UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
20549
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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): September 8, 2005 (September 8, 2005)
Revlon, Inc.
(Exact Name of
Registrant as Specified in its Charter)
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| Delaware | |
1-11178 | |
13-3662955 | ||||||
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or Other Jurisdiction of Incorporation) |
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(Commission File Number) |
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(I.R.S. Employer Identification No.) |
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| 237
Park Avenue New York, New York |
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10017 |
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(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):
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![[ ]](https://cdn.kscope.io/1c891a9df1a6eed19dd497e55499f607-ebox.gif){kind=small} |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 7.01. Regulation FD Disclosure.
On August 31, 2005, Revlon, Inc. (the "Company") issued a press release publicly announcing that an Investor Conference would be held on September 8, 2005 at 11:15 a.m. E.D.T. and that during such conference the Company's President and Chief Executive Officer, Jack L. Stahl, Executive Vice President and Chief Marketing Officer, Stephanie Peponis, and Chief Financial Officer, Tom McGuire, would provide an update on the Company's business progress and strategies. The press release also announced that access to the Investor Conference would simultaneously be available to the public via a live webcast on the Company's website, www.revloninc.com. The Company is disclosing certain information (the "Conference Information") in connection with the presentation by senior management of the Company at the Investor Conference on September 8, 2005.
The Conference Information is divided into the following major components: (i) Company Overview; (ii) Business Progress to Date; (iii) Growth Outlook (including strategic growth initiatives and other key opportunities); and (iv) Summary.
As certain financial information included within the Conference Information consists of non-GAAP amounts, such non-GAAP amounts are reconciled to the most directly comparable GAAP measures in the accompanying financial tables attached as an Appendix to the Conference Information (the "Reconciliation Information"). A copy of the Conference Information (including the Reconciliation Information) is attached to this report as Exhibit 99.1 and will be posted on the Company's website, www.revloninc.com. Such non-GAAP measures include Adjusted EBITDA, gross sales and ongoing operations (see "Basis of Presentation" in the Conference Information). As stated in the "Basis of Presentation," the Company believes that 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, gains/losses on the extinguishment of debt, miscellaneous expenses and interest, taxes, depreciation, and amortization, as well as the adjustments in "ongoing operations" described below, and thus the Company believes that Adjusted EBITDA is a financial metric that can assist the Company's management and investors in assessing its financial operating performance. Similarly, the Company believes that information presented on an "ongoing operations" basis, which excludes the disposition of brands and businesses, restructuring, additional consolidation costs (primarily associated with the closing of the Company's Phoenix and Canada facilities), executive severance and, where indicated, expenses related to the acceleration of aspects of the implementation of the Company's stabilization and growth phase of its plan, is useful to the Company's management and investors in understanding its financial operating performance and underlying strength of its business without the impact of such items.
Statements made in the Conference Information which are not historical are forward-looking statements and are based on estimates, objectives, visions, projections, forecasts, plans, targets, strategies, opportunities, beliefs, intents, destinations, outlooks, initiatives and expectations of the Company's management, and thus are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. See "Forward-Looking Statements" in the Conference Information, including the Appendix.
Item 9.01. Financial Statements and Exhibits.
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| (c) | Exhibits |
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| Exhibit No. | |
Description | ||||
| 99.1 | |
Conference Information (including the Reconciliation Information) | ||||
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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.
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REVLON, INC. | |||||
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By: /s/ Robert K. Kretzman | |||||
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Robert
K. Kretzman Executive Vice President, Chief Legal Officer, General Counsel and Secretary |
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Date: September 8, 2005
3
EXHIBIT INDEX
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| Exhibit No. | |
Description | ||||
| 99.1 | |
Conference Information (including the Reconciliation Information) | ||||
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4
Prudential Back-To-School Conference
September 8, 2005
Agenda
1. Company Overview
2. Business Progress to Date
3. Growth Outlook
Strategic Growth Initiatives
Other Key Opportunities
4. Summary
5.
