EX-99.1 2 y65092exv99w1.htm EX-99.1: UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINNANCIAL STATEMENTS EX-99.1
Exhibit 99.1
 
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
 
Overview
 
 
On July 28, 2008, Revlon, Inc. (“Revlon” and together with its subsidiaries, including Revlon Consumer Products Corporation, the “Company”) consummated the sale of the Company’s non-core Bozzano brand, a leading men’s hair care and shaving line of products, and certain other non-core brands, including Juvena and Aquamarine, which are sold only in the Brazilian market. The transaction was effected through the sale of the Company’s indirect Brazilian subsidiary, Ceil Comércio E Distribuidora Ltda. (“Ceil”) to Hypermarcas S.A., a Brazilian publicly-traded, consumer products corporation. The purchase price was approximately $104 million in cash plus approximately $3 million in cash on Ceil’s balance sheet. Net proceeds, after the payment of taxes and transaction costs, are expected to be approximately $94 million.
 
 
The Company is currently evaluating the most appropriate use of the net proceeds from this transaction. In the Company’s results for the third quarter of 2008, the Company expects to record a one-time gain from this transaction of approximately $50 million. Revlon brand color cosmetics will continue to be marketed in Brazil through the Company’s current third party distributor.
 
 
The adjustments reflected in the unaudited pro forma condensed consolidated financial statements are based on currently available information and certain estimates and assumptions. Actual results may differ from the pro forma adjustments and from the estimates and assumptions used. The Company’s management believes that the estimates and assumptions used provide a reasonable basis for presenting the effects of the sale of the Company’s Ceil subsidiary. The Company’s management also believes that the pro forma adjustments give appropriate effect to these estimates and assumptions and are applied in conformity with U.S. generally accepted accounting principles.
 
 
The pro forma adjustments made in connection with the development of the pro forma information are preliminary and have been made solely for the purpose of developing such pro forma information necessary to comply with disclosure requirements and are not necessarily indicative of the results of continuing operations that would have occurred if the disposition had been consummated on January 1, 2007, nor are they necessarily indicative of the Company’s future results of operations.


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REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in millions)
 
                                     
    As Reported
 		    Pro Forma
 		        Pro Forma
 		 
    June 30, 2008     Adjustments         June 30, 2008  
    (Unaudited)               (Unaudited)  
 
ASSETS
                                   
Current assets:
                                   
Cash and cash equivalents
  $           31 .2       $        93 .7     (b)     $        124 .9    
Trade receivables, less allowance for doubtful accounts
    192 .7         (5 .5)       (a)       187 .2    
Inventories
    182 .9         (3 .5)       (a)       179 .4    
Prepaid expenses and other
    90 .4         (8 .0)       (c)       82 .4    
                                     
Total current assets
    497 .2         76 .7       (a)       573 .9    
Property, plant and equipment, net
    113 .9         (0 .9)       (a)       113 .0    
Other assets
    110 .9         (0 .1)       (a)       110 .8    
Goodwill, net
    186 .4         (3 .5)       (d)       182 .9    
                                     
Total assets
  $ 908 .4       $ 72 .2             $ 980 .6    
                                     
                   
LIABILITIES AND STOCKHOLDER’S DEFICIENCY                  
Current liabilities:
                                   
Short-term borrowings
  $ 2 .7       $ -             $ 2 .7    
Current portion of long-term debt
    8 .7         -               8 .7    
Accounts payable
    103 .4         (4 .1)       (a)       99 .3    
Accrued expenses and other
    247 .9         (9 .1)       (a)       238 .8    
                                     
Total current liabilities
    362 .7         (13 .2)       (a)       349 .5    
Long-term debt
    1,221 .6         -               1,221 .6    
Long-term debt - affiliates
    170 .0         -               170 .0    
Long-term pension and other post-retirement plan liabilities
    110 .2         -               110 .2    
Other long-term liabilities
    82 .2         -               82 .2    
Total stockholder’s deficiency
    (1,038 .3)       85 .4       (e)       (952 .9)    
                                     
Total liabilities and stockholder’s deficiency
  $ 908 .4       $ 72 .2             $ 980 .6    
                                     
 
See Accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
 


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REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in millions)
 
                               
    Year Ended December 31, 2007  
          Pro Forma
 		       
    As Reported     Adjustments     Pro Forma  
          (a)     (Unaudited)  
 
Net sales
  $       1,400 .1       $        (33 .0)       $       1,367 .1    
Cost of sales
    522 .9       (17 .1)       505 .8  
                               
