UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________

FORM 10-K

(Mark One)

x
☒  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2017

OR
For the fiscal year ended December 31, 2019
__OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from__________________ to _______________

For the transition period from__________________ to _______________

Commission File Number: 33-59650
REVLON CONSUMER PRODUCTS CORPORATION
(Exact name of registrant as specified in its charter)

Commission File NumberRegistrant; State of Incorporation; Address and Telephone NumberIRS Employer Identification No.
1-11178Revlon, Inc.13-3662955
Delaware
Delaware13-3662953
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
One New York Plaza
New York, New York10004
212-527-4000
33-59560Revlon Consumer Products Corporation13-3662953
Delaware
One New York Plaza
New York, New York 1000410004
(Address212-527-4000
Securities registered pursuant to Section 12(b) or 12(g) of principal executive offices)the Act:(Zip Code)
Title of each classTrading Symbol(s)Name of each exchange on which registered
Revlon, Inc.Class A Common StockREVNew York Stock Exchange
Revlon Consumer Products CorporationNoneN/AN/A


Registrant's telephone number, including area code: 212-527-4000

Securities registered pursuant to Section 12(b) or 12(g) of the Act: None

Indicate by check mark if the registrant isregistrants are a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.Yes ¨ No ☒
Yes ¨ No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes x No ¨

Indicate by check mark whether the registrantregistrants (1) hashave 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 wasregistrants were required to file such reports), and (2) hashave been subject to such filing requirements for the past 90 days. Yes ¨ Nox

Revlon, Inc.
Yes ☒
No ☐
Revlon Consumer Products Corporation
Yes ☐
No ☒


Indicate by check mark whether the registrant hasregistrants have 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x





Indicate by check mark whether theeach registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or 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. (Check one):
1

Large accelerated filer¨Accelerated filerNon-accelerated filerSmaller Reporting CompanyEmerging Growth Company
Revlon, Inc.
Yes ☐No ☒
Accelerated filer ¨Yes ☒No ☐
Yes ☐No ☒
Yes ☒No ☐
Yes ☐No ☒
Revlon Consumer Products Corporation
Non-accelerated filer x(Do not check if a smaller reporting company)Yes ☐No ☒
Smaller reporting company ¨Yes ☐No ☒
Emerging growth company ¨Yes ☒No ☐
Yes ☒No ☐
Yes ☐No ☒

If an emerging growth company, indicate by check mark if the registrant hasregistrants have 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 theeach registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x

Revlon, Inc.
Yes ☐
No ☒
Revlon Consumer Products Corporation
Yes ☐
No ☒


The aggregate market value of voting stockRevlon, Inc. Class A Common Stock held by non-affiliates (using the New York Stock Exchange closing price as of June 28, 2019, the registrant is not applicable as all 5,260 outstanding shareslast business day of the registrant's most recently completed second fiscal quarter) was approximately $131,677,719. Accordingly, the registrant qualifies under the SEC's revised rules as a "smaller reporting company."

Number of shares of common stock outstanding as of December 31, 2019:
Revlon, Inc. Class A Common Stock:53,069,832 
Revlon Consumer Products Corporation Common Stock:5,260 

At such date, (i) 46,223,321 shares of Revlon, Inc. Class A Common Stock were beneficially owned by MacAndrews & Forbes Incorporated and certain of its affiliates; and (ii) all shares of Revlon Consumer Products Corporation Common Stock were held by one affiliate, Revlon, Inc., at December 31, 2017.


The registrantRevlon Consumer Products Corporation meets the conditions set forth in General Instructions I(1)(a) and (b) of Form 10-K as, among other things, all of the registrant'sRevlon Consumer Products Corporation's equity securities are owned directly by Revlon, Inc., which is a reporting company under the Securities Exchange Act of 1934 and which has filed with the SEC on March 15, 201812, 2020 all of the material required to be filed pursuant to Section 13, 14, or 15(d) thereof and the registrantthereof. Revlon Consumer Products Corporation is therefore filing this Form 10-K with a reduced disclosure format, which omits the information otherwise required by Items 10, 11, 12 and 13 as permitted under General Instruction I(2)(c) onof Form 10-K.


DOCUMENTS INCORPORATED BY REFERENCE


Portions of Revlon, Inc.’s definitive Proxy Statement to be delivered to stockholders in connection with its Annual Stockholders' Meeting to be held on or about June 4, 2020 are incorporated by reference into Part III of this Form 10-K.


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REVLON, INC. AND SUBSIDIARIES
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES

Form 10-K
For the Year Ended December 31, 20172019
Table of ContentsINDEX


PART I
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
PART III
Item 1.Business5.
Item 1A.Risk Factors
10
Item 1B.Unresolved Staff Comments
24
Item 2.Properties
24
Item 3.Legal Proceedings
25
Item 4.Mine and Safety Disclosures
25
PART II
Item 5.Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
PART III
Item 10.

Item 11.

Item 12.

Item 13.

Item 14.
PART IV
Item 15.
Index to Consolidated Financial Statements and Schedules
Revlon, Inc. Report of Independent Registered Public Accounting Firm (Consolidated Financial Statements)
Financial Statements
F-3Revlon, Inc. Report of Independent Registered Public Accounting Firm (Internal Control Over Financial Reporting)
Financial Statement Schedule: Schedule II - Valuation and Qualifying Accounts
F-73Revlon Consumer Products Corporation Report of Independent Registered Public Accounting Firm (Consolidated Financial Statements)
Financial Statements
Item 16.
F-73
Certifications
Exhibits







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PART I - FINANCIAL INFORMATION


Item 1. Business


Background

Revlon, Consumer Products CorporationInc. ("Products Corporation"Revlon" and together with its subsidiaries, the "Company") is theconducts its business exclusively through its direct wholly-owned operating subsidiary, of Revlon Inc.Consumer Products Corporation ("Revlon"Products Corporation"), which and its subsidiaries. Revlon is an indirect majority-owned subsidiary of MacAndrews & Forbes Incorporated (together with certain of its affiliates other than Revlon and the Company, "MacAndrews & Forbes"), a corporation wholly-ownedbeneficially owned by Ronald O. Perelman. Mr. Perelman is Chairman of Revlon's and Products Corporation's Board of Directors.
The Company was founded over 8688 years ago by Charles Revson, who revolutionized the cosmetics industry by introducing nail enamels matched to lipsticks in fashion colors. Today, the Company continues Revson's legacy by producing and marketing innovative products that address consumers' wants and needs for beauty and personal care products.
The Company is a leading global beauty company with an iconic portfolio of brands. The Company develops, manufactures, markets, distributes and sells worldwide an extensive array of beauty and personal care products, including 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 continues to build 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 delightit continues to evolve and transform, with the goal of inspiring and attracting consumers around the world wherever and however they shop for beauty. The Company strivesis committed to beoperating as an ethical company that values inclusive leadershipbusiness and is committed todriving sustainable and responsible growth.


Business Strategy
The Company remains focused on its 3 key strategic pillars to drive its future success and growth. First, strengthening its iconic brands through innovation and relevant product portfolios; second, building its capabilities to better communicate and connect with its consumers through media channels where they spend the most time; and third, ensuring availability of its products where consumers shop, both in-store and increasingly online.

Strategic Review
In August 2019, it was disclosed that MacAndrews & Forbes and the Company determined to explore strategic transactions involving the Company and third parties. This review is ongoing and remains focused on exploring potential options for the Company's portfolio and regional brands (the “Strategic Review”).

Financial Information about Operating Segments
Operating segments include components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (the Company's "Chief Executive Officer") in deciding how to allocate resources and in assessing the Company's performance. As a result of the similarities in the procurement, manufacturing and distribution processes for the Company’s products, much of the information provided in the Audited Consolidated Financial Statements and provided in the segment table below is similar to, or the same as, that reviewed on a regular basis by the Company's Chief Executive Officer. The Company operates in four brand-centric reporting segments: the consumer division ("Consumer");units that are aligned with its organizational structure based on four global brand teams: Revlon; Elizabeth Arden; Portfolio; and Fragrances. The Company manufactures, markets and sells an extensive array of beauty and personal care products worldwide, including color cosmetics; fragrances; skin care; hair color, hair care and hair treatments; beauty tools; men's grooming products; anti-perspirant deodorants; and other beauty care products.
As of December 31, 2019, the professional division ("Professional"); and Other.Company’s operations are organized into the following reportable segments:
•Revlon - The Elizabeth Arden segment consists entirely of the business acquired pursuant to Products Corporation's September 7, 2016 acquisition of Elizabeth Arden, Inc. ("Elizabeth Arden," the "Elizabeth Arden Acquisition" and the "Elizabeth Arden Acquisition Date," respectively). The Professional segment consists entirely of the business acquired pursuant to Products Corporation's October 9, 2013 acquisition of The Colomer Group Participations, S.L., a Spanish company now known as Beautyge Participations, S.L. ("Colomer," the "Colomer Acquisition" and the "Colomer Acquisition Date," respectively).
The Company’s ConsumerRevlon segment is comprised of the Company's flagship Revlon brands. Revlon segment products that are primarily marketed, distributed and sold in the mass retail channel, large volume retailers, chain drug and food stores, chemist shops, hypermarkets, general merchandise stores, the Internet/e-commerce sites, television shopping, department stores, professional hair and nail salons, one-stop shopping beauty retailers and specialty cosmetic stores and perfumeries in the U.S. and internationally under brands such as Revlon, Almay, SinfulColors and Pure Ice in color cosmetics; Revlon ColorSilk and Revlon Professional in women’s hair color; and Revlonin beauty tools; Cutex in nail care products; and Mitchum in anti-perspirant deodorants.tools.
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REVLON, INC. AND SUBSIDIARIES
•Elizabeth Arden - The ConsumerElizabeth Arden segment also includes a skin care line underis comprised of the Natural Honey brand and hair color line under the Llongueras brand (licensed from a third party) that are sold in large volume retailers and other retailers, primarily in Spain.
Company's Elizabeth Arden branded products. The Elizabeth Arden segment markets, distributes and sells fragrances, skin care and color cosmetics primarily to prestige retailers, department and specialty stores, perfumeries, boutiques, e-commerce sites, the mass retail channel, specialty stores, perfumeries, department stores, boutiques, e-commerce, travel retailers and distributors, as well as direct sales to consumers via its Elizabeth Arden branded retail stores and Elizabeth Arden.comelizabetharden.com e-commerce businesswebsite, in the U.S. and internationally, under brands such as Skin Illuminating, SUPERSTART,Elizabeth Arden Ceramide, Prevage, Eight Hour, Elizabeth Arden Ceramide and SUPERSTART, Visible Difference and Skin Illuminating in the Elizabeth Arden skin care brands; and Elizabeth Arden White Tea, Elizabeth Arden Red Door, Elizabeth Arden 5th Avenue, andElizabeth Arden Green Teaand UNTOLD in Elizabeth Arden fragrances; Juicy Couture, John Varvatos, All Saints, La Perla and Wildfox in designer fragrances; and Curve, Elizabeth Taylor, Britney Spears, Christina Aguilera, Shawn Mendes, Halston,Ed Hardy, Geoffrey Beene, Alfred Sung, Giorgio Beverly Hills, Lucky Brand, PS Fine Cologne for Men, White Shoulders and Jennifer Anistonin heritage fragrances.
•Portfolio - The Company’s ProfessionalPortfolio segment markets, distributes and sells professionala comprehensive line of premium, specialty and mass products primarily to the mass retail channel, hair and nail salons and professional salon distributors in the U.S. and internationally and large volume retailers, specialty and department stores under brands such as Revlon Professional Almay and SinfulColors in hair color hair care and hair treatments; cosmetics; American Crew in men’s grooming products (which are also sold direct-to-consumer on its americancrew.com website); CND in nail polishes, gel nail color and nail enhancements, including CND Shellac enhancements; Cutex nail care products; and CND Vinylux nail polishes; and American Crew Mitchumin men’s grooming products.anti-perspirant deodorants. The ProfessionalPortfolio segment also includes a multi-cultural hair care line consisting of Creme of Nature hair care products, which are sold in both professional salons and in large volume retailers and other retailers, primarily in the U.S.; and a hair color line under the Llongueras brand (licensed from a third party) that is sold in the mass retail channel, large volume retailers and other retailers, primarily in Spain.
•Fragrances - The OtherFragrances segment includes the operating results related to the development, marketing and distribution of certain owned and licensed fragrances, as well as the distribution of prestige fragrance brands owned by third parties. These products are typically sold to retailers in the U.S. and internationally, including prestige retailers, specialty stores, e-commerce sites, the mass retail channel, travel retailers and other beauty products.international retailers. The results included within the Other segmentowned and licensed fragrances include brands such as: (i) Juicy Couture (which are not material to the Company’s consolidated resultsalso sold direct-to-consumer on its juicycouturebeauty.com website), John Varvatos and AllSaints in prestige fragrances; (ii) Britney Spears, Elizabeth Taylor, Christina Aguilera, Jennifer Aniston and Mariah Carey in celebrity fragrances; and (iii) Curve, Giorgio Beverly Hills, Ed Hardy, Charlie, Lucky Brand, ‹PS› (logo of operations.

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REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES






former Paul Sebastian brand), Alfred Sung, Halston, Geoffrey Beene and White Diamonds in mass fragrances.
For certain information regarding the Company's segments' performance, foreign and domestic operations and classes of similar products, refer to Note 18,17, "Segment Data and Related Information," to the Company’s Audited Consolidated Financial Statements in this Annual Report on Form 10-K.10-K for the fiscal year ended December 31, 2019 (the "2019 Form 10-K").



