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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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October 30, 2003
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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 No.)
Incorporation)
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)
625 Madison Avenue, New York, New York 10022
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(Former Name or Former Address, if Changed Since Last Report)
Item 12. Results of Operations and Financial Condition.
On October 30, 2003, Revlon, Inc. issued a press release announcing its
earnings for the fiscal quarter ended September 30, 2003. The press release is
attached hereto as Exhibit 99.1.
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 thereunto duly authorized.
Date: October 30, 2003
REVLON, INC.
By: /s/ ROBERT K. KRETZMAN
-----------------------------------
Robert K. Kretzman
Senior Vice President, General Counsel
and Secretary
2
EXHIBIT INDEX
Exhibit
Number Description
- ------ ------------
99.1 Press Release, dated October 30, 2003, issued by Revlon, Inc.
3
Exhibit 99.1
Revlon Reports Third Quarter and Nine-Month 2003 Results;
Progress Against Growth Plan Continues
NEW YORK--(BUSINESS WIRE)--Oct. 30, 2003--Revlon, Inc. (NYSE:REV)
today announced results for the third quarter and nine months ended
September 30, 2003. The Company indicated that it remains on track to
achieve the following objectives:
-- Achieving moderate full-year sales growth;
-- Generating full-year color cosmetics market share growth for
Revlon and Almay combined;
-- Strengthening its retail partnerships; and
-- Strengthening the capability of the Revlon organization.
Commenting on the Company's performance, Revlon President and
Chief Executive Officer Jack Stahl stated, "We continue to make
progress to strengthen our brands, take actions to grow our business
with our retail customers, and build our organization. We recognized
that this would be a year of significant investment, much of it
one-time in nature, to reenergize our brands and strengthen our
overall business. The Revlon leadership team has developed the
long-term strategies that we believe will deliver profitable and
sustainable growth, and we have begun to implement a number of
strategic initiatives to drive efficiency and productivity across the
organization. Despite the prevailing softness in the U.S. color
cosmetics category, which has slowed our rate of progress, we are
absolutely confident that the actions we are taking will build and
capitalize on the strength of the Company's brands and enable us to
achieve our objective of long-term, profitable growth."
The Company indicated that, according to ACNielsen(1), market
share for the Revlon and Almay brands combined advanced 0.2 share
points versus year-ago to 22.4% for the quarter, further building on
the 0.4 share point gain achieved in the third quarter last year. The
Revlon brand registered its fifth consecutive quarterly share increase
versus year-ago, advancing 0.6 share points to 17.3% for the quarter,
while Almay market share declined by 0.4 share points to 5.1%. Total
Company market share, including the Ultima brand, which is sold only
at select retail outlets, was even with year-ago for the quarter. For
the first nine months of 2003, market share for the Revlon brand
advanced 0.7 share points versus year-ago to 17.1%, and Almay market
share advanced 0.1 share points to 5.5%. Reflecting reduced
distribution and the Company's strategy to focus its resources on the
Revlon and Almay brands, Ultima brand share declined 0.4 share points
in the nine-month period versus year-ago.
The Company indicated that it has secured commitments for
incremental shelf space at several key U.S. accounts for color
cosmetics for 2004 as well as new distribution for color cosmetics,
hair color and beauty tools. "The increasing support by our key retail
partners coupled with our strengthening organizational capabilities
are important indicators that we are moving in a positive direction,"
Mr. Stahl stated.
The Company indicated that, as of October 29, 2003, it had
utilized $248 million under its $250 million Bank Credit Agreement,
all of a $100 million MacAndrews & Forbes Term Loan, and $20 million
of the $65 million MacAndrews & Forbes Line of Credit. Reaffirming the
Company's position on liquidity, Mr. Stahl stated, "As I have
indicated in the past, I am confident that Revlon will continue to
have access to the resources we need to execute our growth plan."
The Company will host a conference call with members of the
investment community on October 30, 2003 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 2003 declined approximately 2%
to $316.5 million, compared with net sales of $323.2 million in the
third quarter of 2002, reflecting lower sales in North America(2),
partially offset by growth and favorable foreign currency translation
in International. Excluding the favorable impact of foreign currency
translation, net sales declined approximately 5%.
In North America, net sales for the quarter declined approximately
9% to $212.1 million, versus $232.0 million in the third quarter of
2002. This performance largely reflected the benefit in the 2002
period of the prepayment of approximately $12 million of certain
minimum licensing royalties as well as timing of shipments tied to the
Company's fourth quarter promotional event. For the quarter,
consumption of Revlon and Almay brands combined advanced approximately
1%, in a category that was flat versus year-ago.
In International, net sales grew 14% to $104.4 million, versus
$91.2 million in the third quarter of 2002, reflecting favorable
foreign currency translation and strength in several key markets,
partially offset by softness in Brazil, Mexico and certain distributor
markets in Russia and Central and Eastern Europe. Excluding the
favorable impact of foreign currency translation, International net
sales were up approximately 5% versus year-ago.