Questions & Answers
2
Forward-Looking Statements
This presentation relates to various aspects of Revlon, Inc.’s (“Revlon”) strategic, business and financial plans. Statements made in this presentation which are not historical are forward-looking and based on management's estimates, objectives, vision, projections, forecasts, plans, strategies, beliefs, intent, expectations, outlook, opportunities, initiatives, and destination margin, and thus are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The data contained herein are both audited and unaudited and have been prepared from Revlon's internal and external reporting information.
Accordingly, Revlon's actual results may differ materially from such forward-looking statements for a number of reasons, including, without limitation, those set forth in the Company's filings with the SEC, including its Form 8-K filed on September 8, 2005, Annual Report on Form 10-K/A for 2004, Quarterly Reports on Form 10-Q filed in 2005 and other Current Reports on Form 8-K filed in 2005. Access to these filings is available on the SEC's website at www.sec.gov.
Except for the Company’s ongoing obligations under the U.S. federal securities laws, Revlon undertakes no commitment to update or otherwise revise this presentation to reflect actual results of operations, changes in financial condition, changes in estimates, changes in expectations, changes in assumptions, changes in external sources of information, or other circumstances arising and/or existing since the preparation of the information contained herein or to reflect the occurrence of any future events. Further, Revlon undertakes no commitment to update or revise any of this presentation to reflect changes in general economics or industry conditions or changes in specific industry categories in which Revlon operates.
3
Basis of Presentation
The data contained herein are both audited and unaudited and have been prepared from Revlon's internal and external reporting information. Certain of the data are presented on an "ongoing" basis, unless otherwise noted, and exclude (i) the disposition of brands or businesses, (ii) restructuring, (iii) additional consolidation costs, primarily associated with the closing of the Phoenix and Canada facilities and (iv) executive severance. In addition, certain of the data presented, where indicated, also exclude expenses related to the acceleration of aspects of the implementation of the stabilization and growth phase of Revlon's plan. Ongoing operations is unaudited and a non-GAAP measure that Revlon believes is useful for its management and investors in understanding the financial operating performance and underlying strength of the business without the impact of such items. Ongoing operations does not purport to represent the results of operations or our financial position that actually would have occurred had the foregoing transactions been consummated at the beginning of the periods presented. Reflected in the Company’s Form 8-K filed with the SEC on September 8, 2005 is a reconciliation of all non- GAAP financial measures contained in this presentation, including Adjusted EBITDA, gross sales, and “ongoing” operations, to their respective, most directly comparable GAAP measures. These reconciliations are also available on the Company’s website at www.revloninc.com in an appendix to this presentation.
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 extinguishment of debt, miscellaneous expenses and the items described above. Adjusted EBITDA is a non-GAAP financial measure. Revlon believes that Adjusted EBITDA is a financial metric that can assist Revlon and investors 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, gains/losses on the extinguishment of debt, miscellaneous expenses and the items described above. Adjusted EBITDA should not be considered in isolation or as a substitute for net income/(loss), its most directly comparable GAAP measure.
This presentation includes gross sales data, which are non-GAAP. This data is presented to depict the Company’s shipments of products before giving effect to returns, allowances, discounts and certain other revenue.
All market share and consumption data are based on recently-refreshed ACNielsen database; where Source is noted as Full Year 2004 ACNielsen, data reflects ACNielsen information reported in 2004 prior to the refresh.
4
Powerful Brand Equities
®
5
The Revlon Success Journey
Value Creation Continuum
Cost
Rationalization
Consolidated
Manufacturing/
Distribution
Reduced Overhead
2000-2001
Stabilize
&
Begin To Grow
2002-2003
Continue
Growth
Momentum
Balance
Top-Line
Growth with Margin
Improvement
Develop
and
Begin to Implement
Margin Initiatives
Significantly
Strengthen
Balance Sheet
2004
Accelerated
Growth
2005-2006E
Accelerate Growth:
Accelerate
Top-Line
Momentum
Continue
to Implement
Margin Initiatives
Restored
Consumer
/Customer Confidence
Reversed
Market
Share Declines
Generated
Top-Line Growth
S
U
S
T
A
I
N
A
B
L
E
B
U
S
I
N
E
S
S
M
O
D
E
L
6
Revlon’s Global Business
(1)
Includes Australia and South Africa.