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REVLON, CONSUMER PRODUCTS CORPORATIONINC. AND SUBSIDIARIES






Products
The following table sets forth the Company's principal brands that are included in its Consumer,Revlon, Elizabeth Arden, Portfolio and ProfessionalFragrances segments by product category:
SegmentCOSMETICSHAIRMEN'S GROOMINGBEAUTY TOOLSFRAGRANCESANTI-PERSPIRANT DEODORANTSSKIN CARE / BODY CARE
OwnedLicensed*
RevlonRevlonRevlon ColorSilkRevlon
Revlon ColorStayRevlon Professional
SegmentCOSMETICSHAIRMEN'S GROOMINGBEAUTY TOOLSFRAGRANCESANTI-PERSPIRANT DEODORANTSSKIN CARE / BODY CARE
OwnedLicensed*
ConsumerRevlonRevlon ColorSilkRevlonCharlieMitchumGatineau
AlmayLlongueras*Jean NatéNatural Honey
SinfulColors
Pure Ice
Cutex
ProfessionalCNDRevlon ProfessionalAmerican Crew
Intercosmod:fi
Orofluido
UniqOne
Creme of Nature
Elizabeth ArdenElizabeth ArdenCurveElizabeth TaylorVisible Difference
Giorgio Beverly HillsBritney SpearsSUPERSTART
Elizabeth Arden White TeaChristina AguileraElizabeth Arden ProVisible Difference
Elizabeth Arden 5th AvenueJennifer AnistonPrevageElizabeth Arden Ceramide
Elizabeth Arden Green TeaPS Fine Cologne for MenEight HourElizabeth Arden Pro
Elizabeth Arden Red DoorGeoffrey BeeneElizabeth Arden CeramidePrevage
Elizabeth Arden Always RedLucky BrandSkin Illuminating
Ed HardyEight Hour
Alfred SungSUPERSTART
Juicy Couture
PortfolioCNDCreme of NatureAmerican CrewJohn VarvatosMitchumGatineau
AlmayIntercosmod:fiHalston
SinfulColorsOrofluidoWhite Shoulders
CutexLlongueras*Wildfox
Mariah Carey
FragrancesCurveShawn MendesJuicy Couture
Giorgio Beverly HillsAll SaintsJohn Varvatos
CharlieLa PerlaAllSaints
HalstonTapoutBritney Spears
Jean NatéChristina Aguilera
‹PS›**Elizabeth Taylor
White DiamondsJennifer Aniston
Mariah Carey
Alfred Sung
Ed Hardy
Lucky Brand
Geoffrey Beene
*Licensed from a third party

** Logo of former Paul Sebastian brand.

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REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES







The Company operates in four operating segments: Consumer;Revlon; Elizabeth Arden; Professional;Portfolio; and Other,Fragrances, which also compriserepresent the Company's reportablefour reporting segments. For certain information regarding the Company's segments and domestic and foreign operations, refer to Note 18,17, "Segment Data and Related Information," to the Company’s Audited Consolidated Financial Statements in this 2019 Form 10-K. A further discussion ofFurther information on the Company's brands by segment appears below.
Consumer
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Revlon Segment:
The Company’s ConsumerRevlon segment includes cosmetics, hair color and hair care, beauty tools fragrances, anti-perspirant deodorants and skin care products sold in approximately 150 countries in the mass retail channel, large volume retailers, chain drug and food stores, chemist shops, hypermarkets, general merchandise stores, e-commerce sites, television shopping, department stores, professional hair and nail salons, one-stop shopping beauty retailers and specialty cosmetics stores and perfumeries in the U.S. and internationally.
Cosmetics - The Company manufactures and markets a broad range of cosmetics, including face, lip, eye and nail products. Certain of the Company’s products incorporate patented, patent-pending or proprietary technology into their production, formulation or design. See "Research and Development" for more information.
•Revlon: The Company sells a broad range of cosmetics under its flagship Revlon brand, which are designed to fulfill consumer wants and needs and are principally priced in the upper range for large volume retailers. The Revlon brand is comprised of face makeup, including foundation, powder, blush and concealers; lip makeup, including lipstick, lip gloss and lip liner; eye makeup, including mascaras, eyeliners, eye shadows and brow products; and nail color and nail care lines. Revlon products include innovative formulas and attractive colors that appeal to a wide range of consumers. The following are the key brands within the Revlon segment:
◦Revlon ColorStay offers consumers a full range of products with long-wearing technology in face, lip, and eye;
◦Revlon PhotoReady products that are offered in face and eye makeup and are designed with innovative photochromatic pigments that bend and reflect light to give a flawless, airbrushed appearance in any light;
◦Revlon Age Defying, which consists of face makeup for women in the over-35 age bracket, with ingredients to help reduce the appearance of fine lines and wrinkles;
◦Revlon Ultra HD, which is a liquid-based lip color offered globally;
◦Revlon Super Lustrous, which is the Company’s flagship wax-based lip color and is offered in a wide variety of shades of lipstick and lip gloss; and
◦Revlon Mascara,which consists of a collection of five mascaras, each with a distinct lash benefit including lash definition, length, volume, magnified volume and length and a high impact all-in-one formula.
Hair - The Company sells hair color, hair care and hair treatment products primarily under the Company's Revlon ColorSilk and Revlon Professional franchises.
•Revlon ColorSilk hair color and hair care products are sold throughout the world in the mass retail channel to large volume retailers and other retailers and provide radiant, long-lasting color that leaves hair nourished, hydrated and ultra-conditioned.
•Revlon Professional includes hair color, hair care and hair treatment products that are distributed exclusively to professional salons, salon professionals and salon distributors and are sold in more than 85 countries. Revlon Professional is synonymous with innovation, fashion and technology to service the most creative salon professionals and their clients. Revlon Professional salon hair color and hair care products include Revlonissimo, Eksperience, Nutri Color Creme, UniqOne and Revlon Professional Equave.
Beauty tools - The Company sells Revlon beauty tools, which include nail, eye and manicure and pedicure grooming tools, eye lash curlers and a full line of makeup brushes under the Revlon brand name.

Elizabeth Arden Segment:
The Elizabeth Arden segment is comprised of the Company's Elizabeth Arden branded products. The Elizabeth Arden segment markets, distributes and sells fragrances, skin care and color cosmetics primarily to prestige retailers, department and specialty stores, perfumeries, boutiques, e-commerce sites, the mass retail channel, travel retailers and distributors, as well as direct sales to consumers via its Elizabeth Arden branded retail stores and elizabetharden.com e-commerce website, in the U.S. and internationally.
The Elizabeth Arden segment is comprised of skin care, color cosmetics and fragrances under the Elizabeth Arden brand, including the following:
Skin Care: Elizabeth Arden sells skin care and color cosmetics products including Visible Difference, Ceramide, SUPERSTART, Prevage, Eight Hour and Skin Illuminating.
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◦
Revlon ColorStay offers consumers a full range of products with long-wearing technology;
◦
Revlon PhotoReady products that are offered in face and eye makeup and are designed with innovative photochromatic pigments that bend and reflect light to give a flawless, airbrushed appearance in any light;
◦
Revlon Age Defying, which consists of face makeup for women in the over-35 age bracket, with ingredients to help reduce the appearance of fine lines and wrinkles;
◦
Revlon Ultra HD, which is a liquid-based lip color offered globally;
◦
Revlon Super Lustrous, which is the Company’s flagship wax-based lipcolor and is offered in a wide variety of shades of lipstick and lip gloss; and
◦
Revlon Mascara,which consists of a collection of five mascaras, each with a distinct lash benefit including lash definition, length, volume, magnified volume and length and a high impact all-in-one formula.
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REVLON, INC. AND SUBSIDIARIES
Fragrances: The Elizabeth Arden segment produces fragrances including Elizabeth Arden 5th Avenue, Elizabeth ArdenWhite Tea, Elizabeth Arden Red Door and Elizabeth Arden Green Tea.

Portfolio Segment: 
The Company’s Portfolio segment includes a comprehensive lineup of products sold to hair and nail salons and professional salon distributors, including hair color, shampoos, conditioners, styling products, nail polishes and nail enhancements. The Portfolio segment also includes a multi-cultural line of products sold in both professional salons, large volume retailers and mass retailers.
•American Crew and d:fi: The Company sells men’s shampoos, conditioners, gels and other hair care and men's grooming products for use and sale by professional salons under the American Crew brand name. In 2018, the AmericanCrew brand expanded into the prestige channel with the launch of the men's skin and body care line, AmericanCrew Acumen and has introduced the American Crew TechSeries product lineup. American Crew is the "Official Supplier to Men" of quality grooming products that provide the ultimate usage experience and enhance a man’s personal image. American Crew is the leading salon brand created specifically for men and is sold in more than 70 countries (as well as being sold direct-to-consumer on its americancrew.com website). The Company also sells unisex hair products under the d:fi brand, which is a value-priced full line of cleansing, conditioning and styling products.
•Almay: The Company’s Almay brand consists of hypo-allergenic, dermatologist-tested, fragrance-free cosmetics and skin care products. The Almay brand is comprised of face makeup, including foundation, pressed powder, primer and concealer; eye makeup, including eye shadows, mascaras and eyeliners; lip makeup; and makeup removers. Key brands within Almay include Almay Smart Shade in face; Almay One Coat in eye; and Almay Color + Care in lip. The Almay brand also has a significant makeup remover business under the core Almay brand name.
•SinfulColorsand Pure Ice: In addition to color cosmetics under SinfulColors, the Company’s SinfulColors and Pure Ice brands consist brand consists primarily of value-priced nail enamels, available in many bold, vivid and on-trend colors.
•Cutex: The Company's Cutex brand consists of a full range of nail care products, including nail polish remover, nail enamels, nail tools and hand and nail care treatments.
Hair - •CND: The Company sells both hairnail enhancement systems, nail polishes, gel nail color and hairtreatment products and services for use by the professional nail salon industry under the CND brand name. CND-branded professional nail, hand and foot care products throughoutare sold in more than 50 countries and the worldCompany recently introduced the CND brand into mass retail through CVS stores. CND nail products include:
◦CND Shellac brand 14+ day nail color system, which delivers 14+ days of flawless wear, superior color and mirror shine with zero dry-time and no nail damage. The CND Shellac system is a true innovation in chip-free, extended-wear nail color. In 2018, the Company launched CND Shellac Luxe, a 2-step gel polish system that is ready to large volume retailersremove in 60 seconds with no nail damage; and other retailers, primarily under the
◦CND Vinylux weekly polish, a breakthrough nail polish that uses a patent-pending technology and lasts approximately a week. While ordinary polishes become brittle and deteriorate over time, CND Vinylux dries with exposure to natural light to a flawless finish and strengthens its resistance to chips over time.
•Mitchum: The Company's Revlon ColorSilk franchise, as well as under the premium priced Llongueras Mitchumbrand (licensed from a third party) in Spain. Revlon ColorSilk products provide radiant, long-lasting color that leaves hair nourished, hydrated and ultra-conditioned.
Beauty tools - The Company sells Revlon beauty tools, which include nail, eye and manicure and pedicure grooming tools, eye lash curlers and a full lineconsists of makeup brushes under the Revlon brand name.
Fragrances - The Company sells a selection of moderately-priced fragrances in its Consumer segment, including perfumes, eau de toilettes, colognes and body sprays. The Company’s fragrance portfolio within its Consumer segment includes fragrances under globally-recognized brand names such as Charlie and Jean Naté.
Anti-perspirant deodorants - The Company sells Mitchum anti-perspirant deodorant products for men and women, with patented ingredients that provide consumers with up to 48 hours of protection.
Skin care - Within its Consumer segment,•The Company sells professional hair products under brand names such as Orofluido and Intercosmo, as well as under the premium priced Llongueras brand (licensed from a third party) in Spain. Multi-cultural hair-care products are sold under the Creme of Nature brand, primarily in the U.S., to professional salons, large volume retailers and other retailers.
•The Company also sells certain skin care products in the U.S. and internationally under various regional brands, including the Company’s Natural Honey and Company's Gatineaubrands. brand.


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Fragrances Segment:





Elizabeth Arden Segment:
The Elizabeth ArdenCompany's Fragrances segment is comprisedincludes the development, marketing and distribution of an extensive portfolio,certain owned and licensed fragrances. These products are typically sold to retailers in the U.S. and internationally, including prestige retailers, specialty stores, e-commerce sites, the following:
Elizabeth Arden: Elizabeth Arden produces skin care, color cosmeticsmass retail channel, travel retailers and fragrances under the Elizabeth Arden brand, including Visible Difference, Ceramide, SUPERSTART, Prevage, Eight Hour, Skin Illuminating, White Tea, Red Doorother international retailers. The owned and Green Tea.
Heritage, Designer, and Celebrity Fragrances: Elizabeth Arden’s heritagelicensed fragrances include a number of core brands including such as : (i) Juicy Couture (which are also sold direct-to-consumer on its juicycouturebeauty.com website), John Varvatos and AllSaints in prestige fragrances; (ii)Britney Spears, Elizabeth Taylor, Christina Aguilera,Elizabeth Taylor,  Jennifer Aniston and Mariah Carey in celebrity fragrances; and (iii) Curve,, Giorgio Beverly Hills,Ed Hardy, Jennifer AnistonCharlie, Lucky Brand, PS Fine Cologne for Men‹PS› (logo of former Paul Sebastian brand), Alfred Sung,Halston, Geoffrey Beene, Alfred Sung,and White Shoulders and Tapout. Designer fragrance brands include Juicy Couture, John Varvatos, All Saints, La Perla and Wildfox. Celebrity fragrances include Shawn Mendes and Mariah Carey.
Diamonds in mass fragrances.
Elizabeth ArdenThe Company also distributes approximately 260100 additional prestige fragrance brands owned by third parties. These products are typically sold to retailers in the U.S. and internationally, including prestige retailers and specialty stores and mass retailers, including mid-tier and chain drug retailers, e-commerce sites and other international and travel retailers.

Professional Segment: 
The Company’s Professional segment includes a comprehensive lineup of products sold to hair and nail salons and professional salon distributors, including hair color, shampoos, conditioners, styling products, nail polishes and nail enhancements. The Professional segment also includes a multi-cultural line of products sold in both professional salons, large volume retailers and other retailers.
Revlon Professional: The Company’s Revlon Professional brand includes hair color, hair care and hair treatment products that are distributed exclusively to professional salons, salon professionals and salon distributors and are sold in more than 85 countries. Revlon Professional is synonymous with innovation, fashion and technology to service the most creative salon professionals and their clients. Revlon Professional salon products include Revlonissimo NMT, Nutri Color Creme, Sensor Perm and Revlon Professional Equave.
American Crew and d:fi: The Company sells men’s shampoos, conditioners, gels and other hair care and men's grooming products for use and sale by professional salons under the American Crew brand name. American Crew is the "Official Supplier to Men" of quality grooming products that provide the ultimate usage experience and enhance a man’s personal image. American Crew is the leading salon brand created specifically for men and is sold in more than 70 countries. The Company also sells unisex hair products under the d:fi brand, which is a value-priced full line of cleansing, conditioning and styling products.
CND: The Company sells nail enhancement systems and nail color and treatment products and services for use by the professional nail salon industry under the CND brand name. CND-branded professional nail, hand and foot care products are sold in more than 85 countries and the Company recently introduced the CND brand into mass retail through CVS stores. CND nail products include:
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CND Shellac brand 14+ day nail color system, which delivers 14+ days of flawless wear, superior color and mirror shine with zero dry-time and no nail damage. The CND Shellac system is a true innovation in chip-free, extended-wear nail color; and
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CND Vinylux weekly polish, a breakthrough nail polish that uses a patent-pending technology and lasts approximately a week. While ordinary polishes become brittle and deteriorate over time, CND Vinylux dries with exposure to natural light to a flawless finish and strengthens its resistance to chips over time.
The Company also sells professional hair products under brand names such as Orofluido, UniqOne and Intercosmo.
The Company sells multi-cultural hair-care products to professional salons, large volume retailers and other retailers, primarily in the U.S., under the Creme of Nature brand.

Other Segment:
The Company’s Other segment primarily includes the distribution of certain prestige, designer and celebrity fragrances, cosmetics and skin care products.


Marketing
InThe Company uses various marketing techniques depending on the brand, type of product or target customer, among other variables. For its Consumer segment,mass retail products, the Company markets its extensive product lines covering a broad range of price points within large volume retailers and e-commerce sites in the U.S. and within large volume retailers and other retailers internationally.

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The Company uses social media and other digital marketing, television, outdoor and print advertising and public relations and influencer marketing, as well as point-of-sale merchandising, including displays and samples, coupons and other trial incentives. The Company coordinates its marketing and advertising campaigns such as the Revlon brand'sfor new Live Boldly campaign,product launches and innovation with in-store promotional and other marketing activities.an omni-channel approach. The Company develops, jointly with retailers, customized, tailored point-of-purchase and other focused marketing programs.
The Company also uses cooperative advertising programs, Company-paid or Company-subsidized demonstrators and coordinates in-store promotions and displays. Other marketing strategies, including trial-size products and couponing, are designed to introduce the Company's newest products to consumers and encourage trial and purchase in-store.
In the For Elizabeth Arden segment,products, the Company’s approach is focused on generating strong retailer and consumer demand across its key brands. The Company emphasizes a competitive marketing mix for each brand and implements plans that are designed to ensure that each brand's positioning is carried through consistently across all consumer touch points. The Company is increasingly leveraging new media, such as social networking and mobile and digital applications, along with traditional consumer reach vehicles, such as television and magazine print advertising, to engage with its consumers through their personally-preferred technologies. The Marketing programs for the Company's Elizabeth Arden segment’s marketing programs brands are also integrated with significant cooperative advertising programs that the Company plans and executes with its retailers, often linked with new product innovation and promotions.
In the Professional segment,For products primarily sold to professional salons and distributors, the Company also markets products through educational seminars on such products' application methods and consumer benefits. In addition, the Company uses professional trade advertising, social media and other digital marketing, displays and samples to communicate to professionals and consumers the quality and performance characteristics of its products. Also, inIn some countries, where the Professional segment has operations, the Company's direct sales force provides customers with point of sale communication and merchandising.merchandising for its professional products.
The Company believes that its presence in professional salons benefits the marketing and sale of its products in itssold through other segments,channels, such as mass retailers or specialty stores, as it enables the Company to improve in many of its other product categories, such as hair color, hair care, nail color, nail care and skin care. The Professional business alsopresence of regional brands internationally provides the Company with broader brand, geographic coverage and retail diversification beyond large volume retailers, among others.
Additionally, the Company maintains many brand-specific websites, such as www.revlon.com, www.elizabetharden.com, www.almay.com, www.revloncolorsilk.com, www.revlonprofessional.com, www.americancrew.com, www.cnd.com and www.mitchum.com, devoted to the Revlon, Elizabeth Arden,Almay, Revlon ColorSilk, Revlon Professional, American Crew, CND and Mitchum brands, respectively. Each of these websites featurefeatures product and promotional information for the brands and are updated regularly to stay current with the Company's new product launches and other marketing, advertising and promotional campaigns. The Company sells direct-to-consumer on-line through its elizabetharden.com, americancrew.com and juicycouturebeauty.com websites.


