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EX-32.2 - EXHIBIT 32.2 - REVLON CONSUMER PRODUCTS CORPrcpc-2017q3xex322.htm
EX-32.1 - EXHIBIT 32.1 - REVLON CONSUMER PRODUCTS CORPrcpc-2017q3xex321.htm
EX-31.2 - EXHIBIT 31.2 - REVLON CONSUMER PRODUCTS CORPrcpc-2017q3xex312.htm
EX-31.1 - EXHIBIT 31.1 - REVLON CONSUMER PRODUCTS CORPrcpc-2017q3xex311.htm



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 September 30, 2017

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: 33-59560
REVLON CONSUMER PRODUCTS CORPORATION
(Exact name of registrant as specified in its charter)
    
Delaware
13-3662953
(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

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 ¨ No x

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post 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 ¨
Non-accelerated filer x (Do not check if a smaller reporting company)
 
Smaller reporting company ¨
 
 
 
 
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

The number of shares outstanding of the registrant's common stock was 5,260 shares as of September 30, 2017, all of which were held by one affiliate, Revlon, Inc.





 
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
INDEX

PART I - Financial Information
Item 1.
Financial Statements
 
Consolidated Balance Sheets as of September 30, 2017 (Unaudited) and December 31, 2016
 
Unaudited Consolidated Statements of Operations and Comprehensive (Loss) Income for the Three and Nine Months Ended September 30, 2017 and 2016
 
Unaudited Consolidated Statement of Stockholder's Deficiency for the Nine Months Ended September 30, 2017
 
Unaudited Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2017 and 2016
 
Notes to Unaudited Consolidated 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
 
Signatures



1


PART I - FINANCIAL INFORMATION
Item 1. Financial Statements


REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in millions, except share and per share amounts)
 
September 30, 2017
 
December 31, 2016
 
(Unaudited)
 
 
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
79.2

 
$
186.8

Trade receivables, less allowance for doubtful accounts of $10.8 and $11.1 as of September 30, 2017 and December 31, 2016, respectively
459.4

 
423.9

Inventories
555.4

 
424.6

Prepaid expenses and other
101.9

 
84.9

Receivable from Revlon, Inc.
142.3

 
132.7

Total current assets
1,338.2

 
1,252.9

Property, plant and equipment, net of accumulated depreciation of $373.2 and $304.7 as of September 30, 2017 and December 31, 2016, respectively
349.1

 
320.5

Deferred income taxes
192.3

 
136.1

Goodwill
703.1

 
689.5

Intangible assets, net of accumulated amortization of $119.9 and $84.8 as of September 30, 2017 and December 31, 2016, respectively
600.9

 
636.6

Other assets
109.0

 
103.1

Total assets
$
3,292.6

 
$
3,138.7

 
 
 
 
LIABILITIES AND STOCKHOLDER'S DEFICIENCY
 
 
 
Current liabilities:
 
 
 
Short-term borrowings
$
11.8

 
$
10.8

Current portion of long-term debt
256.8

 
18.1

Accounts payable
344.4

 
296.9

Accrued expenses and other
347.5

 
382.7

Total current liabilities
960.5

 
708.5

Long-term debt
2,656.0

 
2,663.1

Long-term pension and other post-retirement plan liabilities
179.8

 
184.1

Other long-term liabilities
83.0

 
89.8

Stockholder’s deficiency:
 
 
 
RCPC preferred stock, par value $1.00 per share; 1,000 shares authorized; 546 shares issued and
outstanding as of September 30, 2017 and December 31, 2016, respectively

54.6

 
54.6

Common Stock, par value $1.00 per share; 10,000 shares authorized; 5,260 shares issued and outstanding as of June 30, 2017 and December 31, 2016

 

Additional paid-in capital
970.3

 
964.4

Accumulated deficit
(1,375.7
)
 
(1,274.1
)
Accumulated other comprehensive loss
(235.9
)
 
(251.7
)
Total stockholder’s deficiency
(586.7
)
 
(506.8
)
Total liabilities and stockholder’s deficiency
$
3,292.6

 
$
3,138.7





See Accompanying Notes to Unaudited Consolidated Financial Statements

2



REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
(dollars in millions)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
 
 
 
 
 
 
 
 
Net sales
$
666.5

 
$
604.8

 
$
1,907.1

 
$
1,533.3

Cost of sales
290.3

 
243.4

 
823.6

 
568.8

      Gross profit
376.2

 
361.4

 
1,083.5

 
964.5

Selling, general and administrative expenses
360.2

 
283.4

 
1,068.2

 
786.0

Acquisition and integration costs
12.7

 
33.5

 
40.2

 
39.5

Restructuring charges and other, net
6.4

 
0.5

 
11.3

 
2.3

      Operating (loss) income
(3.1
)
 
44.0

 
(36.2
)
 
136.7

Other expenses:
 
 
 
 
 
 
 
   Interest expense
38.6

 
27.4

 
110.3

 
69.3

   Amortization of debt issuance costs
2.3

 
1.7

 
6.8

 
4.6

   Loss on early extinguishment of debt

 
16.9

 

 
16.9

   Foreign currency (gains) losses, net
(3.1
)
 
1.2

 
(16.8
)
 
6.3

   Miscellaneous, net
0.3

 
(0.6
)
 
1.8

 
(0.1
)
      Other expenses
38.1

 
46.6

 
102.1

 
97.0

(Loss) income from continuing operations before income taxes
(41.2
)
 
(2.6
)
 
(138.3
)
 
39.7

(Benefit from) provision for income taxes
(10.0
)
 
0.4

 
(35.4
)
 
18.3

(Loss) income from continuing operations, net of taxes
(31.2
)
 
(3.0
)
 
(102.9
)
 
21.4

Income (loss) from discontinued operations, net of taxes
0.4

 
(0.2
)
 
1.3

 
(2.3
)
Net (loss) income
$
(30.8
)
 
$
(3.2
)
 
$
(101.6
)
 
$
19.1

Other comprehensive income:
 
 
 
 


 


   Foreign currency translation adjustments, net of tax (a)   
(1.2
)
 
2.7

 
5.3

 
8.0

   Amortization of pension related costs, net of tax (b)(c)
2.0

 
1.8

 
6.1

 
5.6

Pension curtailment gain, net of tax(d)

 

 
2.6

 

Reclassification into earnings of accumulated losses from the de-designated 2013 Interest Rate Swap, net of tax(e)
0.6

 

 
1.8

 

Revaluation of derivative financial instruments, net of reclassifications into earnings, net of tax(f)

 
0.8

 

 
0.1

Other comprehensive income, net
1.4

 
5.3

 
15.8

 
13.7

Total comprehensive (loss) income
$
(29.4
)
 
$
2.1

 
$
(85.8
)
 
$
32.8


(a) 
Net of tax benefit of $0.2 million and tax expense $0.7 million for the three months ended September 30, 2017 and 2016, respectively, and tax expense of $1.5 million and $1.3 million for the nine months ended September 30, 2017 and 2016, respectively.
(b) 
Net of tax expense of $0.4 million for each of the three months ended September 30, 2017 and 2016, and $1.3 million and $1.1 million for nine months ended September 30, 2017 and 2016, respectively.
(c)
This amount is included in the computation of net periodic benefit (income) costs. See Note 11, “Pension and Post-Retirement Benefits,” for additional information regarding net periodic benefit (income) costs.
(d) 
Net of tax expense of $0.3 million for the nine months ended September 30, 2017.
(e)
Net of tax benefit of $0.4 million and $1.1 million for the three and nine months ended September 30, 2017, respectively.
(f)
Net of tax expense of $0.5 million and $0.1 million for the three and nine months ended September 30, 2016, respectively.

