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
Date of Report (Date of earliest event reported):August 3, 2006 (August 3, 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 August 3, 2006, Revlon, Inc. issued a press release announcing its
earnings for the fiscal quarter ended June 30, 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 August 3, 2006.
2
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
REVLON, INC.
By: /s/ Robert K. Kretzman
----------------------
Robert K. Kretzman
Executive Vice President, Chief
Legal Officer, General Counsel and
Secretary
Date: August 3, 2006
3
EXHIBIT INDEX
Exhibit No. Description
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99.1 Press release dated August 3, 2006.
4
FOR IMMEDIATE RELEASE
Revlon Reports Second Quarter and Six Months 2006 Results
NEW YORK, August 3, 2006 - Revlon, Inc. (NYSE: REV) today announced results
for the second quarter and six months ended June 30, 2006.
For the quarter, net sales advanced approximately 1% versus year-ago to $321
million, and Adjusted EBITDA(1) was a loss of $20 million versus Adjusted EBITDA
of $24 million in the second quarter of 2005. Revlon indicated that its new
brand Vital Radiance negatively impacted the Company's operating profitability
in the second quarter by approximately $40 million. Net loss in the quarter was
$87 million, or $0.21 per diluted share, compared with a net loss of $36
million, or $0.10 per diluted share, in the second quarter of 2005.
Commenting on the results of the quarter, Revlon President and Chief Executive
Officer Jack Stahl stated, "Our overall portfolio continues to make progress,
and we are confident that we are taking the right actions for the long-term to
build our great brands, reduce costs and create sustainable value. As we
previously disclosed, our results in the second quarter were significantly
impacted by Vital Radiance, a new brand we introduced earlier this year to serve
the affluent and growing 50+ consumer demographic. As we look ahead, as
previously announced, we expect a significant improvement in Adjusted EBITDA in
the second half of 2006, and we are confident that our financial results in 2007
will be strong. Our outlook for 2007 reflects the significant revenue-generating
actions we are planning to take to grow the Revlon brand across the categories
in which we compete, the substantially improved financial profile of Vital
Radiance we expect in 2007 and the cost reduction actions we are aggressively
pursuing to increase our margins."
As previously announced, the Company expects its Adjusted EBITDA for the full
year 2006 to be approximately even with or somewhat below the 2005 Adjusted
EBITDA of $167 million, after taking into account the expected full year
negative impact related to the Vital Radiance brand and a $10 million
restructuring charge taken earlier in 2006.
The Company indicated that, as disclosed last month, it successfully
consummated a $100 million term loan add-on to its bank credit facility, which
provides the Company with additional financial resources and flexibility to
execute its business plan.
Revlon will host a conference call with members of the investment community on
August 3, 2006 at 9:30 AM EDT to discuss the results of the 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
additional information related to the call will be available in the Investor
Relations section of the Company's website, under Press Releases and Financial
Reports, respectively.
Page 1
Second Quarter Results
----------------------
Net sales in the second quarter of 2006 advanced approximately 1% to $321
million, compared with net sales of $318 million in the second quarter of 2005.
This performance reflected a 10% increase versus year-ago in gross sales(2),
almost entirely offset by a $17 million returns and allowances provision for
Vital Radiance related to the previously-announced anticipated reduction of
certain retail space and expected modifications to the brand offering in 2007 in
connection with new product introductions. Also impacting the sales comparison
in the quarter was higher brand support in the form of sales incentives.
In the United States, net sales of $180 million were essentially even with net
sales of $181 million in the second quarter of 2005. This performance reflected
double-digit growth in gross sales, offset by the aforementioned returns and
allowances provision and higher brand support. See Footnote 3 related to certain
geographic reclassifications for management reporting purposes.
In International, net sales grew approximately 3% to $141 million, versus net
sales of $137 million in the second quarter of 2005. This performance largely
reflected growth in Latin America and the benefit of favorable foreign currency
translation. Excluding the impact of foreign currency translation, International
net sales advanced approximately 2% versus year-ago.
Operating loss in the quarter was $45.9 million, versus essentially break-even
operating results in the second quarter of 2005, while Adjusted EBITDA in the
second quarter was a loss of $20.1 million, compared with Adjusted EBITDA of
$24.2 million in the year-ago period. This performance primarily reflected the
unfavorable impact of approximately $40 million in the quarter attributable to
Vital Radiance, as well as significantly higher brand support behind the balance
of the Company's portfolio--most notably Almay--and a provision for estimated
excess inventory, largely related to lower-than-expected growth from the Almay
restage. Partially offsetting these factors was the benefit of the growth in
gross sales and lower compensation and other general and administrative
expenses.