The Company indicated that during the quarter it incurred charges
of approximately $5 million associated with the implementation of its
growth plan, including growth plan related severance. The Company's
growth plan, the implementation of which was accelerated in the fourth
quarter of 2002, involves, among other things, increasing the
effectiveness of its advertising and in-store promotional marketing,
increasing the effectiveness of its in-store wall displays,
discontinuing select products and adjusting prices on several others,
and further strengthening the new product development process and
other organizational capabilities to accelerate the execution of the
plan. The Company further indicated that it continues to expect its
growth plan and related actions will result in charges (excluding
brand support expenses and training and development costs) over the
2002 to 2004 period of up to $160 million, $135 million of which has
been recognized to date, including $104 million charged in 2002.
Operating loss in the quarter was $7.9 million, versus operating
income of $21.8 million in the third quarter of 2002, and Adjusted
EBITDA(3) in the current quarter was $14.6 million, compared with
Adjusted EBITDA of $48.9 million in the same period last year. This
performance primarily reflected the impact of the aforementioned $12
million of licensing revenue in the year-ago period, as well as higher
brand support, growth plan charges of approximately $5 million, and
lower gross margins in the current period, reflecting unfavorable
product mix and lower production volumes.
In addition to growth plan charges of approximately $5 million,
operating loss in the current quarter also included charges totaling
$0.6 million for restructuring and additional consolidation costs,
while the third quarter of 2002 included charges totaling
approximately $4.2 million for restructuring, additional consolidation
costs, and executive severance. Similarly, Adjusted EBITDA, in
addition to growth plan charges of approximately $5 million in the
current quarter, also included $0.4 million for restructuring, while
the third quarter of 2002 included charges totaling $4.0 million for
restructuring, additional consolidation costs and executive severance.
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.
Net loss in the third quarter was $54.7 million, or $0.78 per
diluted share, compared with a net loss of $22.1 million, or $0.41 per
diluted share, in the third quarter of 2002. Cash flow used for
operating activities in the third quarter of 2003 was $49.1 million,
compared with cash flow used for operating activities of $8.5 million
in the third quarter of 2002.
Nine-Month Results
Net sales advanced approximately 3% to $930.8 million for the
first nine months of 2003, compared with net sales of $906.8 million
in the same period last year, largely driven by growth and favorable
foreign currency translation in International. Excluding the favorable
impact of foreign currency translation, net sales for the first nine
months were even with last year.
In North America, net sales of $641.8 million for the first nine
months were slightly lower than net sales of $645.4 million in the
same period last year. International net sales of $289.0 million
advanced approximately 11% versus net sales of $261.4 million in the
year-ago period. Excluding the favorable impact of foreign currency
translation, International net sales grew approximately 3% in the
nine-month period.
Operating loss in the first nine months of 2003 was $15.2 million,
versus operating income of $21.9 million in the first nine months of
2002. Operating loss in the first nine months of 2003 included
approximately $31 million of charges associated with the Company's
growth plan as well as charges totaling $1.5 million for restructuring
and additional consolidation costs, while the first nine months of
2002 included charges totaling approximately $19.0 million for
restructuring, additional consolidation costs, and executive
severance.
Adjusted EBITDA in the first nine months of 2003 was $58.6
million, compared with Adjusted EBITDA of $104.1 million in the first
nine months of 2002. Adjusted EBITDA in the current nine-month period
included approximately $29 million of charges associated with the
Company's growth plan, as well as $0.9 million for restructuring,
while Adjusted EBITDA in the first nine months of 2002 included
expenses totaling $18.4 million for restructuring, additional
consolidation costs, and executive severance.
Net loss was $141.2 million, or $2.36 per diluted share, in the
first nine months of 2003, compared with a net loss of $107.1 million,
or $2.00 per diluted share, in the first nine months of 2002. Cash
flow used for operating activities in the first nine months of 2003
was $183.9 million, compared with cash flow used for operating
activities of $110.9 million in the first nine months of 2002.
About Revlon
Revlon is a worldwide cosmetics, skin care, fragrance, and
personal care products company. The Company's vision is to become the
world's most dynamic leader in global beauty and skin care. 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) 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 60%-65% of the Company's U.S. mass-market dollar
volume. All Revlon brand share and consumption data excludes
StreetWear.
(2) North America includes the United States and Canada.
(3) 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, 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 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.