See Accompanying Notes to Unaudited Consolidated Financial Statements

3




REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENT OF STOCKHOLDER'S DEFICIENCY
(dollars in millions)

 
Preferred Stock
 
Additional Paid-In-Capital
 
Accumulated Deficit
 
Accumulated Other Comprehensive Loss
 
Total Stockholder's Deficiency
 
 
 
 
 
 
 
 
 
 
Balance, January 1, 2017
$
54.6

 
$
964.4

 
$
(1,274.1
)
 
$
(251.7
)
 
$
(506.8
)
Stock-based compensation amortization

 
5.9

 

 

 
5.9

Net loss

 

 
(101.6
)
 

 
(101.6
)
Other comprehensive income, net (a)

 

 

 
15.8

 
15.8

Balance, September 30, 2017
$
54.6

 
$
970.3

 
$
(1,375.7
)
 
$
(235.9
)
 
$
(586.7
)


(a) 
See Note 13, “Accumulated Other Comprehensive Loss,” regarding the changes in the accumulated balances for each component of other comprehensive loss during the nine months ended September 30, 2017.







See Accompanying Notes to Unaudited Consolidated Financial Statements

4



REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in millions)
 
Nine Months Ended September 30,
 
2017
 
2016
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
Net (loss) income
$
(101.6
)
 
$
19.1

Adjustments to reconcile net (loss) income to net cash used in operating activities:
 
 
 
   Depreciation and amortization
111.7

 
81.0

   Foreign currency (gains) losses from re-measurement
(20.8
)
 
5.5

   Amortization of debt discount
0.9

 
1.1

   Stock-based compensation amortization
5.9

 
4.8

   (Benefit from) provision for deferred income taxes
(53.2
)
 
9.3

   Loss on early extinguishment of debt

 
16.9

   Amortization of debt issuance costs
6.8

 
4.6

 Loss on sale of certain assets
1.5

 
0.2

   Pension and other post-retirement cost (income)
1.9

 
(0.5
)
   Change in assets and liabilities, net of acquisitions:
 
 


      Increase in trade receivables
(25.1
)
 
(112.0
)
      (Increase) decrease in inventories
(121.6
)
 
5.0

      Increase in prepaid expenses and other current assets
(22.7
)
 
(32.1
)
      Increase (decrease) in accounts payable
36.4

 
(3.5
)
      Decrease in accrued expenses and other current liabilities
(46.9
)
 
(34.4
)
      Pension and other post-retirement plan contributions
(5.8
)
 
(6.0
)
      Purchases of permanent displays
(37.3
)
 
(25.9
)
      Other, net
(4.3
)
 
(4.0
)
Net cash used in operating activities
(274.2
)
 
(70.9
)
CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
Capital expenditures
(69.5
)
 
(33.1
)
Business acquisition, net of acquired cash

 
(1,028.7
)
Proceeds from the sale of certain assets

 
0.5

Net cash used in investing activities
(69.5
)
 
(1,061.3
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Net increase (decrease) in short-term borrowings and overdraft
1.2

 
(2.6
)
Net borrowings under the 2016 Revolving Credit Facility
243.9

 
65.4

Repayments under the 2016 Term Loan Facility

(13.5
)
 

Repayments under the Old Acquisition Term Loan

 
(15.1
)
Prepayments under the 2011 Term Loan

 
(11.5
)
Repayment of Old Acquisition Term Loan

 
(658.6
)
Repayment of 2011 Term Loan

 
(651.4
)
Borrowings under the 2016 Term Loan Facility

 
1,791.0

Proceeds from the issuance of 6.25% Senior Notes

 
450.0

Payment of financing costs
(1.1
)
 
(61.5
)
Tax withholdings related to net share settlements of restricted stock units and awards

(2.5
)
 
(2.6
)
Other financing activities
(1.3
)
 
(2.2
)
Net cash provided by financing activities
226.7

 
900.9

Effect of exchange rate changes on cash and cash equivalents
9.4

 
3.6

   Net decrease in cash and cash equivalents
(107.6
)
 
(227.7
)
   Cash and cash equivalents at beginning of period
186.8

 
326.9

   Cash and cash equivalents at end of period
$
79.2

 
$
99.2

Supplemental schedule of cash flow information:
 
 
 
   Cash paid during the period for:
 
 
 
Interest
$
124.5

 
$
68.4

Income taxes, net of refunds
11.1

 
19.4



See Accompanying Notes to Unaudited Consolidated Financial Statements

5

REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)

Item 1. Financial Statements

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Revlon Consumer Products Corporation ("Products Corporation" and together with its subsidiaries, including Elizabeth Arden,
Inc. ("Elizabeth Arden"), the "Company") is the direct wholly-owned operating subsidiary of Revlon, Inc. ("Revlon"). Revlon is an indirect majority-owned subsidiary of MacAndrews & Forbes Incorporated (together with certain of its affiliates other than the Company and Revlon, "MacAndrews & Forbes"), a corporation wholly-owned by Ronald O. Perelman. The Company is a leading global beauty company with an iconic portfolio of brands. The Company 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 is building a combined organization that is entrepreneurial, agile and boldly creative, with a passion for beauty. The Company has strategic brand builders developing a diverse portfolio of iconic brands that delight consumers around the world wherever and however they shop for beauty. The Company strives to be an ethical company that values inclusive leadership and is committed to sustainable and responsible growth. The Company operates in four reporting segments: the consumer division (“Consumer”); Elizabeth Arden; the professional division (“Professional”); and Other. The Company’s principal customers for its products in the Consumer segment include large volume retailers, chain drug and food stores, chemist shops, hypermarkets, general merchandise stores, the Internet/e-commerce, television shopping, department stores, one-stop shopping beauty retailers, specialty cosmetics stores and perfumeries in the U.S. and internationally. The Company's principal customers for its products in the Elizabeth Arden segment include prestige retailers, the mass retail channel, perfumeries, boutiques, department and specialty stores, travel retailers and distributors, as well as direct sales to consumers via Elizabeth Arden branded retail stores and e-commerce business. Elizabeth Arden products are also sold through the Elizabeth Arden Red Door Spa beauty salons and spas. The Company's principal customers for its products in the Professional segment include hair and nail salons and distributors to professional salons in the U.S. and internationally. The Other segment primarily includes the operating results related to the development, marketing and distribution of certain licensed fragrances and other beauty products.
The accompanying Consolidated Financial Statements are unaudited. In management's opinion, all adjustments necessary for a fair presentation have been made. The Consolidated Financial Statements include the Company's accounts after the elimination of all material intercompany balances and transactions.
The preparation of the Company's 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 Consolidated Financial Statements in the period they are determined to be necessary. Significant estimates made in the accompanying 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, 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 Consolidated Financial Statements should be read in conjunction with the consolidated financial statements and related notes contained in Products Corporation's Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC on March 3, 2017 (the "2016 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.
Certain prior year amounts in the Consolidated Financial Statements have been reclassified to conform to the current period's presentation.

Recently Adopted Accounting Pronouncements
In March 2016, the FASB issued Accounting Standard Update ("ASU") No. 2016-09, “Improvements to Employee Share-Based Payment Accounting,” which simplifies certain aspects of accounting for share-based payment transactions, including transactions in which an employee uses shares to satisfy the employer’s minimum statutory income tax withholding obligation, forfeitures and income taxes when awards vest or are settled. The Company adopted ASU No. 2016-09 beginning on January 1, 2017 and the adoption of this new guidance did not have a material impact on the Company’s results of operations, financial

6

REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)

condition and/or financial statement disclosures. The adoption of ASU No. 2016-09 resulted in tax withholdings related to net share settlements of restricted stock units and awards in the amount of $2.6 million, previously reported in the Unaudited Consolidated Statement of Cash Flows for the first nine months of 2016 as a component of cash flows from operating activities, to be reclassified as a component of cash flows from financing activities.
In July 2015, the FASB issued ASU No. 2015-11, "Inventory (Topic 330): Simplifying the Measurement of Inventory," which simplifies the subsequent measurement of inventories by requiring inventory to be measured at the lower of cost or net realizable value, rather than at the lower of cost or market. Net realizable value is defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The Company adopted ASU No. 2015-11 beginning on January 1, 2017 and the adoption of this new guidance did not have a material impact on the Company’s results of operations, financial condition and/or financial statement disclosures.

