
Office furniture, fixtures and capitalized software
|
107.0
|
|
|
87.3
|
|
||
Leasehold improvements
|
16.5
|
|
|
12.5
|
|
||
Construction-in-progress
|
22.5
|
|
|
18.8
|
|
||
Property, plant and equipment, gross
|
439.0
|
|
|
325.5
|
|
||
Accumulated depreciation
|
(243.1
|
)
|
|
(226.0
|
)
|
||
Property, plant and equipment, net
|
$
|
195.9
|
|
|
$
|
99.5
|
|
|
Consumer
|
|
Professional
|
|
Total
|
||||||
Balance at January 1, 2012
|
$
|
194.7
|
|
|
$
|
—
|
|
|
$
|
194.7
|
|
Goodwill acquired
|
23.1
|
|
|
—
|
|
|
23.1
|
|
|||
Balance at December 31, 2012
|
217.8
|
|
|
—
|
|
|
217.8
|
|
|||
Goodwill acquired
|
—
|
|
|
255.7
|
|
|
255.7
|
|
|||
Foreign currency translation adjustment
|
0.1
|
|
|
1.1
|
|
|
1.2
|
|
|||
Balance at December 31, 2013
|
$
|
217.9
|
|
|
$
|
256.8
|
|
|
$
|
474.7
|
|
|
December 31, 2013
|
||||||||||||
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
|
Weighted Average Useful Life (in Years)
|
||||||
Finite-lived intangible assets:
|
|
|
|
|
|
|
|
||||||
Trademarks
|
$
|
137.9
|
|
|
$
|
(10.9
|
)
|
|
$
|
127.0
|
|
|
14
|
Customer relationships
|
106.1
|
|
|
(6.7
|
)
|
|
99.4
|
|
|
16
|
|||
Patents and Internally-Developed IP
|
15.8
|
|
|
(1.3
|
)
|
|
14.5
|
|
|
10
|
|||
Licenses
|
4.2
|
|
|
(0.1
|
)
|
|
4.1
|
|
|
10
|
|||
Total finite-lived intangible assets
|
$
|
264.0
|
|
|
$
|
(19.0
|
)
|
|
$
|
245.0
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Indefinite-lived intangible assets:
|
|
|
|
|
|
|
|
||||||
Trade Names
|
$
|
109.7
|
|
|
$
|
—
|
|
|
$
|
109.7
|
|
|
|
Total indefinite-lived intangible assets
|
$
|
109.7
|
|
|
$
|
—
|
|
|
$
|
109.7
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total intangible assets
|
$
|
373.7
|
|
|
$
|
(19.0
|
)
|
|
$
|
354.7
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
December 31, 2012
|
||||||||||||
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
|
Weighted Average Useful Life (in Years)
|
||||||
Finite-lived intangible assets:
|
|
|
|
|
|
|
|
||||||
Customer relationships
|
$
|
48.8
|
|
|
$
|
(2.9
|
)
|
|
$
|
45.9
|
|
|
18
|
Trademarks
|
38.1
|
|
|
(16.3
|
)
|
|
21.8
|
|
|
10
|
|||
Patents
|
11.6
|
|
|
(10.5
|
)
|
|
1.1
|
|
|
10
|
|||
Total finite-lived intangible assets
|
$
|
98.5
|
|
|
$
|
(29.7
|
)
|
|
$
|
68.8
|
|
|
|
|
December 31,
|
||||||
|
2013
|
|
2012
|
||||
Sales returns and allowances
|
$
|
91.5
|
|
|
$
|
87.0
|
|
Compensation and related benefits
|
74.5
|
|
|
56.4
|
|
||
Advertising and promotional costs
|
42.9
|
|
|
38.6
|
|
||
Taxes
|
28.4
|
|
|
15.5
|
|
||
Interest
|
13.8
|
|
|
13.7
|
|
||
Restructuring reserve
|
13.7
|
|
|
19.2
|
|
||
Other
|
48.8
|
|
|
34.3
|
|
||
|
$
|
313.6
|
|
|
$
|
264.7
|
|
|
December 31,
|
||||||
|
2013
|
|
2012
|
||||
Amended Term Loan Facility: Acquisition Term Loan due 2019, net of discounts (see (a) below)
|
$
|
698.3
|
|
|
$
|
—
|
|
Amended Term Loan Facility: 2011 Term Loan due 2017, net of discounts (see (a) and (b) below)
|
670.1
|
|
|
780.9
|
|
||
Amended Revolving Credit Facility (see (a) and (b) below)
|
—
|
|
|
—
|
|
||
5¾% Senior Notes due 2021 (see (c) below)
|
500.0
|
|
|
—
|
|
||
9¾% Senior Secured Notes due 2015, net of discounts (see (d) below)
|
—
|
|
|
328.0
|
|
||
Non-Contributed Loan portion of the Amended and Restated Senior Subordinated Term Loan due 2014 (see (e) below)
|
58.4
|
|
|
58.4
|
|
||
Contributed Loan portion of the Amended and Restated Senior Subordinated Term Loan due 2013 (see (e) below)
|
—
|
|
|
48.6
|
|
||
Spanish Government Loan due 2025 (see (f) below)
|
0.9
|
|
|
—
|
|
||
|
1,927.7
|
|
|
1,215.9
|
|
||
Less current portion of long-term debt
|
(65.4
|
)
|
|
(21.5
|
)
|
||
Less current portion of long-term debt - affiliates (see (e) below)
|
—
|
|
|
(48.6
|
)
|
||
|
$
|
1,862.3
|
|
|
$
|
1,145.8
|
|
Excess Availability
|
|
Alternate Base Rate Loans
|
|
Eurodollar Loans, Eurocurrency Loan or Local Rate Loans
|
Greater than or equal to $92,000,000
|
|
0.50%
|
|
1.50%
|
Less than $92,000,000 but greater than or equal to $46,000,000
|
|
0.75%
|
|
1.75%
|
Less than $46,000,000
|
|
1.00%
|
|
2.00%
|
Year
|
|
Percentage
|
|
2016
|
|
104.313
|
%
|
2017
|
|
102.875
|
%
|
2018
|
|
101.438
|
%
|
2019 and thereafter
|
|
100.000
|
%
|
•
|
incur or guarantee additional indebtedness (“Limitation on Debt”);
|
•
|
pay dividends, make repayments on indebtedness that is subordinated in right of payment to the 5¾% Senior Notes and make other “restricted payments” (“Limitation on Restricted Payments”);
|
•
|
make certain investments;
|
•
|
create liens on their assets to secure debt;
|
•
|
enter into transactions with affiliates;
|
•
|
merge, consolidate or amalgamate with another company (“Successor Company”);
|
•
|
transfer and sell assets (“Limitation on Asset Sales”); and
|
•
|
permit restrictions on the payment of dividends by Products Corporation’s subsidiaries (“Limitation on Dividends from Subsidiaries”).
|
i.
|
modify the interest rate on the Non-Contributed Loan from its prior
12%
fixed rate to a floating rate of LIBOR plus
7%
, with a
1.5%
LIBOR floor, resulting in an interest rate of approximately
8.5%
per annum (or a
3.5%
reduction per annum) upon the effectiveness of the Amended and Restated Senior Subordinated Term Loan Agreement. Interest under the Amended and Restated Senior Subordinated Term Loan Agreement is payable quarterly in arrears in cash;
|
ii.
|
insert prepayment premiums such that Products Corporation may optionally prepay the Non-Contributed Loan (a) from November 1, 2013 through April 30, 2014 with a
2%
prepayment premium on the aggregate principal amount of the Non-Contributed Loan being prepaid, and (b) from May 1, 2014 through maturity on October 8, 2014 with no prepayment premium; and
|
iii.
|
designate Citibank, N.A. as the administrative agent for the Non-Contributed Loan.
|
Years Ended December 31,
|
|
Long-Term Debt Maturities
|
|
||
2014
|
|
$
|
65.4
|
|
(a)
|
2015
|
|
7.0
|
|
(b)
|
|
2016
|
|
7.1
|
|
(b)
|
|
2017
|
|
682.1
|
|
(c)
|
|
2018
|
|
7.1
|
|
(b)
|
|
Thereafter
|
|
1,165.6
|
|
(d)
|
|
Total long-term debt
|
|
1,934.3
|
|
|
|
Discounts
|
|
(6.6
|
)
|
|
|
Total long-term debt, net of discounts
|
|
$
|
1,927.7
|
|
|
(a)
|
Amount includes the
$58.4 million
aggregate principal amount outstanding under the Non-Contributed Loan which matures on October 8, 2014 and the quarterly amortization payments required under the Acquisition Term Loan.
|
(b)
|
Amount includes the quarterly amortization payments required under the Acquisition Term Loan.
|
(c)
|
Amount includes the
$675 million
aggregate principal amount outstanding as of December 31, 2013 under the 2011 Term Loan which matures on November 19, 2017 and the quarterly amortization payments required under the Acquisition Term Loan.
|
(d)
|
Amount is comprised of (i) the aggregate principal amount expected to be outstanding under the
$700 million
Acquisition Term Loan assuming a maturity date of October 9, 2019 and (ii) the
$500 million
aggregate principal amount outstanding as of December 31, 2013 under the 5¾% Senior Notes, which mature on February 21, 2021.
|
•
|
Level 1: Fair valuing the asset or liability using observable inputs, such as quoted prices in active markets for identical assets or liabilities;
|
•
|
Level 2: Fair valuing the asset or liability using inputs other than quoted prices that are observable for the applicable asset or liability, either directly or indirectly, such as quoted prices for similar (as opposed to identical) assets or
|
•
|
Level 3: Fair valuing the asset or liability using unobservable inputs that reflect the Company’s own assumptions regarding the applicable asset or liability.
