Annual Re p ort 2014
OUR M I S S I O N
Revlon is a world leader in cosmetics, skin care, fragrance, personal care, and professional products. Our vision is to provide glamour, excitement and innovation to consumers through high quality products at affordable prices.
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Revlon’s Brands Revlon’s products are sold in approximately 175 countries and territories around the world under well-known brand names.
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Dear Fellow Shareholders,
R
evlon delivered strong performance in 2014 as we continued to execute our business strategy to profitably grow our business. We generated top-line growth reflecting the
effectiveness of our strategy. We introduced new, innovative products, which, together with effective brand communication & strong in-store execution, drove positive performance of our Revlon-branded products in many of our key regions. Our financial performance was strong as we maintained highly competitive margins. We were also very pleased with the integration & performance of our recent acquisitions, SinfulColors速 color cosmetics & Pure Ice速 color cosmetics. We are focused on executing the five elements of our business strategy, specifically, to build our strong brands; develop our organizational capability; drive our company to act globally; pursue growth opportunities; & improve our financial performance.
Building Our Strong Brands During 2014, we continued to focus on building our strong brands with an emphasis on the following key drivers of profitable growth: Innovative, high-quality, consumer-preferred brand offering Effective brand communication Appropriate levels of advertising and promotion Superb execution with our retail partners
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We also continued to build upon our heritage and are proud of our long-standing and continued philanthropic efforts under the banner of Revlon Cares™. As an ambassador for women’s health, we have helped raise millions of dollars for important programs, including the EIF Revlon/Run Walk for Women, Look Good…Feel Better and the National Breast Cancer Coalition, which help support medical research, physician training, clinical care and education and awareness initiatives. We also launched our public service campaign focusing on the message “Your Lips Can Save Lives,” which features Revlon’s Global Brand Ambassadors Halle Berry and Emma Stone and encourages women to talk about cancer, emphasizing the importance of early detection. Philanthropy is a cornerstone of our heritage and we are proud that this campaign celebrates beauty and depicts the power each individual has to positively impact the lives of others.
Developing Our Organizational Capability The success of our strategy depends on our people. We are focused on continuously strengthening our capabilities through retaining and promoting highly capable people internally, and through attracting new talent across all functions in the organization. We have a dedicated team of employees around the world who are focused on achieving our strategic objective of profitably growing our business.
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Driving Our Company To Act Globally Acting globally is a principle that guides how we think, plan and act across all of our brands and markets. We continue to leverage our portfolio planning process and our brand communication plans to meet the needs of our consumers, globally. Additionally, we continue to take specific actions to support our strong operational results and operating efficiencies, including the optimization of our global supply chain and manufacturing footprint.
Pursuing Growth Opportunities In 2014, we delivered net sales growth and are very pleased with our Revlon brand performance around the world. We also complemented our portfolio of brands by adding SinfulColors color cosmetics in 2013 and Pure Ice color cosmetics in 2014, both of which performed very well for us during 2014. We will continue to focus on opportunities to grow our existing brands as well as to acquire brands that complement our core business.
Improving Our Financial Performance We grew net sales for a third year in a row, maintained highly competitive margins and generated free cash flow. We continued to improve our leverage profile, funding our recent acquisitions with cash on hand and enhancing our capital structure by refinancing a significant portion of our debt in early 2015. 6
In closing, I would like to take this opportunity to acknowledge how far we have come as a company since our founding over 80 years ago. Our vision of “Glamour, Excitement, and Innovation through High Quality Products at Affordable Prices� has guided us through the years and I am excited about the future of our Company. Our focus in 2015 will be to build upon the solid foundation we have established and continue to profitably grow our business. I also want to express my sincere appreciation to all of our dedicated employees around the world for their accountability, collaboration, communication and execution and our many accomplishments in 2014. Lastly, I thank our Board of Directors for their leadership, counsel and support, and our stakeholders for their continued interest in Revlon.
Alan T. Ennis President and Chief Executive Officer
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“
Innovation is sustainable. It’s a
continuous process that starts by
listening to consumers and having the desire to fulfill their needs.
