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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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__
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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13-3662955
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(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
|
|
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237 Park Avenue, New York, New York
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10017
|
|
(Address of principal executive offices)
|
(Zip Code)
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|
Large accelerated filer
¨
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Accelerated filer
x
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|
Non-accelerated filer
¨
|
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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
|
||
|
Item 1.
|
Financial Statements
|
|
|
|
Consolidated Balance Sheets as of March 31, 2014 (Unaudited) and December 31, 2013
|
|
|
|
Unaudited Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three Months Ended March 31, 2014 and 2013
|
|
|
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Unaudited Consolidated Statement of Stockholders' Deficiency for the Three Months Ended March 31, 2014
|
|
|
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Unaudited Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2014 and 2013
|
|
|
|
Notes to Unaudited Consolidated Financial Statements
|
|
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Item 2.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
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|
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Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
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Item 4.
|
Controls and Procedures
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PART II - Other Information
|
||
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Item 1.
|
Legal Proceedings
|
|
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Item 1A.
|
Risk Factors
|
|
|
Item 5.
|
Other Information
|
|
|
Item 6.
|
Exhibits
|
|
|
|
Signatures
|
|
|
|
March 31,
2014 |
|
December 31, 2013
(a)
|
||||
|
|
(Unaudited)
|
|
|
||||
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ASSETS
|
|
|
|
||||
|
Current assets:
|
|
|
|
||||
|
Cash and cash equivalents
|
$
|
196.3
|
|
|
$
|
244.1
|
|
|
Trade receivables, less allowance for doubtful accounts of $5.8 and $4.2 as of March 31, 2014 and December 31, 2013, respectively
|
265.5
|
|
|
253.5
|
|
||
|
Inventories
|
188.4
|
|
|
175.0
|
|
||
|
Deferred income taxes – current
|
61.2
|
|
|
65.1
|
|
||
|
Prepaid expenses and other
|
72.4
|
|
|
61.4
|
|
||
|
Total current assets
|
783.8
|
|
|
799.1
|
|
||
|
Property, plant and equipment, net of accumulated depreciation of $251.5 and $243.1 as of March 31, 2014 and December 31, 2013, respectively
|
195.5
|
|
|
195.9
|
|
||
|
Deferred income taxes – noncurrent
|
172.6
|
|
|
179.6
|
|
||
|
Goodwill
|
472.3
|
|
|
472.3
|
|
||
|
Intangible assets, net of accumulated amortization of $24.6 and $19.0 as of March 31, 2014 and December 31, 2013, respectively
|
355.1
|
|
|
360.1
|
|
||
|
Other assets
|
125.8
|
|
|
123.8
|
|
||
|
Total assets
|
$
|
2,105.1
|
|
|
$
|
2,130.8
|
|
|
|
|
|
|
||||
|
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
|
|
|
|
||||
|
Current liabilities:
|
|
|
|
||||
|
Short-term borrowings
|
$
|
11.8
|
|
|
$
|
7.9
|
|
|
Current portion of long-term debt
|
65.4
|
|
|
65.4
|
|
||
|
Accounts payable
|
185.6
|
|
|
165.7
|
|
||
|
Accrued expenses and other
|
272.1
|
|
|
313.7
|
|
||
|
Total current liabilities
|
534.9
|
|
|
552.7
|
|
||
|
Long-term debt
|
1,861.3
|
|
|
1,862.3
|
|
||
|
Long-term pension and other post-retirement plan liabilities
|
109.8
|
|
|
118.3
|
|
||
|
Other long-term liabilities
|
188.1
|
|
|
194.0
|
|
||
|
Commitments and contingencies
|
|
|
|
|
|
||
|
Stockholders’ deficiency:
|
|
|
|
||||
|
Class A Common Stock, par value $0.01 per share; 900,000,000 shares authorized; 53,231,651 shares issued as of March 31, 2014 and December 31, 2013, respectively
|
0.5
|
|
|
0.5
|
|
||
|
Additional paid-in capital
|
1,015.5
|
|
|
1,015.3
|
|
||
|
Treasury stock, at cost: 754,853 shares of Class A Common Stock as of March 31, 2014 and December 31, 2013, respectively
|
(9.8
|
)
|
|
(9.8
|
)
|
||
|
Accumulated deficit
|
(1,447.2
|
)
|
|
(1,452.7
|
)
|
||
|
Accumulated other comprehensive loss
|
(148.0
|
)
|
|
(149.8
|
)
|
||
|
Total stockholders’ deficiency
|
(589.0
|
)
|
|
(596.5
|
)
|
||
|
Total liabilities and stockholders’ deficiency
|
$
|
2,105.1
|
|
|
$
|
2,130.8
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2014
|
|
2013
|
||||
|
|
|
|
|
||||
|
Net sales
|
$
|
469.8
|
|
|
$
|
325.9
|
|
|
Cost of sales
|
163.5
|
|
|
114.4
|
|
||
|
Gross profit
|
306.3
|
|
|
211.5
|
|
||
|
Selling, general and administrative expenses
|
246.2
|
|
|
161.6
|
|
||
|
Acquisition and integration costs
|
3.8
|
|
|
—
|
|
||
|
Restructuring charges and other, net
|
13.5
|
|
|
0.2
|
|
||
|
Operating income
|
42.8
|
|
|
49.7
|
|
||
|
Other expenses, net:
|
|
|
|
||||
|
Interest expense
|
22.3
|
|
|
18.8
|
|
||
|
Interest expense – preferred stock dividends
|
—
|
|
|
1.6
|
|
||
|
Amortization of debt issuance costs
|
1.4
|
|
|
1.3
|
|
||
|
Loss on early extinguishment of debt
|
1.9
|
|
|
27.9
|
|
||
|
Foreign currency losses, net
|
1.4
|
|
|
3.3
|
|
||
|
Miscellaneous, net
|
0.1
|
|
|
0.1
|
|
||
|
Other expenses, net
|
27.1
|
|
|
53.0
|
|
||
|
Income (loss) from continuing operations before income taxes
|
15.7
|
|
|
(3.3
|
)
|
||
|
Provision for income taxes
|
7.0
|
|
|
1.2
|
|
||
|
Income (loss) from continuing operations, net of taxes
|
8.7
|
|
|
(4.5
|
)
|
||
|
Loss from discontinued operations, net of taxes
|
(3.2
|
)
|
|
(2.4
|
)
|
||
|
Net income (loss)
|
$
|
5.5
|
|
|
$
|
(6.9
|
)
|
|
Other comprehensive income:
|
|
|
|
|
|
||
|
Currency translation adjustment, net of tax
(a)
|
1.6
|
|
|
(0.8
|
)
|
||
|
Amortization of pension related costs, net of tax
(b)(d)
|
1.2
|
|
|
1.9
|
|
||
|
Revaluation of derivative financial instruments, net of tax
(c)
|
(1.0
|
)
|
|
—
|
|
||
|
Other comprehensive income
|
1.8
|
|
|
1.1
|
|
||
|
Total comprehensive income (loss)
|
$
|
7.3
|
|
|
$
|
(5.8
|
)
|
|
|
|
|
|
||||
|
Basic earnings (loss) per common share:
|
|
|
|
||||
|
Continuing operations
|
$
|
0.17
|
|
|
$
|
(0.08
|
)
|
|
Discontinued operations
|
(0.06
|
)
|
|
(0.05
|
)
|
||
|
Net income (loss)
|
$
|
0.11
|
|
|
$
|
(0.13
|
)
|
|
|
|
|
|
|
|||
|
Diluted earnings (loss) per common share:
|
|
|
|
|
|||
|
Continuing operations
|
$
|
0.17
|
|
|
$
|
(0.08
|
)
|
|
Discontinued operations
|
(0.06
|
)
|
|
(0.05
|
)
|
||
|
Net income (loss)
|
$
|
0.11
|
|
|
$
|
(0.13
|
)
|
|
|
|
|
|
|
|||
|
Weighted average number of common shares outstanding:
|
|
|
|
|
|||
|
Basic
|
52,356,798
|
|
|
52,356,798
|
|
||
|
Diluted
|
52,367,944
|
|
|
52,356,798
|
|
||
|
(a)
|
Net of tax (benefit) expense of
$(0.5) million
and
$0.3 million
for the three months ended
March 31, 2014
and
2013
, respectively.
|
|
(b)
|
Net of tax benefit of
nil
and
$(0.3) million
for the three months ended
March 31, 2014
and
2013
, respectively.
|
|
(c)
|
Net of tax expense of
$0.6 million
for the three months ended
March 31, 2014
.
|
|
(d)
|
This other comprehensive income component is included in the computation of net periodic benefit (income) costs. See Note 5, “Pension and Post-Retirement Benefits,” for additional information regarding net periodic benefit (income) costs.
|
|
|
Common Stock
|
|
Additional Paid-In-Capital
|
|
Treasury Stock
|
|
Accumulated Deficit
|
|
Accumulated Other Comprehensive Loss
|
|
Total Stockholders’ Deficiency
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Balance, January 1, 2014
|
$
|
0.5
|
|
|
$
|
1,015.3
|
|
|
$
|
(9.8
|
)
|
|
$
|
(1,452.7
|
)
|
|
$
|
(149.8
|
)
|
|
$
|
(596.5
|
)
|
|
Stock-based compensation amortization
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
0.2
|
|
||||||
|
Net income
|
|
|
|
|
|
|
5.5
|
|
|
|
|
5.5
|
|
||||||||||
|
Other comprehensive income, net
(a)
|
|
|
|
|
|
|
|
|
1.8
|
|
|
1.8
|
|
||||||||||
|
Balance, March 31, 2014
|
$
|
0.5
|
|
|
$
|
1,015.5
|
|
|
$
|
(9.8
|
)
|
|
$
|
(1,447.2
|
)
|
|
$
|
(148.0
|
)
|
|
$
|
(589.0
|
)
|
|
(a)
|
See Note 12, “Accumulated Other Comprehensive Loss,” regarding the changes in the accumulated balances for each component of other comprehensive income during the three months ended March 31,
2014
.