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Derivatives:
|
|
|
|
|
|
|
|
||||||||
FX Contracts
(a)
|
$
|
1.0
|
|
|
$
|
—
|
|
|
$
|
1.0
|
|
|
$
|
—
|
|
2013 Interest Rate Swap
(b)
|
2.5
|
|
|
—
|
|
|
2.5
|
|
|
—
|
|
||||
Total assets at fair value
|
$
|
3.5
|
|
|
$
|
—
|
|
|
$
|
3.5
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Derivatives:
|
|
|
|
|
|
|
|
||||||||
FX Contracts
(a)
|
$
|
0.2
|
|
|
$
|
—
|
|
|
$
|
0.2
|
|
|
$
|
—
|
|
Total liabilities at fair value
|
$
|
0.2
|
|
|
$
|
—
|
|
|
$
|
0.2
|
|
|
$
|
—
|
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Derivatives:
|
|
|
|
|
|
|
|
||||||||
FX Contracts
(a)
|
$
|
0.1
|
|
|
$
|
—
|
|
|
$
|
0.1
|
|
|
$
|
—
|
|
Total assets at fair value
|
$
|
0.1
|
|
|
$
|
—
|
|
|
$
|
0.1
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Derivatives:
|
|
|
|
|
|
|
|
||||||||
FX Contracts
(a)
|
$
|
0.4
|
|
|
$
|
—
|
|
|
$
|
0.4
|
|
|
$
|
—
|
|
Total liabilities at fair value
|
$
|
0.4
|
|
|
$
|
—
|
|
|
$
|
0.4
|
|
|
$
|
—
|
|
(a)
|
The fair value of the Company’s FX Contracts was measured based on observable market transactions of spot and forward rates on the respective dates. See Note 13, “Financial Instruments.”
|
(b)
|
The fair value of the Company's 2013 Interest Rate Swap was measured based on the implied forward rates from the U.S. Dollar three-month LIBOR yield curve as of
December 31, 2013
. See Note 13, “Financial Instruments.”
|
|
Fair Value
|
|
|
||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Carrying Value
|
||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Long-term debt, including current portion
|
$
|
—
|
|
|
$
|
1,931.9
|
|
|
$
|
—
|
|
|
$
|
1,931.9
|
|
|
$
|
1,927.7
|
|
|
Fair Value
|
|
|
||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Carrying Value
|
||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Long-term debt, including current portion
|
$
|
—
|
|
|
$
|
1,245.9
|
|
|
$
|
—
|
|
|
$
|
1,245.9
|
|
|
$
|
1,215.9
|
|
(a)
|
Fair Values of Derivative Financial Instruments in Consolidated Balance Sheets:
|
|
Fair Values of Derivative Instruments
|
||||||||||||||||||
|
Assets
|
|
Liabilities
|
||||||||||||||||
|
Balance Sheet
|
|
December 31,
2013 |
|
December 31,
2012 |
|
Balance Sheet
|
|
December 31,
2013 |
|
December 31,
2012 |
||||||||
|
Classification
|
|
Fair Value
|
|
Fair Value
|
|
Classification
|
|
Fair Value
|
|
Fair Value
|
||||||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
2013 Interest Rate Swap
(i)
|
Other assets
|
|
$
|
2.5
|
|
|
$
|
—
|
|
|
|
|
|
|
|
||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
FX Contracts
(ii)
|
Prepaid expenses and other
|
|
1.0
|
|
|
0.1
|
|
|
Accrued Expenses
|
|
$
|
0.2
|
|
|
$
|
0.4
|
|
|
Amount of Gain (Loss) Recognized in Other Comprehensive Income
|
|||||||||||
Year Ended December 31,
|
||||||||||||
2013
|
|
2012
|
|
2011
|
||||||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|||||||
2013 Interest Rate Swap
|
$
|
2.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Income Statement Classification
|
|
Amount of Gain (Loss) Recognized in Net Income (Loss)
|
|||||||||||
|
Year Ended December 31,
|
|||||||||||||
|
2013
|
|
2012
|
|
2011
|
|||||||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|||||||
FX Contracts
|
Foreign currency losses, net
|
|
$
|
2.2
|
|
|
$
|
(1.9
|
)
|
|
$
|
(1.1
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Income from continuing operations before income taxes:
|
|
|
|
|
|
||||||
United States
|
$
|
36.0
|
|
|
$
|
108.4
|
|
|
$
|
58.1
|
|
Foreign
|
44.6
|
|
|
17.7
|
|
|
43.1
|
|
|||
|
$
|
80.6
|
|
|
$
|
126.1
|
|
|
$
|
101.2
|
|
Provision for (benefit from) income taxes:
|
|
|
|
|
|
||||||
United States federal
|
$
|
27.4
|
|
|
$
|
43.1
|
|
|
$
|
33.2
|
|
State and local
|
13.8
|
|
|
(9.8
|
)
|
|
(3.8
|
)
|
|||
Foreign
|
7.4
|
|
|
11.5
|
|
|
6.0
|
|
|||
|
$
|
48.6
|
|
|
$
|
44.8
|
|
|
$
|
35.4
|
|
Current:
|
|
|
|
|
|
||||||
United States federal
|
$
|
3.2
|
|
|
$
|
2.3
|
|
|
$
|
0.8
|
|
State and local
|
0.7
|
|
|
2.2
|
|
|
0.7
|
|
|||
Foreign
|
11.3
|
|
|
10.7
|
|
|
21.7
|
|
|||
|
15.2
|
|
|
15.2
|
|
|
23.2
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
United States federal
|
32.6
|
|
|
76.0
|
|
|
60.1
|
|
|||
State and local
|
22.2
|
|
|
(5.2
|
)
|
|
(1.4
|
)
|
|||
Foreign
|
(1.7
|
)
|
|
3.0
|
|
|
(14.4
|
)
|
|||
|
53.1
|
|
|
73.8
|
|
|
44.3
|
|
|||
Benefits of operating loss carryforwards:
|
|
|
|
|
|
||||||
United States federal
|
(8.4
|
)
|
|
(35.2
|
)
|
|
(27.7
|
)
|
|||
State and local
|
(9.1
|
)
|
|
(6.8
|
)
|
|
(3.1
|
)
|
|||
Foreign
|
(2.2
|
)
|
|
(2.2
|
)
|
|
(1.3
|
)
|
|||
|
(19.7
|
)
|
|
(44.2
|
)
|
|
(32.1
|
)
|
|||
|
$
|
48.6
|
|
|
$
|
44.8
|
|
|
$
|
35.4
|
|
|
Year Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Computed income tax expense
|
$
|
28.2
|
|
|
$
|
44.1
|
|
|
$
|
35.4
|
|
State and local taxes, net of U.S. federal income tax benefit
|
8.9
|
|
|
3.9
|
|
|
(2.5
|
)
|
|||
Foreign and U.S. tax effects attributable to operations outside the U.S.
|
(8.2
|
)
|
|
(7.4
|
)
|
|
3.0
|
|
|||
Reduction in valuation allowance
|
—
|
|
|
(15.8
|
)
|
|
(16.9
|
)
|
|||
Foreign dividends and earnings taxable in the U.S.
|
11.0
|
|
|
12.7
|
|
|
15.2
|
|
|||
Restructuring charges for which there is no tax benefit
|
2.7
|
|
|
7.2
|
|
|
—
|
|
|||
Other
|
6.0
|
|
|
0.1
|
|
|
1.2
|
|
|||
Tax expense
|
$
|
48.6
|
|
|
$
|
44.8
|
|
|
$
|
35.4
|
|
|
December 31,
|
||||||
|
2013
|
|
2012
|
||||
Deferred tax assets:
|
|
|
|
||||
Inventories
|
$
|
9.1
|
|
|
$
|
3.6
|
|
Net operating loss carryforwards - U.S.
|
127.8
|
|
|
143.1
|
|
||
Net operating loss carryforwards - foreign
|
69.9
|
|
|
51.1
|
|
||
Employee benefits
|
65.0
|
|
|
98.9
|
|
||
State and local taxes
|
2.3
|
|
|
2.3
|
|
||
Sales related reserves
|
33.6
|
|
|
31.4
|
|
||
Other
|
41.0
|
|
|
30.7
|
|
||
Total gross deferred tax assets
|
348.7
|
|
|
361.1
|
|
||
Less valuation allowance
|
(61.7
|
)
|
|
(70.6
|
)
|
||
Total deferred tax assets, net of valuation allowance
|
287.0
|
|
|
290.5
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Plant, equipment and other assets
|
(126.3
|
)
|
|
(17.0
|
)
|
||
Foreign currency translation adjustment
|
1.9
|
|
|
(1.1
|
)
|
||
Other
|
(45.2
|
)
|
|
(21.0
|
)
|
||
Total gross deferred tax liabilities
|
(169.6
|
)
|
|
(39.1
|
)
|
||
Net deferred tax assets
|
$
|
117.4
|
|
|
$
|
251.4
|
|
Balance at January 1, 2012
|
$
|
46.0
|
|
Increase based on tax positions taken in a prior year
|
8.5
|
|
|
Decrease based on tax positions taken in a prior year
|
(4.8
|
)
|
|
Increase based on tax positions taken in the current year
|
6.0
|
|
|
Decrease resulting from the lapse of statutes of limitations
|
(5.8
|
)
|
|
Balance at December 31, 2012
|
49.9
|
|
|
Increase based on tax positions taken in a prior year
|
25.8
|
|
|
Decrease based on tax positions taken in a prior year
|
(1.6
|
)
|
|
Increase based on tax positions taken in the current year
|
9.3
|
|
|
Decrease resulting from the lapse of statutes of limitations
|
(8.9
|
)
|
|
Balance at December 31, 2013
|
$
|
74.5
|
|
|
Pension Plans
|
|
Other Post-Retirement Benefit Plans
|
||||||||||||
|
December 31,
|
||||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Change in Benefit Obligation:
|
|
|
|
|
|
|
|
||||||||
Benefit obligation - beginning of year
|
$
|
(744.6
|
)
|
|
$
|
(700.5
|
)
|
|
$
|
(16.5
|
)
|
|
$
|
(16.1
|
)
|
Service cost
|
(0.9
|
)
|
|
(1.6
|
)
|
|
—
|
|
|
—
|
|
||||
Interest cost
|
(27.6
|
)
|
|
(30.0
|
)
|
|
(0.6
|
)
|
|
(0.7
|
)
|
||||
Actuarial gain (loss)
|
65.5
|
|
|
(51.1
|
)
|
|
1.6
|
|
|
(0.5
|
)
|
||||
Curtailment gain
|
—
|
|
|
1.7
|
|
|
—
|
|
|
—
|
|
||||
Settlement gain
|
—
|
|
|
0.2
|
|
|
—
|
|
|
—
|
|
||||
Benefits paid
|
39.1
|
|
|
39.0
|
|
|
0.8
|
|
|
0.8
|
|
||||
Currency translation adjustments
|
(0.1
|
)
|
|
(2.3
|
)
|
|
0.3
|
|
|
—
|
|
||||
Other
|
0.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Benefit obligation - end of year
|
$
|
(668.2
|
)
|
|
$
|
(744.6
|
)
|
|
$
|