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Research and Development
The Company believes that it is an industry leader in the development of innovative and technologically-advanced cosmetics and beauty products. The Company's marketing and research and development groups identify consumer needs and shifts in consumer preferences in order to develop new products, introduce line extensions and promotions and redesign or reformulate existing products to satisfy these needs and preferences. The Company's research and development group is comprised of departments specialized in the technologies critical to many of the Company's product lines. The Company also utilizes specialty laboratories and manufacturers in its supply chain for the development of certain new products, such as fragrances and skin care. The Company continues to refine its rigorous process for the ongoing development and evaluation of new product concepts, led by executives in marketing, sales, research and development, and including input from operations, law and finance. This process has created a comprehensive, long-term portfolio strategy that is intended to optimize the Company's ability to regularly launch innovative new product offerings and to effectively manage the Company’s product portfolio.
The Company operates an extensive research and development facility in Edison, New Jersey for products within its Consumerunder brands such as Revlon, Almay and Elizabeth Arden segments.. The Company also has research facilities for its Professional segmentprofessional products in the U.S. (in California and Florida), Spain and Mexico. The scientists at these various facilities are responsible for performing all of the Company’s research and development activities for new products, ideas, concepts and packaging. The Company’s package development and engineering function is also part of the greater research and development organization and fosters a strong synergy of package and formula development, which is integral to a product’s success. The research and development group performs extensive safety and quality testing on the Company’s products, including toxicology, microbiology, efficacy and package testing. Additionally, quality control testing is performed at each of the Company’s manufacturing facilities.
As of December 31, 2017,2019, the Company employed approximately 200 people in its research and development activities, including specialists in pharmacology, toxicology, chemistry, microbiology, engineering, biology, dermatology and quality control. In 2017, 2016 and 2015, the Company spent $35.7 million, $37 million and $31.2 million, respectively, on research and development activities.

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Manufacturing and Related Operations and Raw Materials
During 2017,2019, the Company’s products within the Consumer and Professional segments were primarily produced at the Company’s facilities in the U.S. (North Carolina and Florida), South Africa, Spain, Italy and Mexico, and at third-party facilities around the world. Products within the A significant portion of ElizabethArden segment products were also produced at the Company’s facilities, as well asby third-party suppliers and contract manufacturers in the U.S. and Europe.
The Company continually reviews its manufacturing needs against its manufacturing capacities to identify opportunities to reduce costs and to operate more efficiently. The Company purchases raw materials and components throughout the world, and continuously pursues reductions in cost of goods through the global sourcing of raw materials and components from qualified vendors, utilizing its purchasing capacity to optimize cost reductions. The Company’s global sourcing strategy for materials and components from qualified vendors is also designed to ensure that the Company maintains a continuous supply of high qualityhigh-quality raw materials and components. The Company believes that alternate sources of raw materials and components exist and does not anticipate any significant shortages of, or difficulty in obtaining, such materials.
As previously disclosed, the Company's 2018 net sales were negatively impacted by service level disruptions that occurred at the Company's Oxford, N.C. manufacturing facility resulting from the Company's launch of a new SAP enterprise resource planning ("ERP") system. This launch impacted the Company's ability to manufacture certain quantities of finished goods and fulfill shipments to retail customers in the U.S. and internationally and caused the Company to incur substantial costs during 2018 to remediate the decline in customer service levels. As of December 31, 2018, the Oxford, N.C. manufacturing facility had resumed operating at pre-SAP levels and the Company was continuing to re-fill inventories across its retail partners, particularly internationally. (See Item 1A. "RiskRisk Factors -The "The Company depends on its Oxford, North Carolina facility for production of a substantial portion of its products within the Consumer segment.products. Disruptions at this facility and/or at other Company or third-party facilities at which the Company's products are manufactured for its Consumer, Elizabeth Arden and Professional segments, could have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows.")


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Distribution
The Company's products are sold in approximately 150 countries across six continents. The Company utilizes a dedicated sales force in countries where the Company maintains operations, and also utilizes sales representatives and independent distributors to serve certain territories and retailers. (See Item 1A. "RiskRisk Factors - The"The Company depends on a limited number of customers for a large portion of its net sales, and the loss of one or more of these customers could reduce the Company's net sales and have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows" and "Competition in the beauty industry could have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows.")
United States. Net sales in the U.S. accounted for approximately 49%47% of the Company's 20172019 net sales, which were made in multiple channels, including mass and prestige retail, e-commerce sites and specialty cosmetics stores. The Company also sells a broad range of beauty products to U.S. Government military exchanges and commissaries. The Company licenses its Revlon trademark to select manufacturers for complementary beauty-related products and accessories that the Company believes have the potential to extend the Company's brand names and image. The Elizabeth Arden and Red Door trademarks are also licensed to a third party in which the Company has a minority interest for the operation of the Elizabeth Arden Red Door Spa beauty salons and spas through which Elizabeth Arden products are sold and which also enables the Company to leverage the unique Red Door Spa heritage to generate both organic and innovation-driven growth. As of December 31, 2017, 102019, 6 of such licenses were in effect for 18 categories of beauty-beauty and fashion-related products and services. Pursuant to such licenses, the Company retains strict control over product design and development, product and service quality, advertising and the use of its trademarks. These licensing arrangements offer opportunities for the Company to generate revenues and cash flow through royalties and renewal fees, some of which are prepaid from time-to-time. During 2018, the Company entered into an agreement to re-acquire from its third-party licensee the rights to use the Elizabeth Arden and Red Door trademarks in connection with operating beauty salons and spas, which rights reverted to the Company in the fourth quarter of 2019.
The Company sells its products through the mass retail channel, prestige retailers, perfumeries, boutiques, department and specialty stores, travel retailers and distributors, as well as direct sales to consumers via its Elizabeth Arden branded retail stores and e-commerce business. In 2018, the Consumer segment, the Company’s retailCompany launched direct-to-consumer on-line selling capabilities on its elizabetharden.com and juicycouturebeauty.com websites and in 2019 on its americancrew.com and fleshbeauty.com websites. Retail merchandisers maintain the Company's point-of-sale wall displays intended to ensure that high-selling SKUs are in stock and to ensure the optimal presentation of the Company's products in retailers. The Company’s products within its Professional segmentProducts for use in professional salons are sold primarily through wholesale beauty supply distributors in the U.S. The Company's products within its Elizabeth Arden segment are sold through prestige retailers, the mass retail channel, perfumeries, boutiques, department and specialty stores, travel retailers and distributors, as well as direct sales to consumers via its 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. 
Outside of the United States. Net sales outside the U.S. accounted for approximately 51%53% of the Company's 20172019 net sales. The three countries outside the U.S. with the highest net sales were Canada,China, Australia and the U.K. and Australia, which together accounted for approximately 13%14% of the Company's 20172019 net sales. The Company distributes its mass retail products, within its Consumer segmentprestige products and fragrances through large volume retailers, chain drug and food stores, chemist shops, hypermarkets, general merchandise stores, e-commerce sites, television shopping, department and specialty stores, one-stop shopping beauty retailers, specialty cosmetics stores and perfumeries. The Company's products within the Elizabeth Arden segment are sold to perfumeries, boutiques, department and specialty stores, travel retailers e-commerce sites and distributors. The Company’s products within its Professional segmentProducts for use in professional hair and nail salons are sold directly to hair and nailthe salons by the Company's direct sales force in countries where it has operations and through wholesale beauty supply distributors in other countries outside the U.S.

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At December 31, 2017,2019, the Company actively sold its products through wholly-owned subsidiaries established in 27approximately 25 countries outside of the U.S., as well as through joint ventures in Asia and the Middle East, and through a large number of independent distributors and licensees elsewhere around the world.


Customers
The Company's principal customers for its Consumer segmentmass retail products, prestige products and fragrances include large volume retailers and chain drug stores, including such well-known retailers such as Walmart, CVS, Target, Kohl’s, Walgreens, TJ Maxx and Target in the U.S., Shoppers DrugMart in Canada, A.S. Watson & Co. retail chains in Asia Pacific and Europe and Walgreens Boots Alliance in the U.S. and the U.K. Walmart and its affiliates worldwide accounted for approximately 16% of the Company's 2017 consolidated net sales.
The Company's principal customers for its Elizabeth Arden segment include prestige retailers; specialty stores andMarshalls, department stores such as Macy’s, Dillard’s, Ulta, Belk, Sephora, Bloomingdales and Nordstrom;Nordstrom in the U.S. mass retailers, including large volume; Shoppers DrugMart in Canada; A.S. Watson & Co. retail chains in Asia Pacific and mid-tier retailersEurope; Walgreens Boots Alliance in the U.S. and chain drug stores, suchthe U.K.; Debenhams and Superdrug Stores in the U.K.; as Walmart, Target, Kohl’s, Walgreens, CVS, TJ Maxx and Marshalls; and international retailers, including prestige retailers,well as a range of specialty stores, department stores, perfumeries and boutiques such as Boots, Debenhams, Superdrug Stores, The Perfume Shop, Hudson’s Bay, Shoppers Drug Mart, Myer, Douglas and various international and travel retailers such as Nuance, Heinemann and World Duty Free.Free throughout various international regions, and e-commerce retailers such as Tmall in China.
The Company's principal customers for its Professional segmentprofessional products include Beauty Systems Group, Salon Centric and Ulta Salon, Cosmetics & Fragrance, as well as individual hair and nail salons and other distributors to professional salons.
As is customary in the industry, none of the Company’s customers isare under an obligation to continue purchasing products from the Company in the future.
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Walmart and its affiliates worldwide accounted for approximately 15% of the Company's 2019 consolidated net sales. The Company expects that Walmart and a small number of other customers will, in the aggregate, continue to account for a large portion of the Company's net sales. (See Item 1A. Risk Factors - "The Company depends on a limited number of customers for a large portion of its net sales, and the loss of one or more of these customers could reduce the Company's net sales and have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows.")


Competition
The Company's cosmetics, fragrance, skin care, hair and beauty care products business categories are highly competitive. The Company competes primarily by:
•developing quality products with innovative performance features, shades, finishes, components and packaging;
•educating consumers, retail customers and salon professionals about the benefits of the Company’s products;
•anticipating and responding to changing consumer, retail customer and salon professional demands in a timely manner, including the timing of new product introductions and line extensions;
•offering attractively priced products relative to the product benefits provided;
•maintaining favorable brand recognition;
•generating competitive margins and inventory turns for its customers by providing relevant products and executing effective pricing, incentive and promotional programs and marketing campaigns, as well as social media and influencer marketing activities;
•ensuring product availability through effective planning and replenishment collaboration with the Company's customers;
•providing strong and effective advertising, marketing, promotion, social media, influencer and merchandising support;
•leveraging e-commerce, social media and mobile commerce initiatives and developing an effective omni-channel strategy to optimize the opportunity for consumers to interact with and purchase the Company's products;products both on-line and in brick and mortar outlets;
•maintaining an effective sales force and distributor network; and
•obtaining and retaining sufficient retail display and floor space, optimal in-store positioning and effective presentation of its products on-shelf.
The Company competes in selected product categories against numerous multi-national manufacturers, in both the Consumer and Professional segments, as well as with expanding private label and store-owned brands, particularly in the Consumer segment.mass retail channel. In addition to products sold in large volume retailers, distributors, wholesalers, professional salons and demonstrator-assisted retailers, the Company's products also compete with products sold in prestige and department stores, television shopping, door-to-door, specialty stores, one-stop shopping beauty retailers, e-commerce sites, perfumeries and other distribution outlets. The Company's competitors include, among others, L'Oréal S.A., The Procter & Gamble Company, Avon Products,The Estée Lauder Companies Inc. & New Avon LLC,, Coty Inc., Shiseido Co., Johnson & Johnson, Kao Corp., Henkel AG & Co., Unilever PLC/Unilever N.V., Beiersdorf AG, Chanel S.A., L Brands, Inc., AmorePacific Corporation, Johnson & Johnson, LG Household & Healthcare, Natura & Co./Avon Products, Colgate-Palmolive Company, Puig, Mary Kay Inc., Hand & Nail Harmony, Inc., Oriflame Holding AG,

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Markwins International Corporation, Sephora (a division of LVMH Moët Henessy Louis Vuitton SE), Boots UK Limited, e.l.f. Beauty, Inc.The Company also competes to a growing extent against e-commerce focused micro-beauty brands, such as Glossier, Inc., NYX Cosmetics and TheUrban Decay Cosmetics (both acquired by L'Oréal), Anastasia Beverly Hills, Sigma Beauty, Benefit Cosmetics LLC (a subsidiary of LVMH), BECCA, Inc, and Too Faced Cosmetics, LLC (both acquired by Estée Lauder Companies Inc.Lauder). (See Item 1A. "RiskRisk Factors - Competition"Competition in the beauty industry could have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows.")


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Patents, Trademarks and Proprietary Technology
The Company considers trademark protection to be very important to its business. The Company’s trademarks are registered in the U.S. and in approximately 150 other countries. SignificantThe Company’ssignificant trademarks include include: (i) in the Company’s Revlon segment, Revlon, Revlon ColorStay, Revlon ColorSilk, Revlon PhotoReady, Revlon Super Lustrous, Almay, Almay Smart Shade, SinfulColors, Pure Ice,Mitchum, Charlie, Jean Naté, Cutex, Revlon ColorSilk, and Revlon Professional Intercosmo, Orofluido, UniqOne, American Crew, Creme of Nature, CND, CND Shellac, CND Vinylux, Gatineau and Natural Honey. With; (ii) in the acquisition of Elizabeth Arden, the Company now also owns or has rights to use other significant trademarks for the manufacture, marketing, distribution and sale of numerous fragrance, cosmetic and skin care brands in ourCompany’s Elizabeth Arden segment, including owned marks such as Elizabeth Arden, Prevage, Eight Hour, SuperStart, Visible Difference, Elizabeth Arden Red Door, Elizabeth Arden 5th Avenue, Elizabeth Arden Always Red, Elizabeth Arden White Tea and Elizabeth Arden Green Tea Visible Difference, Prevage, Eight Hour, SuperStart; (iii) in the Company’s Portfolio segment, Almay, Almay Smart Shade, American Crew, CND, CND Shellac Luxe, CND Vinylux, SinfulColors, Untold,Mitchum, Cutex, Intercosmo, Orofluido, Creme of Nature and Gatineau; and (iv) in the Company’s Fragrances segment, owned marks such as Curve, Giorgio Beverly Hills, Curve,Charlie, Halston, Jean Naté, ‹PS› (logo of former Paul Sebastian brand), Untold, andWhite Diamonds,and as well as licensed trademarks such as Christina Aguilera, Britney Spears, Shawn Mendes, Juicy Couture (which are also sold direct-to-consumer on its juicycouturebeauty.com website), John Varvatos and AllSaints in prestige fragrances; Britney Spears, Elizabeth Taylor, Christina Aguilera, Jennifer Aniston and Mariah Carey in celebrity fragrances; and Ed Hardy, Lucky Brand John Varvatos, All Saints, La Perla, , Alfred Sung Elizabeth Taylor,and Geoffrey Beene Ed Hardy, Jennifer Aniston, Mariah Carey and Wildfox. in mass fragrances. The Company regularly renews its trademark registrations in the ordinary course of business.
The Company utilizes certain proprietary and/or patented technologies in the formulation, packaging and/or manufacture of a number of the Company’s products, including, among others, Revlon Age Defying cosmetics, Almay Smart Shade makeup, Revlon ColorSilk hair color, the Prevage skin care line, products, Mitchum anti-perspirant deodorants, CND ShellacLuxe nail color systems and CND Vinylux nail polishes. The Company considers its proprietary technology and patent protection to be important to its business.
The Company files patentspatent applications in the ordinary course of business onfor certain of the Company’s new technologies. Utility patents in the U.S. are enforceable for at least 20 years and internationalIn general, utility patents are enforceable for up to 20 years.years from the patent application filing date, subject to paying periodic maintenance fees. The patents that the Company currently has in placeowns expire at various times between 20182020 and 20352037 and the Company expects to continue to file patent applications onfor certain of its technologies in the ordinary course of business.


