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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
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November 10, 2004 (November 10, 2004)
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Date of Report (Date of earliest event reported)
Revlon, Inc.
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(Exact Name of Registrant as Specified in its Charter)
Delaware 1-11178 13-3662955
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(State or Other (Commission File No.) (I.R.S. Employer
Jurisdiction of Identification
Incorporation) No.)
237 Park Avenue
New York, New York 10017
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(Address of Principal (Zip Code)
Executive Offices)
(212) 527-4000
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(Registrant's telephone number, including area code)
None
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(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 Operation and Financial Condition.
On November 10, 2004, Revlon, Inc. issued a press release announcing its
earnings for the fiscal quarter ended September 30, 2004. The press release is
attached hereto as Exhibit 99.1.
Item 9.01. Financial Statements and Exhibits
(c) Exhibits
Exhibit 99.1 Press Release, dated November 10, 2004.
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
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Robert K. Kretzman
Executive Vice President, General Counsel
and Chief Legal Officer
Date: November 10, 2004
3
EXHIBIT INDEX
Exhibit No. Description
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99.1 Press Release, dated November 10, 2004.
4
Exhibit 99.1
Revlon Reports Third Quarter and Nine-Month 2004 Results;
Company Confirms Guidance for Full Year 2004 EBITDA
NEW YORK--(BUSINESS WIRE)--Nov. 10, 2004--Revlon, Inc. (NYSE: REV)
today announced results for the third quarter and nine months ended
September 30, 2004. The Company indicated that Adjusted EBITDA(1) for
the third quarter of 2004 advanced to $26 million, compared with
Adjusted EBITDA of $15 million in the third quarter of 2003. In making
the announcement, the Company reconfirmed its previous guidance of
achieving Adjusted EBITDA of approximately $190 million in 2004 and
reiterated its goal to deliver its destination model profit margins
over the next several years.
Adjusted EBITDA is a non-GAAP measure that is defined in the
footnotes of this release and which is reconciled to its most directly
comparable GAAP measures, net loss and cash flow used for operating
activities, in the accompanying financial tables.
During the quarter, the Company made further progress to
strengthen its balance sheet, with the successful consummation of a
debt refinancing that included entering into new credit facilities and
redeeming all of its 12% Senior Secured Notes. As a result of the
refinancing, the Company extended to 2010 at the earliest the
maturities on much of its debt that would have otherwise matured in
2005. The refinancing also further reduced the Company's annual
interest expense.
Commenting on the Company's performance, Revlon President and
Chief Executive Officer Jack Stahl stated, "We are pleased with the
progress we made in the third quarter to strengthen both our business
and our balance sheet. Our year-to-date results have positioned us to
deliver our Adjusted EBITDA target of approximately $190 million in
2004, up significantly versus the Adjusted EBITDA we generated in
2003. Clearly, our productivity initiatives are proving to be an
important driver of our financial progress this year, particularly
given the softness of the color cosmetics category in the U.S. mass
market. As we move forward, we will continue to take what we believe
are the appropriate actions to create long-term value, by capitalizing
on the underlying strengthening of our brands, customer partnerships,
and organization. In 2005, to further accelerate our progress and the
creation of long-term value, we plan to reinvest much, if not all, of
the expected margin benefits from our productivity initiatives back
into our brands to drive long-term growth. We believe that doing so at
this stage of our turnaround is the right course of action and one
that will result in long-term value creation."
Revlon will host a conference call with members of the investment
community on November 10, 2004 at 9:30 AM EST to discuss the results
of the third quarter. 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.
Third Quarter Results
Net sales in the third quarter of 2004 declined approximately 7%
to $294 million, compared with net sales of $317 million in the third
quarter of 2003, while gross sales in the third quarter of 2004 were
modestly higher. The net sales performance in the current quarter
primarily reflected higher provisions for returns, allowances and
discounts combined, partially offset by favorable foreign currency
translation in International. Excluding the favorable impact of
foreign currency translation, net sales declined approximately 9%.
Regarding the Company's previous guidance on sales growth for
2004, Mr. Stahl stated, "Our expectation for gross sales growth of
approximately 3% for 2004 remains intact, while net sales will likely
be even with year-ago."
