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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 1, 2006 (March 1, 2006)
Revlon, Inc.
------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 1-11178 13-3662955
- --------------------------------------------------------------------------------
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
237 Park Avenue
New York, New York 10017
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(212) 527-4000
--------------
(Registrant's telephone number, including area code)
None
----
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[_] Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
[_] Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12)
[_] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[_] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
On March 1, 2006, Revlon, Inc. issued a press release announcing its
earnings for the fourth quarter and full fiscal year ended December 31, 2005. A
copy of the press release is attached hereto as Exhibit 99.1 and is incorporated
by reference herein.
Item 9.01. Financial Statements and Exhibits.
(c) Exhibits
Exhibit No. Description
----------- -----------
99.1 Press release dated March 1, 2006.
2
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
REVLON, INC.
By: /s/ Robert K. Kretzman
----------------------
Robert K. Kretzman
Executive Vice President,
Chief Legal Officer,
General Counsel and Secretary
Date: March 1, 2006
3
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
99.1 Press release dated March 1, 2006.
4
Exhibit 99.1
Revlon Reports Fourth Quarter and Full Year 2005
Results; Company's New Strategic Brand Initiatives On Track
NEW YORK--(BUSINESS WIRE)--March 1, 2006--Revlon, Inc. (NYSE: REV)
today announced results for the fourth quarter ended December 31,
2005. Net earnings for the quarter advanced 39% to $64 million, versus
net earnings of $46 million in the fourth quarter of 2004. Adjusted
EBITDA(1) for the quarter grew 28% to $127 million, versus Adjusted
EBITDA of $99 million in the fourth quarter of 2004.
For the full year of 2005, the Company reduced its net loss to $84
million, from a net loss of $143 million in 2004. Adjusted EBITDA of
$167 million for the year compared with Adjusted EBITDA of $193
million for the full year 2004. Adjusted EBITDA is a non-GAAP measure
that is defined in the footnotes of this release and which is
reconciled to net income/(loss), the most directly comparable GAAP
measure, in the accompanying financial tables.
The Company indicated that, during the fourth quarter of 2005, it
began the rollout of its two new strategic brand initiatives, which
were successful in securing a significant increase in color cosmetics
retail space commitments for the Company. For the full year 2005, net
sales related to the new brand initiatives totaled approximately $33
million, after taking into account some $44 million in incremental
costs for returns and allowances. Total launch costs associated with
the brand initiatives were approximately $62 million in 2005.
Fourth Quarter 2005 Highlights
-- Grew net sales 16% to $438 million
-- Achieved Adjusted EBITDA growth of 28% to $127 million
-- Successfully executed the Company's extensive sell-in for
2006, achieving an increase of approximately 23% in U.S. color
cosmetics space commitments at retail
-- Achieved 42% growth in diluted earnings per share to $0.17
Full Year 2005 Highlights
-- Grew net sales 3% to $1,332 million
-- Achieved Adjusted EBITDA of $167 million, in line with
previous guidance of approximately $170 million
-- Restaged and improved several important Revlon franchises,
reversing consumption declines in 2004
-- Developed and launched Vital Radiance, a first-to-market
complete line of color cosmetics at mass for women over the
age of 50
-- Completely restaged Almay for 2006, capitalizing on the
healthy beauty opportunity at mass
-- Grew U.S. market share in color cosmetics, hair color, and
beauty tools and maintained market share in anti-perspirants
and deodorants
-- Developed and readied for launch the Company's re-entry into
prestige fragrances
Commenting on the Company's performance, Revlon President and
Chief Executive Officer Jack Stahl stated, "We accomplished a great
deal in 2005, and we set the stage for a strong year in 2006. Our
strategy to re-energize important franchises, while simultaneously
developing new products, is working. We are confident that the
benefits of our recently-launched 2006 brand initiatives, coupled with
our productivity and margin enhancement programs, will build as the
quarters progress in 2006, furthering our progress and moving us
closer to our objective of achieving long-term, profitable growth."
The Company will host a conference call with members of the
investment community on March 1, 2006 at 9:30 AM EST to discuss the
results of the fourth quarter and full year 2005. Access to the call
is available to the public at www.revloninc.com, in the Investor
Relations section, under Events Calendar. A copy of the press release
and related information will be available in the Investor Relations
section of the Company's website, under Press Releases and Financial
Reports, respectively.
