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| Revlon Reports Second Quarter Results |
Company Steps Up Spending to Drive Market Share
Strongest Lineup of New Products in Years Led by ColorStay Liquid Lip
Competitive Activity in U.S. and Economic Uncertainty Affect
Second Quarter Results
NEW YORK, July 27 /PRNewswire/ -- Revlon, Inc. (NYSE: REV) today announced
its second quarter results for 1999. The Company also confirmed that it is
continuing its review of strategic alternatives announced on April 7, 1999.
The Company is actively engaged in ongoing discussions with potential
purchasers of all or part of the Revlon business.
In response to the Company's assessment of first half marketplace
dynamics, Revlon plans to increase spending on brand support in the second
half of 1999 to drive market share and enhance franchise value. As a result,
operating income before restructuring charges for the year is expected to be
well ahead of last year but less than analysts' expectations by approximately
the planned increase in promotional spending. Therefore, operating income
before restructuring charges for the year is expected to be approximately
$195-$205 million.
Operating income was $43.9 million in the second quarter of 1999, before
restructuring charges of $9.5 million, compared to operating income of
$51.5 million in the second quarter of 1998. EBITDA was $73.1 million in the
second quarter of 1999 before restructuring charges, as compared to
$78.1 million in the 1998 period. Net sales in the second quarter were
$553.4 million, a decrease of 3.8% compared with the second quarter of 1998 on
a reported basis or a decrease of 1.2% on a constant U.S. dollar basis. In
the quarter, income from continuing operations before restructuring charges
was $5.6 million, or $.11 per diluted share, compared to $11.7 million, or
$.22 per diluted share in the second quarter of 1998.
"In addition, our results for the quarter were affected by the heavily-
promoted launch of two new competing high-profile brands and a continued high
level of spending by competitors," said George Fellows, President and Chief
Executive Officer. "Although the impact of these launches was felt throughout
the industry, the impact on Revlon's market share was proportionally less than
that of our principal competitors, reflecting the fundamental strength of the
Revlon franchise. We believe that the marketplace has already absorbed the
major effect of these launches."
The Company also stated that inventory targets established by the trade in
the U.S. appear to have been lowered even further. Combined with slow
category growth during the first half, these lower targets will extend the
time needed to absorb the effects of inventory rebalancing.
Economic uncertainty and currency fluctuations continued to affect the
international market.
However, the Company anticipates a stronger second half for Revlon,
citing:
-- The Company's strongest lineup of new products in the past several
years, including Revlon ColorStay Liquid Lip, Revlon EveryLash
Waterproof Mascara and EveryLash Curling Mascara, Almay One Coat Color
and Curl Mascara, Skin Stays Clean Compact, Ultima Glowtion to Go and
Mitchum Cool/Dry Antiperspirant; and
-- Increased brand support. The Company is planning an aggressive program
of advertising and in-store and direct consumer promotions, including
the addition of approximately 350 million coupons. All of Revlon's
major accounts in the U.S. have committed to strongly support ColorStay
Liquid Lip beginning in September, in conjunction with its new
advertising campaign, featuring Country superstar, Shania Twain.
Fellows added, "Our strengthened program is designed to drive share growth
in the second half of 1999."
QUARTERLY PERFORMANCE
In the U.S., net sales were $347.3 million for the second quarter,
compared with $340.3 million in the same period last year, an increase of
2.1%. During the quarter, the Revlon brand became the number one in
foundation, attributable in part to the successful re-launch of Age Defying
Makeup and its new Age Defying Makeup and Concealer Compact. EveryLash
Mascara was among the most successful new products in the first half of 1999.
Positive sales results were offset due to continuing adjustments to inventory
levels by retailers and competitive activity.
International net sales were $206.1 million for the second quarter,
compared to $235.0 million in the second quarter of 1998, a decrease of 12.3%
on a reported basis. International net sales on a constant U.S. dollar basis
declined 6.1%. Unfavorable conditions continued in certain markets outside
the U.S.
Selling, general and administrative expenses were $324.6 million in the
second quarter, compared to $329.8 million in the second quarter of 1998,
reflecting increased brand support offset by reduced general and
administrative expenses, due in part to the benefits from our previously
announced restructuring program.