Recently Issued Accounting Pronouncements
In March 2017, the FASB issued ASU No. 2017-07, “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,” which changes the way that employers present net periodic pension cost ("NPPC") and net periodic postretirement benefit cost ("NPPBC") within the income statement. The amendment requires an employer to present the service cost component of NPPC and NPPBC in the same income statement line item(s) as other employee compensation costs arising from services rendered during the period. The other components of NPPC and NPPBC would be presented separately from this line item and below any subtotal of operating income; companies will need to disclose the line items used to present these other components of NPPC and NPPBC, if not separately presented in the statement of operations. In addition, only the service cost component would be eligible for capitalization in assets. This guidance is effective retrospectively for annual and quarterly periods beginning after December 15, 2017, with early adoption permitted. The Company expects to adopt ASU No. 2017-07 beginning as of January 1, 2018, and does not expect this new guidance will have a material impact on the Company’s results of operations, financial condition and/or financial statement disclosures.

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers.” ASU No. 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The underlying principle of ASU No. 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. Entities may adopt ASU No. 2014-09 either retrospectively for all periods presented in the financial statements (i.e., the full retrospective method) or as a cumulative-effect adjustment as of the date of adoption (i.e., the modified retrospective method), without applying it to comparative years’ financial statements.

In August 2015, the FASB issued ASU No. 2015-14, “Revenue from Contracts with Customers: Deferral of the Effective Date,” which allows for a deferral of the adoption date for ASU No. 2014-09 until January 1, 2018, while permitting early adoption no earlier than January 1, 2017.

The Company plans to adopt ASU No. 2014-09 on January 1, 2018 and anticipates adopting this standard using the modified retrospective method. The Company is currently in the process of evaluating its revenue streams under the requirements of ASU No. 2014-09 and based on the progress of this examination to date, the Company anticipates that its adoption of ASU No. 2014-09 will not result in any material adjustment to its results of operations and financial condition. The Company is also analyzing ASU No. 2014-09's expanded disclosure requirements, and whether the adoption of ASU No. 2014-09 will require any changes to its accounting policies, processes, systems and/or internal controls.


2. BUSINESS COMBINATIONS
The Elizabeth Arden Acquisition
On September 7, 2016 (the "Elizabeth Arden Acquisition Date"), the Company completed the acquisition of Elizabeth Arden, Inc. ("Elizabeth Arden" and the "Elizabeth Arden Acquisition") for a total cash purchase price of $1,034.3 million pursuant to an agreement and plan of merger (the "Merger Agreement") by and among Revlon, Products Corporation, RR Transaction Corp. ("Acquisition Sub," then a wholly-owned subsidiary of Products Corporation), and Elizabeth Arden. On the Elizabeth Arden Acquisition Date, Elizabeth Arden merged (the “Merger”) with and into Acquisition Sub, with Elizabeth Arden surviving the Merger as a wholly-owned subsidiary of Products Corporation. Elizabeth Arden is a global prestige beauty products company with an iconic portfolio of brands that are highly complementary to the Company's existing brand portfolio and are sold worldwide. In North America, Elizabeth Arden’s principal customers include prestige retailers, specialty stores, the mass retail channel,

7

REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)

distributors, department stores and other retailers, as well as direct sales to consumers via its Elizabeth Arden Red Door branded retail stores and ElizabethArden.com e-commerce business. Elizabeth Arden products are also sold through the Elizabeth Arden Red Door Spa beauty salons and spas. Internationally, Elizabeth Arden’s portfolio of owned and licensed brands is sold to perfumeries, boutiques, department stores, travel retailers and distributors.
Products Corporation financed the Elizabeth Arden Acquisition with the proceeds from (i) a 7-year $1,800.0 million senior secured term loan facility (the “2016 Term Loan Facility” and such agreement being the “2016 Term Loan Agreement”); (ii) $35.0 million of borrowings under a 5-year $400.0 million senior secured asset-based revolving credit facility (the “2016 Revolving Credit Facility” and such agreement being the “2016 Revolving Credit Agreement” and such facility, together with the 2016 Term Loan Facility, being the “2016 Senior Credit Facilities” and such agreements being the "2016 Credit Agreements"); (iii) $450.0 million aggregate principal amount of Products Corporation’s 6.25% Senior Notes due 2024 (the “6.25% Senior Notes”); and (iv) approximately $126.7 million of cash on hand.

Elizabeth Arden's results of operations are included in the Company’s Consolidated Financial Statements commencing on the Elizabeth Arden Acquisition Date.

For the nine months ended September 30, 2017, the Company incurred $38.1 million of acquisition and integration costs in its Consolidated Statement of Operations and Comprehensive (Loss) Income related to the Elizabeth Arden Acquisition, which consist of $0.8 million of acquisition costs and $37.3 million of integration costs. The acquisition costs primarily include legal and consulting fees to complete the Elizabeth Arden Acquisition. The integration costs consist of non-restructuring costs related to integrating Elizabeth Arden's operations into the Company's business.

Purchase Price Allocation
The Company accounted for the Elizabeth Arden Acquisition as a business combination during the third quarter of 2016. The Company finalized the allocation of the Elizabeth Arden purchase price to the Elizabeth Arden assets acquired and liabilities assumed in the third quarter of 2017, which resulted in several adjustments to their estimated fair value as previously reported (the "Measurement Period Adjustments"). The table below summarizes the allocation of the total consideration of $1,034.3 million paid on the Elizabeth Arden Acquisition Date.
 
Estimated Fair Value as Previously Reported(a)
 
Measurement Period Adjustments
 
Fair Value as Adjusted
Cash
$
41.1

 
$

 
$
41.1

Accounts Receivable
132.6

 

 
132.6

Inventories
323.3

 

 
323.3

Prepaid expenses and other current assets
30.7

 

 
30.7

Property and equipment
91.2

 

 
91.2

Deferred taxes, net (b)
68.7

 
10.0

 
78.7

Intangible assets(c)
336.8

 
(15.4
)
 
321.4

Goodwill
221.7

 
12.3

 
234.0

Other assets
16.6

 

 
16.6

     Total assets acquired
$
1,262.7

 
$
6.9

 
$
1,269.6

Accounts payable
(116.0
)
 

 
(116.0
)
Accrued expenses (d)
(109.3
)
 
1.7

 
(107.6
)
Other long-term liabilities(e)
(3.1
)
 
(8.6
)
 
(11.7
)
     Total liabilities assumed
$
(228.4
)
 
$
(6.9
)
 
$
(235.3
)
     Total consideration transferred
$
1,034.3

 
$

 
$
1,034.3

(a) As previously reported in Products Corporation's 2016 Form 10-K.

(b) The Measurement Period Adjustments to deferred taxes, net related to net increases in deferred tax assets as a result of the changes to the estimated fair values and remaining useful lives of acquired trade name intangible assets and the recognition of non-qualified benefit plan obligations of Elizabeth Arden, as discussed further below.


