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| Revlon Reports Full Year and Fourth Quarter Results; 4th Quarter EPS $.13 Per Diluted Share Before One-Time Charges |
Restructuring Program to Improve Efficiency;
Strong New Product Line Up for 1999
NEW YORK, Jan. 28 /PRNewswire/ -- Revlon, Inc. (NYSE: REV) today announced
its full year and fourth quarter results for 1998, which are in line with
previously announced estimates.
FOURTH QUARTER RESULTS
Income from continuing operations in the fourth quarter 1998 was
$6.5 million, or $.13 per diluted share, compared to $36.6 million, or
$.71 per diluted share in 1997, before non-recurring items. In the fourth
quarter, net sales were $630.5 million, a decrease of 1.5% compared with the
fourth quarter of 1997 on a reported basis or a decrease of 0.4% on a constant
U.S. dollar basis. Operating income was $40.3 million in the fourth quarter
1998, before restructuring charges of $42.9 million, including $2.7 million
reflected in cost of sales, compared to operating income of $74.1 million in
the fourth quarter 1997, before a non-recurring gain of $0.8 million. EBITDA
was $69.8 million in 1998 and $97.7 million in the comparable 1997 period,
both before non-recurring items.
Net sales in the U.S. grew by 2.5% to $383.8 million for the fourth
quarter, compared with $374.5 million in the same period last year. The
International operation's net sales decreased to $246.7 million for the fourth
quarter, or 7.0% on a reported basis, compared to $265.4 million in the fourth
quarter of 1997. International net sales on a constant U.S. dollar basis
declined 4.6%, primarily due to continued economic weakness in certain
markets.
Advertising and consumer-directed promotion increased to $131.0 million,
or 20.8% of net sales in the fourth quarter of 1998, from $121.5 million or
19.0% of net sales in the comparable 1997 period.
Loss from discontinued operations was $32.7 million, or $.64 per diluted
share, in the fourth quarter 1998, reflecting the loss on disposition of the
retail operations during the quarter. Net loss was $69.1 million or $1.35 per
diluted share in the fourth quarter 1998. Net income was $41.4 million, or
$.80 per diluted share in the fourth quarter 1997.
RESTRUCTURING PROGRAM
In order to increase efficiency and enhance the Company's competitive
positioning, Revlon continues to implement its previously announced
restructuring program. The program is expected to provide estimated
annualized cost savings in the range of $30 million to $40 million. The
Company expects to incur charges of up to $80 million as part of the
restructuring program. In the 4th quarter of 1998, charges of $42.9 million,
including $2.7 million reflected in cost of sales, were recorded. The
remainder is expected to be incurred in 1999.
The Company is realigning the way it does business to better service its
customers. Among other items, Consumer Products USA, Revlon's largest
division, has developed a new strategic plan to maximize the potential of the
Revlon brand equity, build the Company's portfolio of brands, and expand its
relationships with key retailers. The division is reorganizing to become
brand focused rather than product focused and combining the Cosmetics and
Beauty Care sales forces to focus on customer needs.
"Revlon's fundamentals remain strong," said George Fellows, President and
Chief Executive Officer. "Market share in the U.S. mass market for Revlon's
portfolio of brands increased to 29.3% in 1998, up from 28.1% for 1997,
according to AC Nielsen. The Revlon brand continues to be number one in color
cosmetics. Almay was the fastest growing major mass market color cosmetics
brand, up over 34% in 1998, and Ultima II exceeded expectations. Our program
to broaden distribution of Ultima II in the mass market channel is showing
significant strength with distribution in approximately 4,000 doors at the end
of 1998."
"We are also confident that our recently announced restructuring program
will better align our business processes with a dynamic market," Fellows said.
"In addition, we have an exciting new product lineup for 1999 that will
continue to grow our portfolio of brands."
1998 PERFORMANCE
Net sales for 1998 increased 0.6% to $2.25 billion on a reported basis, or
2.7% on a constant dollar basis. Operating income in 1998 was $160.4 million
before restructuring and non-recurring charges of $35.8 million. Operating
income in 1997 was $218.5 million, before non-recurring charges of
$3.6 million. EBITDA was $266.6 million in 1998 and $311.6 million in 1997,
both before restructuring and non-recurring charges.