Net loss was $3.9 million or $.08 per diluted share in the second quarter
of 1999, including $9.5 million, or $.19 per diluted share, after giving
effect to the Company's restructuring program. Net loss was $28.7 million, or
$.55 per diluted share in the second quarter of 1998, which included loss from
discontinued operations of $26.9 million, or $.51 per diluted share, and
$13.5 million, or $.26 per diluted share, of extraordinary charges in
connection with refinancings.
FIRST HALF RESULTS
Net sales for the first half of 1999 were $994.5 million, compared to
$1,073.1 million in the first half of 1998. Operating income in the first
half was $56.4 million and EBITDA was $114.7 million, before restructuring
charges, compared to $80.2 million and $132.3 million, respectively in the
first half of 1998. Net loss was $38.1 million or $.74 per diluted share in
the first half of 1999, including $17.7 million, or $.35 per diluted share, in
connection with the Company's restructuring program. Net loss was
$86.8 million, or $1.70 per diluted share in the first half of 1998, which
included loss from discontinued operations of $31.5 million, or $.62 per
diluted share, and $51.7 million, or $1.01 per diluted share, of extraordinary
charges in connection with refinancings.
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), 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 outcome
of the Company's review of strategic alternatives, the Company's estimate of
restructuring costs and activities and resulting benefits, the Company's
intention to increase planned spending to enhance its competitive position,
the Company's assessment of the effects of competitive product launches and
spending by competitors, the Company's expectations regarding its new product
launches, the Company's assessment of retailers' inventory targets and the
time needed to reverse the effects of inventory rebalancing and the Company's
anticipation of a stronger second half of 1999. In addition to the factors
that are described in the Company's SEC filings, including its annual and
quarterly reports, the following factors could cause actual results to differ
materially from those expressed in the forward looking statements: (i)
greater than expected cost or lower than expected effectiveness of the
Company's brand support programs, (ii) difficulties or delays in new product
introductions in 1999; (iii) difficulties or delays in developing and
introducing technology-based innovative products or in continuing as the
industry-leader with innovative products; (iv) difficulties or delays in
realizing future growth from the Company's fundamental strengths and (v)
actions by competitors including business combinations, 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
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(dollars in millions, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
Net sales $ 553.4 $ 575.3 $ 994.5 $ 1,073.1
Cost of sales 184.9 194.0 340.6 357.3
Gross profit 368.5 381.3 653.9 715.8
Selling, general and
administrative expenses 324.6 329.8 597.5 635.6
Business consolidation costs
and other, net 9.5 -- 17.7 --
Operating income 34.4 51.5 38.7 80.2
Other expenses (income):
Interest expense 35.9 33.6 71.8 70.3
Interest income (0.4) (1.1) (1.5) (2.4)
Amortization of
debt issuance costs 1.2 1.2 2.5 2.8
Foreign currency
losses, net -- 1.3 -- 2.8
Miscellaneous, net (0.2) 1.4 0.3 3.2
Other expenses, net 36.5 36.4 73.1 76.7
(Loss) income from continuing
operations before
income taxes (2.1) 15.1 (34.4) 3.5
Provision for income taxes 1.8 3.4 3.7 7.1
(Loss) income from
continuing operations (3.9) 11.7 (38.1) (3.6)
Loss from discontinued
operations -- (26.9) -- (31.5)
Extraordinary items -
early extinguishments
of debt -- (13.5) -- (51.7)
Net loss $(3.9) $(28.7) $(38.1) $(86.8)
Basic (loss) income per common share:
(Loss) income from
continuing operations $(0.08) $0.23 $(0.74) $(0.07)
Loss from
discontinued operations -- (0.53) -- (0.62)
Extraordinary items -- (0.26) -- (1.01)
Net loss per
common share $(0.08) $(0.56) $(0.74) $(1.70)
Diluted (loss) income per common share:
(Loss) income from
continuing operations $(0.08) $0.22 $(0.74) $(0.07)
Loss from discontinued
operations -- (0.51) -- (0.62)
Extraordinary items -- (0.26) -- (1.01)
Net loss per
common share $(0.08) $(0.55) $(0.74) $(1.70)
Weighted average number of common shares outstanding:
Basic 51,237,829 51,218,076 51,237,303 51,199,226
Dilutive 51,237,829 52,596,798 51,237,303 51,199,226
SOURCE Revlon, Inc.
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Company News On-Call:
800-758-5804, ext. 110701
CONTACT:
Press Contact: Walter Montgomery,
212-527-5791; or Investor Relations Contact: Deena S. Fishman,
212-527-5230, both of Revlon, Inc.
