Revlon Reports Second Quarter 2014 Results

NEW YORK--()--Revlon, Inc. (NYSE:REV) today announced results for the second quarter ended June 30, 2014. As a result of the acquisition of The Colomer Group (“TCG”) in October 2013, to provide a basis for comparing the second quarter of 2014 to the second quarter of 2013, this release presents the Company’s results using the following measures:

  • GAAP as reported (“As Reported”);
  • Non-GAAP (“Adjusted”), which excludes certain non-recurring items and non-operating items from As Reported results; and
  • Non-GAAP pro forma (“Pro Forma Adjusted”), which represents pro forma results, or the As Reported financial results and related acquisition financing of Revlon and TCG as if they were a combined company for all of 2013 (“Pro Forma”), and excludes certain non-recurring items and non-operating items from such Pro Forma results.

See footnote (a) for further discussion of the Company’s non-GAAP measures. Reconciliations of As Reported results to Adjusted results and to Pro Forma Adjusted results are provided as an attachment.

Second Quarter 2014 Results

                           
(USD millions)       Three Months Ended June 30, (i)
2014     2013  

2013
Pro Forma

As Reported

  Adjusted As Reported   Adjusted

Adjusted

 
Net Sales
Consumer $ 367.3 $ 367.3 $ 344.7 $ 344.7 $ 363.1
Professional   130.6   130.6   -   -   121.1
Total Company net sales $ 497.9 $ 497.9 $ 344.7 $ 344.7 $ 484.2
 
Segment Profit
Consumer $ 82.4 $ 82.4 $ 85.0 $ 85.0 $ 85.3
Professional   31.4   31.4   -   -   22.2
Total Company segment profit $ 113.8 $ 113.8 $ 85.0 $ 85.0 $ 107.5
 
Operating income $ 62.6 $ 67.4 $ 62.3 $ 52.4 $ 66.6
 
EBITDA $ 88.9 $ 93.7 $ 79.3 $ 69.4 $ 90.8
 
Income from continuing operations, before income taxes $ 32.9 $ 43.8 $ 44.1 $ 34.2 $ 43.0
 
Income from continuing operations, net of taxes $ 14.4 $ 27.1
Diluted earnings per common share $ 0.27 $ 0.52
 
Net income $ 18.1 $ 24.7
Diluted earnings per common share $ 0.34 $ 0.47
                           
       

(i)

 

The Company’s results of operations have been adjusted to reflect as a discontinued operation for all periods presented the Company’s exit of its business operations in China, which plans were announced in December 2013. The Company’s results of operations of its brands sold in retail channels, including retail brands acquired in the TCG acquisition, are included in the “Consumer” segment, and the results of operations of the brands sold in professional channels acquired as part of the TCG acquisition are included in the “Professional” segment.

Impact of Foreign Currency Translation - Venezuela Currency

In the first quarter of 2014, the Venezuelan government enacted changes to its foreign currency exchange rate regulations, which expanded the use of its existing exchange rate mechanisms and created another mechanism, SICAD II. In the second quarter of 2014, the Company began to participate in the SICAD II market, which had an average transaction rate to the Company of approximately 53 Bolivars per U.S. Dollar (the “SICAD II Rate”). Based on the Company’s assessment of factors, including its legal ability and intent to continue to participate in the SICAD II exchange market, the Company determined that it was appropriate to utilize the SICAD II Rate to translate Revlon Venezuela’s balance sheet as of June 30, 2014. As a result, the Company recorded a foreign currency loss of $6.0 million in the second quarter of 2014 due to the required re-measurement of Revlon Venezuela’s monetary assets and liabilities as of June 30, 2014.

During the second quarters of 2014 and 2013, Revlon Venezuela had net sales of less than 2% and 1%, respectively, of the Company’s consolidated As Reported net sales. The As Reported net sales in Venezuela in both periods were translated at the average exchange rate, which was the official rate of 6.3 Bolivars per U.S. Dollar. The use of the SICAD II Rate in lieu of the official rate to translate Revlon Venezuela's financial statements will have a negative impact on Revlon Venezuela’s results of operations going forward.

Segment Results

                                       
(USD millions)   Three Months Ended June 30,
    Net Sales     Segment Profit (b)

2014
As Reported

 

2013
Pro Forma

  % Change    

XFX
% Change

2014
As Reported

 

2013
Pro Forma

 

% Change

 

XFX
% Change

 
Consumer $ 367.3 $ 363.1 1.2 % 2.5 % $ 82.4 $ 85.3 -3.4 % -2.0 %
Professional   130.6   121.1 7.8 % 6.7 %   31.4   22.2 41.4 % 41.9 %
Total $ 497.9 $ 484.2 2.8 % 3.6 % $ 113.8 $ 107.5 5.9 % 7.1 %
                                       

Segment profit is defined in footnote (b) below. Segment profit excludes unallocated corporate expenses, depreciation and amortization and the impact of certain non-recurring items, as discussed in footnote (a) below.