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 moderate full-year sales growth, full-year color
cosmetic market share growth for Revlon and Almay combined,
strengthening its retail partnerships and strengthening the capability
of the Revlon organization during 2003; the Company's belief that its
long-term strategies will deliver profitable and sustainable growth in
the long-term; the Company's expectation that it will continue to have
access to the resources it needs to execute its growth plan; and the
Company's expectation regarding incurring charges over the 2002 to
2004 period up to $160 million as a result of the Company's growth
plan and related actions. 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 2003 (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 the Company's
inability to achieve moderate sales growth, market share increases for
Almay and Revlon combined due to softness in the category, competitive
activities or other factors; the Company's inability to effectuate
long-term strategies which the Company believes will achieve long-term
profitable growth; higher than expected costs and expenses in
connection with the growth plan; and the Company's inability to secure
the resources necessary to fund its growth plan. 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 CONDENSED STATEMENTS OF OPERATIONS
(dollars in millions, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
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2003 2002 2003 2002
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Net sales $ 316.5 $ 323.2 $ 930.8 $ 906.8
Cost of sales 127.1 121.6 363.8 350.4
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Gross profit 189.4 201.6 567.0 556.4
Selling, general
and
administrative
expenses 196.9 177.7 581.3 525.2
Restructuring
costs 0.4 2.1 0.9 9.3
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Operating (loss)
income (7.9) 21.8 (15.2) 21.9
----------- ----------- ----------- -----------
Other expenses
(income):
Interest expense 44.3 40.1 128.5 118.4
Interest income (0.9) (0.8) (3.1) (2.6)
Amortization of
debt issuance
costs 2.2 2.0 6.6 5.8
Foreign currency
(gains) losses,
net (0.8) 1.2 (3.2) 3.0
Miscellaneous,
net (0.3) 0.4 0.1 2.3
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Other expenses,
net 44.5 42.9 128.9 126.9
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Loss before income
taxes (52.4) (21.1) (144.1) (105.0)
Provision
(benefit) for
income taxes 2.3 1.0 (2.9) 2.1
----------- ----------- ----------- -----------
Net loss $ (54.7) $ (22.1) $ (141.2) $ (107.1)
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Basic and diluted
net loss per
common share* $ (0.78) $ (0.41) $ (2.36) $ (2.00)
=========== =========== =========== ===========
Weighted average
number of common
shares
outstanding:
Basic and
diluted* 69,805,118 53,461,796 59,807,555 53,461,796
=========== =========== =========== ===========
* - During the second quarter of 2003, the Company completed the
Rights Offering. Accordingly, the basic and diluted net loss
per common share and the weighted average number of common
shares outstanding reflect this change for all periods
presented.
REVLON, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(dollars in millions)
September December
30, 31,
ASSETS 2003 2002
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(Unaudited)
Current
assets:
Cash and cash equivalents $ 34.6 $ 85.8
Trade receivables, net 179.7 212.3
Inventories 158.8 128.1
Prepaid expenses and other 36.5 39.6
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Total current assets 409.6 465.8
Property, plant and equipment, net 136.5 133.4
Other assets 166.0 154.4
Goodwill, net 186.1 185.9
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Total assets $ 898.2 $ 939.5
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LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current
liabilities:
Short-term borrowings - third parties $ 28.7 $ 25.0
Accounts payable 89.2 92.9
Accrued expenses and other 332.1 392.3
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Total current liabilities 450.0 510.2
Long-term debt 1,856.3 1,750.1
Other long-term liabilities 316.6 320.0
Total stockholders' deficiency (1,724.7) (1,640.8)
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Total liabilities and stockholders'
deficiency $ 898.2 $ 939.5
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REVLON, INC. AND SUBSIDIARIES
UNAUDITED ADJUSTED EBITDA RECONCILIATION
(dollars in millions)
Three Months Nine Months
Ended Ended
September 30, September 30,
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2003 2002 2003 2002
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(Unaudited) (Unaudited)
Reconciliation to cash flows
from operating activities:
- -----------------------------
Net cash used for operating
activities $(49.1) $ (8.5) $(183.9) $(110.9)
Changes in assets and liabilities,
net of acquisitions and dispositions 19.8 16.2 125.3 94.7
Interest expense, net 42.7 38.6 123.2 113.9
Foreign currency (gains) losses, net (0.8) 1.2 (3.2) 3.0
Miscellaneous, net (0.3) 0.4 0.1 1.3
Provision (benefit) for income taxes 2.3 1.0 (2.9) 2.1
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Adjusted EBITDA $ 14.6 $ 48.9 $ 58.6 $ 104.1
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Reconciliation to net loss:
- ---------------------------
Net loss $(54.7) $(22.1) $(141.2) $(107.1)
Interest expense, net 43.4 39.3 125.4 115.8
Amortization of debt issuance costs 2.2 2.0 6.6 5.8
Foreign currency (gains) losses, net (0.8) 1.2 (3.2) 3.0
Miscellaneous, net (0.3) 0.4 0.1 2.3
Provision (benefit) for income taxes 2.3 1.0 (2.9) 2.1
Depreciation and amortization 22.5 27.1 73.8 82.2
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Adjusted EBITDA $ 14.6 $ 48.9 $ 58.6 $ 104.1
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CONTACT: Revlon, Inc.
Investor Relations:
Maria A. Sceppaguercio, 212-527-5230
or
Media:
Catherine Fisher, 212-527-5727