Government Regulation
The Company is subject to regulation by the Federal Trade Commission (the "FTC") and the Food and Drug Administration (the "FDA") in the U.S., as well as various other federal, state, local and foreign regulatory authorities, including those in the European Union (the "EU"), Canada and other countries in which the Company operates. The Company’s Oxford, North Carolina manufacturing facilityis registered with the FDA as a drug manufacturing establishment, permitting the manufacture of cosmetics and other beauty-care products that contain over-the-counter drug ingredients, such as sunscreens, anti-perspirant deodorants and anti-dandruff hair-care products. Compliance with federal, state, local and foreign laws and regulations pertaining to the discharge of materials into the environment, or otherwise relating to the protection of the environment, has not had, and is not anticipated to have, a material effect on the Company's capital expenditures, earnings or competitive position. Regulations in the U.S., the EU, Canada and in other countries in which the Company operates that are designed to protect consumers or the environment have an increasing influence on the Company's product claims, ingredients and packaging. (See "RiskItem 1A. Risk Factors - The Company’s"The Company's products are subject to federal, state and international regulations that could have a material adverse effect on the Company’sCompany's business, prospects, results of operations, financial condition and/or cash flows.")


Employees
As of December 31, 2017,2019, the Company employed approximately 7,8007,100 people, of which approximately 20% were covered by collective bargaining agreements. The Company's total employee population includes the impacts of integration initiatives in connection with the EA Integration Restructuring Program and the 2018 Optimization Program (as hereinafter described), including the impacts of insourcing efforts. The Company believes that its employee relations are satisfactory.


Available Information
The public may read and copy anyaccess materials that the Company files with the Securities and Exchange Commission ("SEC"), including, without limitation, its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, aton the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. Information in the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file with the SECSEC's website at http://www.sec.gov. The Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements and amendments to those reports are also available free of charge on the Company's Internet website at http://www.revloninc.com as soon as reasonably practicable after such reports are electronically filed with or furnished to the SEC.


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Item 1A. Risk Factors


In addition to the other information in this report, investors should consider carefully the following risk factors when evaluating the Company’s business. For definitions of certain capitalized terms used in this Form 10-K referring to the Company's debt facilities, see Part II, Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations - Financial Condition, Liquidity and Capital Resources - Long-Term Debt Instruments" of this 2019 Form 10-K.

Revlon is a holding company with no business operations of its own and is dependent on its subsidiaries to pay certain expenses and dividends. In addition, shares of the capital stock of Products Corporation, Revlon's wholly-owned operating subsidiary, are pledged by Revlon to secure its obligations under the 2016 Credit Agreements and the 2019 Term Loan Facility.
Revlon is a holding company with no business operations of its own. Revlon's only material asset is all of the outstanding capital stock of Products Corporation, Revlon's wholly-owned operating subsidiary, through which Revlon conducts its business operations. As such, Revlon's net income has historically consisted predominantly of its equity in the net loss of Products Corporation, which for 2019 and 2018 was $151.2 million and $289.1 million, respectively (in each case excluding $7.9 million and $6.3 million, respectively, in expenses primarily related to Revlon being a public holding company). Revlon is dependent on the earnings and cash flow of, and dividends and distributions from, Products Corporation to pay Revlon’s expenses incidental to being a public holding company and to pay any cash dividend or distribution on its Class A Common Stock in each case that may be authorized by Revlon’s Board of Directors.
Products Corporation may not generate sufficient cash flow to pay dividends or distribute funds to Revlon because, for example, Products Corporation may not generate sufficient cash or net income; state laws may restrict or prohibit Products Corporation from issuing dividends or making distributions unless Products Corporation has sufficient surplus or net profits, which Products Corporation may not have; or because contractual restrictions, including negative covenants contained in Products Corporation’s various debt instruments, may prohibit or limit such dividends or distributions.
The terms of Products Corporation's 2016 Credit Agreements, the indentures governing Products Corporation's 6.25% Senior Notes due 2024 (the "6.25% Senior Notes Indenture" and the "6.25% Senior Notes," respectively) and 5.75% Senior Notes due 2021 (the "5.75% Senior Notes Indenture" and the "5.75% Senior Notes," respectively, and, together with the 6.25% Senior Notes Indenture, the "Senior Notes Indentures" and the "Senior Notes," respectively) and the 2019 Term Loan Facility (as hereinafter defined) generally restrict Products Corporation from paying dividends or making distributions to Revlon, except in limited circumstances. For example, Products Corporation is permitted to pay dividends and make distributions to Revlon to enable Revlon to, among other things, maintain its existence and its ownership of Products Corporation, such as paying professional fees (e.g., legal, accounting and insurance fees), regulatory fees (e.g., SEC filing fees and NYSE listing fees), pay certain taxes and other expenses related to being a public holding company and, subject to certain limitations, to pay dividends, if any, on Revlon’s outstanding securities or make distributions in certain circumstances to finance Revlon’s purchase of shares of its Class A Common Stock issued in connection with the delivery of such shares to grantees under the Fourth Amended and Restated Revlon, Inc. Stock Plan, as amended. These limitations therefore restrict Revlon's ability to pay dividends on its Class A Common Stock.
All of the shares of Products Corporation’s capital stock held by Revlon are pledged to secure Revlon’s guarantee of Products Corporation's obligations under its 2016 Credit Agreements and the 2019 Term Loan Facility. A foreclosure upon the shares of Products Corporation's common stock would result in Revlon no longer holding its only material asset, would have a material adverse effect on the holders and price of Revlon’s Class A Common Stock and would be a change of control under Products Corporation’s other debt instruments. (See also Item 1A. Risk Factors - "Shares of Revlon Class A Common Stock and Products Corporation's capital stock are pledged to secure various of Revlon's and/or other of the Company's affiliates’ obligations and foreclosure upon these shares or dispositions of shares could result in the acceleration of debt under Products Corporation's 2016 Senior Credit Facilities, 2018 Foreign Asset-Based Term Facility, 2019 Term Loan Facility, Amended 2019 Senior Line of Credit Facility and/or its Senior Notes and could have other consequences.")
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Products Corporation’s substantial indebtedness including the indebtedness it has incurred in connection with the Elizabeth Arden Acquisition, could adversely affect the Company’s operations and flexibility and Products Corporation’s ability to service its debt.
Products Corporation has a substantial amount of outstanding indebtedness. As of December 31, 20172019 the Company’s total indebtedness was $2,897.4$3,252.8 million (or $2,836.3$3,196.4 million net of discounts and debt issuance costs), including: (i) $450$450.0 million in aggregate principal amount of its 6.25% Senior Notes; (ii) $500$500.0 million in aggregate principal amount of its 5.75% Senior Notes; (iii) $157$230.9 million of secured indebtedness under Tranche A of its Amended 2016 Revolving Credit Facility; (iv) $1,777.5$41.5 million of secured indebtedness under Tranche B of its Amended 2016 Revolving Credit Facility; (v) $1,741.5 million in aggregate principal amount of secured indebtedness under its 2016 Term Loan Facility; (vi) $86.3 million in aggregate principal amount of secured indebtedness under its 2018 Foreign Asset-Based Term Facility (as hereinafter defined); (vii) $200.0 million in aggregate principal amount of secured indebtedness under its 2019 Term Loan Facility; (viii) nil in aggregate principal amount of indebtedness under its Amended 2019 Senior Line of Credit Facility (as hereinafter defined); and (v) $12.9(ix) $2.6 million in aggregate principal amount of other indebtedness. In addition, as of such date Products Corporation would have had the ability to incur an additional $193$157.7 million of secured indebtedness under its Amended 2016 Revolving Credit Facility and $30.0 million in aggregate principal amount of indebtedness under its Amended 2019 Senior Line of Credit Facility. If the Company is unable to maintain or increase its profitability and cash flow and sustain such results in future periods, it could adversely affect the Company's operations and Products Corporation's ability to service its debt and/or comply with the financial and/or operating covenants under its various debt instruments. (See also Item 1A. Risk Factors - "Restrictions and covenants in Products Corporation’s various debt instruments limit its ability to take certain actions and impose consequences in the event of failure to comply.")
The Company is subject to the risks normally associated with substantial indebtedness, including the risk that the Company’s profitability and cash flow will be insufficient to meet required payments of principal and interest under Products Corporation’s various debt instruments, and the risk that Products Corporation will be unable to refinance existing indebtedness when it becomes due or, if it is unable to comply with the financial or operating covenants under its various debt instruments, to obtain any necessary consents, waivers or amendments or that the terms of any such refinancing and/or consents, waivers or amendments will be less favorable than the current terms of such indebtedness. Products Corporation’s substantial indebtedness could also have the effect of:
•limiting the Company’s ability to fund (including by obtaining additional financing) the costs and expenses of executing the Company’s business initiatives, (including activities related to the integration of the Elizabeth Arden business), future working capital, capital expenditures, advertising, promotional and/or marketing expenses, new product development costs, purchases and reconfigurations of wall displays, acquisitions, acquisitionand related integration costs, investments, restructuring programs and other general corporate purposes;
•requiring the Company to dedicate a substantial portion of its cash flow from operations to payments on Products Corporation’s indebtedness, thereby reducing the availability of the Company’s cash flow necessary for executing the Company’s business initiatives and for other general corporate purposes;
•placing the Company at a competitive disadvantage compared to its competitors that have less debt;
•exposing the Company to potential events of default (if not cured or waived) under the financial and operating covenants contained in Products Corporation’s various debt instruments;
•limiting the Company’s flexibility in responding to changes in its business and the industry in which it operates; and
•making the Company more vulnerable in the event of adverse economic conditions or a downturn in its business.
Although agreements governing Products Corporation’s indebtedness, including the 2016 Credit Agreements, and the Senior Notes Indentures and the 2019 Term Loan Agreement (as hereinafter defined), limit Products Corporation’s ability to borrow funds, under certain circumstances Products Corporation is allowed to borrow a significant amount of additional money, some of which, in certain circumstances and subject to certain limitations, could be secured indebtedness. To the extent that more debt, whether secured or unsecured, is added to the Company's current debt levels, the risks described above would increase further.See “Recent Developments – 2020 Refinancing Transactions” in Item 7. “Combined Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

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Products Corporation’s ability to pay the principal amount of its indebtedness depends on many factors.

The 5.75% Senior Notes mature in 2021,Tranche B under the Amended 2016 Revolving Credit Facility matures no later than 2021,April 2020; the Amended 2019 Senior Line of Credit Facility matures on December 31, 2020; the 5.75% Senior Notes mature in February 2021; the 2018 Foreign Asset-Based Term Facility matures in July 2021; Tranche A under the Amended 2016 Revolving Credit Facility matures no later than September 2021; the 2019 Term Loan Facility matures no later than August 2023; the 2016 Term Loan Facility matures no later than 2023September 2023; and the 6.25% Senior Notes mature in August 2024. Also, while the 2019 Term Loan Facility is scheduled to mature no later than August 2023, its maturity would accelerate to the earliest of: (y) the 180th day prior to the maturity of Products Corporation’s existing 2016 Term Loan Facility, if any loans under the 2016 Term Loan Facility remain outstanding and have not been replaced or refinanced by such date; and (z) the date of any springing maturity of the 2016 Term Loan Facility (i.e., the 91st day prior to the maturity of the 5.75% Senior Notes due February 15, 2021 if any 5.75% Senior Notes remain outstanding by such date). Tranche A of the Amended 2016 Revolving Credit Facility has a springing maturity similar to the 2016 Term Loan Facility. For a more complete description of the maturities of these debt instruments, including events that could accelerate their respective maturities, see Note 9, “Debt” to the Company's Audited Consolidated Financial Statements in this 2019 Form 10-K. See also, “Recent Developments – 2020 Refinancing Transactions” in Item 7. “Combined Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Products Corporation currently anticipates that, in order to pay the principal amount of its outstanding indebtedness upon the occurrence of any event of default, or to repurchase any of the Senior Notes if a change of control occurs, or in the event that Products Corporation’s cash flows from operations are insufficient to allow it to pay the principal amount of its indebtedness by their respective maturity dates, the Company will be

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required to refinance some or all of Products Corporation’s indebtedness, seek to sell assets or operations, seek to sell additional Revlon equity, seek to sell debt securities of Revlon or Products Corporation and/or seek additional capital contributions or loans from MacAndrews & Forbes Revlon or from the Company’s other affiliates and/or third parties. The Company may be unable to take any of these actions due to a variety of commercial or market factors or constraints in Products Corporation’s various debt instruments, including, for example, market conditions being unfavorable for an equity or debt issuance, additional capital contributions or loans not being available from affiliates and/or third parties, or that the transactions may not be permitted under the terms of Products Corporation’s various debt instruments then in effect, including restrictions on the incurrence of additional debt, incurrence of liens, asset dispositions and/or related party transactions included in such debt instruments. Such actions, if ever taken, may not enable the Company to satisfy its cash requirements if the actions do not result in sufficient cost reductions or generate a sufficient amount of additional capital, as the case may be.
None of the Company’s affiliates are required to make any capital contributions, loans or other payments to Products Corporation regarding its obligations on its indebtedness.indebtedness, other than the Amended 2019 Senior Line of Credit Facility. Products Corporation may not be able to pay the principal amount of its indebtedness using any of the above actions because, under certain circumstances, the 2016 Credit Agreements, the 2018 Foreign Asset-Based Term Agreement, the 2019 Term Loan Agreement, the Senior Notes Indentures, any of Products Corporation's other debt instruments and/or the debt instruments of Products Corporation’s subsidiaries then in effect may not permit the Company to take such actions. (See also Item 1A. Risk Factors - "Restrictions and covenants in Products Corporation’s various debt instruments limit its ability to take certain actions and impose consequences in the event of failure to comply").
The future state of the credit markets, including any volatility and/or tightening of the credit markets and reduction in credit availability, could adversely impact the Company’s ability to refinance or replace, in whole or in part, Products Corporation’s outstanding indebtedness by their respective maturity dates, which could have a material adverse effect on the Company’s business, prospects, results of operations, financial condition and/or cash flows.

