Company Quick10K Filing
Quick10K
Revlon
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$23.51 53 $1,250
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-Q 2014-03-31 Quarter: 2014-03-31
10-K 2013-12-31 Annual: 2013-12-31
8-K 2019-06-27 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2019-06-06 Shareholder Vote
8-K 2019-05-09 Earnings, Exhibits
8-K 2019-04-03 Officers
8-K 2019-03-18 Earnings, Exhibits
8-K 2019-02-12 Officers
8-K 2018-11-26 Officers
8-K 2018-11-13 Officers
8-K 2018-11-09 Earnings, Exhibits
8-K 2018-08-09 Earnings, Exhibits
8-K 2018-07-17 Officers, Officers
8-K 2018-07-09 Enter Agreement, Off-BS Arrangement
8-K 2018-06-18 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2018-06-07 Shareholder Vote
8-K 2018-05-22 Officers
8-K 2018-04-17 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2018-01-29 Earnings, Officers, Officers, Officers, Exhibits
KDP Keurig Dr Pepper 39,800
VIPS Vipshop Holdings 5,700
ARWR Arrowhead Pharmaceuticals 1,840
MCS Marcus 1,150
RGS Regis 737
AMOT Allied Motion Technologies 359
GSIT GSI Technology 174
SSOK Sunstock 0
MRIC MRI Interventions 0
ITOX Iiot-Oxys 0
REV 2019-03-31
Part I - Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 5. Other Information
Item 6. Exhibits
EX-31.1 rev-q1201910xqxex311.htm
EX-31.2 rev-q1201910xqxex312.htm
EX-32.1 rev-q1201910xqxex321.htm
EX-32.2 rev-q1201910xqxex322.htm

Revlon Earnings 2019-03-31

REV 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 revq1201910-q.htm 10-Q Document



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
FORM 10-Q
(Mark One)
 
[x]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
For the quarterly period ended March 31, 2019
 
 
OR
 
 
[ ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
For the transition period from__________________ to _______________
 
Commission File Number: 1-11178
REVLON, INC.
(Exact name of registrant as specified in its charter)
Delaware
13-3662955
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
 
 
One New York Plaza, New York, New York
10004
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code: 212-527-4000
Securities registered pursuant to Section 12(b) or 12(g) of the Act:
Title of each class
Name of each exchange on which registered
Class A Common Stock
New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ¨
 
 
 
Accelerated filer x
Non-accelerated filer ¨
 
Smaller reporting company x
 
 
 
 
Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x

As of March 31, 2019, 53,032,087 shares of Class A Common Stock were outstanding. At such date, 45,853,321 shares of Class A Common Stock were beneficially owned by MacAndrews & Forbes Incorporated and certain of its affiliates.











REVLON, INC. AND SUBSIDIARIES
INDEX

PART I - Financial Information
Item 1.
 
 
 
 
 
Item 2.
Item 3.
Item 4.
 
 
 
PART II - Other Information
Item 1.
Item 1A.
Item 5.
Item 6.
 
 
 
 
 



1

REVLON, INC. AND SUBSIDIARIES


PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

REVLON, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in millions, except share and per share amounts)
 
March 31, 2019
 
December 31, 2018
 
(Unaudited)
 
 
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
68.3

 
$
87.3

Trade receivables, less allowance for doubtful accounts of $16.1 and $15.6 as of March 31, 2019 and December 31, 2018, respectively
378.5

 
431.3

Inventories
546.7

 
523.2

Prepaid expenses and other assets
147.7

 
152.0

Total current assets
1,141.2

 
1,193.8

Property, plant and equipment, net of accumulated depreciation of $444.7 and $425.2 as of March 31, 2019 and December 31, 2018, respectively
444.7

 
354.5

Deferred income taxes
138.3

 
131.8

Goodwill
673.7

 
673.9

Intangible assets, net of accumulated amortization of $201.0 and $187.3 as of March 31, 2019 and December 31, 2018, respectively
515.8

 
532.0

Other assets
128.0

 
130.8

Total assets
$
3,041.7

 
$
3,016.8

 
 
 
 
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
 
 
 
Current liabilities:
 
 
 
Short-term borrowings
$
8.6

 
$
9.3

Current portion of long-term debt
389.7

 
348.1

Accounts payable
355.7

 
332.1

Accrued expenses and other current liabilities
377.9

 
430.9

Total current liabilities
1,131.9

 
1,120.4

Long-term debt
2,723.9

 
2,727.7

Long-term pension and other post-retirement plan liabilities
167.3

 
169.0

Other long-term liabilities
150.8

 
56.5

Stockholders’ deficiency:
 
 
 
Class A Common Stock, par value $0.01 per share: 900,000,000 shares authorized; 55,761,545 and 55,556,466 shares issued as of March 31, 2019 and December 31, 2018, respectively
0.5

 
0.5

Additional paid-in capital
1,064.2

 
1,063.8

Treasury stock, at cost: 1,624,719 and 1,533,320 shares of Class A Common Stock as of March 31, 2019 and December 31, 2018, respectively
(33.5
)
 
(31.9
)
Accumulated deficit
(1,930.1
)
 
(1,855.0
)
Accumulated other comprehensive loss
(233.3
)
 
(234.2
)
Total stockholders’ deficiency
(1,132.2
)
 
(1,056.8
)
Total liabilities and stockholders’ deficiency
$
3,041.7

 
$
3,016.8





See Accompanying Notes to Unaudited Consolidated Financial Statements





REVLON, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(dollars in millions, except share and per share amounts)
 
Three Months Ended March 31,
 
2019
 
2018
 
 
 
 
Net sales
$
553.2

 
$
560.7

Cost of sales
237.8

 
242.6

      Gross profit
315.4

 
318.1

Selling, general and administrative expenses
332.6

 
371.7

Acquisition and integration costs
0.6

 
4.0

Restructuring charges and other, net
5.5

 
4.1

      Operating loss
(23.3
)
 
(61.7
)
Other expenses:
 
 
 
   Interest expense
47.7

 
39.9

   Amortization of debt issuance costs
3.2

 
2.3

   Foreign currency losses (gains), net
0.2

 
(10.6
)
   Miscellaneous, net
1.3

 

      Other expenses
$
52.4

 
$
31.6

Loss from continuing operations before income taxes
(75.7
)
 
(93.3
)
Provision (benefit) from income taxes
0.1

 
(1.6
)
Loss from continuing operations, net of taxes
(75.8
)
 
(91.7
)
Income from discontinued operations, net of taxes
0.7

 
1.4

Net loss
$
(75.1
)
 
$
(90.3
)
Other comprehensive (loss) income:
 
 
 
   Foreign currency translation adjustments
(1.3
)
 
(2.5
)
   Amortization of pension related costs, net of tax(a)(b)
2.2

 
2.1

Reclassification into earnings of accumulated losses from the de-designated 2013 Interest Rate Swap, net of tax(c)

 
0.6

Other comprehensive income, net
0.9

 
0.2

Total comprehensive loss
$
(74.2
)
 
$
(90.1
)
 
 
 
 
Basic (loss) earnings per common share:
 
 
 
Continuing operations
$
(1.43
)
 
$
(1.74
)
Discontinued operations
0.01

 
0.03

Net loss
$
(1.42
)
 
$
(1.71
)
 
 
 
 
Diluted (loss) earnings per common share:
 
 
 
Continuing operations
$
(1.43
)
 
$
(1.74
)
Discontinued operations
0.01

 
0.03

Net loss
$
(1.42
)
 
$
(1.71
)
 
 
 
 
Weighted average number of common shares outstanding:
 
 
 
      Basic
52,913,388

 
52,673,672

      Diluted
52,913,388

 
52,673,672


(a) 
Net of tax expense of $0.3 million for each of the three months ended March 31, 2019 and 2018.
(b) 
This amount is included in the computation of net periodic benefit costs (income). See Note 11, "Pension and Post-Retirement Benefits," for additional information regarding net periodic benefit costs (income).
(c) Net of tax benefit of $0.2 million for the three months ended March 31, 2018.




