x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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__
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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13-3662953
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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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One New York Plaza, New York, New York
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10004
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
¨
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Accelerated filer
¨
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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 - Financial Information
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||
Item 1.
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Financial Statements
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|
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Consolidated Balance Sheets as of June 30, 2015 (Unaudited) and December 31, 2014
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|
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Unaudited Consolidated Statements of Income and Comprehensive Income for the Three and Six Months Ended June 30, 2015 and 2014
|
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Unaudited Consolidated Statement of Stockholder's Deficiency for the Six Months Ended June 30, 2015
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Unaudited Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2015 and 2014
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Notes to Unaudited Consolidated Financial Statements
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Item 2.
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Management's Discussion and Analysis of Financial Condition and Results of Operations
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Item 3.
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Quantitative and Qualitative Disclosures About Market Risk
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Item 4.
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Controls and Procedures
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PART II - Other Information
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Item 1.
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Legal Proceedings
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Item 1A.
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Risk Factors
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Item 5.
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Other Information
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Item 6.
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Exhibits
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|
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Signatures
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June 30, 2015
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December 31, 2014
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||||
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(Unaudited)
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||||
ASSETS
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||||
Current assets:
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||||
Cash and cash equivalents
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$
|
199.0
|
|
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$
|
275.3
|
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Trade receivables, less allowance for doubtful accounts of $9.9 and $9.3 as of June 30, 2015 and December 31, 2014, respectively
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256.4
|
|
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238.9
|
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Inventories
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196.6
|
|
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156.6
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Deferred income taxes – current
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59.2
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58.4
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Prepaid expenses and other
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61.5
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44.6
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Receivable from Revlon, Inc.
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112.3
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|
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105.4
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Total current assets
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885.0
|
|
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879.2
|
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||
Property, plant and equipment, net of accumulated depreciation of $263.6 and $250.5 as of June 30, 2015 and December 31, 2014, respectively
|
205.0
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|
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212.0
|
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Deferred income taxes – noncurrent
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15.9
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|
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34.8
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Goodwill
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478.3
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464.1
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Intangible assets, net of accumulated amortization of $49.1 and $39.3 as of June 30, 2015 and December 31, 2014, respectively
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325.0
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327.8
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Other assets
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109.7
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|
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113.3
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Total assets
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$
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2,018.9
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$
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2,031.2
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|
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||||
LIABILITIES AND STOCKHOLDER'S DEFICIENCY
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||||
Current liabilities:
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||||
Short-term borrowings
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$
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8.5
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$
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6.6
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Current portion of long-term debt
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6.9
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31.5
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Accounts payable
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189.0
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153.5
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Accrued expenses and other
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246.4
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273.3
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Total current liabilities
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450.8
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464.9
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Long-term debt
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1,829.6
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1,832.4
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Long-term pension and other post-retirement plan liabilities
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192.3
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200.9
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Other long-term liabilities
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83.3
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90.0
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Stockholder's deficiency:
|
|
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||||
RCPC Preferred Stock, par value $1.00 per share; 1,000 shares authorized; 546 shares issued and outstanding as of June 30, 2015 and December 31, 2014, respectively
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54.6
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|
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54.6
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Common Stock, par value $1.00 per share; 10,000 shares authorized; 5,260 shares issued and outstanding as of June 30, 2015 and December 31, 2014, respectively
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—
|
|
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—
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Additional paid-in capital
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955.0
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952.1
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Accumulated deficit
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(1,292.4
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)
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(1,320.5
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)
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Accumulated other comprehensive loss
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(254.3
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)
|
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(243.2
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)
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Total stockholder's deficiency
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(537.1
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)
|
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(557.0
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)
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Total liabilities and stockholder's deficiency
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$
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2,018.9
|
|
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$
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2,031.2
|
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Three Months Ended June 30,
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Six Months Ended June 30,
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||||||||||||
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2015
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2014
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2015
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2014
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||||||||
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||||||||
Net sales
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$
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482.4
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$
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497.9
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$
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920.9
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$
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967.7
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Cost of sales
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161.3
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167.2
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303.6
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330.7
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Gross profit
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321.1
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330.7
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617.3
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637.0
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Selling, general and administrative expenses
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256.9
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261.3
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503.8
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505.3
|
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Acquisition and integration costs
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4.7
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0.7
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5.9
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4.5
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Restructuring charges and other, net
|
(3.6
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)
|
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3.8
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(3.1
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)
|
|
17.3
|
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||||
Operating income
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63.1
|
|
|
64.9
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110.7
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|
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109.9
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|
||||
Other expenses, net:
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||||||||
Interest expense
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20.5
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21.0
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40.5
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43.3
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|
||||
Amortization of debt issuance costs
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1.4
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1.4
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2.8
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|
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2.8
|
|
||||
Loss on early extinguishment of debt
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—
|
|
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0.1
|
|
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—
|
|
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2.0
|
|
||||
Foreign currency (gains) losses, net
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(7.9
|
)
|
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7.2
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8.0
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8.6
|
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||||
Miscellaneous, net
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0.2
|
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—
|
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0.2
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|
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0.1
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|
||||
Other expenses, net
|
14.2
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|
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29.7
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|
|
51.5
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|
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56.8
|
|
||||
Income from continuing operations before income taxes
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48.9
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|
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35.2
|
|
|
59.2
|
|
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53.1
|
|
||||
Provision for income taxes
|
21.4
|
|
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19.3
|
|
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31.0
|
|
|
27.0
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|
||||
Income from continuing operations, net of taxes
|
27.5
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|
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15.9
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|
|
28.2
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|
|
26.1
|
|
||||
Income (loss) from discontinued operations, net of taxes
|
—
|
|
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3.7
|
|
|
(0.1
|
)
|
|
0.5
|
|
||||
Net income
|
$
|
27.5
|
|
|
$
|
19.6
|
|
|
$
|
28.1
|
|
|
$
|
26.6
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
||||||
Currency translation adjustment, net of tax
(a)
|
0.8
|
|
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(0.4
|
)
|
|
(12.6
|
)
|
|
1.2
|
|
||||
Amortization of pension related costs, net of tax
(b)(c)
|
1.8
|
|
|
1.1
|
|
|
3.5
|
|
|
2.3
|
|
||||
Revaluation of derivative financial instruments, net of tax
(d)
|
(0.1
|
)
|
|
(1.9
|
)
|
|
(2.0
|
)
|
|
(2.9
|
)
|
||||
Other comprehensive income (loss)
|
2.5
|
|
|
(1.2
|
)
|
|
(11.1
|
)
|
|
0.6
|
|
||||
Total comprehensive income
|
$
|
30.0
|
|
|
$
|
18.4
|
|
|
$
|
17.0
|
|
|
$
|
27.2
|
|
(a)
|
Net of tax benefit of
$0.2 million
and
$0.1 million
for the
three months ended June 30, 2015
and
2014
, respectively, and
$2.8 million
and
$0.6 million
for the
six months ended June 30, 2015
and
2014
, respectively.
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(b)
|
Net of tax benefit of
$0.4 million
and
nil
for the
three months ended June 30, 2015
and
2014
, respectively, and
$0.7 million
and
nil
for the
six months ended June 30, 2015
and
2014
, respectively.
|
(c)
|
This other comprehensive income component is included in the computation of net periodic benefit (income) costs. See Note 11, “Pension and Post-Retirement Benefits,” for additional information regarding net periodic benefit (income) costs.
|
(d)
|
Net of tax benefit of
nil
and
$1.2 million
for the
three months ended June 30, 2015
and
2014
, respectively, and
$1.2 million
and
$1.8 million
for the
six months ended June 30, 2015
and
2014
, respectively.
|
|
RCPC Preferred Stock
|
|
Additional Paid-In-Capital
|
|
Accumulated Deficit
|
|
Accumulated Other Comprehensive Loss
|
|
Total Stockholder's Deficiency
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance, January 1, 2015
|
$
|
54.6
|
|
|
$
|
952.1
|
|
|
$
|
(1,320.5
|
)
|
|
$
|
(243.2
|
)
|
|
$
|
(557.0
|
)
|
Stock-based compensation amortization
|
|
|
2.8
|
|
|
|
|
|
|
2.8
|
|
||||||||
Excess tax benefits from stock-based compensation
|
|
|
0.1
|
|
|
|
|
|
|
0.1
|
|
||||||||
Net income
|
|
|
|
|
28.1
|
|
|
|
|
28.1
|
|
||||||||
Other comprehensive loss, net
(a)
|
|
|
|
|
|
|
(11.1
|
)
|
|
(11.1
|
)
|
||||||||
Balance, June 30, 2015
|
$
|
54.6
|
|
|
$
|
955.0
|
|
|
$
|
(1,292.4
|
)
|
|
$
|
(254.3
|
)
|
|
$
|
(537.1
|
)
|
(a)
|
See Note 13, “Accumulated Other Comprehensive Loss,” regarding the changes in the accumulated balances for each component of other comprehensive loss during the
six months ended June 30, 2015
.
|
|
Six Months Ended June 30,
|
||||||
|
2015
|
|
2014
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
||||
Net income
|
$
|
28.1
|
|
|
$
|
26.6
|
|
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
|
|
|
|
||||
Depreciation and amortization
|
50.8
|
|
|
50.8
|
|
||
Foreign currency losses from re-measurement
|
8.8
|
|
|
7.4
|
|
||
Amortization of debt discount
|
0.7
|
|
|
0.7
|
|
||
Stock-based compensation amortization
|
2.8
|
|
|
0.5
|
|
||
Provision for deferred income taxes
|
19.5
|
|
|
21.5
|
|
||
Loss on early extinguishment of debt
|
—
|
|
|
2.0
|
|
||
Amortization of debt issuance costs
|
2.8
|
|
|
2.8
|
|
||
Gain on sale of certain assets
|
(3.0
|
)
|
|
(0.1
|
)
|
||
Pension and other post-retirement income
|
(1.3
|
)
|
|
(2.6
|
)
|
||
Change in assets and liabilities:
|
|
|
|
|
|||
Increase in trade receivables
|
(18.7
|
)
|
|
(22.1
|
)
|
||
Increase in inventories
|
(36.1
|
)
|
|
(14.7
|
)
|
||
Increase in prepaid expenses and other current assets
|
(25.2
|
)
|
|
(8.9
|
)
|
||
Increase in accounts payable
|
29.6
|
|
|
4.3
|
|
||
Decrease in accrued expenses and other current liabilities
|
(25.4
|
)
|
|
(33.9
|
)
|
||
Pension and other post-retirement plan contributions
|
(5.2
|
)
|
|
(11.7
|
)
|
||
Purchases of permanent displays
|
(22.0
|
)
|
|
(26.3
|
)
|
||
Other, net
|
(3.7
|
)
|
|
(2.7
|
)
|
||
Net cash provided by (used in) operating activities
|
2.5
|
|
|
(6.4
|
)
|
||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
||||
Capital expenditures
|
(17.2
|
)
|
|
(13.3
|
)
|
||
Business acquisitions, net of cash acquired
|
(34.2
|
)
|
|
—
|
|
||
Proceeds from the sale of certain assets
|
2.0
|
|
|
0.2
|
|
||
Net cash used in investing activities
|
(49.4
|
)
|
|
(13.1
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
||||
Net increase in short-term borrowings and overdraft
|
6.6
|
|
|
7.4
|
|
||
Repayment under the Amended and Restated Senior Subordinated Term Loan
|
—
|
|
|
(58.4
|
)
|
||
Repayments under the Acquisition Term Loan
|
(15.9
|
)
|
|
(3.5
|
)
|
||
Prepayments under the 2011 Term Loan
|
(12.1
|
)
|
|
—
|
|
||
Payment of financing costs
|
—
|
|
|
(1.8
|
)
|
||
Other financing activities
|
(2.1
|
)
|
|
(1.4
|
)
|
||
Net cash used in financing activities
|
(23.5
|
)
|
|
(57.7
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(5.9
|
)
|
|
(9.2
|
)
|
||
Net decrease in cash and cash equivalents
|
(76.3
|
)
|
|
(86.4
|
)
|
||
Cash and cash equivalents at beginning of period
|
275.3
|
|
|
244.1
|
|
||
Cash and cash equivalents at end of period
|
$
|
199.0
|
|
|
$
|
157.7
|
|
Supplemental schedule of cash flow information:
|
|
|
|
||||
Cash paid during the period for:
|
|
|
|
||||
Interest
|
$
|
37.9
|
|
|
$
|
45.3
|
|
Income taxes, net of refunds
|
10.8
|
|
|
12.6
|
|
|
Fair Values at April 21, 2015
|
||
Total Net Assets Acquired
(a)
|
$
|
3.9
|
|
Purchased Intangible Assets
(b)
|
11.9
|
|
|
Goodwill
|
18.8
|
|
|
Total consideration
|
$
|
34.6
|
|
1.