(2)
See reconciliation of non-GAAP financial measures on our Form 8-K filed September 8, 2005.
Sales by Category
Sales by Geography
Europe
North
America
Latin
America
Asia
Pacific1
12%
Color
Cosmetics
Beauty
Tools
10%
Fragrances
9%
69%
7%
15%
Hair
70%
4%
Beauty Care
4%
2004
Gross Sales: $1.6 billion(2)
7
Strong Position in Color Cosmetics
Revlon holds the #2 position in color cosmetics in the U.S.
Source: Full Year 2004 ACNielsen Total U.S. All Outlets (excluding Wal-Mart and Regional MVRs).
All Other
23%
CoverGirl /
Max Factor
22%
34%
21%
L’Oreal / Maybelline
Revlon / Almay
2004 U.S. Mass Market $ Share
8
Highly
Profitable Businesses in
Key Related Categories
Source: Full Year 2004 ACNielsen Total U.S. All Outlets (excluding Wal-Mart and Regional MVRs).
Beauty Tools
Hair Color
$850m category
Revlon
fastest growing major
manufacturer since 2003
8.0% share
$250m category
#1 Brand with 24.1% share
9
$450m
category in mass; total
category $2.4bn including
Prestige1
Key
Brands: Charlie, Ciara,
Jean Naté
$1.1bn category
6% share
Highly
Profitable Businesses in
Key Related Categories
Mass
includes ACNielsen Perfumes, Colognes, EDT 52 weeks ending 1/1/05; Total
category includes ACNielsen plus The NPD Group
Prestige estimate of
$2.4bn.
Women’s Fragrances
Anti-Perspirants & Deodorants
Source: Full Year 2004 ACNielsen Total U.S. All Outlets (excluding Wal-Mart and Regional MVRs).
(1)
10
International Overview
2004 Gross Sales: $503 million(2)
International represents an excellent growth opportunity
Asia
Pacific1
30%
Europe
Latin America
Color
Cosmetics
Beauty
Tools
1%
Hair
Fragrances
Beauty Care
49%
21%
59%
12%
18%
10%
Sales by Category
Sales by Geography
(1)
Includes Australia and South Africa.
(2)
See reconciliation of non-GAAP financial measures on our Form 8-K filed September 8, 2005.
11
Business Progress to Date
Progress to Date: Market Share
Source:
Following steep declines, stabilized share and set stage for growth
$ Share
31.0%
28.6%
26.1%
23.1%
22.3%
22.2%
21.4%
22.2%
0%
5%
10%
15%
20%
25%
30%
35%
1998
1999
2000
2001
2002
2003
2004
1H 2005
ACNielsen Total U.S. All Outlets (excluding Wal-Mart and Regional MVRs); data from 2003 to present reflects ACNielsen refreshed database.
13
Progress to Date: Market Share
Market
share growth driven by new products launched with new
New Product
Development process
+0.2 pts
22.2
22.0
Total Color Cosmetics
+0.7 pts
6.5
5.8
Almay Brand
-0.5 pts
15.7
16.1
Revlon Brand
Change
2005
2004
Color Cosmetics 1H $ Market Share
Source: ACNielsen Total U.S. All Outlets (excluding Wal-Mart and Regional MVRs); minor rounding differences.