(14.4
|
)
|
|
$
|
(16.5
|
)
|
Change in Plan Assets:
|
|
|
|
|
|
|
|
||||||||
Fair value of plan assets - beginning of year
|
$
|
520.2
|
|
|
$
|
463.8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Actual return on plan assets
|
58.1
|
|
|
64.2
|
|
|
—
|
|
|
—
|
|
||||
Employer contributions
|
17.7
|
|
|
29.0
|
|
|
0.8
|
|
|
0.8
|
|
||||
Benefits paid
|
(39.1
|
)
|
|
(39.0
|
)
|
|
(0.8
|
)
|
|
(0.8
|
)
|
||||
Settlement gain
|
—
|
|
|
(0.2
|
)
|
|
—
|
|
|
—
|
|
||||
Currency translation adjustments
|
0.7
|
|
|
2.4
|
|
|
—
|
|
|
—
|
|
||||
Fair value of plan assets - end of year
|
$
|
557.6
|
|
|
$
|
520.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Unfunded status of plans at December 31,
|
$
|
(110.6
|
)
|
|
$
|
(224.4
|
)
|
|
$
|
(14.4
|
)
|
|
$
|
(16.5
|
)
|
|
Pension Plans
|
|
Other Post-Retirement Benefit Plans
|
||||||||||||
|
December 31,
|
||||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Accrued expenses and other
|
$
|
(5.9
|
)
|
|
$
|
(6.4
|
)
|
|
$
|
(0.8
|
)
|
|
$
|
(0.8
|
)
|
Pension and other post-retirement benefit liabilities
|
(104.7
|
)
|
|
(218.0
|
)
|
|
(13.6
|
)
|
|
(15.7
|
)
|
||||
Total liability
|
(110.6
|
)
|
|
(224.4
|
)
|
|
(14.4
|
)
|
|
(16.5
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Accumulated other comprehensive loss, gross
|
170.1
|
|
|
264.2
|
|
|
2.8
|
|
|
4.6
|
|
||||
Income tax (benefit) expense
|
(1.8
|
)
|
|
(35.9
|
)
|
|
0.1
|
|
|
(0.5
|
)
|
||||
Portion allocated to Revlon Holdings
|
(0.7
|
)
|
|
(0.9
|
)
|
|
—
|
|
|
—
|
|
||||
Accumulated other comprehensive loss, net
|
$
|
167.6
|
|
|
$
|
227.4
|
|
|
$
|
2.9
|
|
|
$
|
4.1
|
|
|
December 31,
|
||||||
|
2013
|
|
2012
|
||||
Projected benefit obligation
|
$
|
668.2
|
|
|
$
|
744.6
|
|
Accumulated benefit obligation
|
667.3
|
|
|
743.6
|
|
||
Fair value of plan assets
|
557.6
|
|
|
520.2
|
|
|
Pension Plans |
|
Other
Post-Retirement Benefit Plans |
||||||||||||||||||||
|
Year Ended December 31,
|
||||||||||||||||||||||
|
2013
|
|
2012
|
|
2011
|
|
2013
|
|
2012
|
|
2011
|
||||||||||||
Net periodic benefit (income) costs:
|
|
|
|
||||||||||||||||||||
Service cost
|
$
|
0.9
|
|
|
$
|
1.6
|
|
|
$
|
1.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
|
27.6
|
|
|
30.0
|
|
|
32.4
|
|
|
0.6
|
|
|
0.7
|
|
|
0.9
|
|
||||||
Expected return on plan assets
|
(38.3
|
)
|
|
(35.2
|
)
|
|
(35.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Amortization of prior service cost (credit)
|
—
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Amortization of actuarial loss
|
8.6
|
|
|
8.1
|
|
|
5.3
|
|
|
0.4
|
|
|
0.3
|
|
|
0.3
|
|
||||||
Curtailment gain
|
—
|
|
|
(1.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
(1.2
|
)
|
|
3.0
|
|
|
4.0
|
|
|
1.0
|
|
|
1.0
|
|
|
1.2
|
|
||||||
Portion allocated to Revlon Holdings
|
(0.1
|
)
|
|
(0.1
|
)
|
|
(0.1
|
)
|
|
(0.1
|
)
|
|
—
|
|
|
(0.1
|
)
|
||||||
|
$
|
(1.3
|
)
|
|
$
|
2.9
|
|
|
$
|
3.9
|
|
|
$
|
0.9
|
|
|
$
|
1.0
|
|
|
$
|
1.1
|
|
|
Pension Benefits
|
|
Post-Retirement Benefits
|
|
Total
|
||||||
Net actuarial loss
|
$
|
170.1
|
|
|
$
|
2.8
|
|
|
$
|
172.9
|
|
Prior service cost
|
—
|
|
|
—
|
|
|
—
|
|
|||
Accumulated Other Comprehensive Loss, Gross
|
170.1
|
|
|
2.8
|
|
|
172.9
|
|
|||
Income tax (benefit) expense
|
(1.8
|
)
|
|
0.1
|
|
|
(1.7
|
)
|
|||
Portion allocated to Revlon Holdings
|
(0.7
|
)
|
|
—
|
|
|
(0.7
|
)
|
|||
Accumulated Other Comprehensive Loss, Net
|
$
|
167.6
|
|
|
$
|
2.9
|
|
|
$
|
170.5
|
|
|
U.S. Plans
|
|
International Plans
|
||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||
Discount rate
|
4.68
|
%
|
|
3.78
|
%
|
|
4.48
|
%
|
|
4.33
|
%
|
Rate of future compensation increases
|
3.00
|
%
|
|
3.00
|
%
|
|
3.40
|
%
|
|
2.97
|
%
|
|
U.S. Plans
|
|
International Plans
|
||||||||||||||
|
2013
|
|
2012
|
|
2011
|
|
2013
|
|
2012
|
|
2011
|
||||||
Discount rate
|
3.78
|
%
|
|
4.38
|
%
|
|
5.17
|
%
|
|
4.33
|
%
|
|
4.77
|
%
|
|
5.32
|
%
|
Expected long-term return on plan assets
|
7.75
|
%
|
|
7.75
|
%
|
|
8.00
|
%
|
|
6.00
|
%
|
|
6.22
|
%
|
|
6.25
|
%
|
Rate of future compensation increases
|
3.00
|
%
|
|
3.50
|
%
|
|
3.50
|
%
|
|
2.97
|
%
|
|
3.05
|
%
|
|
3.53
|
%
|
|
Target Ranges
|
||
|
U.S. Plans
|
|
International Plans
|
Asset Class:
|
|
|
|
Common and preferred stock
|
0% - 10%
|
|
—
|
Mutual funds
|
20% - 30%
|
|
—
|
Fixed income securities
|
10% - 30%
|
|
—
|
Common and collective funds
|
25% - 55%
|
|
100%
|
Hedge funds
|
0% - 15%
|
|
—
|
Group annuity contract
|
0% - 5%
|
|
—
|
Cash and other investments
|
0% - 10%
|
|
—
|
|
U.S. Plans
|
|
International Plans
|
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Fair value of plan assets
|
$
|
492.5
|
|
|
$
|
461.9
|
|
|
$
|
65.1
|
|
|
$
|
58.3
|
|
•
|
Common and preferred stock: The fair values of the investments included in the common and preferred stock asset class generally reflect the closing price reported on the major market where the individual securities are traded. The Company classifies common and preferred stock investments within Level 1 of the fair value hierarchy.
|
•
|
Mutual funds: The fair values of the investments included in the mutual funds asset class are determined using net asset value (“NAV”) provided by the administrator of the funds. The NAV is based on the closing price reported on the major market where the individual securities within the mutual fund are traded. The Company classifies mutual fund investments within Level 1 of the fair value hierarchy.
|
•
|
Fixed income securities: The fair values of the investments included in the fixed income securities asset class are based on a compilation of primarily observable market information and/or broker quotes. The Company classifies fixed income securities investments primarily within Level 2 of the fair value hierarchy.
|
•
|
Common and collective funds: The fair values of the investments included in the common and collective funds asset class are determined using NAV provided by the administrator of the funds. The NAV is based on the value of the underlying assets owned by the common and collective fund, minus its liabilities, and then divided by the number of shares outstanding. The Company classifies common and collective fund investments within Level 2 of the fair value hierarchy.
|
•
|
Hedge funds: The hedge fund asset class includes hedge funds that primarily invest in a grouping of equities, fixed income instruments, currencies, derivatives and/or commodities. The fair value of investments included in the hedge funds class are determined using NAV provided by the administrator of the funds. The NAV is based on securities listed or quoted on a national securities exchange or market, or traded in the over-the-counter market, and is valued at the closing quotation posted by that exchange or trading system. Securities not listed or quoted on a national securities exchange or market are valued primarily through observable market information or broker quotes. The hedge fund investments generally can be sold on a quarterly or monthly basis and may employ leverage. The Company classifies hedge fund investments within Level 2 of the fair value hierarchy.
|
•
|
Group annuity contract: The group annuity contract asset class primarily invests in equities, corporate bonds and government bonds. The fair value of securities listed or quoted on a national securities exchange or market, or traded in the over-the-counter market, are valued at the closing quotation posted by that exchange or trading system. Securities not listed or quoted on a national securities exchange or market are valued primarily through observable market information or broker quotes. The Company classifies group annuity contract investments within Level 2 of the fair value hierarchy.
|
•
|
Cash and cash equivalents: Cash and cash equivalents are measured at cost, which approximates fair value. The Company classifies cash and cash equivalents within Level 1 of the fair value hierarchy.