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2014
|
|
2013
|
||||
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
||||
|
Net income (loss)
|
$
|
5.5
|
|
|
$
|
(6.9
|
)
|
|
Adjustments to reconcile net income (loss) to net cash used in operating activities:
|
|
|
|
||||
|
Depreciation and amortization
|
24.8
|
|
|
17.0
|
|
||
|
Amortization of debt discount
|
0.3
|
|
|
0.4
|
|
||
|
Stock compensation amortization
|
0.2
|
|
|
—
|
|
||
|
Provision for (benefit from) deferred income taxes
|
8.2
|
|
|
(1.6
|
)
|
||
|
Loss on early extinguishment of debt
|
1.9
|
|
|
27.9
|
|
||
|
Amortization of debt issuance costs
|
1.4
|
|
|
1.3
|
|
||
|
Gain on sale of certain assets
|
—
|
|
|
(0.4
|
)
|
||
|
Pension and other post-retirement income
|
(1.3
|
)
|
|
(0.1
|
)
|
||
|
Change in assets and liabilities:
|
|
|
|
|
|||
|
(Increase) decrease in trade receivables
|
(12.9
|
)
|
|
26.9
|
|
||
|
Increase in inventories
|
(13.7
|
)
|
|
(15.4
|
)
|
||
|
Increase in prepaid expenses and other current assets
|
(9.6
|
)
|
|
(10.5
|
)
|
||
|
Increase in accounts payable
|
16.1
|
|
|
11.1
|
|
||
|
Decrease in accrued expenses and other current liabilities
|
(37.6
|
)
|
|
(48.3
|
)
|
||
|
Pension and other post-retirement plan contributions
|
(6.3
|
)
|
|
(2.7
|
)
|
||
|
Purchases of permanent displays
|
(13.7
|
)
|
|
(11.1
|
)
|
||
|
Other, net
|
(8.8
|
)
|
|
(4.5
|
)
|
||
|
Net cash used in operating activities
|
(45.5
|
)
|
|
(16.9
|
)
|
||
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
||||
|
Capital expenditures
|
(3.7
|
)
|
|
(5.5
|
)
|
||
|
Proceeds from the sale of certain assets
|
0.1
|
|
|
0.4
|
|
||
|
Net cash used in investing activities
|
(3.6
|
)
|
|
(5.1
|
)
|
||
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
||||
|
Net increase in short-term borrowings and overdraft
|
6.1
|
|
|
0.2
|
|
||
|
Repayments under the Acquisition Term Loan
|
(1.8
|
)
|
|
—
|
|
||
|
Proceeds from the issuance of the 5¾% Senior Notes
|
—
|
|
|
500.0
|
|
||
|
Repayment of the 9¾% Senior Secured Notes
|
—
|
|
|
(330.0
|
)
|
||
|
Repayments under the 2011 Term Loan
|
—
|
|
|
(113.0
|
)
|
||
|
Payment of financing costs
|
(1.6
|
)
|
|
(27.9
|
)
|
||
|
Other financing activities
|
(0.5
|
)
|
|
(0.6
|
)
|
||
|
Net cash provided by financing activities
|
2.2
|
|
|
28.7
|
|
||
|
Effect of exchange rate changes on cash and cash equivalents
|
(0.9
|
)
|
|
(2.2
|
)
|
||
|
Net (decrease) increase in cash and cash equivalents
|
(47.8
|
)
|
|
4.5
|
|
||
|
Cash and cash equivalents at beginning of period
|
244.1
|
|
|
116.3
|
|
||
|
Cash and cash equivalents at end of period
|
$
|
196.3
|
|
|
$
|
120.8
|
|
|
Supplemental schedule of cash flow information:
|
|
|
|
||||
|
Cash paid during the period for:
|
|
|
|
||||
|
Interest
|
$
|
29.5
|
|
|
$
|
24.2
|
|
|
Income taxes, net of refunds
|
4.9
|
|
|
2.7
|
|
||
|
Preferred stock dividends
|
—
|
|
|
1.6
|
|
||
|
|
Amounts Previously Recognized As of October 9, 2013 (Provisional)
(a)
|
|
Measurement Period Adjustments
|
|
Amounts Recognized as of Acquisition Date (Adjusted)
|
||||||
|
Cash and cash equivalents
|
$
|
36.9
|
|
|
$
|
—
|
|
|
$
|
36.9
|
|
|
Trade receivables
|
83.9
|
|
|
—
|
|
|
83.9
|
|
|||
|
Inventories
|
75.1
|
|
|
—
|
|
|
75.1
|
|
|||
|
Prepaid expenses and other
|
31.3
|
|
|
—
|
|
|
31.3
|
|
|||
|
Property, plant and equipment
|
96.7
|
|
|
—
|
|
|
96.7
|
|
|||
|
Intangible assets
(b)
|
292.7
|
|
|
5.4
|
|
|
298.1
|
|
|||
|
Goodwill
(b)(c)
|
255.7
|
|
|
(2.4
|
)
|
|
253.3
|
|
|||
|
Deferred tax asset - non-current
|
53.1
|
|
|
—
|
|
|
53.1
|
|
|||
|
Other assets
(c)
|
1.9
|
|
|
3.9
|
|
|
5.8
|
|
|||
|
Total assets acquired
|
927.3
|
|
|
6.9
|
|
|
934.2
|
|
|||
|
Accounts payable
|
48.0
|
|
|
—
|
|
|
48.0
|
|
|||
|
Accrued expenses and other
|
65.6
|
|
|
—
|
|
|
65.6
|
|
|||
|
Long-term debt
|
0.9
|
|
|
—
|
|
|
0.9
|
|
|||
|
Long-term pension and other benefit plan liabilities
|
4.5
|
|
|
—
|
|
|
4.5
|
|
|||
|
Deferred tax liability
(b)
|
123.3
|
|
|
2.1
|
|
|
125.4
|
|
|||
|
Other long-term liabilities
(c)
|
20.5
|
|
|
4.8
|
|
|
25.3
|
|
|||
|
Total liabilities assumed
|
262.8
|
|
|
6.9
|
|
|
269.7
|
|
|||
|
Total consideration
|
$
|
664.5
|
|
|
$
|
—
|
|
|
$
|
664.5
|
|
|
|
Fair Values at October 9, 2013
|
|
Weighted Average Remaining Useful Life (in years)
|
||
|
Trade names, indefinite-lived
|
$
|
108.6
|
|
|
Indefinite
|
|
Trade names, finite-lived
|
109.4
|
|
|
5 - 20
|
|
|
Customer relationships
|
62.4
|
|
|
15 - 20
|
|
|
License agreement
|
4.1
|
|
|
10
|
|
|
Internally-developed IP
|
13.6
|
|
|
10
|
|
|
Total acquired intangible assets
|
$
|
298.1
|
|
|
|
|
|
Unaudited Pro Forma Results
|
||
|
|
Three Months Ended
March 31, 2013 |
||
|
Net sales
|
$
|
450.0
|
|
|
Loss from continuing operations, before income taxes
|
(4.0
|
)
|
|
|
1.
|
$
12.5 million
and
$3.4 million
of non-restructuring integration costs recognized in 2013 and for the three months ended March 31, 2014, respectively. Such costs have been reflected within acquisition and integration costs in the Company's Consolidated Statements of Operations and Comprehensive Income (Loss) and are related to combining Colomer’s operations into the Company’s business.
|
|
2.
|
Expected integration-related capital expenditures of approximately
$8 million
, none of which has been incurred in the first quarter of 2014, of which approximately
$7 million
is expected to be paid during the remainder of 2014 and the remaining balance in 2015.
|
|
3.
|
$13.6 million
of restructuring and related charges recognized for the three months ended March 31, 2014. The Company expects total restructuring and related charges of approximately
$26 million
, with approximately
$7 million
expected to be recognized during the remainder of 2014 and any remaining charges to be recognized in 2015. A summary of the
|
|
|
Restructuring Charges and Other, Net
|
|
|
|
|
|
|
||||||||||||||||
|
|
Employee Severance and Other Personnel Benefits
|
|
Other
|
|
Total Restructuring Charges
|
|
Inventory Write-offs and Other Manufacturing-Related Costs
|
|
Other Charges (a)
|
|
Total Restructuring and Related Charges
|
||||||||||||
|
Charges incurred for the three months ended March 31, 2014
|
$
|
13.4
|
|
|
$
|
0.1
|
|
|
$
|
13.5
|
|
|
$
|
—
|
|
|
$
|
0.1
|
|
|
$
|
13.6
|
|
|
Total expected charges
|
$
|
18.0
|
|
|
$
|
3.5
|
|
|
$
|
21.5
|
|
|
$
|
3.0
|
|
|
$
|
1.5
|
|
|
$
|
26.0
|
|
|
(a)
|
Other charges are recorded within SG&A expenses within the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss).
|
|
|
Restructuring Charges and Other, Net
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
|
Employee Severance and Other Personnel Benefits
|
|
Other
|
|
Total Restructuring Charges
|
|
Allowances and Returns
|
|
Inventory Write-offs
|
|
Other Charges
|
|
Total Restructuring and Related Charges
|
||||||||||||||
|
Charges incurred through December 31, 2013
|
$
|
9.1
|
|
|
$
|
0.5
|
|
|
$
|
9.6
|
|
|
$
|
7.4
|
|
|
$
|
4.0
|
|
|
$
|
0.4
|
|
|
$
|
21.4
|
|
|
Cumulative charges incurred through March 31, 2014
|
$
|
9.1
|
|
|
$
|
0.5
|
|
|
$
|
9.6
|
|
|
$
|
7.4
|
|
|
$
|
4.0
|
|
|
$
|
0.4
|
|
|
$
|
21.4
|
|
|
Total expected charges
|
$
|
9.6
|
|
|
$
|
0.5
|
|
|
$
|
10.1
|
|
|
$
|
7.4
|
|
|
$
|
4.0
|
|
|
$
|
0.5
|
|
|
$
|
22.0
|
|
|
|
|
|
|
|
|
|
Utilized, Net
|
|
|
||||||||||||||
|
Balance
Beginning of Year
|
|
(Income) Expense, Net
|
|
Foreign Currency Translation
|
|
Cash
|
|
Noncash
|
|
Balance End of Year
|
|||||||||||||
|
Integration Program:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Employee severance and other personnel benefits
|
$
|
—
|
|
|
$
|
13.4
|
|
|
$
|
—
|
|
|
$
|
(1.3
|
)
|
|
$
|
—
|
|
|
$
|
12.1
|
|
|
Other
|
—
|
|
|
0.1
|
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
||||||
|
December 2013 Program:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Employee severance and other personnel benefits
|
9.0
|
|
|
—
|
|
|
(0.2
|
)
|
|
(6.3
|
)
|
|
—
|
|
|
2.5
|
|
||||||
|
Other
|
0.5
|
|
|
—
|
|
|
—
|
|
|
(0.5
|
)
|
|
—
|
|
|
—
|
|
||||||
|
September 2012 Program:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Employee severance and other personnel benefits
|
2.7
|
|
|
—
|
|
|
—
|
|
|
(1.4
|
)
|
|
—
|
|
|
1.3
|
|
||||||
|
Other
|
1.5
|
|
|
—
|
|
|
—
|
|
|
(0.8
|
)
|
|
—
|
|
|
0.7
|
|
||||||
|
Total restructuring reserve
|
$
|
13.7
|
|
|
$
|
13.5
|
|
|
$
|
(0.2
|
)
|
|
$
|
(10.4
|
)
|
|
$
|
—
|
|
|
$
|
16.6
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2014
|
|
2013
|
||||
|
Net sales
|
$
|
0.4
|
|
|
$
|
6.0
|
|
|
Loss from discontinued operations, before taxes
|
(2.8
|
)
|
|
(2.4
|
)
|
||
|
Provision for income taxes
|
0.4
|
|
|
—
|
|
||
|
Loss from discontinued operations, net of taxes
|
(3.2
|
)
|
|
(2.4
|
)
|
||
|
|
March 31, 2014
|
|
December 31, 2013
|
||||
|
Cash and cash equivalents
|
$
|
17.4
|
|
|
$
|
0.9
|
|
|
Trade receivables, net
|
1.1
|
|
|
1.9
|
|
||
|
Inventories
|
—
|
|
|
—
|
|
||
|
Other current assets
|
0.1
|
|
|
—
|
|
||
|
Total current assets
|
18.6
|
|
|
2.8
|
|
||
|
Total assets
|
$
|
18.6
|
|
|
$
|
2.8
|
|
|
|
|
|
|
||||
|
Accounts payable
|
$
|
7.5
|
|
|
$
|
4.7
|
|
|
Accrued expenses and other
|
16.0
|
|
|
27.6
|
|
||
|
Total current liabilities
|
23.5
|
|
|
32.3
|
|
||
|
Other long-term liabilities
|
—
|
|
|
2.8
|
|
||
|
Total liabilities
|
$
|
23.5
|
|
|
$
|
35.1
|
|
|
|
Pension Plans |
|
Other
Post-Retirement Benefit Plans |
||||||||||||
|
|
Three Months Ended March 31,
|
||||||||||||||
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
Net periodic benefit (income) costs:
|
|
||||||||||||||
|
Service cost
|
$
|
0.2
|
|
|
$
|
0.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Interest cost
|
7.5
|
|
|
6.9
|
|
|
0.2
|
|
|
0.1
|
|
||||
|
Expected return on plan assets
|
(10.4
|
)
|
|
(9.5
|
)
|
|
—
|
|
|
—
|
|
||||
|
Amortization of actuarial loss
|
1.2
|
|
|
2.1
|
|
|
—
|
|
|
0.1
|
|
||||
|
|
$
|
(1.5
|
)
|
|
$
|
(0.3
|
)
|
|
$
|
0.2
|
|
|
$
|
0.2
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2014
|
|
2013
|
||||
|
Net periodic benefit (income) costs:
|
|
|
|
||||
|
Cost of sales
|
$
|
(0.7
|
)
|
|
$
|
(0.4
|
)
|
|
Selling, general and administrative expense
|
(0.2
|
)
|
|
0.6
|
|
||
|
Inventories
|
(0.4
|
)
|
|
(0.3
|
)
|
||
|
|
$
|
(1.3
|
)
|
|
$
|
(0.1
|
)
|
|
•
|
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 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 Professional segment also includes a multi-cultural line consisting of
Crème of Nature
hair care products sold in the mass retail channel and in professional salons, primarily in the U.S. The Company’s principal customers for its professional products include hair and nail salons and distributors in the U.S. and internationally.
