SEC Filing | Revlon, Inc.

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rev-20220930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the quarterly period ended September 30, 2022
			OR
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from__________________ to _______________

Commission File Number

Registrant; State of Incorporation; Address and Telephone Number

IRS Employer Identification No.

1-11178

Revlon, Inc.

13-3662955

Delaware

One New York Plaza

New York, New York 10004

212-527-4000

33-59650

Revlon Consumer Products Corporation

13-3662953

Delaware

One New York Plaza

New York, New York 10004

212-527-4000

Securities registered pursuant to Section 12(b) or 12(g) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Revlon, Inc.

Class A Common Stock

REVRQ

Revlon Consumer Products Corporation

None

N/A

*Revlon, Inc.'s Class A Common Stock began trading exclusively on the over-the-counter market on October 21, 2022 under the symbol REVRQ following receipt of a final delisting notice from the New York Stock Exchange on October 20, 2022.

Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.


Revlon, Inc.	Yes ☒	No ☐
Revlon Consumer Products Corporation	Yes ☐	No ☒

Indicate by check mark whether the registrants have submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ¨

Indicate by check mark whether each registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller Reporting Company

Emerging Growth Company

Revlon, Inc.

Yes ☐ No ☒

Yes ☒ No ☐

Yes ☐ No ☒

Yes

☒

No ☐

Yes

☐

No ☒

Revlon Consumer Products Corporation

Yes ☐ No ☒

Yes ☒ No ☐

Yes

☒

No ☐

Yes

☐

No ☒

If an emerging growth company, indicate by check mark if the registrants have elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether each registrant is a shell company (as defined in Rule 12b-2 of the Act).


Revlon, Inc.	Yes	☐	No ☒
Revlon Consumer Products Corporation	Yes	☐	No ☒

Number of shares of common stock outstanding as of September 30, 2022:


Revlon, Inc. Class A Common Stock:			54,302,001
Revlon Consumer Products Corporation Common Stock:			5,260

At such date, (i) 46,223,321 shares of Revlon, Inc. Class A Common Stock were beneficially owned by MacAndrews & Forbes Incorporated and certain of its affiliates; and (ii) all shares of Revlon Consumer Products Corporation ("Products Corporation") Common Stock were held by Revlon, Inc.

Products Corporation meets the conditions set forth in General Instructions H(1)(a) and (b) of Form 10-Q as, among other things, all of Products Corporation's equity securities are owned directly by Revlon, Inc., which is a reporting company under the Securities Exchange Act of 1934, as amended, and which filed with the SEC on November 8, 2022 all of the material required to be filed pursuant to Section 13, 14 or 15(d) thereof. Products Corporation is therefore filing this Form 10-Q with a reduced disclosure format applicable to Products Corporation.

REVLON, INC. AND SUBSIDIARIES

INDEX


PART I - Financial Information
Item 1.	Financial Statements of Revlon, Inc. and Subsidiaries
	Consolidated Balance Sheets as of September 30, 2022 (Unaudited) and December 31, 2021	2
	Unaudited Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended September 30, 2022 and 2021	3
	Unaudited Consolidated Statement of Stockholders' Deficiency for the Three and Nine Months Ended September 30, 2022 and 2021	4
	Unaudited Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2022 and 2021	5
	Financial Statements of Revlon Consumer Products Corporation and Subsidiaries
	Consolidated Balance Sheets as of September 30, 2022 (Unaudited) and December 31, 2021	7
	Unaudited Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended September 30, 2022 and 2021	8
	Unaudited Consolidated Statement of Stockholders' Deficiency for the Three and Nine Months Ended September 30, 2022 and 2021	9
	Unaudited Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2022 and 2021	10
	Combined Notes to Unaudited Condensed Consolidated Financial Statements	12
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	59
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	77
Item 4.	Controls and Procedures	78

PART II - Other Information
Item 1.	Legal Proceedings	81
Item 1A.	Risk Factors	81
Item 3.	Defaults upon Senior Securities	83
Item 5.	Other Information	83
Item 6.	Exhibits	84
	Signatures