Innovative product ideas are the
fusion of information, imagination,
”
and technology. Combine these, and you have a winner. M. Katherine Dwyer
President Revlon Cosmetics USA
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REVLON TOP PRODUCTS
colorstay Whipped Creme Makeup Mineral Lipglaze Revlon’s first longwearing lip gloss with a unique mineral complex that provides a glossy seal of conditioning color. Just one application of this cushiony formula keeps lips coated with comfortable color for up to 8 hours. Available in 12 gorgeous, shades.
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Liquid Liner Elegant, sexy & sophisticated, Revlon® Colorstay™ Liquid Liner lets you to emphasize your eyes with precision. Dries quickly and lasts all day.
Finally, truly decadent makeup offers ultimate performance.The mousselike texture feels like silk on your skin. And, the time release formula balances skin for a flawless look. All day flexible wear without flaking, caking or feeling heavy.
super lustrious Lipgloss Lipstick Infused with mega-moisturizers to seal in color and softness. Find your lip color amongst a dazzling array of 82 shade in 4 fabulous finishes of Matte, Pearl, Crème and Shine.
A silky gloss that boosts hydration and plumps lips with moisture for a colorful glamorous shine. Available in twelve gorgeous shades. Moisturizing Shine. Non-sticky Feel.
Shine Lipstick A silky lightweight formula that lets you indulge your decadent side. Available in 10 new luxurious shades. Lightweight color, moisturizing shine.
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Age Defying Powder Cream Makeup Revlon Age Defying with DNA Advantage Cream Makeup combines makeup + powerful anti-aging skincare to help protect skin’s DNA to fight the visible signs of aging. Lines & wrinkles are visibly diminished while skin is refreshed, hydrated, revitalized. SPF 20.
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Concealer Concealer & powerful anti-aging skincare targets: undereye puffiness, dark circles, fine lines & wrinkles. Hydrates & brightens for a revitalized look.
Our ultra fine powder helps skin to feel conditioned & look luminous, minimizing the appearance of discoloration due to the signs of aging. This powder glides on seamlessly & feels lightweight on skin. Skin looks smoother & conditioned & does not settle into fine lines, wrinkles & pores.
Photo Ready Concealer 3D Volume Mascara Get glamorous, big volume lashes from every angle. Lashes look 100% more magnified, multiplied, amplified. Award winning. Lash finding brush with rounded tip easily reaches every single lash for maximum dimension.
For a flawless, airbrushed appearance in any light. Oil-free and fragrancefree. Full yet undetectable coverage. Photochromatic pigments bend, reflect and diffuse light.
Bronzer A unique bronzer that incorporates 4 different bronzer shades into 1 beautiful palette, which can be used throughout the year for ‘four seasons’ of bronzing color. The formula contains photochromatic pigments that bend, reflect and diffuse light for a flawless, golden glow.
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2014 BEAUTY AWARDS UNITED STATES
Allure Best of Beauty Awards 2014 Best Primer: Revlon PhotoReady Perfecting Primer Best Touch-Up Tool: Almay Oil-Free Makeup Eraser Best Eye-Makeup Remover: Almay Oil-Free Eye Makeup Remover Pads Best Lipstick – Dark Shade: Revlon Super Lustrous Lipstick in Black Cherry
Readers’ Choice Awards
Best Drugstore Lipstick: Revlon Super Lustrous Lipstick in Softsilver Rose
Instyle Best Beauty Buys 2014
Best Inexpensive Lipgloss: Revlon Super Lustrous Lipgloss
SELF Healthy Beauty Awards 2014 Almay Clear Complexion Concealer + Treatment Gel Revlon Luxurious Color Diamond Lust Eye Shadow
Teen Vogue Readers’ Choice Awards
Best Lipstick: Revlon Super Lustrous Lipstick
O, The Oprah Magazine Spring Makeup O-Wards Revlon ColorBurst Lip Butter Revlon PhotoReady 3D Volume Mascara Revlon ColorStay Longwear Nail Enamel in Coastal Surf
WWD Beauty Inc. Digital Innovator of the Year Award The Revlon Expression Experiment
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AUSTRALIA
Australian Beauty Awards Judges Choice
Face/Powder: Revlon Age Defying with DNA Advantage Powder
Reader’s Choice