|
|
Total
|
|
Quoted Prices in Active Markets for Identical Assets (Level 1)
|
|
Significant Observable Inputs (Level 2)
|
|
Significant Unobservable Inputs (Level 3)
|
||||||||
Common and Preferred Stock:
|
|
|
|
|
|
|
|
||||||||
U.S. small/mid cap equity
|
$
|
23.1
|
|
|
$
|
23.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Mutual Funds
(a)
:
|
|
|
|
|
|
|
|
||||||||
Corporate bonds
|
24.4
|
|
|
24.4
|
|
|
—
|
|
|
—
|
|
||||
Government bonds
|
15.1
|
|
|
15.1
|
|
|
—
|
|
|
—
|
|
||||
U.S. large cap equity
|
68.7
|
|
|
68.7
|
|
|
—
|
|
|
—
|
|
||||
International equities
|
4.3
|
|
|
4.3
|
|
|
—
|
|
|
—
|
|
||||
Emerging markets international equity
|
4.2
|
|
|
4.2
|
|
|
—
|
|
|
—
|
|
||||
Other
|
0.9
|
|
|
0.9
|
|
|
—
|
|
|
—
|
|
||||
Fixed Income Securities:
|
|
|
|
|
|
|
|
||||||||
Corporate bonds
|
46.1
|
|
|
—
|
|
|
45.8
|
|
|
0.3
|
|
||||
Government bonds
|
9.6
|
|
|
—
|
|
|
8.0
|
|
|
1.6
|
|
||||
Common and Collective Funds
(a)
:
|
|
|
|
|
|
|
|
||||||||
Corporate bonds
|
53.7
|
|
|
—
|
|
|
53.7
|
|
|
—
|
|
||||
Government bonds
|
69.8
|
|
|
—
|
|
|
69.8
|
|
|
—
|
|
||||
U.S. large cap equity
|
33.8
|
|
|
—
|
|
|
33.8
|
|
|
—
|
|
||||
U.S. small/mid cap equity
|
23.0
|
|
|
—
|
|
|
23.0
|
|
|
—
|
|
||||
International equities
|
92.1
|
|
|
—
|
|
|
92.1
|
|
|
—
|
|
||||
Emerging markets international equity
|
17.3
|
|
|
—
|
|
|
17.3
|
|
|
—
|
|
||||
Cash and cash equivalents
|
2.0
|
|
|
—
|
|
|
2.0
|
|
|
—
|
|
||||
Other
|
2.9
|
|
|
—
|
|
|
2.9
|
|
|
—
|
|
||||
Hedge Funds
(a)
:
|
|
|
|
|
|
|
|
||||||||
Corporate bonds
|
11.8
|
|
|
—
|
|
|
11.8
|
|
|
—
|
|
||||
Government bonds
|
24.5
|
|
|
—
|
|
|
24.5
|
|
|
—
|
|
||||
U.S. large cap equity
|
4.3
|
|
|
—
|
|
|
4.3
|
|
|
—
|
|
||||
International equities
|
6.1
|
|
|
—
|
|
|
6.1
|
|
|
—
|
|
||||
Cash and cash equivalents
|
5.7
|
|
|
—
|
|
|
5.7
|
|
|
—
|
|
||||
Other
|
4.1
|
|
|
—
|
|
|
4.1
|
|
|
—
|
|
||||
Group Annuity Contract
|
2.6
|
|
|
—
|
|
|
2.6
|
|
|
—
|
|
||||
Cash and Cash Equivalents
|
7.5
|
|
|
7.5
|
|
|
—
|
|
|
—
|
|
||||
Fair value of plan assets at December 31, 2013
|
$
|
557.6
|
|
|
$
|
148.2
|
|
|
$
|
407.5
|
|
|
$
|
1.9
|
|
|
Total
|
|
Quoted Prices in Active Markets for Identical Assets (Level 1)
|
|
Significant Observable Inputs (Level 2)
|
|
Significant Unobservable Inputs (Level 3)
|
||||||||
Common and Preferred Stock:
|
|
|
|
|
|
|
|
||||||||
U.S. small/mid cap equity
|
$
|
18.9
|
|
|
$
|
18.9
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Mutual Funds
(a)
:
|
|
|
|
|
|
|
|
||||||||
Corporate bonds
|
19.4
|
|
|
19.4
|
|
|
—
|
|
|
—
|
|
||||
Government bonds
|
16.0
|
|
|
16.0
|
|
|
—
|
|
|
—
|
|
||||
U.S. large cap equity
|
63.2
|
|
|
63.2
|
|
|
—
|
|
|
—
|
|
||||
International equities
|
4.6
|
|
|
4.6
|
|
|
—
|
|
|
—
|
|
||||
Emerging markets international equity
|
5.0
|
|
|
5.0
|
|
|
—
|
|
|
—
|
|
||||
Other
|
3.6
|
|
|
3.6
|
|
|
—
|
|
|
—
|
|
||||
Fixed Income Securities:
|
|
|
|
|
|
|
|
||||||||
Corporate bonds
|
49.8
|
|
|
—
|
|
|
49.2
|
|
|
0.6
|
|
||||
Government bonds
|
9.9
|
|
|
—
|
|
|
9.9
|
|
|
—
|
|
||||
Common and Collective Funds
(a)
:
|
|
|
|
|
|
|
|
||||||||
Corporate bonds
|
57.0
|
|
|
—
|
|
|
57.0
|
|
|
—
|
|
||||
Government bonds
|
70.2
|
|
|
—
|
|
|
70.2
|
|
|
—
|
|
||||
U.S. large cap equity
|
27.0
|
|
|
—
|
|
|
27.0
|
|
|
—
|
|
||||
U.S. small/mid cap equity
|
17.7
|
|
|
—
|
|
|
17.7
|
|
|
—
|
|
||||
International equities
|
74.3
|
|
|
—
|
|
|
74.3
|
|
|
—
|
|
||||
Emerging markets international equity
|
17.7
|
|
|
—
|
|
|
17.7
|
|
|
—
|
|
||||
Cash and cash equivalents
|
3.0
|
|
|
—
|
|
|
3.0
|
|
|
—
|
|
||||
Other
|
1.1
|
|
|
—
|
|
|
1.1
|
|
|
—
|
|
||||
Hedge Funds
(a)
:
|
|
|
|
|
|
|
|
||||||||
Corporate bonds
|
4.2
|
|
|
—
|
|
|
4.2
|
|
|
—
|
|
||||
Government bonds
|
30.9
|
|
|
—
|
|
|
30.9
|
|
|
—
|
|
||||
U.S. large cap equity
|
4.6
|
|
|
—
|
|
|
4.6
|
|
|
—
|
|
||||
International equities
|
3.1
|
|
|
—
|
|
|
3.1
|
|
|
—
|
|
||||
Foreign exchange contracts
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Cash and cash equivalents
|
6.0
|
|
|
—
|
|
|
6.0
|
|
|
—
|
|
||||
Other
|
3.8
|
|
|
—
|
|
|
3.8
|
|
|
—
|
|
||||
Group Annuity Contract
|
2.3
|
|
|
—
|
|
|
2.3
|
|
|
—
|
|
||||
Cash and Cash Equivalents
|
6.9
|
|
|
6.9
|
|
|
—
|
|
|
—
|
|
||||
Fair value of plan assets at December 31, 2012
|
$
|
520.2
|
|
|
$
|
137.6
|
|
|
$
|
382.0
|
|
|
$
|
0.6
|
|
|
Total
|
|
Fixed Income Securities
|
||||
Balance, December 31, 2011
|
$
|
—
|
|
|
$
|
—
|
|
Purchases, sales, and settlements, net
|
0.6
|
|
|
0.6
|
|
||
Balance, December 31, 2012
|
0.6
|
|
|
0.6
|
|
||
Purchases, sales, and settlements, net
|
0.6
|
|
|
0.6
|
|
||
Loss on assets held during the period
|
(0.2
|
)
|
|
(0.2
|
)
|
||
Transfers into Level 3
|
0.9
|
|
|
0.9
|
|
||
Balance, December 31, 2013
|
$
|
1.9
|
|
|
$
|
1.9
|
|
|
Total Pension Benefits
|
|
Total Other Benefits
|
||||
2014
|
$
|
40.7
|
|
|
$
|
1.2
|
|
2015
|
41.2
|
|
|
1.2
|
|
||
2016
|
41.8
|
|
|
1.2
|
|
||
2017
|
43.0
|
|
|
1.2
|
|
||
2018
|
43.4
|
|
|
1.2
|
|
||
Years 2019 to 2023
|
225.0
|
|
|
5.8
|
|
|
Stock Options (000's)
|
|
Weighted Average Exercise Price
|
|||
Outstanding at January 1, 2011
|
987.9
|
|
|
$
|
31.68
|
|
Forfeited and expired
|
(723.4
|
)
|
|
31.92
|
|
|
Outstanding at December 31, 2011
|
264.5
|
|
|
31.02
|
|
|
Forfeited and expired
|
(256.4
|
)
|
|
31.06
|
|
|
Outstanding at December 31, 2012
|
8.1
|
|
|
29.91
|
|
|
Forfeited and expired
|
(7.3
|
)
|
|
30.17
|
|
|
Outstanding at December 31, 2013
|
0.8
|
|
|
27.50
|
|
|
|
Outstanding and Exercisable
|
|||||||||||
Range of Exercise Prices
|
|
Number of Options (000's)
|
|
Weighted Average Years Remaining
|
|
Weighted Average Exercise Price
|
|
Aggregate Intrinsic Value
|
|||||
$27.50
|
|
0.8
|
|
|
0.07
|
|
$
|
27.50
|
|
|
$
|
—
|
|
|
Restricted Stock (000's)
|
|
Weighted Average Grant Date Fair Value
|
|||
Outstanding at January 1, 2011
|
690.7
|
|
|
$
|
8.20
|
|
Vested
(a)
|
(419.5
|
)
|
|
8.95
|
|
|
Forfeited
|
(13.8
|
)
|
|
7.15
|
|
|
Outstanding at December 31, 2011
|
257.4
|
|
|
7.04
|
|
|
Vested
(a)
|
(257.4
|
)
|
|
7.04
|
|
|
Outstanding at December 31, 2012
|
—
|
|
|
—
|
|
|
Granted
|
120.0
|
|
|
24.80
|
|
|
Outstanding at December 31, 2013
|
120.0
|
|
|
24.80
|
|
(a)
|
Of the amounts vested during
2012
and
2011
,
83,582
and
138,433
shares, respectively, were withheld by the Company to satisfy certain grantees’ minimum withholding tax requirements, which withheld shares became Revlon, Inc. treasury stock and are not sold on the open market.