Consumer Segment

Consumer segment net sales increased 1.2% to $367.3 million in the second quarter of 2014 as compared to Pro Forma net sales of $363.1 million in the second quarter of 2013. Excluding the impact of foreign currency fluctuations (“XFX”), net sales during the second quarter of 2014 increased 2.5%, primarily driven by higher net sales of Revlon color cosmetics and Revlon ColorSilk hair color, partially offset by lower net sales of Almay color cosmetics. The Consumer segment also includes the results of retail brands acquired in the TCG acquisition, which represented $17.5 million of As Reported net sales in the second quarter of 2014 and $18.4 million of Pro Forma net sales in the second quarter of 2013.

Consumer segment profit in the second quarter of 2014 was $82.4 million, as compared to Pro Forma Consumer segment profit of $85.3 million in the second quarter of 2013. On an XFX basis, Consumer segment profit during the second quarter of 2014 decreased 2.0%, primarily due to $11.7 million of higher advertising expense to support the Consumer brands, partially offset by higher gross profit primarily due to higher net sales, as discussed above.

Professional Segment

Professional segment net sales for the second quarter of 2014 were $130.6 million compared to Pro Forma net sales of $121.1 million in the second quarter of 2013. On an XFX basis, net sales during the second quarter of 2014 increased 6.7% primarily due to higher net sales of American Crew, Revlon Professional and Creme of Nature products in the second quarter of 2014, as compared to the second quarter of 2013.

Professional segment profit in the second quarter of 2014 was $31.4 million, as compared to Pro Forma Professional segment profit of $22.2 million in the second quarter of 2013. On an XFX basis, Professional segment profit during the second quarter of 2014 increased 41.9%, due to higher gross profit primarily as a result of higher net sales, as discussed above.

Geographic Net Sales- Total Company

                         
(USD millions)       Three Months Ended June 30,
Net Sales:

2014
As Reported

 

2013
As Reported

 

2013
Pro Forma

 

Pro Forma
% Change

 

Pro Forma XFX
% Change

 
United States $ 255.2 $ 203.9 $ 247.0 3.3 % 3.3 %
International   242.7   140.8   237.2 2.3 % 3.8 %
Total Net Sales $ 497.9 $ 344.7 $ 484.2 2.8 % 3.6 %
                       

United States

Total Company net sales in the U.S. in the second quarter of 2014 were $255.2 million, compared to $247.0 million of Pro Forma U.S. net sales in the second quarter of 2013, an increase of 3.3%. Within the Consumer segment, the Company had higher U.S. net sales of Revlon color cosmetics, Revlon ColorSilk hair color and SinfulColors color cosmetics, partially offset by lower U.S. net sales of Almay color cosmetics in the second quarter of 2014. Within the Professional segment, the Company had higher U.S. net sales of Creme of Nature and CND nail products, as well as higher net sales from contract manufacturing services, partially offset by lower U.S. net sales of CND Shellac in the second quarter of 2014.

International

Total Company International net sales in the second quarter of 2014 were $242.7 million, compared to $237.2 million of Pro Forma International net sales in the second quarter of 2013. On an XFX basis, net sales during the second quarter of 2014 increased 3.8%. Within the Consumer segment, the Company had higher net sales in Venezuela of Revlon ColorSilk hair color, Revlon color cosmetics and other beauty care products. Results in Venezuela benefited from the increased availability of U.S. Dollars to import finished goods for sale in Venezuela in the second quarter of 2014, as compared to the second quarter of 2013. Within the Professional segment, the Company had higher net sales of Revlon Professional, CND Shellac and American Crew throughout most of the International region, partially offset by lower net sales of Orofluido throughout most of the International region.

Total Company Results

Total Company Adjusted operating income in the second quarter of 2014 was $67.4 million, compared to Pro Forma Adjusted operating income of $66.6 million in the prior year period, an increase of 1.2%. Total Company Adjusted EBITDA in the second quarter of 2014 was $93.7 million, compared to Pro Forma Adjusted EBITDA of $90.8 million in the prior year period, an increase of 3.2%. Non-recurring items excluded from these Adjusted results in the second quarter of 2014 include a charge of $4.1 million for restructuring and related actions and $0.7 million in acquisition and integration costs related to the TCG acquisition. Non-recurring items excluded from Pro Forma Adjusted EBITDA and Pro Forma Adjusted operating income results in the second quarter of 2013 include an $18.1 million gain from insurance proceeds related to the June 2011 fire that destroyed the Company’s facility in Venezuela, a $4.5 million charge for estimated costs to clean-up the Venezuela facility, and a charge of $3.7 million for restructuring and related actions. The increase in Adjusted operating income and Adjusted EBITDA was primarily due to higher gross profit as a result of increased net sales, partially offset by an increase in advertising expenses within SG&A expenses. In addition, Adjusted operating income and Adjusted EBITDA were negatively impacted by foreign currency fluctuations of approximately $1.0 million.