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2014
(a)
|
|
2013
|
||||
|
Segment Net Sales:
|
|
|
|
||||
|
Consumer
|
$
|
339.5
|
|
|
$
|
325.9
|
|
|
Professional
|
130.3
|
|
|
—
|
|
||
|
Total
|
$
|
469.8
|
|
|
$
|
325.9
|
|
|
|
|
|
|
||||
|
Segment Profit:
|
|
|
|
||||
|
Consumer
|
$
|
71.5
|
|
|
$
|
76.3
|
|
|
Professional
|
31.9
|
|
|
—
|
|
||
|
Total
|
$
|
103.4
|
|
|
$
|
76.3
|
|
|
|
|
|
|
||||
|
Reconciliation:
|
|
|
|
||||
|
Segment Profit
|
$
|
103.4
|
|
|
$
|
76.3
|
|
|
Less:
|
|
|
|
||||
|
Unallocated corporate expenses
|
15.6
|
|
|
17.6
|
|
||
|
Depreciation and amortization
|
25.0
|
|
|
17.0
|
|
||
|
Non-recurring items:
|
|
|
|
||||
|
Restructuring and related charges
|
13.6
|
|
|
0.3
|
|
||
|
Acquisition and integration costs
|
3.8
|
|
|
—
|
|
||
|
Inventory purchase accounting adjustment, cost of sales
|
2.6
|
|
|
—
|
|
||
|
Gain from insurance proceeds related to Venezuela fire
|
—
|
|
|
(8.3
|
)
|
||
|
Operating Income
|
42.8
|
|
|
49.7
|
|
||
|
Less:
|
|
|
|
||||
|
Interest Expense
|
22.3
|
|
|
18.8
|
|
||
|
Interest Expense - Preferred Stock
|
—
|
|
|
1.6
|
|
||
|
Amortization of debt issuance costs
|
1.4
|
|
|
1.3
|
|
||
|
Loss on early extinguishment of debt
|
1.9
|
|
|
27.9
|
|
||
|
Foreign currency losses, net
|
1.4
|
|
|
3.3
|
|
||
|
Miscellaneous, net
|
0.1
|
|
|
0.1
|
|
||
|
Income (loss) from continuing operations before income taxes
|
$
|
15.7
|
|
|
$
|
(3.3
|
)
|
|
|
Three Months Ended March 31,
|
||||||||||
|
|
2014
|
|
2013
|
||||||||
|
Geographic area:
|
|
|
|
|
|
|
|
||||
|
Net sales:
|
|
|
|
|
|
|
|
||||
|
United States
|
$
|
250.2
|
|
|
53%
|
|
$
|
192.1
|
|
|
59%
|
|
Outside of the United States
|
219.6
|
|
|
47%
|
|
133.8
|
|
|
41%
|
||
|
|
$
|
469.8
|
|
|
|
|
$
|
325.9
|
|
|
|
|
|
March 31,
2014 |
|
December 31,
2013 |
||||||||
|
Long-lived assets, net:
|
|
|
|
|
|
|
|||||
|
United States
|
$
|
840.4
|
|
|
73%
|
|
$
|
837.0
|
|
|
73%
|
|
Outside of the United States
|
308.3
|
|
|
27%
|
|
315.1
|
|
|
27%
|
||
|
|
$
|
1,148.7
|
|
|
|
$
|
1,152.1
|
|
|
|
|
|
|
Three Months Ended March 31,
|
||||||||||
|
|
2014
|
|
2013
|
||||||||
|
Classes of similar products:
|
|
|
|
|
|
|
|
||||
|
Net sales:
|
|
|
|
|
|
|
|
||||
|
Color cosmetics
|
$
|
255.3
|
|
|
54%
|
|
$
|
219.2
|
|
|
67%
|
|
Hair care
|
130.7
|
|
|
28%
|
|
41.6
|
|
|
13%
|
||
|
Beauty care and fragrance
|
83.8
|
|
|
18%
|
|
65.1
|
|
|
20%
|
||
|
|
$
|
469.8
|
|
|
|
|
$
|
325.9
|
|
|
|
|
|
March 31, 2014
|
|
December 31,
2013 |
||||
|
Raw materials and supplies
|
$
|
51.0
|
|
|
$
|
50.8
|
|
|
Work-in-process
|
20.1
|
|
|
12.8
|
|
||
|
Finished goods
|
117.3
|
|
|
111.4
|
|
||
|
|
$
|
188.4
|
|
|
$
|
175.0
|
|
|
|
Consumer
|
|
Professional
|
|
Total
|
||||||
|
Balance at December 31, 2013 before Measurement Period Adjustments
(a)
|
$
|
217.9
|
|
|
$
|
256.8
|
|
|
$
|
474.7
|
|
|
Measurement Period Adjustments
|
—
|
|
|
(2.4
|
)
|
|
(2.4
|
)
|
|||
|
Balance at December 31, 2013 and March 31, 2014
|
$
|
217.9
|
|
|
$
|
254.4
|
|
|
$
|
472.3
|
|
|
|
March 31, 2014
|
||||||||||
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
||||||
|
Finite-lived intangible assets:
|
|
|
|
|
|
||||||
|
Trademarks and Licenses
|
$
|
142.5
|
|
|
$
|
(14.3
|
)
|
|
$
|
128.2
|
|
|
Customer relationships
|
111.5
|
|
|
(8.4
|
)
|
|
103.1
|
|
|||
|
Patents and Internally-Developed IP
|
15.8
|
|
|
(1.9
|
)
|
|
13.9
|
|
|||
|
Total finite-lived intangible assets
|
$
|
269.8
|
|
|
$
|
(24.6
|
)
|
|
$
|
245.2
|
|
|
|
|
|
|
|
|
||||||
|
Indefinite-lived intangible assets:
|
|
|
|
|
|
||||||
|
Trade Names
|
$
|
109.9
|
|
|
|
|
$
|
109.9
|
|
||
|
Total indefinite-lived intangible assets
|
$
|
109.9
|
|
|
|
|
$
|
109.9
|
|
||
|
|
|
|
|
|
|
||||||
|
Total intangible assets
|
$
|
379.7
|
|
|
$
|
(24.6
|
)
|
|
$
|
355.1
|
|
|
|
|
|
|
|
|
||||||
|
|
December 31, 2013
(a)
|
||||||||||
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
||||||
|
Finite-lived intangible assets:
|
|
|
|
|
|
||||||
|
Trademarks and Licenses
|
$
|
142.1
|
|
|
$
|
(11.0
|
)
|
|
$
|
131.1
|
|
|
Customer relationships
|
111.5
|
|
|
(6.7
|
)
|
|
104.8
|
|
|||
|
Patents and Internally-Developed IP
|
15.8
|
|
|
(1.3
|
)
|
|
14.5
|
|
|||
|
Total finite-lived intangible assets
|
$
|
269.4
|
|
|
$
|
(19.0
|
)
|
|
$
|
250.4
|
|
|
|
|
|
|
|
|
||||||
|
Indefinite-lived intangible assets:
|
|
|
|
|
|
||||||
|
Trade Names
|
$
|
109.7
|
|
|
|
|
$
|
109.7
|
|
||
|
Total indefinite-lived intangible assets
|
$
|
109.7
|
|
|
|
|
$
|
109.7
|
|
||
|
|
|
|
|
|
|
||||||
|
Total intangible assets
|
$
|
379.1
|
|
|
$
|
(19.0
|
)
|
|
$
|
360.1
|
|
|
|
March 31,
2014 |
|
December 31,
2013 |
||||
|
|
|
||||||
|
Sales returns and allowances
|
$
|
70.4
|
|
|
$
|
91.5
|
|
|
Compensation and related benefits
|
55.9
|
|
|
74.5
|
|
||
|
Advertising and promotional costs
|
50.3
|
|
|
42.9
|
|
||
|
Taxes
|
24.0
|
|
|
28.5
|
|
||
|
Interest
|
6.3
|
|
|
13.8
|
|
||
|
Restructuring reserve
|
16.2
|
|
|
13.7
|
|
||
|
Other
|
49.0
|
|
|
48.8
|
|
||
|
|
$
|
272.1
|
|
|
$
|
313.7
|
|
|
|
March 31, 2014
|
|
December 31, 2013
|
||||
|
Amended Term Loan Facility: Acquisition Term Loan due 2019, net of discounts
(a)
|
$
|
696.6
|
|
|
$
|
698.3
|
|
|
Amended Term Loan Facility: 2011 Term Loan due 2017, net of discounts
(a)
|
670.8
|
|
|
670.1
|
|
||
|
Amended Revolving Credit Facility
(b)
|
—
|
|
|
—
|
|
||
|
5¾% Senior Notes due 2021
(c)
|
500.0
|
|
|
500.0
|
|
||
|
Amended and Restated Senior Subordinated Term Loan due 2014
(d)
|
58.4
|
|
|
58.4
|
|
||
|
Spanish Government Loan due 2025
(e)
|
0.9
|
|
|
0.9
|
|
||
|
|
1,926.7
|
|
|
1,927.7
|
|
||
|
Less current portion
|
(65.4
|
)
|
|
(65.4
|
)
|
||
|
|
$
|
1,861.3
|
|
|
$
|
1,862.3
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2014
|
|
2013
|
||||
|
Numerator:
|
|
|
|
||||
|
Income (loss) from continuing operations
|
$
|
8.7
|
|
|
$
|
(4.5
|
)
|
|
Loss from discontinued operations
|
(3.2
|
)
|
|
(2.4
|
)
|
||
|
Net income (loss)
|
$
|
5.5
|
|
|
$
|
(6.9
|
)
|
|
Denominator:
|
|
|
|
||||
|
Weighted average common shares outstanding – Basic
|
52,356,798
|
|
|
52,356,798
|
|
||
|
Effect of dilutive restricted stock
|
11,146
|
|
|
—
|
|
||
|
Weighted average common shares outstanding – Diluted
|
52,367,944
|
|
|
52,356,798
|
|
||
|
Basic earnings (loss) per common share:
|
|
|
|
||||
|
Continuing operations
|
$
|
0.17
|
|
|
$
|
(0.08
|
)
|
|
Discontinued operations
|
(0.06
|
)
|
|
(0.05
|
)
|
||
|
Net income (loss)
|
$
|
0.11
|
|
|
$
|
(0.13
|
)
|
|
Diluted earnings (loss) per common share:
|
|
|
|
|
|||
|
Continuing operations
|
$
|
0.17
|
|
|
$
|
(0.08
|
)
|
|
Discontinued operations
|
(0.06
|
)
|
|
(0.05
|
)
|
||
|
Net income (loss)
|
$
|
0.11
|
|
|
$
|
(0.13
|
)
|
|
|
Foreign Currency Translation
|
|
Actuarial (Loss) Gain on Post-retirement Benefits
|
|
