BUSINESS COMBINATION

12 Months Ended

Dec. 31, 2014

Business Combinations [Abstract]

BUSINESS COMBINATION

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 have been included, commencing on the Acquisition Date, in the Company’s Consolidated Financial Statements.

For 2014 and 2013, respectively, the Company has incurred acquisition and integration costs related to the Colomer Acquisition, summarized as follows:

	Year Ended December 31,
	2014		2013
Acquisition costs	$	0.5	$	12.9
Integration costs	5.9		12.5
Total acquisition and integration costs	$	6.4	$	25.4

Acquisition costs in 2014 and 2013 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. Integration costs incurred during 2014 primarily include employee-related costs related to management changes and audit-related fees. For 2013, integration costs were primarily related to an impairment of in-progress capitalized software development costs and employee-related costs related to management changes.

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 consolidated 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 Income and Comprehensive (Loss) Income for 2014.

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 - noncurrent	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 the Company's 2013 Annual Report on Form 10-K.

^(b) The Measurement Period Adjustments to intangible assets, deferred tax liability and goodwill in the first quarter of 2014 related 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 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.

In determining the fair values of net assets acquired in the Colomer Acquisition and resulting goodwill, the Company considered, among other factors, an analysis 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 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 unaudited pro forma results include the historical consolidated statements of income of the Company and Colomer, giving effect to the Colomer Acquisition and related financing transactions as if they had occurred on January 1, 2012.

The following table presents the Company's pro forma consolidated net sales and income from continuing operations, before income taxes for 2013 and 2012.

	Unaudited Pro Forma Results
	Year Ended December 31,
	2013		2012
Net sales	$	1,908.9	$	1,911.6
Income from continuing operations, before income taxes	135.2		127.2

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

(i) as a result of an $11.1 million fair value adjustment to acquired inventory at the Acquisition Date, the Company recognized $8.5 million of the increase in cost of sales in its historical 2013 consolidated financial statements. The pro forma adjustments include an adjustment to reverse the $8.5 million recognized in 2013 cost of sales and recognize the full $11.1 million in 2012 cost of sales;

(ii) 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 $14.3 million and $19.2 million in 2013 and 2012, respectively;

(iii) the elimination of goodwill impairment charges recognized by Colomer in 2013 and 2012 of $9.0 million and $5.3 million, respectively;

(iv) the elimination of acquisition and integration costs recognized by the Company and Colomer in 2013 and 2012 of $25.8 million and $0.8 million, respectively;

(v) the elimination of Colomer's debt facility fees of $3.6 million recognized in 2013, as the debt facility was closed on the Acquisition Date; and

(vi) 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 $19.4 million and $24.4 million in 2013 and 2012, respectively.

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.