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| Revlon Reports Fourth Quarter and Full Year 1999 Performance |
New CEO Sets Course of Action for Revlon Recovery
NEW YORK, Feb. 19 /PRNewswire/ -- Revlon, Inc. (NYSE: REV) announced today
its fourth quarter and full year financial performance. In addition,
Jeffrey M. Nugent, Revlon's new President and Chief Executive Officer,
outlined actions aimed at returning the Company to operating profitability,
both by increasing consumer demand for new and existing products and by
reducing operating costs.
Results for the full year and fourth quarter of 1999 were affected
primarily by the decision made by the Company, working with its key chain drug
accounts, to curtail its level of shipments in order to reduce their warehouse
inventories. Results were also affected by lower than anticipated share
growth, and the delay until 2000 of the introduction of new products into the
market that were originally scheduled for launch in the fourth quarter. In
addition, disruptions caused by the Company's previous announcement to pursue
the sale of both its worldwide Professional Products business and its non-core
Latin American brands, and charges associated with executive separation costs
and restructuring, also adversely impacted results.
Mr. Nugent said, "As previously announced, working with our customers,
Revlon has taken the tough steps necessary to accelerate the reduction in U.S.
retailers' warehouse inventory levels, which will go a significant way toward
re-staging the Company for a profitable 2000. We will continue to cut costs
through restructuring; we have addressed our inventory issues; we expect to
generate additional liquidity from the sale of non-core assets; and we have
installed a new management team, while at the same time improving the health
of our core business. Although we still have some distance to go before we
achieve satisfactory levels of performance, Revlon is on the right course. In
fact, results thus far in 2000 appear very encouraging."
Fourth Quarter Results
Net loss in the fourth quarter of 1999 was $128.6 million, or $2.51 per
diluted share, before restructuring and executive separation costs, as
compared to income from continuing operations of $6.5 million, or $.13 per
diluted share, before restructuring charges in the fourth quarter of 1998.
Net sales were $414.4 million in the fourth quarter of 1999, a decrease of
34.3% compared with the fourth quarter of 1998 on a reported basis or a
decrease of 31.8% on a constant U.S. dollar basis. Operating loss was
$85.7 million in the fourth quarter of 1999, before $18.1 million for
restructuring and $22.0 million for executive separation costs, compared to
operating income of $40.3 million in the fourth quarter 1998, before $42.9
million for restructuring charges, including $2.7 million reflected in cost of
sales. EBITDA was negative $51.6 million in the fourth quarter of 1999 as
compared to $69.8 million in the comparable 1998 period, both before the
aforementioned charges.
Net sales in the U.S. were $199.1 million for the fourth quarter, compared
with $385.4 million in the same period last year. International net sales
decreased to $215.3 million for the fourth quarter, or 12.2% on a reported
basis, compared to $245.1 million in the fourth quarter of 1998.
International net sales on a constant U.S. dollar basis declined 4.4%.
Net loss was $168.7 million, or $3.29 per diluted share in the fourth
quarter of 1999 compared to a loss from continuing operations of $36.4
million, or $.71 per diluted share in the fourth quarter of 1998.
As previously announced, the Company continues to re-evaluate its
organizational structure, and in December 1999 implemented a restructuring
program principally at its New York headquarters and New Jersey locations,
which resulted in a charge of $18.1 million, as noted above. As a result of
this restructuring, executive separation costs, resulting in a charge totaling
$22.0 million, and the elimination of open positions, the Company anticipates
annual savings of between $45 million to $50 million, starting this year.
1999 Performance
Net sales for 1999 were $1.86 billion, a decrease of 17.4% on a reported
basis or 14.9% on a constant U.S. dollar basis, as compared to 1998.
Operating loss in 1999 was $150.4 million, before restructuring and executive
separation costs of $62.2 million, compared to operating income of
$160.4 million in 1998, before restructuring charges and other, net of
$35.8 million. EBITDA was negative $28.7 million in 1999 as compared to
$266.6 million in 1998, both before the aforementioned charges.
Net loss in 1999 was $309.3 million, or $6.04 per diluted share, as
compared to income from continuing operations in 1998 of $8.5 million, or
$.17 per diluted share, before the aforementioned charges in both periods.
In the U.S., net sales were $1.05 billion in 1999, as compared to $1.34
billion in 1998, a decrease of 22.1%.