Income from continuing operations in 1998 was $8.5 million, or $.17 per
diluted share and was $61.4 million, or $1.19 per diluted share in 1997,
before the restructuring and non-recurring charges in such periods. Income
(loss) from discontinued operations was ($64.2) million in 1998 and
$0.7 million in 1997.
Extraordinary charges for early extinguishments of debt in connection with
refinancings were $51.7 million and $14.9 million for 1998 and 1997,
respectively. Advertising and consumer-directed promotion was $422.9 million
or 18.8% of net sales in 1998, and $397.4 million or 17.8% of net sales
in 1997.
FULL YEAR U.S. OPERATIONS
In the U.S., net sales grew by 2.9% to $1.34 billion in 1998, compared
with $1.30 billion last year. The increase in net sales in 1998 reflects
improvements in net sales in the Company's Almay and Ultima II franchises.
Net sales for 1998 were impacted by retailers, particularly chain drugstores
driven by recent consolidation, pursuing efficiencies by reducing inventory
levels.
FULL YEAR INTERNATIONAL OPERATIONS
The International operation's net sales in 1998 decreased to
$913.7 million for 1998, or 2.6% on a reported basis, compared to $938.4
million in 1997. Net sales on a constant U.S. dollar basis increased 2.4%.
This increase in net sales on a constant dollar basis reflects the benefits of
increased distribution, including acquisitions, and successful new product
introductions in several markets, partially offset by unfavorable economic
conditions in certain markets which restrained consumer and trade demand
outside of the U.S. During 1998, the Company introduced new products such as
MoistureStay lip color and Top Speed nail enamel in selected international
markets.
1999 FOCUS - PORTFOLIO GROWTH
In 1999, Revlon plans to build its entire portfolio of brands with
exciting new products. The Company intends to continue to drive innovation in
the industry by developing a wide range of revolutionary proprietary
technology based products designed to meet consumers' changing needs. Revlon
will introduce new Revlon Age Defying Makeup and Concealer that is specially
formulated to meet the needs of aging skin. Its unique two-in-one design
offers makeup and concealer in one convenient package. Additionally, the
first half will also feature ColorStay Compact Makeup, capitalizing on the
number one foundation brand and Everylash mascara, which provides a unique
delivery system for separating lashes. Almay will launch Stay Smooth mascara
and Stay Smooth medicated lipcolor - both important extensions of the highly
successful Stay Smooth franchise. Revlon will continue to reinforce its color
authority heritage through seasonal shade statements and a full slate of
innovative product launches throughout the year.
Beyond cosmetics, Revlon will launch Super Lustrous Haircolor, a permanent
hair color with proprietary shine-enhancing technology and deep-penetrating
conditioners that leave hair in better condition than before coloring. The
Company's ethnic business will introduce innovative new products like African
Pride High Lites, the first hair highlighting product targeting ethnic
consumers, and will relaunch Revlon's existing ethnic brands. In the
professional market, American Crew has created Modern Organic Products, a
unique approach to hair care for the modern family which has received
enthusiastic support from salons and exclusive distributors.
Revlon is a worldwide leader in cosmetics, skin care, fragrance, personal
care and professional products. The Company's vision is to provide glamour,
excitement and innovation through quality products at affordable prices. A
web site featuring current product and promotional information can be reached
at http://www.revlon.com. Revlon's brands include Revlon(R), ColorStay(R),
Age Defying, StreetWear, Almay(R), Ultima II(R), Super Lustrous(R), African
Pride(R), Creme of Nature(R), Charlie(R) and Flex(R) and are sold in
approximately 175 countries and territories.
FORWARD-LOOKING STATEMENTS
Information in this press release includes forward-looking statements made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Such statements include, without limitation, the
Company's estimate of restructuring activities and costs and resulting cost
savings and benefits, the Company's expectations regarding new product
launches and the Company's intent to drive innovation in the industry by
development of technology based products. In addition to the factors that are
described in the Company's SEC filings, including its quarterly reports on
Form 10-Q, the following factors could cause actual results to differ
materially from those expressed in the forward looking statements: (i)
difficulties or delays in or unexpected costs or lower than expected savings
and benefits from the restructuring; (ii) difficulties or delays in new
product introductions in 1999; (iii) difficulties or delays in developing and
introducing technology based products; and (iv) actions by competitors
including business combination, technological breakthroughs, new product
offerings and marketing and promotional success. The Company assumes no
responsibility to update forward looking information contained herein.