See Accompanying Notes to Unaudited Consolidated Financial Statements

3


REVLON, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIENCY
(dollars in millions, except share and per share amounts)
 
Common Stock
 
Additional Paid-In Capital
 
Treasury Stock
 
Accumulated Deficit
 
Accumulated Other Comprehensive Loss
 
Total Stockholders’ Deficiency
 
 
 
 
 
 
 
 
 
 
 
 
Balance, January 1, 2019
$
0.5

 
$
1,063.8

 
$
(31.9
)
 
$
(1,855.0
)
 
$
(234.2
)
 
$
(1,056.8
)
Treasury stock acquired, at cost (a)

 

 
(1.6
)
 

 

 
(1.6
)
Stock-based compensation amortization

 
0.4

 

 

 

 
0.4

Net loss

 

 

 
(75.1
)
 

 
(75.1
)
Other comprehensive income, net (b)

 

 

 

 
0.9

 
0.9

Balance, March 31, 2019
$
0.5

 
$
1,064.2

 
$
(33.5
)
 
$
(1,930.1
)
 
$
(233.3
)
 
$
(1,132.2
)

 
Common Stock
 
Additional Paid-In Capital
 
Treasury Stock
 
Accumulated Deficit
 
Accumulated Other Comprehensive Loss
 
Total Stockholders’ Deficiency
 
 
 
 
 
 
 
 
 
 
 
 
Balance, January 1, 2018
$
0.5

 
$
1,040.0

 
$
(21.7
)
 
$
(1,560.8
)
 
$
(228.4
)
 
$
(770.4
)
Treasury stock acquired, at cost (a)

 

 
(2.9
)
 

 

 
(2.9
)
Stock-based compensation amortization

 
7.7

 

 

 

 
7.7

Net loss

 

 

 
(90.3
)
 

 
(90.3
)
Other comprehensive income, net (b)

 

 

 

 
0.2

 
0.2

Balance, March 31, 2018
$
0.5

 
$
1,047.7

 
$
(24.6
)
 
$
(1,651.1
)
 
$
(228.2
)
 
$
(855.7
)

(a)
Pursuant to the share withholding provisions of the Fourth Amended and Restated Revlon, Inc. Stock Plan (the "Stock Plan"), the Company withheld an aggregate of 85,607 and 136,583 shares of Revlon Class A Common Stock during the three months ended March 31, 2019 and 2018, respectively, to satisfy certain minimum statutory tax withholding requirements related to the vesting of restricted shares and restricted stock units for certain senior executives and employees. These withheld shares were recorded as treasury stock using the cost method, at a weighted-average price per share of $18.86 and $21.30 during the three months ended March 31, 2019 and 2018, respectively, based on the closing price of Revlon Class A Common Stock as reported on the New York Stock Exchange (the "NYSE") consolidated tape on each respective vesting date, for a total of $1.6 million and $2.9 million.

(b)
See Note 14, "Accumulated Other Comprehensive Loss," regarding the changes in the accumulated balances for each component of other comprehensive loss during the three months ended March 31, 2019.




See Accompanying Notes to Unaudited Consolidated Financial Statements


4


REVLON, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in millions)
 
Three Months Ended March 31,
 
2019
 
2018
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
Net loss
$
(75.1
)
 
$
(90.3
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
   Depreciation and amortization
47.0

 
38.7

   Foreign currency losses (gains) from re-measurement
0.2

 
(10.5
)
   Amortization of debt discount
0.4

 
0.3

   Stock-based compensation amortization
0.4

 
7.7

   Benefit from deferred income taxes
(5.6
)
 
(18.5
)
   Amortization of debt issuance costs
3.2

 
2.3

 Loss on sale of certain assets

 
0.1

   Pension and other post-retirement cost
2.0

 
0.6

   Change in assets and liabilities:
 
 
 
      Decrease in trade receivables
52.4

 
67.6

      Increase in inventories
(24.0
)
 
(14.6
)
      Decrease (increase) in prepaid expenses and other current assets
1.5

 
(46.3
)
      Increase in accounts payable
41.1

 
2.3

      Decrease in accrued expenses and other current liabilities
(66.7
)
 
(24.1
)
      Pension and other post-retirement plan contributions
(1.8
)
 
(1.8
)
      Purchases of permanent displays
(9.7
)
 
(14.2
)
      Other, net
6.3

 
3.4

Net cash used in operating activities
(28.4
)
 
(97.3
)
CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
Capital expenditures
(5.8
)
 
(13.7
)
Net cash used in investing activities
(5.8
)
 
(13.7
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Net (decrease) increase in short-term borrowings and overdraft
(17.2
)
 
1.0

Net borrowings under the Amended 2016 Revolving Credit Facility
40.6

 
83.8

Repayments under the 2016 Term Loan Facility
(4.5
)
 
(4.5
)
Payment of financing costs
(0.9
)
 

Tax withholdings related to net share settlements of restricted stock units and awards
(1.6
)
 
(2.9
)
Other financing activities
(0.2
)
 
(0.2
)
Net cash provided by financing activities
16.2

 
77.2

Effect of exchange rate changes on cash, cash equivalents and restricted cash
0.3

 
2.9

   Net decrease in cash, cash equivalents and restricted cash
(17.7
)
 
(30.9
)
   Cash, cash equivalents and restricted cash at beginning of period (a)
87.5

 
87.4

   Cash, cash equivalents and restricted cash at end of period (a)
$
69.8

 
$
56.5

Supplemental schedule of cash flow information:(b)
 
 
 
   Cash paid during the period for:
 
 
 
Interest
$
61.3

 
$
53.6

Income taxes, net of refunds
0.4

 
2.6


(a) These amounts include restricted cash of $1.5 million and $0.8 million as of March 31, 2019 and 2018, respectively, which represent cash on deposit in lieu of a mandatory prepayment under the 2018 Foreign Asset-Based Term Facility, and cash on deposit to support outstanding undrawn letters of credit, and were included within other assets in the Company's consolidated balance sheets.
(b) See Note 5, "Leases," for supplemental disclosure of non-cash financing and investing activities in relation with the lease liabilities arising from obtaining right-of-use assets following the implementation of ASC Topic 842.



See Accompanying Notes to Unaudited Consolidated Financial Statements

5

REVLON, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)


1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Revlon, Inc. ("Revlon" and together with its subsidiaries, the "Company") conducts its business exclusively through its direct wholly-owned operating subsidiary, Revlon Consumer Products Corporation ("Products Corporation") and its subsidiaries. Revlon is an indirect majority-owned subsidiary of MacAndrews & Forbes Incorporated (together with certain of its affiliates other than the Company, "MacAndrews & Forbes"), a corporation beneficially owned by Ronald O. Perelman. Mr. Perelman is Chairman of Revlon's and Products Corporation's Board of Directors.
The Company is a leading global beauty company with an iconic portfolio of brands that develops, manufactures, markets, distributes and sells an extensive array of color cosmetics; hair color, hair care and hair treatments; fragrances; skin care; beauty tools; men’s grooming products; anti-perspirant deodorants; and other beauty care products across a variety of distribution channels.
The Company operates in four reporting segments: Revlon; Elizabeth Arden; Portfolio; and Fragrances.
The accompanying Consolidated Financial Statements are unaudited. In management's opinion, all adjustments necessary for a fair presentation of the Company's financial information have been made. The Unaudited Consolidated Financial Statements include the Company's accounts after the elimination of all material intercompany balances and transactions.
The preparation of the Company's Unaudited Consolidated Financial Statements in conformity with U.S. generally accepted accounting principles ("U.S. GAAP") requires management to make estimates and assumptions that affect amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the financial statements and reported amounts of revenues and expenses during the periods presented. Actual results could differ from these estimates. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the Unaudited Consolidated Financial Statements in the period they are determined to be necessary. Significant estimates made in the accompanying Unaudited Consolidated Financial Statements include, but are not limited to: allowances for doubtful accounts; inventory valuation reserves; expected sales returns and allowances; trade support costs; certain assumptions related to the valuation of acquired intangible and long-lived assets and the recoverability of goodwill, intangible and long-lived assets; income taxes, including deferred tax valuation allowances and reserves for estimated tax liabilities; restructuring costs; and certain estimates and assumptions used in the calculation of the net periodic benefit (income) costs and the projected benefit obligations for the Company’s pension and other post-retirement plans, including the expected long-term return on pension plan assets and the discount rate used to value the Company’s pension benefit obligations. The Unaudited Consolidated Financial Statements should be read in conjunction with the audited consolidated financial statements and related notes contained in Revlon's Annual Report on Form 10-K for the fiscal year ended December 31, 2018 (the "2018 Form 10-K").

The Company's results of operations and financial position for interim periods are not necessarily indicative of those to be expected for the full year.

Recently Adopted Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)" ("ASU 2016-02" or "ASC 842"), which requires lessees to recognize a right-of-use asset and a related lease liability on the balance sheet for all leases, with the exception of short-term leases. The lease liability will be equal to the present value of lease payments and the right-of-use asset will be based on the lease liability, subject to certain adjustments, such as initial direct costs. Leases will continue to be classified as either operating or finance leases in the income statement. This guidance is effective for annual periods beginning after December 15, 2018, with early adoption permitted. The Company adopted ASU No. 2016-02 beginning as of January 1, 2019, using a modified retrospective approach and applying the standard’s transition provisions at the effective date of January 1, 2019. In addition, the Company elected to apply the package of practical expedients identified under Topic 842. See Note 5, "Leases," for additional disclosures provided as a result of this ASU.

In February 2018, the FASB issued ASU No. 2018-02, "Income Statement - Reporting Comprehensive Income (Topic 220) - Reclassification of Certain Tax Effects from Accumulated Other Comprehensive income," which gives entities the option to reclassify tax effects stranded in accumulated other comprehensive income as a result of the Tax Cuts and Jobs Act of 2017 (the "Tax Act") to retained earnings. The guidance was effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Entities are required to make additional disclosures, regardless of whether they elect to reclassify stranded amounts of tax effects. The Company has elected not to adopt this amendment and will include required financial statement disclosures, as applicable. No impact is expected to the Company’s results of operations and/or financial condition.


6

REVLON, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

Recently Issued Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," which was subsequently amended in November 2018 through ASU No. 2018-19, "Codification Improvements to Topic 326, Financial Instruments - Credit Losses." ASU No. 2016-13 will require entities to estimate lifetime expected credit losses for trade and other receivables, net investments in leases, financing receivables, debt securities and other instruments, which will result in earlier recognition of credit losses. Further, the new credit loss model will affect how entities in all industries estimate their allowance for losses for receivables that are current with respect to their payment terms. ASU No. 2018-19 further clarifies that receivables arising from operating leases are not within the scope of Subtopic 326. Instead, impairment from receivables of operating leases should be accounted for in accordance with Topic 842, Leases. The new guidance on credit losses is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company expects to adopt ASU No. 2016-03, and the related ASU No. 2018-19 amendments, beginning as of January 1, 2020 and is in the process of assessing the impact that this new guidance is expected to have on the Company’s results of operations, financial condition and/or financial statement disclosures.