Restrictions and covenants in Products Corporation’s various debt instruments limit its ability to take certain actions and impose consequences in the event of failure to comply.

comply.
The agreements that govern Products Corporation's indebtedness, including the 2016 Credit Agreements, the 2018 Foreign Asset-Based Term Agreement, the 2019 Term Loan Agreement and itsProducts Corporation's Senior Notes Indentures, contain a number of significant restrictions and covenants that limit Products Corporation’s ability (subject in each case to certain exceptions) to, among other things:
•borrow money;
•use assets as security in other borrowings or transactions;
•pay dividends on stock or purchase stock;
•sell assets and use the proceeds from such sales;
•enter into certain transactions with affiliates;
•make certain investments;
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•prepay, redeem or repurchase specified indebtedness; and
•permit restrictions on the payment of dividends to Products Corporation by its subsidiaries.
These covenants affect Products Corporation’s operating flexibility by, among other things, restricting its ability to incur indebtedness that could be used to fund the costs of executing the Company’s business initiatives and to grow the Company’s business, as well as to fund general corporate purposes.
Certain breaches under the 2016 Credit Agreements, the 2018 Foreign Asset-Based Term Agreement, the 2019 Term Loan Agreement, the Amended 2019 Senior Line of Credit Agreement and/or the Senior Notes Indentures would permit the Company’s lenders to accelerate amounts outstanding thereunder. The acceleration of amounts outstanding under the 2016 Senior Credit Facilities, the 2018 Foreign Asset-Based Term Facility, the 2019 Term Loan Facility, the Amended 2019 Senior Line of Credit Facility and/or the Senior Notes Indentures would in certain circumstances constitute an event of default under the other instruments permitting amounts outstanding under such instruments to be accelerated. See “Recent Developments – 2020 Refinancing Transactions” in Item 7. “Combined Management’s Discussion and Analysis of Financial Condition and Results of Operations.” In addition, holders of the Senior Notes may require Products Corporation to repurchase their notes in the event of a change of control under the applicable indenture and a change of control would be an event of default under the 2016 Credit Agreements.Agreements, the 2018 Foreign Asset-Based Term Agreement and the 2019 Term Loan Agreement. Products Corporation may not have sufficient funds at the time of any such breach or change of control to repay, in full or in part, amounts outstanding under the 2016 Senior Credit Facilities, the 2019 Term Loan Facility, the Amended 2019 Senior Line of Credit Facility or the 2018 Asset-Based Term Facility or to repay, repurchase or redeem, in full or in part, the Senior Notes.
Events beyond the Company’s control could impair the Company’s operating performance, which could affect Products Corporation’s ability to comply with the terms of Products Corporation’s debt instruments. Such events may include decreased consumer spending in response to weak economic conditions or weakness in the consumption of beauty products;products in one or more of the Company's segments; adverse changes in tariffs, foreign currency exchange rates, foreign currency controls and/or government-mandated pricing controls; decreased sales of the Company's products as a result of increased competitive activities by the Company’s competitors and/or decreased performance

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by third-party suppliers;suppliers, whether due to shortages of raw materials or otherwise; changes in consumer purchasing habits, including with respect to retailer preferences and/or among sales channels;channels, such as due to any further consumption declines that the Company has experienced; inventory management by the Company's customers; inventory de-stocking by certain retail customers; space reconfigurations or reductions in display space by the Company's customers; retail store closures in the brick-and-mortar channels where the Company sells its products, as consumers continue to shift purchases to online and e-commerce channels; changes in pricing, marketing, advertising and/or promotional strategies by the Company's customers; less than anticipated results from the Company's existing or new products or from its advertising, promotional, pricing and/or marketing plans; or if the Company’s expenses, including, without limitation, those related to integrating the Elizabeth Arden business into the Company’s business, as well as those for pension expense under its benefit plans, restructuring programs and related severance expenses, acquisitions and related integration costs, capital expenditures, costs related to litigation, advertising, promotional and/or marketing activities or for sales returns related to any reduction of space by the Company's customers, product discontinuances or otherwise, exceed the Company's anticipated level of expenses.
Under such circumstances, Products Corporation may be unable to comply with the requirements of one or more of its various debt instruments, including any financial covenants in the 2016 Credit Agreements.Agreementsand the 2019 Term Loan Agreement. If Products Corporation is unable to satisfy such requirements at any future time, Products Corporation would need to seek an amendment or waiver of such requirements. The respective lenders under the 2016 Credit Agreements and/or the 2019 Term Loan Agreement may not consent to any amendment or waiver requests that Products Corporation may make in the future, and, if they do consent, they may only do so on terms that are unfavorable to Products Corporation and/or Revlon.

If Products Corporation is unable to obtain any such waiver or amendment, Products Corporation's inability to meet the requirements of the 2016 Credit Agreements and/or the 2019 Term Loan Agreement would constitute an event of default under such agreements, which, under certain circumstances, would permit the bank lenders to accelerate the repayment of the 2016 Senior Credit Facilities and the 2019 Term Loan Facility, and, under certain circumstances, would constitute an event of default under the 2018 Foreign Asset-Based Term Agreement, the Amended 2019 Senior Line of Credit Agreement and the Senior Notes Indentures. An event of default under the Senior Notes Indentures would permit the respective Notes Trustee or the Requisite Note Holders to accelerate payment of the principal and accrued, but unpaid, interest on the respective Senior Notes. An event of default under the Amended 2019 Senior Line of Credit Agreement, under certain circumstances, would permit the lenders to accelerate the repayment of such facility.

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Products Corporation’s assets and/or cash flows and/or that of Products Corporation’s subsidiaries may not be sufficient to fully repay borrowings under its various debt instruments, either upon maturity or if accelerated upon an event of default or change of control, and if the Company is required to repay, repurchase and/or redeem, in whole or in part, amounts outstanding under its 2016 Senior Credit Facilities, the 2018 Foreign Asset-Based Term Facility, 2019 Term Loan Facility, Amended 2019 Senior Line of Credit Facility and/or its Senior Notes, it may be unable to refinance or restructure the payments on such debt. See “Recent Developments – 2020 Refinancing Transactions” in Item 7. “Combined Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Further, if the Company is unable to repay, refinance or restructure its indebtedness under the 2016 Senior Credit Facilities, the 2018 Foreign Asset-Based Term Facility and/or the 2019 Term Loan Facility, the lenders could proceed against the collateral securing that indebtedness, subject to certain conditions and limitations as set forth in the related intercreditor agreement.agreements and collateral agreements. As described above, the consequences of complying with the foregoing restrictions, covenants and limitations under the Company’s various debt instruments could have a material adverse effect on the Company’s business, prospects, results of operations, financial condition and/or cash flows.

Limits on Products Corporation's borrowing capacity under the Amended 2016 Revolving Credit Facility and the 2018 Foreign Asset-Based Term Facility may affect the Company's ability to finance its operations.

At December 31, 2017,2019, Products Corporation had $157$272.4 million in aggregate borrowings outstanding under the Amended 2016 Revolving Credit Facility and $86.3 million outstanding under the 2016 Revolving Credit2018 Foreign Asset-Based Term Facility. While the Amended 2016 Revolving Credit Facility provides for up to $400$441.5 million of commitments, the Company’s ability to borrow funds under such facility is limited by a borrowing base determined relative to the value, from time-to-time, of certain eligible assets.
IfWhile the 2018 Foreign Asset-Based Term Facility provides for a euro-denominated senior secured asset-based term loan facility in an aggregate principal amount of €77 million, the full amount of which was funded on the closing of the facility in July 2018, the 2018 Foreign Asset-Based Term Agreement requires the maintenance of a borrowing base supporting the borrowing thereunder, based on the sum of: (i) 85% of eligible accounts receivable; and (ii) 90% of the net orderly liquidation value of eligible inventory, in each case with respect to certain of Products Corporation’s subsidiaries organized in Australia, Bermuda, Germany, Italy, Spain and Switzerland, subject to certain customary availability reserves.
Under the Amended 2016 Revolving Credit Facility and the 2018 Foreign Asset-Based Term Facility, if the value of the Company's eligible assets is not sufficient to support the full $400 million borrowing base under the respective facility, Products Corporation will not have complete access to the entire commitment available under the 2016 Revolving Credit Facility,such facilities, but rather would have access to a lesser amount as determined by the borrowing base.
The Borrowers must prepay loans under the Amended 2016 Revolving Credit Facility and the 2018 Foreign Asset-Based Term Facility to the extent that outstanding loans exceed its respective borrowing base Under the 2018 Foreign Asset-Based Term Facility, in lieu of a mandatory prepayment, the Loan Parties may deposit cash in an amount not to exceed 10% of the borrowing base into a designated U.S. bank account with the Agent that is subject to a control agreement (such cash, the "Qualified Cash"). If any such over-advance has not been cured within 60 days, the Qualified Cash may be applied, at the Agent’s option, to prepay the loans under the 2018 Foreign Asset-Based Term Facility. To the extent certain levels of availability are obtained during a certain period of time, the Borrowers can withdraw the Qualified Cash from such bank account. In addition, the 2018 Foreign Asset-Based Term Facility is subject to mandatory prepayments from the net proceeds from the incurrence by the Loan Parties of debt not permitted thereunder.
As Products Corporation continues to manage its working capital (including its and its subsidiaries inventory and accounts receivable, which are significant components of the eligible assets comprising the borrowing base)base under the Amended 2016 Revolving Credit Facility and the 2018 Foreign Asset-Based Term Facility), this could reduce the borrowing base under the Amended 2016 Revolving Credit Facility and/or the 2018 Asset-Based Term Facility. Further, if Products Corporation borrows funds under such facility,the Amended 2016 Revolving Credit Facility, subsequent changes in the value or eligibility of the assets within the borrowing base could require Products Corporation to pay down amounts outstanding under such facility so that there is no amount outstanding in excess of the then-existing borrowing base. Likewise, subsequent changes in the value or eligibility of the assets within the borrowing base under the 2018 Foreign Asset-Based Term Facility could require Products Corporation to pay down amounts outstanding under such facility so that there is no amount outstanding in excess of the then-existing borrowing base, which, unlike the Amended 2016 Revolving Credit Facility, cannot be re-borrowed.
The Company’s ability to borrow under the Amended 2016 Revolving Credit Facility is also conditioned upon its compliance with other covenants in the agreements that govern the 2016 Senior Credit Facilities. Because of these limitations, the Company may not always be able to meet its cash requirements with funds borrowed under the Amended 2016 Revolving Credit Facility, which could have a material adverse effect on the Company’s business, prospects, results of operations, financial condition and/or cash flows.
At December 31, 2017, the aggregate principal amount outstanding under the 2016 Term Loan Facility was $1,777.5 million, with the Company having a liquidity position of $280.1 million, consisting of $87.1 million of unrestricted cash and cash equivalents (net of any outstanding checks), as well as $193 million in available borrowings under Product Corporation's $400 million 2016 Revolving Credit Facility, based upon the borrowing base of $381.9 million, less $10.1 million of undrawn outstanding letters of credit, $21.8 million of outstanding checks and $157 million outstanding under the 2016 Revolving Credit Facility at such date.

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If one or more lenders under the Amended 2016 Revolving Credit Facility are unable to fulfill their commitment to advance funds to Products Corporation under such facility, it would impact the Company’s liquidity and, depending upon the amount involved and the Company’s liquidity requirements, it could have an adverse effect on the Company’s ability to fund its operations, which could have a material adverse effect on the Company’s business, prospects, results of operations, financial condition and/or cash flows.

At December 31, 2019, the Company had a liquidity position of $278.7 million, consisting of: (i) $104.3 million of unrestricted cash and cash equivalents; (ii) $157.7 million in available borrowing capacity under Products Corporation's Amended 2016 Revolving Credit Facility (which had $272.4 million drawn at such date); (iii) $30 million in available borrowing capacity under the Amended 2019 Senior Line of Credit Facility, which had no borrowings at such date; and less (iv) $13.3 million of outstanding checks. See “Recent Developments – 2020 Refinancing Transactions” in Item 7. “Combined Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
A substantial portion of Products Corporation's indebtedness is subject to floating interest rates.

rates and the potential discontinuation or replacement of LIBOR could result in an increase to our interest expense.
A substantial portion of the Products Corporation's indebtedness is subject to floating interest rates, which makes the Company more vulnerable in the event of adverse economic conditions, increases in prevailing interest rates or a downturn in the Company’s business. The Company has hedged some of its exposure to floating interest rates under its 2016 Term Loan Facility through its existing $400 million floating-to-fixed 2013 Interest Rate Swap. As of December 31, 2017, including the effect of the 2013 Interest Rate Swap, $1,498.62019, $2,253.6 million of Products Corporation’s total indebtedness, or approximately 53%,71% of its total indebtedness, was subject to floating interest rates.
In July 2017, the U.K.’s Financial Conduct Authority, which regulates LIBOR, announced that it intends to stop persuading or compelling banks to submit LIBOR rates after 2021. It is unclear whether or not LIBOR will cease to exist at that time (and if so, what reference rate will replace it) or if new methods of calculating LIBOR will be established such that it continues to exist after 2021. Certain of Products Corporation’s financing agreements, including its 2016 Term Loan Facility, the Amended 2016 Revolving Credit Facility and the 2019 Term Loan Facility are made at variable rates that use LIBOR as a benchmark for establishing the applicable interest rate. While the 2016 Credit Agreements contain limited “fallback” provisions providing for comparable or successor rates in the event LIBOR is unavailable, these provisions may not adequately address the actual changes to LIBOR or its successor rates. For example, if future rates based upon the successor reference rate (or a new method of calculating LIBOR) are higher than LIBOR rates as currently determined, it may have a material adverse effect on our business, prospects, results of operations, financial condition and/or cash flows. On the other hand, if future rates based upon the successor reference rate (or a new method of calculating LIBOR) are lower than LIBOR rates as currently determined, the lenders under such credit agreements may seek amendments to increase the applicable interest rate margins or invoke their right to require the use of the alternate base rate in place of LIBOR, which could result in an increase to our interest expense as discussed below. By contrast, the 2019 Term Loan Facility does not have provisions for selecting or requiring the alternative base rate, and therefore in the event that LIBOR is discontinued in the future and a comparable or successor rate is not approved by the required lenders under the 2019 Term Loan Facility, it may become necessary to amend the 2019 Term Loan Facility. More generally, a phase-out of LIBOR could cause market volatility or disruption and may adversely affect our access to the capital markets and cost of funding, which would have a material adverse effect on our business, prospects, results of operations, financial condition and/or cash flows.
Similar considerations as the ones described above with respect to LIBOR as benchmark for establishing interest rates apply to EURIBOR. Our 2018 Foreign Asset-Based Term Facility is denominated in Euros and the interest rate thereunder is tied to EURIBOR. To the extent that EURIBOR becomes unavailable, the agreement contains fallback provisions ultimately providing for a rate determined by the administrative agent as the all-in-cost of funds for borrowings denominated in Euros with maturities comparable to the interest period applicable to the loans under the 2018 Foreign Asset-Based Term Facility.
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As of December 31, 2017,2019, the entire $1,777.5$1,741.5 million in aggregate principal amount outstanding under the 2016 Term Loan Facility bore interest, at Product Corporation’s option, at a rate per annum of LIBOR (which has a floor of 0.75%) plus a margin of 3.5% or an alternate base rate plus a margin of 2.5%, payable quarterly, at a minimum. At December 31, 2019, LIBOR and the alternate base rate for the 2016 Term Loan Facility were 4.75% and 1.908%, respectively. As of December 31, 2017, $1572019, $230.9 million in aggregate principal amount outstanding under Tranche A of the Amended 2016 Revolving Credit Facility bore interest, at Products Corporation’s option, at a rate per annum equal to either: (i) the alternate base rate plus an applicable margin equal to 0.25%, 0.50% or 0.75%, depending on the average excess availability (based on the borrowing base as most recently reported by Products Corporation to the administrative agent from time-to-time); or (ii) the Eurocurrency rate plus an applicable margin equal to 1.25%, 1.50%1.5% or 1.75%, depending on the average excess availability (based on the borrowing base as most recently reported by Products Corporation to the administrative agent from time-to-time). TheAs of December 31, 2019, $41.5 million in aggregate principal amount outstanding under Tranche B of the Amended 2016 Revolving Credit Facility bore interest, at Products Corporation’s option, at a rate per annum equal to either: (i) the alternate base rate plus an applicable margin equal to 1.5%, 1.75% or 2.0%, depending on the average excess availability (based on the borrowing base as most recently reported by Products Corporation to the administrative agent from time-to-time); or (ii) the Eurocurrency rate plus an applicable margin equal to 2.5%, 2.75% or 3.0%, depending on the average excess availability (based on the borrowing base as most recently reported by Products Corporation to the administrative agent from time-to-time). Under Tranches A and B of the Amended 2016 Revolving Credit Facility, the applicable margin increases as average excess availability underthereunder decreases. Under the 2016 Revolving Credit2018 Foreign Asset-Based Term Facility, decreases. Atwhich had $86.3 million in aggregate principal amount outstanding as of December 31, 2017, LIBOR and2019, interest accrues on borrowings at a rate per annum equal to the alternate baseEURIBOR rate forplus a 6.50% applicable margin. Interest accrues on the 20162019 Term Loan Facility, were 1.569% and 4.5%which had $200.0 million in aggregate principal amount outstanding as of December 31, 2019, at a rate per annum of one-month adjusted LIBOR (which has a floor of 0%), respectively.plus a margin of 9.50%.
If any of LIBOR (or its successor rate), the prime rate or the federal funds effective rate increases, Products Corporation’s debt service costs will increase to the extent that Products Corporation has elected such rates for its outstanding loans. Based on the amounts outstanding under the 2016 Senior Credit Facilities, the 2018 Foreign Asset-Based Term Facility, the 2019 Term Loan Facility and other short-term borrowings (which, in the aggregate, are Products Corporation’s only debt currently subject to floating interest rates) as of December 31, 2017,2019, a 1% increase in LIBOR (or an equivalent successor rate) would increase the Company’s annual interest expense by $15.7$21.4 million. Based on the same amounts outstanding, a change from LIBOR to the alternate base rate in the case of the 2016 Credit Agreements would increase the Company’s annual interest expense by $37.7 million. Increased debt service costs would adversely affect the Company’s cash flows and could have a material adverse effect on the Company’s business, prospects, results of operations, financial condition and/or cash flows.