PART I - FINANCIAL INFORMATION

REVLON, INC. AND SUBSIDIARIES

(DEBTOR-IN-POSSESSION)

CONSOLIDATED BALANCE SHEETS

(dollars in millions, except share and per share amounts)


	September 30, 2022		December 31, 2021
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	246.4	$	102.4
Trade receivables (net of allowance for doubtful accounts of $6.9 and $9.0, respectively)	319.0		383.8
Inventories, net	456.0		417.4
Prepaid expenses and other assets	217.2		136.0
Total current assets	1,238.6		1,039.6
Property, plant and equipment (net of accumulated depreciation of $549.2 and $551.3, respectively)	249.9		297.3
Deferred income taxes	41.2		42.8
Goodwill	561.2		562.8
Intangible assets (net of accumulated amortization and impairment of $368.4 and $326.4, respectively)	335.4		392.2
Other assets	94.3		97.8
Total assets	$	2,520.6	$	2,432.5

LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
Current liabilities:
Short-term borrowings	$	0.6	$	0.7
Current portion of long-term debt	746.9		137.2
Accounts payable	105.0		217.7
Accrued expenses and other current liabilities	392.1		432.0

Total current liabilities	1,244.6		787.6
Long-term debt	0.1		3,305.5
Long-term pension and other post-retirement plan liabilities	85.4		147.3
Other long-term liabilities	72.5		206.2
Liabilities subject to compromise	3,615.1		—
Stockholders’ deficiency:
Class A Common Stock, par value $0.01 per share: 900,000,000 shares authorized; 60,399,830 and 58,005,142 shares issued, respectively	0.5		0.5
Additional paid-in capital	1,111.6		1,096.3
Treasury stock, at cost: 2,424,166 and 1,992,957 shares of Class A Common Stock, respectively	(40.9)		(37.6)
Accumulated deficit	(3,334.0)		(2,838.6)
Accumulated other comprehensive loss	(234.3)		(234.7)
Total stockholders’ deficiency	(2,497.1)		(2,014.1)
Total liabilities and stockholders’ deficiency	$	2,520.6	$	2,432.5

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

Table of Contents

REVLON, INC. AND SUBSIDIARIES

(DEBTOR-IN-POSSESSION)

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(dollars in millions, except share and per share amounts)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,

	2022		2021		2022		2021

Net sales	$	468.4	$	521.1	$	1,390.6	$	1,463.5
Cost of sales	207.5		221.2		595.8		608.7
Gross profit	260.9		299.9		794.8		854.8
Selling, general and administrative expenses	248.5		256.1		758.4		796.0
Acquisition, integration and divestiture costs	0.2		0.6		0.7		1.8
Restructuring charges and other, net	(0.7)		9.0		4.3		22.8
Impairment charges	—		—		24.3		—
Gain on divested assets	—		0.1		—		(1.7)
Operating income (loss)	12.9		34.1		7.1		35.9
Other expenses:
Interest expense, net	56.2		63.1		175.8		183.9

Amortization of debt issuance costs	—		8.7		20.9		30.7

Foreign currency losses (gains), net	19.4		9.9		41.4		11.5
Miscellaneous, net	2.3		0.1		9.0		2.8
Reorganization items, net	85.0		—		243.3		—
Other expenses	162.9		81.8		490.4		228.9
Loss from operations before income taxes	(150.0)		(47.7)		(483.3)		(193.0)
(Benefit from) provision for income taxes	2.8		5.4		12.1		23.8


Net loss	$	(152.8)	$	(53.1)	$	(495.4)	$	(216.8)
Other comprehensive income (loss):
Foreign currency translation adjustments	(6.2)		(0.6)		(8.2)		(6.0)
Amortization of pension related costs, net of tax(a)(b)	2.9		3.5		8.6		10.5





Other comprehensive income, net	(3.3)		2.9		0.4		4.5
Total comprehensive loss	$	(156.1)	$	(50.2)	$	(495.0)	$	(212.3)


Basic and Diluted loss per common share:	$	(2.77)	$	(0.98)	$	(9.04)	$	(4.02)









Weighted average number of common shares outstanding:
Basic	55,111,423		54,025,861		54,818,140		53,899,732
Diluted	55,111,423		54,025,861		54,818,140		53,899,732

(a) Net of tax expense of nil for both the three months ended and nine months ended September 30, 2022 and 2021.