In August 2018, the FASB issued ASU No. 2018-15, "Internal Use Software (Subtopic 350-40) - Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract," which requires a customer in a cloud computing hosting arrangement that is a service contract to follow the existing guidance in ASC 350-40 on internal-use software to determine which implementation costs are to be deferred and recognized as an asset and which costs are to be expensed as incurred. The new guidance: (i) specifies the financial statement presentation of capitalized implementation costs and the related amortization; (ii) will require entities to disclose the nature of hosting arrangements that are service contracts and the amount of implementation costs capitalized, amortized and impaired in each reporting period; and (iii) provides disclosures about significant judgments made when applying the guidance. Implementation costs that are recognized as an asset under the new guidance would be expensed over the term of the hosting arrangement. The term of the hosting arrangement would be the non-cancellable period of the arrangement and certain periods covered by options to renew the arrangement. The Company currently presents the cost of acquired software as a component of property, plant and equipment in its consolidated financial statements. This guidance is effective for annual periods beginning after December 15, 2019, with early adoption permitted. The Company will adopt ASU No. 2018-15 beginning as of January 1, 2020 and is in the process of assessing the impact, if any, that ASU No. 2018-15 is expected to have on the Company’s results of operations, financial condition and/or financial statement disclosures.


2. RESTRUCTURING CHARGES

2018 Optimization Restructuring Program

On November 9, 2018, the Company announced that it was implementing the 2018 Optimization Restructuring Program (the "2018 Optimization Program") designed to streamline the Company’s operations, reporting structures and business processes, with the objective of maximizing productivity and improving profitability, cash flows and liquidity. In connection with implementing the 2018 Optimization Program, the Company expects to recognize approximately $30 million to $40 million of total pre-tax restructuring and related charges, consisting of employee-related costs, such as severance, pension and other termination costs, as well as other related charges. The Company also expects to incur approximately $10 million of additional capital expenditures. The Company expects the 2018 Optimization Program to be substantially completed by December 31, 2019.

A summary of the 2018 Optimization Restructuring Charges incurred through March 31, 2019 is presented in the following table:
 
Restructuring Charges and Other, Net
 
 
 
 
 
Employee Severance and Other Personnel Benefits
 
Other Costs
 
Total Restructuring Charges
 
Other Related Charges(a)
 
Total Restructuring and Related Charges
Charges incurred through December 31, 2018
$
4.5

 
$

 
$
4.5

 
$
1.2

 
$
5.7

Charges incurred during the three months ended March 31, 2019
5.1

 

 
5.1

 
6.6

 
11.7

Cumulative charges incurred through March 31, 2019
$
9.6

 
$

 
$
9.6

 
$
7.8

 
$
17.4

(a) Other related charges are recorded within SG&A in the Company’s Consolidated Statement of Operations and Comprehensive Loss.

7

REVLON, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

A summary of the 2018 Optimization Restructuring Charges incurred through March 31, 2019 by reportable segment is presented in the following table:
 
 
Charges incurred during the three months ended March 31, 2019
 
Cumulative charges incurred through March 31, 2019
Revlon
 
$
2.8

 
$
4.7

Elizabeth Arden
 
0.9

 
1.8

Portfolio
 
0.7

 
1.7

Fragrances
 
0.7

 
1.4

     Total
 
$
5.1

 
$
9.6


The Company expects that approximately 85% of the restructuring charges will be paid in cash, of which approximately $3.8 million were paid through March 31, 2019, with $22 million to $30 million expected to be paid in 2019, with any remaining balance to be paid in 2020.

EA Integration Restructuring Program

In December 2016, in connection with integrating the Elizabeth Arden and Revlon organizations, the Company began the process of implementing certain integration activities, including consolidating offices, eliminating certain duplicative activities and streamlining back-office support (the "EA Integration Restructuring Program"). The EA Integration Restructuring Program is designed to reduce the Company’s cost of goods sold and SG&A expenses. The EA Integration Restructuring Program was substantially completed by December 31, 2018 and the Company expects to incur limited further charges under this program, primarily related to its exit from certain leased spaces. In connection with implementing the EA Integration Restructuring Program, the Company recognized $82.2 million of total pre-tax restructuring charges (the "EA Integration Restructuring Charges"), consisting of: (i) $72.2 million of employee-related costs, including severance, retention and other contractual termination benefits; (ii) $5.1 million of lease termination costs; and (iii) $4.9 million of other related charges. The Company expects that cash payments will total $80 million to $85 million in connection with the EA Integration Restructuring Charges, of which $67.0 million were paid through March 31, 2019. The remaining balance is expected to be substantially paid by the end of 2020.
No charges were incurred during the three months ended March 31, 2019 in relation to the EA Integration Restructuring Program. A summary of the EA Integration Restructuring Charges incurred through March 31, 2019 is presented in the following table:
 
Restructuring Charges and Other, Net
 
 
 
 
 
 
 
Employee Severance and Other Personnel Benefits
 
Lease Termination and Other Costs(a)
 
Total Restructuring Charges
 
Inventory Adjustments(b)
 
Other Related Charges(c)
 
Total Restructuring and Related Charges
Cumulative charges incurred through March 31, 2019
$
72.2

 
$
5.1

 
$
77.3

 
$
1.9

 
$
3.0

 
$
82.2

(a) Lease termination liabilities related to certain exited office space were adjusted following the implementation of ASC 842. See Note 5, "Leases," for additional information.
(b) Inventory adjustments are recorded within cost of sales in the Company’s Consolidated Statement of Operations and Comprehensive Loss.
(c) Other related charges are recorded within SG&A in the Company’s Consolidated Statement of Operations and Comprehensive Loss.
A summary of the EA Integration Restructuring Charges incurred through March 31, 2019 by reportable segment is presented in the following table:
 
 
Cumulative charges incurred through March 31, 2019
Revlon
 
$
32.9

Elizabeth Arden
 
13.3

Portfolio
 
13.1

Fragrances
 
18.0

     Total
 
$
77.3



8

REVLON, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

Restructuring Reserve

The liability balance and related activity for each of the Company's restructuring programs are presented in the following table:
 
 
 
 
 
 
 
Utilized, Net
 
 
Liability
Balance at January 1, 2019
 
Expense, Net
 
Foreign Currency Translation
 

Cash
 

Non-cash
 
Liability Balance at March 31, 2019
2018 Optimization Program:(a)
 
 
 
 
 
 
 
 
 
 
 
Employee severance and other personnel benefits
$
3.7

 
$
5.1

 
$

 
$
(1.8
)
 
$

 
$
7.0

Other
1.2

 
6.6

 

 
(1.2
)
 

 
6.6

Total 2018 Optimization Program
4.9

 
11.7

 

 
(3.0
)
 

 
13.6

 
 
 
 
 
 
 
 
 
 
 
 
EA Integration Restructuring Program:(b)
 
 
 
 
 
 
 
 
 
 
 
Employee severance and other personnel benefits
13.8

 

 
(0.2
)
 
(3.0
)
 

 
10.6

Other
4.2

 

 

 
(0.1
)
 
(3.5
)
 
0.6

Total EA Integration Restructuring Program
18.0

 

 
(0.2
)
 
(3.1
)
 
(3.5
)
 
11.2

 

 
 
 
 
 
 
 
 
 

Other individually immaterial actions:(c)

 
 
 
 
 
 
 
 
 
 
Employee severance and other personnel benefits
4.6

 
0.2

 

 
(1.1
)
 

 
3.7

Other
0.8

 
0.2

 

 
(0.5
)
 

 
0.5

Total other individually immaterial actions
5.4

 
0.4

 

 
(1.6
)
 

 
4.2

Total restructuring reserve
$
28.3

 
$
12.1

 
$
(0.2
)
 
$
(7.7
)
 
$
(3.5
)
 
$
29.0


(a) Includes approximately $6.6 million related to other restructuring-related charges that were reflected within SG&A in the Company’s March 31, 2019 Consolidated Statement of Operations and Comprehensive Loss.
(b) Other includes approximately $3.5 million of lease termination liabilities related to certain exited office space that were adjusted following the implementation of ASC 842. See Note 5, "Leases," for additional information.
(c) Consists primarily of other immaterial restructuring initiatives in Denmark, Norway and Sweden.

As of March 31, 2019 and 2018, all of the restructuring reserve balances were included within accrued expenses and other current liabilities in the Company's Consolidated Balance Sheets.



