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| Revlon Reports Second Quarter Performance |
Sales and Income Decrease on Asset Sales, Destocking, Consolidations, and
Other Factors
Consumer Take Away Remains Strong at Retail
New Products, Cost Reductions, Realignments Confirm Turnaround Strategy
NEW YORK, Aug. 2 /PRNewswire/ -- Revlon, Inc. (NYSE: REV) announced today
its second quarter results for 2000.
In the second quarter of 2000 net sales were $350.6 million, operating
income was $17.2 million and net loss was $24.6 million, or $.48 per diluted
share, compared with the second quarter 1999 net sales of $553.4 million,
operating income of $34.4 million, and net loss of $3.9 million, or $.08 per
diluted share. In the U.S., net sales were $207.6 million for the second
quarter of 2000, compared with $347.3 million for the second quarter of 1999,
a decrease of 40.2%. For the second quarter of 2000, international net sales
were $143.0 million as compared with $206.1 million in the second quarter of
1999, a decrease of 30.6% on a reported basis, or 28.9% on a constant U.S.
dollar basis. The decline in consolidated net sales from a year ago is
primarily due to the sale of the worldwide professional products and Plusbelle
businesses, a reduction of overall U.S. customer inventories, and reduced
consumer demand for hair care products.
Selling, general and administrative expenses, other than consumer
advertising and promotion, were $130.7 million in the second quarter of 2000
compared with $229.3 million in the second quarter of 1999. The decrease
primarily reflects reduced trade promotion and couponing activity, the sale of
the worldwide professional products and Plusbelle businesses and the favorable
impact of the Company's restructuring efforts.
In the second quarter of 2000, operating income and EBITDA before business
consolidation costs of $5.1 million were $22.3 million and $49.9 million,
respectively. For the second quarter of 1999, operating income and EBITDA
before business consolidation costs of $9.5 million were $43.9 million and
$73.1 million, respectively.
Net loss before business consolidation costs and a $3.2 million loss on
the sale of the Plusbelle business in the second quarter 2000 was
$16.3 million, or $.32 per diluted share. Net income before business
consolidation costs in the second quarter 1999 was $5.6 million, or $.11 per
diluted share.
First Half Results
For the first half of 2000, net sales were $818.6 million, operating
income was $28.3 million and net loss was $52.5 million, or $1.02 per diluted
share. For the comparable period in 1999, net sales were $994.5 million,
operating income was $38.7 million, and net loss was $38.1 million, or
$.74 per diluted share.
Also in the first half of 2000, operating income and EBITDA before
business consolidation costs of $14.6 million were $42.9 million and
$101.1 million, respectively. Revlon reported that it met its bank covenant
requirements of a minimum of $90.0 million in EBITDA for the first half of
2000. In the first half of 1999, operating income and EBITDA before business
consolidation costs of $17.7 million were $56.4 million and $114.7 million,
respectively.
In the first half 2000, net loss before business consolidation costs and
the $3.0 million net gain on the sale of the worldwide professional products
and Plusbelle businesses was $40.9 million, or $.80 per diluted share. For
the first half of 1999, net loss before business consolidation costs was
$20.4 million, or $.40 per diluted share.
Consumer Take Away Remains Strong
Despite significantly decreased sales to retailers in the U.S., consumer
take away (dollar volume) of Revlon cosmetics in the first half of 2000 (as
measured by ACNielsen) in the U.S. mass cosmetic market remained approximately
the same compared with the first half of 1999 ($473.1 million in first half
2000 vs. $475.6 million in the first half 1999). The sustained consumer
take away of Revlon products during a period of significant competitive
activity and despite significantly reduced trade promotions and couponing
activity shows the continuing fundamental strength of the Revlon brands.
Comparison of Continuing Operations
The financial information below, for the 2000 and 1999 periods, is
provided to allow a comparison of results solely from continuing operations.
It excludes business consolidation costs, the net gain on the sale of the
worldwide professional products division and the net loss on the sale of the
Plusbelle business, and the operating results of the Company's worldwide
professional products line and the Plusbelle business, both of which were sold
in the first half of 2000.
Second Quarter
Net sales in the second quarter 2000 were $346.6 million versus
$447.0 million in the second quarter of 1999. Operating income was
$22.5 million in the second quarter of 2000 compared with $34.7 million in the
second quarter of 1999. EBITDA was $50.1 million in the second quarter of
2000 as compared with $60.8 million in the second quarter of 1999. Net loss
was $15.9 million in the second quarter of 2000, or $.31 per diluted share, as
compared with a net loss of $0.1 million.