14
Revlon Age Defying Make-Up
Dramatically strengthened franchise with complete product restage
Note:
+1.1 pts
+1.2 pts
-0.4 pts
+0.2 pts
$ Share
+34%
+28%
-5%
-1%
Retail
$
Consumption
Q2 ‘05
Q1 ’05
2004
2003
Change vs. PY
All
share and consumption data are based on ACNielsen All Outlets (excluding
Wal-Mart and Regional MVRs) and include
Company estimates for
2003 vs 2002 comparison.
15
Revlon Super Lustrous Lipstick
Reversed
long-term declining trend behind product restage, with
momentum continuing
to build
All
share and consumption data are based on ACNielsen All Outlets (excluding
Wal-Mart and Regional MVRs) and include Company estimates for
2003 vs 2002 comparison.
+0.8 pts
+0.5 pts
+0.1 pts
-0.9 pts
$ Share
+11%
+4%
-4%
-19%
Retail
$
Consumption
Q2 ‘05
Q1 ’05
2004
2003
Change vs. PY
Note:
16
Revlon Core Nail Enamel
Reversed
long-term declining trends on flagship franchise with
2005 restage efforts
beginning in Q2
Transition
period between
old and restaged product
All
share and consumption data are based on ACNielsen All Outlets (excluding
Wal-Mart and Regional MVRs) and include Company estimates for
2003 vs 2002
comparison.
+0.8 pts
-0.7 pts
-0.1 pts
+0.7 pts
$ Share
+2%
-8%
-2%
-3%
Retail
$
Consumption
Q2 ‘05
Q1 ’05
2004
2003
Change vs. PY
Note:
17
New Revlon Brand Eye Products
Revlon
Eye consumption up
11% YTD, and up 13% in July
Revlon
Eye share up 0.3 pts.
YTD, and up 0.4 pts. in July
Momentum
building behind
new, impactful Fabulash
advertising
First-half results strong, with momentum building
Note: All share and consumption data are based on ACNielsen All Outlets (excluding Wal-Mart and Regional MVRs); YTD thru 7/30/05.
Fabulash Mascara
ColorStay
12 Hour
Eye Shadow
18
Fabulash Print Ad
19
Almay Intense i-Color
Almay
Eye consumption up 39%
YTD, and up 49% in Q2
Almay
Eye share up 2.0 pts. YTD,
and 2.5 pts. in Q2
Total
Eye category up 8% YTD and
up 10% in Q2
Runaway
success driving category growth and validating
Almay strategy for 2006 and
beyond
Note: All share and consumption data are based on ACNielsen All Outlets (excluding Wal-Mart and Regional MVRs); YTD thru 7/30/05.
20
Revlon Hair Color
Fastest
growing hair color company since 2003 among major
mass players, driven by
strong ColorSilk consumer proposition
Note:
+0.6 pts
+0.9 pts
+0.7 pts
+0.3 pts
$ Share
+10%
+11%
+3%
-1%
Retail
$
Consumption
Q2 ‘05
Q1 ’05
2004
2003
Change vs. PY
All
share and consumption data are based on ACNielsen All Outlets (excluding
Wal-Mart and Regional MVRs) and include Company
estimates for 2003 vs 2002
comparison.
21
Revlon Beauty Tools
Introduced
new products in 2004 and 2005, gaining additional
pegs at retail and
driving share growth
Note:
+1.0 pts
+0.2 pts
+1.9 pts
-1.6 pts
$ Share
+6%
+5%
+11%
-10%
Retail
$
Consumption
Q2 ‘05
Q1 ’05
2004
2003
Change vs. PY
All
share and consumption data are based on ACNielsen All Outlets (excluding
Wal-Mart and Regional MVRs) and include Company
estimates for 2003 vs 2002
comparison.
22
Mitchum Anti-Perspirants & Deodorants
Reversed
declining consumption trend with investment behind
targeted advertising and
creative promotional events
Note:
+0.1 pts
-0.2 pts
-0.1 pts
+0.1 pts
$ Share
+4%
-2%
-3%
-4%
Retail
$
Consumption
Q2 ‘05
Q1 ’05
2004
2003
Change vs. PY
Advertising
Started in April
All
share and consumption data are based on ACNielsen All Outlets (excluding
Wal-Mart and Regional MVRs) and include Company
estimates for 2003 vs 2002
comparison.