9

REVLON, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

3. DISCONTINUED OPERATIONS

In December 2013, the Company announced restructuring actions that primarily included exiting its direct manufacturing, warehousing and sales business operations in mainland China within the Revlon segment (the "December 2013 Program"). The December 2013 Program resulted in the elimination of approximately 1,100 positions in 2014, primarily in China. With the implementation of the December 2013 Program, the results of the China discontinued operations, which relate entirely to the Revlon segment, are included within income from discontinued operations, net of taxes. The summary comparative financial results of discontinued operations were as follows for the periods presented:
 
 
Three Months Ended March 31,
 
 
2019
 
2018
Net sales
 
$

 
$

Income from discontinued operations, before taxes
 
0.7

 
1.4

Provision for income taxes
 

 

Income from discontinued operations, net of taxes
 
0.7

 
1.4


As of March 31, 2019 and December 31, 2018, assets and liabilities of the China discontinued operations included in the Consolidated Balance Sheets consisted of the following:
 
March 31,
 
December 31,
 
2019
 
2018
Cash and cash equivalents
$
1.1

 
$
1.1

Trade receivables, net

 
0.2

Total current assets
1.1

 
1.3

Total assets
$
1.1

 
$
1.3

 
 
 
 
Accounts payable
$

 
$
0.5

Accrued expenses and other
3.1

 
3.3

Total current liabilities
3.1

 
3.8

Total liabilities
$
3.1

 
$
3.8



4. INVENTORIES

As of March 31, 2019 and December 31, 2018, the Company's inventory balances consisted of the following:
 
March 31,
 
December 31,
 
2019
 
2018
Raw materials and supplies
$
137.9

 
$
143.5

Work-in-process
6.8

 
5.6

Finished goods
402.0

 
374.1

 
$
546.7

 
$
523.2




10

REVLON, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

5. LEASES

Products Corporation leases facilities for executive offices, warehousing, research and development and sales operations and leases various types of equipment under operating and finance lease agreements. The majority of Products Corporation’s real estate leases are located in the U.S.
As disclosed in Note 1, in February 2016, the FASB issued ASU No. 2016-02, which requires that a lessee recognize, for both finance leases and operating leases, a liability to make lease payments (the lease liability) and a right-of-use (“ROU”) asset representing its right to use the underlying leased asset for the lease term. The lease liability is equal to the present value of the lease payments and the ROU asset is based on the lease liability, subject to certain adjustments, such as pre-payments, initial direct costs, lease incentives and accrued rent.
The Company adopted ASU No. 2016-02 beginning as of January 1, 2019, using a modified retrospective approach and applying the standard’s transition provisions at the effective date of January 1, 2019. The comparative information has not been restated and continues to be reported under the lease accounting standard in effect for those periods. The standard had a material impact on the Company’s unaudited consolidated balance sheets but did not have an impact on the Company’s unaudited statements of operations and comprehensive loss and cash flows.
As of January 1, 2019, the Company's adoption of ASU No. 2016-02 resulted in:
the recognition of ROU assets for operating leases and finance leases of approximately $109.3 million and $1.5 million, respectively;
the recognition of lease liabilities for operating leases and finance leases of approximately $123.4 million and $1.4 million, respectively; and
a decrease of approximately $11.3 million in accrued rent (of which $10.7 million was recorded in other long-term liabilities and $0.6 million was recorded in accrued expenses and other current liabilities), a decrease of approximately $3.5 million in lease termination liabilities and a decrease of approximately $0.7 million in prepaid rent, due to adjustments to balances previously recorded on the unaudited condensed consolidated balance sheets upon transition from the legacy ASC 840, "Leases," to ASC 842.

Upon adoption of ASU No. 2016-02, the Company elected the available practical expedients allowed by the guidance under:
ASC 842-10-15-37, by not separating lease components from non-lease components and instead accounting for all components as a single lease component for all of its classes of underlying assets, i.e., for any type of equipment leases and real estate leases; and
ASC 842-10-65-1, by not reassessing at the transition date: (i) whether any expired or existing contracts are or contain leases, (ii) lease classification for any expired or existing leases, and (iii) initial direct costs for any existing leases.

The Company determines if an arrangement is a lease at inception, considering whether the contract conveys a right to control the use of the identified asset for a period of time in exchange for consideration. Operating leases are included in operating lease ROU assets, recorded within “Property, Plant and Equipment”, and operating lease liabilities, recorded within either "Accrued expenses and other current liabilities" and/or "Other long-term liabilities" in the Company’s unaudited consolidated balance sheets. Finance leases are included in finance lease ROU assets recorded within “Property, Plant and Equipment”, and finance lease liabilities, recorded within either "Accrued expenses and other current liabilities" and/or "Other long-term liabilities" in the Company’s unaudited consolidated balance sheets.
As most of the Company’s leases do not provide the lease implicit rates, the Company uses its incremental borrowing rates as the discount rate, adjusted as applicable, based on the information available at the lease commencement dates to determine the present value of lease payments. The Company may use the lease implicit rate, when readily determinable, as the discount rate to determine the present value of lease payments. As of January 1, 2019, the Company used an average discount rate of approximately 16%, based on an estimate of the Company's incremental borrowing rates.
Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for operating lease payments is recognized on a straight-line basis over the applicable lease term.
At lease commencement, for initial measurement, variable lease payments that do not depend on an index or rate, if any, are excluded from lease payments. Subsequent to initial measurement, these variable payments are recognized when the event determining the amount of the variable consideration to be paid occurs. Leases with an initial lease term of 12 months or less are not included in the lease liability or ROU asset.

11

REVLON, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

The following table includes disclosure related to the new lease standard:
 
 
Three Months Ended
 
 
March 31, 2019
Lease Cost:
 
 
Finance Lease Cost:
 
 
    Amortization of ROU assets
 
$
0.0

    Interest on lease liabilities
 
0.0

Operating Lease Cost
 
10.6

Total Lease Cost
 
10.6

 
 
 
Other Information:
 
 
Cash paid for amounts included in the measurement of lease liabilities:
 
 
    Operating cash flows from finance leases
 
0.0

    Operating cash flows from operating leases
 
11.0

    Financing cash flows from finance leases
 
0.2

 
 
 
ROU assets for finance leases
 
$
1.5

ROU assets for operating leases
 
103.4

Amortization on ROU assets for finance leases
 
0.0

Amortization on ROU assets for operating leases
 
5.9

 
 
 
Weighted-average remaining lease term - finance leases
 
2.3 years

Weighted-average remaining lease term - operating leases
 
6.4 years

 
 
 
Weighted-average discount rate - finance leases
 
6.1
%
Weighted-average discount rate - operating leases
 
15.5
%

Maturities of lease liabilities as of March 31, 2019 were as follows:
 
Operating Leases
 
Finance Leases
April 2019 through December 2019
$
29.6

 
$
0.6

2020
33.6

 
0.4

2021
30.0

 
0.2

2022
23.2

 
0.1

2023
19.0

 

Thereafter
60.6

 

Total undiscounted cash flows
$
196.0

 
$
1.3

 
 
 
 
Present value:


 


Short-term lease liability
$
16.9

 
$
0.7

Long-term lease liability
98.0

 
0.5

Total lease liability
$
114.9

 
$
1.2

Difference between undiscounted cash flows and discounted cash flows
$
81.1

 
$
0.1




12

REVLON, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

6. GOODWILL AND INTANGIBLE ASSETS, NET

Goodwill

The following table presents the changes in goodwill by segment during the three months ended March 31, 2019:
 
Revlon
 
Portfolio
 
Elizabeth Arden
 
Fragrances
 
Total
Balance at January 1, 2019
$
265.0

 
$
171.2

 
$
116.9

 
$
120.8

 
$
673.9

Foreign currency translation adjustment
(0.1
)
 
(0.1
)
 

 

 
(0.2
)
Balance at March 31, 2019
$
264.9

 
$
171.1

 
$
116.9

 
$
120.8

 
$
673.7

 
 
 
 
 
 
 
 
 
 
Cumulative goodwill impairment charges(a)


 


 


 


 
$
(55.2
)
(a) Amount refers to cumulative goodwill impairment charges related to impairments recognized in 2015, 2017 and 2018; no impairment charges were recognized during the three months ended March 31, 2019.

Intangible Assets, Net

The following tables present details of the Company's total intangible assets as of March 31, 2019 and December 31, 2018:
 
March 31, 2019
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
Weighted-Average Useful Life (in Years)
Finite-lived intangible assets:
 
 
 
 
 
 
 
Trademarks and licenses
$
271.7

 
$
(98.7
)
 
$
173.0

 
13
Customer relationships
248.1

 
(86.3
)
 
161.8

 
12
Patents and internally-developed intellectual property
20.9

 
(10.5
)
 
10.4

 
6
Distribution rights
31.0

 
(4.4
)
 
26.6

 
15
Other
1.3

 
(1.1
)
 
0.2

 
1
Total finite-lived intangible assets
$
573.0

 
$
(201.0
)
 
$
372.0

 
 
 
 
 
 
 
 
 
 
Indefinite-lived intangible assets:
 
 
 
 
 
 
 
Trade names
$
143.8

 
N/A

 
$
143.8

 
 
Total indefinite-lived intangible assets
$
143.8

 
N/A

 
$
143.8

 
 
 
 
 
 
 
 
 
 
Total intangible assets
$
716.8

 
$
(201.0
)
 
$
515.8

 
 
 
 
 
 
 
 
 
 
 
December 31, 2018
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
Weighted-Average Useful Life (in Years)
Finite-lived intangible assets:
 
 
 
 
 
 
 
Trademarks and licenses
$
272.3

 
$
(94.3
)
 
$
178.0

 
13
Customer relationships
248.6

 
(77.9
)
 
170.7

 
12
Patents and internally-developed intellectual property
20.9

 
(10.1
)
 
10.8

 
6
Distribution rights
31.0

 
(4.0
)
 
27.0

 
16
Other
1.3

 
(1.0
)
 
0.3

 
1
Total finite-lived intangible assets
$
574.1

 
$
(187.3
)
 
$
386.8

 
 
 
 
 
 
 
 
 
 
Indefinite-lived intangible assets:
 
 
 
 
 
 
 
Trade names
$
145.2

 
N/A

 
$
145.2

 
 
Total indefinite-lived intangible assets
$
145.2

 
N/A

 
$
145.2

 
 
 
 
 
 
 
 
 
 
Total intangible assets
$
719.3

 
$
(187.3
)
 
$
532.0

 
 


13

REVLON, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

Amortization expense for finite-lived intangible assets was $14.8 million and $10.0 million for the three months ended March 31, 2019 and 2018, respectively, with the increase primarily attributable to the accelerated amortization of the Pure Ice intangible assets as a result of the revision of the brand’s intangible assets useful lives following the termination of a business relationship with its principal customer in 2018.