In the U.S., net sales were $207.6 million for the second quarter of 2000
compared with $299.6 million in the second quarter of 1999. International net
sales were $139.0 million for the second quarter 2000 compared with
$147.4 million in the second quarter of 1999.
Selling, general and administrative expenses, other than consumer
advertising and promotion, were $129.4 million in the second quarter of 2000
compared with $182.2 million in the second quarter of 1999.
First Half
Net sales for the first half of 2000 were $722.3 million, compared with
$793.7 million in the first half of 1999. Operating income and EBITDA in the
first half of 2000 were $38.3 million and $93.6 million, respectively,
compared with $39.3 million and $91.5 million, respectively, in the first half
of 1999. Net loss was $39.4 million, or $.77 per diluted share in the first
half of 2000 as compared with a net loss of $29.1 million, or $.57 per diluted
share in the first half of 1999.
CEO Update on Turnaround
Jeffrey M. Nugent, President and CEO, commented, "Results for the second
quarter are in line with our strategy to (1) work with our retailers on
reducing and improving the mix of their overall trade inventories, (2) shift
the focus of our brand support towards consumer advertising and rational
consumer promotional activity, and (3) achieve market share levels that better
balance our objectives of long-term growth and profitability. We believe this
strategy will be effective in turning around the Company, and to establish a
base from which significant innovation and growth can proceed. We expect the
positive effects of the strategy will show in our future growth and cash flow
and heightened brand loyalty."
Mr. Nugent added, "We believe that this strategy helped keep the level of
Revlon cosmetics consumption in the U.S. this year even with last year and
considerably ahead of our net sales. This is a clear sign of the strength of
our brands.
"As we have said before, this is a transitional year as we work to restore
Revlon to financial and competitive health. We continue to focus on the three
initiatives cited at the end of the first quarter, and I believe our resolve
in following this course is beginning to have a positive effect."
Mr. Nugent reported progress in the three priority areas:
-- Establishing closer working partnerships with Revlon's top accounts
through communication and coordination globally;
-- Revitalizing Revlon's brands with a strong new product pipeline through
launches of innovative, new cosmetic, skin care and hair
care products; and
-- Increasing Revlon's competitive stance through rational cost
reductions, re-directed spending to fund brand building, and improved
operational efficiencies.
Mr. Nugent continued, "During the second quarter, we continued efforts to
forge stronger trade partnerships with our key accounts. The Company took
steps to make our in-store space more productive and increase consumer demand
by creating a more exciting environment at the point of sale. And, in
response to U.S. retailers' continuing reductions in inventory target levels,
we are working with our trade partners to better balance overall inventories."
He added, "We are laying the groundwork for stimulating top-line growth
for next year by revitalizing our brand franchises with new products, fresher
advertising and sharper brand positioning. We also made significant progress
in the second quarter toward our key skin care strategy by signing an
exclusive licensing agreement for the use of Kinetin in mass market skin care
and cosmetics, and a consulting agreement with noted dermatologist Dr. Pat
Wexler." Kinetin is an essential plant growth factor that retards senescence
of plants and was shown in laboratory testing to delay age-related changes in
cultured human skin cells.
The best selling new products for Revlon in the second quarter were Revlon
Age Defying All Day Lifting Foundation and Revlon ColorStay LipSHINE. Other
Revlon products that either grew significantly faster than the category, or
ranked in the top five products of the category, for the second quarter
included: Revlon ColorStay Lipstick, Liquid Lip, EveryLash Mascara and
Foundation, Revlon Super Lustrous Lipstick, Revlon Moisture Stay Lipstick,
Revlon Age Defying Foundation, Revlon New Complexion Foundation, Revlon Top
Speed Nail Color, Almay One Coat Mascara, Lipstick and Lip Creams, and Almay
Skin Stays Clean Foundation.
Revlon has a number of planned second half 2000 new product launches,
including Revlon ColorStay Extra Thick Lashes Mascara and Smooth-On Blush,
Almay Insider Mascara, Beyond Powder Eye Shadow and Beyond Powder Blush,
Ultima II Lashfinder Mascara, Fade Not Crease Not Shadow and Liner, and
Glowtion Skin Brightening Makeup. The fall 2000 color collection Revlon
Report features "go chili," with the tag-line "fired-up color with real bite."
Mr. Nugent continued, "We are very excited about our first half 2001
lineup of new products. We believe this group of fresh innovations represents
Revlon's strongest pipeline of new products in years."
