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): May 4, 2006 (May 4, 2006)
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 Jurisdiction of (Commission (I.R.S. Employer
Incorporation) File Number) Identification No.)
237 Park Avenue
New York, New York 10017
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(Address of Principal Executive Offices) (Zip Code)
(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 Operations and Financial Condition.
On May 4, 2006, Revlon, Inc. issued a press release announcing its
earnings for the fiscal quarter ended March 31, 2006. 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.
(d) Exhibits
Exhibit No. Description
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99.1 Press release dated May 4, 2006.
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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.
REVLON, INC.
By: /s/ Robert K. Kretzman
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Robert K. Kretzman
Executive Vice President, Chief
Legal Officer, General Counsel and
Secretary
Date: May 4, 2006
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EXHIBIT INDEX
Exhibit No. Description
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99.1 Press release dated May 4, 2006.
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Exhibit 99.1
FOR IMMEDIATE RELEASE
Revlon Reports First Quarter 2006 Results
Retail Rollout of the Company's Strategic Brand Initiatives on Track
NEW YORK--(BUSINESS WIRE)--May 4, 2006--Revlon, Inc. (NYSE: REV) today announced
results for the first quarter ended March 31, 2006. Net sales in the quarter
advanced 8% versus year-ago to $326 million. Adjusted EBITDA(1) in the quarter
was approximately $15 million, and operating loss in the quarter was
approximately $17 million, both after giving effect to $9 million in charges
related to the Company's previously-announced organizational realignment. Net
loss in the quarter was approximately $58 million, or $0.15 per diluted share,
including the impact of the aforementioned realignment charge, which impacted
the per share net loss by approximately $0.02.
During the quarter, the retail rollout of the Company's new strategic brand
initiatives--namely Vital Radiance and the re-stage of Almay--proceeded on
track. The Company believes that, as of the end of April, this retailer reset
process was largely complete and, marketplace performance of these two
initiatives is expected to build over the course of the year.
Also during the quarter, the Company made further progress to strengthen its
balance sheet, having successfully consummated its planned $110 million equity
rights offering. The proceeds from the offering were subsequently used in April
2006 to reduce debt. The Company plans to further improve its capital structure
during the second quarter of 2006 via its previously-announced intention to
conduct a $75 million equity issuance to be completed by the end of June 2006.
Commenting on the quarter, Revlon President and Chief Executive Officer Jack
Stahl stated, "We are pleased with our results in the quarter and the progress
we have made with the rollout of Vital Radiance and the re-staged Almay. As we
expected, our results in the quarter reflect both the initial benefits to
revenue of these two important initiatives, as well as the significant
investment we are making behind them. We expect that, as the year unfolds, our
financial results will increasingly reflect the completion of the rollouts at
retail of Vital Radiance and Almay, as well as the benefits of our marketing
investments and ongoing productivity initiatives. We continue to expect to
achieve strong growth in both sales and Adjusted EBITDA for the year, and we are
confident that we are taking the right actions to build the value of our brands
and our business for the long term."
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The Company will host a conference call with members of the investment community
on May 4, 2006 at 9:30 AM EDT to discuss the results of the first quarter.
Access to the call is available to the public at www.revloninc.com.
First Quarter Results
Net sales in the first quarter of 2006 advanced 8% to approximately $326
million, compared with net sales of $301 million in the first quarter of 2005.
This performance primarily reflected strong growth in North America(2) and, to a
lesser extent, International, partially offset by unfavorable foreign currency
translation. Excluding the impact of foreign currency translation, net sales in
the first quarter of 2006 advanced approximately 9% versus year-ago.
In North America, net sales in the first quarter of 2006 grew 11% to $216
million, compared with net sales of $194 million in the first quarter of 2005.
This performance was driven by strong growth of color cosmetics--stemming from
the Vital Radiance and re-staged Almay rollouts, partially offset by lower
shipments of Revlon. Also impacting the sales comparison were shipment strength
in hair color, beauty tools and anti-perspirants and deodorants and lower
returns, partially offset by higher sales-related brand support.
