BUSINESS COMBINATIONS

3 Months Ended

Mar. 31, 2014

Business Combinations [Abstract]

BUSINESS COMBINATIONS

BUSINESS COMBINATION

The Colomer Acquisition

On October 9, 2013 (the "Acquisition Date"), Products Corporation completed its acquisition of The Colomer Group Participations, S.L. ("Colomer" and the "Colomer Acquisition"), a Spanish company which primarily manufactures, markets and sells professional products to hair and nail salons and other professional channels under brands such as Revlon Professional, CND, including CND Shellac, and American Crew, as well as retail and multi-cultural product lines. The cash purchase price for the Colomer Acquisition was $664.5 million, which Products Corporation financed with proceeds from the Acquisition Term Loan under the Amended Term Loan Facility (both as hereinafter defined). The Colomer Acquisition provides the Company with broad brand, geographic and channel diversification and substantially expands the Company's business, providing both distribution into new channels and cost synergy opportunities.

The results of operations of the Colomer business are included in the Company’s Consolidated Financial Statements commencing on the Acquisition Date.

For the three months ended March 31, 2014, the Company incurred $3.8 million of acquisition and integration costs in the Consolidated Statements of Operations and Comprehensive Income (Loss), which consist of $0.4 million of acquisition costs and $3.4 million of integration costs related to the Colomer Acquisition. The acquisition costs primarily include legal and consulting fees related to the Colomer Acquisition. The integration costs consist of non-restructuring costs related to the Company's plans to integrate Colomer's operations into the Company's business, and, for 2014, primarily include employee-related costs related to management changes and audit-related fees.

Purchase Price Allocation

The Company accounted for the Colomer Acquisition as a business combination during the fourth quarter of 2013. The table below summarizes the amounts recognized for assets acquired and liabilities assumed as of the Acquisition Date, as well as adjustments made in the period after the Acquisition Date to the amounts initially recorded in 2013 (the "Measurement Period Adjustments"). Accordingly, the Company retrospectively adjusted its balance sheet as of December 31, 2013 to reflect these Measurement Period Adjustments. The Measurement Period Adjustments did not have a material impact on the Company's Consolidated Statements of Operations and Comprehensive Income for the year ended December 31, 2013.

The total consideration of $664.5 million was recorded based on the respective estimated fair values of the net assets acquired on the Acquisition Date with resulting goodwill, as follows:

	Amounts Previously Recognized As of October 9, 2013 (Provisional) (a)		Measurement Period Adjustments			Amounts Recognized as of Acquisition Date (Adjusted)
Cash and cash equivalents	$	36.9	$	—		$	36.9
Trade receivables	83.9		—			83.9
Inventories	75.1		—			75.1
Prepaid expenses and other	31.3		—			31.3
Property, plant and equipment	96.7		—			96.7
Intangible assets(b)	292.7		5.4			298.1
Goodwill(b)(c)	255.7		(2.4		)	253.3
Deferred tax asset - non-current	53.1		—			53.1
Other assets(c)	1.9		3.9			5.8
Total assets acquired	927.3		6.9			934.2
Accounts payable	48.0		—			48.0
Accrued expenses and other	65.6		—			65.6
Long-term debt	0.9		—			0.9
Long-term pension and other benefit plan liabilities	4.5		—			4.5
Deferred tax liability(b)	123.3		2.1			125.4
Other long-term liabilities(c)	20.5		4.8			25.3
Total liabilities assumed	262.8		6.9			269.7
Total consideration	$	664.5	$	—		$	664.5

^(a) As previously reported in Revlon, Inc.'s 2013 Form 10-K.

^(b) The Measurement Period Adjustments to intangible assets, deferred tax liability and goodwill during the three months ended March 31, 2014 relate to a change in assumptions used to calculate the fair value of an acquired customer relationship intangible asset, which increased the intangible asset by $5.4 million and extended the life of the asset from 10 to 20 years, increased deferred tax liabilities by $2.1 million, and resulted in a net decrease to goodwill of $3.3 million.

^(c) The Company also recorded a $3.9 million income tax adjustment to the beginning tax balance within other assets and a $4.8 million adjustment to other long-term liabilities, resulting in a net increase to goodwill of $0.9 million.

The fair values of the net assets acquired in the Colomer Acquisition are based on management’s preliminary estimate of the respective fair values. The estimated fair values of net assets and resulting goodwill are subject to the Company finalizing its analysis of the fair value of Colomer’s assets and liabilities as of the Acquisition Date and may be adjusted upon completion of such analysis. In addition, information unknown at the time of the Colomer Acquisition could result in adjustments to the respective fair values and resulting goodwill within the year following the Colomer Acquisition.

In determining the fair values of net assets acquired and resulting goodwill, the Company considered, among other factors, the analyses of Colomer's historical financial performance and an estimate of the future performance of the acquired business, as well as market participants' intended use of the acquired assets.

The acquired intangible assets, based on the fair values of the identifiable intangible assets, are as follows:

	Fair Values at October 9, 2013		Weighted Average Remaining Useful Life (in years)
Trade names, indefinite-lived	$	108.6	Indefinite
Trade names, finite-lived	109.4		5 - 20
Customer relationships	62.4		15 - 20
License agreement	4.1		10
Internally-developed IP	13.6		10
Total acquired intangible assets	$	298.1

Unaudited Pro Forma Results

The following table presents the Company's pro forma consolidated net sales and income from continuing operations, before income taxes for the three months ended March 31, 2013. The unaudited pro forma results include the historical consolidated statements of operations of the Company and Colomer, giving effect to the Colomer Acquisition and related financing transactions as if they had occurred on January 1, 2012.

	Unaudited Pro Forma Results
	Three Months Ended    March 31, 2013
Net sales	$	450.0
Loss from continuing operations, before income taxes	(4.0		)

The pro forma results, prepared in accordance with U.S. GAAP, include the following pro forma adjustments related to the Colomer Acquisition:

(i) the pro forma increase in depreciation and amortization expense based on the fair value adjustments to property, plant and equipment and acquired finite-lived intangible assets recorded in connection with the Colomer Acquisition of $4.6 million in the three months ended March 31, 2013; and

(ii) the pro forma increase in interest expense and amortization of debt issuance costs, resulting from the issuance of the Acquisition Term Loan used by Products Corporation to finance the Colomer Acquisition, for a total combined increase of $6.1 million in the three months ended March 31, 2013.

The unaudited pro forma results do not include: (1) any revenue or cost reductions that may be achieved through the business combination; or (2) the impact of non-recurring items directly related to the business combination.

The unaudited pro forma results are not necessarily indicative of the operating results that would have occurred if the Colomer Acquisition had been completed as of the date for which the pro forma financial information is presented. In addition, the unaudited pro forma results do not purport to project the future consolidated operating results of the combined company.