Adjusted income from continuing operations, before income taxes, was $43.8 million in the second quarter of 2014 compared to Pro Forma Adjusted income from continuing operations, before income taxes, of $43.0 million in the prior year period, an increase of $0.8 million, or 1.9%. Adjusted income from continuing operations, before income taxes, excludes the $6.0 million foreign currency loss related to the re-measurement of Revlon Venezuela’s balance sheet, as discussed above.

On an As Reported basis, net income in the second quarter of 2014 was $18.1 million, or $0.34 earnings per diluted share, compared to net income of $24.7 million, or $0.47 earnings per diluted share, in the same period last year.

Six Months Results

Below presents the Company’s results for the six months ended June 30, 2014 and 2013, respectively, on the same basis as the second quarter 2014 results presented above.

                           
(USD millions)       Six Months Ended June 30, (i)
2014     2013  

2013
Pro Forma

As Reported   Adjusted As Reported   Adjusted

Adjusted

 
Net Sales
Consumer $ 706.8 $ 706.8 $ 670.6 $ 670.6 $ 703.1
Professional   260.9   260.9   -   -   231.1
Total Company net sales $ 967.7 $ 967.7 $ 670.6 $ 670.6 $ 934.2
 
Segment Profit
Consumer $ 153.9 $ 153.9 $ 161.3 $ 161.3 $ 161.9
Professional   63.3   63.3   -   -   40.4
Total Company segment profit $ 217.2 $ 217.2 $ 161.3 $ 161.3 $ 202.3
 
Operating income $ 105.4 $ 130.2 $ 112.0 $ 94.1 $ 118.6
 
EBITDA $ 156.7 $ 181.5 $ 146.0 $ 128.1 $ 167.0
 
Income from continuing operations, before income taxes $ 48.6 $ 81.4 $ 40.8 $ 51.4 $ 59.5
 
Income from continuing operations, net of taxes $ 23.1 $ 22.6
Diluted earnings per common share $ 0.44 $ 0.43
 
Net income $ 23.6 $ 17.8
Diluted earnings per common share $ 0.45 $ 0.34
                       
       

(i)

 

The Company’s results of operations have been adjusted to reflect as a discontinued operation for all periods presented the Company’s exit of its business operations in China, which plans were announced in December 2013. The Company’s results of operations of its brands sold in retail channels, including retail brands acquired in the TCG acquisition, are included in the “Consumer” segment, and the results of operations of the brands sold in professional channels acquired as part of the TCG acquisition are included in the “Professional” segment.

Cash Flow for the Six-Month Period

Net cash (used in) provided by operating activities in the first six months of 2014 was $(6.4) million compared to $11.3 million in the same period last year. Free cash flow used in the first six months of 2014 was $(19.5) million compared to $(0.4) million of free cash flow used in the same period last year. The first six months of 2014 as compared to the same period last year had increased cash used in operating activities of $17.7 million as a result of unfavorable changes in working capital, including: (i) approximately $24.0 million in restructuring and other payments related to the Company’s exit of its China operations; (ii) higher interest payments; and (iii) payments of acquisition and integration costs related to the TCG acquisition; partially offset by cash provided by operating activities related to the operations acquired in the TCG acquisition.

Second Quarter 2014 Results and Conference Call

The Company will host a conference call with members of the investment community on July 30, 2014 at 9:30 A.M. EDT to discuss Second Quarter 2014 results. Access to the call is available to the public at www.revloninc.com.

Footnotes to Press Release

(a) Non-GAAP Financial Measures: Adjusted EBITDA; Adjusted operating income; Adjusted income from continuing operations, before income taxes; pro forma results; and free cash flow are non-GAAP financial measures that are reconciled to their most directly comparable GAAP measures in the accompanying financial tables.

For comparison purposes, pro forma non-GAAP results reflect the financial results of both the Company and TCG as if they were a combined company for all of 2013, including adjustments related to the financing of the TCG acquisition, and excluding the non-recurring items referred to below. Such pro forma results make certain adjustments or exclude certain charges and gains that are identified in the reconciliation table of GAAP to pro forma non-GAAP information provided at the end of this release. Management believes that this pro forma non-GAAP information provides investors with additional information to assess the Company’s operating performance and to compare the Company’s operating performance to prior periods by making certain adjustments or excluding certain costs or gains that are not reflective of the Company’s ongoing operations. Management uses this pro forma non-GAAP information, along with GAAP information, in evaluating the combined Company’s historical performance. Pro forma results are not necessarily indicative of the operating results that would have occurred if the TCG Acquisition had been completed for the period presented. In addition, the unaudited pro forma results do not purport to project the future consolidated operating results of the combined company. Pro forma non-GAAP results are unaudited and are not prepared in accordance with GAAP and may not be comparable to non-GAAP information used by other companies. Pro forma non-GAAP information should not be viewed as a substitute for other results prepared in accordance with GAAP. Unless identified as “pro forma” results or as one of the non-GAAP measures referred to in this footnote, the results are presented on an As Reported basis pursuant to GAAP. For additional information regarding the Company’s and TCG’s pro forma results stated on a GAAP basis, please refer to the Company’s Q2 2014 Form 10-Q filed with the SEC.