|
$1.2 million
and
$18.4 million
of non-restructuring integration costs recognized during the
six months ended June 30, 2015
, and through December 31, 2014, respectively. Such costs have been reflected within acquisition and integration costs in the Company's Consolidated Statements of Income and Comprehensive Income and are related to combining Colomer’s operations into the Company’s business;
|
2.
|
Expected integration-related capital expenditures of approximately
$6 million
, of which
$0.7 million
and
$4.4 million
has been paid during the
six months ended June 30, 2015
and through December 31, 2014, respectively, with the remaining balance expected to be paid during the remainder of 2015; and
|
3.
|
Expected total restructuring and related charges of approximately
$22 million
, of which
$(2.4) million
and
$20.1 million
was recognized during the
six months ended June 30, 2015
and through December 31, 2014, respectively, with the remaining charges expected to be recognized during the remainder of 2015. A summary of the restructuring and related charges for the Integration Program incurred through
June 30, 2015
and those expected to be incurred during the remainder of 2015 are as follows:
|
|
Restructuring Charges and Other, Net
|
|
|
|
|
|
|
||||||||||||||||
|
Employee Severance and Other Personnel Benefits
|
|
Other
|
|
Total Restructuring Charges
|
|
Inventory Write-offs and Other Manufacturing-Related Costs (a)
|
|
Other Charges (b)
|
|
Total Restructuring and Related Charges
|
||||||||||||
Charges incurred through December 31, 2014
|
$
|
17.3
|
|
|
$
|
1.6
|
|
|
$
|
18.9
|
|
|
$
|
0.6
|
|
|
$
|
0.6
|
|
|
$
|
20.1
|
|
Charges incurred in the six months ended June 30, 2015
|
$
|
(2.9
|
)
|
|
$
|
—
|
|
|
$
|
(2.9
|
)
|
|
$
|
0.2
|
|
|
$
|
0.3
|
|
|
$
|
(2.4
|
)
|
Cumulative charges incurred through June 30, 2015
|
$
|
14.4
|
|
|
$
|
1.6
|
|
|
$
|
16.0
|
|
|
$
|
0.8
|
|
|
$
|
0.9
|
|
|
$
|
17.7
|
|
Total expected charges
|
$
|
15.0
|
|
|
$
|
3.0
|
|
|
$
|
18.0
|
|
|
$
|
2.5
|
|
|
$
|
1.5
|
|
|
$
|
22.0
|
|
(a)
|
Inventory write-offs and other manufacturing-related costs are recorded within cost of sales within the Company’s Consolidated Statements of Income and Comprehensive Income.
|
(b)
|
Other charges are recorded within SG&A expenses within the Company’s Consolidated Statements of Income and Comprehensive Income.
|
|
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
|
||||||||||||||
Cumulative charges incurred through June 30, 2015
|
$
|
8.6
|
|
|
$
|
0.3
|
|
|
$
|
8.9
|
|
|
$
|
6.5
|
|
|
$
|
3.1
|
|
|
$
|
0.4
|
|
|
$
|
18.9
|
|
Total expected charges
|
$
|
8.6
|
|
|
$
|
0.3
|
|
|
$
|
8.9
|
|
|
$
|
6.5
|
|
|
$
|
3.1
|
|
|
$
|
0.4
|
|
|
$
|
18.9
|
|
|
|
|
|
|
|
|
Utilized, Net
|
|
|
||||||||||||||
Balance
Beginning of Year
|
|
(Income) Expense, Net
|
|
Foreign Currency Translation
|
|
Cash
|
|
Non-cash
|
|
Balance End of Year
|
|||||||||||||
Integration Program:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Employee severance and other personnel benefits
|
$
|
9.6
|
|
|
$
|
(2.9
|
)
|
|
$
|
(0.1
|
)
|
|
$
|
(3.4
|
)
|
|
$
|
—
|
|
|
$
|
3.2
|
|
Other
|
0.1
|
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
||||||
December 2013 Program:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Employee severance and other personnel benefits
|
1.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.2
|
|
||||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Other immaterial actions:
(a)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Employee severance and other personnel benefits
|
3.1
|
|
|
(0.2
|
)
|
|
—
|
|
|
(1.6
|
)
|
|
—
|
|
|
1.3
|
|
||||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total restructuring reserve
|
$
|
14.0
|
|
|
$
|
(3.1
|
)
|
|
$
|
(0.1
|
)
|
|
$
|
(5.1
|
)
|
|
$
|
—
|
|
|
$
|
5.7
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Net sales
|
$
|
—
|
|
|
$
|
2.2
|
|
|
$
|
—
|
|
|
$
|
2.6
|
|
Income (loss) from discontinued operations, before taxes
|
—
|
|
|
3.5
|
|
|
(0.1
|
)
|
|
0.7
|
|
||||
Provision for income taxes
|
—
|
|
|
(0.2
|
)
|
|
—
|
|
|
0.2
|
|
||||
Income (loss) from discontinued operations, net of taxes
|
—
|
|
|
3.7
|
|
|
(0.1
|
)
|
|
0.5
|
|
|
June 30, 2015
|
|
December 31, 2014
|
||||
Cash and cash equivalents
|
$
|
2.9
|
|
|
$
|
2.4
|
|
Trade receivables, net
|
0.2
|
|
|
0.2
|
|
||
Total current assets
|
3.1
|
|
|
2.6
|
|
||
Total assets
|
$
|
3.1
|
|
|
$
|
2.6
|
|
|
|
|
|
||||
Accounts payable
|
$
|
0.7
|
|
|
$
|
0.2
|
|
Accrued expenses and other
|
3.8
|
|
|
3.9
|
|
||
Total current liabilities
|
4.5
|
|
|
4.1
|
|
||
Total liabilities
|
$
|
4.5
|
|
|
$
|
4.1
|
|
|
June 30, 2015
|
|
December 31, 2014
|
||||
Raw materials and supplies
|
$
|
63.3
|
|
|
$
|
47.2
|
|
Work-in-process
|
11.0
|
|
|
9.0
|
|
||
Finished goods
|
122.3
|
|
|
100.4
|
|
||
|
$
|
196.6
|
|
|
$
|
156.6
|
|
|
Consumer
|
|
Professional
|
|
Other
|
|
Total
|
||||||||
Balance at December 31, 2014
|
$
|
217.9
|
|
|
$
|
246.2
|
|
|
$
|
—
|
|
|
$
|
464.1
|
|
Goodwill acquired
|
—
|
|
|
—
|
|
|
18.8
|
|
|
18.8
|
|
||||
Foreign currency translation adjustment
|
—
|
|
|
(4.6
|
)
|
|
—
|
|
|
(4.6
|
)
|
||||
Balance at June 30, 2015
|
$
|
217.9
|
|
|
$
|
241.6
|
|
|
$
|
18.8
|
|
|
$
|
478.3
|
|
|
June 30, 2015
|
||||||||||||
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
|
Weighted Average Useful Life (in Years)
|
||||||
Finite-lived intangible assets:
|
|
|
|
|
|
|
|
||||||
Trademarks and Licenses
|
$
|
140.2
|
|
|
$
|
(29.0
|
)
|
|
$
|
111.2
|
|
|
14
|
Customer relationships
|
118.4
|
|
|
(16.9
|
)
|
|
101.5
|
|
|
16
|
|||
Patents and Internally-Developed IP
|
16.3
|
|
|
(3.1
|
)
|
|
13.2
|
|
|
10
|
|||
Distribution rights
|
2.8
|
|
|
(0.1
|
)
|
|
2.7
|
|
|
5
|
|||
Total finite-lived intangible assets
|
$
|
277.7
|
|
|
$
|
(49.1
|
)
|
|
$
|
228.6
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Indefinite-lived intangible assets:
|
|
|
|
|
|
|
|
||||||
Trade Names
|
$
|
96.4
|
|
|
$
|
—
|
|
|
$
|
96.4
|
|
|
|
Total indefinite-lived intangible assets
|
$
|
96.4
|
|
|
$
|
—
|
|
|
$
|
96.4
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total intangible assets
|
$
|
374.1
|
|
|
$
|
(49.1
|
)
|
|
$
|
325.0
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
December 31, 2014
|
||||||||||||
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
|
Weighted Average Useful Life (in Years)
|
||||||
Finite-lived intangible assets:
|
|
|
|
|
|
|
|
||||||
Trademarks and Licenses
|
$
|
140.5
|
|
|
$
|
(23.5
|
)
|
|
$
|
117.0
|
|
|
14
|
Customer relationships
|
109.1
|
|
|
(13.4
|
)
|
|
95.7
|
|
|
17
|
|||
Patents and Internally-Developed IP
|
16.2
|
|
|
(2.4
|
)
|
|
13.8
|
|
|
10
|
|||
Total finite-lived intangible assets
|
$
|
265.8
|
|
|
$
|
(39.3
|
)
|
|
$
|
226.5
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Indefinite-lived intangible assets:
|
|
|
|
|
|
|
|
||||||
Trade Names
|
$
|
101.3
|
|
|
$
|
—
|
|
|
$
|
101.3
|
|
|
|
Total indefinite-lived intangible assets
|
$
|
101.3
|
|
|
$
|
—
|
|
|
$
|
101.3
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total intangible assets
|
$
|
367.1
|
|
|
$
|
(39.3
|
)
|
|
$
|
327.8
|
|
|
|
|
June 30, 2015
|
|
December 31, 2014
|
||||
Sales returns and allowances
|
$
|
58.6
|
|
|
$
|
70.6
|
|
Compensation and related benefits
|
53.9
|
|
|
66.8
|
|
||
Advertising and promotional costs
|
40.6
|
|
|
44.9
|
|
||
Taxes
|
25.8
|
|
|
23.3
|
|
||
Interest
|
12.4
|
|
|
11.0
|
|
||
Restructuring reserve
|
5.7
|
|
|
13.7
|
|
||
Other
|
49.4
|
|
|
43.0
|
|
||
|
$
|
246.4
|
|
|
$
|
273.3
|
|
|
June 30, 2015
|
|
December 31, 2014
|
||||
Amended Term Loan Facility: Acquisition Term Loan due 2019, net of discounts
(a)
|
$
|
675.8
|
|
|
$
|
691.6
|
|
Amended Term Loan Facility: 2011 Term Loan due 2017, net of discounts
(a)
|
660.1
|
|
|
671.6
|
|
||
Amended Revolving Credit Facility
(b)
|
—
|
|
|
—
|
|
||
5¾% Senior Notes due 2021
(c)
|
500.0
|
|
|
500.0
|
|
||
Spanish Government Loan due 2025
(d)
|
0.6
|
|
|
0.7
|
|
||
|
1,836.5
|
|
|
1,863.9
|
|
||
Less current portion (*)
|
(6.9
|
)
|
|
(31.5
|
)
|
||
|
$
|
1,829.6
|
|
|
$
|
1,832.4
|
|
•
|
Level 1: Fair valuing the asset or liability using observable inputs, such as quoted prices in active markets for identical assets or liabilities;
|
•
|
Level 2: Fair valuing the asset or liability using inputs other than quoted prices that are observable for the applicable asset or liability, either directly or indirectly, such as quoted prices for similar (as opposed to identical) assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active; and
|
•
|
Level 3: Fair valuing the asset or liability using unobservable inputs that reflect the Company’s own assumptions regarding the applicable asset or liability.