The following table reflects the estimated future amortization expense for each period presented, a portion of which is subject to exchange rate fluctuations, for the Company's finite-lived intangible assets as of March 31, 2019:
 
Estimated Amortization Expense
2019
$
26.3

2020
34.1

2021
33.2

2022
32.3

2023
30.7

Thereafter
215.4

Total
$
372.0



7. ACCRUED EXPENSES AND OTHER

As of March 31, 2019 and December 31, 2018, the Company's accrued expenses and other current liabilities consisted of the following:
 
March 31,
 
December 31,
 
2019
 
2018
Sales returns and allowances
$
85.8

 
$
97.7

Advertising and promotional costs
63.6

 
76.2

Compensation and related benefits
40.1

 
55.9

Taxes
23.5

 
30.9

Restructuring reserve
21.7

 
26.4

Interest
19.7

 
33.8

Other
123.5

 
110.0

Total
$
377.9

 
$
430.9




14

REVLON, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

8. LONG-TERM DEBT

As of March 31, 2019 and December 31, 2018, the Company's debt balances consisted of the following:
 
March 31,
 
December 31,
 
2019
 
2018
2018 Foreign Asset-Based Term Facility due 2021, net of discounts and debt issuance costs (a)
$
81.0

 
$
82.7

Amended 2016 Revolving Credit Facility due 2021, net of debt issuance costs (b)
371.6

 
330.0

2016 Term Loan Facility: 2016 Term Loan due 2023, net of discounts and debt issuance costs (c)
1,721.8

 
1,724.6

5.75% Senior Notes due 2021, net of debt issuance costs (d) 
497.0

 
496.6

6.25% Senior Notes due 2024, net of debt issuance costs (e)
441.8

 
441.4

Spanish Government Loan due 2025
0.4

 
0.5

 
$
3,113.6

 
$
3,075.8

Less current portion(*)
(389.7
)
 
(348.1
)
 
$
2,723.9

 
$
2,727.7

 
 
 
 
Short-term borrowings
$
8.6

 
$
9.3

(*) At March 31, 2019, the Company classified $389.7 million as its current portion of long-term debt, comprised primarily of $371.6 million of net borrowings under the Amended 2016 Revolving Credit Facility, net of debt issuance costs, and $18 million of amortization payments on the 2016 Term Loan Facility scheduled to be paid over the next four calendar quarters. At December 31, 2018, the Company classified $348.1 million as its current portion of long-term debt, comprised primarily of $330 million of net borrowings under the Amended 2016 Revolving Credit Facility, net of debt issuance costs, and $18 million of amortization payments on the 2016 Term Loan Facility.
(a) See Note 10, "Long-Term Debt," to the Consolidated Financial Statements in Revlon's 2018 Form 10-K for certain details regarding the euro-denominated senior secured asset-based term loan facility in an aggregate principal amount of €77 million that various foreign subsidiaries of Products Corporation entered into in July 2018 (the “2018 Foreign Asset-Based Term Facility”).
(b) See Note 10, "Long-Term Debt," to the Consolidated Financial Statements in Revlon's 2018 Form 10-K for certain details regarding Products Corporation's Amended 2016 Revolving Credit Facility. In April 2018, Products Corporation amended the Amended 2016 Revolving Credit Facility agreement, as detailed below, to, among other things, add a new $41.5 million senior secured first in, last out "Tranche B," while the original $400 million tranche under such facility became a senior secured last in, first out "Tranche A." Tranche A matures on the earlier of: (x) September 7, 2021; and (y) the 91st day prior to the maturity of Products Corporation’s 5.75% Senior Notes if, on that date (and solely for so long as), (i) any of Products Corporation’s 5.75% Senior Notes remain outstanding and (ii) Products Corporation’s available liquidity does not exceed the aggregate principal amount of the then outstanding 5.75% Senior Notes by at least $200 million. Tranche B matures on April 17, 2020. Total borrowings at face amount under Tranche A and Tranche B under the Amended 2016 Revolving Credit Facility at March 31, 2019 were $338.2 million (excluding $10.9 million of outstanding undrawn letters of credit) and $37.5 million, respectively (the 2016 Term Loan Facility and the Amended 2016 Revolving Credit Facility are collectively referred to as the "2016 Senior Credit Facilities").
(c) See Note 10, "Long-Term Debt," to the Consolidated Financial Statements in Revlon's 2018 Form 10-K for certain details regarding Products Corporation's 2016 Term Loan that matures on the earlier of: (x) September 7, 2023; and (y) the 91st day prior to the maturity of Products Corporation’s 5.75% Senior Notes due 2021 if, on that date (and solely for so long as), (i) any of Products Corporation's 5.75% Senior Notes remain outstanding and (ii) Products Corporation’s available liquidity does not exceed the aggregate principal amount of the then outstanding 5.75% Senior Notes by at least $200 million. The aggregate principal amount outstanding under the 2016 Term Loan Facility at March 31, 2019 was $1,755 million.
(d) See Note 10, "Long-Term Debt," to the Consolidated Financial Statements in Revlon's 2018 Form 10-K for certain details regarding Products Corporation's 5.75% Senior Notes that mature on February 15, 2021. The aggregate principal amount outstanding under the 5.75% Senior Notes at March 31, 2019 was $500 million.
(e) See Note 10, "Long-Term Debt," to the Consolidated Financial Statements in Revlon's 2018 Form 10-K for certain details regarding Products Corporation's 6.25% Senior Notes that mature on August 1, 2024. The aggregate principal amount outstanding under the 6.25% Senior Notes at March 31, 2019 was $450 million.



15

REVLON, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

Current Year Debt Transactions

March 2019 Amendment to 2016 Revolving Credit Facility
On March 6, 2019, Products Corporation, Revlon and certain of their subsidiaries entered into Amendment No. 2 (“Amendment No. 2”) to the 2016 Revolving Credit Agreement (as amended by Amendment No. 2, the “Amended 2016 Revolving Credit Agreement”) in respect of the 2016 Revolving Credit Facility (as in effect after Amendment No. 2, the “Amended 2016 Revolving Credit Facility”). Pursuant to the terms of Amendment No. 2, the maturity date applicable to the $41.5 million senior secured first in, last out Tranche B of the Amended 2016 Revolving Credit Facility was extended from April 17, 2019 to April 17, 2020. Prior to Amendment No. 2, the Amended 2016 Revolving Credit Agreement provided that the “Liquidity Amount” (defined in the Amended 2016 Revolving Credit Agreement as the sum of each borrowing base less the sum of (x) the aggregate outstanding extensions of credit under the Amended 2016 Revolving Credit Facility, and (y) any availability reserve in effect on such date) may exceed the aggregate commitments under the Amended 2016 Revolving Credit Facility by up to 5%. Amendment No. 2 limited the Liquidity Amount to no more than the aggregate commitments under the Amended 2016 Revolving Credit Facility. Prior to Amendment No. 2, under the Amended 2016 Revolving Credit Agreement, a “Liquidity Event Period” generally occurs if Products Corporation’s Liquidity Amount fell below the greater of $35 million and 10% of the maximum availability under the Amended 2016 Revolving Credit Facility. Amendment No. 2 changed these thresholds to $50 million and 15%, respectively, only for purposes of triggering certain notification obligations of Products Corporation, increased borrowing base reporting frequency and the ability of the administrative agent to apply amounts collected in controlled accounts for the repayment of loans under the Amended 2016 Revolving Credit Facility. After entering into Amendment No. 2, on March 7, 2019 Products Corporation’s availability under the Amended 2016 Revolving Credit Facility was $37.3 million, which was less than the greater of $35 million and 10% of the maximum availability under the Amended 2016 Revolving Credit Facility, which at such date equated to $41.3 million. Accordingly, effective beginning in March 2019 Products Corporation is required to maintain a consolidated fixed charge coverage ratio ("FCCR") of a minimum of 1.0 to 1.0 (which it currently satisfies), the administrative agent may apply amounts collected in controlled accounts for the repayment of loans under the Amended 2016 Revolving Credit Facility, which the administrative agent began applying in March 2019, and Products Corporation is required to provide the administrative agent with weekly borrowing base certificates, in each case until such time that Products Corporation’s availability under the Amended 2016 Revolving Credit Facility is equal to or exceeds the greater of $35 million and 10% of the maximum availability under the Amended 2016 Revolving Credit Facility for at least 20 consecutive business days. Amendment No. 2 also adjusts, among other things, the “payment conditions” required to make unlimited restricted payments.
Covenants

Products Corporation was in compliance with all applicable covenants under the 2016 Senior Credit Facilities as of March 31, 2019. At March 31, 2019, the aggregate principal amounts outstanding and availability under Products Corporation’s various revolving credit facilities were as follows:
 
Commitment
 
Borrowing Base
 
Aggregate principal amount outstanding at March 31, 2019
 
Availability at March 31, 2019 (a)
Tranche A of the Amended 2016 Revolving Credit Facility
$
400.0

 
$
390.9

 
$
338.2

 
$
41.8

Tranche B of the Amended 2016 Revolving Credit Facility
41.5

 
37.5

 
37.5

 

Total Tranche A & B of the Amended 2016 Revolving Credit Facility(a)
$
441.5

 
$
428.4

 
$
375.7

 
$
41.8

(a) Availability as of March 31, 2019 is based upon the borrowing base then in effect of $428.4 million, less $10.9 million of outstanding undrawn letters of credit and $375.7 million then drawn. As Products Corporation’s consolidated fixed charge coverage ratio was greater than 1.0 to 1.0 as of March 31, 2019, all of the $41.8 million of availability under the Amended 2016 Revolving Credit Facility was available as of such date.