The Company defines Adjusted EBITDA as income from continuing operations before interest, taxes, depreciation, amortization, gains/losses on foreign currency fluctuations, gains/losses on the early extinguishment of debt, miscellaneous expenses (the foregoing being the “Non-Operating Exclusions”), as well as to exclude certain other non-recurring items that are not directly attributable to the Company's underlying operating performance (the “Non-Recurring Items”), such as those described in the following table:

                 
(USD millions)       Q2 2014   Q2 2013  

Pro Forma
Q2 2013

Income / (Loss)                
Restructuring and related charges       $ (4.1 )   $ (3.3 )   $ (3.3 )
TCG acquisition and integration costs         (0.7 )     (0.4 )     (0.4 )
Estimated costs to clean-up Venezuela facility         -       (4.5 )     (4.5 )
Insurance gain related to the 2011 fire in Venezuela         -       18.1       18.1  
Inventory purchase accounting adjustment related to TCG         -       -       -  
Foreign currency loss, Venezuela re-measurement         (6.0 )     -       -  
                 
(USD millions) YTD 2014 YTD 2013

Pro Forma
YTD 2013

Income / (Loss)                
Restructuring and related charges       $ (17.7 )   $ (3.6 )   $ (3.6 )
TCG acquisition and integration costs         (4.5 )     (0.4 )     (0.4 )
Estimated costs to clean-up Venezuela facility         -       (4.5 )     (4.5 )
Insurance gain related to the 2011 fire in Venezuela         -       26.4       26.4  
Inventory purchase accounting adjustment related to TCG         (2.6 )     -       -  
Foreign currency loss, Venezuela re-measurement         (6.0 )     (0.6 )     (0.6 )
 

Adjusted operating income also excludes the impact of the Non-Recurring Items and the Non-Operating Exclusions, other than depreciation and amortization.

Adjusted income from continuing operations, before income taxes, excludes the impact of the Non-Recurring Items, as well as loss on early extinguishment of debt and the foreign currency loss related to the re-measurement of Revlon Venezuela’s balance sheet.

The Company excludes the Non-Operating Exclusions and the Non-Recurring Items, as applicable, in calculating non-GAAP measures because the Company's management believes that some of these items may not occur in certain periods, the amounts recognized can vary significantly from period to period and these items do not facilitate an understanding of the Company's operating performance.

Free cash flow is defined as net cash provided by operating activities, less capital expenditures for property, plant and equipment, plus proceeds from the sale of certain assets. Free cash flow excludes proceeds on sale of discontinued operations. Free cash flow does not represent the residual cash flow available for discretionary expenditures, as it excludes certain expenditures such as mandatory debt service requirements, which for the Company are significant.

The Company's management uses Adjusted EBITDA, Adjusted operating income, Adjusted income from continuing operations before income taxes and free cash flow as operating performance measures (in conjunction with GAAP measures), as an integral part of its reporting and planning processes and to, among other things: (i) monitor and evaluate the performance of the Company's business operations, financial performance and overall liquidity; (ii) facilitate management's internal comparisons of the Company's historical operating performance of its business operations; (iii) facilitate management's external comparisons of the results of its overall business to the historical operating performance of other companies that may have different capital structures and debt levels; (iv) review and assess the operating performance of the Company's management team and, together with other operational objectives, as a measure in evaluating employee compensation and bonuses; (v) analyze and evaluate financial and strategic planning decisions regarding future operating investments; and (vi) plan for and prepare future annual operating budgets and determine appropriate levels of operating investments.

Management believes that Adjusted EBITDA, Adjusted operating income, Adjusted income from continuing operations before income taxes and free cash flow are useful to investors to provide them with disclosures of the Company's operating results on the same basis as that used by management. Additionally, management believes that Adjusted EBITDA, Adjusted operating income and Adjusted income from continuing operations before income taxes provide useful information to investors about the performance of the Company's overall business because such measures eliminate the effects of unusual or other infrequent charges that are not directly attributable to the Company's underlying operating performance. Additionally, management believes that because it has historically provided Adjusted EBITDA and free cash flow in its previous press releases, including such non-GAAP measures in its earnings releases provides consistency in its financial reporting and continuity to investors for comparability purposes. Management believes that free cash flow is useful for investors because it provides them with an important perspective on the cash available for debt repayment and other strategic measures, after making necessary capital investments in property and equipment to support the Company's ongoing business operations, and provides them with the same measures that management uses as the basis for making resource allocation decisions.