|
|
Foreign Currency Translation
|
|
Actuarial (Loss) Gain on Post-retirement Benefits
|
|
Prior Service Cost on Post-retirement Benefits
|
|
Deferred Gain - Hedging
|
|
Accumulated Other Comprehensive Loss
|
||||||||||
Balance, January 1, 2011
|
$
|
33.1
|
|
|
$
|
(183.2
|
)
|
|
$
|
(0.2
|
)
|
|
$
|
—
|
|
|
$
|
(150.3
|
)
|
Unrealized gains (losses), net of tax of $1.8 million
|
(8.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8.3
|
)
|
|||||
Amortization of pension related costs, net of tax of $(2.0) million
(a)
|
—
|
|
|
3.5
|
|
|
0.1
|
|
|
—
|
|
|
3.6
|
|
|||||
Pension re-measurement, net of tax of $30.1 million
|
—
|
|
|
(45.9
|
)
|
|
—
|
|
|
—
|
|
|
(45.9
|
)
|
|||||
Balance, December 31, 2011
|
24.8
|
|
|
(225.6
|
)
|
|
(0.1
|
)
|
|
—
|
|
|
(200.9
|
)
|
|||||
Unrealized gains (losses), net of tax of $1.0 million
|
(1.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.5
|
)
|
|||||
Amortization of pension related costs, net of tax of $(1.0) million
(a)(b)
|
—
|
|
|
9.4
|
|
|
—
|
|
|
—
|
|
|
9.4
|
|
|||||
Pension re-measurement, net of tax of $7.2 million
|
—
|
|
|
(15.4
|
)
|
|
—
|
|
|
—
|
|
|
(15.4
|
)
|
|||||
Pension curtailment gain
(c)
|
—
|
|
|
0.1
|
|
|
0.1
|
|
|
—
|
|
|
0.2
|
|
|||||
Balance, December 31, 2012
|
23.3
|
|
|
(231.5
|
)
|
|
—
|
|
|
—
|
|
|
(208.2
|
)
|
|||||
Unrealized gains (losses), net of tax of $3.3 million
|
(4.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4.1
|
)
|
|||||
Amortization of pension related costs, net of tax of $(1.2) million
(a)
|
—
|
|
|
7.7
|
|
|
—
|
|
|
—
|
|
|
7.7
|
|
|||||
Pension re-measurement, net of tax of $(33.5) million
|
—
|
|
|
53.3
|
|
|
—
|
|
|
—
|
|
|
53.3
|
|
|||||
Revaluation of derivative financial instrument, net of tax of $(1.0) million
(d)
|
—
|
|
|
—
|
|
|
—
|
|
|
1.5
|
|
|
1.5
|
|
|||||
Balance, December 31, 2013
|
$
|
19.2
|
|
|
$
|
(170.5
|
)
|
|
$
|
—
|
|
|
$
|
1.5
|
|
|
$
|
(149.8
|
)
|
Minimum Rental Commitments
|
|
Total
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
Thereafter
|
||||||||||||||
Capital leases
|
|
$
|
7.3
|
|
|
$
|
3.4
|
|
|
$
|
2.2
|
|
|
$
|
1.4
|
|
|
$
|
0.3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Operating leases
|
|
78.8
|
|
|
28.7
|
|
|
13.4
|
|
|
9.5
|
|
|
6.4
|
|
|
4.7
|
|
|
16.1
|
|
|
Year Ended December 31, 2013
|
||||||||||||||
|
1st Quarter
|
|
2nd Quarter
|
|
3rd Quarter
|
|
4th Quarter
|
||||||||
Net sales
|
$
|
325.9
|
|
|
$
|
344.7
|
|
|
$
|
333.1
|
|
|
$
|
491.0
|
|
Gross profit
|
211.5
|
|
|
222.1
|
|
|
212.0
|
|
|
304.0
|
|
||||
(Loss) income from continuing operations, net of taxes
(a)(b)(c)
|
(1.9
|
)
|
|
29.5
|
|
|
11.5
|
|
|
(7.1
|
)
|
||||
Loss from discontinued operations, net of taxes
(c)
|
(2.4
|
)
|
|
(2.4
|
)
|
|
(1.5
|
)
|
|
(24.1
|
)
|
||||
Net (loss) income
(a)(b)(c)
|
(4.3
|
)
|
|
27.1
|
|
|
10.0
|
|
|
(31.2
|
)
|
|
Year Ended December 31, 2012
|
||||||||||||||
|
1st Quarter
|
|
2nd Quarter
|
|
3rd Quarter
|
|
4th Quarter
|
||||||||
Net sales
|
$
|
321.5
|
|
|
$
|
350.2
|
|
|
$
|
341.2
|
|
|
$
|
383.5
|
|
Gross profit
|
209.2
|
|
|
229.0
|
|
|
216.8
|
|
|
247.6
|
|
||||
Income (loss) from continuing operations, net of taxes
(d)(e)
|
11.8
|
|
|
23.0
|
|
|
(6.3
|
)
|
|
52.8
|
|
||||
Loss from discontinued operations, net of taxes
|
(1.8
|
)
|
|
(2.5
|
)
|
|
(3.7
|
)
|
|
(2.1
|
)
|
||||
Net income (loss)
(d)(e)
|
10.0
|
|
|
20.5
|
|
|
(10.0
|
)
|
|
50.7
|
|
(a)
|
Loss from continuing operations and net loss for the first quarter of 2013 were unfavorably impacted by a
$27.9 million
aggregate loss on early extinguishment of debt due to the 2013 Senior Notes Refinancing and the February 2013 Term Loan Amendments. (See Note 11, “Long-Term Debt”).
|
(b)
|
(Loss) income from continuing operations and net (loss) income for the first quarter of 2013 and the second quarter of 2013 were favorably impacted by an
$8.3 million
and an
$18.1 million
, respectively, gain from insurance proceeds due to the settlement of the Company's claims for the loss of inventory, business interruption and property losses as a result of the fire at the Company's Venezuela facility. (See Note 1, “Description of Business and Summary of Significant Accounting Policies - Other Events - Fire at Revlon Venezuela Facility”).
|
(c)
|
Loss from continuing operations and net loss for the fourth quarter of 2013 were unfavorably impacted by
$19.1 million
of acquisition and integration costs related to the Colomer Acquisition. Additionally, the Company incurred
$21.4 million
of restructuring and related charges in the fourth quarter of 2013 related to the December 2013 Program, of which
$20.0 million
relates to the Company's exit of its business operations in China and is recorded in loss from discontinued operations, net of taxes.
|
(d)
|
Loss from continuing operations and net loss for the third quarter of 2012 were unfavorably impacted by
$24.1 million
in restructuring and related charges recorded as a result of the September 2012 Program. (See Note 3, “Restructuring Charges” ).
|
(e)
|
Income from continuing operations and net income for the fourth quarter of 2012 were favorably impacted by an increase in net income driven by a non-cash benefit of
$15.8 million
related to the reduction of the Company’s deferred tax valuation allowance on its net deferred tax assets for certain jurisdictions in the U.S. at December 31, 2012, as a result of the Company’s improved earnings trends and cumulative taxable income in those jurisdictions, which is reflected in the provision for income taxes (See Note 14, “Income Taxes”).
|
•
|
Consumer
- The Consumer segment is comprised of the Company's consumer brands, which primarily include
Revlon
,
Almay
,
SinfulColors
and
Pure Ice
in cosmetics;
Revlon ColorSilk
in women’s hair color;
Revlon
in beauty tools; and
Mitchum
in anti-perspirant deodorants. The Company’s principal customers for its consumer products include the mass retail channel, consisting of large mass volume retailers and chain drug and food stores in the U.S. and internationally, as well as certain department stores and other specialty stores, such as perfumeries, outside the U.S.
|
•
|
Professional
- The Professional segment is comprised of the brands which the Company recently acquired in the Colomer Acquisition, which primarily include
Revlon Professional
in hair color and hair care;
CND
-branded products
in nail polishes and nail enhancements
; and
American Crew
in men’s
grooming products; all of which are sold worldwide in the
professional salon channel. The Professional segment also includes a skincare line under the
Natural Honey
brand sold in the mass retail channel, primarily in Spain, and a multi-cultural line consisting of
Crème of Nature
hair care products sold in the mass retail channel and in professional salons, primarily in the U.S. The Company’s principal customers for its professional products include hair and nail salons and distributors in the U.S. and internationally.
|
|
Year Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Segment Net Sales:
|
|
|
|
|
|
||||||
Consumer
|
$
|
1,377.9
|
|
|
$
|
1,396.4
|
|
|
$
|
1,347.5
|
|
Professional
|
116.8
|
|
|
—
|
|
|
—
|
|
|||
Total
|
$
|
1,494.7
|
|
|
$
|
1,396.4
|
|
|
$
|
1,347.5
|
|
|
|
|
|
|
|
||||||
Segment Profit:
|
|
|
|
|
|
||||||
Consumer
|
$
|
347.1
|
|
|
$
|
363.1
|
|
|
$
|
323.4
|
|
Professional
|
5.2
|
|
|
—
|
|
|
—
|
|
|||
Total
|
$
|
352.3
|
|
|
$
|
363.1
|
|
|
$
|
323.4
|
|
|
|
|
|
|
|
||||||
Reconciliation:
|
|
|
|
|
|
||||||
Segment Profit
|
$
|
352.3
|
|
|
$
|
363.1
|
|
|
$
|
323.4
|
|
Less:
|
|
|
|
|
|
||||||
Unallocated corporate expenses
|
58.7
|
|
|
55.0
|
|
|
47.4
|
|
|||
Non-recurring items:
|
|
|
|
|
|
||||||
Gain from insurance proceeds related to Venezuela fire
|
(26.4
|
)
|
|
—
|
|
|
—
|
|
|||
Acquisition and integration costs
|
25.4
|
|
|
—
|
|
|
—
|
|
|||
Inventory purchase accounting adjustment, cost of sales