In North America(2), net sales for the quarter declined
approximately 10% to $192 million, versus $212 million in the third
quarter of 2003, largely reflecting higher provisions for returns,
allowances and discounts combined, while gross sales were essentially
even with year-ago.
In International, net sales declined approximately 2% to $102
million, versus $105 million in the third quarter of 2003. The
performance primarily reflected higher provisions for returns,
allowances and discounts combined, offset by favorable foreign
currency translation and higher gross sales, stemming from strength in
the Far East region. Excluding the favorable impact of foreign
currency translation, International net sales were down 8% versus
year-ago, largely reflecting the increase in returns, allowances and
discounts that more than offset the gross sales growth in the quarter.
Operating loss in the quarter was $2.0 million, versus an
operating loss of $7.9 million in the third quarter of 2003. This
performance reflected, in part, the absence in the current quarter of
approximately $6 million of growth plan charges taken in the third
quarter of 2003. The performance also reflected the benefit of
manufacturing efficiencies in the current quarter and lower
discretionary spending, stemming from a reduction of brand support to
more appropriately reflect current top-line trends. Partially
offsetting these positive factors were the lower net sales and higher
depreciation and amortization.
Adjusted EBITDA in the current quarter was $25.7 million, compared
with Adjusted EBITDA of $14.6 million in the same period last year.
This performance was driven by largely the same factors that impacted
the operating income comparison.
Net loss of $91.6 million in the third quarter of 2004 included
expenses totaling approximately $59 million associated with the
Company's refinancing activities completed during the quarter. This
compared with a net loss of $54.7 million in the third quarter of
2003. On a diluted per share basis, net loss in the third quarter of
2004 was $0.25, compared with a net loss of $0.78 in the third quarter
of 2003. The diluted per share comparison was impacted by the
Company's exchange offers, consummated in March 2004, which
significantly increased common shares outstanding in the 2004 period.
Cash flow used for operating activities in the third quarter of 2004
was $35.2 million, compared with cash flow used for operating
activities of $49.1 million in the third quarter of 2003.
In terms of U.S. marketplace performance, according to
ACNielsen(3), the color cosmetics category for the quarter declined
3.1% versus the same period last year. For the nine-month period, the
category was down 2.0% versus year-ago. Combined share for the Revlon
and Almay brands totaled 21.3% for the quarter, compared with 22.5% in
the third quarter of 2003. For the nine months, combined market share
totaled 21.7% in 2004, compared with 22.6% for the first nine months
of 2003. The Company's share performance reflected less share
contribution from new products this year, while market share on
existing businesses advanced solidly. In other key categories, the
Company gained share during the quarter in hair color and beauty
tools, while market share was down in anti-perspirants/deodorants.
Nine-Month Results
Net sales of $919 million in the first nine months of 2004 were
down 1% versus net sales of $931 million in the first nine months of
2003. This performance largely reflected softness in North America,
offset by growth and favorable foreign currency translation in
International. For the nine-month period, gross sales were up
modestly. Excluding the favorable impact of foreign currency
translation, net sales for the first nine months of 2004 were down
approximately 4% versus the same period last year.
In North America, net sales of $605 million for the first nine
months of 2004 were down approximately 6% versus net sales of $642
million in the same period last year. International net sales of $314
million in the first nine months of 2004 advanced approximately 9%
versus net sales of $289 million in the year-ago period. Excluding the
favorable impact of foreign currency translation, International net
sales grew approximately 1% in the nine-month period.
Operating income in the first nine months of 2004 was $16.3
million, versus an operating loss of $15.2 million in the first nine
months of 2003. Adjusted EBITDA in the first nine months of 2004 was
$93.9 million, compared with Adjusted EBITDA of $58.6 million in the
first nine months of 2003. Operating loss and Adjusted EBITDA in the
first nine months of 2003 included charges of approximately $31
million and $29 million, respectively, associated with the Company's
growth plan.
Net loss of $188.7 million, or $0.68 per diluted share, in the
first nine months of 2004, included approximately $91 million of fees
and expenses associated with the Company's 2004 exchange offers and
refinancing activities. Net loss in 2003 was $141.2 million, or $2.36
per diluted share, in the first nine months of 2003. Cash flow used
for operating activities in the first nine months of 2004 was $135.3
million, compared with cash flow used for operating activities of
$183.9 million in the first nine months of 2003.