The Company's ability to service its debt and meet its cash requirements depends on many factors, including achieving anticipated levels of revenue and expenses. If such revenue or expense levels prove to be other than as anticipated, the Company may be unable to meet its cash requirements or Products Corporation may be unable to meet the requirements of the 2016 Credit Agreements, 2018 Foreign Asset-Based Term Loan Agreement, 2019 Term Loan Agreement and/or Amended 2019 Senior Line of Credit Agreement, which could have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows.

The Company currently expects that operating revenues, cash on hand, and funds that may be available for borrowing under the Amended 2016 Revolving Credit Facility, the Amended 2019 Senior Line of Credit Facility, the 2020 Refinancing Transactions and other permitted lines of creditpermissible borrowings will be sufficient to enable the Company to cover its operating expenses for 2018, including2020, including: cash requirements for the payment of expenses in connection with executing the Company's business initiatives (including integrating the Elizabeth Arden business into the Company's business) and its advertising, promotional, pricing and/or marketing plans,plans; purchases of permanent wall displays,displays; capital expenditure requirements,requirements; debt service payments and costs,costs; cash tax payments,payments; pension and other post-retirement plan contributions,contributions; payments in connection with the Company's restructuring programs severance(including, without limitation, the EA Integration Restructuring Program, the 2018 Optimization Program and the Revlon 2020 Restructuring Program); severance not otherwise included in the Company's restructuring programs andprograms; business and/or brand acquisitions (including, without limitation, through licensing transactions), if any; debt and/or equity repurchases, if any.any; costs related to litigation; and payments in connection with discontinuing non-core business lines and/or exiting and/or entering certain territories and/or channels of trade. See “Recent Developments – 2020 Refinancing Transactions” in Item 7. “Combined Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
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However, if the Company's anticipated level of revenue is not achieved because of, for example, decreased consumer spending in response to weak economic conditions or weakness in the consumption of beauty products;products in one or more of the Company's segments; adverse changes in tariffs, foreign currency exchange rates, foreign currency controls and/or government-mandated pricing controls; decreased sales of the Company's products as a result of increased competitive activities by the Company's competitors and/or decreased performance by third-party suppliers;suppliers, whether due to shortages of raw materials or otherwise; changes in consumer purchasing habits, including with respect to retailer preferences and/or sales channels;channels, such as due to the consumption declines in core beauty categories in the mass retail channel in North America, which continues to have a negative impact on net sales of Revlon color cosmetics and SinfulColors color cosmetics; inventory management by the Company's customers; space reconfigurations or reductions in display space by the Company's customers; retail store closures in brick-and-mortar channels where the Company sells its products, as consumers continue to shift purchases to online and e-commerce channels; changes in pricing, marketing, advertising and/or promotional strategies by the Company's customers; less than anticipated results from the Company's existing or new products or from its advertising, promotional, pricing and/or marketing plans; or if the Company's expenses, including, without limitation, those related to integrating the Elizabeth Arden business into the Company's business, as well as those for pension expense under its benefit plans, capital expenditures, restructuring and severance costs (including, without limitation, for the EA Integration Restructuring Program, the 2018 Optimization Program and the Revlon 2020 Restructuring Program), acquisition and integration costs, costs related to litigation, advertising, promotional or marketing activities or for sales returns related to any reduction of space by the Company's customers, product discontinuances or otherwise, exceed the anticipated level of expenses, the Company's current sources of funds may be insufficient to meet its cash requirements.

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In addition, such developments, if significant, could reduce the Company's revenues and could have a material adverse effect on Products Corporation's ability to comply with the terms of the 2016 Credit Agreements.Agreements, 2018 Foreign Asset-Based Term Loan Agreement, 2019 Term Loan Agreement and/or Amended 2019 Senior Line of Credit Agreement (See also Item 1A. Risk Factors - "Restrictions and covenants in Products Corporation’s various debt instruments limit its ability to take certain actions and impose consequences in the event of failure to comply," which discusses, among other things, the consequences of noncompliance with Products Corporation's debt covenants).
If the Company's operating revenues, cash on hand and/or funds that may be available for borrowing are insufficient to cover the Company's expenses and/or are insufficient to enable Products Corporation to comply with the requirements of the 2016 Credit Agreements, 2018 Foreign Asset-Based Term Loan Agreement, 2019 Term Loan Agreement and/or Amended 2019 Senior Line of Credit Agreement, the Company could be required to adopt one or more of the alternatives listed below:
•delaying the implementation of or revising certain aspects of the Company's business initiatives;
•reducing or delaying purchases of wall displays and/or expenses related to the Company's advertising, promotional and/or marketing activities;
•reducing or delaying capital spending;
•implementing new restructuring programs;
•refinancing Products Corporation's indebtedness;
•selling assets or operations;
•seeking additional capital contributions and/or loans from MacAndrews & Forbes, Revlon, the Company's other affiliates and/or third parties;
•selling additional Revlon equity or debt securities ofor Products Corporation; Corporation's debt securities; and/or
•reducing other discretionary spending.
The Company may not be able to take any of these actions because of a variety of commercial or market factors or constraints in one or more of Products Corporation's various debt instruments, including, for example, market conditions being unfavorable for an equity or a debt issuance, additional capital contributions or loans not being available from affiliates and/or third parties, or that the transactions may not be permitted under the terms of one or more of Products Corporation's various debt instruments then in effect, such as due to restrictions on the incurrence of debt, incurrence of liens, asset dispositions and/or related party transactions. If the Company is required to take any of these actions, it could have a material adverse effect on its business, prospects, results of operations, financial condition and/or cash flows.
Such actions, if ever taken, may not enable the Company to satisfy its cash requirements or enable Products Corporation to comply with the terms of the 2016 Credit Agreements, 2018 Foreign Asset-Based Term Loan Agreement and/or 2019 Term Loan Agreement if the actions do not result in sufficient costcost reductions or generate a sufficient amount of additional capital, as the case may be. (See also Item 1A. Risk Factors - "Restrictions and covenants in Products Corporation'sCorporation’s various debt instruments limit its ability to take certain actions and impose consequences in the event of failure to comply," which discusses, among other things, the consequences of noncompliance with Products Corporation's debt covenants).


The Company may not realize the anticipated synergies, net cost reductions and growth opportunities from the Elizabeth Arden Acquisition. 
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The benefits that the Company expects to achieve as a result of the Elizabeth Arden Acquisition will depend, in part, on the ability of the combined company to realize the anticipated synergies, net cost reductions and growth opportunities. The Company’s success in realizing these anticipated synergies, net cost reductions and growth opportunities, and the timing of this realization, largely depends on the successful integration of Elizabeth Arden’s historical business and operations into the Company’s historical business and operations. Even ifREVLON, INC. AND SUBSIDIARIES
If the Company is successfulunable to consummate its committed financing, or otherwise obtain sufficient alternative funding, for the repayment in effectively integrating Elizabeth Arden’s business and operations intofull of its 5.75% Senior Notes due 2021, certain of its credit facilities will be subject to an Accelerated Maturity Event which could have a material adverse effect on the Company’s business, the Company may not realize the full benefits of the anticipated synergies, net cost reductions and growth opportunities that the Company currently expects, whether due to unanticipated expenses, unavailability of liquidity to fund such expenses, trade conditions or other unforeseen events. Even if such synergy and other benefits are fully realized, they may not be realized within the anticipated time frame. Moreover, the Company expects to incur substantial expenses in connection with integrating Elizabeth Arden’s business into the Company’s business, the amount of which is difficult to estimate accurately and may exceed the Company’s current estimates. Accordingly, the benefits expected from the Elizabeth Arden Acquisition may be offset by costs or delays incurred in integrating the businesses. The projected net cost reductions and synergies related to the Elizabeth Arden Acquisition are based on a number of assumptions relating to the Company’s historical business and Elizabeth Arden’s business, such as achieving certain sales volume increases. Those assumptions may be inaccurate, and, as a result, the Company’s projected net cost reductions and synergies may be inaccurate, and the Company's business, prospects, results of operations, financial condition and/or cash flowsflows.

The 5.75% Senior Notes are due on February 15, 2021. If Products Corporation is unable to repay or refinance the 5.75% Senior Notes in full prior to November 16, 2020 (91 days before they are due) (the "Accelerated Maturity Date"), then, subject to certain minimum liquidity-related exceptions, the 2016 Term Loan Facility, Tranche A of the Amended 2016 Revolving Credit Facility and the 2019 Term Loan Facility will become due on the Accelerated Maturity Date (an "Accelerated Maturity Event"). As of December 31, 2019, the aggregate principal amount of indebtedness outstanding under the 5.75% Senior Notes, the 2016 Term Loan Facility, Tranche A of the Amended 2016 Revolving Credit Facility and the 2019 Term Loan Facility was $500.0 million, $1,741.5 million, $230.9 million, and $200.0 million, respectively.

On March 9, 2020, Products Corporation entered into a commitment letter (the “2020 Commitment Letter”) with Jefferies Finance LLC to provide sufficient financing to refinance the 5.75% Senior Notes and the 2019 Term Loan Facility in full prior to the Accelerated Maturity Date. The financing under the 2020 Commitment Letter is available until June 30, 2020 and is subject to customary conditions precedent, such as the execution of definitive loan and security documents, absence of material adverse change and other customary conditions. Although the Company expects that it will be able to satisfy the conditions to the financing contemplated by the 2020 Commitment Letter, if the financing does not occur for any reason, the Company will need to obtain sufficient alternative funding (whether from borrowed funds or from the proceeds of asset sales) or amend or obtain a waiver from the lenders under the 2016 Term Loan Facility, Tranche A of the Amended 2016 Revolving Credit Facility and the 2019 Term Loan Facility. There can be no assurance that the Company will be able to obtain any such alternative financing or amendment or waiver on favorable terms or at all. If an Accelerated Maturity Event were to occur, it could be materiallyhave a material adverse effect on the Company’s business, prospects, results of operations, financial condition and/or cash flows. For a discussion of factors affecting Products Corporation's ability to repay or refinance indebtedness by maturity and adversely affected.the consequences of its inability to do so, see Item 1A. Risk Factors – “Products Corporation’s ability to pay the principal amount of its indebtedness depends on many factors.”



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In connection withThe Company depends on its Oxford, North Carolina facility for production of a substantial portion of its products. Disruptions at this facility and/or at other Company or third-party facilities at which the Elizabeth Arden Acquisition, we have assumed potential liabilities relating to Elizabeth Arden’s business.

In connection with the Elizabeth Arden Acquisition, we have assumed potential liabilities relating to Elizabeth Arden’s business. To the extent we have not identified such liabilities or miscalculated their potential financial impact, these liabilitiesCompany's products are manufactured could have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows.

The Company depends on its Oxford, North Carolina facility for production of a substantial portion of its products within the Consumer segment. Disruptions at this facility and/or at other Company or third-party facilities at which the Company's products are manufactured for its Consumer, Elizabeth Arden and Professional segments could have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows.

The Company produces a substantial portion of its products at its Oxford, North Carolina facility. Significant unscheduled downtime at this facility, or at other Company facilities and/or third-party facilities at which the Company's products are manufactured, whether due to equipment breakdowns, power failures, natural disasters, weather conditions hampering delivery schedules, shortages of raw materials, technology disruptions or other disruptions, including those caused by transitioning manufacturing across these facilities, or any other cause could have a material adverse effect on the Company's ability to provide products to its customers, which could have a material adverse effect on the Company's sales, business, prospects, results of operations, financial condition and/or cash flows. Additionally, if product sales exceed the Company's forecasts, internal or third-party production capacities and/or the Company's ability to procure sufficient levels of finished goods, raw materials and/or components from third-party suppliers, the Company could, from time-to-time, not have an adequate supply of products to meet customer demands, which could have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows.
Prior to the Elizabeth Arden Acquisition, Elizabeth Arden did not own or operate any manufacturing facilities
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Volatility in costs and relied on third-party manufacturers and component suppliers to source and manufacture substantially all of its owned and licensed products and while certain consolidation has and will continue to occur, as planned, as a result of the Company's integration activities, we will continue to use third-party manufacturers for the Elizabeth Arden segmentdisruption in the future. Oversupply of materials and services could have a material adverse effect on the past several years, Elizabeth Arden reduced the third-party manufacturers and component and materials suppliers that it uses. Elizabeth Arden also implemented a "turnkey" manufacturing process for substantially all of its products, as a result of which it relies on its third-party manufacturers for certain supply chain functions that it previously handled, such as component and raw materials planning, purchasing and warehousing. The Company's business, prospects, results of operations, financial condition and/or cash flows could be materially adversely affected if Elizabeth Arden experiences any supply chain disruptions caused by this "turnkey" manufacturing process or other supply chain projects, or if its manufacturers orflows.
The Company purchases raw material suppliers were to experience problems with product quality, credit or liquidity issues, or disruptions or delays inmaterials, including essential oils, alcohols, chemicals, containers and packaging components, from various third-party suppliers. Substantial cost increases and the manufacturing process or deliveryunavailability of finished products or the raw materials or other commodities, as well as higher costs for energy, transportation and other necessary services have adversely affected and may continue to adversely affect the Company’s profit margins if it is unable to wholly or partially offset them, such as by achieving cost efficiencies in its supply chain, manufacturing and/or distribution activities. In addition, the Company purchases certain finished goods, raw materials, packaging and other components usedfrom single-source suppliers or a limited number of suppliers and if the Company is required to makefind alternative sources of supply, these new suppliers may have to be qualified under applicable industry, governmental and Company-mandated vendor standards, which can require additional investment and be time-consuming. Any significant disruption to the Company’s manufacturing or sourcing of products or raw materials, packaging and other components for any reason could interrupt and delay the Company’s supply of products to its retail customers. Also, the Company is continually looking for opportunities to provide essential business services in a more cost-effective manner.  In some cases, the Company outsources certain functions that it believes can be performed more efficiently by third parties, such products.as in the areas of IT, finance, tax and human resources. These third parties could fail to provide the expected level of services, provide them on a timely basis or to provide them at the expected fees. Such events, if not promptly remedied, could have a material adverse effect on the Company’s business, prospects, results of operation, financial condition and/or cash flows.