International net sales were $815.1 million as compared to $908.5 million
in 1998, a decrease of 10.3% on an as reported basis. International net sales
on a constant U.S. dollar basis decreased 3.7% in 1999 from 1998.
Asset Sales
Separately, Revlon signed a definitive agreement to sell Revlon's
worldwide Professional Products business for $315 million, before adjustments,
plus $10 million in contingent consideration, subject to a number of
conditions, including the closing of financing and the receipt of regulatory
approvals. Closing is anticipated in early March of 2000. The Company
intends to use approximately 60% of the net proceeds to permanently pay down
debt, and the balance will be available for general corporate purposes.
Revlon remains in active discussions with prospective purchasers regarding the
sale of its non-core Latin American brands sold under the Colorama, Juvena,
Bozzano and Plusbelle names. Gross proceeds from both transactions are
expected to total approximately $450 million.
New CEO Outlines Course of Action
Mr. Nugent said, "When I came on board two months ago, the senior
management team and I immediately took a hard look at the issues Revlon faced.
We concluded that we had two priorities -- first, to get Revlon growing faster
by increasing innovation and consumer demand for our products and, second, to
reduce operating costs in order to enhance profitability. Reaching the
desired goals will take time, but I want to underscore the sense of urgency
felt by everyone at Revlon to quickly accomplish what needs to be done so that
our long-term ambitions for the Company can be realized as soon as possible."
To strengthen worldwide consumer demand for its 2000 product lineup, the
Company has:
-- Overhauled its marketing plans to emphasize consumer-directed
advertising and promotion in order to build consumption.
-- Identified skin care as a key area for growth and has named one of its
most senior marketing executives to spearhead the Company's global push
in this category.
-- Reorganized Revlon's management structure along global marketing and
regional business lines to enable the Company to more quickly take
advantage of commercial opportunities anywhere in the world.
To improve operating efficiencies in year 2000, the Company intends to:
-- Continue to streamline the organization and reallocate resources.
-- Capture manufacturing, forecasting and supply chain efficiencies.
-- Eliminate low-value-added processes.
Mr. Nugent added, "We are taking aggressive action intended to improve
performance and put the issues that impacted our performance in 1999 firmly
behind us. However, these steps are only the beginning. Additional actions
will be taken in the coming months to set Revlon on the right course."
He continued, "This management team is united behind the goal of making
Revlon a global beauty and skin care leader. While we still have many
challenges ahead of us, Revlon has great strengths, including a strong
portfolio of brands, talented and dedicated people, and a powerful position in
the marketplace. We recognize that a transformation is needed which builds on
our strengths and adds new disciplines and capabilities to our organization,
and we intend to achieve that. Our goal is to build a new Revlon."
Forward-Looking Statements
Information in this press release which is not historical is
forward-looking and subject to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Such statements include the
Company's expectations and estimates about future events including (i) its
intent to return to profitability by increasing consumer demand for new and
existing products and by reducing operating costs; (ii) its expectation that
its decision, working with its key chain drug accounts, to curtail its level
of shipments will reduce their warehouse inventories and will re-stage the
Company for a profitable 2000; (iii) its expectation that it will continue to
cut costs through restructuring; (iv) its expectation that it will generate
additional liquidity from the sale of its non-core assets; (v) its expectation
regarding annual cost savings as a result of restructuring, executive
separation and the elimination of open positions; (vi) its expectation that it
will consummate the sale of its worldwide Professional Products business by
early March of 2000; (vii) its expectation that it will reduce debt as a
result of the sale of its worldwide Professional Products business; (viii) its
intent to sell its non-core Latin American brands; (ix) its expectation
regarding the gross proceeds from its asset dispositions; and (x) its intent
to build consumption, streamline its organization, capture efficiencies and
eliminate low value-added processes. Actual results may differ materially from
such forward-looking statements for a number of reasons including (i)
difficulties, delays or inability to return to profitability by increasing
consumer demand and reducing costs; (ii) difficulties, delays or inability to
continue to address the Company's inventory issues; (iii) difficulties, delays
or inability to continue to cut costs through restructuring; (iv)
difficulties, delays or inability to generate additional liquidity from the
sale of the Company's non-core assets; (v) difficulties, delays or inability
to achieve expected cost savings from restructuring; (vi) difficulties, delays
or an inability to consummate the sale of the worldwide Professional Products
business; (vii) difficulties, delays or inability to reduce debt as a result
of the sale of the Company's Professional Products business; (viii)
difficulties, delays or inability to consummate the sale of the Company's
non-core Latin American brands; (ix) inability to secure the expected proceeds
from its asset sales; and (x) difficulties, delays or inability to build
consumption, streamline its organization, capture efficiencies and eliminate
low-value-added processes.