Deferred Gain - Hedging
|
|
Accumulated Other Comprehensive Loss
|
||||||||
|
Balance, January 1, 2014
|
$
|
19.2
|
|
|
$
|
(170.5
|
)
|
|
$
|
1.5
|
|
|
$
|
(149.8
|
)
|
|
Currency translation adjustment, net of tax benefit of $0.5 million
|
1.6
|
|
|
—
|
|
|
—
|
|
|
1.6
|
|
||||
|
Amortization of pension related costs, net of tax of nil
(a)
|
—
|
|
|
1.2
|
|
|
—
|
|
|
1.2
|
|
||||
|
Revaluation of derivative financial instrument, net of tax of $0.6 million
(b)
|
—
|
|
|
—
|
|
|
(1.0
|
)
|
|
(1.0
|
)
|
||||
|
Other comprehensive income (loss)
|
1.6
|
|
|
1.2
|
|
|
(1.0
|
)
|
|
1.8
|
|
||||
|
Balance, March 31, 2014
|
$
|
20.8
|
|
|
$
|
(169.3
|
)
|
|
$
|
0.5
|
|
|
$
|
(148.0
|
)
|
|
(a)
|
Amount represents the change in accumulated other comprehensive loss as a result of the amortization of unrecognized prior service costs and actuarial losses (gains) arising during each year related to the Company’s pension and other post-retirement plans. See Note 5, “Pension and Post-retirement Benefits,” for further discussion of the Company’s pension and other post-retirement plans.
|
|
(b)
|
For the three months ended March 31, 2014, the 2013 Interest Rate Swap (as hereinafter defined) was deemed effective and therefore the changes in fair value related to the 2013 Interest Rate Swap are recorded in other comprehensive income. See Note 14, "Financial Instruments," for further discussion of the 2013 Interest Rate Swap.
|
|
•
|
Level 1: Fair valuing the asset or liability using observable inputs, such as quoted prices in active markets for identical assets or liabilities;
|
|
•
|
Level 2: Fair valuing the asset or liability using inputs other than quoted prices that are observable for the applicable asset or liability, either directly or indirectly, such as quoted prices for similar (as opposed to identical) assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active; and
|
|
•
|
Level 3: Fair valuing the asset or liability using unobservable inputs that reflect the Company’s own assumptions regarding the applicable asset or liability.
|
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
|
Assets:
|
|
|
|
|
|
|
|
||||||||
|
Derivatives:
|
|
|
|
|
|
|
|
||||||||
|
FX Contracts
(a)
|
$
|
0.6
|
|
|
$
|
—
|
|
|
$
|
0.6
|
|
|
$
|
—
|
|
|
2013 Interest Rate Swap
(b)
|
0.9
|
|
|
—
|
|
|
0.9
|
|
|
—
|
|
||||
|
Total assets at fair value
|
$
|
1.5
|
|
|
$
|
—
|
|
|
$
|
1.5
|
|
|
$
|
—
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
|
Derivatives:
|
|
|
|
|
|
|
|
||||||||
|
FX Contracts
(a)
|
$
|
0.5
|
|
|
$
|
—
|
|
|
$
|
0.5
|
|
|
$
|
—
|
|
|
Total liabilities at fair value
|
$
|
0.5
|
|
|
$
|
—
|
|
|
$
|
0.5
|
|
|
$
|
—
|
|
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
|
Assets:
|
|
|
|
|
|
|
|
||||||||
|
Derivatives:
|
|
|
|
|
|
|
|
||||||||
|
FX Contracts
(a)
|
$
|
1.0
|
|
|
$
|
—
|
|
|
$
|
1.0
|
|
|
$
|
—
|
|
|
2013 Interest Rate Swap
(b)
|
2.5
|
|
|
—
|
|
|
2.5
|
|
|
—
|
|
||||
|
Total assets at fair value
|
$
|
3.5
|
|
|
$
|
—
|
|
|
$
|
3.5
|
|
|
$
|
—
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
|
Derivatives:
|
|
|
|
|
|
|
|
||||||||
|
FX Contracts
(a)
|
$
|
0.2
|
|
|
$
|
—
|
|
|
$
|
0.2
|
|
|
$
|
—
|
|
|
Total liabilities at fair value
|
$
|
0.2
|
|
|
$
|
—
|
|
|
$
|
0.2
|
|
|
$
|
—
|
|
|
(a)
|
The fair value of the Company’s foreign currency forward exchange contracts ("FX Contracts") was measured based on observable market transactions of spot and forward rates on the respective dates. See Note 14, “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 14, “Financial Instruments.”
|
|
|
Fair Value
|
|
|
||||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Carrying Value
|
||||||||||
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Long-term debt, including current portion
|
$
|
—
|
|
|
$
|
1,933.8
|
|
|
$
|
—
|
|
|
$
|
1,933.8
|
|
|
$
|
1,926.7
|
|
|
|
Fair Value
|
|
|
||||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Carrying Value
|
||||||||||
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Long-term debt, including current portion
|
$
|
—
|
|
|
$
|
1,931.9
|
|
|
$
|
—
|
|
|
$
|
1,931.9
|
|
|
$
|
1,927.7
|
|
|
(a)
|
Fair Values of Derivative Financial Instruments in Consolidated Balance Sheets:
|
|
|
Fair Values of Derivative Instruments
|
||||||||||||||||||
|
|
Assets
|
|
Liabilities
|
||||||||||||||||
|
|
Balance Sheet
|
|
March 31,
2014 |
|
December 31,
2013 |
|
Balance Sheet
|
|
March 31,
2014 |
|
December 31,
2013 |
||||||||
|
|
Classification
|
|
Fair Value
|
|
Fair Value
|
|
Classification
|
|
Fair Value
|
|
Fair Value
|
||||||||
|
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
2013 Interest Rate Swap
(i)
|
Other assets
|
|
$
|
0.9
|
|
|
$
|
2.5
|
|
|
|
|
|
|
|
||||
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
FX Contracts
(ii)
|
Prepaid expenses and other
|
|
0.6
|
|
|
1.0
|
|
|
Accrued Expenses
|
|
$
|
0.5
|
|
|
$
|
0.2
|
|
||
|
|
Amount of Gain (Loss) Recognized in Other Comprehensive Income
|
|||||||
|
Three Months Ended March 31,
|
||||||||
|
2014
|
|
2013
|
||||||
|
Derivatives designated as hedging instruments:
|
|
|
|
|||||
|
2013 Interest Rate Swap
|
$
|
(1.6
|
)
|
|
$
|
—
|
|
|
|
|
Income Statement Classification
|
|
Amount of Gain (Loss) Recognized in Net Income (Loss)
|
|||||||
|
|
Three Months Ended March 31,
|
|||||||||
|
|
2014
|
|
2013
|
|||||||
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|||||
|
FX Contracts
|
Foreign currency losses, net
|
|
$
|
(0.1
|
)
|
|
$
|
0.5
|
|
|
|
1.
|
Manage financial drivers for value creation.
We are focused on gross profit margin expansion, which includes optimizing price, as well as allocating sales allowances to maximize our return on trade spending. We also continue to focus on reducing costs across our global supply chain. In addition, we are focused on eliminating non-value added general and administrative costs in order to fund reinvestment to facilitate growth.
|
|
2.
|
Grow our global brands through exceptional innovation and effective brand support
. We are focused on creating fewer, bigger and better innovations across our brands that are relevant, unique, impactful and distinctive. We want to continue to build strong brands by focusing on high-quality, consumer-preferred offerings; effective consumer communication; increased levels of effective advertising and promotion; and superb execution and collaboration with our customers.
|
|
3.
|
Pursue growth opportunities.
We are focused on pursuing organic growth opportunities within our existing brand portfolio and existing channels, as well as seeking acquisition opportunities that complement our portfolio. We are also focused on exploring opportunities to expand our geographical presence in key markets, as appropriate.
|
|
4.
|
Improve cash flow.