(b) This amount is included in the computation of net periodic benefit costs (income). See Note 10, "Pension and Post-Retirement Benefits," for additional information regarding net periodic benefit costs (income).

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

Table of Contents

REVLON, INC. AND SUBSIDIARIES

(DEBTOR-IN-POSSESSION)

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIENCY

(dollars in millions, except share and per share amounts)

(Unaudited)


	Common Stock		Additional Paid-In Capital		Treasury Stock		Accumulated Deficit		Accumulated Other Comprehensive (Loss) Income		Total Stockholders’ Deficiency

Balance at January 1, 2022	$	0.5	$	1,096.3	$	(37.6)	$	(2,838.6)	$	(234.7)	$	(2,014.1)
Treasury stock acquired, at cost (a)	—		—		(3.2)		—		—		(3.2)
Stock-based compensation amortization	—		1.8		—		—		—		1.8
Net loss	—		—		—		(67.0)		—		(67.0)
Other comprehensive (loss) income, net (b)	—		—		—		—		3.9		3.9
Balance at March 31, 2022	0.5		1,098.1		(40.8)		(2,905.6)		(230.8)		(2,078.6)
Treasury stock acquired, at cost (a)	—		—		(0.1)		—		—		(0.1)
Stock-based compensation amortization	—		6.3		—		—		—		6.3
Net loss	—		—		—		(275.6)		—		(275.6)
Other comprehensive (loss) income, net (b)	—		—		—		—		(0.2)		(0.2)
Balance, June 30, 2022	0.5		1,104.4		(40.9)		(3,181.2)		(231.0)		(2,348.2)





Treasury stock acquired, at cost (a)	—		—		—		—		—		—
Stock-based compensation amortization	—		7.2		—		—		—		7.2
Net loss	—		—		—		(152.8)		—		(152.8)
Other comprehensive (loss) income, net (b)	—		—		—		—		(3.3)		(3.3)
Balance at September 30, 2022	$	0.5	$	1,111.6	$	(40.9)	$	(3,334.0)	$	(234.3)	$	(2,497.1)


	Common Stock		Additional Paid-In Capital		Treasury Stock		Accumulated Deficit		Accumulated Other Comprehensive (Loss) Income		Total Stockholders’ Deficiency
Balance at January 1, 2021	$	0.5	$	1,082.3	$	(35.2)	$	(2,631.7)	$	(277.9)	$	(1,862.0)
Treasury stock acquired, at cost (a)	—		—		(2.4)		—		—		(2.4)
Stock-based compensation amortization	—		3.1		—		—		—		3.1
Net loss	—		—		—		(96.0)		—		(96.0)
Other comprehensive (loss) income, net (b)	—		—		—		—		(1.4)		(1.4)
Balance at March 31, 2021	0.5		1,085.4		(37.6)		(2,727.7)		(279.3)		(1,958.7)
Treasury stock acquired, at cost (a)	—		—		—		—		—		—
Stock-based compensation amortization	—		3.4		—		—		—		3.4
Net loss	—		—		—		(67.7)		—		(67.7)
Other comprehensive (loss) income, net (b)	—		—		—		—		3.0		3.0
Balance, June 30, 2021	$	0.5	$	1,088.8	$	(37.6)	$	(2,795.4)	$	(276.3)	$	(2,020.0)





Treasury stock acquired, at cost (a)	—		—		—		—		—		—
Stock-based compensation amortization	—		3.9		—		—		—		3.9
Net loss	—		—		—		(53.1)		—		(53.1)
Other comprehensive (loss) income, net (b)	—		—		—		—		2.9		2.9
Balance at September 30, 2021	$	0.5	$	1,092.7	$	(37.6)	$	(2,848.5)	$	(273.4)	$	(2,066.3)