Eyeshadow: Revlon ColorStay 16 Hour Eye Shadow Face Primer: Revlon PhotoReady Perfecting Primer Face Powder: Revlon Age Defying with DNA Advantage Powder
Instyle Best in Beauty
Best Lipstick under $25: Revlon ColorBurst Lipstick Best Red Nail: Revlon Classic Nail Enamel in Revlon Red
NEW ZEALAND
New Zealand Beauty Awards
Best Foundation: Revlon PhotoReady Makeup Best Eyeliner: Revlon ColorStay Eyeliner in Black
New Zealand Women’s Weekly
Best Foundation: Revlon PhotoReady Makeup Best Concealer: Revlon PhotoReady Concealer Best Lipstick: Revlon Super Lustrous Lipstick Best Eye Shadow: Revlon ColorStay 16 Hour Eye Shadow
SOUTH AFRICA
Seventeen Magazine
UNITED KINGDOM
Cosmopolitan
Best Blush: Revlon Smooth-On Blush Best Eyeliner: Revlon ColorStay Liquid Eye Pen Best Nail Enamel: Revlon Nail Enamel in Revlon Red Best Concealer: Revlon PhotoReady Concealer Best Lipstick: Revlon Super Lustrous Lipstick in Orange Flip Best Compact Powder: Revlon PhotoReady Translucent Finisher Best Lipgloss: Revlon ColorBurst Lipgloss Best Foundation: Revlon PhotoReady AirBrush Mousse Makeup
Beauty Awards
Best Nail Polish: Revlon Core Nail Enamel
Elle Beauty Awards
Best Primer: Revlon PhotoReady Perfecting Primer
Glamour The Beauty Power List
Easy To Use Liner: Revlon Colorstay Crème Gel Eye Liner Lightweight Cream: PhotoReady Cream Blush in Coral Reef The Sole Softener: Revlon Pedi-Expert Pedicure Kit
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Revlon Global
THE REVLON HEADQUARTERS AROUND THE WORLD
Canada
Europe
Revlon Canada
Revlon Int’l Corporation
www.revlon.ca
www.revlon.co.uk
France Revlon
New York/U.S.A Revlon, Inc.
w
www.revlon.com
Miami/U.S.A. Revlon, Inc.
www.revlon.com
Mexico
Revlon SE de CV
Venezuela
Revlon Venezuela
Argentina
Collectora Panamericama www.revlon.com.ar
Italy
Revlon
Japan
www.revlonitaly.com
Revlon
www.revlonjapan.com
China
Shanghai Revstar Cosmetics
Dubai
Dubai Airport Free Zone
Taiwan
Revlon Taiwan Co., Ltd.
Hong Kong Revlon Ltd.
Singapore/ Asia-Pacific
Manufacturing Ltd.
South Africa Revlon
www.revlon.co.za
Australia
Revlon Australia www.revlon.com.au
Since 1990, Revlon has helped raise over $75 million toward women’s health organizations.
“
”
The best part of being part of Revlon is all that they have done for breast cancer awareness and research. Emma Stone Revlon Global Brand Ambassador
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YOUR LIPS CAN SAVE LIVES. Use them to talk with the women you love about cancer. Talking creates awareness. Awareness brings about early detection. Early detection saves lives.
Revlon’s Partnerships Revlon/UCLA Women’s Cancer Research Program
The Revlon/UCLA Women’s Cancer Research Program at the Jonsson Comprehensive Cancer Center at UCLA wa;s cofounded in 1990. Under the directorship of Dr. Dennis Slamon MD Phd, The Revlon/UCLA Program’s most important achievement to date is the discovery research and clinical investigations leading the development of Herceptin, the first gene-based treatment for a specific subtype of breast cancer.
Entertainment Industry Foundation
The Entertainment Industry Foundation (EIF), as a leading charitable organization of the entertainment industry, has distributed hundreds of millions of dollars to support charitable initiatives addressing critical health, education and social issues.
Look Good Feel Better
Look Good Feel Better is an inspiring program helping cancer patients cope with the appearance-related side effects of cancer treatment. Revlon has supported Look Good Feel Better since its inception in 1989. The organization has provided assistance to more than 700,000 women across the globe by helping them to look and feel beautiful and find hope & courage at a time when it is often in short supply.
National Breast Cancer Coalition
Since 1993, Revlon has been a major supporter of the National Breast Cancer Coalition (NBCC), a grass roots organization dedicated to eradicating breast cancer through advocacy for government funding for research. Revlon has actively assisted the NBCC in such efforts as its national signature campaign, which collected millions of signatures to petition the federal government for funding of increased breast cancer research and led to the first National Action Plan to address the breast cancer epidemic.