8

REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)

(c) The Measurement Period Adjustments to intangible assets related to a revised approach in the determination of the fair values for the acquired Elizabeth Arden trade names. During the first quarter of 2017, the Company obtained further clarity into the product portfolio acquired through the Elizabeth Arden Acquisition, and, recognizing that each brand has its own distinct profile with its own defining attributes, as well as differing expected useful lives, determined that a revised valuation approach was needed. The Company valued the acquired trade names within the Elizabeth Arden product portfolio, including Visible Difference, Elizabeth Arden Ceramide, Prevage, Eight Hour Cream, Elizabeth Arden Red Door, Elizabeth Arden Green Tea and Elizabeth Arden 5th Avenue. The Company determined the fair values of each acquired trade name using a risk-adjusted discounted cash flow approach, specifically the relief-from-royalty method. The relief-from-royalty method requires identifying the hypothetical cash flows generated by an assumed royalty rate that a third party would pay to license the trade names, and discounting them back to the Elizabeth Arden Acquisition Date. The royalty rate used in the valuation of each acquired trade name was based on a consideration of market rates for similar categories of assets.

The difference between the preliminary valuation of the Elizabeth Arden trade name and the sum of the fair values of the individual trade names within the Elizabeth Arden product portfolio resulted in an increase to goodwill of $15.4 million, which was recorded in the fiscal quarter ended March 31, 2017. As a result of this revised approach, the Company recognized amortization expense of approximately $1.8 million in its Unaudited Consolidated Statement of Operations and Comprehensive (Loss) Income during the first nine months of 2017 related to the amortization of the acquired trade names from the date of acquisition through December 31, 2016.

(d) The Measurement Period Adjustments to accrued expenses during the nine months ended September 30, 2017 related to changes in estimated payments for acquisition-related costs.

(e) The Measurement Period Adjustments to other long-term liabilities during the nine months ended September 30, 2017 related to the recognition of the projected benefit obligation of a certain foreign non-qualified benefit plan of Elizabeth Arden.

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

The intangible assets acquired in the Elizabeth Arden Acquisition based on the estimate of the fair values of the identifiable intangible assets are as follows:
 
As Previously Reported(a)
 
 
 
Adjusted
 
Estimated Fair Values
 
Remaining Useful Life at the Elizabeth Arden Acquisition Date (in years)
 
Measurement Period Adjustments(b)
 
Fair Values
 
Remaining Useful Life at the Elizabeth Arden Acquisition Date
(in years)
Trademarks, indefinite-lived
$
142.0

 
Indefinite
 
$
(103.0
)
 
$
39.0

 
Indefinite
Trademarks, finite-lived
15.0

 
15
 
87.6

 
102.6

 
5 - 20
Technology
2.5

 
10
 

 
2.5

 
10
Customer relationships
123.0

 
16
 

 
123.0

 
16
License agreements
22.0

 
19
 

 
22.0

 
19
Distribution rights
31.0

 
18
 

 
31.0

 
18
Favorable lease commitments
1.3

 
3
 

 
1.3

 
3
     Total acquired intangible assets
$
336.8

 
 
 
$
(15.4
)
(b) 
$
321.4

 
 
(a) As previously reported in Products Corporation's 2016 Form 10-K.

(b) The Measurement Period Adjustments to the Elizabeth Arden acquired trade names resulted in a $15.4 million increase to goodwill, which was recorded in the fiscal quarter ended March 31, 2017.

In the fiscal quarter ended March 31, 2017, the Company recorded a $54.8 million deferred tax liability related to the $321.4 million of acquired intangible assets outlined in the above table. This deferred tax liability represents the tax effect of the difference between the $321.4 million assigned fair value of the intangible assets and the $148.6 million tax basis of such assets.

The goodwill and intangible assets acquired in the Elizabeth Arden Acquisition are not expected to be deductible for income tax purposes.


9

REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)

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 and nine months ended September 30, 2016, respectively. The unaudited pro forma results include the historical consolidated statements of operations of the Company and Elizabeth Arden, giving effect to the Elizabeth Arden Acquisition and related financing transactions as if they had occurred at the beginning of the earliest period presented.
 
Unaudited Pro Forma Results
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2016
 
2016
Net sales
$
745.1

 
$
2,058.2

Income (loss) from continuing operations, before income taxes
0.4

 
(22.0
)

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

(i) as a result of a $38.0 million increase in the fair value of acquired inventory at the Acquisition Date, the Company recognized a $4.2 million increase in its cost of sales during the three and nine months ended September 30, 2016 in its consolidated financial statements. The pro forma adjustments include an adjustment to reverse the $4.2 million recognized in the third quarter of 2016 within cost of sales because it will not have a recurring impact;

(ii) the elimination of $58.1 million and $64.7 million of acquisition and integration costs recognized by the Company and Elizabeth Arden during the three and nine months ended September 30, 2016, respectively;

(iii) nil and $1.4 million pro forma decrease in depreciation as a result of the fair value adjustments to property and equipment for the three and nine months ended September 30, 2016, respectively;

(iv) a $1.7 million and $4.6 million pro forma increase in amortization expense of acquired finite-lived intangible assets recorded in connection with the Elizabeth Arden Acquisition for the three and nine months ended September 30, 2016, respectively; and

(v) a pro forma increase in interest expense and amortization of debt issuance costs related to financing the Elizabeth Arden Acquisition and related debt restructuring transactions as summarized in the following table:
 
Three Months Ended
 
Nine Months Ended
($ in millions)
September 30, 2016
 
September 30, 2016
Interest Expense
 
 
 
Pro forma interest on 2016 Senior Credit Facilities and 6.25% Senior Notes
$
29.1

 
$
86.7

Reversal of Elizabeth Arden’s historical interest expense
(5.6
)
 
(19.5
)
Company historical interest expense, as reflected in the historical consolidated financial statements
(20.3
)
 
(45.2
)
Total adjustment for pro forma interest expense
$
3.2

 
$
22.0

Debt issuance costs
 
 
 
Pro forma amortization of debt issuance costs
$
2.0

 
$
6.1

Company historical amortization of debt issuance costs, as reflected in the historical consolidated financial statements
(1.1
)
 
(3.3
)
Reversal of Elizabeth Arden’s historical amortization of debt issuance costs
(0.4
)
 
(1.3
)
Total adjustment for pro forma amortization of debt issuance costs
$
0.5

 
$
1.5


The unaudited pro forma results do not include: (1) any incremental revenue generation, synergies or cost reductions that may be achieved as a result of the Elizabeth Arden Acquisition; or (2) the impact of non-operating or non-recurring items directly related to the Elizabeth Arden Acquisition. In addition, the unaudited pro forma results do not purport to project the future consolidated operating results of the combined company.


10

REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)


3. RESTRUCTURING CHARGES
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 selling, general and administrative expenses ("SG&A"). As a result of the EA Integration Restructuring Program, the Company expects to eliminate approximately 350 positions worldwide.
In connection with implementing the EA Integration Restructuring Program, the Company expects to recognize approximately $65 million to $75 million of total pre-tax restructuring charges (the “EA Integration Restructuring Charges”), consisting of: (i) approximately $40 million to $50 million of employee-related costs, including severance, retention and other contractual termination benefits; (ii) approximately $15 million of lease termination costs; and (iii) approximately $10 million of other related charges.

A summary of the restructuring and related charges incurred through September 30, 2017 in connection with the EA Integration Restructuring Program 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
Charges incurred through December 31, 2016
$
31.5

 
$
0.2

 
$
31.7

 
$
0.5

 
$
2.3

 
$
34.5

Charges incurred during the nine months ended September 30, 2017
10.1

 
4.0

 
14.1

 
0.5

 
1.0

 
15.6

Cumulative charges incurred through September 30, 2017
$
41.6

 
$
4.2

 
$
45.8

 
$
1.0

 
$
3.3

 
$
50.1


(a) Includes primarily lease termination costs of approximately $3.9 million recorded in the third quarter of 2017 related to certain Elizabeth Arden office space.
(b) Inventory adjustments are recorded within cost of sales in the Company’s Consolidated Statement of Operations and Comprehensive (Loss) Income.
(c) Other related charges are recorded within SG&A in the Company’s Consolidated Statement of Operations and Comprehensive (Loss) Income.

