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| Revlon Completes Review of Strategic Alternatives |
Professional Products Business and Non-Core Latin American Brands to be Sold
Company to Retain and Focus Resources on Core Franchises
Company Accelerates Program to Trim Retailer Inventories
Expects 1999 Financial Results Below Previous Estimate
NEW YORK, Oct. 1 /PRNewswire/ -- Revlon, Inc. (NYSE: REV) today announced
that, as a result of its review of strategic alternatives it has decided to
pursue the sale of its worldwide Professional Products business and its
non-core Latin American brands, conducted under the Colorama, Juvena, Bozzano,
and Plusbelle names. The Company said it is negotiating or in active
discussions with prospective purchasers and, subject to reaching agreement on
terms and documentation, anticipates consummating the sales by the end of the
first quarter of next year for gross proceeds in excess of $500 million.
Proceeds net of fees and transaction-related charges will be applied to reduce
borrowings. The Company said it has determined not to sell its remaining
cosmetics, personal care, fragrances and skin treatment businesses and will
concentrate on establishing the leadership of the Revlon portfolio of brands
in all of its key global markets.
At the same time, working with its customers, the Company has decided to
accelerate the reduction of U.S. retailers' warehouse inventory levels.
Instead of the originally planned gradual reduction, the Company plans to
achieve the accounts' new, lower inventory targets by reducing the level of
shipments through year end. During this process, the Company intends to
maintain its previously announced step up in second half spending, designed to
drive consumer purchasing and facilitate the inventory reduction process.
George Fellows, President and CEO, said, "For the past year, the issue of
retail inventory imbalances has kept the Company from realizing the full
benefit of the continuing consumer acceptance of Revlon products. In order to
allow the efficient introduction of new products into the marketplace, we
decided to work with our retail partners to put this issue behind us now by
foregoing planned sales of both new and established products amounting to
approximately $280 million for the third and fourth quarters of 1999 to reduce
inventories in accordance with our accounts' months' supply target levels."
These actions adversely affected third quarter results and will also
adversely impact the fourth quarter. Because of this, combined with lower
than expected volume and worsening economic conditions in key international
markets, the Company said it now expects a 1999 full year operating loss
before restructuring charges of between $70 million and $80 million versus
earlier forecasts. The Company now expects a third quarter 1999 net loss
before restructuring charges of approximately $3.10 to $3.20 per diluted
share, net sales of approximately $435 to $450 million, and operating loss
before restructuring charges of approximately $120 to $125 million. As a
result, the Company will not be in compliance with certain of the financial
covenants under its existing Credit Agreement. The Company has begun
discussions with its bank lenders and is confident of amending the Agreement
on satisfactory terms.
Fellows emphasized that the planned reduction in sales to retailers is not
expected to have any impact on Revlon's consumer market share, which has been
unaffected by the imbalances in trade inventory. According to A.C. Nielsen,
Revlon's U.S. color cosmetics portfolio dollar share for the most recent four
week period is 29.2%, as compared with 27.8% year to date, fueling a category
growth rate of 12.4% for the same period as compared to 8.5% year to date.
Mr. Fellows continued, "Our fundamentals are strong, consumer take-away is
growing, our share is up, and we are entering the fall season with terrific
new product launches. Now that the burden of inventory rebalancing is behind
us, we are looking ahead to strong performance in the year 2000."
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), Revlon
Age Defying(R), Almay(R), Ultima II(R), Charlie(R), Mitchum(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, (i) the
Company's intent to pursue the sale of its Professional Products business and
its regional Latin American businesses; (ii) the Company's expectation that it
will consummate such sales by the end of the first quarter of next year; (iii)
the Company's expectation regarding the proceeds of such sales; (iv) the
Company's intent to achieve retailers' inventory targets; (v) the Company's
intent to step up spending in the second half of 1999, designed to drive
consumer purchasing and grow market share; (vi) the Company's expectation of
third quarter net sales, operating loss and net loss per diluted share; (vii)
the Company's expectation as to 1999 full year operating loss; and (viii) the
Company's expectation that it will renegotiate certain covenants under its
Credit Agreement on satisfactory terms. 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) difficulties or
delays in pursuing the sale of the Company's Professional Products business or
its non-core Latin American brands; (ii) difficulties or delays or inability
to consummate such sales by the end of the first quarter of next year; (iii)
inability to secure the expected level of proceeds from such sales; (iv)
difficulties or delays in achieving retailers' inventory targets; (v) failure
to step up spending in the second half of 1999, failure to drive consumer
purchasing or to grow market share; (vi) lower than expected third quarter
results; (vii) lower than expected 1999 full year results; and (viii)
inability to renegotiate certain covenants under the Company's Credit
Agreement on satisfactory terms.
SOURCE Revlon
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CONTACT:
Investors, Deena Fishman of Revlon,
212-527-5230; Media, Walter Montgomery, 212-527-5791, for Revlon