|
8.5
|
|
|
—
|
|
|
—
|
|
|||
Accrual for Venezuela fire clean-up
|
7.6
|
|
|
—
|
|
|
—
|
|
|||
Restructuring and related charges
|
4.5
|
|
|
24.1
|
|
|
—
|
|
|||
|
274.0
|
|
|
284.0
|
|
|
276.0
|
|
|||
Less:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
76.9
|
|
|
65.2
|
|
|
62.5
|
|
|||
Interest Expense
|
78.6
|
|
|
85.3
|
|
|
91.1
|
|
|||
Amortization of debt issuance costs
|
3.5
|
|
|
3.4
|
|
|
3.7
|
|
|||
Loss on early extinguishment of debt
|
29.7
|
|
|
—
|
|
|
11.2
|
|
|||
Foreign currency losses, net
|
3.7
|
|
|
2.8
|
|
|
4.7
|
|
|||
Miscellaneous, net
|
1.0
|
|
|
1.2
|
|
|
1.6
|
|
|||
Income from continuing operations before income taxes
|
$
|
80.6
|
|
|
$
|
126.1
|
|
|
$
|
101.2
|
|
|
Year Ended December 31,
|
||||||||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||||||||
Geographic area:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
United States
|
$
|
832.8
|
|
|
56%
|
|
$
|
799.8
|
|
|
57%
|
|
$
|
757.4
|
|
|
56%
|
Outside of the United States
|
661.9
|
|
|
44%
|
|
596.6
|
|
|
43%
|
|
590.1
|
|
|
44%
|
|||
|
$
|
1,494.7
|
|
|
|
|
$
|
1,396.4
|
|
|
|
|
$
|
1,347.5
|
|
|
|
|
December 31,
2013 |
|
December 31,
2012 |
||||||||
Long-lived assets, net:
|
|
|
|
|
|
|
|||||
United States
|
$
|
830.1
|
|
|
72%
|
|
$
|
430.1
|
|
|
90%
|
Outside of the United States
|
315.1
|
|
|
28%
|
|
48.5
|
|
|
10%
|
||
|
$
|
1,145.2
|
|
|
|
$
|
478.6
|
|
|
|
|
Year Ended December 31,
|
||||||||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||||||||
Classes of similar products:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Color cosmetics
|
$
|
926.4
|
|
|
62%
|
|
$
|
913.0
|
|
|
65%
|
|
$
|
849.7
|
|
|
63%
|
Hair care
|
263.9
|
|
|
18%
|
|
191.1
|
|
|
14%
|
|
179.3
|
|
|
13%
|
|||
Beauty care and fragrance
|
304.4
|
|
|
20%
|
|
292.3
|
|
|
21%
|
|
318.5
|
|
|
24%
|
|||
|
$
|
1,494.7
|
|
|
|
|
$
|
1,396.4
|
|
|
|
|
$
|
1,347.5
|
|
|
|
Condensed Consolidating Balance Sheets
|
|||||||||||||||||||
As of December 31, 2013
|
|||||||||||||||||||
|
Products Corporation
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
141.3
|
|
|
$
|
0.8
|
|
|
$
|
102.0
|
|
|
$
|
—
|
|
|
$
|
244.1
|
|
Trade receivables, less allowances for doubtful accounts
|
88.7
|
|
|
24.5
|
|
|
140.3
|
|
|
—
|
|
|
253.5
|
|
|||||
Inventories
|
78.0
|
|
|
9.5
|
|
|
87.5
|
|
|
—
|
|
|
175.0
|
|
|||||
Deferred income taxes - current
|
44.2
|
|
|
—
|
|
|
20.9
|
|
|
—
|
|
|
65.1
|
|
|||||
Prepaid expenses and other
|
111.6
|
|
|
4.7
|
|
|
39.8
|
|
|
—
|
|
|
156.1
|
|
|||||
Intercompany receivables
|
1,051.3
|
|
|
614.5
|
|
|
474.1
|
|
|
(2,139.9
|
)
|
|
—
|
|
|||||
Investment in subsidiaries
|
517.3
|
|
|
400.6
|
|
|
—
|
|
|
(917.9
|
)
|
|
—
|
|
|||||
Property, plant and equipment, net
|
86.7
|
|
|
0.6
|
|
|
108.6
|
|
|
—
|
|
|
195.9
|
|
|||||
Deferred income taxes - noncurrent
|
110.0
|
|
|
—
|
|
|
54.8
|
|
|
—
|
|
|
164.8
|
|
|||||
Goodwill
|
185.8
|
|
|
30.0
|
|
|
258.9
|
|
|
—
|
|
|
474.7
|
|
|||||
Intangible assets, net
|
57.4
|
|
|
0.3
|
|
|
297.0
|
|
|
—
|
|
|
354.7
|
|
|||||
Other assets
|
90.9
|
|
|
1.6
|
|
|
27.4
|
|
|
—
|
|
|
119.9
|
|
|||||
Total assets
|
$
|
2,563.2
|
|
|
$
|
1,087.1
|
|
|
$
|
1,611.3
|
|
|
$
|
(3,057.8
|
)
|
|
$
|
2,203.8
|
|
LIABILITIES AND STOCKHOLDER’S DEFICIENCY
|
|
|
|
|
|
|
|
|
|||||||||||
Short-term borrowings
|
$
|
—
|
|
|
$
|
1.8
|
|
|
$
|
6.1
|
|
|
$
|
—
|
|
|
$
|
7.9
|
|
Current portion of long-term debt
|
65.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
65.4
|
|
|||||
Accounts payable
|
72.2
|
|
|
6.2
|
|
|
87.3
|
|
|
—
|
|
|
165.7
|
|
|||||
Accrued expenses and other
|
161.8
|
|
|
13.4
|
|
|
138.4
|
|
|
—
|
|
|
313.6
|
|
|||||
Intercompany payables
|
790.0
|
|
|
675.9
|
|
|
674.0
|
|
|
(2,139.9
|
)
|
|
—
|
|
|||||
Long-term debt
|
1,861.4
|
|
|
—
|
|
|
0.9
|
|
|
—
|
|
|
1,862.3
|
|
|||||
Other long-term liabilities
|
128.9
|
|
|
2.9
|
|
|
173.6
|
|
|
—
|
|
|
305.4
|
|
|||||
Total liabilities
|
3,079.7
|
|
|
700.2
|
|
|
1,080.3
|
|
|
(2,139.9
|
)
|
|
2,720.3
|
|
|||||
Stockholder’s deficiency
|
(516.5
|
)
|
|
386.9
|
|
|
531.0
|
|
|
(917.9
|
)
|
|
(516.5
|
)
|
|||||
Total liabilities and stockholder’s deficiency
|
$
|
2,563.2
|
|
|
$
|
1,087.1
|
|
|
$
|
1,611.3
|
|
|
$
|
(3,057.8
|
)
|
|
$
|
2,203.8
|
|
Condensed Consolidating Balance Sheets
|
|||||||||||||||||||
As of December 31, 2012
|
|||||||||||||||||||
|
Products Corporation
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
59.1
|
|
|
$
|
—
|
|
|
$
|
57.2
|
|
|
$
|
—
|
|
|
$
|
116.3
|
|
Trade receivables, less allowances for doubtful accounts
|
96.2
|
|
|
23.1
|
|
|
96.7
|
|
|
—
|
|
|
216.0
|
|
|||||
Inventories
|
74.1
|
|
|
6.1
|
|
|
34.5
|
|
|
—
|
|
|
114.7
|
|
|||||
Deferred income taxes - current
|
38.2
|
|
|
—
|
|
|
10.3
|
|
|
—
|
|
|
48.5
|
|
|||||
Prepaid expenses and other
|
92.1
|
|
|
4.7
|
|
|
23.7
|
|
|
—
|
|
|
120.5
|
|
|||||
Intercompany receivables
|
947.9
|
|
|
488.2
|
|
|
408.0
|
|
|
(1,844.1
|
)
|
|
—
|
|
|||||
Investment in subsidiaries
|
(94.6
|
)
|
|
(190.0
|
)
|
|
—
|
|
|
284.6
|
|
|
—
|
|
|||||
Property, plant and equipment, net
|
86.9
|
|
|
0.5
|
|
|
12.1
|
|
|
—
|
|
|
99.5
|
|
|||||
Deferred income taxes - noncurrent
|
189.9
|
|
|
—
|
|
|
13.2
|
|
|
—
|
|
|
203.1
|
|
|||||
Goodwill
|
150.6
|
|
|
65.2
|
|
|
2.0
|
|
|
—
|
|
|
217.8
|
|
|||||
Intangible assets, net
|
0.9
|
|
|
61.3
|
|
|
6.6
|
|
|
—
|
|
|
68.8
|
|
|||||
Other assets
|
63.5
|
|
|
3.5
|
|
|
25.5
|
|
|
—
|
|
|
92.5
|
|
|||||
Total assets
|
$
|
1,704.8
|
|
|
$
|
462.6
|
|
|
$
|
689.8
|
|
|
$
|
(1,559.5
|
)
|
|
$
|
1,297.7
|
|
LIABILITIES AND STOCKHOLDER’S DEFICIENCY
|
|
|
|
|
|
|
|
|
|||||||||||
Short-term borrowings
|
$
|
—
|
|
|
$
|
5.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5.0
|
|
Current portion of long-term debt
|
21.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21.5
|
|
|||||
Current portion of long-term debt – affiliates
|
48.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
48.6
|
|
|||||
Accounts payable
|
62.2
|
|
|
5.1
|
|
|
34.5
|
|
|
—
|
|
|
101.8
|
|
|||||
Accrued expenses and other
|
155.7
|
|
|
13.8
|
|
|
95.2
|
|
|
—
|
|
|
264.7
|
|
|||||
Intercompany payables
|
614.6
|
|
|
650.7
|
|
|
578.8
|
|
|
(1,844.1
|
)
|
|
—
|
|
|||||
Long-term debt
|
1,145.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,145.8
|
|
|||||
Other long-term liabilities
|
233.1
|
|
|
6.2
|
|
|
47.7
|
|
|
—
|
|
|
287.0
|
|
|||||
Total liabilities
|
2,281.5
|
|
|
680.8
|
|
|
756.2
|
|
|
(1,844.1
|
)
|
|
1,874.4
|
|
|||||
Stockholder’s deficiency
|
(576.7
|
)
|
|
(218.2
|
)
|
|
(66.4
|
)
|
|
284.6
|
|
|
(576.7
|
)
|
|||||
Total liabilities and stockholder’s deficiency
|
$
|
1,704.8
|
|
|
$
|
462.6
|
|
|
$
|
689.8
|
|
|
$
|
(1,559.5
|
)
|
|
$
|
1,297.7
|
|
Condensed Consolidating Statements of Income and Comprehensive Income
|
|||||||||||||||||||
Twelve Months Ended December 31, 2013
|
|||||||||||||||||||
|
Products Corporation
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net Sales
|
$
|
972.8
|
|
|
$
|
90.5
|
|
|
$
|
626.6
|
|
|
$
|
(195.2
|
)
|
|
$
|
1,494.7
|
|
Cost of sales
|
438.4
|
|
|
45.6
|
|
|
256.3
|
|
|
(195.2
|
)
|
|
545.1
|
|
|||||
Gross profit
|
534.4
|
|
|
44.9
|
|
|
370.3
|
|
|
—
|
|
|
949.6
|
|
|||||
Selling, general and administrative expenses
|
418.1
|
|
|
37.8
|
|
|
267.7
|
|
|
—
|
|
|
723.6
|
|
|||||
Acquisition and integration costs
|
24.2
|
|
|
—
|
|
|
1.2
|
|
|
—
|
|
|
25.4
|
|
|||||
Restructuring charges and other, net
|
—
|
|
|
0.4
|
|
|
3.1
|
|
|
—
|
|
|
3.5
|
|
|||||
Operating income
|
92.1
|
|
|
6.7
|
|
|
98.3
|
|
|
—
|
|
|
197.1
|
|
|||||
Other expenses, net:
|
|
|
|
|
|
|
|
|
|
||||||||||
Intercompany interest, net
|
(0.8
|
)
|
|
(0.6
|
)
|
|
6.2
|
|
|
—
|
|
|
4.8
|
|
|||||
Interest expense
|
72.9
|
|
|
0.3
|
|
|
0.6
|
|
|
—
|
|
|
73.8
|
|
|||||
Amortization of debt issuance costs
|
3.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3.5
|
|
|||||