Page 2
Adjusted EBITDA and gross sales are non-GAAP measures that are defined in the
footnotes of this release and are reconciled to net income/(loss) and net sales,
respectively, the most directly comparable GAAP measures, in the accompanying
financial tables.
Net loss in the second quarter was $87.1 million, or $0.21 per diluted share,
compared with a net loss of $35.8 million, or $0.10 per diluted share, in the
second quarter of 2005. The diluted per share comparison reflects the impact of
the shares issued in the March 2006 rights offering. Cash flow used for
operating activities in the second quarter of 2006 was $104.0 million, compared
with cash flow used for operating activities of $39.2 million in the second
quarter of 2005.
Six-Month Results
-----------------
For the first six months of 2006, net sales advanced approximately 4% to $647
million, compared with net sales of $619 million in the first six months of
2005.
In the United States, net sales of $378 million for the first six months of 2006
were up approximately 5% versus net sales of $361 million in the same period
last year. In International, net sales of $268 million advanced approximately 4%
in the first six months of 2006, compared with net sales of $259 million in the
same period last year. In the six-month period, foreign currency translation had
virtually no impact on the year-over-year comparison.
The Company generated an operating loss of $63.1 million in the first six months
of 2006, versus an operating loss of $2.4 million in the first six months of
2005. Adjusted EBITDA in the first six months of 2006 was a loss of $4.8
million, compared with Adjusted EBITDA of $45.9 million in the first six months
of 2005.
Net loss was $145.3 million, or $0.37 per diluted share, in the first six months
of 2006, compared with a net loss of $82.6 million, or $0.22 per diluted share,
in the first six months of 2005. Cash flow used for operating activities in the
first six months of 2006 was $95.5 million, compared with cash flow used for
operating activities of $46.8 million in the first six months of 2005.
Market Share Results(4)
-----------------------
According to ACNielsen, the color cosmetics category grew 4.2% versus year-ago
in the second quarter, while the Company grew its consumption in the category by
3.3% in the period, resulting in a 0.2 point share decline to 22.0%. The Revlon
brand registered a share of 14.2%, compared with 15.7% in the year-ago period,
while the Almay brand essentially held share at 6.4% in the quarter, versus 6.5%
in the second quarter last year, and Vital Radiance achieved a quarterly share
of 1.4%.
Page 3
The Company believes that Vital Radiance continues to build a presence in the
U.S. mass market and has achieved good results in several key food and drug
retail accounts, having been in distribution for only several months. In certain
key accounts, the brand has already achieved a market share approaching 3.0% in
the month of June, which the Company believes provides it with a solid platform
from which to build the brand and achieve broader success across its customer
base over time.
In each of the Company's other key categories, the Company gained share for the
quarter. Specifically, in women's hair color, the Company grew consumption 9%
versus year-ago in a category that advanced 3%, resulting a share gain of 0.5
points to 9.0%. Similarly, in beauty tools, the Company grew consumption 12% in
the quarter in a category that advanced 6%, resulting in a 1.4 share point
improvement to 27.0% in the quarter. In anti-perspirants and deodorants, the
Company registered a share 6.4% in the quarter, versus a share of 6.3% in the
same period last year.
Commenting on the Company's market share results, Mr. Stahl stated, "We believe
that we are making progress to build the underlying value of our brands, and we
are confident that the actions we are taking are strengthening our brands in the
marketplace and establishing a solid growth platform for us going into 2007."
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, 212-527-5230 Scott Behles, 212-527-4718
Page 4
Footnotes to Press Release
--------------------------
(1) Adjusted EBITDA is a non-GAAP financial measure 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) Gross Sales is a non-GAAP financial measure defined as net sales before
returns, allowances, discounts and other revenues, and essentially represents
the dollar value of shipments. In calculating Gross Sales, the Company excludes
the effects of returns, allowances, discounts and other revenues as the
Company's management believes that some of these items can vary significantly
from period to period. This data is presented to depict the Company's shipment
of products before giving effect to returns, allowances, discounts and certain
other revenue. The Company's management utilizes Gross Sales as an operating
performance measure in conjunction with other GAAP measures, such as net sales
and gross margin calculated in accordance with GAAP. Gross Sales should not be
considered in isolation or as a substitute for net sales prepared in accordance
with GAAP.