A summary of the restructuring charges incurred through September 30, 2017 in connection with the EA Integration Restructuring Program by reportable segment is presented in the following table:
 
 
Charges incurred during the nine months ended
 
Cumulative charges incurred through
 
 
September 30, 2017
 
September 30, 2017
Elizabeth Arden
 
$
7.3

 
$
13.8

Consumer
 
2.9

 
7.1

Professional
 
0.3

 
5.9

Unallocated Corporate Expenses
 
3.6

 
19.0

     Total
 
$
14.1

 
$
45.8



The Company expects that cash payments will total $65 million to $75 million in connection with the EA Integration Restructuring Charges, of which $30.5 million was paid in the nine months ended September 30, 2017. The remaining balance is expected to be substantially paid by the end of 2020.


11

REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)

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, 2017
 
Expense (Income), Net
 
Foreign Currency Translation
 

Cash
 

Non-cash
 
Liability Balance at September 30, 2017
 
 
 
 
 
 
 
 
 
 
 
 
EA Integration Restructuring Program:(a)
 
 
 
 
 
 
 
 
 
 
 
Employee severance and other personnel benefits
$
31.5

 
$
10.1

 
$

 
$
(27.5
)
 
$

 
$
14.1

Other
3.0

 
5.5

 

 
(3.0
)
 

 
5.5

2015 Efficiency Program:(b)
 
 
 
 
 
 
 
 
 
 
 
Employee severance and other personnel benefits
4.5

 
(3.2
)
 

 
(0.9
)
 

 
0.4

Other
0.2

 

 

 

 

 
0.2

Other immaterial actions: (c)

 

 

 

 

 

Employee severance and other personnel benefits
2.6

 
0.7

 

 
(0.8
)
 

 
2.5

Other
1.0

 
0.5

 
0.1

 
(0.1
)
 

 
1.5

Total restructuring reserve
$
42.8

 
$
13.6

 
$
0.1

 
$
(32.3
)
 
$

 
$
24.2


(a) Includes $1.5 million in charges related to inventory adjustments and other restructuring-related charges that were reflected within cost of sales and SG&A, respectively, in the Company’s September 30, 2017 Unaudited Consolidated Statement of Operations and Comprehensive (Loss) Income.

(b) In September 2015, the Company initiated restructuring actions to drive certain organizational efficiencies across the Company's Consumer and Professional segments (the "2015 Efficiency Program"). These actions were planned to occur through 2017 and are expected to reduce general and administrative expenses within the Consumer and Professional segments. During the third quarter of 2017, the Company performed a review of the 2015 Efficiency Program and determined that employees in certain positions that were initially identified to be eliminated would continue to be employed by the Company in varying positions in connection with integrating the Elizabeth Arden and Revlon organizations. As a result, the Company reversed approximately $3.2 million in previously accrued restructuring charges recognized in connection with the 2015 Efficiency Program. Of the total expected cash payments related to the 2015 Efficiency Program, $7.0 million was paid through September 30, 2017, with a remaining balance of approximately $0.6 million expected to be paid by the end of 2017. A summary of the restructuring and related charges incurred through September 30, 2017 in connection with the 2015 Efficiency Program by reportable segment is presented in the following table:
 
 
2015 Efficiency Program cumulative charges incurred through
 
 
September 30, 2017
Consumer
 
$
3.6

Professional
 
3.5

Unallocated Corporate Expenses
 
0.5

     Total
 
$
7.6


(c) Consists primarily of $0.8 million in charges related to the program that Elizabeth Arden commenced prior to the Elizabeth Arden Acquisition to further align their organizational structure and distribution arrangements for the purpose of improving its go-to-trade capabilities and execution and to streamline their organization (the "Elizabeth Arden 2016 Business Transformation Program").

At September 30, 2017 and December 31, 2016, all of the restructuring reserve balances were included within accrued expenses and other in the Company's Consolidated Balance Sheets.



12

REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)

4. DISCONTINUED OPERATIONS
On December 30, 2013, the Company announced that it was implementing the December 2013 Program, which primarily included exiting its direct manufacturing, warehousing and sales business operations in mainland China within the Consumer segment.
The results of the China discontinued operations are included within Income (loss) from discontinued operations, net of taxes, and relate entirely to the Consumer segment. The summary comparative financial results of discontinued operations are as follows:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
Net sales
$

 
$

 
$

 
$

Income (loss) from discontinued operations, before taxes
0.7

 
(0.2
)
 
1.6

 
(2.3
)
Provision for income taxes
0.3

 

 
0.3

 

Income (loss) from discontinued operations, net of taxes
0.4

 
(0.2
)
 
1.3

 
(2.3
)

Assets and liabilities of the China discontinued operations included in the Consolidated Balance Sheets consist of the following:
 
September 30, 2017
 
December 31, 2016
Cash and cash equivalents
$
1.3

 
$
1.7

Trade receivables, net
0.2

 
0.2

Total current assets
1.5

 
1.9

Total assets
$
1.5

 
$
1.9

 

 

Accounts payable
$
0.5

 
$
0.5

Accrued expenses and other
3.4

 
3.3

Total current liabilities
3.9

 
3.8

Total liabilities
$
3.9

 
$
3.8



5. INVENTORIES
The Company's inventory balances consist of the following:
 
September 30, 2017
 
December 31, 2016
Raw materials and supplies
$
119.9

 
$
72.9

Work-in-process
19.7

 
33.5

Finished goods
415.8

 
318.2

 
$
555.4

 
$
424.6




13

REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)

6. GOODWILL AND INTANGIBLE ASSETS, NET

Goodwill

The following table presents the changes in goodwill by segment during the nine months ended September 30, 2017:
 
Consumer
 
Professional
 
Elizabeth Arden
 
 Other
 
Total
Balance at January 1, 2017
$
227.5

 
$
240.3

 
$
221.7

 
$

 
$
689.5

Measurement Period Adjustments(a)

 

 
12.3

 

 
12.3

Foreign currency translation adjustment

 
1.3

 

 

 
1.3

Balance at September 30, 2017
$
227.5

 
$
241.6

 
$
234.0

 
$

 
$
703.1

 
 
 
 
 
 
 
 
 
 
Cumulative goodwill impairment charges(b)
$
(9.7
)
 
$

 
$

 
$
(16.7
)
 
$
(26.4
)

(a) Refer to Note 2, "Business Combinations," for more information on the Measurement Period Adjustments related to the Elizabeth Arden Acquisition.

(b) Cumulative goodwill impairment charges relate to impairments recognized in 2015 within the Consumer segment and in 2016 within the Other segment.