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Derivatives:
|
|
|
|
|
|
|
|
||||||||
FX Contracts
(a)
|
$
|
0.7
|
|
|
$
|
—
|
|
|
$
|
0.7
|
|
|
$
|
—
|
|
Total assets at fair value
|
$
|
0.7
|
|
|
$
|
—
|
|
|
$
|
0.7
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Derivatives:
|
|
|
|
|
|
|
|
||||||||
FX Contracts
(a)
|
$
|
0.2
|
|
|
$
|
—
|
|
|
$
|
0.2
|
|
|
$
|
—
|
|
2013 Interest Rate Swap
(b)
|
7.1
|
|
|
—
|
|
|
7.1
|
|
|
—
|
|
||||
Total liabilities at fair value
|
$
|
7.3
|
|
|
$
|
—
|
|
|
$
|
7.3
|
|
|
$
|
—
|
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Derivatives:
|
|
|
|
|
|
|
|
||||||||
FX Contracts
(a)
|
$
|
0.2
|
|
|
$
|
—
|
|
|
$
|
0.2
|
|
|
$
|
—
|
|
Total assets at fair value
|
$
|
0.2
|
|
|
$
|
—
|
|
|
$
|
0.2
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Derivatives:
|
|
|
|
|
|
|
|
||||||||
2013 Interest Rate Swap
(b)
|
$
|
3.5
|
|
|
$
|
—
|
|
|
$
|
3.5
|
|
|
$
|
—
|
|
Total liabilities at fair value
|
$
|
3.5
|
|
|
$
|
—
|
|
|
$
|
3.5
|
|
|
$
|
—
|
|
(a)
|
The fair value of the Company’s foreign currency forward exchange contracts ("FX Contracts") was measured based on observable market transactions for similar transactions in actively quoted markets of spot and forward rates on the respective dates. See Note 10, “Financial Instruments.”
|
(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 on the respective dates. See Note 10, “Financial Instruments.”
|
|
Fair Value
|
|
|
||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Carrying Value
|
||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Long-term debt, including current portion
|
$
|
—
|
|
|
$
|
1,828.9
|
|
|
$
|
—
|
|
|
$
|
1,828.9
|
|
|
$
|
1,836.5
|
|
|
Fair Value
|
|
|
||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Carrying Value
|
||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Long-term debt, including current portion
|
$
|
—
|
|
|
$
|
1,844.0
|
|
|
$
|
—
|
|
|
$
|
1,844.0
|
|
|
$
|
1,863.9
|
|
(a)
|
Fair Values of Derivative Financial Instruments in the Consolidated Balance Sheets:
|
|
Fair Values of Derivative Instruments
|
||||||||||||||||||
|
Assets
|
|
Liabilities
|
||||||||||||||||
|
Balance Sheet
|
|
June 30,
2015 |
|
December 31,
2014 |
|
Balance Sheet
|
|
June 30,
2015 |
|
December 31,
2014 |
||||||||
|
Classification
|
|
Fair Value
|
|
Fair Value
|
|
Classification
|
|
Fair Value
|
|
Fair Value
|
||||||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|||||||||||
2013 Interest Rate Swap
(i)
|
Prepaid expenses and other
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Accrued expenses and other
|
|
$
|
4.2
|
|
|
$
|
2.1
|
|
|
Other assets
|
|
—
|
|
|
—
|
|
|
Other long-term liabilities
|
|
2.9
|
|
|
1.4
|
|
||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|||||||||||
FX Contracts
(ii)
|
Prepaid expenses and other
|
|
$
|
0.7
|
|
|
$
|
0.2
|
|
|
Accrued Expenses
|
|
$
|
0.2
|
|
|
$
|
—
|
|
|
Amount of Gain (Loss) Recognized in Other Comprehensive Income
|
|||||||||||||||
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
|||||||||
2013 Interest Rate Swap, net of tax
(a)
|
$
|
(0.1
|
)
|
|
$
|
(1.9
|
)
|
|
$
|
(2.0
|
)
|
|
$
|
(2.9
|
)
|
(a)
|
Net of tax benefit of
nil
and
$1.2 million
for the three months ended June 30, 2015 and 2014, respectively, and
$1.2 million
and
$1.8 million
for the six month ended June 30, 2015 and 2014, respectively.
|
|
Income Statement Classification
|
Amount of Gain (Loss) Recognized in Net Income
|
|||||||||||||||
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|||||||||||||||
2015
|
|
2014
|
|
2015
|
|
2014
|
|||||||||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
||||||||||
2013 Interest Rate Swap
|
Interest Expense
|
$
|
(0.5
|
)
|
|
$
|
—
|
|
|
$
|
(0.5
|
)
|
|
$
|
—
|
|
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
||||||||||
FX Contracts
|
Foreign currency gain (loss), net
|
$
|
0.4
|
|
|
$
|
(1.2
|
)
|
|
$
|
0.9
|
|
|
$
|
(1.3
|
)
|
|
Pension Plans |
|
Other
Post-Retirement Benefit Plans |
||||||||||||
|
Three Months Ended June 30,
|
||||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Net periodic benefit (income) costs:
|
|
||||||||||||||
Service cost
|
$
|
0.2
|
|
|
$
|
0.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
|
7.1
|
|
|
7.6
|
|
|
0.1
|
|
|
0.1
|
|
||||
Expected return on plan assets
|
(10.2
|
)
|
|
(10.3
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization of actuarial loss
|
2.1
|
|
|
1.0
|
|
|
0.1
|
|
|
0.1
|
|
||||
|
(0.8
|
)
|
|
(1.5
|
)
|
|
0.2
|
|
|
0.2
|
|
||||
Portion allocated to Revlon Holdings
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
|
$
|
(0.9
|
)
|
|
$
|
(1.5
|
)
|
|
$
|
0.2
|
|
|
$
|
0.2
|
|
|
Pension Plans |
|
Other
Post-Retirement Benefit Plans |
||||||||||||
|
Six Months Ended June 30,
|
||||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Net periodic benefit (income) costs:
|
|
||||||||||||||
Service cost
|
$
|
0.4
|
|
|
$
|
0.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
|
14.3
|
|
|
15.1
|
|
|
0.2
|
|
|
0.3
|
|
||||
Expected return on plan assets
|
(20.3
|
)
|
|
(20.7
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization of actuarial loss
|
4.1
|
|
|
2.2
|
|
|
0.1
|
|
|
0.1
|
|
||||
|
(1.5
|
)
|
|
(3.0
|
)
|
|
0.3
|
|
|
0.4
|
|
||||
Portion allocated to Revlon Holdings
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
|
$
|
(1.6
|
)
|
|
$
|
(3.0
|
)
|
|
$
|
0.3
|
|
|
$
|
0.4
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Net periodic benefit (income) costs:
|
|
|
|
|
|
|
|
||||||||
Cost of sales
|
$
|
(1.0
|
)
|
|
$
|
(1.1
|
)
|
|
$
|
(2.0
|
)
|
|
$
|
(1.8
|
)
|
Selling, general and administrative expense
|
0.3
|
|
|
(0.1
|
)
|
|
0.7
|
|
|
(0.3
|
)
|
||||
Inventories
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
(0.5
|
)
|
||||
|
$
|
(0.7
|
)
|
|
$
|
(1.3
|
)
|
|
$
|
(1.3
|
)
|
|
$
|
(2.6
|
)
|
|
Foreign Currency Translation
|
|
Actuarial (Loss) Gain on Post-retirement Benefits
|
|
Deferred Gain (Loss) - Hedging
|
|
Other
|
|
Accumulated Other Comprehensive Loss
|
||||||||||
Balance at January 1, 2015
|
$
|
(5.4
|
)
|
|
$
|
(235.3
|
)
|
|
$
|
(2.2
|
)
|
|
$
|
(0.3
|
)
|
|
$
|
(243.2
|
)
|
Currency translation adjustment, net of tax benefit of $2.8 million
|
$
|
(12.6
|
)
|
|
|
|
|
|
|
|
|
|
|
(12.6
|
)
|
||||
Amortization of pension related costs, net of tax benefit of $0.7 million
(a)
|
|
|
|
$
|
3.5
|
|
|
|
|
|
|
|
|
3.5
|
|
||||
Revaluation of derivative financial instrument, net of tax benefit of $1.2 million
(b)
|
|
|
|
|
|
|
$
|
(2.0
|
)
|
|
|
|
|
(2.0
|
)
|
||||
Other comprehensive loss
|
(12.6
|
)
|
|
3.5
|
|
|
(2.0
|
)
|
|
—
|
|
|
(11.1
|
)
|
|||||
Balance at June 30, 2015
|
$
|
(18.0
|
)
|
|
$
|
(231.8
|
)
|
|
$
|
(4.2
|
)
|
|
$
|
(0.3
|
)
|
|
$
|
(254.3
|
)
|
(a)
|
Amounts represent the change in accumulated other comprehensive loss as a result of the amortization of actuarial losses (gains) arising during each year related to the Company’s pension and other post-retirement plans. See Note 11, “Pension and Post-retirement Benefits,” for further discussion of the Company’s pension and other post-retirement plans.
|
(b)
|
For the
six months ended June 30, 2015
, the 2013 Interest Rate Swap was deemed effective and therefore, the changes in fair value related to the 2013 Interest Rate Swap are recorded in other comprehensive loss. See Note 10, "Financial Instruments," for further discussion of the 2013 Interest Rate Swap.
|
|
|
2013
Interest Rate Swap
|
||
Beginning accumulated losses at March 31, 2015
|
|
(4.1
|
)
|
|
Reclassifications into earnings (net of $0.2 million tax benefit)
(a)
|
|
0.3
|
|
|
Change in fair value (net of $0.2 million tax benefit)
|
|
(0.4
|
)
|
|
Ending accumulated losses at June 30, 2015
|
|
$
|
(4.2
|
)
|
(a)
|
Reclassified to interest expense.
|
|
|
2013
Interest Rate Swap
|
||
Beginning accumulated losses at December 31, 2014
|
|
(2.2
|
)
|
|
Reclassifications into earnings (net of $0.2 million tax benefit)
(a)
|
|
0.3
|
|
|
Change in fair value (net of $1.4 million tax benefit)
|
|
(2.3
|
)
|
|
Ending accumulated losses at June 30, 2015
|
|
$
|
(4.2
|
)
|
(a)
|
Reclassified to interest expense.
|
•
|
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. The Consumer segment also includes a skincare line and hair color line sold in the mass retail channel, primarily in Spain, which were acquired as part of the Colomer Acquisition.
|
•
|
Professional
- The Professional segment is comprised primarily of the brands which the Company acquired in the Colomer Acquisition, which include
Revlon Professional
in hair color and hair care;
CND
-branded products
in nail polishes and nail enhancements; and
American Crew
in men’s grooming products, all of which are sold worldwide in the professional salon channel. The Company’s principal customers for its professional products include hair and nail salons and distributors in the U.S. and internationally. The Professional segment also includes a multi-cultural line consisting of
Creme of Nature
hair care products sold in the mass retail channel and in professional salons, primarily in the U.S.