(3) During the second quarter of 2006, management responsibility for its
business in Canada was transferred from the North America region to the European
operations of the International region. Accordingly, all prior period amounts
have been reclassified to reflect Canada's financial information in
International.
(4) 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
--------------------------
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 beliefs, expectations and estimates about: (i) its
future growth, profitability and financial performance, including that it is
taking the right actions for the long-term to build the underlying value of its
brands, reduce costs and create sustainable value; that it will have a
significant improvement in Adjusted EBITDA in the second half of 2006; that its
Adjusted EBITDA for the full year 2006 will be approximately even with or
somewhat below 2005 Adjusted EBITDA of $167 million, after taking into account
the expected full year negative impact related to the Vital Radiance brand and a
$10 million restructuring charge taken earlier in 2006; that its financial
results in 2007 will be strong reflecting the significant revenue-generating
actions to grow the Revlon brand across its categories, a substantially improved
financial profile of Vital Radiance in 2007 and cost reduction actions to
increase its margins; and that it is taking actions to strengthen its brands in
the marketplace and establish a solid growth platform going into 2007; (ii) its
beliefs and plans as to the potential growth, financial performance and
effectiveness of its Vital Radiance brand, including that its share performance
in a number of key accounts provide the Company with a solid platform from which
to build the brand and achieve broader success across its customer base over
time; (iii) its expectations as to future retail space configurations, including
its previously-announced anticipated reduction of certain retail space for Vital
Radiance; and (iv) its belief as to having additional financial resources and
flexibility to execute its business plan. 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 SEC, including the Company's 2005
Annual Report on Form 10-K and the Company's Form 10-Qs and Form 8-Ks that it
files with the SEC during 2006 (which may be viewed on the SEC's website at
http://www.sec.gov or on the Company's website at http://www.revloninc.com), as
well as reasons including difficulties, delays or the inability of the Company
to: (i) achieve its future growth, profitability and financial performance
objectives, including less than anticipated growth, or a decrease in, net sales
or Adjusted EBITDA, including due to less than anticipated results from the
Company's Revlon, Vital Radiance, Almay and/or other brands, such as less than
expected effectiveness of their marketing programs, a decrease in sales of the
Company's other products or more than anticipated returns or product
discontinuances, or difficulties, delays in or the inability to increase its
operating margins, such as due to its productivity initiatives or cost reduction
actions being less effective than planned, including as a result of higher than
expected expenses; (ii) improve the financial performance of the Vital Radiance
brand moving forward, such as due to less than anticipated retailer or consumer
acceptance of the brand or continued increased competitive activity; (iii)
greater than anticipated retailer space reductions for the Company's brands;
and/or (iv) less than expected financial resources and flexibility to execute
its business plan, as such due to lower than expected revenues or higher than
expected expenses. 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 incorporated by reference into this release.
Page 6
REVLON, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in millions, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- --------------------------
2006 2005 2006 2005
------------ ------------ ------------ ------------
Net sales ................................................... $ 321.1 $ 318.3 $ 646.6 $ 619.2
Cost of sales ............................................... 138.0 118.9 255.3 233.1
------------ ------------ ------------ ------------
Gross profit .......................................... 183.1 199.4 391.3 386.1
Selling, general and administrative expenses ................ 228.5 199.9 444.9 387.0
Restructuring costs (benefit), net .......................... 0.5 (0.2) 9.5 1.5
------------ ------------ ------------ ------------
Operating loss ........................................ (45.9) (0.3) (63.1) (2.4)
------------ ------------ ------------ ------------
Other expenses (income):
Interest expense ...................................... 35.9 31.8 71.1 61.5
Interest income ....................................... (0.5) (1.8) (0.8) (3.4)
Amortization of debt issuance costs ................... 1.8 1.7 3.6 3.3
Foreign currency (gains) losses, net .................. (0.4) (1.2) (1.2) 1.3
Loss on early extinguishment of debt .................. 0.4 1.5 0.4 9.0
Miscellaneous, net .................................... 0.7 0.2 0.4 1.6
------------ ------------ ------------ ------------
Other expenses, net ................................. 37.9 32.2 73.5 73.3
------------ ------------ ------------ ------------
Loss before income taxes .................................... (83.8) (32.5) (136.6) (75.7)
Provision for income taxes .................................. 3.3 3.3 8.7 6.9
------------ ------------ ------------ ------------