We are focused on improving our cash flows through, among other things, continued effective management of our working capital and by focusing on appropriate return on capital spending.
|
|
•
|
$94.8 million
of higher gross profit due to a
$143.9 million
increase in consolidated net sales, partially offset by a
$49.1 million
increase in cost of sales; and
|
|
•
|
a $
27.9 million
aggregate loss on early extinguishment of debt recognized in the first quarter of 2013 primarily due to the 2013 Senior Notes Refinancing (as hereinafter defined), compared to an aggregate loss on early extinguishment of debt of
$1.9 million
in the first quarter of 2014 as a result of the February 2014 Term Loan Amendment (as hereinafter defined);
|
|
•
|
$84.6 million
of higher selling general and administrative ("SG&A") expenses primarily driven by the inclusion of the SG&A expenses as a result of the Colomer Acquisition; and
|
|
•
|
$13.3 million
of higher restructuring charges related to continuing operations incurred in the first quarter of 2014, as a result of the Integration Program.
|
|
•
|
Restructuring and related costs:
During the first quarter of 2014, the Company recorded charges totaling
$13.6 million
related to restructuring and related actions under the Integration Program, of which
$13.5 million
is recorded in restructuring charges and other, net and
$0.1 million
is recorded in SG&A expenses. The Company expects total restructuring and related charges of approximately
$26 million
, with approximately
$7 million
expected to be recognized for the remainder of 2014 and any remaining charges to be recognized in 2015. The Company expects cash payments related to the restructuring and related charges in connection with the Integration Program to total approximately
$26 million
, of which
$1.4 million
was paid in the first quarter of 2014, with
$20 million
expected to be paid in the remainder of 2014 and with the remaining balance expected to be paid in 2015.
|
|
•
|
Non-restructuring integration costs:
$
12.5 million
and
$3.4 million
of non-restructuring integration costs recognized in 2013 and for the three months ended March 31, 2014, respectively. Such costs have been reflected within acquisition and integration costs in the Company's Consolidated Statements of Operations and Comprehensive Income (Loss) related to combining Colomer’s operations into the Company’s business.
|
|
•
|
Capital Expenditures:
Expected integration-related capital expenditures of approximately
$8 million
, none of which has been incurred in the first quarter of 2014. The Company expects approximately
$7 million
to be paid during the remainder of 2014, with the remaining balance to be paid in 2015.
|
|
•
|
The Consumer segment is comprised of the Company's consumer brands, which primarily include
Revlon
,
Almay
,
SinfulColors
and
Pure Ice
in color cosmetics;
Revlon ColorSilk
in women’s hair color;
Revlon
in beauty tools; and
Mitchum
in anti-perspirant deodorants. The Company’s principal customers for its consumer products include the mass retail channel in the U.S. and internationally, consisting of large mass volume retailers and chain drug and food stores in the U.S., as well as certain department stores and other specialty stores, such as perfumeries, outside the U.S. The Consumer segment also includes a skincare line and a hair color line sold in the mass retail channel, primarily in Spain, which was acquired as part of the Colomer Acquisition.
|
|
•
|
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 Professional segment also includes a multi-cultural hair care line sold in the mass retail channel and in professional salons, primarily in the U.S. The Company’s principal customers for its professional products include hair and nail salons and distributors in the U.S. and internationally.
|
|
|
Net Sales
|
|
Segment Profit
|
|||||||||||||||||||||||||||||||||
|
|
Three Months Ended March 31,
|
|
Change
|
|
XFX Change
(a)
|
|
Three Months Ended March 31,
|
|
Change
|
|||||||||||||||||||||||||||
|
|
2014
|
|
2013
|
|
$
|
|
%
|
|
$
|
|
%
|
|
2014
|
|
2013
|
|
$
|
|
%
|
|||||||||||||||||
|
Consumer
|
$
|
339.5
|
|
|
$
|
325.9
|
|
|
$
|
13.6
|
|
|
4.2
|
%
|
|
$
|
23.6
|
|
|
7.2
|
%
|
|
$
|
71.5
|
|
|
$
|
76.3
|
|
|
$
|
(4.8
|
)
|
|
(6.3
|
)%
|
|
Professional
|
130.3
|
|
|
—
|
|
|
130.3
|
|
|
—
|
|
|
130.3
|
|
|
—
|
|
|
31.9
|
|
|
—
|
|
|
31.9
|
|
|
—
|
|
|||||||
|
Total Net Sales
|
$
|
469.8
|
|
|
$
|
325.9
|
|
|
$
|
143.9
|
|
|
44.2
|
%
|
|
$
|
153.9
|
|
|
47.2
|
%
|
|
$
|
103.4
|
|
|
$
|
76.3
|
|
|
$
|
27.1
|
|
|
35.5
|
%
|
|
|
Three Months Ended March 31,
|
|
Change
|
|
XFX Change
(a)
|
||||||||||||||||
|
|
2014
|
|
2013
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||
|
United States
|
$
|
250.2
|
|
|
$
|
192.1
|
|
|
$
|
58.1
|
|
|
30.2
|
%
|
|
$
|
58.1
|
|
|
30.2
|
%
|
|
International
|
219.6
|
|
|
133.8
|
|
|
85.8
|
|
|
64.1
|
%
|
|
95.8
|
|
|
71.6
|
%
|
||||
|
Total Net Sales
|
$
|
469.8
|
|
|
$
|
325.9
|
|
|
$
|
143.9
|
|
|
44.2
|
%
|
|
$
|
153.9
|
|
|
47.2
|
%
|
|
|
Three Months Ended March 31,
|
|
Change
|
||||||||
|
|
2014
|
|
2013
|
|
2014 vs 2013
|
||||||
|
Gross profit
|
$
|
306.3
|
|
|
$
|
211.5
|
|
|
$
|
94.8
|
|
|
Percentage of net sales
|
65.2
|
%
|
|
64.9
|
%
|
|
0.3
|
%
|
|||
|
•
|
the inclusion of gross profit from the October 2013 Colomer Acquisition, which increased gross profit by $98.5 million and increased gross profit as a percentage of net sales by 0.8 percentage points;
|
|
•
|
the favorable impact of a first quarter 2014 returns accrual adjustment, net of related inventory write-off charges, due to lower expected discontinued products related to the Company's strategy to focus on fewer, bigger and better innovations, which increased gross profit by $4.0 million, with a de minimis impact to gross profit as a percentage of net sales;
|
|
•
|
favorable product and country sales mix within the Consumer segment, which increased gross profit by $2.9 million and increased gross profit as a percentage of net sales by 0.9 percentage points; and
|
|
•
|
lower manufacturing and freight costs, as a result of supply chain cost reduction initiatives and restructuring cost reductions, which increased gross profit by $1.6 million and increased gross profit as a percentage of net sales by 0.5 percentage points;
|
|
•
|
unfavorable foreign currency fluctuations, which reduced gross profit by $7.1 million and reduced gross profit as a percentage of net sales by 0.2 percentage points;
|
|
•
|
higher inventory obsolescence expense, which reduced gross profit by $2.4 million and reduced gross profit as a percentage of net sales by 0.7 percentage points; and
|
|
•
|
additional inventory costs as a result of the recognition of an increase in the fair value of inventory acquired in the Colomer Acquisition, which reduced gross profit by $2.6 million and reduced gross profit as a percentage of net sales by 0.6 percentage points.
|
|
|
Three Months Ended March 31,
|
|
Change
|
||||||||
|
|
2014
|
|
2013
|
|
2014 vs 2013
|
||||||
|
SG&A expenses
|
$
|
246.2
|
|
|
$
|
161.6
|
|
|
$
|
(84.6
|
)
|
|
•
|
the inclusion of SG&A expenses as a result of the Colomer Acquisition, commencing on the Acquisition Date, which contributed $73.5 million to the increase in SG&A expenses;
|
|
•
|
$8.4 million of higher advertising expenses to support the Company's brands within the Consumer segment; and
|
|
•
|
an $8.3 million gain from insurance proceeds in the first quarter of 2013 due to the settlement of the Company's claim for the loss of inventory from the fire that destroyed the Company's facility in Venezuela that did not recur in the first quarter of 2014;
|
|
•
|
$4.4 million of favorable impact of foreign currency fluctuations.
|
|
|
Three Months Ended March 31,
|
|
Change
|
||||||||
|
|
2014
|
|
2013
|
|
2014 vs 2013
|
||||||
|
Acquisition and integration costs
|
$
|
3.8
|
|
|
$
|
—
|
|
|
$
|
(3.8
|
)
|
|
|
Three Months Ended March 31,
|
|
Change
|
||||||||
|
|
2014
|
|
2013
|
|
2014 vs 2013
|
||||||
|
Restructuring charges and other, net
|
$
|
13.5
|
|
|
$
|
0.2
|
|
|
$
|
(13.3
|
)
|
|
|
Three Months Ended March 31,
|
|
Change
|
||||||||
|
|
2014
|
|
2013
|
|
2014 vs 2013
|
||||||
|
Interest expense
|
$
|
22.3
|
|
|
$
|
18.8
|
|
|
$
|
(3.5
|
)
|
|
Interest expense - preferred stock dividends
|
—
|
|
|
1.6
|
|
|
1.6
|
|
|||
|
|
Three Months Ended March 31,
|
|
Change
|
||||||||
|
|
2014
|
|
2013
|
|
2014 vs 2013
|
||||||
|
Loss on early extinguishment of debt
|
$
|
1.9
|
|
|
$
|
27.9
|
|
|
$
|
26.0
|
|
|
|
Three Months Ended March 31,
|
|
Change
|
||||||||
|
|
2014
|
|
2013
|
|
2014 vs 2013
|
||||||
|
Foreign currency losses, net
|
$
|
1.4
|
|
|
$
|
3.3
|
|
|
$
|
1.9
|
|
|
|
Three Months Ended March 31,
|
|
Change
|
||||||||
|
|
2014
|
|
2013
|
|
2014 vs 2013
|
||||||
|
Provision for income taxes
|
$
|
7.0
|
|
|
$
|
1.2
|
|
|
$
|
(5.8
|
)
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2014
|
|
2013
|
||||
|
Net cash used in operating activities
|
$
|
(45.5
|
)
|
|
$
|
(16.9
|
)
|
|
Net cash used in investing activities
|
(3.6
|
)
|
|
(5.1
|
)
|
||
|
Net cash provided by financing activities
|
2.2
|
|
|
28.7
|
|
||
|
Effect of exchange rate changes on cash and cash equivalents
|
(0.9
|
)
|
|
(2.2
|
)
|
||
|
•
|
$6.1 million of short-term borrowings and overdraft;
|
|
•
|
a $1.8 million scheduled amortization payment on the Acquisition Term Loan; and
|
|
•
|
the payment of $1.6 million of financing costs primarily related to the February 2014 Term Loan Amendment.