Fourth Quarter Results
Net sales in the fourth quarter of 2005 advanced 16% to $438
million, compared with net sales of $378 million reported in the
fourth quarter of 2004. This growth was primarily driven by North
America(2), stemming from the Company's strong sell-in of its two new
brand initiatives for 2006. Also contributing to the strong sales
performance was growth in International, despite unfavorable foreign
currency translation. Excluding the impact of foreign currency
translation, net sales for the Company advanced approximately 17%
versus year-ago in the fourth quarter of 2005.
In North America, net sales for the quarter grew 22% to $306
million, versus $251 million in the fourth quarter of 2004. This
performance was fueled by the successful sell-in of the Company's new
Vital Radiance brand and the re-launch of its Almay brand, which
combined contributed some $65 million in net sales in the quarter,
after giving effect to approximately $12 million in incremental
returns and allowances associated with the initiatives. Also
contributing to the net sales growth was shipment strength in other
areas of the Company's portfolio--namely beauty tools and hair color.
These positive factors were partially offset by some continued
softness of several base color cosmetics franchises. Importantly, the
Company is continuing to implement its strategy to restage and
rejuvenate important franchises and, in 2006, Revlon is restaging its
ColorStay long-wear franchise.
In International, net sales for the quarter grew approximately 4%
to $132 million, versus $127 million in the fourth quarter of 2004.
This performance reflected growth in each of the Company's
International regions, partially offset by unfavorable foreign
currency translation. Excluding the impact of foreign currency
translation, International net sales were up approximately 7% versus
year-ago.
Operating income in the fourth quarter was $100 million, versus
operating income of $72 million in the fourth quarter of 2004.
Adjusted EBITDA in the fourth quarter of 2005 was $127 million,
compared with Adjusted EBITDA of $99 million in the same period last
year. This performance was largely driven by the growth in shipments
and a lower rate of returns and allowances on the base business,
partially offset by fourth quarter start-up costs associated with the
Company's new brand initiatives.
Operating income and Adjusted EBITDA in the fourth quarter of 2004
included charges totaling approximately $7 million and $6 million,
respectively, for restructuring and additional consolidation costs,
while restructuring charges in the fourth quarter of 2005 were
negligible.
Net income in the fourth quarter of 2005 advanced 39% to $64
million, or $0.17 per diluted share, compared with net income of $46
million, or $0.12 per diluted share, in the fourth quarter of 2004.
This improvement was primarily driven by the growth in operating
income in the quarter.
Cash flow used for operating activities in the fourth quarter of
2005 was $24 million, compared with cash flow from operating
activities of $41 million in the fourth quarter of 2004. This
performance largely reflected increased working capital and permanent
display purchases associated with launching the Company's new brand
initiatives, partially offset by the growth in operating income in the
quarter.
Full-Year Results
Net sales advanced approximately 3% to $1,332 million for the full
year of 2005, compared with net sales of $1,297 million for the full
year of 2004. Excluding the benefit of favorable foreign currency
translation, net sales for the full year advanced approximately 2%.
Driving this performance was International and the benefit of the
Company's new brand initiatives in North America. Partially offsetting
these benefits were continued softness of several base color cosmetics
franchises not yet restaged and an $11 million reduction in licensing
revenue due to the prepayment of certain minimum royalties and renewal
fees in 2004.
In North America, net sales of $857 million in 2005 were
essentially even with net sales of $856 million in 2004. This
performance largely reflected the benefits of approximately $33
million in net sales from the Company's new brand initiatives, after
giving effect to approximately $44 million in incremental returns and
allowances associated with launching the initiatives. Also benefiting
the net sales comparison were lower returns and allowances on the
Company's base franchises. Offsetting these benefits were lower sales
of several base color cosmetics franchises and the aforementioned
reduction in licensing revenue.
International net sales advanced approximately 8% to $475 million
in 2005, versus International net sales of $442 million in 2004. This
performance reflected broad-based shipment strength, with each of the
Company's regions registering growth. Also benefiting the
International sales comparison for the year was favorable foreign
currency translation, which added approximately two points of the
growth.
Operating income for the full year of 2005 was $65 million, versus
operating income of $89 million in 2004, while Adjusted EBITDA for
2005 was $167 million, versus Adjusted EBITDA of $193 million in 2004.
This performance largely reflected the benefit of the growth in
shipments, which was more than offset by approximately $62 million of
start-up costs associated with the Company's new brand initiatives,
including the $44 million of incremental returns and allowances
provisions and, as it relates to the operating income comparison, some
$7 million of accelerated amortization. Also impacting the comparison
were the aforementioned lower licensing revenue, higher overall brand
support and higher personnel-related expenses, including severance.