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 and www.almay.com.
Corporate investor relations information can be accessed at
www.revloninc.com. The Company's brands, which are sold worldwide,
include Revlon(R), Almay(R), Ultima(R), Charlie(R), Flex(R), and
Mitchum(R).
Footnotes to Press Release
(1) 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. Adjusted
EBITDA is a non-GAAP financial measure. The Company believes that
Adjusted EBITDA is a financial metric that can assist the Company and
investors in assessing its financial operating performance and
liquidity. The Company believes that, as a performance measure,
Adjusted EBITDA is useful in understanding the financial operating
performance and underlying strength of its business, excluding the
effects of certain factors, including gains/losses on foreign currency
transactions, gains/losses on the sale of assets and miscellaneous
expenses. Adjusted EBITDA should not be considered in isolation, as a
substitute for net income/(loss) or cash flow from/used for operating
activities prepared in accordance with GAAP. Adjusted EBITDA does not
take into account our debt service requirements and other commitments
and, accordingly, is not necessarily indicative of amounts that may be
available for discretionary uses. EBITDA is defined differently for
our credit agreement. Furthermore, other companies may define EBITDA
differently and, as a result, our measure of Adjusted EBITDA may not
be comparable to EBITDA of other companies.
In the accompanying tables, Adjusted EBITDA is reconciled to net
income/(loss) to account for its use as a performance measurement and
to cash flow from/used for operating activities to account for its use
in assessing liquidity. Net income/(loss) and cash flow from/used for
operating activities are the most directly comparable GAAP performance
and cash flow measures, respectively.
(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 70% of the Company's
U.S. mass market dollar volume. All Revlon brand share and consumption
data excludes StreetWear.
Forward-Looking Statements
Statements 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,
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 as a result of
new information, future events or otherwise. Such forward-looking
statements include, without limitation, the Company's expectations and
estimates about future events, including the Company's expectations
that it will achieve Adjusted EBITDA of approximately $190 million in
2004, as well as gross sales growth of approximately 3% in 2004, and
net sales in 2004 that are likely to be even with year-ago; the
Company's belief that it will deliver its destination model profit
margins over the next several years; the Company's belief that it is
taking the appropriate actions to create long-term value by
capitalizing on the underlying strength of its brands, customer
partnerships and organization; the Company's belief that its
productivity initiatives are proving to be an important driver of its
financial progress in 2004; and the Company's plan to accelerate its
progress and create long-term value by reinvesting much, if not all,
of its expected margin benefits from its productivity initiatives back
into its brands to drive top-line growth. 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 and Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K filed with the SEC during 2004 (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 reasons including the
Company's inability to achieve its Adjusted EBITDA target of
approximately $190 million in 2004, as well as gross sales growth of
approximately 3% in 2004, and even net sales in 2004 versus year-ago;
the Company's inability to deliver its destination model profit
margins over the next several years; the Company's inability to take
actions to create long-term value, including the inability to
capitalize on the underlying strength of its brands, customer
partnerships or organization; the Company's inability to achieve its
productivity initiatives; and the Company's inability to reinvest
much, if not all, of its expected margin benefits from its
productivity initiatives back into its brands to drive top-line
growth. Factors other than those listed above could also cause the
Company's results to differ materially from expected results.