REVLON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in millions, except per share data)
Three Months Ended
December 31 Year End December 31
1998 1997 1998 1997
Net sales $630.5 $639.9 $2,252.2 $2,238.6
Cost of sales* 222.3* 209.8 765.7* 743.1
Gross profit 408.2 430.1 1,486.5 1,495.5
Selling, general and
administrative expenses 370.6 356.0 1,328.8 1,277.0
Business consolidation costs
and other, net 40.2 (0.8) 33.1 3.6
Operating (loss) income (2.6) 74.9 124.6 214.9
Other expenses (income):
Interest expense 34.6 34.5 137.9 133.7
Interest and net
investment income (1.4) (1.1) (5.2) (4.2)
Amortization of debt
issuance costs 1.2 1.3 5.1 6.6
Foreign currency
(gains) losses, net (0.1) 1.2 4.6 6.4
Miscellaneous, net 0.9 1.5 4.5 5.3
Other expenses, net 35.2 37.4 146.9 147.8
(Loss) income from continuing
operations before income taxes(37.8) 37.5 (22.3) 67.1
(Benefit) provision for
income taxes (1.4) 0.1 5.0 9.3
(Loss) income from continuing
operations (36.4) 37.4 (27.3) 57.8
Discontinued operations (32.7) 4.0 (64.2) 0.7
Extraordinary items -
early extinguishments of debt -- -- (51.7) (14.9)
Net (loss) income $(69.1) $41.4 $(143.2) $43.6
Basic (loss) income per
common share:
(Loss) income from continuing
operations $(0.71) $0.73 $(0.53) $1.13
(Loss) income from discontinued
operations (0.64) 0.08 (1.26) 0.01
Extraordinary items -- -- (1.01) (0.29)
Net (loss) income per
common share $(1.35) $0.81 $(2.80) $0.85
Diluted (loss) income per
common share:
(Loss) income from continuing
operations $(0.71) $0.72 $(0.53) $1.13
(Loss) income from discontinued
operations (0.64) 0.08 (1.26) 0.01
Extraordinary items -- -- (1.01) (0.29)
Net (loss) income per
common share $(1.35) $0.80 $(2.80) $0.85
Weighted average number of
common shares
outstanding
Basic 51,236,771 51,136,329 51,217,997 51,131,440
Dilutive 51,236,771 51,464,122 51,217,997 51,544,318
* 1998 three months and full year cost of sales include $2.7 of charges
related to restructuring.
REVLON, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in millions)
ASSETS December 31 December 31
1998 1997
Current assets:
Cash and cash equivalents $34.7 $37.4
Trade receivables, net 536.0 492.5
Inventories 264.1 260.7
Prepaid expenses and other 69.9 94.4
Total current assets 904.7 885.0
Property, plant and
equipment, net 378.9 364.0
Intangible and
other assets, net 546.4 507.0
Total assets $1,830.0 $1,756.0
LIABILITIES AND STOCKHOLDERS'
DEFICIENCY
Current liabilities:
Short-term borrowings -
third parties $27.9 $42.7
Current portion of long-term
debt - third parties 6.0 5.5
Accounts payable, accrued
expenses and other 524.5 534.8
Total current liabilities 558.4 583.0
Long-term debt 1,654.0 1,419.7
Other long-term liabilities 265.6 211.8
Total stockholders'
deficiency (648.0) (458.5)
Total liabilities and
stockholders' deficiency $1,830.0 $1,756.0
SOURCE Revlon, Inc.
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CONTACT:
Press - Nancy Risdon, 212-527-5791, or
Investor Relations - Deena S. Fishman, 212-527-5230, both of
Revlon, Inc.
NOTE TO EDITORS: Revlon press releases are available at the
Revlon website at http://www.revlon.com.