The Company's financial performance depends on its ability to anticipate and respond to consumer trends and changes in consumer preferences. New product introductions may not be as successful as the Company anticipates, which could have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows.

The Company has a rigorous process for the continuous development and evaluation of new product concepts, led by executives in marketing, sales, research and development, product development, operations, law and finance. However, consumer preference and spending patterns change rapidly and cannot be predicted with certainty. There can be no assurance that the Company will anticipate and respond to trends for beauty products effectively. Each new product launch, including those resulting from the Company's recently updated product development process, carries risks, as well as the possibility of unexpected consequences, including:
•the acceptance of the Company's new product launches by, and sales of such new products to, the Company's customers may not be as high as the Company anticipates;
•the Company's marketing, promotional, advertising and/or pricing strategies for its new products may be less effective than planned and may fail to effectively reach the targeted consumer base or engender the desired consumption of the Company's products by consumers;
•the rate of purchases by the Company's consumers may not be as high as the Company anticipates;
•the Company's wall displays to showcase its new products may fail to achieve their intended effects;
•the Company may experience out-of-stocks and/or product returns exceeding its expectations as a result of the Company's new product launches or space reconfigurations or as a result of reductions in retail display space by the Company's customers;
•the Company's net sales may also be impacted by inventory management by its customers or changes in pricing, marketing, advertising and/or promotional strategies by its customers;

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•the Company may incur costs exceeding its expectations as a result of the continued development and launch of new products, including, for example, unanticipated levels of research and development costs, advertising, promotional and/or marketing expenses, sales return expenses or other costs related to launching new products;
•the Company may experience a decrease in sales of certain of the Company's existing products as a result of newly-launched products, the impact of which could be exacerbated by shelf space limitations and/or any shelf space loss. (See also Item 1A. Risk Factors - "Competition in the cosmetics, hair and beauty care products businessindustry could have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows"flows.").
•the Company's product pricing strategies for new product launches may not be accepted by its customers and/or its consumers, which may result in the Company's sales being less than it anticipates;
•the Company may experience a decrease in sales of certain of the Company's products as a result of counterfeit products and/or products sold outside of their intended territories; and/or
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•delays or difficulties impacting the Company's ability, or the ability of the Company's suppliers, to timely manufacture, distribute and ship products or raw materials, as the case may be, displays or display walls in connection with launching new products, such as due to inclement weather conditions or other delays or difficulties such(such as those discussed under Item 1A. Risk Factors - "The Company depends on its Oxford, North Carolina facility for production of a substantial portion of the Company's products within the Consumer segment.its products. Disruptions at this facility and/or at other Company or third-party facilities at which the Company's products are manufactured for its Consumer, Elizabeth Arden and Professional segments could affecthave a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows,"flows"), could have a material adverse effect on the Company's ability to ship and deliver products to meet its customers’ reset deadlines.
Each of the risks referred to above could delay or impede the Company's ability to achieve its sales objectives, which could have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows.

Economic conditions could have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows and/or on the financial condition of its customers and suppliers.

Economic conditions in the U.S. and/or other countries where the Company operates have in the past contributed, and may in the future contribute, to high unemployment levels, lower consumer spending and/or reduced credit availability. Such economic conditions have impacted, and could in the future impact, business and consumer confidence, especially in relation to discretionary purchases. These conditions could have an impact on customer and/or consumer purchases of the Company's products, which could result in a reduction of the Company's net sales, operating income and/or cash flows. Additionally, disruptions in the credit and other financial markets and economic conditions could, among other things, impair the financial condition of one or more of the Company's customers or suppliers, thereby increasing the risk of customer bad debts or non-performance by suppliers. These conditions could have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows.

The U.K.’s ongoing withdrawal process from the European Union may have a negative effect on global economic conditions, financial markets and on the Company's business, prospects, results of operations, financial condition and/or cash flows.

The Company is a multinational company with worldwide operations, including material business operations in Europe. In June 2016, a majority of voters in the U.K. elected to withdraw from the European Union in a national referendum. In March 2017, the U.K. government invoked Article 50 of the Treaty on the European Union and the U.K. is scheduled to leave the European Union in March 2019. The "Brexit" process has created significant ongoing uncertainty about the future relationship between the U.K. and the European Union and has given rise to calls for the governments of other European Union member states to consider withdrawal from the European Union. These developments, or the perception that any of them could occur, have had and may continue to have a material adverse effect on global economic conditions and the stability of global financial markets and could significantly reduce global market liquidity and restrict the ability of key market participants to operate in certain financial markets. Asset valuations, currency exchange rates and credit ratings may be especially subject to increased market volatility. Lack of clarity about future U.K. laws and regulations as the U.K. determines which European Union laws to replace or replicate as the withdrawal process proceeds, including financial laws and regulations, tax and free trade agreements, intellectual property rights, supply chain logistics, environmental, health and safety laws and regulations, immigration laws and employment laws, could decrease foreign direct investment in the U.K., increase costs, depress economic activity, restrict the Company’s access to capital and make regulatory compliance and the distribution, sourcing, manufacturing and sales and marketing of the Company’s products more difficult or costly. If the U.K. and the European Union are unable to negotiate acceptable withdrawal terms or if other European Union member states pursue withdrawal, barrier-free access between the U.K. and other European Union member states or among the European economic area overall could be diminished or eliminated. Similar adverse consequences could occur if regions such as Catalonia, where the Company's Spain businesses are headquartered, eventually succeed in withdrawing from

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their parent country. Approximately 5% of the Company's net sales are in the U.K. and approximately 14% of the Company's net sales are in the remainder of the European Union. Any of these factors could have a material adverse effect on the Company’s business, prospects, results of operations, financial condition and/or cash flows.

The Company depends on a limited number of customers for a large portion of its net sales, and the loss of one or more of these customers could reduce the Company's net sales and have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows.

Walmart and its affiliates worldwide accounted for approximately 16%, 17% and 18%15% of the Company’s worldwide net sales for 2017, 2016in both 2019 and 2015, respectively.2018. The Company expects that, for future periods, Walmart and a small number of other customers in the Consumer, Elizabeth Arden and Professional segments will, in the aggregate, continue to account for a large portion of the Company's net sales. The Company may be affected by changes in the policies and demands of its customers relating to service levels, inventory de-stocking, pricing, marketing, advertising and/or promotional strategies or limitations on access to wall display space. As is customary in the consumer products industry, none of the Company's customers is under any obligation to continue purchasing products from the Company in the future.
The loss of Walmart and/or one or more of the Company's other customers that account for a significant portion of the Company's net sales, or any significant decrease in sales to these customers, including as a result of consolidation among such customers, retail store closures in response to the growth in retail sales through e-commerce channels, inventory management by these customers, changes in pricing, marketing, advertising and/or promotional strategies by such customers or space reconfigurations by the Company's customers or any significant decrease in the Company's display space, could reduce the Company's net sales and/or operating income and therefore could have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows.

Declines in the financial markets may result in increased pension expense and increased cash contributions to the Company's pension plans.

Declines in the U.S. and global financial markets could result in significant declines in the Company's pension plan assets and result in increased pension expense and cash contributions to the Company's pension plans. Interest rate levels will affect the discount rate used to value the Company's year-end pension benefit obligations. One or more of these factors, individually or taken together, could impact future required cash contributions to the Company's pension plans and pension expense. Any one or more of these conditions could reduce the Company's available liquidity, which could have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows.

The Company may be unable to maintain or increase its sales through the Company's primary retailers, which could have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows.

A decrease in consumer demand in the U.S. and/or internationally for beauty products, inventory management by the Company's customers, changes in pricing, marketing, advertising and/or promotional strategies by the Company's customers (such as the development and/or continued expansion of private label or their own store-owned brands), a reduction in display space by the Company's customers, store closures in the brick-and-mortar channels where the Company sells its products, as consumers continue to shift purchases to online and e-commerce channels and/or a change in consumers’ purchasing habits, such as with respect to retailer preferences and/or sales channels, could result in decreased sales of the Company's products, which could have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows.

Competition in the beauty industry could have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows.

The beauty industry is highly competitive. The Company competes primarily by:
•developing quality products with innovative performance features, shades, finishes, components and packaging;
•educating consumers, retail customers and salon professionals about the benefits of the Company’s products;products both on-line and in brick and mortar retail outlets;
•anticipating and responding to changing consumer, retail customer and salon professional demands in a timely manner, including as to the timing of new product introductions and line extensions;
•offering attractively priced products relative to the product benefits provided;
•maintaining favorable brand recognition;

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•generating competitive margins and inventory turns for the Company’s customers by providing relevant products and executing effective pricing, incentive and promotional programs and marketing and advertising campaigns, as well as social media and influencer marketing activities;
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•ensuring product availability through effective planning and replenishment collaboration with the Company's customers;
•providing strong and effective advertising, promotion, marketing, social media, influencer and merchandising support;
•leveraging e-commerce, social media and mobile commerce initiatives and developing an effective omni-channel strategy to optimize the opportunity for consumers to interact with and purchase the Company's products;products both on-line and in brick and mortar retail outlets;
•maintaining an effective sales force and distribution network; and
•obtaining and retaining sufficient display space, optimal in-store positioning and effective presentation of the Company’s products on-shelf.
An increase in or change in the current level of competition that the Company faces could have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows.
In addition to competing with expanding private label and store-owned brands, in the Consumer segment, the Company competes against a number of multi-national manufacturers, some of which are larger and have substantially greater resources than the Company, and which may therefore have the ability to spend more aggressively than the Company on new business acquisitions, research and development activities, technological advances to evolve in their e-commerce capabilities and advertising, promotional, social media influencer and/or marketing activities and have more flexibility than the Company to respond to changing business and economic conditions. The Company's products in certain of its reporting segments also compete with similar products sold through retailers (including via e-commerce) other than those in which the Company principally competes in those segments.
Additionally, the Company's major customers periodically assess the allocation of display space among competitors and in the course of doing so could elect to reduce the display space allocated to the Company's products, if, for example, the Company's marketing, promotional, advertising and/or pricing strategies for its new and/or existing products are less effective than planned, fail to effectively reach the targeted consumer base, fail to engender the desired consumption of the Company's products by consumers and/or fail to sustain productive levels of consumption dollar share;share and/or the rate of purchases by the Company's consumers are not as high as the Company anticipates. Within the Company’s Consumer segment, amongAmong the factors used by the Company’s major customers in assessing the allocation of display space is a brand’s share of the color cosmetics category. The Company's color cosmetics brands have experienced, over time, year-over-year declines in their share of the color cosmetics category in the U.S. and it is possible that the Company may continue to experience further share declines. Further declines in the Company's share for one or more of its principal brands, including with respect to the Company’s Almay brand, could, among other things, contribute to athe additional loss of display space and/or decreased revenues. Any significant loss of display space could have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows.

Elizabeth ArdenThe Company's Fragrances segment depends on various brand licenses and distribution arrangements for a significant portion of its sales, and the loss of one or more of these licenses or distribution arrangements could have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows.

Elizabeth Arden’sThe Company’s rights to market and sell certain of its prestige fragrance brands are derived from licenses and other distribution arrangements from unaffiliated third parties and itssuch business is dependent upon the continuation and renewal of such licenses and distribution arrangements on terms favorable to Elizabeth Arden.the Company. Each license is for a specific term and may have optional renewal terms. In addition, such licenses and distribution arrangements may be subject to Elizabeth Ardenthe Company satisfying required minimum royalty payments, minimum advertising and promotional expenditures and satisfying minimum sales requirements. In addition, under certain circumstances, lower net sales may shorten the duration of the applicable license agreement. The loss of one or more of these licenses or other significant distribution arrangements, or a renewal of one or more of these arrangements on less than favorable terms, the failure to renew one or more of these arrangements and/or difficulties in finding replacement brand licenses for terminated or expired licenses could have a material adverse effect on the Company’s business, prospects, results of operations, financial condition and/or cash flows.

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The success of our Elizabeth Ardenthe Company's Fragrances segment depends, in part, on the demand for heritage and designer fragrance products. A decrease in demand for such products, or the loss or infringement of any intellectual property rights, could have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows.

The Company's Elizabeth ArdenFragrances segment has license agreements to manufacture, market and distribute a number of heritage and designer fragrance products, including those of (i) Juicy Couture, John Varvatos and AllSaints in prestige fragrances; (ii) Britney Spears, Christina Aguilera, Elizabeth Taylor Britney Spears, Christina Aguilera, Shawn Mendes, All Saints, La Perla, , Jennifer Aniston and Mariah Carey in celebrity fragrances; and (iii) Ed Hardy, Lucky Brand Halston, and Geoffrey Beene and Wildfox.in mass fragrances. In 2017,2019, the Company's Elizabeth ArdenFragrances segment derived approximately 42%60% of its net sales from heritage and designer fragrance brands. The demand for these products is, to some extent, dependent on the appeal to consumers of the particular designer or talent and the

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designer’s or talent’s reputation. Elizabeth ArdenThe Company also cannot assure that the owners of the trademarks that it licenses can or will successfully maintain their intellectual property rights. If other parties infringe on the intellectual property rights that Elizabeth Ardenthe Company licenses, the value of Elizabeth Arden'ssuch brands in the marketplace may be diluted. To the extent that the heritage or designer fragrance category or a particular designer or talent ceases to be appealing to consumers or a designer’s or talent’s reputation is adversely affected, sales of the related products and the value of the impacted brands cancould decrease materially, which could have a material adverse effect on the Company’s business, prospects, results of operations, financial condition and/or cash flows.

The Company's foreign operations are subjectinability to a variety of social, politicalacquire or license additional fragrance brands or secure additional distribution arrangements and economic risks and have been, and are expected to continue to be, affected by foreign currency exchange fluctuations, foreign currency controls and/or government-mandated pricing controls, whicharrangements could have a materialan adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flowsnet sales and the value of its foreign assets.