Net loss .................................................... $ (87.1) $ (35.8) $ (145.3) $ (82.6)
============ ============ ============ ============
Basic and diluted net loss per common share ................. $ (0.21) $ (0.10) $ (0.37) $ (0.22)
============ ============ ============ ============
Weighted average number of common shares outstanding:
Basic and diluted ..................................... 412,379,628 374,169,802 395,684,062 373,611,830
============ ============ ============ ============
REVLON, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(dollars in millions)
June 30, December 31,
ASSETS 2006 2005
----------- ---------
(Unaudited)
Current assets:
Cash and cash equivalents ............................................ $ 21.2 $ 32.5
Trade receivables, net ............................................... 173.0 282.2
Inventories .......................................................... 230.2 220.6
Prepaid expenses and other ........................................... 56.9 56.7
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Total current assets ............................................. 481.3 592.0
Property, plant and equipment, net ....................................... 120.5 119.7
Other assets ............................................................. 172.8 146.0
Goodwill, net ............................................................ 186.1 186.0
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Total assets ..................................................... $ 960.7 $ 1,043.7
=========== =========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
Short-term borrowings ................................................ $ 12.1 $ 9.0
Current portion of long-term debt .................................... 5.3 -
Accounts payable ..................................................... 110.2 133.1
Accrued expenses and other ........................................... 298.3 328.4
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Total current liabilities ........................................ 425.9 470.5
Long-term debt ........................................................... 1,403.3 1,413.4
Other long-term liabilities .............................................. 258.1 255.7
Total stockholders' deficiency ........................................... (1,126.6) (1,095.9)
----------- ---------
Total liabilities and stockholders' deficiency ................... $ 960.7 $ 1,043.7
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REVLON, INC. AND SUBSIDIARIES
UNAUDITED ADJUSTED EBITDA RECONCILIATION
(dollars in millions)
Three Months Ended
June 30,
------------------------
2006 2005
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(Unaudited)
Reconciliation to net loss:
- --------------------------------------------------------------------------
Net loss ................................................................. $ (87.1) $ (35.8)
Interest expense, net .................................................... 35.4 30.0
Amortization of debt issuance costs ...................................... 1.8 1.7
Foreign currency (gains) losses, net ..................................... (0.4) (1.2)
Loss on early extinguishment of debt ..................................... 0.4 1.5
Miscellaneous, net ....................................................... 0.7 0.2
Provision for income taxes ............................................... 3.3 3.3
Depreciation and amortization ............................................ 25.8 24.5
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Adjusted EBITDA .......................................................... $ (20.1) $ 24.2
=========== ==========
Six Months Ended Year Ended
June 30, December 31,
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2006 2005 2005
---------- ------ -------------
(Unaudited) (Unaudited)
Reconciliation to net loss:
- --------------------------------------------------------------------------
Net loss ................................................................. $ (145.3) $(82.6) $ (83.7)
Interest expense, net .................................................... 70.3 58.1 124.2
Amortization of debt issuance costs ...................................... 3.6 3.3 6.9
Foreign currency (gains) losses, net ..................................... (1.2) 1.3 0.5
Loss on early extinguishment of debt ..................................... 0.4 9.0 9.0
Miscellaneous, net ....................................................... 0.4 1.6 (0.5)
Provision for income taxes ............................................... 8.7 6.9 8.5
Depreciation and amortization ............................................ 58.3 48.3 101.7
---------- ------ -------------
Adjusted EBITDA .......................................................... $ (4.8) $ 45.9 $ 166.6
========== ====== =============
REVLON, INC. AND SUBSIDIARIES
UNAUDITED GROSS SALES TO NET SALES RECONCILIATION
(dollars in millions)
Three Months Ended
June 30,
----------------------
2006 2005
----------- ---------
Reconciliation to net sales: (Unaudited)
- --------------------------------------------------------------------------
Consolidated gross sales ................................................. $ 432.8 $ 395.1
Consolidated returns, allowances and discounts ........................... (113.5) (78.9)
Consolidated other revenues .............................................. 1.8 2.1
----------- ---------
Consolidated net sales ................................................... $ 321.1 $ 318.3
=========== =========