Accordingly, the Company believes that the presentation of Adjusted EBITDA, Adjusted operating income, Adjusted income from continuing operations before income taxes and free cash flow, when used in conjunction with GAAP financial measures, are useful financial analysis measures, used by management, as described above, that can assist investors in assessing the Company's financial condition, operating performance and underlying strength. Adjusted EBITDA, Adjusted operating income, Adjusted income from continuing operations before income taxes and free cash flow should not be considered in isolation or as a substitute for net income/loss, operating income, income from continuing operations or net cash provided by operating activities, respectively, prepared in accordance with GAAP. Other companies may define such non-GAAP measures differently. Also, while EBITDA is defined differently than Adjusted EBITDA for the Company's credit agreement, certain financial covenants in its borrowing arrangements are tied to similar measures. These non-GAAP financial measures should be read in conjunction with the Company's financial statements and related footnotes filed with the SEC.

(b) Segment profit is defined as income from continuing operations for each of the Company's Consumer and Professional segments, before the Non-Operating Exclusions. Segment profit also excludes unallocated corporate expenses and the impact of certain items that are not directly attributable to the segments' underlying operating performance, including the impact of the Non-Recurring Items noted above in footnote (a). Unallocated corporate expenses primarily relate to general and administrative expenses related to the corporate administrative organization. These expenses are recorded in unallocated corporate expenses as these items are centrally directed and controlled. The Company does not have any material intersegment sales.

Forward-Looking Statements

Statements made in this press release, which are not historical facts, are forward-looking. Forward-looking statements speak only as of the date they are made and, except for the Company's ongoing obligations under the U.S. federal securities laws, the Company undertakes no obligation to publicly update any forward-looking statement, whether to reflect actual results of operations; changes in financial condition; changes in general U.S. or international economic or industry conditions and/or conditions in the overall Consumer and/or Professional segments; changes in estimates, expectations or assumptions; or other circumstances, conditions, developments or events arising after the issuance of this press release. Such forward-looking statements include, without limitation, the Company's belief and expectation that the use of the SICAD II Rate in lieu of the official rate to translate Revlon Venezuela's financial statements will have a negative impact on the Revlon Venezuela's results of operations going forward. Actual results may differ materially from such forward-looking statements for a number of reasons, including those set forth in our filings with the SEC, including, without limitation, our 2013 Annual Report on Form 10-K that we filed with the SEC in March 2014 and our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K that we have filed or will file with the SEC during 2014 (which may be viewed on the SEC's website at http://www.sec.gov or on our website at http://www.revloninc.com), as well as reasons including greater than anticipated adverse changes in Venezuela’s foreign currency exchange markets and/or unanticipated foreign currency exchange controls in Venezuela that could adversely affect the availability of U.S. Dollars to import finished goods for sale in Venezuela. The business and financial materials and any other statement or disclosure on or made available through the Company’s websites or other websites referenced herein shall not be incorporated by reference into this release.

             
REVLON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(dollars in millions, except share and per share amounts)
 
 
 
Three Months Ended Six Months Ended
June 30, June 30,
2014 2013 2014 2013
(Unaudited) (Unaudited)
 
Net sales $ 497.9 $ 344.7 $ 967.7 $ 670.6
Cost of sales 167.2 122.6 330.7 237.0
Gross profit 330.7 222.1 637.0 433.6
Selling, general and administrative expenses 263.6 156.3 509.8 317.9
Acquisition and integration costs 0.7 0.4 4.5 0.4
Restructuring charges and other, net 3.8 3.1 17.3 3.3
 
Operating income 62.6 62.3 105.4 112.0
 
Other expenses, net:
Interest expense 21.0 15.8 43.3 34.6
Interest expense - preferred stock dividends - 1.6 - 3.2
Amortization of debt issuance costs 1.4 1.2 2.8 2.5
Loss on early extinguishment of debt 0.1 - 2.0 27.9
Foreign currency losses (gains), net 7.2 (0.5) 8.6 2.8
Miscellaneous, net - 0.1 0.1 0.2
Other expenses, net 29.7 18.2 56.8 71.2
 
Income from continuing operations before income taxes 32.9 44.1 48.6 40.8
Provision for income taxes 18.5 17.0 25.5 18.2
Income from continuing operations, net of taxes 14.4 27.1 23.1 22.6
Income (loss) from discontinued operations, net of taxes 3.7 (2.4) 0.5 (4.8)
 
Net income $ 18.1 $ 24.7 $ 23.6 $ 17.8
 
Other comprehensive (loss) income:
Currency translation adjustment, net of tax (0.4) (3.9) 1.2 (4.7)
Amortization of pension related costs, net of tax 1.1 1.9 2.3 3.8
Revaluation of derivative financial instruments, net of tax (1.9) - (2.9) -
Other comprehensive (loss) income (1.2) (2.0) 0.6 (0.9)
 