23
Mitchum Man Print Ads
24
Progress to Date: International
Significant
progress achieved to strengthen internal capabilities to
drive performance
improvement
Installed
stronger management in key positions and implemented more disciplined
management processes
Controlled costs; improved working capital management; and benefited from FX
Increased marketing behind NY-driven Revlon brand plans in key markets
Optimized fixed cost structure, focused on Europe and Latin America
Note:
Key Performance Drivers
-3%
+123%
NM
Operating Income
+7%
+8%
+12%
Net Sales
1H 2005
2004
2003
% Change vs. PY
All
data presented on an ongoing basis and adjusted for Growth Plan charges; see
reconciliation of non-GAAP financial
measures on our Form 8-K filed
September 8, 2005.
25
Progress to Date: Financial Results
Strengthened
financial performance, with momentum expected to
build in 2H 2005 and
beyond
All
data presented on an ongoing basis and adjusted for Growth Plan charges; see
reconciliation of non-GAAP financial
measures on our Form 8-K filed
September 8, 2005.
1H 2005
2004
2003
2002
($m)
$(1)
NM
NM
$96
+61%
7.4%
$59
+321%
4.6%
$14
1.2%
Operating Income
Change
Vs PY
$47
-30%
7.6%
$199
+27%
15.3%
$157
+30%
12.0%
$121
10.1%
Adjusted EBITDA
Change
Vs PY
$619
-1%
$1,297
0%
$1,304
+9%
$1,195
Net Sales
Change
Vs PY
Note:
% of Net Sales
% of Net Sales
26
Progress to Date: Capital Structure
$804m
of debt converted into
common equity
M&F converted $461m
Fidelity converted $196m
Other
Bondholders
converted $147m
M&F
converted $55m of
Preferred Stock into common
equity
Revlon
entered into new $960m
credit facility
Replaced existing facility
Redeemed 12% Notes
Refinancing
reduced interest
expense and extended debt
maturities
Revlon
issued $310m of
9½% Notes due 2011
Redeemed
8 1/8% Notes due
‘06
Redeemed 9% Notes due ‘06
Repaid $100m of term loan
Revlon
issued $80m of 9½%
Notes to help fund strategic
initiatives
Revlon
to issue $185m of
equity by 3/06 and use
proceeds from $110m of
issuance to reduce debt
Over $1 Billion of Equity Invested / Committed
Significant
operating flexibility created through debt-for-equity exchange offers and
subsequent debt refinancings
2006
2005
2004
27
Growth Outlook
Strategic Growth Initiatives
Compound Annual
Growth Rate
(since 2000)
Other -5.0%
Direct +3.9%
Specialty
(Prestige) +5.6%
Dept Store
(Prestige) +3.6%
Food -4.3%
Drug +0.1%
MVR +4.5%
+2.9%
Total
Prestige
4.0%
Total
Mass
1.7%
Source: Euromonitor
Total Color Cosmetics Retail Consumption ($ Billions): All Outlets
U.S. Mass Channel Growth Below Average
$8.1
$8.1
$7.9
$7.6
$7.2
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
$8.0
$9.0
2000
2001
2002
2003
2004
29
$3.6
$3.5
$3.8
$3.8
$3.8
2000
2001
2002
2003
2004
Source: Full
Year 2004 ACNielsen Total U.S. All Outlets (including Wal-Mart in 2000) plus
Wal-Mart Homescan Data for 2001-2004, 1H 2005
comparison reflects ACNielsen
Total U.S. All Outlets refreshed database plus Wal-Mart Homescan.