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. A web site featuring current product
and promotional information can be reached at http://www.revlon.com. Revlon brands
include Revlon(R), Almay(R), Ultima II(R), Charlie(R) and Flex(R), and they
are sold in approximately 175 countries and territories.
REVLON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in millions, except per share data)
Three Months Ended
December 31, Year Ended December 31,
1999 1998 1999 1998
Net sales $ 414.4 $ 630.5 $ 1,861.3 $ 2,252.2
Cost of sales * 175.5 222.3 * 686.1 765.7 *
Gross profit 238.9 408.2 1,175.2 1,486.5
Selling, general and
administrative
expenses ** 346.6 ** 370.6 1,347.6 ** 1,328.8
Business consolidation
costs and other, net 18.1 40.2 40.2 33.1
Operating (loss)
income (125.8) (2.6) (212.6) 124.6
Other expenses (income):
Interest expense 39.3 34.6 147.9 137.9
Interest and net
investment income (0.9) (1.4) (2.8) (5.2)
Amortization of
debt issuance costs 1.0 1.2 4.3 5.1
Foreign currency (gains)
losses, net (0.7) (0.1) (0.5) 4.6
Miscellaneous, net 0.7 0.9 0.9 4.5
Other expenses, net 39.4 35.2 149.8 146.9
Loss from continuing operations
before income taxes (165.2) (37.8) (362.4) (22.3)
Provision (benefit)
for income taxes 3.5 (1.4) 9.1 5.0
Loss from continuing
operations (168.7) (36.4) (371.5) (27.3)
Discontinued operations -- (32.7) -- (64.2)
Extraordinary items
- early extinguishments
of debt -- -- -- (51.7)
Net loss $ (168.7) $ (69.1) $ (371.5) $ (143.2)
Basic loss per common share:
Loss from continuing
operations $ (3.29) $ (0.71) $ (7.25) $ (0.53)
Loss from discontinued
operations -- (0.64) -- (1.26)
Extraordinary items -- -- -- (1.01)
Net loss per
common share $ (3.29) $ (1.35) $ (7.25) $ (2.80)
Diluted loss per common share:
Loss from continuing
operations $ (3.29) $ (0.71) $ (7.25) $ (0.53)
Loss from discontinued
operations -- (0.64) -- (1.26)
Extraordinary items -- -- -- (1.01)
Net loss per
common share $ (3.29) $ (1.35) $ (7.25) $ (2.80)
Weighted average number
of common shares
outstanding:
Basic 51,242,837 51,236,771 51,240,225 51,217,997
Dilutive 51,242,837 51,236,771 51,240,225 51,217,997
* 1998 three month and full year cost of sales includes $2.7 of charges
related to restructuring.
** 1999 three month and full year selling, general and administrative
expenses includes $22.0 of charges related to executive separation
costs.
REVLON, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(dollars in millions)
December 31, December 31,
ASSETS 1999 1998
Current assets:
Cash and cash equivalents $ 25.4 $ 34.7
Trade receivables, net 332.6 536.0
Inventories 278.3 264.1
Prepaid expenses and other 51.3 69.9
Total current assets 687.6 904.7
Property, plant and equipment, net 336.4 378.9
Intangible and other assets, net 534.3 546.4
Total assets $ 1,558.3 $ 1,830.0
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
Short-term borrowings - third parties $ 37.6 $ 27.9
Current portion of long-term debt
- third parties 10.2 6.0
Accounts payable, accrued
expenses and other 549.5 524.5
Total current liabilities 597.3 558.4
Long-term debt 1,761.9 1,654.0
Other long-term liabilities 214.0 265.6
Total stockholders' deficiency (1,014.9) (648.0)
Total liabilities and
stockholders' deficiency $ 1,558.3 $ 1,830.0
SOURCE Revlon, Inc.
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CONTACT:
Media, Richard Woods, 212-527-5791, or
Investors, Deena Fishman, 212-527-5230, both of Revlon