Loss on early extinguishment of debt, net
|
29.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
29.7
|
|
|||||
Foreign currency losses, net
|
3.2
|
|
|
1.3
|
|
|
(0.8
|
)
|
|
—
|
|
|
3.7
|
|
|||||
Miscellaneous, net
|
(2.4
|
)
|
|
(11.5
|
)
|
|
14.9
|
|
|
—
|
|
|
1.0
|
|
|||||
Other expenses, net
|
106.1
|
|
|
(10.5
|
)
|
|
20.9
|
|
|
—
|
|
|
116.5
|
|
|||||
(Loss) income from continuing operations before income taxes
|
(14.0
|
)
|
|
17.2
|
|
|
77.4
|
|
|
—
|
|
|
80.6
|
|
|||||
Provision for income taxes
|
39.9
|
|
|
0.3
|
|
|
8.4
|
|
|
—
|
|
|
48.6
|
|
|||||
(Loss) income from continuing operations
|
(53.9
|
)
|
|
16.9
|
|
|
69.0
|
|
|
—
|
|
|
32.0
|
|
|||||
Income (loss) from discontinued operations, net of taxes
|
0.3
|
|
|
—
|
|
|
(30.7
|
)
|
|
—
|
|
|
(30.4
|
)
|
|||||
Equity in income of subsidiaries
|
55.2
|
|
|
24.6
|
|
|
—
|
|
|
(79.8
|
)
|
|
—
|
|
|||||
Net income
|
$
|
1.6
|
|
|
$
|
41.5
|
|
|
$
|
38.3
|
|
|
$
|
(79.8
|
)
|
|
$
|
1.6
|
|
Other comprehensive income
|
58.4
|
|
|
16.7
|
|
|
10.2
|
|
|
(26.9
|
)
|
|
58.4
|
|
|||||
Total comprehensive income
|
$
|
60.0
|
|
|
$
|
58.2
|
|
|
$
|
48.5
|
|
|
$
|
(106.7
|
)
|
|
$
|
60.0
|
|
Condensed Consolidating Statements of Income and Comprehensive Income
|
|||||||||||||||||||
Twelve Months Ended December 31, 2012
|
|||||||||||||||||||
|
Products Corporation
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net Sales
|
$
|
929.9
|
|
|
$
|
113.6
|
|
|
$
|
546.4
|
|
|
$
|
(193.5
|
)
|
|
$
|
1,396.4
|
|
Cost of sales
|
418.6
|
|
|
53.7
|
|
|
215.0
|
|
|
(193.5
|
)
|
|
493.8
|
|
|||||
Gross profit
|
511.3
|
|
|
59.9
|
|
|
331.4
|
|
|
—
|
|
|
902.6
|
|
|||||
Selling, general and administrative expenses
|
397.2
|
|
|
47.3
|
|
|
218.8
|
|
|
—
|
|
|
663.3
|
|
|||||
Restructuring charges and other, net
|
1.2
|
|
|
0.7
|
|
|
18.6
|
|
|
—
|
|
|
20.5
|
|
|||||
Operating income
|
112.9
|
|
|
11.9
|
|
|
94.0
|
|
|
—
|
|
|
218.8
|
|
|||||
Other expenses, net:
|
|
|
|
|
|
|
|
|
|
||||||||||
Intercompany interest, net
|
0.8
|
|
|
(0.8
|
)
|
|
6.2
|
|
|
—
|
|
|
6.2
|
|
|||||
Interest expense
|
78.4
|
|
|
0.3
|
|
|
0.4
|
|
|
—
|
|
|
79.1
|
|
|||||
Amortization of debt issuance costs
|
3.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3.4
|
|
|||||
Foreign currency (gains) losses, net
|
(0.4
|
)
|
|
0.5
|
|
|
2.7
|
|
|
—
|
|
|
2.8
|
|
|||||
Miscellaneous, net
|
(70.1
|
)
|
|
6.8
|
|
|
64.5
|
|
|
—
|
|
|
1.2
|
|
|||||
Other expenses, net
|
12.1
|
|
|
6.8
|
|
|
73.8
|
|
|
—
|
|
|
92.7
|
|
|||||
Income from continuing operations before income taxes
|
100.8
|
|
|
5.1
|
|
|
20.2
|
|
|
—
|
|
|
126.1
|
|
|||||
Provision for income taxes
|
25.0
|
|
|
8.9
|
|
|
10.9
|
|
|
—
|
|
|
44.8
|
|
|||||
Income (loss) from continuing operations
|
75.8
|
|
|
(3.8
|
)
|
|
9.3
|
|
|
—
|
|
|
81.3
|
|
|||||
Income (loss) from discontinued operations, net of taxes
|
0.4
|
|
|
—
|
|
|
(10.5
|
)
|
|
—
|
|
|
(10.1
|
)
|
|||||
Equity in loss of subsidiaries
|
(5.0
|
)
|
|
(11.9
|
)
|
|
—
|
|
|
16.9
|
|
|
—
|
|
|||||
Net income (loss)
|
$
|
71.2
|
|
|
$
|
(15.7
|
)
|
|
$
|
(1.2
|
)
|
|
$
|
16.9
|
|
|
$
|
71.2
|
|
Other comprehensive (loss) income
|
(7.3
|
)
|
|
10.6
|
|
|
12.8
|
|
|
(23.4
|
)
|
|
(7.3
|
)
|
|||||
Total comprehensive income (loss)
|
$
|
63.9
|
|
|
$
|
(5.1
|
)
|
|
$
|
11.6
|
|
|
$
|
(6.5
|
)
|
|
$
|
63.9
|
|
Condensed Consolidating Statements of Income and Comprehensive Income
|
|||||||||||||||||||
Twelve Months Ended December 31, 2011
|
|||||||||||||||||||
|
Products Corporation
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net Sales
|
$
|
883.7
|
|
|
$
|
95.2
|
|
|
$
|
541.0
|
|
|
$
|
(172.4
|
)
|
|
$
|
1,347.5
|
|
Cost of sales
|
399.8
|
|
|
45.0
|
|
|
208.8
|
|
|
(172.4
|
)
|
|
481.2
|
|
|||||
Gross profit
|
483.9
|
|
|
50.2
|
|
|
332.2
|
|
|
—
|
|
|
866.3
|
|
|||||
Selling, general and administrative expenses
|
391.9
|
|
|
40.6
|
|
|
220.3
|
|
|
—
|
|
|
652.8
|
|
|||||
Operating income
|
92.0
|
|
|
9.6
|
|
|
111.9
|
|
|
—
|
|
|
213.5
|
|
|||||
Other expenses, net:
|
|
|
|
|
|
|
|
|
|
||||||||||
Intercompany interest, net
|
0.1
|
|
|
(1.0
|
)
|
|
7.1
|
|
|
—
|
|
|
6.2
|
|
|||||
Interest expense
|
84.2
|
|
|
0.3
|
|
|
0.4
|
|
|
—
|
|
|
84.9
|
|
|||||
Amortization of debt issuance costs
|
3.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3.7
|
|
|||||
Loss on extinguishment of debt, net
|
11.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11.2
|
|
|||||
Foreign currency (gains) losses, net
|
(1.5
|
)
|
|
0.5
|
|
|
5.7
|
|
|
—
|
|
|
4.7
|
|
|||||
Miscellaneous, net
|
(47.9
|
)
|
|
(1.9
|
)
|
|
51.4
|
|
|
—
|
|
|
1.6
|
|
|||||
Other expenses, net
|
49.8
|
|
|
(2.1
|
)
|
|
64.6
|
|
|
—
|
|
|
112.3
|
|
|||||
Income from continuing operations before income taxes
|
42.2
|
|
|
11.7
|
|
|
47.3
|
|
|
—
|
|
|
101.2
|
|
|||||
Provision for income taxes
|
26.8
|
|
|
3.2
|
|
|
5.4
|
|
|
—
|
|
|
35.4
|
|
|||||
Income from continuing operations
|
15.4
|
|
|
8.5
|
|
|
41.9
|
|
|
—
|
|
|
65.8
|
|
|||||
Income (loss) from discontinued operations, net of taxes
|
0.6
|
|
|
—
|
|
|
(2.4
|
)
|
|
—
|
|
|
(1.8
|
)
|
|||||
Equity in income of subsidiaries
|
48.0
|
|
|
10.8
|
|
|
—
|
|
|
(58.8
|
)
|
|
—
|
|
|||||
Net income
|
$
|
64.0
|
|
|
$
|
19.3
|
|
|
$
|
39.5
|
|
|
$
|
(58.8
|
)
|
|
$
|
64.0
|
|
Other comprehensive loss
|
(50.6
|
)
|
|
(6.3
|
)
|
|
(14.3
|
)
|
|
20.6
|
|
|
(50.6
|
)
|
|||||
Total comprehensive income
|
$
|
13.4
|
|
|
$
|
13.0
|
|
|
$
|
25.2
|
|
|
$
|
(38.2
|
)
|
|
$
|
13.4
|
|
Condensed Consolidating Statements of Cash Flows
|
|||||||||||||||||||
For the Twelve Months Ended December 31, 2013
|
|||||||||||||||||||
|
Products Corporation
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by operating activities
|
$
|
76.9
|
|
|
$
|
4.6
|
|
|
$
|
41.8
|
|
|
$
|
—
|
|
|
$
|
123.3
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Capital expenditures
|
(21.1
|
)
|
|
(0.6
|
)
|
|
(6.9
|
)
|
|
—
|
|
|
(28.6
|
)
|
|||||
Business acquisition, net of cash and cash equivalents acquired
|
(627.6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(627.6
|
)
|
|||||
Insurance proceeds for property, plant and equipment
|
—
|
|
|
—
|
|
|
13.1
|
|
|
—
|
|
|
13.1
|
|
|||||
Proceeds from the sale of certain assets
|
0.3
|
|
|
—
|
|
|
3.4
|
|
|
—
|
|
|
3.7
|
|
|||||
Net cash (used in) provided by investing activities
|
(648.4
|
)
|
|
(0.6
|
)
|
|
9.6
|
|
|
—
|
|
|
(639.4
|
)
|
|||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net decrease in short-term borrowings and overdraft
|
(2.0
|
)
|
|
(3.2
|
)
|
|
(1.1
|
)
|
|
—
|
|
|
(6.3
|
)
|
|||||
Borrowings under the Acquisition Term Loan
|
698.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
698.3
|
|
|||||
Proceeds from the issuance of the 5¾% Senior Notes
|
500.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
500.0
|
|
|||||
Repayment under the 2011 Term Loan Facility
|
(113.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(113.0
|
)
|
|||||
Repayment of the 9¾% Senior Secured Notes
|
(330.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(330.0
|
)
|
|||||
Repayment of Contributed Loan
|
(48.6
|
)
|
|
|
|
|
|
|
|
|
|
|
(48.6
|
)
|
|||||
Payment of financing costs
|
(48.8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(48.8
|
)
|
|||||
Other financing activities
|
(2.2
|
)
|
|
—
|
|
|
(0.4
|
)
|
|
—
|
|
|
(2.6
|
)
|
|||||
Net cash provided by (used in) financing activities
|
653.7
|
|
|
(3.2
|
)
|
|
(1.5
|
)
|
|
—
|
|
|
649.0
|
|
|||||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
—
|
|
|
(5.1
|
)
|
|
—
|
|
|
(5.1
|
)
|
|||||
Net increase in cash and cash equivalents
|
82.2
|
|
|
0.8
|
|
|
44.8
|
|
|
—
|
|
|
127.8
|
|
|||||
Cash and cash equivalents at beginning of period
|
59.1
|
|
|
—
|
|
|
57.2
|
|
|
—
|
|
|
116.3
|
|
|||||
Cash and cash equivalents at end of period
|
$
|
141.3
|
|
|
$
|
0.8
|
|
|
$
|
102.0
|
|
|
$
|
—
|
|
|
$
|
244.1
|
|
Condensed Consolidating Statements of Cash Flows
|