|
•
|
Other
- The Other segment primarily includes the operating results of the CBB business and related purchase accounting for the Company's April 2015 CBB Acquisition. The results included within the Other segment are not material to the Company's consolidated results of operations.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Segment Net Sales:
|
|
|
|
|
|
|
|
||||||||
Consumer
|
$
|
354.7
|
|
|
$
|
367.3
|
|
|
$
|
679.0
|
|
|
$
|
706.8
|
|
Professional
|
123.4
|
|
|
130.6
|
|
|
237.6
|
|
|
260.9
|
|
||||
Other
|
$
|
4.3
|
|
|
$
|
—
|
|
|
$
|
4.3
|
|
|
$
|
—
|
|
Total
|
$
|
482.4
|
|
|
$
|
497.9
|
|
|
$
|
920.9
|
|
|
$
|
967.7
|
|
|
|
|
|
|
|
|
|
||||||||
Segment Profit:
|
|
|
|
|
|
|
|
||||||||
Consumer
(a)
|
$
|
83.8
|
|
|
$
|
80.3
|
|
|
$
|
146.0
|
|
|
$
|
149.8
|
|
Professional
|
24.3
|
|
|
31.4
|
|
|
53.5
|
|
|
63.3
|
|
||||
Other
|
$
|
(0.5
|
)
|
|
$
|
—
|
|
|
$
|
(0.5
|
)
|
|
$
|
—
|
|
Total
|
$
|
107.6
|
|
|
$
|
111.7
|
|
|
$
|
199.0
|
|
|
$
|
213.1
|
|
|
|
|
|
|
|
|
|
||||||||
Reconciliation:
|
|
|
|
|
|
|
|
||||||||
Segment Profit
|
$
|
107.6
|
|
|
$
|
111.7
|
|
|
$
|
199.0
|
|
|
$
|
213.1
|
|
Less:
|
|
|
|
|
|
|
|
|
|
||||||
Unallocated corporate expenses
(a)
|
15.8
|
|
|
15.7
|
|
|
30.5
|
|
|
27.1
|
|
||||
Depreciation and amortization
|
25.2
|
|
|
26.0
|
|
|
50.8
|
|
|
50.8
|
|
||||
Non-cash stock compensation expense
|
1.2
|
|
|
0.3
|
|
|
2.8
|
|
|
0.5
|
|
||||
Non-recurring items:
|
|
|
|
|
|
|
|
||||||||
Restructuring and related charges
|
(3.0
|
)
|
|
4.1
|
|
|
(2.3
|
)
|
|
17.7
|
|
||||
Acquisition and integration costs
|
4.7
|
|
|
0.7
|
|
|
5.9
|
|
|
4.5
|
|
||||
Inventory purchase accounting adjustment, cost of sales
|
0.6
|
|
|
—
|
|
|
0.6
|
|
|
2.6
|
|
||||
Operating Income
|
63.1
|
|
|
64.9
|
|
|
110.7
|
|
|
109.9
|
|
||||
Less:
|
|
|
|
|
|
|
|
||||||||
Interest Expense
|
20.5
|
|
|
21.0
|
|
|
40.5
|
|
|
43.3
|
|
||||
Amortization of debt issuance costs
|
1.4
|
|
|
1.4
|
|
|
2.8
|
|
|
2.8
|
|
||||
Loss on early extinguishment of debt
|
—
|
|
|
0.1
|
|
|
—
|
|
|
2.0
|
|
||||
Foreign currency losses (gains), net
|
(7.9
|
)
|
|
7.2
|
|
|
8.0
|
|
|
8.6
|
|
||||
Miscellaneous, net
|
0.2
|
|
|
—
|
|
|
0.2
|
|
|
0.1
|
|
||||
Income from continuing operations before income taxes
|
$
|
48.9
|
|
|
$
|
35.2
|
|
|
$
|
59.2
|
|
|
$
|
53.1
|
|
(a)
|
During the second quarter of 2015, the Company removed pension-related costs for its
U.S. qualified defined benefit pension plans from the measurement of its operating segment results. As a result,
$2.1 million
and
$4.1 million
in pension-related costs were reclassified from the measurement of Consumer segment profit and included as a component of unallocated corporate expenses for the three and six months ended June 30, 2014, respectively.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||||||||||
Geographic area:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
United States
|
$
|
267.0
|
|
|
55%
|
|
$
|
255.2
|
|
|
51%
|
|
$
|
511.4
|
|
|
56%
|
|
$
|
505.4
|
|
|
52%
|
Outside of the United States
|
215.4
|
|
|
45%
|
|
242.7
|
|
|
49%
|
|
409.5
|
|
|
44%
|
|
462.3
|
|
|
48%
|
||||
|
$
|
482.4
|
|
|
|
|
$
|
497.9
|
|
|
|
|
$
|
920.9
|
|
|
|
|
$
|
967.7
|
|
|
|
|
June 30, 2015
|
|
December 31, 2014
|
||||||||
Long-lived assets, net:
|
|
|
|
|
|
|
|||||
United States
|
$
|
838.4
|
|
|
75%
|
|
$
|
845.5
|
|
|
76%
|
Outside of the United States
|
280.6
|
|
|
25%
|
|
271.7
|
|
|
24%
|
||
|
$
|
1,119.0
|
|
|
|
$
|
1,117.2
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||||||||||
Classes of similar products:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Color cosmetics
|
$
|
266.0
|
|
|
55%
|
|
$
|
265.6
|
|
|
53%
|
|
$
|
505.5
|
|
|
55%
|
|
$
|
520.9
|
|
|
54%
|
Hair care
|
130.0
|
|
|
27%
|
|
142.0
|
|
|
29%
|
|
256.9
|
|
|
28%
|
|
272.7
|
|
|
28%
|
||||
Beauty care and fragrance
|
86.4
|
|
|
18%
|
|
90.3
|
|
|
18%
|
|
158.5
|
|
|
17%
|
|
174.1
|
|
|
18%
|
||||
|
$
|
482.4
|
|
|
|
|
$
|
497.9
|
|
|
|
|
$
|
920.9
|
|
|
|
|
$
|
967.7
|
|
|
|
Condensed Consolidating Balance Sheets
|
|||||||||||||||||||
As of June 30, 2015
|
|||||||||||||||||||
|
Products Corporation
|
|
Guarantor Subsidiaries
(a)
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
66.4
|
|
|
$
|
86.8
|
|
|
$
|
45.8
|
|
|
$
|
—
|
|
|
$
|
199.0
|
|
Trade receivables, less allowances for doubtful accounts
|
90.5
|
|
|
46.2
|
|
|
119.7
|
|
|
—
|
|
|
256.4
|
|
|||||
Inventories
|
91.8
|
|
|
40.8
|
|
|
64.0
|
|
|
—
|
|
|
196.6
|
|
|||||
Deferred income taxes - current
|
47.5
|
|
|
—
|
|
|
11.7
|
|
|
—
|
|
|
59.2
|
|
|||||
Prepaid expenses and other
|
133.1
|
|
|
7.2
|
|
|
33.5
|
|
|
—
|
|
|
173.8
|
|
|||||
Intercompany receivables
|
987.2
|
|
|
647.3
|
|
|
117.2
|
|
|
(1,751.7
|
)
|
|
—
|
|
|||||
Investment in subsidiaries
|
583.5
|
|
|
(147.7
|
)
|
|
—
|
|
|
(435.8
|
)
|
|
—
|
|
|||||
Property, plant and equipment, net
|
113.0
|
|
|
27.7
|
|
|
64.3
|
|
|
—
|
|
|
205.0
|
|
|||||
Deferred income taxes - noncurrent
|
1.9
|
|
|
—
|
|
|
14.0
|
|
|
—
|
|
|
15.9
|
|
|||||
Goodwill
|
185.8
|
|
|
29.5
|
|
|
263.0
|
|
|
—
|
|
|
478.3
|
|
|||||
Intangible assets, net
|
53.9
|
|
|
160.3
|
|
|
110.8
|
|
|
—
|
|
|
325.0
|
|
|||||
Other assets
|
78.9
|
|
|
6.8
|
|
|
24.0
|
|
|
—
|
|
|
109.7
|
|
|||||
Total assets
|
$
|
2,433.5
|
|
|
$
|
904.9
|
|
|
$
|
868.0
|
|
|
$
|
(2,187.5
|
)
|
|
$
|
2,018.9
|
|
LIABILITIES AND STOCKHOLDER’S DEFICIENCY
|
|
|
|
|
|
|
|||||||||||||
Short-term borrowings
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8.5
|
|
|
$
|
—
|
|
|
$
|
8.5
|
|
Current portion of long-term debt
|
6.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6.9
|
|
|||||
Accounts payable
|
79.3
|
|
|
30.0
|
|
|
79.7
|
|
|
—
|
|
|
189.0
|
|
|||||
Accrued expenses and other
|
150.6
|
|
|
19.8
|
|
|
76.0
|
|
|
—
|
|
|
246.4
|
|
|||||
Intercompany payables
|
676.4
|
|
|
707.6
|
|
|
367.7
|
|
|
(1,751.7
|
)
|
|
—
|
|
|||||
Long-term debt
|
1,829.0
|
|
|
—
|
|
|
0.6
|
|
|
—
|
|
|
1,829.6
|
|
|||||
Other long-term liabilities
|
228.4
|
|
|
1.3
|
|
|
45.9
|
|
|
—
|
|
|
275.6
|
|
|||||
Total liabilities
|
2,970.6
|
|
|
758.7
|
|
|
578.4
|
|
|
(1,751.7
|
)
|
|
2,556.0
|
|
|||||
Stockholder’s deficiency
|
(537.1
|
)
|
|
146.2
|
|
|
289.6
|
|
|
(435.8
|
)
|
|
(537.1
|
)
|
|||||
Total liabilities and stockholder’s deficiency
|
$
|
2,433.5
|
|
|
$
|
904.9
|
|
|
$
|
868.0
|
|
|
$
|
(2,187.5
|
)
|
|
$
|
2,018.9
|
|
Condensed Consolidating Balance Sheets
|
|||||||||||||||||||
As of December 31, 2014
|
|||||||||||||||||||
|
Products Corporation
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
104.2
|
|
|
$
|
88.1
|
|
|
$
|
83.0
|
|
|
$
|
—
|
|
|
$
|
275.3
|
|
Trade receivables, less allowances for doubtful accounts
|
87.8
|
|
|
39.7
|
|
|
111.4
|
|
|
—
|
|
|
238.9
|
|
|||||
Inventories
|
75.5
|
|
|
30.6
|
|
|
50.5
|
|
|
—
|
|
|
156.6
|
|
|||||
Deferred income taxes - current
|
46.2
|
|
|
—
|
|
|
12.2
|
|
|
—
|
|
|
58.4
|
|
|||||
Prepaid expenses and other
|
119.0
|
|
|
6.2
|
|
|
24.8
|
|
|
—
|
|
|
150.0
|
|
|||||
Intercompany receivables
|
992.5
|
|
|
630.0
|
|
|
129.6
|
|
|
(1,752.1
|
)
|
|
—
|
|
|||||
Investment in subsidiaries
|
562.8
|
|
|
(161.4
|
)
|
|
—
|
|
|
(401.4
|
)
|
|
—
|
|
|||||
Property, plant and equipment, net
|
112.4
|
|
|
28.0
|
|
|
71.6
|
|
|
—
|
|
|
212.0
|
|
|||||
Deferred income taxes - noncurrent
|
22.6
|
|
|
—
|
|
|
12.2
|
|
|
—
|
|
|
34.8
|
|
|||||
Goodwill
|
185.8
|
|
|
30.0
|
|
|
248.3
|
|
|
—
|
|
|
464.1
|
|
|||||
Intangible assets, net
|
53.2
|
|
|
164.6
|
|
|
110.0
|
|
|
—
|
|
|
327.8
|
|
|||||
Other assets
|
83.2
|
|
|
2.9
|
|
|
27.2
|
|
|
—
|
|
|
113.3
|
|
|||||
Total assets
|
$
|
2,445.2
|
|
|
$
|
858.7
|
|
|
$
|
880.8
|
|
|
$
|
(2,153.5
|
)
|
|
$
|
2,031.2
|
|
LIABILITIES AND STOCKHOLDER’S DEFICIENCY
|
|
|
|
|
|
|
|||||||||||||
Short-term borrowings
|
$
|
—
|
|
|
—
|
|
|
$
|
6.6
|
|
|
$
|
—
|
|
|
$
|
6.6
|
|
|
Current portion of long-term debt
|
31.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
31.5
|
|
|||||
Accounts payable
|
68.3
|
|
|
19.0
|
|
|
66.2
|
|
|
—
|
|
|
153.5
|
|
|||||
Accrued expenses and other
|
159.0
|
|
|
24.5
|
|
|
89.8
|
|
|
—
|
|
|
273.3
|
|
|||||
Intercompany payables
|
672.9
|
|
|
703.6
|
|
|
375.6
|
|
|
(1,752.1
|
)
|
|
—
|
|
|||||
Long-term debt
|
1,831.7
|
|
|
—
|
|
|
0.7
|
|
|
—
|
|
|
1,832.4
|
|
|||||
Other long-term liabilities
|
238.8
|
|
|
4.4
|
|
|
47.7
|
|
|
—
|
|
|
290.9
|
|
|||||
Total liabilities
|
3,002.2
|
|
|
751.5
|
|
|
586.6
|
|
|
(1,752.1
|
)
|
|
2,588.2
|
|
|||||
Stockholder’s deficiency
|
(557.0
|
)
|
|
107.2
|
|
|
294.2
|
|
|
(401.4
|
)
|
|
(557.0
|
)
|
|||||
Total liabilities and stockholder’s deficiency
|
$
|
2,445.2
|
|
|
$
|
858.7
|
|
|
$
|
880.8
|
|
|
$
|
(2,153.5
|
)
|
|
$
|
2,031.2
|
|
Condensed Consolidating Statements of Operations and Comprehensive Income (Loss)
|
|||||||||||||||||||
For the Three Months Ended June 30, 2015
|
|||||||||||||||||||
|
Products Corporation
|
|
Guarantor Subsidiaries
(a)
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net Sales
|
$
|
268.4
|
|
|
$
|
85.3
|
|
|
$
|
178.6
|
|
|
$
|
(49.9
|
)
|
|
$
|
482.4
|
|
Cost of sales
|
114.4
|
|
|
33.0
|
|
|
63.8
|
|
|
(49.9
|
)
|
|
161.3
|
|
|||||
Gross profit
|
154.0
|
|
|
52.3
|
|
|
114.8
|
|
|
—
|
|
|
321.1
|
|
|||||
Selling, general and administrative expenses
|
119.3
|
|
|
40.2
|
|
|
97.4
|
|
|
—
|
|
|
256.9
|
|
|||||
Acquisition and integration costs
|
4.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4.7
|
|
|||||
Restructuring charges and other, net
|
(0.7
|
)
|
|
0.6
|
|
|
(3.5
|
)
|
|
—
|
|
|
(3.6
|
)
|
|||||
Operating income
|
30.7
|
|
|
11.5
|
|
|
20.9
|
|
|
—
|
|
|
63.1
|
|
|||||
Other expenses, net:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Intercompany interest, net
|
(2.1
|
)
|
|
—
|
|
|
2.1
|
|
|
—
|
|
|
—
|
|
|||||
Interest expense
|
20.3
|
|
|
—
|
|
|
0.2
|
|
|
—
|
|
|
20.5
|
|
|||||
Amortization of debt issuance costs
|
1.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.4
|
|
|||||
Foreign currency (gains) losses, net
|
(1.4
|
)
|
|
—
|
|
|
(6.5
|
)
|
|
—
|
|
|
(7.9
|
)
|
|||||
Miscellaneous, net
|
11.4
|
|
|
(2.9
|
)
|
|
(8.3
|
)
|
|
—
|
|
|
0.2
|
|
|||||