14

REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)

Intangible Assets, Net

The following tables present details of the Company's total intangible assets:
 
September 30, 2017
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
Weighted Average Useful Life (in Years)
Finite-lived intangible assets:
 
 
 
 
 
 
 
Trademarks and Licenses
$
270.4

 
$
(67.4
)
 
$
203.0

 
13
Customer relationships
250.3

 
(41.7
)
 
208.6

 
13
Patents and Internally-Developed IP
20.8

 
(7.9
)
 
12.9

 
7
Distribution rights
31.0

 
(2.3
)
 
28.7

 
17
Other
1.3

 
(0.6
)
 
0.7

 
2
Total finite-lived intangible assets
$
573.8

 
$
(119.9
)
 
$
453.9

 
 
 
 
 
 
 
 
 
 
Indefinite-lived intangible assets:
 
 
 
 
 
 
 
Trade Names
$
147.0

 
$

 
$
147.0

 
 
Total indefinite-lived intangible assets
$
147.0

 
$

 
$
147.0

 
 
 
 
 
 
 
 
 
 
Total intangible assets
$
720.8

 
$
(119.9
)
 
$
600.9

 
 
 
 
 
 
 
 
 
 
 
December 31, 2016
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
Weighted Average Useful Life (in Years)
Finite-lived intangible assets:
 
 
 
 
 
 
 
Trademarks and Licenses
$
177.9

 
$
(47.9
)
 
$
130.0

 
13
Customer relationships
247.6

 
(30.1
)
 
217.5

 
14
Patents and Internally-Developed IP
20.3

 
(6.1
)
 
14.2

 
8
Distribution rights
31.0

 
(0.5
)
 
30.5

 
18
Other
1.3

 
(0.2
)
 
1.1

 
3
Total finite-lived intangible assets
$
478.1

 
$
(84.8
)
 
$
393.3

 
 
 
 
 
 
 
 
 
 
Indefinite-lived intangible assets:
 
 
 
 
 
 
 
Trade Names
$
243.3

 
$

 
$
243.3

 
 
Total indefinite-lived intangible assets
$
243.3

 
$

 
$
243.3

 
 
 
 
 
 
 
 
 
 
Total intangible assets
$
721.4

 
$
(84.8
)
 
$
636.6

 
 

Amortization expense for finite-lived intangible assets was $10.4 million and $6.2 million for the three months ended September 30, 2017 and 2016, respectively. Amortization expense for finite-lived intangible assets was $32.6 million and $18.2 million for the nine months ended September 30, 2017 and 2016, respectively.


15

REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)

The following table reflects the estimated future amortization expense, a portion of which is subject to exchange rate fluctuations, for the Company's finite-lived intangible assets as of September 30, 2017:
 
Estimated Amortization Expense
2017
$
7.4

2018
39.4

2019
36.7

2020
36.0

2021
34.9

Thereafter
299.5

Total
$
453.9



7. ACCRUED EXPENSES AND OTHER
The Company's accrued expenses and other current liabilities consist of the following:
 
September 30, 2017
 
December 31, 2016
Compensation and related benefits
$
54.6

 
$
75.8

Advertising and promotional costs
75.4

 
66.7

Sales returns and allowances
50.6

 
51.9

Taxes
41.3

 
39.0

Restructuring reserve
21.9

 
38.0

Interest
10.3

 
24.4

Other
93.4

 
86.9

 
$
347.5

 
$
382.7



8. LONG-TERM DEBT
The Company's debt balances consist of the following:
 
September 30, 2017
 
December 31, 2016
2016 Term Loan Facility: 2016 Term Loan due 2023, net of discounts and debt issuance costs (a)
$
1,738.8

 
$
1,747.8

2016 Revolving Credit Facility due 2021, net of debt issuance costs (b)
238.7

 

6.25% Senior Notes due 2024, net of debt issuance costs (c)
440.0

 
439.1

5.75% Senior Notes due 2021, net of debt issuance costs (d)
494.8

 
493.8

Spanish Government Loan due 2025  (e)
0.5

 
0.5

 
2,912.8

 
2,681.2

Less current portion (*)   
(256.8
)
 
(18.1
)
 
$
2,656.0

 
$
2,663.1


(*) At September 30, 2017, the Company classified $256.8 million as its current portion of long-term debt, comprised primarily of $238.7 million of net borrowings under the 2016 Revolving Credit Facility and $18.0 million of amortization payments on the 2016 Term Loan Facility scheduled to be paid over the next four calendar quarters. At December 31, 2016, the Company classified $18.1 million as its current portion of long-term debt, comprised primarily of $18.0 million of amortization payments on the 2016 Term Loan Facility.

(a) See Note 11, "Long-Term Debt," to the Consolidated Financial Statements in Products Corporation's 2016 Form 10-K for certain details regarding Products Corporation's 2016 Term Loan that matures on the earlier of: (x) the seventh anniversary of the Elizabeth Arden Acquisition Date; 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

16

REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)

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 $200.0 million. The aggregate principal amount outstanding under the 2016 Term Loan Facility at September 30, 2017 was $1,782.0 million.

(b) See Note 11, "Long-Term Debt," to the Consolidated Financial Statements in Products Corporation's 2016 Form 10-K for certain details regarding Products Corporation's 2016 Revolving Credit Facility, which matures on the earlier of: (x) the fifth anniversary of the Elizabeth Arden Acquisition Date; 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 $200.0 million. Total borrowings at face amount under the 2016 Revolving Credit Facility at September 30, 2017 were $243.9 million (excluding $10.0 million of outstanding undrawn letters of credit).
(c) See Note 11, "Long-Term Debt," to the Consolidated Financial Statements in Products Corporation's 2016 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 September 30, 2017 was $450 million.
(d) See Note 11, "Long-Term Debt," to the Consolidated Financial Statements in Products Corporation's 2016 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 September 30, 2017 was $500 million.
(e) See Note 11, "Long-Term Debt," to the Consolidated Financial Statements in Products Corporation's 2016 Form 10-K for certain details regarding the euro-denominated loan payable to the Spanish government that matures on June 30, 2025.

Covenants
Products Corporation was in compliance with all applicable covenants under the 2016 Senior Credit Facilities as of September 30, 2017. At September 30, 2017, the aggregate principal amounts outstanding under the 2016 Term Loan Facility and the 2016 Revolving Credit Facility were $1,782.0 million and $243.9 million, respectively. Availability under the $400.0 million 2016 Revolving Credit Facility at September 30, 2017, based upon the calculated borrowing base of $400.0 million, less $10.0 million of outstanding undrawn letters of credit, less $20.5 million of outstanding checks and less $243.9 million then drawn on the 2016 Revolving Credit Facility, was $125.6 million.
Products Corporation was in compliance with all applicable covenants under the indentures governing Products Corporation's 6.25% Senior Notes and 5.75% Senior Notes (together, the "Senior Notes Indentures") as of September 30, 2017.


9. FAIR VALUE MEASUREMENTS
Assets and liabilities are required to be categorized into three levels of fair value based upon the assumptions used to price 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.

17

REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)

As of September 30, 2017, the fair values of the Company’s financial assets and liabilities that are required to be measured at fair value are categorized in the table below:
 
Total
 
Level 1
 
Level 2
 
Level 3
Assets:
 
 
 
 
 
 
 
Derivatives:
 
 
 
 
 
 
 
FX Contracts(a)     
$
0.5

 
$

 
$
0.5

 
$

Total assets at fair value
$
0.5

 
$

 
$
0.5

 
$

Liabilities:
 
 
 
 
 
 
 
Derivatives:
 
 
 
 
 
 
 
FX Contracts(a)    
$
2.9

 
$

 
$
2.9

 
$

2013 Interest Rate Swap(b)
1.9

 

 
1.9

 

Total liabilities at fair value
$
4.8

 
$

 
$
4.8

 
$


As of December 31, 2016, the fair values of the Company’s financial assets and liabilities that are required to be measured at fair value are categorized in the table below:
 
Total
 
Level 1
 
Level 2
 
Level 3
Assets:
 
 
 
 
 
 
 
Derivatives:
 
 
 
 
 
 
 
FX Contracts(a)     
$
2.3

 
$

 
$
2.3

 
$

Total assets at fair value
$
2.3

 
$

 
$
2.3

 
$

Liabilities:
 
 
 
 
 
 
 
Derivatives:
 
 
 
 
 
 
 
FX Contracts(a)    
$
1.1

 
$

 
$
1.1

 
$

2013 Interest Rate Swap(b)
4.7

 

 
4.7

 

Total liabilities at fair value
$
5.8

 
$

 
$
5.8

 
$


(a)The fair value of the Company’s foreign currency forward exchange contracts ("FX Contracts") was measured based on observable market transactions for similar transactions in actively quoted markets of spot and forward rates on the respective dates. See Note 10, “Financial Instruments."
(b)The fair value of Products Corporation's 2013 Interest Rate Swap (as hereinafter defined) was measured based on the implied forward rates from the U.S. Dollar three-month LIBOR yield curve on the respective dates. See Note 10, “Financial Instruments.”