Total comprehensive income $ 16.9 $ 22.7 $ 24.2 $ 16.9
 
Basic earnings (loss) per common share:
Continuing operations $ 0.27 $ 0.52 $ 0.44 $ 0.43
Discontinued operations 0.07 (0.05) 0.01 (0.09)
Net income $ 0.34 $ 0.47 $ 0.45 $ 0.34
 
Diluted earnings (loss) per common share:
Continuing operations $ 0.27 $ 0.52 $ 0.44 $ 0.43
Discontinued operations 0.07 (0.05) 0.01 (0.09)
Net income $ 0.34 $ 0.47 $ 0.45 $ 0.34
 
Weighted average number of common shares outstanding:
Basic 52,356,798 52,356,798 52,356,798 52,356,798
Diluted 52,386,381 52,356,798 52,377,214 52,356,798
 

 
REVLON, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(dollars in millions)
   
June 30, December 31,
2014 2013
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 157.7 $ 244.1
Trade receivables, net 270.4 253.5
Inventories 189.8 175.0
Deferred income taxes - current 62.3 65.1
Prepaid expenses and other 62.4 61.4
Total current assets 742.6 799.1
Property, plant and equipment, net 200.8 195.9
Deferred income taxes - noncurrent 47.1 65.7
Goodwill 472.0 472.3
Intangible assets, net 349.6 360.1
Other assets 126.6 123.8
Total assets $ 1,938.7 $ 2,016.9
 
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
Short-term borrowings $ 13.0 $ 7.9
Current portion of long-term debt 7.0 65.4
Accounts payable 172.9 165.7
Accrued expenses and other 274.4 313.7
Total current liabilities 467.3 552.7
Long-term debt 1,859.9 1,862.3
Long-term pension and other post-retirement plan liabilities 102.9 118.3
Other long-term liabilities 80.4 80.1
Commitments and contingencies
Total stockholders' deficiency (571.8) (596.5)
Total liabilities and stockholders' deficiency $ 1,938.7 $ 2,016.9
 

       
REVLON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in millions)
 
Six Months Ended
June 30,
2014 2013
(Unaudited)
 
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 23.6 $ 17.8
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization 50.8 34.0
Foreign currency loss from Venezuela devaluation 6.0 0.6
Amortization of debt discount 0.7 0.8
Stock compensation amortization 0.5 -
Provision for deferred income taxes 20.0 10.4
Loss on early extinguishment of debt 2.0 27.9
Amortization of debt issuance costs 2.8 2.5
Gain on sale of certain assets (0.1) (0.4)
Pension and other post-retirement income (2.6) (0.1)
Change in assets and liabilities:
(Increase) decrease in trade receivables (22.1) 23.9
Increase in inventories (14.7) (22.9)
Increase in prepaid expenses and other current assets (4.3) (24.3)
Increase in accounts payable 4.3 6.1
Decrease in accrued expenses and other current liabilities (32.6) (30.4)
Pension and other post-retirement plan contributions (11.7) (7.6)
Purchases of permanent displays (26.3) (23.0)
Other, net (2.7) (4.0)
Net cash (used in) provided by operating activities (6.4) 11.3
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (13.3) (12.1)
Proceeds from the sale of certain assets 0.2 0.4
Net cash used in investing activities (13.1) (11.7)
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in short-term borrowings and overdraft 7.4 2.5
Repayment under the Amended and Restated Senior Subordinated Term Loan (58.4) -
Repayments under the Acquisition Term Loan (3.5) -
Proceeds from the issuance of the 5 3/4% Senior Notes - 500.0
Repayment of the 9 3/4% Senior Secured Notes - (330.0)
Repayments under the 2011 Term Loan - (113.0)
Payment of financing costs (1.8) (28.7)
Other financing activities (1.4) (1.1)
Net cash (used in) provided by financing activities (57.7) 29.7
Effect of exchange rate changes on cash and cash equivalents (9.2) (4.3)
Net (decrease) increase in cash and cash equivalents (86.4) 25.0
Cash and cash equivalents at beginning of period 244.1 116.3
Cash and cash equivalents at end of period $ 157.7 $ 141.3
 
Supplemental schedule of cash flow information:
Cash paid during the period for:
Interest $ 45.3 $ 34.9
Income taxes, net of refunds $ 12.7 $ 8.0
Preferred stock dividends $ - $ 3.1
 

       
REVLON, INC. AND SUBSIDIARIES
EBITDA AND ADJUSTED EBITDA RECONCILIATION
(dollars in millions)
 
 
 
Three Months Ended
June 30,
2014 2013
(Unaudited)
Reconciliation to net income:
 
Net income $ 18.1 $ 24.7
Income (loss) from discontinued operations, net of taxes 3.7 (2.4)
Income from continuing operations, net of taxes 14.4 27.1
 