Rex HealthCare
Revlon’s manufacturing plant is located in Oxford, NC and employs almost 1,400 people. The health of Revlon employees and their community is a top priority and the company has partnered with Rex Healthcare in Raleigh, NC to help raise money for their foundation to power Rex’s Mobile Mammography Unit. The units travel throughout 10 counties with stops at local businesses, churches, schools and civic groups to help ensure that all women can take advantage of mammography’s early detection capabilities. 19
Consolidated Balance Sheet REVLON, INC. AND SUBSIDARIES
Dollars in millions,
Except per share data
2014
ASSETS CURRENT ASSETS: Cash and Cash Equivalents $ 42.8 Trade receivables, less allowances of $25.9 and $24.9, respectively 493.9 Inventories 349.3 Prepaid expenses and other 97.5 TOTAL CURRENT ASSETS 983.5 Property, Plant and equipment, net 378.2 Other assets 143.7 Intangible assets, net 329.2 TOTAL ASSETS 1,834.6
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY CURRENT LIABILITIES: Short-term borrowings - third parties Current portion of long-term debt - third parties Accounts payable Accrued expenses and other TOTAL CURRENT LIABILITIES Long-term debt - third parties Long term debt - affiliates Other long-term liabilities STOCKHOLDERS’ DEFICIENCY: Preferred stock, par value $.01 per share; 20,000,000 Shares authorized, 546 shares of series a preferred stock issued and outstanding Class B common stock, par value $.01 per share; 200,000,000 Shares authorized 31,250,000 issued and outstanding Class A common stock, par value $.01 per share; 350,000,000 Shares authorized, 19,886,575 and 19,875,000 issued and outstanding, respectively Capital deficiency Accumulated deficit since June 24, 1992 Adjustment for minimum pension liability Currency translation adjustment TOTAL STOCKHOLDERS’ DEFICIENCY TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIENCY 20
42.7 5.5 195.5 366.1 609.8 1,427.8 30.9 224.6
54.6 0.3 0.2 231.1 258.8 4.5 19.2 458.5 1,834.6
Five Year Financial Highlights REVLON, INC. AND SUBSIDARIES
2014 2013 2012 2011 2010
STATEMENTS OF OPERATION DATA: NET SALES OPERATING INCOME Income (loss) before extraordinary Items and cumulative effect of accounting changes Extraordinary items- early extinguisments of debt Cumulative effect of accounting changes NET INCOME (LOSS)
2,390.9 213.3
2,169.5 200.6
1,940.0 145.6
1,736.7 107.4
1,595.2 50.5
58.5 14.9 – 43.6
24.8 6.6 – 18.2
41.2 – – 41.2
75.0 – 0.68 103.8
130.2 0.22 0.14 145.7
BASIC INCOME (LOSS) PER COMMON SHARE: Income (loss) before extraordinary items Extraordinary items Cumulative effect of accounting changes NET INCOME (LOSS) PER COMMON SHARE
1.14 0.29 – 0.85
0.50 0.13 – 0.37
0.97 – – 0.97
2.76 – 0.68 2.44
3.07 0.22 0.14 3.43
DILUTED INCOME (LOSS) PER COMMON SHARE: Income (loss) before extraordinary items Extraordinary items Cumulative effect of accounting changes NET INCOME (LOSS) PER COMMON SHARE
1.14 0.29 – 0.85
0.50 0.13 – 0.37
0.97 – – 0.97
1.76 – 0.68 2.44
3.07 0.22 0.14 3.43
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: Basic Dilutive EBITDA (e)
51,131,440 49,687,500 42,500,000 42,500,000 42,500,000 51,544,318 49,818,792 42,500,000 42,500,000 42,500,000 318.0 283.2 223.0 177.8 119.5
BALANCE SHEET DATA: TOTAL ASSETS LONG-TERM DEBT, EXCLUDING CURRENT PORTION TOTAL STOCKHOLDERS’ DEFICIENCY
1,834.6 1,621.9 1,536.0 1,419.4 1,551.1 1,458.7 1,352.2 1,467.5 1,327.5 1,203.8 458.5 497.1 702.3 656.2 554.2
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