The Company’s foreign subsidiaries held $63.2 million out of the Company's total $68.3 million in cash and cash equivalents as of March 31, 2019. While the cash held by the Company’s foreign subsidiaries is primarily used to fund their operations, the Company regularly assesses its global cash needs and the available sources of cash to fund these needs, which regularly includes repatriating foreign-held cash to settle historical intercompany loans and other intercompany payables. The Company believes that it continues to have sufficient liquidity to meet its cash needs for at least the next 12 months based upon the cash generated by its operations, cash on hand, availability under the Amended 2016 Revolving Credit Facility and other permitted lines of credit,

16

REVLON, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

along with the option to further settle historical intercompany loans and payables with certain foreign subsidiaries. The Company also expects to generate additional liquidity from cost reductions resulting from the implementation of the 2018 Optimization Program, which was initiated during the fourth quarter of 2018, and cost reductions generated from other cost control initiatives.
 
 
 
 

9. FAIR VALUE MEASUREMENTS

Assets and liabilities are required to be categorized into three levels of fair value based upon the assumptions used to value the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3, if applicable, generally would require significant management judgment. The three levels for categorizing the fair value measurement of assets and liabilities are as follows:
Level 1: Fair valuing the asset or liability using observable inputs, such as quoted prices in active markets for identical assets or liabilities;
Level 2: Fair valuing the asset or liability using inputs other than quoted prices that are observable for the applicable asset or liability, either directly or indirectly, such as quoted prices for similar (as opposed to identical) assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active; and
Level 3: Fair valuing the asset or liability using unobservable inputs that reflect the Company’s own assumptions regarding the applicable asset or liability.
As of March 31, 2019 and December 31, 2018, the Company did not have any financial assets and liabilities that were required to be measured at fair value.

As of March 31, 2019, the fair value and carrying value of the Company’s long-term debt, including the current portion of long-term debt, are categorized in the table below:
 
March 31, 2019
 
Fair Value
 
 
 
Level 1
 
Level 2
 
Level 3
 
Total
 
Carrying Value
Liabilities:
 
 
 
 
 
 
 
 
 
Long-term debt, including current portion(a)
$

 
$
2,392.4

 
$

 
$
2,392.4

 
$
3,113.6


As of December 31, 2018, the fair value and carrying value of the Company’s long-term debt, including the current portion of long-term debt, are categorized in the table below:
 
December 31, 2018
 
Fair Value
 
 
 
Level 1
 
Level 2
 
Level 3
 
Total
 
Carrying Value
Liabilities:
 
 
 
 
 
 
 
 
 
Long-term debt, including current portion(a)
$

 
$
2,259.5

 
$

 
$
2,259.5

 
$
3,075.8

(a) The fair value of the Company's long-term debt, including the current portion of long-term debt, is based on quoted market prices for similar issuances and maturities.
The carrying amounts of the Company's cash and cash equivalents, trade receivables, notes receivable, accounts payable and short-term borrowings approximate their respective fair values.



17

REVLON, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

10. FINANCIAL INSTRUMENTS

Letters of Credit

Products Corporation maintains standby and trade letters of credit for various corporate purposes under which Products Corporation is obligated, of which $10.9 million and $10.1 million (including amounts available under credit agreements in effect at that time) were maintained as of both March 31, 2019 and December 31, 2018, respectively. Included in these amounts are approximately $7.8 million and $7.3 million in standby letters of credit that support Products Corporation’s self-insurance programs, in each case as outstanding as of March 31, 2019 and December 31, 2018, respectively. The estimated liability under such programs is accrued by Products Corporation.

Derivative Financial Instruments

The Company may, from time to time, use derivative financial instruments, primarily FX Contracts, to manage foreign currency exchange risk by reducing the effects of fluctuations in foreign currency exchange rates on the Company’s net cash flows. The Company does not hold or issue financial instruments for speculative or trading purposes.
Foreign Currency Forward Exchange Contracts
The FX Contracts may, from time to time, be entered into primarily to hedge the anticipated net cash flows resulting from inventory purchases and intercompany payments denominated in currencies other than the local currencies of the Company’s foreign and domestic operations and generally have maturities of less than one year. The Company did not enter into any FX Contracts during the three months ended March 31, 2019. The U.S. Dollar notional amounts of the FX Contracts outstanding at each of March 31, 2019 and December 31, 2018 were nil.
Interest Rate Swap Transaction
In November 2013, Products Corporation executed a forward-starting floating-to-fixed interest rate swap transaction (the "2013 Interest Rate Swap") that, at its inception, was based on a notional amount of $400 million in respect of indebtedness under Products Corporation’s 2013 bank term loan that was incurred in connection with completing the October 2013 acquisition of The Colomer Group (the "Old Acquisition Term Loan" and the "Colomer Acquisition," respectively). The 2013 Interest Rate Swap, which initially had a floor of 1.00% that in December 2016 was amended to 0.75%, expired in May 2018. In connection with entering into the 2016 Term Loan Facility, the 2013 Interest Rate Swap was carried over to apply to a notional amount of $400 million in respect of indebtedness under such loan for the remaining balance of the term of such swap. The Company initially designated the 2013 Interest Rate Swap as a cash flow hedge of the variability of the forecasted 3-month LIBOR interest rate payments initially related to the $400 million notional amount under the Old Acquisition Term Loan over the 3-year term of the 2013 Interest Rate Swap (and subsequently to the $400 million notional amount under the 2016 Term Loan Facility). Under the terms of the 2013 Interest Rate Swap, Products Corporation received from the counterparty a floating interest rate based on the higher of the 3-month U.S. Dollar LIBOR or the floor percentage in effect, while paying a fixed interest rate payment to the counterparty equal to 2.0709% (which, with respect to the 2016 Term Loan Facility, effectively fixed the interest rate on such notional amount at 5.5709% through May 2018).
As a result of completely refinancing the Old Acquisition Term Loan with a portion of the proceeds from Product's Corporation's consummation of the 2016 Senior Credit Facilities and the issuance of its 6.25% Senior Notes in connection with consummating the Elizabeth Arden Acquisition, the critical terms of the 2013 Interest Rate Swap no longer matched the terms of the underlying debt under the 2016 Term Loan Facility. At the refinancing date, which was the same as the September 7, 2016 Elizabeth Arden Acquisition Date (the "De-designation Date"), the 2013 Interest Rate Swap was determined to no longer be highly effective and the Company discontinued hedge accounting for the 2013 Interest Rate Swap. Following the de-designation of the 2013 Interest Rate Swap, changes in fair value of such swap were accounted for as a component of other non-operating expenses. Accumulated deferred losses of $6.3 million, or $3.9 million net of tax, at the De-designation Date, that were previously recorded as a component of accumulated other comprehensive loss, were fully amortized into earnings over the remaining term of the 2013 Interest Rate Swap, which expired in May 2018. See "Quantitative Information – Derivative Financial Instruments" below for additional information on the balance sheet balances related to this swap.
Credit Risk
Exposure to credit risk in the event of nonperformance by any of the counterparties to the Company's derivative instruments is limited to the gross fair value of these derivative instruments in asset positions, which was nil at each of March 31, 2019 and December 31, 2018. The Company attempts to minimize exposure to credit risk by generally entering into derivative contracts

18

REVLON, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

with counterparties that have investment-grade credit ratings and are major financial institutions. The Company also periodically monitors any changes in the credit ratings of its counterparties.

Quantitative Information – Derivative Financial Instruments

As of March 31, 2019 and December 31, 2018, the Company did not have any derivative financial instruments.
 
 
 
 
 
 
 
 
 
 
The effects of the Company's derivative financial instruments on its Unaudited Consolidated Statements of Operations and Comprehensive Loss were as follows for the periods presented:
Derivative Instruments
 
Statement of Operations Classification
 
Amount of Gain (Loss) Recognized in Net Loss
 
Three Months Ended March 31,
 
2019
 
2018
Derivative financial instruments:
 
 
 
 
2013 Interest Rate Swap
 
Interest Expense
 
$

 
$
(0.8
)
FX Contracts
 
Foreign currency gain (loss), net
 

 
0.1

2013 Interest Rate Swap
 
Miscellaneous, net
 

 
0.2


 
 
Amount of Gain Recognized in Other Comprehensive Loss
 
 
Three Months Ended March 31,
 
 
2019
 
2018
Derivatives previously designated as hedging instruments:
 
 
 
 
2013 Interest Rate Swap, net of tax (a)
 
$

 
$
0.6

(a) Net of tax benefits of $0.2 million for the three months ended March 31, 2018.