($ Billions)
U.S. Mass Color Cosmetics Category Flat Since 2002
First Half 2005 Category Up 2.4%
30
$2.4
$2.5
$2.6
$2.8
2001
2002
2003
2004
Source: The NPD Group
$ % Chg: +4.2% +4.0% +7.0%
CAGR (2001 – 2004): 5.1%
Color Cosmetics Trend ($ Billions): Total US Department Stores
Department Store Momentum Surged in 2004
31
Revlon Strategic Response
Simplicity
Health and Wellness
Enhanced Shopping Experience
Aging Demographic
Centered on Four Key Trends:
Revlon Strategic Growth Initiatives
32
Growth Outlook
The Almay Initiative
The Almay Initiative
Vision:
Drive Healthy Beauty at Mass
34
Healthy Beauty is Under-Developed in Mass
Source: 2004 ACNielsen Total U.S. All Outlets and The NPD Group
Healthy Brands:
Almay
Neutrogena
Physicians Formula
Healing Beauty
Healthy Brands:
Clinique
Clarins
Origins
Shiseido
Prescriptives
Mass
Department Stores
Healthy
12%
Fashion
88%
Healthy
31%
Fashion
69%
35
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
The Healthy Beauty Opportunity
Cosmetics
Opportunity =
$800m
U.S. Retail
$ Consumption
Healthy
Beauty In
Mass @ 12% Share
Healthy
Beauty In
Mass @ 31% Share
Potential Size of Healthy Beauty Cosmetics in Mass
Source: Internal Company estimates
36
Healthy Beauty in Department Stores
All-inclusive beauty section
Shoppability; easier for busy women
Customized for her through sales assistance
Better beauty “experience”
It’s more fun, more interactive
Almay
Will Leverage This Insight Into A Simple And
Rewarding Beauty Experience In
Mass
A Simple and Rewarding Experience
37
The Almay Initiative
Intense i-Color customized for her…
38
The Almay Initiative
…and brought to life in-store
Almay
initiative to create a new in-store experience
focused on simplicity,
healthy beauty and personalization
39
Growth Outlook
The 50+ Opportunity
The 50+ Group is Large and Growing
Every
7 seconds,
someone turns 50 years old!
41
The 50+ Group is Large and Affluent
86 MM people will be 50+ in 2005
39 MM Men
47 MM Women
42
50+ consumers are the most affluent of any
age segment
50+ consumers spend heavily on health needs as
they age
50+ consumers spend heavily on personal
and beauty care in order to look good
Opportunity to grow color cosmetics by bringing her back into lapsed categories
Eye
shadow,
Eye liner,
Lip liner and
Face powder
drop off
She
increases
usage of
Lipstick,
Foundation,
Blush, and
Nail polish
Increasing her usage of cosmetics overall…
…but using fewer categories
She’s
Using Color Cosmetics More Often but Dropping
Out of Categories as They
Stop Working for Her
43
“I’m constantly
fighting to not look
older or to not even
look my age.”
AGE DEFIERS
Anti-aging cosmetics
“I
don’t want to look
twenty years younger.
I just want to look as
good as I can for my
age.”
AGE OPTIMIZERS
Enhancing cosmetics
“I want to do
something now
to prevent the
signs of
aging.”
Preventative cosmetics
AGE PREVENTERS
Some Women Want to Fight It and Some Want to Accept It
Attitude
Segment
Desired
Cosmetics
Divergent Attitudes to Aging
44
The 50+ Opportunity
45
Vision:
Meet the Beauty Needs of
Women Aged 50+ with a Full Line of
Cosmetics Designed Just for Her
Growth Outlook
Other Key Opportunities
Other Key Opportunities
47
Leverage momentum in core business to capitalize on close-in
opportunities
Continue to re-energize key Revlon Color Cosmetics
franchises
Drive innovation and excitement with new product
development capability
Capitalize on Revlon Hair Color opportunity
Drive Beauty Tools growth with targeted new products
and merchandising
Build on Mitchum anti-perspirants/deodorants momentum
Continue to leverage strength in International to drive global
strategy
International Opportunity
Strategic Highlights
Body Sprays in South Africa
Ultima II in Hong Kong B
Leverage
strengthened organizational capabilities across
global portfolio
Focus
on countries where we have or can build a winning
competitive position
Leverage
progress and enhanced marketing sophistication of U.S.