As of September 30, 2017, 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:
 
Fair Value
 
 
 
Level 1
 
Level 2
 
Level 3
 
Total
 
Carrying Value
Liabilities:
 
 
 
 
 
 
 
 
 
Long-term debt, including current portion
$

 
$
2,615.4

 
$

 
$
2,615.4

 
$
2,912.8

As of December 31, 2016, the fair values and carrying values of the Company’s long-term debt, including the current portion of long-term debt, are categorized in the table below:
 
Fair Value
 
 
 
Level 1
 
Level 2
 
Level 3
 
Total
 
Carrying Value
Liabilities:
 
 
 
 
 
 
 
 
 
Long-term debt, including current portion
$

 
$
2,770.9

 
$

 
$
2,770.9

 
$
2,681.2


18

REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)

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 issues and maturities.
The carrying amounts of cash and cash equivalents, trade receivables, notes receivable, accounts payable and short-term borrowings approximate their respective fair values.


10. FINANCIAL INSTRUMENTS
Products Corporation maintains standby and trade letters of credit for various corporate purposes under which Products Corporation is obligated, of which $10.0 million and $10.4 million (including amounts available under credit agreements in effect at that time) were maintained at September 30, 2017 and December 31, 2016, respectively. Included in these amounts are approximately $6.8 million and $7.3 million at September 30, 2017 and December 31, 2016, respectively, in standby letters of credit that support Products Corporation’s self-insurance programs. The estimated liability under such programs is accrued by Products Corporation.

Derivative Financial Instruments
The Company uses derivative financial instruments, primarily: (i) FX Contracts, intended for the purpose of managing foreign currency exchange risk by reducing the effects of fluctuations in foreign currency exchange rates on the Company’s net cash flows; and (ii) interest rate hedging transactions, such as the 2013 Interest Rate Swap, intended for the purpose of managing interest rate risk associated with Products Corporation’s variable rate indebtedness.
Foreign Currency Forward Exchange Contracts
The FX Contracts are 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 U.S. Dollar notional amount of the FX Contracts outstanding at September 30, 2017 and December 31, 2016 was $162.5 million and $79.6 million, respectively.
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 term loan, that was incurred in connection with completing the October 2013 acquisition of The Colomer Group (the "Old Acquisition Term Loan"). The 2013 Interest Rate Swap initially had a floor of 1.00% that in December 2016 was amended to 0.75%. In connection with entering into the 2016 Term Loan Facility, the 2013 Interest 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 three-month LIBOR interest rate payments initially related to the $400 million notional amount under the Old Acquisition Term Loan over the three-year term of the 2013 Interest Rate Swap (and subsequently to the $400 million notional amount under the 2016 Term Loan Facility for the remaining balance of the term of such swap). Under the terms of the 2013 Interest Rate Swap, commencing in May 2015, Products Corporation receives from the counterparty a floating interest rate based on the higher of the three-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 fixes the interest rate on such notional amount at 5.5709% over the remaining balance of the three-year term of the 2013 Interest Rate Swap). At September 30, 2017, the fair value of the 2013 Interest Rate Swap was a liability of $1.9 million and the accumulated loss recorded in accumulated other comprehensive loss was $1.2 million, net of tax.
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 6.25% Senior Notes Offering 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 are 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, will be amortized into earnings over the remaining term of the 2013 Interest Rate Swap. At September 30,

19

REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)

2017, $2.1 million, or $1.2 million net of tax, remains as a component of accumulated other comprehensive loss related to the 2013 Interest Rate Swap. See "Quantitative Information – Derivative Financial Instruments" below.
The Company expects that $1.2 million of the deferred net losses, net of taxes, related to the 2013 Interest Rate Swap will be amortized into earnings over the next 12 months.
Credit Risk
Exposure to credit risk in the event of nonperformance by any of the counterparties is limited to the gross fair value of the derivative instruments in asset positions, which totaled $0.5 million and $2.3 million as of September 30, 2017 and December 31, 2016, respectively. The Company attempts to minimize exposure to credit risk by generally entering into derivative contracts 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. Given the current credit standing of the Company's counterparties to its derivative instruments, the Company believes that the risk of loss under these derivative instruments arising from any non-performance by any of the counterparties is remote.

Quantitative Information – Derivative Financial Instruments
The fair values of the Company's derivative financial instruments in its Consolidated Balance Sheets were as follows:
 
Fair Values of Derivative Instruments
 
Assets
 
Liabilities
 
Balance Sheet
 
September 30,
2017
 
December 31,
2016
 
Balance Sheet
 
September 30,
2017
 
December 31,
2016
 
Classification
 
Fair Value
 
Fair Value
 
Classification
 
Fair Value
 
Fair Value
Derivatives not designated as hedging instruments:
 
 
 
 
 
 
 
 
FX Contracts(a)   
Prepaid expenses and other
 
$
0.5

 
$
2.3

 
Accrued Expenses
 
$
2.9

 
$
1.1

2013 Interest Rate Swap(b)
Prepaid expenses and other
 

 

 
Accrued expenses and other
 
1.9

 
3.7

 
Other assets
 

 

 
Other long-term liabilities
 

 
1.0


(a) The fair values of the FX Contracts at September 30, 2017 and December 31, 2016 were measured based on observable market transactions of spot and forward rates at September 30, 2017 and December 31, 2016, respectively.

(b) The fair values of the 2013 Interest Rate Swap at September 30, 2017 and December 31, 2016 were measured based on the implied forward rates from the U.S. Dollar three-month LIBOR yield curve at September 30, 2017 and December 31, 2016, respectively.

The effects of the Company's derivative financial instruments on its Consolidated Statements of Operations and Comprehensive (Loss) Income were as follows for the periods presented:
 
Amount of Gain (Loss) Recognized in Other Comprehensive (Loss) Income
Three Months Ended September 30,

Nine Months Ended September 30,
2017

2016

2017

2016
Derivatives previously designated as hedging instruments:
 
 
 
 
 
 
 
2013 Interest Rate Swap, net of tax (a)
$
0.6

 
$
0.8

 
$
1.8

 
$
0.1

(a) Net of tax benefit of $0.4 million and $0.5 million for the three months ended September 30, 2017 and 2016, respectively, and $1.1 million and $0.1 million for the nine months ended September 30, 2017 and 2016, respectively.