Operating income and Adjusted EBITDA in 2005 included charges
totaling approximately $2 million for restructuring, while operating
income and Adjusted EBITDA in 2004 included charges totaling
approximately $7 million and $6 million, respectively, for
restructuring and additional consolidation costs.
Net loss declined in 2005 to $84 million, or $0.23 per diluted
share, compared with net loss of $143 million, or $0.47 per diluted
share, in 2004. This improvement largely reflected an $82 million
decline in costs related to the early extinguishment of debt.
Partially offsetting this benefit was the decline in operating income
for the full year 2005.
Cash flow used for operating activities in 2005 was $140 million,
compared with cash flow used for operating activities of $94 million
in 2004. This performance largely reflected the decline in operating
income, as well as a significant increase in working capital and
permanent display purchases associated with the Company's new brand
initiatives.
U.S. Marketplace Results
In terms of U.S. marketplace performance, according to
ACNielsen(3), the color cosmetics category grew 4.9% versus year-ago
in the fourth quarter and 3.2% for the full year of 2005. For the
Company, total color cosmetics consumption outpaced that of the
category in both periods, with consumption up 5.1% in the quarter and
4.0% for the full year. Market share for Revlon and Almay combined
totaled 20.5% in the fourth quarter, which was essentially even with
the fourth quarter of 2004. For the full year, combined market share
totaled 21.6% in 2005, compared with 21.4% in 2004, with strong growth
of the Almay brand partially offset by a share decline for the Revlon
brand.
The Company indicated that marketplace performance of its recently
restaged franchises improved markedly in 2005. Specifically,
consumption of Revlon's Age Defying face makeup and Super Lustrous
lipstick franchises was up 28% and 12%, respectively, in 2005, while
Revlon Core Nail Enamel was up 4%. In each of these three restages,
the 2005 growth reversed declines in 2004. The Company intends to
continue to take action to strengthen its core franchises and, in
2006, is restaging its Revlon ColorStay franchise.
In other key categories, the Company gained share for the quarter
in hair color, beauty tools, and anti-perspirants and deodorants. For
the year, the Company achieved consumption growth of 9% in both hair
color and beauty tools, resulting in market share growth in both
categories, while in anti-perspirants and deodorants, consumption
growth of 3% modestly outpaced that of the category, resulting in
share that was essentially even with 2004.
Commenting on the Company's marketplace results, Mr. Stahl stated,
"We are extremely pleased with the strong positive reaction our 2005
restaged products have received from consumers. We are confident that,
by leveraging important consumer insights with our technology
capabilities, we will continue to successfully bring innovation and
excitement into the categories in which we compete. In 2006, in
addition to our new brand initiatives, we are restaging Revlon
ColorStay, the franchise that created the long-wear segment of the
category in the mid-90's. We are also re-entering prestige fragrances
in the second half of the year. These and other exciting initiatives
still in the planning stages give us confidence in our outlook for
2006 and beyond."
About Revlon
Revlon is a worldwide cosmetics, skin care, fragrance, and
personal care products company. The Company's vision is to deliver the
promise of beauty through creating and developing the most consumer
preferred brands. Websites featuring current product and promotional
information can be reached at www.revlon.com, www.almay.com,
www.vitalradiance.com and www.mitchumman.com. Corporate and investor
relations information can be accessed at www.revloninc.com. The
Company's brands include Revlon(R), Almay(R), Vital Radiance(R),
Ultima(R), Charlie(R), Flex(R), and Mitchum(R).
Footnotes to Press Release
(1) Adjusted EBITDA is a non-GAAP financial measure that is reconciled
to net income/(loss), its most directly comparable GAAP measure,
in the accompanying financial tables. Adjusted EBITDA is defined
as net earnings before interest, taxes, depreciation,
amortization, gains/losses on foreign currency transactions,
gains/losses on the sale of assets, gains/losses on the early
extinguishment of debt and miscellaneous expenses. In calculating
Adjusted EBITDA, the Company excludes the effects of gains/losses
on foreign currency transactions, gains/losses on the sale of
assets, gains/losses on the early extinguishment of debt and
miscellaneous expenses 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. The Company's management utilizes
Adjusted EBITDA as an operating performance measure in conjunction
with GAAP measures, such as net income and gross margin calculated
in accordance with GAAP.
The Company's management uses Adjusted EBITDA as an integral part of
its reporting and planning processes and as one of the primary
measures to, among other things --
(i) monitor and evaluate the performance of the Company's business
operations;
(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 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.
The Company's management believes that Adjusted EBITDA is useful to
investors to provide them with disclosures of the Company's operating
results on the same basis as that used by the Company's management.