business across
International markets
Support key local brands to drive growth
Body Sprays in South Africa Gatineau in France
Ultima II in Hong Kong Bozzano in Brazil
48
Other Key Opportunities
Operating
margin improvement opportunity to significantly expand
profitability beyond
2006
Operating Income As % of Gross Sales
D
E
S
T
I
N
A
T
I
O
N
2003
2004
2005
2006
2007
2008
4%
6%
~12–14%
49
Overall Outlook
Strategic
growth initiatives expected to accelerate
growth beginning in late 2005
Other
key initiatives expected to contribute to growth
in 2006 and
beyond
Solid
Not Meaningful
Adjusted EBITDA
Strong
~$50m
Net Sales
Overall
2006
Growth
Outlook
Estimated
Incremental
Impact
of Initiatives
50
Summary
Marketplace
and Value Creation
Actions are Building
Stabilized
Business
Addressed
Capital
Structure
More Innovation
to Come
Launched
New
Product
Development
Capability
Launched
Productivity
Program
Destination
Operating
Margin
V
A
L
U
E
C
R
E
A
T
I
O
N
Revlon Organization
Consumer Insights
Retail Partnerships
2002 — 2004
2005
2006 — 2008
Restaged
Age
Defying
Super
Lustrous
Core Nail
Tested
Almay
Strategy
via
Intense
i-Color
Launching
Strategic
Growth
Initiatives
52
Appendix
Appendix: Forward-Looking Statements
Statements made in this presentation which are not historical facts, including statements about the Company's estimates, objectives, visions, projections, forecasts, plans, targets, strategies, opportunities, beliefs, intents, destinations, outlooks, initiatives 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, plans and/or beliefs concerning:
(i)
(ii)
(iii)
(iv)
(v)
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, and the Company's Quarterly Reports on Form 10-Q and Current Reports on Form 8-K that it files with the SEC during 2005 (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), including, without limitation, the Form 8-K filed with the SEC on September 8, 2005, as well as:
(i)
(ii)
(iii)
(iv)
its growth outlook, growth opportunities and momentum for growth, including the Company's belief that it has a sustainable business model and is positioned for accelerated growth and top-line momentum, that its International business represents an excellent growth opportunity, its plans for growth from launching its two strategic growth initiatives, its beliefs about the growth momentum behind various of its brands and product lines, its plans to accelerate growth from other key opportunities, such as leveraging momentum in its core business to capitalize on close-in opportunities (such as continuing to re-energize key Revlon color cosmetics franchises, driving innovation and excitement with new product development capabilities, capitalizing on Revlon hair color opportunities, driving Beauty Tools growth with targeted new products and merchandising and building on momentum in the Company's Mitchum anti-perspirants and deodorants business), plans to take advantage of International growth opportunities (including, without limitation, leveraging strengthened organizational capabilities against the Company's global portfolio, focusing on countries where the Company has or can build a winning competitive position, leveraging progress and enhanced marketing sophistication of the Company's U.S. business across its International markets and supporting key local brands to drive growth) and its plans to restore Revlon brand growth and generate growth from more innovations, as well as the Company's expectations regarding the timing of such growth opportunities;
its continuing to execute against its previously-disclosed operating margin objective to significantly expand profitability beyond 2006, create value and achieve its destination operating margin, as well as the Company's expectations regarding the timing of achieving such objective;
the incremental impact from the two strategic growth initiatives on the Company's net sales and Adjusted EBITDA;
its use of proceeds from the issuance of $80 million aggregate principal amount of its 9½% Senior Notes due 2011 to help fund the strategic growth initiatives; and
its issuance of $185 million of equity by March 31, 2006 and its plans with respect to the use of proceeds.