20

REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)

 
Statement of Operations Classification
 
Amount of Gain (Loss) Recognized in Net (Loss) Income
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
Derivatives designated as hedging instruments:
 
 
 
 
 
 
 
 
2013 Interest Rate Swap
Interest Expense
 
$
(0.9
)
 
$
(1.0
)
 
$
(2.9
)
 
$
(3.2
)
Derivatives not designated as hedging instruments:
 
 
 
 
 
 
 
 
FX Contracts
Foreign currency gain (loss), net
 
$
(2.4
)
 
$
(0.3
)
 
$
(4.0
)
 
$
(0.8
)
2013 Interest Rate Swap
Miscellaneous, net
 

 

 
(0.1
)
 



11. PENSION AND POST-RETIREMENT BENEFITS
The components of net periodic benefit costs (income) for the Company’s pension and the other post-retirement benefit plans for the third quarter of 2017 and 2016 were as follows:
 


Pension Plans
 
Other
Post-Retirement
Benefit Plans
 
Three Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
Net periodic benefit costs (income):
 
Service cost
$
0.6

 
$
0.1

 
$

 
$

Interest cost
4.9

 
5.2

 
0.1

 
0.1

Expected return on plan assets
(7.1
)
 
(7.7
)
 

 

Amortization of actuarial loss
2.3

 
2.2

 

 

Total net periodic benefit costs (income)
$
0.7

 
$
(0.2
)
 
$
0.1

 
$
0.1

In the three months ended September 30, 2017, the Company recognized net periodic benefit cost of $0.8 million, compared to net periodic benefit income of $0.1 million in the three months ended September 30, 2016. The increase in costs was primarily due to lower expected return on plan assets and higher service costs during the three months ended September 30, 2017.
The components of net periodic benefit costs (income) for the Company's pension and other post-retirement benefit plans for the first nine months of 2017 and 2016 were as follows:
 


Pension Plans
 
Other
Post-Retirement
Benefit Plans

 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
Net periodic benefit costs (income):
 
Service cost
$
1.9

 
$
0.4

 
$

 
$

Interest cost
14.7

 
15.5

 
0.3

 
0.3

Expected return on plan assets
(21.4
)
 
(23.3
)
 

 

Amortization of actuarial loss
7.1

 
6.6

 
0.2

 
0.1

Curtailment gain
(0.8
)
 

 

 

Total net periodic benefit costs (income)
1.5

 
(0.8
)
 
0.5

 
0.4

Portion allocated to Revlon Holdings
(0.1
)
 
(0.1
)
 

 

 
$
1.4

 
$
(0.9
)
 
$
0.5

 
$
0.4

In the nine months ended September 30, 2017, the Company recognized net periodic benefit cost of $1.9 million, compared to net periodic benefit income of $0.5 million in the nine months ended September 30, 2016. The increase in costs was primarily

21

REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)

due to lower expected return on plan assets and higher service cost during the nine months ended September 30, 2017, partially offset by a curtailment gain resulting from a certain foreign non-qualified benefit plan.
Net periodic benefit costs (income) are reflected in the Company's Consolidated Financial Statements as follows:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
Net periodic benefit costs (income):
 
 
 
 
 
 
 
Cost of sales
$
(2.5
)
 
$
(0.6
)
 
$
(0.8
)
 
$
(1.9
)
Selling, general and administrative expense
3.3

 
0.5

 
2.7

 
1.4

Total net periodic benefit costs (income)
$
0.8

 
$
(0.1
)
 
$
1.9

 
$
(0.5
)
The Company expects that it will have net periodic benefit cost of approximately $3.0 million for its pension and other post-retirement benefit plans for all of 2017, compared with net periodic benefit income of $0.6 million in 2016.
During the third quarter of 2017, $1.7 million and $0.2 million were contributed to the Company’s pension plans and other post-retirement benefit plans, respectively. During the first nine months of 2017, $5.2 million and $0.6 million were contributed to the Company’s pension plans and other post-retirement benefit plans, respectively. During 2017, the Company expects to contribute approximately $10.0 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 14, "Pension and Post-Retirement Benefits," to the Consolidated Financial Statements in Products Corporation's 2016 Form 10-K.


12. 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., non-deductible expenses and other items. The Company’s tax provision changes quarterly based on various factors including, but not limited to, the geographical mix of earnings, enacted tax legislation, foreign, state and local income taxes, tax audit settlements and the interaction of various global tax strategies.
For the third quarter of 2017 and 2016, the Company recorded a benefit from income taxes of $10.0 million and a provision of $0.4 million, respectively. The $10.4 million increase in the benefit from income taxes was primarily due to the level and mix of earnings between jurisdictions.
The Company recorded a benefit from income taxes of $35.4 million for the first nine months of 2017 and a provision for income taxes of $18.3 million for first nine months of 2016, respectively. The $53.7 million decrease in the provision for income taxes was primarily due to the pre-tax loss from continuing operations in the first nine months of 2017.
The Company's effective tax rate for the three months ended September 30, 2017 was lower than the federal statutory rate of 35% as a result of the level and mix of earnings between jurisdictions, foreign dividends and earnings taxable in the U.S., partially offset by the effect of certain favorable discrete items.
The Company's effective tax rate for the nine months ended September 30, 2017 was lower than the federal statutory rate of 35% as a result of the level and mix of earnings between jurisdictions, foreign dividends and earnings taxable in the U.S., and state and local taxes, partially offset by the effect of certain favorable discrete items.



22

REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)

13. ACCUMULATED OTHER COMPREHENSIVE LOSS
The components of accumulated other comprehensive loss as of September 30, 2017 were as follows:
 
Foreign Currency Translation
 
Actuarial (Loss) Gain on Post-retirement Benefits
 
Deferred Gain (Loss) - Hedging
 
Other
 
Accumulated Other Comprehensive Loss
Balance at January 1, 2017
$
(24.0
)
 
$
(224.4
)
 
$
(3.0
)
 
$
(0.3
)
 
$
(251.7
)
Currency translation adjustment, net of tax of $1.5 million
5.3

 

 

 

 
5.3

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

 
6.1

 

 

 
6.1

Amortization of deferred losses related to the de-designated 2013 Interest Rate Swap, net of tax benefit of $1.1 million(b)   

 

 
1.8

 

 
1.8

Curtailment gain, net of tax of $0.3 million(c)

 
2.6

 

 

 
2.6

Other comprehensive income
$
5.3

 
$
8.7

 
$
1.8

 
$

 
$
15.8

Balance at September 30, 2017
$
(18.7
)
 
$
(215.7
)
 
$
(1.2
)
 
$
(0.3
)
 
$
(235.9
)
(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.
(b)  
See Note 10, "Financial Instruments," for further discussion of the 2013 Interest Rate Swap.
(c)  
As a result of the Elizabeth Arden Acquisition, the Company recognized $2.6 million in curtailment gains related to a foreign non-qualified defined benefit plan of Elizabeth Arden.
As shown above, other comprehensive income includes changes in the fair value of the 2013 Interest Rate Swap prior to de-designation. Following is a roll-forward of the amounts reclassified out of accumulated other comprehensive loss into earnings as of September 30, 2017:
 
 
2013
Interest Rate Swap
Beginning accumulated losses at June 30, 2017
 
$
(1.8
)
Reclassifications into earnings (net of $0.4 million tax benefit)(a)    
 
0.6

Ending accumulated losses at September 30, 2017
 
$
(1.2
)
 
 
2013
Interest Rate Swap
Beginning accumulated losses at December 31, 2016
 
$
(3.0
)
Reclassifications into earnings (net of $1.1 million tax benefit)(a)
 
1.8

Ending accumulated losses at September 30, 2017
 
$
(1.2
)
(a) 
Reclassified to interest expense.


23

REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)

Following is a roll-forward of the amounts reclassified out of accumulated other comprehensive loss into earnings as of September 30, 2016:
 
 
2013
Interest Rate Swap
Beginning accumulated losses at June 30, 2016
 
$
(4.5
)
Reclassifications into earnings (net of $0.4 million tax benefit)(a)
 
0.7

Change in fair value (net of $0.1 million tax benefit)
 
0.1

Ending accumulated losses at September 30, 2016
 
$
(3.7
)
 
 
2013
Interest Rate Swap
Beginning accumulated losses at December 31, 2015
 
$
(3.8
)
Reclassifications into earnings (net of $1.2 million tax expense)(a)
 
2.0