Interest expense 21.0 17.4
Amortization of debt issuance costs 1.4 1.2
Loss on early extinguishment of debt 0.1 -
Foreign currency losses (gains), net 7.2 (0.5)
Miscellaneous, net - 0.1
Provision for income taxes 18.5 17.0
Depreciation and amortization 26.3 17.0
 
EBITDA $ 88.9 $ 79.3
 
Non-recurring items:
Restructuring and related charges 4.1 3.3
Acquisition and integration costs 0.7 0.4
Gain from insurance proceeds related to Venezuela fire - (18.1)
Accrual for Venezuela fire clean-up - 4.5
 
Adjusted EBITDA $ 93.7 $ 69.4
 
 
Six Months Ended
June 30,
2014 2013
(Unaudited)
Reconciliation to net income:
 
Net income $ 23.6 $ 17.8
Income (loss) from discontinued operations, net of taxes 0.5 (4.8)
Income from continuing operations, net of taxes 23.1 22.6
 
Interest expense 43.3 37.8
Amortization of debt issuance costs 2.8 2.5
Loss on early extinguishment of debt 2.0 27.9
Foreign currency losses, net 8.6 2.8
Miscellaneous, net 0.1 0.2
Provision for income taxes 25.5 18.2
Depreciation and amortization 51.3 34.0
 
EBITDA $ 156.7 $ 146.0
 
Non-recurring items:
Restructuring and related charges 17.7 3.6
Acquisition and integration costs 4.5 0.4
Inventory purchase accounting adjustment 2.6 -
Gain from insurance proceeds related to Venezuela fire - (26.4)
Accrual for Venezuela fire clean-up - 4.5
 
Adjusted EBITDA $ 181.5 $ 128.1
 

               
REVLON, INC. AND SUBSIDIARIES
SEGMENT PROFIT, ADJUSTED EBITDA, ADJUSTED OPERATING INCOME AND PRO FORMA RECONCILIATION
(dollars in millions)
 

Three Months Ended
June 30, 2014

Three Months Ended June 30, 2013
Revlon, Inc. Revlon, Inc. Colomer

Pro Forma
Adjustments

Pro Forma
Combined

(Unaudited) (Unaudited)
Segment Net Sales:
Consumer $ 367.3 $ 344.7 $ - $ 18.4 $ 363.1
Professional   130.6   -     139.5     (18.4 )   121.1  
Total Segment Net Sales $ 497.9 $ 344.7   $ 139.5   $ -   $ 484.2  
 
Segment Profit:
Consumer $ 82.4 $ 85.0 $ - $ 0.3 $ 85.3
Professional   31.4   -     22.1     0.1     22.2  
Total Segment Profit $ 113.8

 

$ 85.0   $ 22.1   $ 0.4   $ 107.5  
Unallocated Corporate Expenses   20.1   15.6     1.1     -     16.7  
Total Adjusted EBITDA $ 93.7 $ 69.4   $ 21.0   $ 0.4   $ 90.8  
 
Reconciliation to income from continuing operations before income taxes:
Income from continuing operations before income taxes $ 32.9 $ 44.1 $ 18.8 $ (10.0 ) $ 52.9
 
Interest expense 21.0 15.8 1.5 5.6 22.9
Interest expense - preferred stock dividends - 1.6 - - 1.6
Amortization of debt issuance costs 1.4 1.2 - 0.6 1.8
Foreign currency losses (gains), net 7.2 (0.5 ) (2.2 ) - (2.7 )
Loss on early extinguishment of debt 0.1 - - - -
Miscellaneous, net   -   0.1     (0.1 )   -     -  
Operating income 62.6 62.3 18.0 (3.8 ) 76.5
 
Non-recurring items:
Restructuring and related charges 4.1 3.3 0.4 - 3.7
Acquisition and integration costs 0.7 0.4 - (0.4 ) -
Gain from insurance proceeds related to Venezuela fire - (18.1 ) - - (18.1 )
Accrual for Venezuela fire clean-up   -   4.5     -     -     4.5  
Adjusted operating income 67.4 52.4 18.4 (4.2 ) 66.6
 
Depreciation and amortization 26.3 17.0 2.6 4.6 24.2
         
Adjusted EBITDA $ 93.7 $ 69.4   $ 21.0   $ 0.4   $ 90.8  
 

                 
REVLON, INC. AND SUBSIDIARIES
SEGMENT PROFIT, ADJUSTED EBITDA, ADJUSTED OPERATING INCOME AND PRO FORMA RECONCILIATION
(dollars in millions)
 

Six Months Ended
June 30, 2014

Six Months Ended June 30, 2013

Revlon, Inc. Revlon, Inc. Colomer

Pro Forma
Adjustments

Pro Forma
Combined

(Unaudited) (Unaudited)
Segment Net Sales:
Consumer $ 706.8 $ 670.6 $ - $ 32.5 $ 703.1
Professional   260.9   -     263.6     (32.5 )   231.1  
Total Segment Net Sales $ 967.7 $ 670.6   $ 263.6   $ -   $ 934.2  
 