REVLON, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in millions, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
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2004 2003 2004 2003
------------ ------------ ------------ ------------
Net sales $ 294.4 $ 316.5 $ 918.9 $ 930.8
Cost of sales 117.9 127.1 353.4 363.8
------------ ------------ ------------ ------------
Gross profit 176.5 189.4 565.5 567.0
Selling,
general and
administrative
expenses 177.9 196.9 549.2 581.3
Restructuring
costs 0.6 0.4 - 0.9
------------ ------------ ------------ ------------
Operating
(loss)
income (2.0) (7.9) 16.3 (15.2)
------------ ------------ ------------ ------------
Other expenses
(income):
Interest
expense 28.8 44.3 102.4 128.5
Interest
income (1.3) (0.9) (3.4) (3.1)
Amortization
of debt
issuance
costs 1.7 2.2 6.8 6.6
Foreign
currency
(gains)
losses, net (1.2) (0.8) 0.4 (3.2)
Loss on early
extinguish-
ment of debt 58.8 - 91.4 -
Miscellaneous,
net (0.1) (0.3) 2.4 0.1
------------ ------------ ------------ ------------
Other
expenses,
net 86.7 44.5 200.0 128.9
------------ ------------ ------------ ------------
Loss before
income taxes (88.7) (52.4) (183.7) (144.1)
Provision
(benefit) for
income taxes 2.9 2.3 5.0 (2.9)
------------ ------------ ------------ ------------
Net loss $ (91.6) $ (54.7) $ (188.7) $ (141.2)
============ ============ ============ ============
Basic and
diluted net
loss per
common share $ (0.25) $ (0.78) $ (0.68) $ (2.36)
============ ============ ============ ============
Weighted
average
number of
common shares
outstanding:
Basic and
diluted 370,117,944 69,805,118 277,863,756 59,807,555
============ ============ ============= ============
REVLON, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(dollars in millions)
September 30, December 31,
ASSETS 2004 2003
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(Unaudited)
Current assets:
Cash and cash equivalents $ 83.8 $ 56.5
Trade receivables, net 171.8 182.5
Inventories 159.8 142.7
Prepaid expenses and other 55.2 33.9
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Total current assets 470.6 415.6
Property, plant and equipment, net 120.8 132.1
Other assets 159.6 158.4
Goodwill, net 186.1 186.1
------------- -------------
Total assets $ 937.1 $ 892.2
============= =============
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
Short-term borrowings - third parties $ 32.5 $ 28.0
Accounts payable 80.4 97.4
Accrued expenses and other 299.1 321.9
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Total current liabilities 412.0 447.3
Long-term debt 1,318.7 1,869.5
Other long-term liabilities 290.1 301.0
Total stockholders' deficiency (1,083.7) (1,725.6)
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Total liabilities and stockholders'
deficiency $ 937.1 $ 892.2
============= =============
REVLON, INC. AND SUBSIDIARIES
UNAUDITED ADJUSTED EBITDA RECONCILIATION
(dollars in millions)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
2004 2003 2004 2003
--------- --------- --------- ---------
(Unaudited) (Unaudited)
Reconciliation to cash
flows from operating
activities:
- ---------------------------
Net cash used for operating
activities $ (35.2) $ (49.1) $ (135.3) $ (183.9)
Changes in assets and
liabilities, net of
acquisitions and
dispositions 31.2 18.7 110.1 125.3
Loss on early
extinguishment of debt -
cash portion 0.8 - 14.1 -
Interest expense, net 27.3 43.8 97.2 123.2
Foreign currency (gains)
losses, net (1.2) (0.8) 0.4 (3.2)
Miscellaneous, net (0.1) (0.3) 2.4 0.1
Provision (benefit) for
income taxes 2.9 2.3 5.0 (2.9)
--------- --------- --------- ---------
Adjusted EBITDA $ 25.7 $ 14.6 $ 93.9 $ 58.6
========= ========= ========= =========
Reconciliation to net loss:
- ---------------------------
Net loss $ (91.6) $ (54.7) $ (188.7) $ (141.2)
Interest expense, net 27.5 43.4 99.0 125.4
Amortization of debt
issuance costs 1.7 2.2 6.8 6.6
Foreign currency (gains)
losses, net (1.2) (0.8) 0.4 (3.2)
Loss on early
extinguishment of debt 58.8 - 91.4 -
Miscellaneous, net (0.1) (0.3) 2.4 0.1
Provision (benefit) for
income taxes 2.9 2.3 5.0 (2.9)
Depreciation and
amortization 27.7 22.5 77.6 73.8
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Adjusted EBITDA $ 25.7 $ 14.6 $ 93.9 $ 58.6
========= ========= ========= =========
CONTACT: Revlon
Investor Relations
Maria A. Sceppaguercio, 212-527-5230
or
Media
Catherine Fisher, 212-527-5727