Additionally, the Company's management believes that Adjusted EBITDA
provides useful information to investors about the performance of the
Company's overall business because such measure eliminates the
effects of unusual or other infrequent charges that are not directly
attributable to the Company's underlying operating performance.
Additionally, the Company's management believes that because it has
historically provided Adjusted EBITDA in previous press releases,
that including such non-GAAP measure in its earnings releases
provides consistency in its financial reporting and continuity to
investors for comparability purposes. Accordingly, the Company
believes that the presentation of Adjusted EBITDA, when used in
conjunction with GAAP financial measures, is a useful financial
analysis tool, used by the Company's management as described above,
that can assist investors in assessing the Company's financial
condition, operating performance and underlying strength. Adjusted
EBITDA should not be considered in isolation or as a substitute for
net income/(loss) prepared in accordance with GAAP. Other companies
may define EBITDA 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. Adjusted EBITDA, as well as the other information in
this press release, should be read in conjunction with the Company's
financial statements and footnotes contained in the documents that the
Company files with the U.S. Securities and Exchange Commission.
(2) North America includes the United States and Canada.
(3) All market share and consumption data is U.S. mass-market dollar
volume according to ACNielsen (an independent research entity).
ACNielsen data is an aggregate of the drug channel, Kmart, Target
and Food and Combo stores, and excludes Wal-Mart and regional
mass volume retailers. This data represents approximately
two-thirds of the Company's U.S. mass-market dollar volume.
Forward-Looking Statements
Statements made in this press release which are not historical
facts, including statements about the Company's plans, strategies,
beliefs and expectations, are forward-looking and subject to the safe
harbor provisions of the Private Securities Litigation Reform Act of
1995. Forward-looking statements speak only as of the date they are
made. Accordingly, except for the Company's ongoing obligations under
the U.S. federal securities laws, the Company does not intend to
update or otherwise revise the forward-looking information to reflect
actual results of operations, changes in financial condition, changes
in estimates, expectations or assumptions, changes in general
economic, industry or cosmetic category conditions or other
circumstances arising and/or existing since the preparation of this
press release or to reflect the occurrence of any unanticipated
events. Such forward-looking statements include, without limitation,
the Company's expectations, plans and/or beliefs: (i) concerning its
overall growth outlook for 2006 and beyond, including that it has set
the stage for a strong year in 2006 and that the recently-launched
2006 brand initiatives, coupled with its productivity and margin
enhancement programs, will build as the quarters progress in 2006,
furthering the Company's progress and moving it closer to achieving
its objective of long-term, profitable growth; and (ii) the Company's
new product launch and restage plans, including its plans to re-enter
prestige fragrances and to restage and rejuvenate important
franchises, such as its ColorStay franchise in 2006. Actual results
may differ materially from such forward-looking statements for a
number of reasons, including those set forth in the Company's filings
with the Securities and Exchange Commission, including the Company's
Annual Report on Form 10-K/A for the year ended December 31, 2004, the
Company's Quarterly Reports on Form 10-Q and Current Reports on Form
8-K that it filed with the SEC during 2005 and during 2006 (which may
be viewed on the SEC's website at http://www.sec.gov or on the
Company's website at http://www.revloninc.com), as well as the
following reasons: (i) difficulties, delays or higher than expected
costs to generate the Company's anticipated growth and profitability
or an improved operating margin with its productivity and margin
enhancement programs, such as due to less than anticipated net sales,
higher than anticipated returns, less than anticipated shipments
associated with the Company's strategic brand initiatives, higher than
expected expenses, less than anticipated retail customer or consumer
acceptance of these initiatives, decreased sales of the Company's
existing products as a result of the sale of products associated with
these initiatives and/or competitive activities, actions by the
Company's retail customers impacting the Company's financial
performance, including in response to decreased consumer spending in
response to weak economic conditions or weakness in the category,
changes in consumer preferences, changes in consumer purchasing
habits, including with respect to shopping channels, retailer
inventory management, and changes in the competitive environment, such
as actions by the Company's competitors, including business
combinations, technological breakthroughs, new products offerings,
promotional spending and marketing and promotional successes; and (ii)
difficulties or delays in implementing the Company's new product
launch or restage plans or unanticipated circumstances resulting in
changes to such plans. Additionally, the business and financial
materials and any other statement or disclosure on, or made available
through, the Company's websites shall not be considered a "free
writing prospectus" under the SEC's Rule 405 of the Securities Act of
1933, as amended, unless specifically identified as such.