difficulties, delays or higher than expected costs to achieve the Company's anticipated growth objectives, including the expected incremental impact on net sales and Adjusted EBITDA, such as due to less than anticipated net sales, higher than anticipated returns, higher than expected expenses, less than anticipated retail customer or consumer acceptance of the strategic growth 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 or unanticipated circumstances that could impact our ability to take advantage of growth opportunities in our International business;
difficulties, delays or unanticipated costs in the Company's efforts to execute against its previously-disclosed operating margin objective, such as due to increased costs of raw materials, components, labor or other items or other difficulties or delays in implementing initiatives intended to improve its operating margin;
the unavailability of proceeds from the Company's issuance of $80 million aggregate principal amount of its 9½% Senior Notes due 2011 to help fund the strategic growth initiatives, such as due to increased costs in other areas of the Company's business; and
difficulties, delays or increased costs associated with, or the Company's inability to consummate, in whole or in part, the issuance of $185 million of equity by March 31, 2006.
2
Appendix: Reconciliation Schedules
REVLON, INC. AND SUBSIDIARIES
UNAUDITED ADJUSTED EBITDA, NET SALES AND OPERATING INCOME RECONCILIATION
(dollars in millions)
2005
2004
2004
2003
2002
$
(83)
$
(97)
$
(143)
$
(154)
$
(287)
58
72
126
170
156
3
5
8
9
8
1
2
(5)
(5)
1
-
-
-
-
1
9
33
91
-
-
2
3
2
1
1
7
2
9
1
5
48
50
104
101
109
46
68
193
122
(6)
2
(1)
6
6
14
-
-
-
-
10
-
-
-
29
103
$
47
$
68
$
199
$
157
$
121
$
619
625
1,297
1,299
1,119
5
76
$
619
$
625
$
1,297
$
1,304
$
1,195
$
(2)
18
89
21
(115)
2
(1)
6
6
14
0
2
1
10
-
31
104
$
(1)
$
18
$
96
$
59
$
14
Year Ended
December 31,
June 30,
YTD
Adjusted EBITDA Reconciliation
Net Sales Reconciliation
Operating Income Reconciliation
Growth plan charges
Adjusted EBITDA - Ongoing
Net sales - As Reported
Restructuring costs
Consolidation costs
Restructuring costs
Adjusted EBITDA
Consolidation costs
Growth plan charges
Operating income (loss) - Ongoing
Consolidation costs
Growth plan charges
Net sales - Ongoing
Operating income (loss) - As Reported
Restructuring costs
Depreciation and amortization
Provision for income taxes
Amortization of debt issuance costs
Interest expense, net
Net income (loss)
Miscellaneous, net
Loss on early extinguishment of debt
Loss on sale of brand and facilities, net
Foreign currency gains, net
3
Appendix: Reconciliation Schedules
REVLON, INC. AND SUBSIDIARIES
UNAUDITED GROSS SALES RECONCILIATION
(dollars in millions)
North
Consolidated
America
International
Revlon, Inc.
Gross sales
$
1,127
$
503
$
1,630
Returns, allowances, discounts & other revenue
(272)
(61)
(333)
Net sales
$
856
$
442
$
1,297
Year Ended December 31, 2004:
4
Appendix: Reconciliation Schedules
5
REVLON, INC. AND SUBSIDIARIES
UNAUDITED SELECTED FINANCIAL DATA
(dollars in millions)
Progress To Date: International
2002
2003
2004
% Change
2003 vs 2002
% Change
2004 vs 2003
2004
2005
%
Change
Net sales - As Reported
359
$
409
$
442
$
14%
8%
212
$
227
$
7%
Growth Plan
6
1
-83%
-100%
-
-
-
Net sales - Ongoing
365
$
410
$
442
$
12%
8%
212
$
227
$
7%
First Half
Year Ended December 31,