Other expenses, net
|
29.6
|
|
|
(2.9
|
)
|
|
(12.5
|
)
|
|
—
|
|
|
14.2
|
|
|||||
Income from continuing operations before income taxes
|
1.1
|
|
|
14.4
|
|
|
33.4
|
|
|
—
|
|
|
48.9
|
|
|||||
Provision for income taxes
|
9.5
|
|
|
9.5
|
|
|
2.4
|
|
|
—
|
|
|
21.4
|
|
|||||
(Loss) income from continuing operations
|
(8.4
|
)
|
|
4.9
|
|
|
31.0
|
|
|
—
|
|
|
27.5
|
|
|||||
Loss from discontinued operations, net of taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Equity in income (loss) of subsidiaries
|
35.9
|
|
|
22.6
|
|
|
—
|
|
|
(58.5
|
)
|
|
—
|
|
|||||
Net income (loss)
|
$
|
27.5
|
|
|
$
|
27.5
|
|
|
$
|
31.0
|
|
|
$
|
(58.5
|
)
|
|
$
|
27.5
|
|
Other comprehensive income (loss)
|
2.5
|
|
|
(1.8
|
)
|
|
1.8
|
|
|
—
|
|
|
2.5
|
|
|||||
Total comprehensive income (loss)
|
$
|
30.0
|
|
|
$
|
25.7
|
|
|
$
|
32.8
|
|
|
$
|
(58.5
|
)
|
|
$
|
30.0
|
|
Condensed Consolidating Statements of Operations and Comprehensive Income (Loss)
|
|||||||||||||||||||
For the Three Months Ended June 30, 2014
|
|||||||||||||||||||
|
Products Corporation
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net Sales
|
$
|
256.1
|
|
|
$
|
88.5
|
|
|
$
|
204.9
|
|
|
$
|
(51.6
|
)
|
|
$
|
497.9
|
|
Cost of sales
|
115.7
|
|
|
33.7
|
|
|
69.4
|
|
|
(51.6
|
)
|
|
167.2
|
|
|||||
Gross profit
|
140.4
|
|
|
54.8
|
|
|
135.5
|
|
|
—
|
|
|
330.7
|
|
|||||
Selling, general and administrative expenses
|
121.6
|
|
|
33.0
|
|
|
106.7
|
|
|
—
|
|
|
261.3
|
|
|||||
Acquisition and integration costs
|
0.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.7
|
|
|||||
Restructuring charges and other, net
|
—
|
|
|
1.3
|
|
|
2.5
|
|
|
—
|
|
|
3.8
|
|
|||||
Operating income
|
18.1
|
|
|
20.5
|
|
|
26.3
|
|
|
—
|
|
|
64.9
|
|
|||||
Other expenses, net:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Intercompany interest, net
|
(2.1
|
)
|
|
(0.2
|
)
|
|
2.3
|
|
|
—
|
|
|
—
|
|
|||||
Interest expense
|
20.6
|
|
|
0.1
|
|
|
0.3
|
|
|
—
|
|
|
21.0
|
|
|||||
Amortization of debt issuance costs
|
1.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.4
|
|
|||||
Loss on early extinguishment of debt, net
|
0.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|||||
Foreign currency (gains) losses, net
|
(6.1
|
)
|
|
0.1
|
|
|
13.2
|
|
|
—
|
|
|
7.2
|
|
|||||
Miscellaneous, net
|
(11.9
|
)
|
|
(1.2
|
)
|
|
13.1
|
|
|
—
|
|
|
—
|
|
|||||
Other expenses, net
|
2.0
|
|
|
(1.2
|
)
|
|
28.9
|
|
|
—
|
|
|
29.7
|
|
|||||
Income (loss) from continuing operations before income taxes
|
16.1
|
|
|
21.7
|
|
|
(2.6
|
)
|
|
—
|
|
|
35.2
|
|
|||||
Provision for (benefit from) income taxes
|
40.2
|
|
|
(26.4
|
)
|
|
5.5
|
|
|
—
|
|
|
19.3
|
|
|||||
(Loss) income from continuing operations
|
(24.1
|
)
|
|
48.1
|
|
|
(8.1
|
)
|
|
—
|
|
|
15.9
|
|
|||||
Loss from discontinued operations, net of taxes
|
0.2
|
|
|
—
|
|
|
3.5
|
|
|
—
|
|
|
3.7
|
|
|||||
Equity in income (loss) of subsidiaries
|
43.5
|
|
|
(12.1
|
)
|
|
—
|
|
|
(31.4
|
)
|
|
—
|
|
|||||
Net income (loss)
|
$
|
19.6
|
|
|
$
|
36.0
|
|
|
$
|
(4.6
|
)
|
|
$
|
(31.4
|
)
|
|
$
|
19.6
|
|
Other comprehensive (loss) income
|
(1.2
|
)
|
|
(1.1
|
)
|
|
(1.6
|
)
|
|
2.7
|
|
|
(1.2
|
)
|
|||||
Total comprehensive income (loss)
|
$
|
18.4
|
|
|
$
|
34.9
|
|
|
$
|
(6.2
|
)
|
|
$
|
(28.7
|
)
|
|
$
|
18.4
|
|
Condensed Consolidating Statements of Operations and Comprehensive Income (Loss)
|
|||||||||||||||||||
For the Six Months Ended June 30, 2015
|
|||||||||||||||||||
|
Products Corporation
|
|
Guarantor Subsidiaries
(a)
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net Sales
|
$
|
511.8
|
|
|
$
|
166.3
|
|
|
$
|
334.8
|
|
|
$
|
(92.0
|
)
|
|
$
|
920.9
|
|
Cost of sales
|
215.6
|
|
|
60.7
|
|
|
119.3
|
|
|
(92.0
|
)
|
|
303.6
|
|
|||||
Gross profit
|
296.2
|
|
|
105.6
|
|
|
215.5
|
|
|
—
|
|
|
617.3
|
|
|||||
Selling, general and administrative expenses
|
245.8
|
|
|
68.8
|
|
|
189.2
|
|
|
—
|
|
|
503.8
|
|
|||||
Acquisition and integration costs
|
5.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5.9
|
|
|||||
Restructuring charges and other, net
|
(0.5
|
)
|
|
0.7
|
|
|
(3.3
|
)
|
|
—
|
|
|
(3.1
|
)
|
|||||
Operating income
|
45.0
|
|
|
36.1
|
|
|
29.6
|
|
|
—
|
|
|
110.7
|
|
|||||
Other expenses, net:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Intercompany interest, net
|
(4.1
|
)
|
|
(0.1
|
)
|
|
4.2
|
|
|
—
|
|
|
—
|
|
|||||
Interest expense
|
40.3
|
|
|
—
|
|
|
0.2
|
|
|
—
|
|
|
40.5
|
|
|||||
Amortization of debt issuance costs
|
2.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.8
|
|
|||||
Foreign currency (gains) losses, net
|
(1.2
|
)
|
|
(0.5
|
)
|
|
9.7
|
|
|
—
|
|
|
8.0
|
|
|||||
Miscellaneous, net
|
(6.2
|
)
|
|
(1.4
|
)
|
|
7.8
|
|
|
—
|
|
|
0.2
|
|
|||||
Other expenses, net
|
31.6
|
|
|
(2.0
|
)
|
|
21.9
|
|
|
—
|
|
|
51.5
|
|
|||||
Income from continuing operations before income taxes
|
13.4
|
|
|
38.1
|
|
|
7.7
|
|
|
—
|
|
|
59.2
|
|
|||||
Provision for income taxes
|
11.0
|
|
|
18.1
|
|
|
1.9
|
|
|
—
|
|
|
31.0
|
|
|||||
Income from continuing operations
|
2.4
|
|
|
20.0
|
|
|
5.8
|
|
|
—
|
|
|
28.2
|
|
|||||
Loss from discontinued operations, net of taxes
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
(0.1
|
)
|
|||||
Equity in income (loss) of subsidiaries
|
25.7
|
|
|
12.4
|
|
|
—
|
|
|
(38.1
|
)
|
|
—
|
|
|||||
Net income (loss)
|
$
|
28.1
|
|
|
$
|
32.4
|
|
|
$
|
5.7
|
|
|
$
|
(38.1
|
)
|
|
$
|
28.1
|
|
Other comprehensive (loss) income
|
(11.1
|
)
|
|
(2.8
|
)
|
|
(13.3
|
)
|
|
16.1
|
|
|
(11.1
|
)
|
|||||
Total comprehensive income (loss)
|
$
|
17.0
|
|
|
$
|
29.6
|
|
|
$
|
(7.6
|
)
|
|
$
|
(22.0
|
)
|
|
$
|
17.0
|
|
Condensed Consolidating Statements of Operations and Comprehensive Income (Loss)
|
|||||||||||||||||||
For the Six Months Ended June 30, 2014
|
|||||||||||||||||||
|
Products Corporation
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net Sales
|
$
|
495.5
|
|
|
$
|
181.5
|
|
|
$
|
388.1
|
|
|
$
|
(97.4
|
)
|
|
$
|
967.7
|
|
Cost of sales
|
220.7
|
|
|
72.8
|
|
|
134.6
|
|
|
(97.4
|
)
|
|
330.7
|
|
|||||
Gross profit
|
274.8
|
|
|
108.7
|
|
|
253.5
|
|
|
—
|
|
|
637.0
|
|
|||||
Selling, general and administrative expenses
|
234.4
|
|
|
63.3
|
|
|
207.6
|
|
|
—
|
|
|
505.3
|
|
|||||
Acquisition and integration costs
|
4.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4.5
|
|
|||||
Restructuring charges and other, net
|
2.3
|
|
|
3.1
|
|
|
11.9
|
|
|
—
|
|
|
17.3
|
|
|||||
Operating income
|
33.6
|
|
|
42.3
|
|
|
34.0
|
|
|
—
|
|
|
109.9
|
|
|||||
Other expenses, net:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Intercompany interest, net
|
(4.2
|
)
|
|
(0.3
|
)
|
|
4.5
|
|
|
—
|
|
|
—
|
|
|||||
Interest expense
|
42.8
|
|
|
0.1
|
|
|
0.4
|
|
|
—
|
|
|
43.3
|
|
|||||
Amortization of debt issuance costs
|
2.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.8
|
|
|||||
Loss on early extinguishment of debt, net
|
2.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.0
|
|
|||||
Foreign currency (gains) losses, net
|
(6.6
|
)
|
|
0.2
|
|
|
15.0
|
|
|
—
|
|
|
8.6
|
|
|||||
Miscellaneous, net
|
(29.3
|
)
|
|
(0.9
|
)
|
|
30.3
|
|
|
—
|
|
|
0.1
|
|
|||||
Other expenses, net
|
7.5
|
|
|
(0.9
|
)
|
|
50.2
|
|
|
—
|
|
|
56.8
|
|
|||||
Income (loss) from continuing operations before income taxes
|
26.1
|
|
|
43.2
|
|
|
(16.2
|
)
|
|
—
|
|
|
53.1
|
|
|||||
Provision for (benefit from) income taxes
|
53.5
|
|
|
(27.9
|
)
|
|
1.4
|
|
|
—
|
|
|
27.0
|
|
|||||
(Loss) income from continuing operations
|
(27.4
|
)
|
|
71.1
|
|
|
(17.6
|
)
|
|
—
|
|
|
26.1
|
|
|||||
Income from discontinued operations, net of taxes
|
0.2
|
|
|
—
|
|
|
0.3
|
|
|
—
|
|
|
0.5
|
|
|||||
Equity in income (loss) of subsidiaries
|
53.8
|
|
|
(15.2
|
)
|
|
—
|
|
|
(38.6
|
)
|
|
—
|
|
|||||
Net income (loss)
|
$
|
26.6
|
|
|
$
|
55.9
|
|
|
$
|
(17.3
|
)
|
|
$
|
(38.6
|
)
|
|
$
|
26.6
|
|
Other comprehensive income (loss)
|
0.6
|
|
|
(0.2
|
)
|
|
(1.2
|
)
|
|
1.4
|
|
|
0.6
|
|
|||||
Total comprehensive income (loss)
|
$
|
27.2
|
|
|
$
|
55.7
|
|
|
$
|
(18.5
|
)
|
|
$
|
(37.2
|
)
|
|
$
|
27.2
|
|
Condensed Consolidating Statements of Cash Flows
|
|||||||||||||||||||
For the Six Months Ended June 30, 2015
|
|||||||||||||||||||
|
Products Corporation
|
|
Guarantor Subsidiaries
(a)
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash (used in) provided by operating activities
|
$
|
(1.7
|
)
|
|
$
|
(0.3
|
)
|
|
$
|
4.5
|
|
|
$
|
—
|
|
|
$
|
2.5
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Capital expenditures
|
(10.6
|
)
|
|
(2.5
|
)
|
|
(4.1
|
)
|
|
—
|
|
|
(17.2
|
)
|
|||||
Business acquisition, net of cash acquired
|
—
|
|
|
—
|
|
|
(34.2
|
)
|
|
—
|
|
|
(34.2
|
)
|
|||||
Proceeds from the sale of certain assets
|
0.4
|
|
|
1.5
|
|
|
0.1
|
|
|
—
|
|
|
2.0
|
|
|||||
Net cash used in investing activities
|
(10.2
|
)
|
|
(1.0
|
)
|
|
(38.2
|
)
|
|
—
|
|
|
(49.4
|
)
|
|||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net increase in short-term borrowings and overdraft
|
4.0
|
|
|
—
|
|
|
2.6
|
|
|
—
|
|
|
6.6
|
|
|||||
Repayments under the Acquisition Term Loan
|
(15.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15.9
|
)
|
|||||
Prepayments under the 2011 Term Loan
|
(12.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12.1
|
)
|
|||||
Other financing activities
|
(1.9
|
)
|
|
—
|
|
|
(0.2
|
)
|
|
—
|
|
|
(2.1
|
)
|
|||||
Net cash (used in) provided by financing activities
|
(25.9
|
)
|
|
—
|
|
|
2.4
|
|
|
—
|
|
|
(23.5
|
)
|
|||||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
—
|
|
|
(5.9
|
)
|
|
—
|
|
|
(5.9
|
)
|
|||||
Net decrease in cash and cash equivalents
|
(37.8
|
)
|
|
(1.3
|
)
|
|
(37.2
|
)
|
|
—
|
|
|
(76.3
|
)
|
|||||
Cash and cash equivalents at beginning of period
|
104.2
|
|
|
88.1
|
|
|
83.0
|
|
|
—
|
|
|
275.3
|
|
|||||
Cash and cash equivalents at end of period
|
$
|
66.4
|
|
|
$
|
86.8
|
|
|
$
|
45.8
|
|
|
$
|
—
|
|
|
$
|
199.0
|
|
Condensed Consolidating Statements of Cash Flows
|
|||||||||||||||||||
For the Six Months Ended June 30, 2014
|
|||||||||||||||||||
|
Products Corporation
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash (used in) provided by operating activities
|
$
|
(22.8
|
)
|
|
