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| Revlon Reports Third Quarter Results |
Results in Line With Revised Expectations Previously Announced
NEW YORK, Oct. 28 /PRNewswire/ -- Revlon, Inc. (NYSE: REV) today announced
results for the third quarter and nine months ended September 30, 1998. These
results were in line with expectations previously announced.
Net sales were $548.6 million for the third quarter of 1998, compared to
$581.0 million for the third quarter of 1997. On a constant U.S. dollar
basis, sales declined 3.5% from the third quarter of 1997. Operating income
was $47.0 million, compared to $71.8 million in the 1997 third quarter.
Operating income includes non-recurring gains of $7.1 million and $1.0 million
in the third quarter 1998 and 1997, respectively. EBITDA was $71.6 million
compared to $95.9 million in last year's third quarter (including the
non-recurring gains for both periods). Income from continuing operations for
the third quarter of 1998 was $12.7 million compared to $34.6 million in the
third quarter of 1997. Basic income per share from continuing operations for
the 1998 third quarter was $.25, and diluted income per share from continuing
operations was $.24. Basic income per share from continuing operations for
the 1997 third quarter was $.68 and diluted income per share from continuing
operations was $.67. In connection with Revlon's previously announced exit
from retail operations, such operations are reported as discontinued.
"As we have previously discussed, a number of factors affected our
quarterly results," said George Fellows, President and CEO. "However, our
business fundamentals are strong and our outlook for the future continues to
be positive. We will address the challenges we face by pursuing the same
business strategy that fueled our success for the prior 19 quarters and
through restructuring efforts we have already announced, including the closing
of international plants, a reorganization of the Company's workforce
principally outside the U.S., and other actions designed to reduce costs. The
resulting efficiencies are intended to enhance the Company's competitive
position and provide estimated annualized benefits in the range of $25 million
to $30 million."
Fellows noted that the Revlon brand remains number one in dollar share in
U.S. mass color cosmetics, and Almay continues as the fastest-growing major
brand in that category. Launches of new products in the New Complexion,
MoistureStay and Almay lines contributed to sales in the third quarter, along
with expanded distribution of the Company's Ultima II line.
Fellows noted that the dollar share for the Company's portfolio in the
U.S. mass market for 1998 through September was 30.0%, compared to 28.3% in
the comparable period last year, according to AC Nielsen. Almay enjoyed
growth of 41%, and an 8% share year to date through September. Fellows also
noted that the Company's international distribution continued to expand in
1998.
Net Sales
In the U.S., net sales were $332.9 million for the third quarter of 1998,
compared with $346.5 million in the same period last year. Factors affecting
the U.S. business include a slowdown in the rate of growth in the mass market
color cosmetics category, a greater than expected seasonal flattening of share
and delays in some product introductions. At the same time, retailers,
particularly chain drugstores driven by recent consolidation, are pursuing
efficiencies by reducing inventory levels, which impacted the Company's sales.
As previously reported, the Company expects retail inventory balancing and
reductions to affect sales in the fourth quarter and in 1999.
International net sales were $215.7 million for the third quarter,
compared to $234.5 million in the third quarter of 1997 on an as reported
basis. On a constant U.S. dollar basis, sales declined 2.9% from the third
quarter of 1997. The aggregate effect of the weak international economic
environment impacted results by restraining consumer and trade demand outside
the U.S., particularly in South America and the Far East as well as Russia and
other developing economies. The Company's international performance also was
affected by the unfavorable effect of a strong U.S. dollar against most
foreign currencies. Positive results from operations in other areas were not
strong enough to outweigh these negatives.
Operating Income
Operating income for the 1998 third quarter was $47.0 million, compared to
$71.8 million for the same period last year. Income for the third quarter of
1998 includes a gain on the sale of a small non-core business of $7.1 million.
Income for the third quarter of 1997 included a non-recurring gain of
$1.0 million related to business consolidation. Advertising and
consumer-directed promotion as a percentage of sales was 18.5%, or
$101.4 million, in the third quarter of 1998 compared to 18.0%, or
$104.5 million, in the third quarter of 1997. Selling, general and
administrative expenses (other than advertising and consumer-directed
promotion expenses) as a percentage of sales was 40.3% in the third quarter of
1998, compared to 36.8% in the third quarter of 1997, reflecting the effects
of lower than expected sales relative to costs.
Income from Continuing Operations
Income from continuing operations was $12.7 million for the quarter,
compared to income from continuing operations of $34.6 million for the third
quarter of 1997. Basic income per share from continuing operations for the
1998 third quarter was $.25, and diluted income per share from continuing
operations was $.24, both compared to $.68 and $.67, on a basic and diluted
basis, respectively, in the third quarter of 1997. Loss from discontinued
operations was $1.5 million, or $.03 per share (on a basic and diluted basis),
in the 1997 third quarter.