Gross profit
    877 .2       (15 .9)       861 .3  
Selling, general and administrative expenses
    741 .9       (12 .7)       729 .2  
Restructuring costs and other, net
    7 .3       -         7 .3  
                               
Operating income
    128 .0       (3 .2)       124 .8  
                               
Other expenses (income):
                             
Interest expense
    136 .3       -         136 .3  
Interest income
    (2 .0)       -         (2 .0)  
Amortization of debt issuance costs
    3 .3       -         3 .3  
Foreign currency gains, net
    (6 .8)       2 .1       (4 .7)  
Miscellaneous, net
    (1 .7)       -         (1 .7)  
                               
Other expenses, net
    129 .1       2 .1       131 .2  
                               
                               
Loss before income taxes
    (1 .1)       (5 .3)       (6 .4)  
Provision for income taxes
    7 .9       (1 .4)       6 .5  
                               
                               
Net loss
  $ (9 .0)     $ (3 .9)     $ (12 .9)  
                               
 
See Accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements


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REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in millions)
 
                               
    Six Months Ended June 30, 2008  
          Pro Forma
 		       
    As Reported     Adjustments     Pro Forma  
    (Unaudited)     (a)     (Unaudited)  
 
Net sales
  $       696 .8       $        (18 .6)       $       678 .2    
Cost of sales
    247 .4       (9 .8)       237 .6  
                               
Gross profit
    449 .4       (8 .8)       440 .6  
Selling, general and administrative expenses
    365 .2       (7 .5)       357 .7  
Restructuring costs and other, net
    (11 .6)       -         (11 .6)  
                               
Operating income
    95 .8       (1 .3)       94 .5  
                               
Other expenses (income):
                             
Interest expense
    62 .9       -         62 .9  
Interest income
    (0 .5)       -         (0 .5)  
Amortization of debt issuance costs
    2 .8       -         2 .8  
Foreign currency gains, net
    (5 .6)       1 .2       (4 .4)  
Miscellaneous, net
    -         -         -    
                               
Other expenses, net
    59 .6       1 .2       60 .8  
                               
                               
Income before income taxes
    36 .2       (2 .5)       33 .7  
Provision for income taxes
    14 .9       (0 .4)       14 .5  
                               
                               
Net income
  $ 21 .3     $ (2 .1)     $ 19 .2  
                               
 
See Accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements


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REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(all tabular amounts in millions)
 
1.    Basis of Presentation
 
The historical condensed consolidated balance sheet as of June 30, 2008 and historical condensed consolidated statement of operations for the six months ended June 30, 2008 are derived from and should be read in conjunction with Products Corporation’s unaudited condensed consolidated financial statements in its June 30, 2008 Form 10-Q, which was filed with the SEC on July 31, 2008. The historical condensed consolidated statement of operations for the year ended December 31, 2007 is derived from and should be read in conjunction with Products Corporation’s audited consolidated financial statements in its December 31, 2007 Form 10-K, which was filed with the SEC on March 5, 2008.
 
The pro forma adjustments in the accompanying condensed consolidated balance sheet have been prepared as if the sale of the Company’s Ceil subsidiary was completed on June 30, 2008. The pro forma adjustments in the accompanying condensed consolidated statements of operations for the six months ended June 30, 2008 and year ended December 31, 2007 have been prepared as if the sale of the Company’s Ceil subsidiary was completed on January 1, 2007.
 
These pro forma financial statements do not purport to be indicative of the Company’s financial position or results of operations as of the dates presented or for such periods, nor are they necessarily indicative of the Company’s future results of operations.
 
 
2.    Pro Forma Adjustments and Assumptions
 
The unaudited pro forma condensed consolidated financial statements give pro forma effect to the following:
 
  (a)  The pro forma adjustments relate to the assets disposed of from the sale of the Company’s Ceil subsidiary.
 
  (b)  The purchase price for the Company’s Ceil subsidiary was $104.0 million in cash, plus $3.6 million in cash on Ceil’s balance sheet. Net proceeds received at the closing, after the payment of taxes and the elimination of cash on hand in the Company’s Ceil subsidiary, were $93.7 million.
 
  (c)  The elimination of $8.0 million of prepaid expenses includes approximately $6 million related to non-income taxes receivable.
 
  (d)  The write-off of $3.5 million of goodwill represents the portion of goodwill allocated to the Company’s Ceil subsidiary.
 
  (e)  The $85.4 million adjustment to stockholder’s deficiency represents the difference between the net cash proceeds, the elimination of net assets (as related to the assets disposed) and the write-off of the currency translation adjustment related to the Company’s Ceil subsidiary (none of which are included in the pro forma condensed consolidated income statements).
 


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