(a) Pursuant to the share withholding provisions of the Fifth Amended and Restated Revlon, Inc. Stock Plan (as amended, the "Stock Plan"), the Company withheld an aggregate of 875 and 763 shares of Revlon Class A Common Stock during the three months ended September 30, 2022 and 2021, respectively, and 431,209 and 163,259 shares of Revlon Class A Common Stock during the nine months ended September 30, 2022 and 2021, respectively, to satisfy certain minimum statutory tax withholding requirements related to the vesting of restricted shares and restricted stock units ("RSUs") for certain senior executives and employees. These withheld shares were recorded as treasury stock using the cost method, at a weighted-average price per share of $5.42 and $12.84 during the three months ended September 30, 2022 and 2021, respectively, and $7.72 and $14.94 during the nine months ended September 30, 2022 and 2021, respectively, based on the closing price of Revlon Class A Common Stock as reported on the New York Stock Exchange (the "NYSE") consolidated tape on each respective vesting date, for a total of approximately $4,700 and $9,700 during the three months ended September 30, 2022 and 2021, respectively, and $3.3 million and $2.4 million during the nine months ended September 30, 2022 and 2021, respectively. See Note 11, "Stock Compensation Plan," for details regarding restricted stock awards and RSUs under the Stock Plan.

(b) See Note 13, "Accumulated Other Comprehensive Loss," regarding the changes in the accumulated balances for each component of other comprehensive loss during the nine months ended September 30, 2022 and 2021, respectively.

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

Table of Contents

REVLON, INC. AND SUBSIDIARIES

(DEBTOR-IN-POSSESSION)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in millions)

(Unaudited)


	Nine Months Ended September 30,
	2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(495.4)	$	(216.8)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	80.7		96.8
Foreign currency losses from re-measurement	41.4		11.5
Amortization of debt discount	0.3		0.7
Stock-based compensation amortization	15.3		10.4
Impairment charges	24.3		—
(Benefit from) provision for deferred income taxes	(0.2)		3.9

Amortization of debt issuance costs	20.9		30.7

Gain on divested assets	—		(1.7)
Non-cash reorganization items, net	131.5		—
Pension and other post-retirement cost	3.7		3.6

Paid-in-kind interest expense on the 2020 BrandCo Facilities	19.0		14.1
Change in assets and liabilities:
Decrease (increase) in trade receivables	45.4		(44.4)
(Increase) in inventories	(55.4)		(8.1)
Decrease (increase) in prepaid expenses and other current assets	(85.9)		0.2
Increase (decrease) in accounts payable	(3.6)		56.1
Increase (decrease) in accrued expenses and other current liabilities	40.2		(25.2)
Decrease in deferred revenue	(2.0)		(2.0)
Pension and other post-retirement plan contributions	(4.4)		(20.5)
Purchases of permanent displays	(15.6)		(15.0)
Other, net	(11.2)		19.0
Net cash used in operating activities	(251.0)		(86.7)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(8.1)		(6.3)


Proceeds from the sale of certain assets	—		2.1
Net cash used in investing activities	(8.1)		(4.2)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net decrease in short-term borrowings and overdraft	(0.6)		(12.5)
Borrowings on term loans	—		305.0
Repayments on term loans (a)	(88.6)		(186.7)


Net (repayments) borrowings under the revolving credit facilities	(0.6)		(2.7)
Borrowings on DIP Term Loan Facility	575.0		—
Repayments on Tranche A DIP ABL Facility	(67.2)		—





Payment of financing costs	(18.8)		(17.9)

Tax withholdings related to net share settlements of restricted stock and RSUs	(3.3)		(2.4)

Other financing activities	(0.2)		(0.3)
Net cash provided by financing activities	395.7		82.5
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(7.3)		(2.4)
Net increase in cash, cash equivalents and restricted cash	129.3		(10.8)
Cash, cash equivalents and restricted cash at beginning of period (b)	120.9		102.5
Cash, cash equivalents and restricted cash at end of period (c)	$	250.2	$	91.7
Supplemental schedule of cash flow information:
Cash paid during the period for:
Interest	$	159.1	$