$
|
27.7
|
|
|
$
|
(11.3
|
)
|
|
$
|
—
|
|
|
$
|
(6.4
|
)
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Capital expenditures
|
(9.2
|
)
|
|
(0.2
|
)
|
|
(3.9
|
)
|
|
—
|
|
|
(13.3
|
)
|
|||||
Proceeds from the sale of certain assets
|
—
|
|
|
—
|
|
|
0.2
|
|
|
—
|
|
|
0.2
|
|
|||||
Net cash used in investing activities
|
(9.2
|
)
|
|
(0.2
|
)
|
|
(3.7
|
)
|
|
—
|
|
|
(13.1
|
)
|
|||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net increase in short-term borrowings and overdraft
|
2.4
|
|
|
1.3
|
|
|
3.7
|
|
|
—
|
|
|
7.4
|
|
|||||
Repayment under the Amended and Restated Senior Subordinated Term Loan
|
(58.4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(58.4
|
)
|
|||||
Repayments under the Acquisition Term Loan
|
(3.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3.5
|
)
|
|||||
Payment of financing costs
|
(1.8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.8
|
)
|
|||||
Other financing activities
|
(1.2
|
)
|
|
—
|
|
|
(0.2
|
)
|
|
—
|
|
|
(1.4
|
)
|
|||||
Net cash (used in) provided by financing activities
|
(62.5
|
)
|
|
1.3
|
|
|
3.5
|
|
|
—
|
|
|
(57.7
|
)
|
|||||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
—
|
|
|
(9.2
|
)
|
|
—
|
|
|
(9.2
|
)
|
|||||
Net (decrease) increase in cash and cash equivalents
|
(94.5
|
)
|
|
28.8
|
|
|
(20.7
|
)
|
|
—
|
|
|
(86.4
|
)
|
|||||
Cash and cash equivalents at beginning of period
(a)
|
141.3
|
|
|
14.5
|
|
|
88.3
|
|
|
—
|
|
|
244.1
|
|
|||||
Cash and cash equivalents at end of period
|
$
|
46.8
|
|
|
$
|
43.3
|
|
|
$
|
67.6
|
|
|
$
|
—
|
|
|
$
|
157.7
|
|
1.
|
Manage financial drivers for value creation.
Gross profit margin expansion, which includes optimizing price, allocating sales allowances to maximize our return on trade spending and 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.
|
2.
|
Grow profitability through intensive innovation and geographical expansion.
Creating fewer, bigger and better innovations across our brands that are relevant, unique, impactful, distinctive and ownable. We are also focused on pursuing organic growth opportunities within our existing brand portfolio and existing channels, and pursuing opportunities to expand our geographical presence.
|
3.
|
Improve cash flow.
Improving our cash flows through, among other things, continued effective management of our working capital and by focusing on appropriate return on capital spending.
|
4.
|
People.
Attracting, developing and supporting employees who fit into our innovative culture and inspire the creative drive that represents the foundation of our vision and execution of our strategy.
|
•
|
$15.1 million of favorable variance in foreign currency (gains) losses, net, as a result of $7.9 million in foreign currency gains, net, recognized during the second quarter of 2015 primarily due to the favorable impact of the revaluation of certain U.S. Dollar denominated payables as compared to $7.2 million in foreign currency losses, net, recognized during the second quarter of 2014, which was primarily due to a $6.0 million foreign currency loss recognized as a result of the re-measurement of Revlon Venezuela's balance sheet as of June 30, 2014; and
|
•
|
$7.4 million decrease in restructuring charges and other, net, in the second quarter of 2015, which decrease is due to net reductions in estimated restructuring costs of $3.6 million during the second quarter of 2015, as compared to $3.8 million of charges incurred under the Integration Program during the second quarter of 2014;
|
•
|
$9.6 million
of lower gross profit in the second quarter of 2015 due to a
$15.5 million
decrease in consolidated net, sales, partially offset by a
$5.9 million
decrease in cost of sales.
|
•
|
$20.4 million decrease in restructuring charges and other, net, in the first six months of 2015, which decrease is due to $17.3 million of charges taken under the Integration Program during the first six months of 2014, following its implementation in January 2014, as compared to net reductions in estimated restructuring costs of $3.1 million during the first six months of 2015; and
|
•
|
$2.8 million decrease in interest expense in the first six months of 2015 primarily due to lower weighted average borrowing rates and lower average debt outstanding;
|
•
|
$19.7 million
of lower gross profit in the first six months of 2015 due to a
$46.8 million
decrease in consolidated net sales, partially offset by a
$27.1 million
decrease in cost of sales.
|
•
|
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
|
•
|
The Professional segment is comprised primarily of the Company's professional brands, which include
Revlon Professional
in hair color and hair care;
CND
-
branded products
in nail polishes and nail enhancements; and
American Crew
in men’s grooming products, all of which are sold worldwide in the professional salon channel. The Company’s principal customers for its professional products include hair and nail salons and distributors in the U.S. and internationally. The Professional segment also includes a multi-cultural hair care line consisting of Creme of Nature hair care products sold in the mass retail channel and in professional salons, primarily in the U.S.
|
•
|
The Other segment primarily includes the operating results of the CBB business and related purchase accounting for the Company's April 2015 CBB Acquisition. The results included within the Other segment are not material to the Company's consolidated results of operations.
|
|
Net Sales
|
|
Segment Profit
|
||||||||||||||||||||||||||||||||||||||||
|
Three Months Ended June 30,
|
|
Change
|
|
XFX Change
(a)
|
|
Three Months Ended June 30,
|
|
Change
|
|
XFX Change
(a)
|
||||||||||||||||||||||||||||||||
|
2015
|
|
2014
|
|
$
|
|
%
|
|
$
|
|
%
|
|
2015
|
|
2014
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||||||||||
Consumer
|
$
|
354.7
|
|
|
$
|
367.3
|
|
|
$
|
(12.6
|
)
|
|
(3.4
|
)%
|
|
$
|
5.0
|
|
|
1.4
|
%
|
|
$
|
83.8
|
|
|
$
|
80.3
|
|
|
$
|
3.5
|
|
|
4.4
|
%
|
|
$
|
3.2
|
|
|
4.0
|
%
|
Professional
|
123.4
|
|
|
130.6
|
|
|
(7.2
|
)
|
|
(5.5
|
)%
|
|
5.4
|
|
|
4.1
|
%
|
|
24.3
|
|
|
31.4
|
|
|
(7.1
|
)
|
|
(22.6
|
)%
|
|
(6.7
|
)
|
|
(21.3
|
)%
|
||||||||
Other
|
4.3
|
|
|
—
|
|
|
4.3
|
|
|
100.0
|
%
|
|
4.3
|
|
|
100.0
|
%
|
|
(0.5
|
)
|
|
—
|
|
|
(0.5
|
)
|
|
—
|
%
|
|
(0.5
|
)
|
|
100.0
|
%
|
||||||||
Total Net Sales
|
$
|
482.4
|
|
|
$
|
497.9
|
|
|
$
|
(15.5
|
)
|
|
(3.1
|
)%
|
|
$
|
14.7
|
|
|
3.0
|
%
|
|
$
|
107.6
|
|
|
$
|
111.7
|
|
|
$
|
(4.1
|
)
|
|
(3.7
|
)%
|
|
$
|
(4.0
|
)
|
|
(3.6
|
)%
|
|
Net Sales
|
|
Segment Profit
|
||||||||||||||||||||||||||||||||||||||||
|
Six Months Ended June 30,
|
|
Change
|
|
XFX Change
(a)
|
|
Six Months Ended June 30,
|
|
Change
|
|
XFX Change
(a)
|
||||||||||||||||||||||||||||||||
|
2015
|
|
2014
|
|
$
|
|
%
|
|
$
|
|
%
|
|
2015
|
|
2014
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||||||||||
Consumer
|
$
|
679.0
|
|
|
$
|
706.8
|
|
|
$
|
(27.8
|
)
|
|
(3.9
|
)%
|
|
$
|
9.6
|
|
|
1.4
|
%
|
|
$
|
146.0
|
|
|
$
|
149.8
|
|
|
$
|
(3.8
|
)
|
|
(2.5
|
)%
|
|
$
|
(2.2
|
)
|
|
(1.5
|
)%
|
Professional
|
237.6
|
|
|
260.9
|
|
|
(23.3
|
)
|
|
(8.9
|
)%
|
|
0.5
|
|
|
0.2
|
%
|
|
53.5
|
|
|
63.3
|
|
|
(9.8
|
)
|
|
(15.5
|
)%
|
|
(9.2
|
)
|
|
(14.5
|
)%
|
||||||||
Other
|
4.3
|
|
|
—
|
|
|
4.3
|
|
|
100.0
|
%
|
|
4.3
|
|
|
100.0
|
%
|
|
(0.5
|
)
|
|
—
|
|
|
(0.5
|
)
|
|
100.0
|
%
|
|
(0.5
|
)
|
|
100.0
|
%
|
||||||||
Total Net Sales
|
$
|
920.9
|
|
|
$
|
967.7
|
|
|
$
|
(46.8
|
)
|
|
(4.8
|
)%
|
|
$
|
14.4
|
|
|
1.5
|
%
|
|
$
|
199.0
|
|
|
$
|
213.1
|
|
|
$
|
(14.1
|
)
|
|
(6.6
|
)%
|
|
$
|
(11.9
|
)
|
|
(5.6
|
)%
|
|
Three Months Ended June 30,
|
|
Change
|
|
XFX Change
(a)
|
||||||||||||||||
|
2015
|
|
2014
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||
United States
|
$
|
267.0
|
|
|
$
|
255.2
|
|
|
$
|
11.8
|
|
|
4.6
|
%
|
|
$
|
11.8
|
|
|
4.6
|
%
|
International
|
215.4
|
|
|
242.7
|
|
|
(27.3
|
)
|
|
(11.2
|
)%
|
|
2.9
|
|
|
1.2
|
%
|
||||
Total Net Sales
|
$
|
482.4
|
|
|
$
|
497.9
|
|
|
$
|
(15.5
|
)
|
|
(3.1
|
)%
|
|
$
|
14.7
|
|
|
3.0
|
%
|
|
Six Months Ended June 30,
|
|
Change
|
|
XFX Change
(a)
|
||||||||||||||||
|
2015
|
|
2014
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||
United States
|
$
|
511.4
|
|
|
$
|
505.4
|
|
|
$
|
6.0
|
|
|
1.2
|
%
|
|
$
|
6.0
|
|
|
1.2
|
%
|
International
|
409.5
|
|
|
462.3
|
|
|
(52.8
|
)
|
|
(11.4
|
)%
|
|
8.4
|
|
|
1.8
|
%
|
||||
Total Net Sales
|
$
|
920.9
|
|
|
$
|
967.7
|
|
|
$
|
(46.8
|
)
|
|
(4.8
|
)%
|
|
$
|
14.4
|
|
|
1.5
|
%
|
|
Three Months Ended June 30,
|
|
|
|
Six Months Ended June 30,
|
|
|
||||||||||||||||
|
2015
|
|
2014
|
|
Change
|
|
2015
|
|
2014
|
|
Change
|
||||||||||||
Gross profit
|
$
|
321.1
|
|
|
$
|
330.7
|
|
|
$
|
(9.6
|
)
|
|
$
|
617.3
|
|
|
$
|
637.0
|
|
|
$
|
(19.7
|
)
|
Percentage of net sales
|
66.6
|
%
|
|
66.4
|
%
|
|
0.1
|
%
|
|
67.0
|
%
|
|
65.8
|
%
|
|
1.2
|
%
|
•
|
favorable sales mix, which increased gross profit by $2.9 million and increased gross profit as a percentage of net sales by 0.6 percentage points;
|
•
|
lower manufacturing and freight costs in the second quarter of 2015, as a result of supply chain cost reduction initiatives, which increased gross profit by $2.1 million and increased gross profit as a percentage of net sales in the second quarter of 2015 by 0.4 percentage points;
|
•
|
lower returns, which increased gross profit by $4.5 million and increased gross profit as a percentage of net sales by 0.3 percentage points; and
|
•
|
favorable volume, which increased gross profit by $3.4 million, with no impact on gross profit as a percentage of net sales;
|
•
|
a favorable adjustment related to a decrease in the inventory obsolescence reserve in the second quarter of 2014, with no similar adjustment in the second quarter of 2015, and which reduced gross profit by $3.4 million and reduced gross profit as a percentage of net sales by 0.7 percentage points; and
|
•
|
unfavorable foreign currency fluctuations, which reduced gross profit by $22.9 million and reduced gross profit as a percentage of net sales by 0.5 percentage points.