|
|
•
|
Products Corporation's issuance of the $500.0 million aggregate principal amount of the 5¾% Senior Notes at par;
|
|
•
|
the repayment and redemption of all of the $330.0 million aggregate principal amount outstanding of Products Corporation's 9¾% Senior Secured Notes in connection with the 2013 Senior Notes Refinancing;
|
|
•
|
the repayment of the $113.0 million in principal on the 2011 Term Loan in connection with the consummation of the February 2013 Term Loan Amendments; and
|
|
•
|
the payment of $27.9 million of financing costs comprised of: (i) $17.4 million of redemption and tender offer premiums, as well as fees and expenses related to the repayment and redemption of all of the $330.0 million aggregate principal amount outstanding of the 9¾% Senior Secured Notes; (ii) $9.4 million of underwriters' fees and other fees in connection with the issuance of the 5¾% Senior Notes; and (iii) $1.1 million of fees incurred in connection with the February 2013 Term Loan Amendments.
|
|
|
|
Payments Due by Period
(dollars in millions) |
||||||||||||||||||
|
Contractual Obligations
|
|
Total
|
|
2014 Q2-Q4
|
|
2015-2016
|
|
2016-2017
|
|
After 2017
|
||||||||||
|
Interest on long-term debt
(a)
|
|
$
|
449.4
|
|
|
$
|
57.8
|
|
|
$
|
164.7
|
|
|
$
|
138.0
|
|
|
$
|
88.9
|
|
|
(a)
|
Consists of interest through the respective maturity dates on (i) the
$698.2 million
aggregate principal amount outstanding under the Acquisition Term Loan; (ii) the
$675.0 million
in aggregate principal amount outstanding under the 2011 Term Loan; (iii) the $500.0 million in aggregate principal amount of the 5¾% Senior Notes; and (iv) the $58.4 million aggregate principal amount outstanding of the Non-Contributed Loan; based on interest rates under such debt agreements as of March 31, 2014. For a discussion of the 2013 Interest Rate Swap, see "Interest Rate Swap Transaction" above.
|
|
|
Expected Maturity Date for the year ended December 31,
|
|
|
||||||||||||||||||||||||||||
|
|
(dollars in millions, except for rate information)
|
|
|
||||||||||||||||||||||||||||
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
Thereafter
|
|
Total
|
|
Fair Value March 31, 2014
|
||||||||||||||||
|
Debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Short-term variable rate (various currencies)
|
$
|
10.6
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
10.6
|
|
|
$
|
10.6
|
|
||||||||||
|
Average interest rate
(a)
|
4.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Short-term fixed rate (third party - EUR)
|
1.2
|
|
|
|
|
|
|
|
|
|
|
|
|
1.2
|
|
|
1.2
|
|
|||||||||||||
|
Average interest rate
|
11.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Long-term fixed rate – third party (USD)
|
|
|
|
|
|
|
|
|
|
|
$
|
500.0
|
|
|
500.0
|
|
|
500.0
|
|
||||||||||||
|
Average interest rate
|
|
|
|
|
|
|
|
|
|
|
5.75
|
%
|
|
|
|
|
|||||||||||||||
|
Long-term fixed rate – third party (EUR)
|
|
|
|
|
$
|
0.1
|
|
|
$
|
0.1
|
|
|
$
|
0.1
|
|
|
0.6
|
|
|
0.9
|
|
|
0.9
|
|
|||||||
|
Average interest rate
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
||||||||||||
|
Long-term variable rate – third party (USD)
|
63.6
|
|
(b)
|
$
|
7.0
|
|
|
7.0
|
|
|
682.0
|
|
|
7.0
|
|
|
665.0
|
|
|
1,431.6
|
|
|
1,432.9
|
|
|||||||
|
Average interest rate
(a)(c)
|
8.1
|
%
|
|
4.0
|
%
|
|
4.2
|
%
|
|
4.0
|
%
|
|
5.0
|
%
|
|
5.3
|
%
|
|
|
|
|
||||||||||
|
Total debt
|
$
|
75.4
|
|
|
$
|
7.0
|
|
|
$
|
7.1
|
|
|
$
|
682.1
|
|
|
$
|
7.1
|
|
|
$
|
1,165.6
|
|
|
$
|
1,944.3
|
|
|
$
|
1,945.6
|
|
|
(a)
|
Weighted average variable rates are based upon implied forward rates from the U.S. Dollar LIBOR and Euribor yield curves at
March 31, 2014
.
|
|
(b)
|
Includes the $58.4 million aggregate principal amount outstanding for the Non-Contributed Loan (the portion of the Amended and Restated Senior Subordinated Term Loan that remains owing from Products Corporation to various third parties) as of
March 31, 2014
, which loan matures on October 8, 2014, and the quarterly amortization payments required under the Acquisition Term Loan.
|
|
(c)
|
At March 31, 2014, 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%). As a result of the February 2014 Term Loan Amendment, 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%). The Non-Contributed Loan bears interest at a floating rate of LIBOR plus 7%, with a 1.5% LIBOR floor, which is payable quarterly in arrears in cash. For discussion of the February 2014 Term Loan Amendment, which reduced interest rates on the 2011 Term Loan, refer to Note 10, "Long-Term Debt," to the Unaudited Consolidated Financial Statements in this Form 10-Q.
|
|
Forward Contracts (“FC”)
|
|
Average Contractual Rate
$/FC
|
|
Original US Dollar Notional Amount
|
|
Contract Value
March 31, 2014
|
|
Asset (Liability) Fair Value March 31, 2014
|
||||||
|
Sell Canadian Dollars/Buy USD
|
|
0.9471
|
|
$
|
11.5
|
|
|
$
|
12.0
|
|
|
$
|
0.5
|
|
|
Sell Australian Dollars/Buy USD
|
|
0.8910
|
|
10.3
|
|
|
10.0
|
|
|
(0.3
|
)
|
|||
|
Sell Japanese Yen/Buy USD
|
|
0.0098
|
|
3.9
|
|
|
4.0
|
|
|
0.1
|
|
|||
|
Sell South African Rand/Buy USD
|
|
0.0943
|
|
2.9
|
|
|
2.9
|
|
|
—
|
|
|||
|
Buy Australian Dollars/Sell NZ Dollars
|
|
1.1265
|
|
2.7
|
|
|
2.5
|
|
|
(0.2
|
)
|
|||
|
Sell New Zealand Dollars/Buy USD
|
|
0.8454
|
|
0.9
|
|
|
0.9
|
|
|
—
|
|
|||
|
Sell Canadian Dollars/Buy EUR
|
|
1.5280
|
|
0.9
|
|
|
0.9
|
|
|
—
|
|
|||
|
Sell Hong Kong Dollars/Buy USD
|
|
0.1288
|
|
0.6
|
|
|
0.6
|
|
|
—
|
|
|||
|
Sell Danish Krone/Buy EUR
|
|
7.4680
|
|
0.2
|
|
|
0.2
|
|
|
—
|
|
|||
|
Sell EUR/Buy USD
|
|
1.3870
|
|
0.1
|
|
|
0.1
|
|
|
—
|
|
|||
|
Total forward contracts
|
|
|
|
$
|
34.0
|
|
|
$
|
34.1
|
|
|
$
|
0.1
|
|
|
(i)
|
the Company's future financial performance;
|
|
(ii)
|
the effect on sales of decreased consumer spending in response to weak economic conditions or weakness in the consumption of beauty care products in either the Consumer or Professional segment; adverse changes in currency exchange rates, currency controls and/or government-mandated pricing controls; decreased sales of the Company’s products as a result of increased competitive activities by the Company’s competitors, changes in consumer purchasing habits, including with respect to shopping channels; inventory management by the Company's customers; space reconfigurations or reductions in display space by the Company's customers; changes in pricing or promotional strategies by the Company's customers; less than anticipated results from the Company’s existing or new products or from its advertising, promotional and/or marketing plans; or if the Company’s expenses, including, without limitation, for pension expense under its benefit plans, acquisition-related integration costs (including, without limitation, 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 integration of the Colomer Acquisition (including the Company’s plans to integrate the operations of Colomer into the Company’s business and its expectations that the Integration Program will deliver cost reductions throughout the combined organization by generating cost synergies and operating efficiencies within the Company's global supply chain and consolidating offices and back office support, and other actions designed to reduce selling, general and administrative expenses, and achieve approximately $30 million to $35 million of annualized cost reductions by the end of 2015, with approximately $10 million to $15 million of these cost reductions expected to benefit 2014 results, while recognizing total restructuring charges, capital expenditures (including expected integration-related capital expenditures of approximately $8 million, of which approximately $7 million is expected to be paid during the remainder of 2014, with the remaining balance expected to be paid in 2015) and related non-restructuring costs of approximately $45 million to $50 million in the aggregate over 2013 through 2015), any of which, the intended purpose of which would be to create value through improving our financial performance, could result in the Company making investments and/or recognizing charges related to executing against such opportunities, which activities may be funded with cash on hand, funds available under the Amended Revolving Credit Facility and/or other permitted additional sources of capital, which actions could increase the Company’s total debt;
|
|
(iv)
|
the Company’s vision to establish Revlon as the quintessential and most innovative beauty company in the world by offering products that make consumers feel attractive and beautiful and to inspire its consumers to express themselves boldly and confidently; and the Company's expectations regarding its strategic goal to optimize the market and financial performance of its portfolio of brands and assets by: (a) managing financial drivers for value creation by being focused on gross profit margin expansion, which includes optimizing price, as well as allocating sales allowances to maximize our return on trade spending, continuing to focus on reducing costs across our global supply chain and focusing on eliminating non-value added general and administrative costs in order to fund reinvestment to facilitate growth; (b) growing our global brands through exceptional innovation and effective brand support by being focused on creating fewer, bigger and better innovations across our brands that are relevant, unique, impactful and distinctive; wanting to continue to build strong brands by focusing on high-quality, consumer-preferred offerings; effective consumer communication; increased levels of effective advertising and promotion; and superb execution and collaboration with our customers; (c) pursuing growth opportunities by being focused on pursuing organic growth opportunities within our existing brand portfolio and existing channels, as well as seeking acquisition opportunities that complement our portfolio and being focused on exploring opportunities to expand our geographical presence in key markets, as appropriate; and (d) improve cash flow by being focused on improving our cash flows through, among other things, continued effective management of our working capital and by focusing on appropriate return on capital spending;
|
|
(v)
|
the effect of restructuring activities, restructuring costs and charges, the timing of restructuring payments and the benefits from such activities; including, without limitation, the Company’s expectation (i) that total restructuring and related charges related to the Integration Program will be approximately $26 million, with approximately $7 million to be recognized during the remainder of 2014 and any remaining charges to be recognized in 2015; (ii) that cash payments related to the Integration Program will total approximately $26 million, of which $1.4 million was paid in the first quarter of 2014, with approximately $20 million expected to be paid in the remainder of 2014 and with the balance expected to be paid in 2015; (iii) that net cash payments will total approximately $25 million related to the September 2012 Program, of which $21.1 million was paid cumulatively through December 31, 2013, $2.2 million was paid in the three months ended March 31, 2014, with the balance expected to be paid during the remainder of
|
|
(vi)
|
the Company’s expectation that operating revenues, cash on hand and funds available for borrowing under Products Corporation's Amended Revolving Credit Facility and other permitted lines of credit will be sufficient to enable the Company to cover its operating expenses for 2014, including the cash requirements referred to in item (viii) below;
|
|
(vii)
|
the Company’s expected principal sources of funds, including operating revenues, cash on hand and funds available for borrowing under Products Corporation's Amended Revolving Credit Facility and other permitted lines of credit, as well as the availability of funds from the Company taking certain measures, including, among other things, reducing discretionary spending;
|
|
(viii)
|
the Company's expected principal uses of funds, including amounts required for the payment of operating expenses, including expenses in connection with the continued execution of the Company’s business strategy; integration costs related to the Colomer Acquisition; payments in connection with the Company's purchases of permanent wall displays; capital expenditure requirements; debt service payments and costs, tax payments, pension and post-retirement benefit plan contributions (including the Company's intent to fund at least the minimum contributions required to meet applicable federal employee benefits and local laws); payments in connection with the Company's restructuring programs, severance and discontinued operations 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 certain 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 obligations and/or equity in open market purchases, in privately negotiated transactions or otherwise and may seek to refinance some or all of its indebtedness based upon market conditions and that any retirement or purchase of debt and/or equity may be funded with operating cash flows of the business or other sources and will depend upon prevailing market conditions, liquidity requirements, contractual restrictions and other factors, and the amounts involved may be material); and its estimates of the amount and timing of such operating and other expenses;
|
|
(ix)
|
matters concerning the Company's market-risk sensitive instruments, as well as the Company’s expectations as to the counterparty’s performance, including that any loss arising from any non-performance by the counterparty would not be material and 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, including, without limitation, the Company's expectation to have net periodic benefit income of approximately $(5) million for its pension and other post-retirement benefit plans for all of 2014;
|
|
(xii)
|
the Company's expectation that its tax provision and effective tax rate in any individual quarter will vary and may not be indicative of the Company's tax provision and effective tax rate for the full year;
|
|
(xiii)
|
the Company's expectation that it will decide whether to exchange Bolivars for U.S. Dollars to the extent permitted through the CENCOEX, SICAD and/or SICAD II markets based on its ability to participate in those markets and to the extent reasonable for its business in the future and the Company's belief that current or additional governmental restrictions, worsening import authorization controls, price and profit controls or labor unrest in Venezuela could have further adverse impacts on the Company's business and results of operations;
|
|
(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; and
|
|
(xv)
|
the Company’s beliefs and expectations regarding certain benefits of the Colomer Acquisition, including that it provides the Company with broad brand, geographic and channel diversification and substantially expands the Company's business, providing both distribution into new channels and cost synergy opportunities.