11. PENSION AND POST-RETIREMENT BENEFITS

Net Periodic Benefit Cost
The components of net periodic benefit costs for the Company's pension and the other post-retirement benefit plans were as follows for the periods presented:
 
 
 
 
 
 
 
 
 
Pension Plans
 
Other
Post-Retirement Benefit Plans
 
Three Months Ended March 31,
 
2019
 
2018
 
2019
 
2018
Net periodic benefit costs:
 
 
 
 
 
 
 
Service cost
$
0.5

 
$
0.5

 
$

 
$

Interest cost
4.9

 
4.6

 
0.1

 
0.1

Expected return on plan assets
(6.0
)
 
(7.0
)
 

 

Amortization of actuarial loss
2.4

 
2.3

 
0.1

 
0.1

Total net periodic benefit costs prior to allocation
$
1.8

 
$
0.4

 
$
0.2

 
$
0.2

Portion allocated to Revlon Holdings

 

 

 

Total net periodic benefit costs
$
1.8

 
$
0.4

 
$
0.2

 
$
0.2


19

REVLON, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

In the three months ended March 31, 2019, the Company recognized net periodic benefit cost of $2.0 million, compared to net periodic benefit cost of $0.6 million in the three months ended March 31, 2018, primarily due to lower expected return on plan assets and higher interest cost.

Net periodic benefit costs are reflected in the Company's Unaudited Consolidated Financial Statements as follows for the periods presented:
 
Three Months Ended March 31,
 
2019
 
2018
Net periodic benefit costs:
 
 
 
Selling, general and administrative expense
$
0.5

 
$
0.5

Miscellaneous, net
1.5

 
0.1

Total net periodic benefit costs
$
2.0

 
$
0.6


The Company expects that it will have net periodic benefit cost of approximately $7.9 million for its pension and other post-retirement benefit plans for all of 2019, compared with net periodic benefit cost of $2.6 million in 2018.
Contributions:
The Company’s intent is to fund at least the minimum contributions required to meet applicable federal employee benefit laws and local laws, or to directly pay benefit payments where appropriate. During the first quarter of 2019, $1.6 million and $0.2 million were contributed to the Company’s pension plans and other post-retirement benefit plans, respectively. During 2019, the Company expects to contribute approximately $12 million in the aggregate to its pension and other post-retirement benefit plans.

Relevant aspects of the qualified defined benefit pension plans, non-qualified pension plans and other post-retirement benefit plans sponsored by Products Corporation are disclosed in Note 13, "Pension and Post-Retirement Benefits," to the Consolidated Financial Statements in Revlon's 2018 Form 10-K.


12. STOCK COMPENSATION PLAN
Revlon maintains the Fourth Amended and Restated Revlon, Inc. Stock Plan (the "Stock Plan"), which provides for awards of stock options, stock appreciation rights, restricted or unrestricted stock and restricted stock units ("RSUs") to eligible employees and directors of Revlon and its affiliates, including Products Corporation. An aggregate of 6,565,000 shares were reserved for issuance as Awards under the Stock Plan, of which there remained approximately 2.7 million shares available for grant as of March 31, 2019. In July 2014, the Stock Plan was amended to renew the Stock Plan for a 7-year renewal term expiring on April 14, 2021.

Long-Term Incentive Program

The Company's LTIP RSUs consist of time-based RSUs and performance-based RSUs. Time-based RSUs are scheduled to vest ratably over a 3-year service period, while performance-based RSUs are scheduled to vest based on the achievement of certain Company performance metrics and cliff-vest at the completion of a 3-year performance period.

The fair value of the LTIP RSUs is determined based on the NYSE closing share price on the grant date.

During the first quarter of 2019, the Company granted nil time-based and performance-based RSU awards under the Stock Plan (the "2019 LTIP RSUs").


20

REVLON, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

During the three months ended March 31, 2019, the activity related to time-based and performance-based LTIP RSUs previously granted to eligible employees and the grant date fair value per share related to these LTIP RSUs were as follows:
 
Time-Based LTIP
 
Performance-Based LTIP
 
RSUs (000's)
 
Weighted-Average Grant Date Fair Value per RSU
 
RSUs (000's)
 
Weighted-Average Grant Date Fair Value per RSU
Outstanding as of December 31, 2018
 
 
 
 
 
 
 
2018
434.7

 
$
19.11

 
434.7

 
$
19.11

2017
156.4

 
19.70

 
156.4

 
19.70

Total LTIP RSU's Outstanding as of December 31, 2018
591.1

 
 
 
591.1

 
 
LTIP RSU's Vested
 
 
 
 
 
 
 
2018
(128.9
)
 
19.04

 

 

2017
(64.3
)
 
19.70

 

 

Total LTIP RSU's Vested
(193.2
)
 
 
 

 
 
LTIP RSU's Forfeited/Canceled
 
 
 
 
 
 
 
2018
(33.8
)
 
19.70

 
(34.9
)
 
19.70

2017
(21.7
)
 
19.70

 
(23.1
)
 
19.70

Total LTIP RSU's Forfeited/Canceled
(55.5
)
 
 
 
(58.0
)
 
 
Outstanding as of March 31, 2019
 
 
 
 
 
 
 
2018
272.0

 
19.08

 
399.8

 
19.06

2017
70.4

 
19.70

 
133.3

 
19.70

Total LTIP RSU's Outstanding as of March 31, 2019
342.4

 
 
 
533.1

 
 

Time-Based LTIP RSUs

The Company recognized a net adjustment to compensation expense related to the time-based LTIP RSUs of $0.1 million for the three months ended March 31, 2019. As of March 31, 2019, the Company had $6.1 million of total deferred compensation expense related to non-vested, time-based LTIP RSUs. The cost is recognized over the vesting period of the awards, as described above. One tranche of time-based LTIP RSUs vested during the three months ended March 31, 2019.

Performance-based LTIP RSUs

The Company recognized a net adjustment to compensation expense related to the performance-based LTIP RSUs of $0.1 million for the three months ended March 31, 2019. As of March 31, 2019, the Company had $7.3 million of total deferred compensation expense related to non-vested, performance-based LTIP RSUs, which is recognized over the 3-year performance period of the performance-based 2018 LTIP RSUs and 2 years for the performance-based 2017 LTIP RSUs. No performance-based LTIP RSUs vested during the three months ended March 31, 2019.



21

REVLON, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

13. INCOME TAXES
 
 
 
 
The Company's provision for income taxes represents federal, foreign, state and local income taxes. The Company's effective tax rate differs from the applicable federal statutory rate due to the effect of state and local income taxes, tax rates and income in foreign jurisdictions, foreign earnings taxable in the U.S., the limitation on the deductibility of interest, valuation allowances and other items. The Company’s tax provision changes quarterly based on various factors including, but not limited to, the geographical level and mix of earnings; enacted tax legislation; foreign, state and local income taxes; tax audit settlements and the interaction of various global tax strategies.
The Company recorded a provision for income taxes of $0.1 million for the three months ended March 31, 2019 and a benefit from incomes taxes of $1.6 million for three months ended March 31, 2018, respectively. For the three months ended March 31, 2019, the Company concluded that the use of the discrete method was more appropriate than the annual effective tax rate method, because the annual effective tax rate method would not be reliable due to its sensitivity to minimal changes in forecasted annual pre-tax earnings. For the three months ended March 31, 2018, the tax rate at the end of the period was calculated using an estimate of the annual effective tax rate expected for the full fiscal year. The $1.7 million increase in the Company's provision for income taxes in the three months ended March 31, 2019, as compared to the three months ended March 31, 2018, was primarily due to: (i) the decreased loss from continuing operations before income taxes; (ii) the mix and level of earnings; (iii) valuation allowances recorded in the current quarter; (iv) the limitation on the deductibility of interest; and (v) the U.S. tax on the Company's foreign earnings.
The Company's effective tax rate for the three months ended March 31, 2019 was lower than the federal statutory rate of 21%, primarily due to the valuation allowance related to limitation on the deductibility of interest and the U.S. tax on the Company's foreign earnings.
The Company's effective tax rate for the three months ended March 31, 2018 was lower than the federal statutory rate of 21% as a result of nondeductible expenses for interest and executive compensation, as well as the U.S. taxation of the Company's foreign earnings under the GILTI provisions of the Tax Act, partially offset by the impact of reducing the Company's liability under APB 23.
The Company expects that its tax provision and effective tax rate in any individual quarter and year-to-date period will vary and may not be indicative of the Company's tax provision and effective tax rate for the full year.
As of the first quarter of 2019, the Company concluded that, based on its evaluation of objective verifiable evidence, it does not require a valuation allowance on its federal deferred tax assets, other than those associated with the limitation on the deductibility of interest. The Company does have a valuation allowance on deferred tax assets associated with its activity in certain U.S. states and foreign jurisdictions. These conclusions regarding the establishment of valuation allowances on the Company's deferred tax assets as of the first quarter of 2019 are consistent with the Company's conclusions on such matters as of the end of 2018. However, if the Company does not generate sufficient taxable income in future periods, its deferred tax assets may not be realizable on a more-likely-than-not basis, which would result in the Company having to establish an additional valuation allowance against its deferred tax assets. The Company will continue to assess all available evidence, both negative and positive, to determine whether such additional valuation allowance is warranted.
For a further discussion, see Note 15, "Income Taxes," to the Consolidated Financial Statements in Revlon's 2018 Form 10-K and Item 1A. “Risk Factors-Uncertainties in the interpretation and application of the U.S. income tax provisions could have a material impact on the Company's financial condition, results of operations and/or cash flows” in Revlon's 2018 Form 10-K.