In International, net sales in the first quarter of 2006 advanced 2% to $109
million, compared with net sales of $107 million in the first quarter of 2005.
This growth reflected shipment strength and the benefit of lower returns,
partially offset by unfavorable foreign currency translation. Excluding the
impact of foreign currency translation, International net sales in the first
quarter of 2006 advanced approximately 5% versus year-ago.
The Company generated an operating loss of $17.2 million in the first quarter of
2006, versus an operating loss of $2.1 million in the first quarter of 2005.
This performance, as expected, largely reflected significant investment spending
behind the rollouts of Vital Radiance and Almay, which more than offset the
strong growth in shipments and the benefits of lower returns and improved
manufacturing margins. Also impacting the comparison in the quarter were higher
restructuring expenses, stemming from the aforementioned realignment initiative
the Company announced in February 2006, higher compensation expenses, including
amortization of stock-based compensation, and higher display amortization.
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Adjusted EBITDA in the first quarter of 2006 was approximately $15.3 million,
including $9 million of restructuring expense. This compared with Adjusted
EBITDA of approximately $21.6 million in the first quarter of 2005, which
included restructuring expense of approximately $2 million. Substantially the
same factors driving the comparison for operating income also drove the
comparison for Adjusted EBITDA, with the exception of the amortization-related
expenses.
Adjusted EBITDA is a non-GAAP measure that is defined in the footnotes to this
release and which is reconciled to net income/(loss), the most directly
comparable GAAP measure, in the accompanying financial tables.
Net loss in the first quarter of 2006 was $58.2 million, or $0.15 per diluted
share, compared with a net loss of $46.8 million, or $0.13 per diluted share, in
the first quarter of 2005. Cash flow provided by operating activities in the
first quarter of 2006 was $8.5 million, compared with cash flow used in
operating activities of $7.6 million in the first quarter of 2005.
In terms of U.S. marketplace performance(3), according to ACNielsen, the color
cosmetics category grew 3.8% versus year-ago in the first quarter. The Company
registered a share of 21.3% for the quarter, which was down 0.8 share points
versus the same period last year, as the Company underwent a significant
marketplace transition relating to retail wall resets. For the quarter, the
Revlon brand registered a share of 14.3%, compared with 15.6% in the year-ago
period, while the Almay brand held share in the quarter at 6.4%, and Vital
Radiance achieved a quarterly share of 0.6%.
Importantly, market share performance improved as the quarter progressed, with
total Company share advancing to 22.3% for the month of March, from 20.2% in
January and 20.9% in February. Almay and Vital Radiance share momentum drove
this improvement, with Almay achieving a share of 7.0% for the month of March,
versus a share of 5.9% in January, and Vital Radiance achieving a share of 1.1%
in March, versus a share of only 0.1% in January.
In other key categories, the Company gained share for the quarter in hair color
and beauty tools, while market share was essentially even for
anti-perspirants/deodorants.
Page 3
About Revlon
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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).
Investor Relations Contact: Media Contact:
Maria A. Sceppaguercio Scott Behles
(212) 527-5230 (212) 527-4718
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Footnotes to Press Release
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(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, which 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.