REVLON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in millions, except per share data)
Three Months Ended Year Ended
December 31, December 31,
------------------------- -------------------------
2005 2004 2005 2004
(unaudited) (unaudited) (unaudited)
------------ ------------ ------------ ------------
Net sales $ 437.8 $ 378.3 $ 1,332.3 $ 1,297.2
Cost of sales 158.0 131.9 508.1 485.3
------------ ------------ ------------ ------------
Gross profit 279.8 246.4 824.2 811.9
Selling, general
and
administrative
expenses 180.2 168.4 757.8 717.6
Restructuring
costs - 5.8 1.5 5.8
------------ ------------ ------------ ------------
Operating
income 99.6 72.2 64.9 88.5
------------ ------------ ------------ ------------
Other expenses
(income):
Interest
expense 35.3 28.4 130.0 130.8
Interest income (1.0) (1.4) (5.8) (4.8)
Amortization of
debt issuance
costs 1.8 1.4 6.9 8.2
Foreign
currency
gains, net 1.9 (5.6) 0.5 (5.2)
(Gain) loss on
early
extinguishment
of debt - (0.7) 9.0 90.7
Miscellaneous,
net (2.0) (0.4) (0.5) 2.0
------------ ------------ ------------ ------------
Other
expenses,
net 36.0 21.7 140.1 221.7
------------ ------------ ------------ ------------
Income (loss)
before income
taxes 63.6 50.5 (75.2) (133.2)
Provision for
income taxes (0.7) 4.3 8.5 9.3
------------ ------------ ------------ ------------
Net income (loss) $ 64.3 $ 46.2 $ (83.7) $ (142.5)
============ ============ ============ ============
Basic net income
(loss) per
common share $ 0.17 $ 0.12 $ (0.23) $ (0.47)
============ ============ ============ ============
Diluted net
income (loss)
per common share $ 0.17 $ 0.12 $ (0.23) $ (0.47)
============ ============ ============ ============
Weighted average
number of common
shares
outstanding:
Basic 371,676,418 370,117,944 371,132,302 301,053,334
============ ============ ============ ============
Diluted 373,750,572 370,399,138 371,132,302 301,053,334
============ ============ ============ ============
REVLON, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(dollars in millions)
December 31, December 31,
ASSETS 2005 2004
(unaudited)
------------- -------------
Current assets:
Cash and cash equivalents $ 32.5 $ 120.8
Trade receivables, net 282.2 200.6
Inventories 220.6 154.7
Prepaid expenses and other 56.7 69.7
------------- -------------
Total current assets 592.0 545.8
Property, plant and equipment, net 119.7 118.7
Other assets 146.0 149.9
Goodwill, net 186.0 186.1
------------- -------------
Total assets $ 1,043.7 $ 1,000.5
============= =============
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
Short-term borrowings
- third parties $ 9.0 $ 36.6
Current portion of long-term debt
- third parties - 10.5
Accounts payable 133.1 95.2
Accrued expenses and other 328.4 283.2
------------- -------------
Total current liabilities 470.5 425.5
Long-term debt 1,413.4 1,308.2
Other long-term liabilities 255.7 286.7
Total stockholders' deficiency (1,095.9) (1,019.9)
------------- -------------
Total liabilities and
stockholders' deficiency $ 1,043.7 $ 1,000.5
============= =============
REVLON, INC. AND SUBSIDIARIES
UNAUDITED ADJUSTED EBITDA RECONCILIATION
(dollars in millions)
Three Months Ended Year Ended
December 31, December 31,
----------------------------------------
2005 2004 2005 2004
--------- --------- --------- ---------
(Unaudited) (Unaudited)
Reconciliation to net
income (loss):
- ----------------------------
Net income (loss) $ 64.3 $ 46.2 $ (83.7) $ (142.5)
Interest expense, net 34.3 27.0 124.2 126.0
Amortization of debt issuance
costs 1.8 1.4 6.9 8.2
Foreign currency gains, net 1.9 (5.6) 0.5 (5.2)
(Gain) loss on early
extinguishment of debt - (0.7) 9.0 90.7
Miscellaneous, net (2.0) (0.4) (0.5) 2.0
Provision for income taxes (0.7) 4.3 8.5 9.3
Depreciation and amortization 27.2 26.7 101.7 104.3
--------- --------- --------- ---------
Adjusted EBITDA $ 126.8 $ 98.9 $ 166.6 $ 192.8
========= ========= ========= =========
CONTACT: Revlon, Inc.
Investor Relations:
Maria A. Sceppaguercio, 212-527-5230
or
Media:
Scott Behles, 212-527-4718