 
 
 
 
 
 

22

REVLON, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

14. ACCUMULATED OTHER COMPREHENSIVE LOSS

A roll-forward of the Company's accumulated other comprehensive loss as of March 31, 2019 is as follows:
 
Foreign Currency Translation
 
Actuarial (Loss) Gain on Post-retirement Benefits
 
Other
 
Accumulated Other Comprehensive Loss
Balance at January 1, 2019
$
(24.4
)
 
$
(209.5
)
 
$
(0.3
)
 
$
(234.2
)
Foreign currency translation adjustment
(1.3
)
 

 

 
(1.3
)
Amortization of pension related costs, net of tax of $(0.3) million(a)

 
2.2

 

 
2.2

Other comprehensive (loss) income
$
(1.3
)

$
2.2


$


$
0.9

Balance at March 31, 2019
$
(25.7
)
 
$
(207.3
)
 
$
(0.3
)
 
$
(233.3
)
(a) Amounts represent the change in accumulated other comprehensive loss as a result of the amortization of actuarial losses (gains) arising during each year related to the Company’s pension and other post-retirement plans. See Note 11, "Pension and Post-retirement Benefits," for further discussion of the Company’s pension and other post-retirement plans.

For the three months ended March 31, 2019, the Company did not have any activity related to financial instruments. The following is a roll-forward of the amounts reclassified out of accumulated other comprehensive loss into earnings during the three months ended March 31, 2018 related to the 2013 Interest Rate Swap:
 
 
2013
Interest Rate Swap
Beginning accumulated losses at December 31, 2017
 
$
(0.7
)
Reclassifications into earnings (net of $0.2 million tax benefit)(a)
 
0.6

Ending accumulated losses at March 31, 2018
 
$
(0.1
)
(a) Reclassified to interest expense.


15. SEGMENT DATA AND RELATED INFORMATION
Operating Segments
Operating segments include components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (the Company's "Chief Executive Officer") in deciding how to allocate resources and in assessing the Company's performance. As a result of the similarities in the procurement, manufacturing and distribution processes for the Company’s products, much of the information provided in the Unaudited Consolidated Financial Statements and provided in the segment table below is similar to, or the same as, that reviewed on a regular basis by the Company's Chief Executive Officer.
As of March 31, 2019, the Company’s operations are organized into the following reportable segments:
Revlon - The Revlon segment is comprised of the Company's flagship Revlon brands. Revlon segment products are primarily marketed, distributed and sold in the mass retail channel, large volume retailers, chain drug and food stores, chemist shops, hypermarkets, general merchandise stores, e-commerce sites, television shopping, department stores, professional hair and nail salons, one-stop shopping beauty retailers and specialty cosmetic stores in the U.S. and internationally under brands such as Revlon in color cosmetics; Revlon ColorSilk and Revlon Professional in hair color; and Revlon in beauty tools.
Elizabeth Arden - The Elizabeth Arden segment is comprised of the Company's Elizabeth Arden branded products. The Elizabeth Arden segment markets, distributes and sells fragrances, skin care and color cosmetics primarily to prestige retailers, department and specialty stores, perfumeries, boutiques, e-commerce sites, the mass retail channel, travel retailers and distributors, as well as direct sales to consumers via its Elizabeth Arden branded retail stores and elizabetharden.com e-commerce website, in the U.S. and internationally, under brands such as Elizabeth Arden Ceramide, Prevage, Eight Hour, SUPERSTART, Visible Difference and Skin Illuminating in the Elizabeth Arden

23

REVLON, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

skin care brands; and Elizabeth Arden White Tea, Elizabeth Arden Red Door, Elizabeth Arden 5th Avenue and Elizabeth Arden Green Tea in Elizabeth Arden fragrances.
Portfolio - The Company’s Portfolio segment markets, distributes and sells a comprehensive line of premium, specialty and mass products primarily to the mass retail channel, hair and nail salons and professional salon distributors in the U.S. and internationally and large volume retailers, specialty and department stores under brands such as Almay and SinfulColors in color cosmetics; American Crew in men's grooming products (which are also sold direct-to-consumer on its americancrew.com website); CND in nail polishes, gel nail color and nail enhancements; Cutex nail care products; Pure Ice in nail polishes; and Mitchum in anti-perspirant deodorants. The Portfolio segment also includes a multi-cultural hair care line consisting of Creme of Nature hair care products, which are sold in both professional salons and in large volume retailers and other retailers, primarily in the U.S.; and a body care line under the Natural Honey brand and hair color line under the Llongueras brand (licensed from a third party) that are both sold in the mass retail channel, large volume retailers and other retailers, primarily in Spain.
Fragrances - The Fragrances segment includes the development, marketing and distribution of certain owned and licensed fragrances as well as the distribution of prestige fragrance brands owned by third parties. These products are typically sold to retailers in the U.S. and internationally, including prestige retailers, specialty stores, e-commerce sites, the mass retail channel, travel retailers and other international retailers. The owned and licensed fragrances include brands such as Juicy Couture (which are also sold direct-to-consumer on its juicycouturebeauty.com website), Britney Spears, Elizabeth Taylor, Curve, John Varvatos, Christina Aguilera, Giorgio Beverly Hills, Ed Hardy, Charlie, Lucky Brand, Paul Sebastian, Alfred Sung, Jennifer Aniston, Mariah Carey, Halston, Geoffrey Beene, La Perla, White Shoulders, AllSaints  and Wildfox.
The Company's management evaluates segment profit for each of the Company's reportable segments. The Company allocates corporate expenses to each reportable segment to arrive at segment profit, and these expenses are included in the internal measure of segment operating performance. The Company defines segment profit as income from continuing operations before interest, taxes, depreciation, amortization, stock-based compensation expense, gains/losses on foreign currency fluctuations, gains/losses on the early extinguishment of debt and miscellaneous expenses. Segment profit also excludes the impact of certain items that are not directly attributable to the reportable segments' underlying operating performance. Such items are shown below in the table reconciling segment profit to consolidated income from continuing operations before income taxes. The Company does not have any material inter-segment sales.
The accounting policies for each of the reportable segments are the same as those described in Note 1, "Description of Business and Summary of Significant Accounting Policies." The Company's assets and liabilities are managed centrally and are reported internally in the same manner as the Unaudited Consolidated Financial Statements; thus, no additional information regarding assets and liabilities of the Company’s reportable segments is produced for the Company's Chief Executive Officer or included in these Unaudited Consolidated Financial Statements.

24

REVLON, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

The following table is a comparative summary of the Company’s net sales and segment profit by reportable segment for the periods presented.
 
Three Months Ended March 31,
 
2019
 
2018
Segment Net Sales:
 
 
 
Revlon
$
247.3

 
$
229.1

Elizabeth Arden
111.4

 
105.7

Portfolio
117.2

 
134.5

Fragrances
77.3

 
91.4

Total
$
553.2

 
$
560.7

 
 
 
 
Segment Profit:
 
 
 
Revlon
$
25.6

 
$
2.3

Elizabeth Arden
1.9

 
1.5

Portfolio
4.5

 
(2.8
)
Fragrances
6.8

 
3.2

Total
$
38.8

 
$
4.2

 
 
 
 
Reconciliation:
 
 
 
Total Segment Profit
$
38.8

 
$
4.2

Less:
 
 
 
Depreciation and amortization
47.0

 
38.7

Non-cash stock compensation expense
0.4

 
7.7

Non-Operating items:
 
 


Restructuring and related charges
12.1

 
5.5

Acquisition and integration costs
0.6

 
4.0

Oxford ERP system disruption-related charges

 
10.0

Financial control remediation actions and related charges
2.0

 

Operating loss
(23.3
)
 
(61.7
)
Less:
 
 
 
Interest Expense
47.7

 
39.9

Amortization of debt issuance costs
3.2

 
2.3

Foreign currency losses (gains), net
0.2

 
(10.6
)
Miscellaneous, net
1.3

 

Loss from continuing operations before income taxes
$
(75.7
)
 
$
(93.3
)

As of March 31, 2019, the Company had operations established in approximately 25 countries outside of the U.S. and its products are sold throughout the world. Generally, net sales by geographic area are presented by attributing revenues from external customers on the basis of where the products are sold.


25

REVLON, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

The following tables present the Company's segment net sales by geography and total net sales by classes of similar products for the periods presented:
 
 
Three Months Ended March 31, 2019
 
 
Revlon
 
Elizabeth Arden
 
Portfolio
 
Fragrances
 
Total
Geographic Area:
 
 
 
 
 
 
 
 
 
 
 Net Sales
 
 
 
 
 
 
 
 
 
 
   North America
 
$
133.2

 
$
28.2

 
$
70.1

 
$
47.2

 
$
278.7

   EMEA*
 
55.7