Page 5
Forward-Looking Statements
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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. 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 and estimates about its future growth and
profitability; the Company's belief that the retail rollout of its new strategic
brand initiatives proceeded on track, and that, as of the end of April, the
retailer reset process was largely complete and that the marketplace performance
of these initiatives will build over the course of the year and that as the year
unfolds the Company's financial results will increasingly reflect the completion
of the rollouts at retail of Vital Radiance and Almay, as well as the benefits
of its marketing investments and ongoing productivity initiatives; the Company's
expectation that it will achieve strong growth in both sales and Adjusted EBITDA
for the year; and the Company's belief that it is taking the right actions to
build the value of its brands and its business for the long term. 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 for
the year ended December 31, 2005, and the Company's Quarterly Reports on Form
10-Q and Current Reports on Form 8-K that it files with the SEC during 2006
(which may be viewed on the SEC's website at http://sec.gov or on the Company's
website at http://www.revloninc.com), as well as reasons including difficulties,
delays or the inability of the Company to achieve its growth and profitability
objectives; less than anticipated results from the Company's Vital Radiance and
Almay brand initiatives, such as less than expected retailer or consumer
acceptance of such products or less than expected effectiveness of the marketing
programs related to these initiatives; the retailer reset process in connection
with the retail rollout of the Vital Radiance and Almay brand initiatives taking
longer than anticipated or being less effective than anticipated or a decrease
in sales of the Company's other products; difficulties, delays or the Company's
inability to achieve its operating margin improvements; less that anticipated
growth, or a decrease in, sales and/or Adjusted EBITDA; or difficulties delays
or the Company's inability to take actions to build the value of its brands and
its business for the long term. Factors other than those listed above could also
cause the Company's results to differ materially from expected results.
Additionally, 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 considered a "free writing prospectus"
under the SEC's Rule 405 of the Securities Act of 1933, as amended, unless
specifically identified as such.
Page 6
REVLON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in millions, except per share data)
Three Months Ended
March 31,
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2006 2005
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Net sales $ 325.5 $ 300.9
Cost of sales 117.3 114.2
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Gross profit 208.2 186.7
Selling, general and administrative expenses 216.4 187.1
Restructuring costs, net 9.0 1.7
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Operating loss (17.2) (2.1)
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Other expenses (income):
Interest expense 35.2 29.7
Interest income (0.3) (1.6)
Amortization of debt issuance costs 1.8 1.6
Foreign currency (gains) losses, net (0.8) 2.5
Loss on early extinguishment of debt - 7.5
Miscellaneous, net (0.3) 1.4
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Other expenses, net 35.6 41.1
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Loss before income taxes (52.8) (43.2)
Provision for income taxes 5.4 3.6
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Net loss $ (58.2) $ (46.8)
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Basic and diluted net loss per common share $ (0.15) $ (0.13)
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Weighted average number of common shares outstanding:
Basic and diluted 378,802,990 373,047,659
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REVLON, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(dollars in millions)
March 31, December 31,
ASSETS 2006 2005
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Current assets:
Cash and cash equivalents $ 137.2 $ 32.5
Trade receivables, net 167.2 282.2
Inventories 239.7 220.6
Prepaid expenses and other 65.4 56.7
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Total current assets 609.5 592.0
Property, plant and equipment, net 119.2 119.7
Other assets 170.7 146.0
Goodwill, net 186.0 186.0
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Total assets $ 1,085.4 $ 1,043.7
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LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current
liabilities:
Short-term borrowings $ 10.8 $ 9.0
Current portion of long-term debt 110.7 -
Accounts payable 120.6 133.1
Accrued expenses and other 330.1 328.4
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Total current liabilities 572.2 470.5
Long-term debt 1,303.9 1,413.4
Other long-term liabilities 251.4 255.7
Total stockholders' deficiency (1,042.1) (1,095.9)
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Total liabilities and stockholders' deficiency $ 1,085.4 $ 1,043.7
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REVLON, INC. AND SUBSIDIARIES
UNAUDITED ADJUSTED EBITDA RECONCILIATION
(dollars in millions)
Three Months Ended
March 31,
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2006 2005
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(Unaudited)
Reconciliation to net loss:
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Net loss $ (58.2) $ (46.8)
Interest expense, net 34.9 28.1
Amortization of debt issuance costs 1.8 1.6
Foreign currency (gains) losses, net (0.8) 2.5
Loss on early extinguishment of debt - 7.5
Miscellaneous, net (0.3) 1.4
Provision for income taxes 5.4 3.6
Depreciation and amortization 32.5 23.7
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Adjusted EBITDA $ 15.3 $ 21.6
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