|||||||||||||||||||
For the Twelve Months ended December 31, 2012
|
|||||||||||||||||||
|
Products Corporation
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by operating activities
|
$
|
21.3
|
|
|
$
|
64.9
|
|
|
$
|
17.9
|
|
|
$
|
—
|
|
|
$
|
104.1
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Capital expenditures
|
(18.1
|
)
|
|
(0.4
|
)
|
|
(2.4
|
)
|
|
—
|
|
|
(20.9
|
)
|
|||||
Business acquisition
|
—
|
|
|
(66.2
|
)
|
|
—
|
|
|
|
|
|
(66.2
|
)
|
|||||
Proceeds from the sale of certain assets
|
0.1
|
|
|
0.4
|
|
|
0.3
|
|
|
—
|
|
|
0.8
|
|
|||||
Net cash used in investing activities
|
(18.0
|
)
|
|
(66.2
|
)
|
|
(2.1
|
)
|
|
—
|
|
|
(86.3
|
)
|
|||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net increase (decrease) in short-term borrowings and overdraft
|
7.4
|
|
|
1.2
|
|
|
(2.3
|
)
|
|
—
|
|
|
6.3
|
|
|||||
Repayments under the 2011 Term Loan Facility
|
(8.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8.0
|
)
|
|||||
Payments of financing costs
|
(0.4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.4
|
)
|
|||||
Other financing activities
|
(0.9
|
)
|
|
—
|
|
|
(0.4
|
)
|
|
—
|
|
|
(1.3
|
)
|
|||||
Net cash (used in) provided by financing activities
|
(1.9
|
)
|
|
1.2
|
|
|
(2.7
|
)
|
|
—
|
|
|
(3.4
|
)
|
|||||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
—
|
|
|
0.2
|
|
|
—
|
|
|
0.2
|
|
|||||
Net increase (decrease) in cash and cash equivalents
|
1.4
|
|
|
(0.1
|
)
|
|
13.3
|
|
|
—
|
|
|
14.6
|
|
|||||
Cash and cash equivalents at beginning of period
|
57.7
|
|
|
0.1
|
|
|
43.9
|
|
|
—
|
|
|
101.7
|
|
|||||
Cash and cash equivalents at end of period
|
$
|
59.1
|
|
|
$
|
—
|
|
|
$
|
57.2
|
|
|
$
|
—
|
|
|
$
|
116.3
|
|
Condensed Consolidating Statements of Cash Flows
|
|||||||||||||||||||
For the Twelve Months ended December 31, 2011
|
|||||||||||||||||||
|
Products Corporation
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by (used in) operating activities
|
$
|
58.2
|
|
|
$
|
37.4
|
|
|
$
|
(7.6
|
)
|
|
$
|
—
|
|
|
$
|
88.0
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Capital expenditures
|
(11.7
|
)
|
|
(0.4
|
)
|
|
(1.8
|
)
|
|
—
|
|
|
(13.9
|
)
|
|||||
Business acquisition
|
—
|
|
|
(39.0
|
)
|
|
—
|
|
|
|
|
|
(39.0
|
)
|
|||||
Proceeds from the sale of certain assets
|
0.1
|
|
|
—
|
|
|
0.2
|
|
|
—
|
|
|
0.3
|
|
|||||
Net cash used in investing activities
|
(11.6
|
)
|
|
(39.4
|
)
|
|
(1.6
|
)
|
|
—
|
|
|
(52.6
|
)
|
|||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net (decrease) increase in short-term borrowings and overdraft
|
(2.5
|
)
|
|
2.0
|
|
|
0.7
|
|
|
—
|
|
|
0.2
|
|
|||||
Repayments under the 2010 Term Loan Facility
|
(794.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(794.0
|
)
|
|||||
Borrowings under the 2011 Term Loan Facility
|
796.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
796.0
|
|
|||||
Repayments under the 2011 Term Loan Facility
|
(4.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4.0
|
)
|
|||||
Payments of financing costs
|
(4.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4.3
|
)
|
|||||
Other financing activities
|
(0.6
|
)
|
|
—
|
|
|
(0.8
|
)
|
|
—
|
|
|
(1.4
|
)
|
|||||
Net cash (used in) provided by financing activities
|
(9.4
|
)
|
|
2.0
|
|
|
(0.1
|
)
|
|
—
|
|
|
(7.5
|
)
|
|||||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
—
|
|
|
(2.9
|
)
|
|
—
|
|
|
(2.9
|
)
|
|||||
Net increase (decrease) in cash and cash equivalents
|
37.2
|
|
|
—
|
|
|
(12.2
|
)
|
|
—
|
|
|
25.0
|
|
|||||
Cash and cash equivalents at beginning of period
|
20.5
|
|
|
0.1
|
|
|
56.1
|
|
|
—
|
|
|
76.7
|
|
|||||
Cash and cash equivalents at end of period
|
$
|
57.7
|
|
|
$
|
0.1
|
|
|
$
|
43.9
|
|
|
$
|
—
|
|
|
$
|
101.7
|
|
1.
|
$12.5 million
of non-restructuring integration costs recognized in 2013 within acquisition and integration costs in the Company's Consolidated Statements of Income and Comprehensive Income related to combining Colomer’s operations into the Company’s business. The Company expects to incur in 2014 approximately
$2 million
of additional similar non-restructuring costs.
|
2.
|
Expected total pre-tax restructuring and related charges of approximately
$22 million
to
$27 million
, with approximately
$22 million
to
$25 million
expected to be recognized in 2014 and any remaining charges to be recognized in 2015.
|
a.
|
These total charges consist primarily of approximately
$20 million
to
$23 million
in employee-related costs, including severance and other contractual termination benefits.
|
b.
|
All of these charges are expected to be cash, with approximately
$20 million
to
$25 million
to be paid in 2014 and the remaining balance in 2015.
|
3.
|
Expected integration-related capital expenditures of approximately
$8 million
, of which approximately
$7 million
is expected to be paid in 2014 and the remaining balance in 2015.
|
|
Balance at Beginning of Year
|
|
Charged to Cost and Expenses
|
|
Other Deductions
|
|
Balance at End of Year
|
||||||||
Allowance for Doubtful Accounts:
|
|
|
|
|
|
|
|
||||||||
2013
|
$
|
3.5
|
|
|
$
|
1.6
|
|
|
$
|
(0.9
|
)
|
|
$
|
4.2
|
|
2012
|
3.2
|
|
|
0.6
|
|
|
(0.3
|
)
|
|
3.5
|
|
||||
2011
|
3.1
|
|
|
(0.1
|
)
|
|
0.2
|
|
|
3.2
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Allowance for Volume and Early Payment Discounts:
|
|
|
|
|
|
|
|
||||||||
2013
|
$
|
14.6
|
|
|
$
|
57.6
|
|
|
$
|
(60.1
|
)
|
|
$
|
12.1
|
|
2012
|
15.7
|
|
|
58.4
|
|
|
(59.5
|
)
|
|
14.6
|
|
||||
2011
|
15.2
|
|
|
54.4
|
|
|
(53.9
|
)
|
|
15.7
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Allowance for Sales Returns:
|
|
|
|
|
|
|
|
||||||||
2013
|
$
|
54.5
|
|
|
$
|
77.8
|
|
|
$
|
(79.2
|
)
|
|
$
|
53.1
|
|
2012
|
57.8
|
|
|
73.7
|
|
|
(77.0
|
)
|
|
54.5
|
|
||||
2011
|
59.9
|
|
|
77.0
|
|
|
(79.1
|
)
|
|
57.8
|
|
Revlon Consumer Products Corporation
|
||||
(Registrant)
|
||||
|
|
|
|
|
By: /s/ Lorenzo Delpani
|
|
By: /s/ Lawrence B. Alletto
|
|
By: /s/ Jessica T. Graziano
|
Lorenzo Delpani
|
|
Lawrence B. Alletto
|
|
Jessica T. Graziano
|
President,
|
|
Executive Vice President,
|
|
Senior Vice President,
|
Chief Executive Officer and
|
|
Chief Financial Officer and
|
|
Corporate Controller and
|
Director
|
|
Chief Administrative Officer
|
|
Chief Accounting Officer
|
Signature
|
|
Title
|
|
|
|
*
|
|
Chairman of the Board and Director
|
(Ronald O. Perelman)
|
|
|
*
|
|
Director
|
(Barry F. Schwartz)
|
|
|
*
|
|
Vice Chairman of the Board and Director
|
(David L. Kennedy)
|
|
|
*
|
|
Director
|
(Alan S. Bernikow)
|
|
|
*
|
|
Director
|
(Viet D. Dinh)
|
|
|
By: /s/ Lucinda K. Treat
|
Lucinda K. Treat
|
Attorney-in-fact
|
By:
|
/s/ Jack Carrothers
Name: Jack Carrothers Title: Senior Corporate Counsel and Secretary |
By:
|
/s/ Jack Carrothers
Name: Jack Carrothers Title: Senior Corporate Counsel and Secretary |
By:
|
/s/ Jack Carrothers
Name: Jack Carrothers Title: Senior Corporate Counsel and Secretary |
By:
|
/s/ Jack Carrothers
Name: Jack Carrothers Title: Senior Corporate Counsel and Secretary |
By:
|
/s/ Jack Carrothers
Name: Jack Carrothers Title: Senior Corporate Counsel and Secretary |
By:
|
/s/ Jack Carrothers
Name: Jack Carrothers Title: Senior Corporate Counsel and Secretary |
By:
|
/s/ Michael T. Sheehan
Name: Michael T. Sheehan |
By:
|
/s/ Michael T. Sheehan
Name: Michael T. Sheehan |
By:
|
/s/ Joshua A. Hahn
Name: Joshua A. Hahn |
|
|
|
|
|
|
/S/ RONALD. O. PERELMAN
|
RONALD O. PERELMAN
|
|
/S/ BARRY F. SCHWARTZ
|
BARRY F. SCHWARTZ
|
|
/S/ ALAN S. BERNIKOW
|
ALAN S. BERNIKOW
|
/S/ VIET D. DINH
|
VIET D. DINH
|
/S/ DAVID L. KENNEDY
|
DAVID L. KENNEDY
|
|
1.
|
I have reviewed this annual report on Form 10-K (the "Report") of Revlon Consumer Products Corporation (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 annual report on Form 10-K (the "Report") of Revlon Consumer Products Corporation (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):
|