|
•
|
favorable sales mix, which increased gross profit by $8.1 million and increased gross profit as a percentage of net sales by 0.9 percentage points;
|
•
|
lower manufacturing and freight costs in the first six months of 2015, as a result of supply chain cost reduction initiatives, which increased gross profit by $4.2 million and increased gross profit as a percentage of net sales in the first six months of 2015 by 0.5 percentage points;
|
•
|
lower returns, which increased gross profit by $9.7 million and increased gross profit as a percentage of net sales by 0.4 percentage points; and
|
•
|
favorable volume, which increased gross profit by $4.1 million, with no impact on gross profit as a percentage of net sales;
|
•
|
unfavorable foreign currency fluctuations, which reduced gross profit by $46.2 million and reduced gross profit as a percentage of net sales by 0.6 percentage points; and
|
•
|
a favorable adjustment related to a decrease in the inventory obsolescence reserve in the first six months of 2014, with no similar adjustment in the first six months of 2015, and which reduced gross profit by $3.4 million and reduced gross profit as a percentage of net sales by 0.4 percentage points.
|
|
Three Months Ended June 30,
|
|
|
|
Six Months Ended June 30,
|
|
|
||||||||||||||||
|
2015
|
|
2014
|
|
Change
|
|
2015
|
|
2014
|
|
Change
|
||||||||||||
SG&A expenses
|
$
|
256.9
|
|
|
$
|
261.3
|
|
|
$
|
(4.4
|
)
|
|
$
|
503.8
|
|
|
$
|
505.3
|
|
|
$
|
(1.5
|
)
|
•
|
$21.1 million of favorable impacts due to foreign currency fluctuations;
|
•
|
$14.7 million of higher brand support expenses for the Company's brands within both the Consumer and Professional segments.
|
•
|
$40.6 million of favorable impacts due to foreign currency fluctuations in
the first six months of 2015
;
|
•
|
$31.3 million of higher brand support expenses for the Company's brands within both the Consumer and Professional segments in
the first six months of 2015
; and
|
•
|
$6.9 million of higher general and administrative expenses in
the first six months of 2015
, primarily due to higher severance costs and stock-based compensation expense, partially offset by lower incentive compensation.
|
|
Three Months Ended June 30,
|
|
|
|
Six Months Ended June 30,
|
|
|
||||||||||||||||
|
2015
|
|
2014
|
|
Change
|
|
2015
|
|
2014
|
|
Change
|
||||||||||||
Acquisition and integration costs
|
$
|
4.7
|
|
|
$
|
0.7
|
|
|
$
|
(4.0
|
)
|
|
$
|
5.9
|
|
|
$
|
4.5
|
|
|
$
|
(1.4
|
)
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Acquisition costs
|
$
|
4.0
|
|
|
$
|
—
|
|
|
$
|
4.7
|
|
|
$
|
0.4
|
|
Integration costs
|
0.7
|
|
|
0.7
|
|
|
1.2
|
|
|
4.1
|
|
||||
Total acquisition and integration costs
|
$
|
4.7
|
|
|
$
|
0.7
|
|
|
$
|
5.9
|
|
|
$
|
4.5
|
|
|
Three Months Ended June 30,
|
|
|
|
Six Months Ended June 30,
|
|
|
||||||||||||||||
|
2015
|
|
2014
|
|
Change
|
|
2015
|
|
2014
|
|
Change
|
||||||||||||
Restructuring charges and other, net
|
$
|
(3.6
|
)
|
|
$
|
3.8
|
|
|
$
|
7.4
|
|
|
$
|
(3.1
|
)
|
|
$
|
17.3
|
|
|
$
|
20.4
|
|
|
Three Months Ended June 30,
|
|
|
|
Six Months Ended June 30,
|
|
|
||||||||||||||||
|
2015
|
|
2014
|
|
Change
|
|
2015
|
|
2014
|
|
Change
|
||||||||||||
Interest expense
|
$
|
20.5
|
|
|
$
|
21.0
|
|
|
$
|
0.5
|
|
|
$
|
40.5
|
|
|
$
|
43.3
|
|
|
$
|
2.8
|
|
|
Three Months Ended June 30,
|
|
|
|
Six Months Ended June 30,
|
|
|
||||||||||||||||
|
2015
|
|
2014
|
|
Change
|
|
2015
|
|
2014
|
|
Change
|
||||||||||||
Foreign currency (gains) losses, net
|
$
|
(7.9
|
)
|
|
$
|
7.2
|
|
|
$
|
(15.1
|
)
|
|
$
|
8.0
|
|
|
$
|
8.6
|
|
|
$
|
(0.6
|
)
|
•
|
a $6.0 million foreign currency loss recognized in the first six months of 2014 as a result of the re-measurement of Revlon Venezuela's balance sheet, as compared to a $1.9 million foreign currency loss recognized in the first six months of 2015;
|
•
|
the unfavorable impact of the revaluation of certain U.S. Dollar denominated intercompany payables during
the first six months of 2015
, as compared to
the first six months of 2014
.
|
|
Three Months Ended June 30,
|
|
|
|
Six Months Ended June 30,
|
|
|
||||||||||||||||
|
2015
|
|
2014
|
|
Change
|
|
2015
|
|
2014
|
|
Change
|
||||||||||||
Provision for income taxes
|
$
|
21.4
|
|
|
$
|
19.3
|
|
|
$
|
(2.1
|
)
|
|
$
|
31.0
|
|
|
$
|
27.0
|
|
|
$
|
4.0
|
|
|
Six Months Ended June 30,
|
||||||
|
2015
|
|
2014
|
||||
Net cash provided by (used in) operating activities
|
$
|
2.5
|
|
|
$
|
(6.4
|
)
|
Net cash used in investing activities
|
(49.4
|
)
|
|
(13.1
|
)
|
||
Net cash used in financing activities
|
(23.5
|
)
|
|
(57.7
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(5.9
|
)
|
|
(9.2
|
)
|
•
|
a
$24.6 million
required prepayment made under the Amended Term Loan Facility, as discussed below; and
|
•
|
$3.4 million of scheduled amortization payments on the Acquisition Term Loan;
|
•
|
$6.6 million
of short-term borrowings and overdraft.
|
•
|
the complete repayment of the $58.4 million aggregate principal amount outstanding of the Non-Contributed Loan;
|
•
|
$3.5 million scheduled amortization payments on the Acquisition Term Loan; and
|
•
|
the payment of $1.8 million of financing costs primarily related to the February 2014 Term Loan Amendment;
|
•
|
$7.4 million of short-term borrowings and overdraft.
|
|
Expected Maturity Date for the year ended December 31,
|
|
|
|||||||||||||||||||||||||||||
|
(dollars in millions, except for rate information)
|
|
|
|||||||||||||||||||||||||||||
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
Thereafter
|
|
Total
|
|
Fair Value June 30, 2015
|
||||||||||||||||
Debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Short-term variable rate (various currencies)
|
|
$
|
7.5
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
7.5
|
|
|
$
|
7.5
|
|
||||||||||
Average interest rate
(a)
|
|
3.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Short-term fixed rate (third party - EUR)
|
|
1.0
|
|
|
|
|
|
|
|
|
|
|
|
|
1.0
|
|
|
$
|
1.0
|
|
||||||||||||
Average interest rate
|
|
11.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Long-term fixed rate – third party (USD)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
500.0
|
|
|
500.0
|
|
|
$
|
490.0
|
|
|||||||||||
Average interest rate
|
|
|
|
|
|
|
|
|
|
|
|
5.75
|
%
|
|
|
|
|
|||||||||||||||
Long-term fixed rate – third party (EUR)
|
|
|
|
|
|
$
|
0.1
|
|
|
$
|
0.1
|
|
|
$
|
0.1
|
|
|
0.3
|
|
|
0.6
|
|
|
$
|
0.6
|
|
||||||
Average interest rate
|
|
|
|
|
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
|
|
|
|
||||||||||||
Long-term variable rate – third party (USD)
(b)
|
|
3.4
|
|
|
$
|
6.9
|
|
|
669.8
|
|
|
6.9
|
|
|
653.0
|
|
|
|
|
1,340.0
|
|
|
$
|
1,338.3
|
|
|||||||
Average interest rate
(a)(c)
|
|
4.0
|
%
|
|
4.0
|
%
|
|
3.7
|
%
|
|
4.7
|
%
|
|
4.9
|
%
|
|
|
|
|
|
|
|||||||||||
Total debt
|
|
$
|
11.9
|
|
|
$
|
6.9
|
|
|
$
|
669.9
|
|
|
$
|
7.0
|
|
|
$
|
653.1
|
|
|
$
|
500.3
|
|
|
$
|
1,849.1
|
|
|
$
|
1,837.4
|
|
(a)
|
Weighted average variable rates are based upon implied forward rates from the U.S. Dollar LIBOR and Euribor yield curves at
June 30, 2015
.
|
(b)
|
Includes total quarterly amortization payments required within each year under the Acquisition Term Loan.
|
(c)
|
At
June 30, 2015
, the Acquisition Term Loan 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 2011 Term Loan bears interest at the Eurodollar Rate plus 2.5% per annum (with the Eurodollar Rate not to be less than 0.75%).