Segment Profit:
Consumer $ 153.9 $ 161.3 $ - $ 0.6 $ 161.9
Professional   63.3   -     40.6     (0.2 )   40.4  
Total Segment Profit $ 217.2 $ 161.3   $ 40.6   $ 0.4   $ 202.3  
Unallocated Corporate Expenses   35.7   33.2     2.1     -     35.3  
Total Adjusted EBITDA $ 181.5 $ 128.1   $ 38.5   $ 0.4   $ 167.0  
 
Reconciliation to income from continuing operations before income taxes:
Income from continuing operations before income taxes $ 48.6 $ 40.8 $ 28.8 $ (20.7 ) $ 48.9
 
Interest expense 43.3 34.6 3.0 11.1 48.7
Interest expense - preferred stock dividends - 3.2 - - 3.2
Amortization of debt issuance costs 2.8 2.5 - 1.2 3.7
Foreign currency losses , net 8.6 2.8 1.5 - 4.3
Loss on early extinguishment of debt 2.0 27.9 - - 27.9
Miscellaneous, net   0.1   0.2     (0.4 )   -     (0.2 )
Operating income 105.4 112.0 32.9 (8.4 ) 136.5
 
Non-recurring items:
Restructuring and related charges 17.7 3.6 0.4 - 4.0
Acquisition and integration costs 4.5 0.4 - (0.4 ) -
Inventory purchase accounting adjustment 2.6 - - - -
Gain from insurance proceeds related to Venezuela fire - (26.4 ) - - (26.4 )
Accrual for Venezuela fire clean-up   -   4.5     -     -     4.5  
Adjusted operating income 130.2 94.1 33.3 (8.8 ) 118.6
 
Depreciation and amortization 51.3 34.0 5.2 9.2 48.4
         
Adjusted EBITDA $ 181.5 $ 128.1   $ 38.5   $ 0.4   $ 167.0  
 

                         
REVLON, INC. AND SUBSIDIARIES
ADJUSTED INCOME FROM CONTINUING OPERATIONS RECONCILIATION
(dollars in millions)
 
 
 
Three Months Ended
June 30,
2014 2013

2013
Pro Forma (a)

 

(Unaudited)

Reconciliation to income from continuing operations before income taxes:

 

Income from continuing operations before income taxes

$ 32.9 $ 44.1 $ 52.9
 
Non-recurring items:
Loss on early extinguishment of debt 0.1 - -
Foreign currency loss, Venezuela devaluation 6.0 - -
Restructuring and related charges 4.1 3.3 3.7
Acquisition and integration costs 0.7 0.4 -
Inventory purchase accounting adjustment - - -
Gain from insurance proceeds related to Venezuela fire - (18.1 ) (18.1 )
Accrual for Venezuela fire clean-up                 - 4.5   4.5  
 
Adjusted income from continuing operations before income taxes $                 43.8 $ 34.2   $ 43.0  
 
(a) See Segment Profit, Adjusted EBITDA, Adjusted Operating Income and Pro Forma Reconciliation for reconciliation of As Reported to Pro Forma results.
 
 
 
 
Six Months Ended
June 30,
2014 2013

2013
Pro Forma (a)

 

(Unaudited)

Reconciliation to income from continuing operations before income taxes:
 
Income from continuing operations before income taxes $ 48.6 $ 40.8 $ 48.9
 
Non-recurring items:
Loss on early extinguishment of debt 2.0 27.9 27.9
Foreign currency loss, Venezuela devaluation 6.0 0.6 0.6
Restructuring and related charges 17.7 3.6 4.0
Acquisition and integration costs 4.5 0.4 -
Inventory purchase accounting adjustment 2.6 - -
Gain from insurance proceeds related to Venezuela fire - (26.4 ) (26.4 )
Accrual for Venezuela fire clean-up                 - 4.5   4.5  
 
Adjusted income from continuing operations before income taxes $                 81.4 $ 51.4   $ 59.5  
 
(a) See Segment Profit, Adjusted EBITDA, Adjusted Operating Income and Pro Forma Reconciliation for reconciliation of As Reported to Pro Forma results.
 

       
REVLON, INC. AND SUBSIDIARIES
FREE CASH FLOW RECONCILIATION
(dollars in millions)
 
 
 
Six Months Ended
June 30,
2014 2013
(Unaudited)
Reconciliation to net cash (used in) provided by operating activities:
 
Net cash (used in) provided by operating activities $ (6.4) $ 11.3
 
Less capital expenditures (13.3) (12.1)
Plus proceeds from the sale of certain assets 0.2 0.4
 
Free cash flow $ (19.5) $ (0.4)

Contacts

Investor Relations:
212-527-5230

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Contacts

Investor Relations:
212-527-5230