|
|
(i)
|
unanticipated circumstances or results affecting the Company's financial performance, including decreased consumer spending in response to weak economic conditions or weakness in the consumption of beauty care products in either the Consumer or Professional segment; adverse changes in currency exchange rates, currency controls and/or government-mandated pricing controls; decreased sales of the Company's products as a result of increased competitive activities by the Company's competitors; changes in consumer preferences, such as reduced consumer demand for the Company's color cosmetics and other current products, including new product launches; changes in consumer purchasing habits, including with respect to shopping channels; lower than expected customer acceptance or consumer acceptance of, or less than anticipated results from, the Company’s existing or new products; higher than expected restructuring costs, acquisition and integration costs related to the Colomer Acquisition; higher than expected pension expense and/or cash contributions under its benefit plans, costs related to litigation, advertising, promotional and/or marketing expenses or lower than expected results from the Company’s advertising, promotional and/or marketing plans; higher than expected sales returns related to any reduction of space by the Company's customers, product discontinuances or otherwise or decreased sales of the Company’s existing or new products; actions by the Company’s customers, such as inventory management and greater than anticipated space reconfigurations or reductions in display space and/or product discontinuances or a greater than expected impact from pricing or promotional strategies by the Company's customers; and changes in the competitive environment and actions by the Company's competitors, including business combinations, technological breakthroughs, new product offerings, increased advertising, promotional and marketing spending and advertising, promotional and/or marketing successes by competitors;
|
|
(ii)
|
in addition to the items discussed in (i) above, the effects of and changes in economic conditions (such as continued volatility in the financial markets, inflation, monetary conditions and foreign currency fluctuations, currency controls and/or government-mandated pricing controls, as well as in trade, monetary, fiscal and tax policies in international markets) and political conditions (such as military actions and terrorist activities);
|
|
(iii)
|
unanticipated costs or difficulties or delays in completing projects associated with the continued execution of the Company’s business strategy or lower than expected revenues or the inability to create value through improving our financial performance as a result of such strategy, including lower than expected sales, or higher than expected costs, including as may arise from any additional repositioning, repackaging or reformulating of one or more brands or product lines, launching of new product lines, including higher than expected expenses, including for sales returns, for launching its new products, acquiring businesses or brands, divesting or discontinuing non-core business lines (which may include exiting certain territories), further refining its approach to retail merchandising, and/or difficulties, delays or increased costs in connection with taking further actions to optimize the Company’s manufacturing, sourcing, supply chain or organizational size and structure, including optimizing the integration of the Colomer Acquisition (including difficulties or delays in and/or the Company’s inability to integrate the Colomer business which could result in less than expected cost reductions, more than expected costs to achieve the expected cost reductions or delays in achieving the expected cost reductions and/or less than expected benefits from the Integration Program, more than expected costs in implementing such program and/or difficulties or delays, in whole or in part, in executing
|
|
(iv)
|
difficulties, delays or unanticipated costs in achieving the Company’s strategic goals and vision, including due to factors such as (a) difficulties, delays or the Company's inability to build its strong brands, such as due to less than effective product development, less than expected acceptance of its new or existing products by consumers, salon 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; (b) difficulties, delays in or less than expected results from the Company’s efforts to optimize the market and financial performance of its portfolio of brands and assets due to the reasons set forth in clause (a) above, as well as due to: (i) difficulties, delays in or less than expected results from the Company’s efforts to manage financial drivers for value creation, such as due to higher than expected costs; (ii) difficulties, delays in or less than expected results from the Company’s efforts to grow our global brands through exceptional innovation and effective brand support; (iii) difficulties, delays in or less than expected results from the Company’s efforts to pursue growth opportunities, as well as difficulties, delays in and/or the Company’s inability to complete acquisition opportunities that complement our portfolio, such as difficulties, delays in and/or unanticipated costs in consummating, or the Company’s inability to consummate, transactions to acquire new brands; and (iv) difficulties, delays in and/or the Company’s inability to improve cash flow;
|
|
(v)
|
difficulties, delays or unanticipated costs or charges or less than expected savings and other benefits resulting from the Company's restructuring activities, such as greater than anticipated costs or charges or less than anticipated cost reductions or other benefits from the September 2012 Program, the December 2013 Program and/or the Integration Program and/or the risk that any of such programs may not satisfy the Company’s objectives;
|
|
(vi)
|
lower than expected operating revenues, cash on hand and/or funds available under the Amended Revolving Credit Facility and/or other permitted lines of credit or higher than anticipated operating expenses, such as referred to in clause (viii) below;
|
|
(vii)
|
the unavailability of funds under Products Corporation's Amended Revolving Credit Facility or other permitted lines of credit; or from difficulties, delays in or the Company's inability to take other measures, such as reducing discretionary spending;
|
|
(viii)
|
higher than expected operating expenses, sales returns, working capital expenses, permanent wall display costs, capital expenditures, debt service payments, tax payments, cash pension plan contributions, post-retirement benefit plan contributions and/or net periodic benefit costs for the pension and other post-retirement benefit plans, integration costs related to the Colomer Acquisition, restructuring costs, severance and discontinued operations not otherwise included in the Company’s restructuring programs, debt and/or equity repurchases and/or costs related to litigation;
|
|
(ix)
|
interest rate or foreign exchange rate changes affecting the Company and its market-risk sensitive financial instruments and/or difficulties, delays or the inability of the counterparty to perform such transactions;
|
|
(x)
|
difficulties, delays or the inability of the Company to efficiently manage its cash and working capital;
|
|
(xi)
|
lower than expected returns on pension plan assets and/or lower discount rates, which could result in higher than expected cash contributions, 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, SICAD, SICAD II and/or CENCOEX markets);
|
|
(xiv)
|
unexpected effects on the Company’s business, financial condition and/or its results of operations as a result of legal proceedings; and
|
|
(xv)
|
difficulties or delays in realizing, or less than anticipated, benefits from the Colomer Acquisition, such as (i) less than expected cost reductions, more than expected costs to achieve the expected cost reductions or delays in achieving the expected cost reductions, such as due to difficulties or delays in and/or the Company’s inability to integrate the Colomer business, in whole or in part, and/or changes in the timing of completing its expected integration actions; and/or (ii) less than expected growth from the Colomer brands, such as due to difficulties, delays, unanticipated costs
|
|
4.1
|
Schedules and Exhibits to the Third Amended and Restated Term Loan Agreement dated as of May 19, 2011 (the “2011 Term Loan Agreement”), among Products Corporation, as borrower, the lenders party thereto, Citigroup Global Markets Inc. (“CGMI”), J.P. Morgan Securities LLC (“JPM Securities”), Merrill Lynch, Pierce, Fenner & Smith Incorporated (“Merrill Lynch”), Credit Suisse Securities (USA) LLC (“Credit Suisse”) and Wells Fargo Securities, LLC (“WFS”), as the joint lead arrangers; CGMI, JPM Securities, Merrill Lynch, Credit Suisse, WFS and Natixis, New York Branch (“Natixis”), as joint bookrunners; JPMorgan Chase Bank, N.A. and Bank of America, N.A., as co-syndication agents; Credit Suisse, Wells Fargo Bank, N.A. and Natixis, as co-documentation agents; and Citicorp USA, Inc. (“CUSA”), as administrative agent and collateral agent (Confidential information has been omitted from this exhibit and filed separately with the Securities and Exchange Commission. Revlon, Inc. has requested confidential treatment from the Securities and Exchange Commission with respect to this omitted information)(incorporated by reference to Exhibit 4.1 to Products Corporation's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2014 filed with the SEC on April 30, 2014 ("Products Corporation's Q1 2014 Form 10-Q")).
|
|
4.2
|
Amendment No. 3 to the Term Loan Agreement, dated as of February 26, 2014 (incorporated by reference to Exhibit 4.1 to Products Corporation's Current Report on Form 8-K filed with the SEC on February 26, 2014).
|
|
4.3
|
Reaffirmation Agreement, dated as of February 26, 2014, among Products Corporation, Revlon, Inc., certain of Products Corporation's domestic subsidiaries and CUSA, as administrative agent and collateral agent in connection with Amendment No. 3 to the Term Loan Agreement (incorporated by reference to Exhibit 4.2 to RCPC's Current Report on Form 8-K filed with the SEC on February 26, 2014).