Mr. Nugent said, "We continue our efforts to reduce costs and to make
Revlon as operationally efficient and competitive as possible. Departmental
overhead expenses have been reduced and we have taken management layers out of
our international structure. Our business in Japan is being restructured and
our international business is shifting from a regional focus to a key market
hub strategy. Throughout this ongoing process, our employees have been, and
will continue to be, integral in eliminating inefficiencies and containing
costs."
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 Revlon's
expectations and estimates about future events, including (i) the Company's
belief that its strategies will be effective in turning the Company around and
establishing a base from which innovation, cash flow, brand loyalty and growth
can proceed; (ii) the Company's strategy to establish close relationships with
its retail customers, revitalize its brands with a strong new product pipeline
and increase its competitive stance through redirected spending and improved
operating efficiencies and that this and other strategies will restore the
Company to financial and competitive health; (iii) the Company's belief that
stronger trade partnerships with key accounts will increase consumer demand
and that its strategies with trade partners will reduce and better balance
overall inventories; (iv) the Company's belief that new products, advertising
and positioning will stimulate top line growth next year; (v) the Company's
plan to introduce new products in the second half of 2000 and in 2001; and
(vi) the Company's intent to make Revlon as operationally effective and
competitive as possible, including the completion of various international
restructurings. 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 its form 10K for 1999 and 10Q for the
quarter ended March 31, 2000 and reasons including (i) difficulties, delays or
inability to implement its strategy to turn the Company around and establish a
base from which innovation, cash flow, brand loyalty and growth can proceed;
(ii) difficulties, delays or inability to implement its strategy to establish
close relationships with its retail customers, revitalize its brands with a
strong new product pipeline, increase its competitive stance through
redirected spending and increased operating efficiencies and to implement
strategies to restore the Company to financial and competitive health; (iii)
difficulties, delays or inability to implement its program with key accounts
to increase consumer demand and to implement its strategies to reduce and
better balance overall inventories with certain trade partners; (iv)
difficulties, delays or inability to stimulate top line growth through new
products, advertising and positioning; (v) difficulties, delays or inability
to introduce new products in the second half of 2000 and in 2001; and (vi)
difficulties, delays or inability to make Revlon as operationally effective
and competitive as possible or to complete various international
restructurings.
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 worldwide.
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,
2000 1999 2000 1999
Net sales $350.6 $553.4 $818.6 $994.5
Cost of sales 124.3 184.9 292.8 340.6
Gross profit 226.3 368.5 525.8 653.9
Selling, general and
administrative
expenses 204.0 324.6 482.9 597.5
Business consolidation
costs, net 5.1 9.5 14.6 17.7
Operating income 17.2 34.4 28.3 38.7
Other expenses (income):
Interest expense 33.9 35.9 73.3 71.8
Interest income (0.4) (0.4) (0.8) (1.5)
Amortization of debt
issuance costs 1.0 1.2 3.5 2.5
Foreign currency
losses, net 2.6 -- 2.1 --
Miscellaneous, net 0.4 (0.2) 0.9 0.3
Loss (gain) on sale of
product line and
brand, net 3.2 -- (3.0) --
Other expenses,
net 40.7 36.5 76.0 73.1
Loss before
income taxes (23.5) (2.1) (47.7) (34.4)
Provision for
income taxes 1.1 1.8 4.8 3.7
Net loss $(24.6) $(3.9) $(52.5) $(38.1)
Basic and diluted loss
per common share $(0.48) $(0.08) $(1.02) $(0.74)
Weighted average number
of common shares
outstanding:
Basic and
diluted 51,359,171 51,237,829 51,301,004 51,237,303
REVLON, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(dollars in millions)
June 30, December 31,
ASSETS 2000 1999
(Unaudited)
Current assets:
Cash and cash equivalents $38.1 $25.4
Trade receivables, net 227.6 332.6
Inventories 213.5 278.3
Prepaid expenses and other 42.5 51.3
Total current assets 521.7 687.6
Property, plant and equipment, net 267.5 336.4
Intangible and other assets, net 379.4 534.3
Total assets $1,168.6 $1,558.3
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
Short-term borrowings - third parties $36.5 $37.6
Current portion of long-term debt - third parties -- 10.2
Accounts payable, accrued expenses and other 394.8 549.5
Total current liabilities 431.3 597.3
Long-term debt 1,547.7 1,761.9
Other long-term liabilities 217.5 214.0
Total stockholders' deficiency (1,027.9) (1,014.9)
Total liabilities and
stockholders' deficiency $1,168.6 $1,558.3
SOURCE Revlon, Inc.
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CONTACT:
Press - Mary Ann Dunnell, 212-527-5791, or
Investor - Laura Kiernan, 212-527-5230, of Revlon, Inc.