Nine Months Results
Net sales for the first nine months of 1998 increased 1.4% to
$1.622 billion or 4.0% on a constant U.S. dollar basis. Operating income was
$120.1 million, compared to $144.4 million (before a non-recurring gain of
$7.1 million and a non-recurring charge of $4.4 million in the 1998 and 1997
periods, respectively). EBITDA was $196.8 million compared to $213.9 million
(before the non-recurring items in the 1998 and 1997 periods, respectively).
Income from continuing operations for the first nine months of 1998 was
$9.1 million, or $.17 per diluted share, compared to income from continuing
operations of $20.4 million, or $.40 per share for the first nine months of
1997. Loss from discontinued operations was $31.5 million for the nine months
of 1998, including a charge of $15.0 million recorded in the 1998 second
quarter in connection with the Company's previously announced exit from retail
operations. Loss from discontinued operations was $3.3 million for the nine
months of 1997. Extraordinary charges for early extinguishments of debt in
connection with the refinancing of indebtedness were $51.7 million and
$14.9 million for the nine months of 1998 and 1997, respectively.
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
website 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, Almay(R), Ultima II(R), Charlie(R), Flex(R) and Creme of
Nature(R) and are sold in approximately 175 countries and territories.
Forward-Looking Statements
Information in this press release which is not historical 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 effect on sales of retail inventory balancing and
reductions and the Company's estimate of restructuring activities and
benefits. In addition to the factors that are described in the Company's SEC
filings, including its quarterly reports on Form 10-Q and annual reports on
Form 10-K, the following factors could cause actual results to differ
materially from those expressed in the forward-looking statements: (i) lower
than expected sales as a result of a longer than expected duration of retail
inventory balancing and reductions; and (ii) difficulties, delays or
unanticipated costs or less than expected benefits resulting from the
restructuring. 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 Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
Net sales $ 548.6 $ 581.0 $ 1,621.7 $ 1,598.7
Cost of sales 186.1 191.7 543.4 533.3
Gross profit 362.5 389.3 1,078.3 1,065.4
Selling, general
and administrative
expenses 322.6 318.5 958.2 921.0
Business consolidation
costs and other, net (7.1) (1.0) (7.1) 4.4
Operating income 47.0 71.8 127.2 140.0
Other expenses (income):
Interest expense 33.0 33.0 103.3 99.2
Interest and net
investment income (1.4) (1.0) (3.8) (3.1)
Amortization of debt
issuance costs 1.1 1.5 3.9 5.3
Foreign currency
losses, net 1.9 2.4 4.7 5.2
Miscellaneous, net 0.4 1.1 3.6 3.8
Other expenses, net 35.0 37.0 111.7 110.4
Income from continuing
operations before
income taxes 12.0 34.8 15.5 29.6
(Benefit) provision for
income taxes (0.7) 0.2 6.4 9.2
Income from continuing
operations 12.7 34.6 9.1 20.4
Discontinued operations -- (1.5) (31.5) (3.3)
Extraordinary items --
early extinguishments
of debt -- -- (51.7) (14.9)
Net income (loss) $ 12.7 $ 33.1 $ (74.1) $ 2.2
Basic income (loss) per common share:
Income from
continuing
operations $ 0.25 $ 0.68 $ 0.18 $ 0.40
Loss from
discontinued
operations -- (0.03) (0.62) (0.07)
Extraordinary
items -- -- (1.01) (0.29)
Net income (loss)
per common
share $ 0.25 $ 0.65 $ (1.45) $ 0.04
Diluted income (loss) per common share:
Income from
continuing
operations $ 0.24 $ 0.67 $ 0.17 $ 0.40
Loss from
discontinued
operations -- (0.03) (0.60) (0.07)
Extraordinary
items -- -- (0.99) (0.29)
Net income (loss)
per common
share $ 0.24 $ 0.64 $ (1.42) $ 0.04
Weighted average common shares outstanding:
Basic 51,234,946 51,133,791 51,211,511 51,129,792
Dilutive 52,175,749 51,747,173 52,326,097 51,565,398
REVLON, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(dollars in millions)
September 30, December 31,
ASSETS 1998 1997
(Unaudited)
Current assets:
Cash and cash equivalents $ 35.6 $ 37.4
Trade receivables, net 479.1 492.5
Inventories 309.7 260.7
Prepaid expenses and other 96.3 94.4
Total current assets 920.7 885.0
Property, plant and equipment, net 369.3 364.0
Intangible and other assets, net 571.7 507.0
Total assets $ 1,861.7 $ 1,756.0
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
Short-term borrowings -
third parties $ 45.6 $ 42.7
Current portion of long-term
debt - third parties 205.2 5.5
Accounts payable, accrued
expenses and other 475.8 534.8
Total current liabilities 726.6 583.0
Long-term debt 1,468.1 1,419.7
Other long-term liabilities 209.7 211.8
Total stockholders' deficiency (542.7) (458.5)
Total liabilities and
stockholders' deficiency $ 1,861.7 $ 1,756.0
SOURCE Revlon, Inc.
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