|
|
4.4
|
Schedule to Incremental Amendment, dated as of August 19, 2013, to the 2011 Term Loan Agreement, as amended on February 21, 2013 and August 19, 2013 (incorporated by reference to Exhibit 4.4 to Products Corporation's Q1 2014 Form 10-Q).
|
|
4.5
|
Schedules and Exhibits to the Third Amended and Restated Revolving Credit Agreement, dated as of June 16, 2011, among Products Corporation and certain of its foreign subsidiaries, as borrowers, and CGMI and Wells Fargo Capital Finance, LLC (“WFCF”), as the joint lead arrangers; CGMI, WFCF, Merrill Lynch, JPM Securities and Credit Suisse, as joint bookrunners; and CUSA, as administrative agent and collateral agent (Confidential information has been omitted from this exhibit and filed separately with the Securities and Exchange Commission. Revlon, Inc. has requested confidential treatment from the Securities and Exchange Commission with respect to this omitted information)(incorporated by reference to Exhibit 4.5 to Products Corporation's Q1 2014 Form 10-Q).
|
|
*10.1
|
Letter Agreement and Release, dated as of March 24, 2014, between Products Corporation and Chris Elshaw.
|
|
*31.1
|
Certification of Lorenzo Delpani, Chief Executive Officer, dated April 30, 2014, pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange Act.
|
|
*31.2
|
Certification of Lawrence B. Alletto, Chief Financial Officer, dated April 30, 2014, pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange Act.
|
|
32.1 (furnished herewith)
|
Certification of Lorenzo Delpani, Chief Executive Officer, dated April 30, 2014, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
32.2 (furnished herewith)
|
Certification of Lawrence B. Alletto, Chief Financial Officer, dated April 30, 2014, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
*101.INS
|
XBRL Instance Document
|
|
*101.SCH
|
XBRL Taxonomy Extension Schema
|
|
*101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
*101.DEF
|
XBRL Taxonomy Extension Definition Linkbase
|
|
*101.LAB
|
XBRL Taxonomy Extension Label Linkbase
|
|
*101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase
|
|
Revlon, Inc.
|
||||
|
(Registrant)
|
||||
|
|
|
|
|
|
|
By: /s/ Lorenzo Delpani
|
|
By: /s/ Lawrence B. Alletto
|
|
By: /s/ Jessica T. Graziano
|
|
Lorenzo Delpani
|
|
Lawrence B. Alletto
|
|
Jessica T. Graziano
|
|
President,
|
|
Executive Vice President,
|
|
Senior Vice President,
|
|
Chief Executive Officer and
|
|
Chief Financial Officer and
|
|
Corporate Controller and
|
|
Director
|
|
Chief Administrative Officer
|
|
Chief Accounting Officer
|
No information found
* THE VALUE IS THE MARKET VALUE AS OF THE LAST DAY OF THE QUARTER FOR WHICH THE 13F WAS FILED.
| FUND | NUMBER OF SHARES | VALUE ($) | PUT OR CALL |
|---|
| DIRECTORS | AGE | BIO | OTHER DIRECTOR MEMBERSHIPS |
|---|---|---|---|
THOMAS J. KENNY, 61 Former Partner and Co-Head of Global Fixed Income, Goldman Sachs Asset Management Director Since 2015 Committees: CD, CSR, FI | |||
W. Paul Bowers LEAD NON-MANAGEMENT DIRECTOR The Corporate Governance Committee has nominated Mr. Bowers to serve as Lead Non-Management Director, a position he has held since May 2019. Mr. Bowers’ experience at Southern Company, particularly his strong leadership and operational background, make him well-suited to serve as our Lead Non-Management Director. He has also served as Chair of the Corporate Development Committee and is a member of the Audit and Risk, Corporate Social Responsibility and Sustainability, and Executive Committees. | |||
NOBUCHIKA MORI, 68 Representative Director, Japan Financial and Economic Research Co. Ltd. Director Since 2020 Committees: CG, FI | |||
MIWAKO HOSODA, 55 Professor, Seisa University Director Since 2023 Committees: CSR | |||
KATHERINE T. ROHRER, 71 Vice Provost Emeritus, Princeton University Director Since 2017 Committees: C, CG , E | |||
Karole F. Lloyd CERTIFIED PUBLIC ACCOUNTANT AND RETIRED ERNST & YOUNG LLP AUDIT PARTNER | |||
JOSEPH L. MOSKOWITZ, 71 Retired Executive Vice President, Primerica, Inc. Director Since 2015 Committees: AR*, C , CD, E | |||
GEORGETTE D. KISER, 57 Former Manager Director and Chief Information Officer, The Carlyle Group Director Since 2019 Committees: AR*, C | |||
• Executive vice president of Primerica, Inc., an insurance and investments company, from 2009 until 2014, leading the Product Economics and Financial Analysis Group • Joined Primerica in 1988 and served in various capacities, including managing the group responsible for financial budgeting, capital management support, earnings analysis, and analyst and stockholder communications support • Chief actuary from 1999 to 2004 • Vice president of Sun Life Insurance Company from 1985 to 1988 • Senior manager at KPMG from 1979 to 1985 Notable Experience Aligned with Our Strategy and Key Board Contributions With forty years of actuarial experience and leadership roles in the insurance industry, Mr. Moskowitz provides our Board with vital insight into the analysis and evaluation of actuarial and financial models, which form the basis of various aspects of corporate planning, financial reporting, and risk assessment. Other Board or Leadership Positions, Professional Memberships or Awards • Fellow, Society of Actuaries (since 1979) • Member, American Academy of Actuaries (since 1979) | |||
ARTHUR R. COLLINS, 65 Founder and Chairman of theGROUP Director Since 2022 Committees: CG, CSR |
|
Name and
Principal Position |
Year |
Salary
($) |
Bonus
($) |
Stock
Awards ($) |
Option
Awards ($) |
Non-equity
Incentive Plan Compensation ($) |
Change in
Pension Value and Nonqualified Deferred Compensation Earnings ($) |
All Other
Compensation ($) |
Total
($) |
Total
without Change in Pension Value * ($) |
|||||||||||||||||||||||||
|
Daniel P. Amos
Chairman, CEO and President |
2024
|
1,441,100 | — | 10,399,871 | — | 5,821,241 | — | 1,606,042 | 19,268,254 | 19,268,254 | |||||||||||||||||||||||||
|
2023
|
1,441,100 | — | 10,270,666 | — | 5,796,333 | 2,720,265 | 474,889 | 20,703,253 | 17,982,988 | ||||||||||||||||||||||||||
|
2022
|
1,441,100 | — | 9,495,081 | — | 4,548,167 | — | 291,943 | 15,776,291 | 15,776,291 | ||||||||||||||||||||||||||
|
Max K. Brodén
Executive Vice President, CFO |
2024
|
850,000 | — | 2,510,924 | — | 2,325,606 | — | 526,983 | 6,213,513 | 6,213,513 | |||||||||||||||||||||||||
|
2023
|
750,000 | — | 2,428,668 | — | 2,075,603 | — | 479,749 | 5,734,020 | 5,734,020 | ||||||||||||||||||||||||||
|
2022
|
655,000 | — | 1,724,741 | — | 1,303,206 | — | 356,238 | 4,039,185 | 4,039,185 | ||||||||||||||||||||||||||
|
Bradley E. Dyslin
Executive Vice President, Global Chief Investment Officer; President, Aflac Global Investments |
2024
|
700,000 | — | 1,378,529 | — | 2,425,284 | — | 503,704 | 5,007,517 | 5,007,517 | |||||||||||||||||||||||||
|
2023
|
625,000 | — | 1,125,293 | — | 2,100,111 | 49,952 | 426,855 | 4,327,211 | 4,277,259 | ||||||||||||||||||||||||||
|
Virgil R. Miller
President, Aflac U.S. |
2024
|
700,000 | — | 1,550,855 | — | 1,042,582 | — | 319,667 | 3,613,104 | 3,613,104 | |||||||||||||||||||||||||
|
Audrey Boone Tillman
Executive Vice President, General Counsel |
2024
|
750,000 | — | 2,215,530 | — | 1,229,625 | — | 355,096 | 4,550,251 | 4,550,251 | |||||||||||||||||||||||||
|
2023
|
740,000 | — | 1,979,004 | — | 1,254,524 | 2,509,620 | 27,508 | 6,510,656 | 4,001,036 | ||||||||||||||||||||||||||
| 2022 | 740,000 | — | 2,025,875 | — | 1,045,629 | — | 20,435 | 3,831,939 | 3,831,939 | ||||||||||||||||||||||||||
No Customers Found
Price
Yield
| Owner | Position | Direct Shares | Indirect Shares |
|---|---|---|---|
| AMOS DANIEL P | - | 687,513 | 908,632 |
| AMOS DANIEL P | - | 667,789 | 908,632 |
| TILLMAN AUDREY B | - | 257,658 | 8 |
| Crawford Frederick John | - | 236,539 | 0 |
| TILLMAN AUDREY B | - | 180,372 | 8 |
| HOWARD JUNE P | - | 124,821 | 1,413 |
| Broden Max | - | 99,149 | 301 |
| Koide Masatoshi | - | 70,992 | 0 |
| BOWERS WILLIAM P | - | 61,817 | 0 |
| LAKE CHARLES D II | - | 61,522 | 1,273 |
| Daniels James Todd | - | 60,274 | 515 |
| Koide Masatoshi | - | 55,598 | 0 |
| Broden Max | - | 54,414 | 0 |
| Lloyd Karole | - | 44,896 | 0 |
| BEAVER STEVEN KENT | - | 43,741 | 0 |
| LAKE CHARLES D II | - | 36,125 | 1,259 |
| RIMER BARBARA K | - | 35,090 | 0 |
| RIGGIERI ALBERT | - | 32,825 | 0 |
| RIGGIERI ALBERT | - | 26,210 | 0 |
| MOSKOWITZ JOSEPH L | - | 26,096 | 0 |
| BEAVER STEVEN KENT | - | 20,914 | 0 |
| BEAVER STEVEN KENT | - | 20,793 | 0 |
| Rohrer Katherine | - | 19,822 | 0 |
| Dyslin Bradley Eugene | - | 17,641 | 0 |
| Miller Virgil Raynard | - | 17,499 | 2 |
| KENNY THOMAS J | - | 12,954 | 0 |
| Mori Nobuchika | - | 12,526 | 0 |
| Dyslin Bradley Eugene | - | 11,364 | 0 |
| Blackmon Robin Littrell | - | 7,175 | 0 |
| Collins Arthur Reginald | - | 6,728 | 0 |
| Forrester Michael A | - | 4,661 | 0 |
| Simard Frederic Jean Guy | - | 3,922 | 0 |
| Simard Frederic Jean Guy | - | 3,535 | 579 |
| Hosoda Miwako | - | 3,531 | 0 |
| Miller Virgil Raynard | - | 2,181 | 2 |