|
Forward Contracts (“FC”)
|
|
Average Contractual Rate
$/FC
|
|
Original US Dollar Notional Amount
|
|
Contract Value
June 30, 2015
|
|
Asset Fair Value June 30, 2015
|
||||||
Sell Australian Dollars/Buy USD
|
|
0.7737
|
|
$
|
18.5
|
|
|
$
|
18.7
|
|
|
$
|
0.2
|
|
Sell Canadian Dollars/Buy USD
|
|
0.8095
|
|
16.4
|
|
|
16.6
|
|
|
0.2
|
|
|||
Buy Mexican Peso/Sell USD
|
|
0.0645
|
|
8.8
|
|
|
8.6
|
|
|
(0.2
|
)
|
|||
Sell Japanese Yen/Buy USD
|
|
0.0083
|
|
4.8
|
|
|
4.8
|
|
|
—
|
|
|||
Sell South African Rand/Buy USD
|
|
0.0811
|
|
4.5
|
|
|
4.5
|
|
|
—
|
|
|||
Buy Australian Dollars/Sell NZ dollars
|
|
1.0684
|
|
4.4
|
|
|
4.7
|
|
|
0.3
|
|
|||
Sell British Pound/Buy USD
|
|
1.5718
|
|
3.1
|
|
|
3.1
|
|
|
|
||||
Sell Hong Kong Dollars/Buy USD
|
|
0.1290
|
|
0.5
|
|
|
0.5
|
|
|
—
|
|
|||
Sell New Zealand Dollars/Buy USD
|
|
0.6898
|
|
0.2
|
|
|
0.2
|
|
|
—
|
|
|||
Total forward contracts
|
|
|
|
$
|
61.2
|
|
|
$
|
61.7
|
|
|
$
|
0.5
|
|
(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 and/or among professional salons; 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 (including, without limitation, costs related to the continued integration of the Colomer Acquisition), 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 Colomer Acquisition and the CBB Acquisition (including the Company’s plans to continue 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 which are designed to reduce selling, general and administrative expenses, and achieve approximately
$30.0 million
to
$35.0 million
of annualized cost reductions by the end of 2015, approximately
$17.0 million
of which benefited the Company's 2014 results, while recognizing approximately
$50 million
, in the aggregate over 2013 through 2015, of total restructuring charges, capital expenditures (including expected integration-related capital expenditures of approximately
$6 million
,
$4.4 million
of which was paid during 2014 and
$0.7 million
of which was paid during the six months ended June 30, 2015, with the remaining balance expected to be paid in the remainder of 2015) and related non-restructuring costs, any of which, the intended purpose of which would be to create value through improving the Company's financial performance, could result in the Company making investments and/or recognizing charges related to executing against such opportunities, which activities may be funded with cash on hand, funds available under the 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 through gross profit margin expansion, which includes optimizing price, allocating sales allowances to maximize our return on trade spending, reducing costs across our global supply chain and eliminating non-value added general and administrative costs in order to fund reinvestment to facilitate growth; (b) growing profitability through intensive innovation and geographical expansion by creating fewer, bigger and better innovations across our brands that are relevant, unique, impactful, distinctive and ownable; pursuing organic growth opportunities within our existing brand portfolio and existing channels; and pursuing opportunities to expand our geographical presence; (c) improving our cash flows through, among other things, continued effective management of our working capital and by focusing on appropriate return on capital spending; and (d) attracting, developing and supporting employees who fit into our innovative culture and inspire the creative drive that represents the foundation of our vision and execution of our strategy;
|
(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 total restructuring and related charges related to the Integration Program will be approximately
$22 million
, of which
$(2.4) million
and
$20.1 million
of charges were recognized during the first six months of 2015 and during 2014, respectively, with any remaining charges to be recognized in the remainder of 2015; (ii) that cash payments related to the restructuring and related charges in connection with the Integration Program will total approximately
$21 million
, of which
$3.9 million
was paid in the first six months of 2015 and
$9.6 million
was paid during 2014, with the remaining balance of
$7.5 million
expected to be paid during the remainder of 2015; (iii) that total restructuring and related charges under the December 2013 Program will be approximately
$18.9 million
; (iv) that cash payments will total approximately
$17 million
related to the December 2013 Program, of which
$15.5 million
was paid during 2014,
$0.1 million
was paid in 2013, and the remaining balance is expected to be paid in 2016; and (v) that the Company expects to substantially complete the Integration Program by the end of 2015;
|
(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 2015, including the cash requirements referred to in item (viii) below, and the Company's beliefs that (a) the cash generated by its domestic operations and availability under the Amended Revolving Credit Facility and other permitted lines of credit should be sufficient to meet its domestic liquidity needs for at least the next twelve months, and (b) restrictions or taxes on repatriation of foreign earnings will not have a material effect on the Company's liquidity during such period;
|
(vii)
|
the Company’s expected principal sources of funds, including operating revenues, cash on hand and funds available for borrowing under Products Corporation's 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; payments in connection with the Company's purchases of permanent wall displays; capital expenditure requirements; debt service payments and costs, cash tax payments, pension and other post-retirement benefit plan contributions; payments in connection with the Company's restructuring programs; costs related to the continuing integration of the Colomer Acquisition; business and/or brand acquisitions, if any; severance not otherwise included in the Company’s restructuring programs; debt and/or equity repurchases, if any; costs related to litigation; and payments in connection with discontinuing non-core business lines and/or exiting certain territories (including, without limitation, that the Company may also, from time to time, seek to retire or purchase its outstanding debt and/or equity obligations in open market purchases, in privately negotiated transactions or otherwise and may seek to refinance some or all of its indebtedness based upon market conditions and that any retirement or purchase of debt and/or equity may be funded with operating cash flows of the business or other sources and will depend upon prevailing market conditions, liquidity requirements, contractual restrictions and other factors, and the amounts involved may be material); and its estimates of the amount and timing of such operating and other expenses;
|
(ix)
|
matters concerning the Company's market-risk sensitive instruments, as well as the Company’s expectations as to the counterparty’s performance, including that any risk of loss under its derivative instruments arising from any non-performance by any of the counterparties is remote;
|
(x)
|
the Company's expectation to efficiently manage its working capital, including, among other things, initiatives intended to optimize inventory levels over time; centralized procurement to secure discounts and efficiencies; prudent management of trade receivables and accounts payable; and controls on general and administrative spending; and the Company’s belief that in the ordinary course of business, its source or use of cash from operating activities may vary on a quarterly basis as a result of a number of factors, including the timing of working capital flows;
|
(xi)
|
the Company’s expectations regarding its future net periodic benefit cost for its U.S. and international defined benefit plans;
|
(xii)
|
the Company's expectation that its tax provision and effective tax rate in any individual quarter and year-to-date period will vary and may not be indicative of the Company's tax provision and effective tax rate for the full year;
|
(xiii)
|
the Company's expectation that it will decide whether to exchange Bolivars for U.S. Dollars to the extent permitted through the CADIVI, CENCOEX and/or SIMADI markets based on its ability to participate in those markets and to the extent reasonable for its business in the future, the Company's belief that current or additional governmental restrictions, worsening import authorization controls, price and profit controls or labor unrest in Venezuela could impact the Company's ability to sell to its distributor in Venezuela;
|
(xiv)
|
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;
|
(xv)
|
the Company's plans in connection with continuing to integrate Colomer into the Company's business; and
|
(xvi)
|
the Company's expectation that CBB will provide the Company with a platform to develop the Company's presence in the fragrance category and certain estimates used by management in estimating the fair value of the assets acquired in the CBB Acquisition.
|
(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 and/or decreased performance by third party suppliers; changes in consumer preferences, such as reduced consumer demand for the Company's color cosmetics and other current products, including new product launches; changes in consumer purchasing habits, including with respect to shopping channels and/or among professional salons; 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-related integration costs, including, without limitation, costs related to the continued integration of 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, among other things, business combinations, technological breakthroughs, implementation of new pricing strategies, new product offerings, increased advertising, promotional and marketing spending and advertising, promotional and/or marketing successes by competitors;
|
(ii)
|
in addition to the items discussed in (i) above, the effects of and changes in economic conditions (such as continued volatility in the financial markets, inflation, monetary conditions and foreign currency fluctuations, 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 Company's Colomer Acquisition and CBB Acquisition (including difficulties or delays in and/or the Company’s inability to continue 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 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, among other things, less than effective product development, less than expected acceptance of its new or existing products by consumers, salon professionals and/or customers 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 professionals 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, 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 profitability through intensive innovation and geographical expansion, such as less than effective product development and/or difficulties, delays in and/or the Company's inability to consummate transactions to expand its geographical presence; (iii) difficulties, delays in or less than expected results from the Company's efforts to improve its cash flow; and/or (iv) difficulties, delays in and/or the inability to attract or retain employees essential to the execution of our strategy;
|
(v)
|
difficulties, delays or unanticipated costs or charges or less than expected cost reductions and other benefits resulting from the Company's restructuring activities, such as greater than anticipated costs or charges or less than anticipated cost reductions or other benefits from the 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, and/or less than anticipated cash generated by the Company's domestic operations or unanticipated restrictions or taxes on repatriation of foreign earnings;
|
(vii)
|
the unavailability of funds under Products Corporation's 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, cash tax payments, cash pension plan contributions, other post-retirement benefit plan contributions and/or net periodic benefit costs for the pension and other post-retirement benefit plans, costs related to the continuing integration of the Colomer Acquisition, restructuring costs, severance and discontinued operations not otherwise included in the Company’s restructuring programs, debt and/or equity repurchases, costs related to litigation and/or payments in connection with business and/or brand acquisitions, if any, and discontinuing non-core business lines and/or exiting certain territories;
|
(ix)
|
interest rate or foreign exchange rate changes affecting the Company and its market-risk sensitive financial instruments and/or difficulties, delays or the inability of the counterparty to perform such transactions;
|
(x)
|
difficulties, delays or the inability of the Company to efficiently manage its cash and working capital;
|
(xi)
|
lower than expected returns on pension plan assets and/or lower discount rates, which could result in higher than expected cash contributions, higher net periodic benefit costs and/or less than expected net periodic benefit income;
|
(xii)
|
unexpected significant variances in the Company's tax provision and effective tax rate;
|
(xiii)
|
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 Venezuela's monetary systems (including, without limitation, the CADIVI, CENCOEX and/or SIMADI markets);
|
(xiv)
|
unexpected effects on the Company’s business, financial condition and/or its results of operations as a result of legal proceedings;
|
(xv)
|
difficulties or delays in realizing, or less than anticipated, benefits from the Colomer Acquisition, such as 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 continue to implement the Integration Program, in whole or in part, and/or changes in the timing of completing its expected integration actions; and/or
|
(xvi)
|
less than expected benefits arising from the Company's CBB Acquisition, such as difficulties in retaining CBB's licensed fragrance brands and/or securing new fragrance licensing opportunities and/or unexpected changes in the fair values of CBB's assets due to, among other things, unanticipated future performance of the acquired licenses.
|
Revlon Consumer Products Corporation
|
||||
(Registrant)
|
||||
|
|
|
|
|
By: /s/ Lorenzo Delpani
|
|
By: /s/ Roberto Simon
|
|
By: /s/ Siobhan Anderson
|
Lorenzo Delpani
|
|
Roberto Simon
|
|
Siobhan Anderson
|
President,
|
|
Executive Vice President and
|
|
Vice President,
|
Chief Executive Officer and
|
|
Chief Financial Officer
|
|
Chief Accounting Officer,
|
Director
|
|
|
|
Corporate Controller, Treasurer
|
|
|
|
|
and Investor Relations
|
By:
|
/s/ Michael T. Sheehan
Name: Michael T. Sheehan Title: Vice President and Assistant 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 Hahn
Authorized Signatory |
By:
|
/s/ Michael T. Sheehan
Name: Michael T. Sheehan Title: Vice President and Secretary |
By:
|
/s/ Michael T. Sheehan
Name: Michael T. Sheehan |
By:
|
/s/ Michael T. Sheehan
Name: Michael T. Sheehan |
By:
|
/s/ Michael T. Sheehan
Name: Michael T. Sheehan |
By:
|
/s/ Joshua Hahn
Authorized Signatory |
1.
|
I have reviewed this quarterly report on Form 10-Q (the "Report") of Revlon, Inc. (the "Registrant");
|
2.
|
Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this Report;
|
4.
|
The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
|
5.
|
The Registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the equivalent functions):
|
1.
|
I have reviewed this quarterly report on Form 10-Q (the "Report") of Revlon, Inc. (the "Registrant");
|
2.
|
Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this Report;
|
4.
|
The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
|
5.
|
The Registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the equivalent functions):
|