As of December 31, 2017, the Company had operations based in 27 foreign countries and its products were sold in approximately 150 countries. The Company is exposed to risks associated with social, political and economic conditions, including inflation, inherent in operating in foreign countries, including those in Asia (including Japan), Australia, Canada, Eastern Europe (including Russia), Mexico, South Africa and South America (including Argentina), which could have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows. Such risks include hyperinflation, foreign currency devaluation, foreign currency controls, government-mandated pricing controls, currency remittance restrictions, changes in tax laws, changes in consumer purchasing habits (including as to retailer preferences), as well as, to a lesser extent, changes in U.S. laws and regulations relating to foreign trade and investment.
These risks and limitations could affect the ability of the Company's foreign subsidiaries to obtain sufficient capital to conduct their operations in the ordinary course of business. Limitations and the difficulties that certain of the Company's foreign subsidiaries may experience on the free flow of funds to and from these foreign subsidiaries could restrict the Company's ability to respond timely to challenging business conditions or changes in operations, which could have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows.
The Company's net sales outsidesuccess of the U.S. for eachFragrances segment depends in part upon the continued growth of 2017, 2016its portfolio of owned, licensed and 2015 represented approximately 51%, 45%distributed brands, including expanding its geographic presence to take advantage of opportunities in developed and 45%emerging regions. Efforts to increase sales of the Company's total consolidatedprestige fragrance portfolio and expand its geographic market presence depend upon a number of factors, including its ability to:
•develop its fragrance brand portfolio through branding, innovation and execution;
•identify and develop new and existing fragrance brands with the potential to become successful global brands;
•innovate and develop new fragrance products that are appealing to consumers;
•acquire or license additional fragrance brands or secure additional distribution arrangements and the Company's ability to obtain the required financing for these agreements and arrangements;
•expand the Company's geographic presence to take advantage of opportunities in developed and emerging regions;
•continue to expand the Company's distribution channels within existing geographies to increase trade presence, brand recognition and sales;
•expand the Company's trade presence through alternative distribution channels, such as through e-commerce channels;
•expand margins through sales growth, the development of higher margin products and overhead and supply chain integration and efficiency initiatives;
•effectively manage capital investments and working capital to improve the generation of cash flow; and
•execute any acquisitions quickly and efficiently and integrate new businesses successfully.
There can be no assurance that the Company can successfully achieve any or all of the above objectives in the manner or time period that it expects. Further, achieving these objectives will require investments, which may result in material short-term costs without generating any current net sales respectively. Fluctuations in foreign currency exchange rates positively affectedand the Company's resultsCompany may not ultimately achieve its net sales objectives associated with such efforts. The future expansion of the Fragrances segment through acquisitions, new fragrance licenses, e-commerce initiatives or other new fragrance distribution arrangements, if any, will depend upon the ability to identify suitable brands to acquire, license or distribute and to obtain the required financing for these acquisitions, licenses or distribution arrangements or to launch or support the brands associated with these agreements or arrangements. The Company may not be able to identify, negotiate, finance or consummate such acquisitions, licenses or arrangements on terms acceptable to the Company, or at all. In addition, the Company may decide to divest or discontinue certain brands or streamline operations and may incur costs and charges in doing so. The inability to acquire or license additional fragrance brands or secure additional distribution arrangements for the value ofFragrances segment (such as optimizing its e-commerce sales opportunities) and obtain the Company's foreign net assets in 2017; however, they may adversely affect the Company's results of operationsrequired financing for these agreements and the value of the Company's foreign net assets in future periods, which in turnarrangements could cause a materialhave an adverse effect on the Company's reportedCompany’s net sales and earnings and the comparability of period-to-period results of operations.
Products Corporation enters into foreign currency forward exchange contracts to hedge certain net cash flows denominated in foreign currencies. The foreign currency forward exchange contracts are entered into primarily for the purpose of hedging anticipated inventory purchases and certain intercompany payments denominated in foreign currencies and generally have maturities of less than one year. At December 31, 2017, the notional amount of Products Corporation's foreign currency forward exchange contracts was $147.1 million. These foreign currency forward exchange contracts may not adequately protect the Company against the negative effects of foreign currency fluctuations, which could adversely affect the Company's overall liquidity.

Terrorist attacks, acts of war or military actions and/or other civil unrest may adversely affect the territories in which the Company operates and the Company's business, prospects, results of operations, financial condition and/or cash flows.

On September 11, 2001, the U.S. was the target of terrorist attacks of unprecedented scope. These attacks contributed to major instability in the U.S. and other financial markets and reduced consumer confidence. These terrorist attacks, as well as subsequent terrorist attacks (such as those that have occurred in Berlin, Germany; Nice, France; Orlando, Florida; Istanbul, Turkey; Brussels, Belgium; Paris, France; Benghazi, Libya; Madrid, Spain; and London, England), attempted terrorist attacks, military responses to terrorist attacks, other military actions (such as the ongoing missile launch testing program of the Kim Jong-un regime in North Korea) and/or civil unrest such as that occurring in the Ukraine, Venezuela, Turkey, Syria, Iraq and surrounding areas, may adversely affect prevailing economic conditions, resulting in work stoppages, reduced consumer spending and/or reduced demand for the Company's products. These developments subject the Company's worldwide operations to increased risks and, depending on their magnitude, could reduce the Company's net sales and therefore could have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows.

The Company's products are subject to federal, state and international regulations that could have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows.

The Company is subject to regulation by the FTC and the FDA in the U.S., as well as various other federal, state, local and foreign regulatory authorities, including those in the EU, Canada and other countries in which the Company operates. The

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REVLON, CONSUMER PRODUCTS CORPORATIONINC. AND SUBSIDIARIES






Company's Oxford, North Carolina manufacturing facility is registered with the FDA as a drug manufacturing establishment, permitting the manufacture of cosmetics and other beauty-care products that contain over-the-counter drug ingredients, such as sunscreens, anti-perspirant deodorants and anti-dandruff hair-care products. Regulations in the U.S., the EU, Canada and other countries in which the Company operates that are designed to protect consumers or the environment have an increasing influence on the Company's product claims, ingredients and packaging. To the extent federal, state, local and/or foreign regulatory changes occur in the future, they could require the Company to reformulate or discontinue certain of its products or revise its product packaging or labeling, any of which could result in, among other things, increased costs to the Company, delays in product launches, product returns or recalls and lower net sales, and therefore could have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows.

Any violation of the U.S. Foreign Corrupt Practices Act or other similar foreign anti-corruption laws could have amaterial adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows.

A significant portion of the Company’s revenue is derived from operations outside the U.S. and the Company has significant facilities outside the U.S., which exposes the Company to complex foreign and U.S. regulations inherent in conducting international business transactions. The Company is subject to compliance with the U.S. Foreign Corrupt Practices Act ("FCPA") and other similar foreign anti-corruption laws, which generally prohibit companies and their intermediaries from making improper payments to foreign government officials for the purpose of obtaining or retaining business and other types of improper payments. While the Company’s employees and agents are required to comply with these laws and the Company has developed policies and procedures to facilitate compliance with such laws, there is no assurance that the Company’s policies and procedures will prevent all violations of these laws, despite the Company’s long-standing commitment to conducting its business and achieving its objectives by maintaining the highest level of ethical standards and legal compliance. The SEC and the U.S. Department of Justice, and their foreign counterparts, have increased their enforcement activities with respect to the FCPA and similar foreign anti-corruption laws and any violation of these laws or allegations of such may result in severe criminal and civil sanctions, as well as other substantial costs and penalties, any of which could have a material adverse effect the Company’s business, prospects, results of operations, financial condition and/or cash flows.

Disruptions to the Company's information technology systems could disrupt the Company's business operations which could have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows.

The operation of the Company's business depends on the Company's information technology systems. The Company relies on its information technology systems to effectively manage, among other things, the Company's business data, communications, supply chain, inventory management, customer order entry and order fulfillment, processing transactions, summarizing and reporting results of operations, human resources benefits and payroll management, compliance with regulatory, legal and tax requirements and other processes and data necessary to manage the Company's business. Disruptions to the Company's information technology systems, including any disruptions to the Company's current systems and/or as a result of transitioning to additional or replacement information technology systems, as the case may be, could disrupt the Company's business and could result in, among other things, transaction errors, processing inefficiencies, loss of data and the loss of sales and customers, which could have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows. In addition, the Company's information technology systems may be vulnerable to damage or interruption from circumstances beyond the Company's control, including, without limitation, fire, natural disasters, power outages, systems disruptions, system conversions, security breaches, cyber-attacks, viruses and/or human error. In any such event, the Company could be required to make a significant investment to fix or replace its information technology systems, and the Company could experience interruptions in its ability to service its customers. Any such damage or interruption could have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows.
In addition, as part of our normal business activities, the Company collects and stores certain confidential information, including personal information with respect to customers and employees, as well as information related to intellectual property, and the success of its e-commerce operations depends on the secure transmission of confidential and personal data over public networks, including the use of cashless payments. The Company’s information technology systems, or those of its third-party service providers, may be accessed by unauthorized users such as cyber criminals as a result of a disruption, cyberattack or other security breach. As techniques used by cyber criminals change frequently, a disruption, cyberattack or other security breach of the Company’s information technology systems or infrastructure, or those of its third-party service providers, may go undetected for an extended period and could result in the theft, transfer, unauthorized access to, disclosure, modification, misuse, loss or destruction of Company, employee, representative, customer, vendor and/or other third-party data, including sensitive or confidential data, personal information and/or intellectual property, which could have a material adverse effect on the Company’s business, prospects, results of operations, financial condition and/or cash flows.


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REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES






Difficulties in implementing the Company’s new ERP system have disrupted the Company's business operations and ongoing disruptions with such implementation could have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows.

The Company is implementing a new company-wide SAP enterprise resource planning ("ERP") system, which subjects the Company to inherent risks associated with migrating from the Company's legacy systems to a new IT platform, including, without limitation:
the inability to fill customer orders accurately or on a timely basis, or at all;
increased demands on management and staff time to the detriment of other corporate initiatives;
significant capital and operating expenditures;
the inability to process payments to vendors accurately or in a timely manner;
disruption of the Company's internal control structure; and/or
the inability to fulfill federal, state and local reporting and filing requirements in a timely or accurate manner.
During February 2018, the Company launched the new ERP system in the U.S., which caused its Oxford, N.C. manufacturing facility to experience service level disruptions that have impacted the Company’s ability to manufacture certain quantities of finished goods and fulfill shipments to several large retail customers in the U.S. The Company cannot provide assurances that it will remedy the ERP systems issues in time to fully recover these sales and/or that the ERP implementation will not continue to disrupt the Company's operations and its ability to fulfill customer orders. Also, these ERP-related disruptions have caused the Company to incur expedited shipping fees and other unanticipated expenses in connection with actions that the Company has implemented to remediate the decline in customer service levels, which could continue until the ERP systems issues are resolved. To the extent that these disruptions occur in larger magnitudes or continue to persist over time, it could negatively impact the Company’s competitive position and its relationships with its customers and thus could have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows.

The illegal distribution and sale by third parties of counterfeit versions of the Company’s products or the unauthorized diversion by third parties of the Company’s products could have an adverse effect on the Company’s net sales and a negative impact on the Company’s reputation and business.

Third parties may illegally distribute and sell counterfeit versions of the Company’s products. These counterfeit products may be inferior in terms of quality and other characteristics compared to the Company’s authentic products and/or the counterfeit products could pose safety risks that the Company’s authentic products would not otherwise present to consumers. Consumers could confuse counterfeit products with the Company’s authentic products, which could damage or diminish the image, reputation and/or value of the Company’s brands and cause consumers to refrain from purchasing the Company’s products in the future, which could adversely affect the Company’s net sales and have a negative impact on the Company’s reputation.
AThe Company sells a substantial portion of theits professional products that the Company sells under its Professional segment are sold to professional salon distributors and/or wholesalers. Products sold to these customers are meant to be used exclusively by salons and individual salon professionals or are sold exclusively to the retail consumers of these salons. Despite the Company’s efforts to prevent diversion of such products from these customers, incidents have occurred and continue to occur whereby the Company’s products are sold to sales outlets other than the intended salons and salon professionals, such as to general merchandise retailers or unapproved outlets. In some instances, these diverted products may be old, damaged or otherwise adulterated, which could damage or diminish the image, reputation and/or value of the Company’s brands. In addition, such diversion may result in lower net sales of the Company’s products if consumers choose to purchase diverted products and/or choose to purchase products manufactured or sold by the Company’s competitors because of any perceived damage or diminishment to the image, reputation and/or value of the Company’s brands.
The Company believes that its trademarks, patents and other intellectual property rights are extremely important to the Company’s success and its competitive position. The Company devotes significant resources to registering and protecting its intellectual property rights and maintaining the positive image of its brands. The Company’s trademark and patent applications may fail to result in issued registrations or provide the scope of coverage sought. Unplanned increases in legal fees and other costs associated with enforcing and/or defending the Company’s trademarks, patents and/or other intellectual property rights could result in higher than expected operating expenses. The Company has been unable to eliminate, and may in the future be unable to eliminate, all counterfeiting activities, unauthorized product diversion and infringement of its trademarks, patents and/or other intellectual property, any of which could adversely affect the Company’s net sales and have a negative impact on the Company’s reputation.


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REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES






Elizabeth Arden's inability to acquire or license additional brands or secure additional distribution arrangements and arrangements could have an adverse effect on the Company's net sales and a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows.

The success of the Elizabeth Arden business depends in part upon the continued growth of its portfolio of owned, licensed and distributed brands, including expanding its geographic presence to take advantage of opportunities in developed and emerging regions. Efforts to increase sales of the Elizabeth Arden brand and Elizabeth Arden's prestige fragrance portfolio and expand its geographic market presence depend upon a number of factors, including its ability to:

develop Elizabeth Arden's brand portfolio through branding, innovation and execution;
identify and develop new and existing brands with the potential to become successful global brands;
innovate and develop new products that are appealing to consumers;
acquire or license additional brands or secure additional distribution arrangements and our ability to obtain the required financing for these agreements and arrangements;
expand Elizabeth Arden's geographic presence to take advantage of opportunities in developed and emerging regions;
continue to expand Elizabeth Arden's distribution channels within existing geographies to increase trade presence, brand recognition and sales;
expand Elizabeth Arden's trade presence through alternative distribution channels, such as through e-commerce channels;
expand margins through sales growth, the development of higher margin products and overhead and supply chain integration and efficiency initiatives;
effectively manage capital investments and working capital to improve the generation of cash flow; and
execute any acquisitions quickly and efficiently and integrate new businesses successfully.
There can be no assurance that the Company can successfully achieve any or all of the above objectives in the manner or time period that it expects. Further, achieving these objectives will require investments, which may result in material short-term costs without generating any current net sales and the Company may not ultimately achieve its net sales objectives associated with such efforts. The future expansion of the Elizabeth Arden segment through acquisitions, new product licenses, e-commerce initiatives or other new product distribution arrangements, if any, will depend upon the ability to identify suitable brands to acquire, license or distribute and to obtain the required financing for these acquisitions, licenses or distribution arrangements or to launch or support the brands associated with these agreements or arrangements. The Company may not be able to identify, negotiate, finance or consummate such acquisitions, licenses or arrangements on terms acceptable to the Company, or at all. In addition, the Company may decide to divest or discontinue certain brands or streamline operations under the Elizabeth Arden business and may incur costs and charges in doing so. The inability to acquire or license additional brands or secure additional distribution arrangements for the Elizabeth Arden segment (such as optimizing its e-commerce sales opportunities) and obtain the required financing for these agreements and arrangements could have an adverse effect on the Company’s net sales and a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows.

The Company's success depends, in part, on the quality, efficacy and safety of its products.

The Company's success depends, in part, on the quality, efficacy and safety of its products. If the Company's products are found or alleged to be defective or unsafe, or if they fail to meet customer or consumer standards, the Company's relationships with its customers or consumers could suffer, the appeal of one or more of the Company's brands could be diminished and the Company could lose sales and/or become subject to liability claims, any of which could have a material adverse effect on ourthe Company's business, prospects, results of operations, financial condition and/or cash flows.

The Company’s success largely depends upon its ability to attract, hire and retain its senior management team, other key employees and a highly skilled and diverse workforce, as well as effectively implement succession planning for its senior management team, and, as such, the Company’s inability to do so could adversely affect the Company’s business, prospects, results of operations, financial condition and/or cash flows.


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REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES






Continuing to execute the Company's business initiatives largely depends on the Company’s ability to attract, hire and retain its senior management team, other key employees and a highly skilled and diverse workforce, as well as effectively implement succession planning for its senior management team. Unexpected levels of employee turnover or the Company’s failure to maintain an adequate succession plan to effectively transition current management leadership positions and/or the Company’s failure to attract, hire and retain its senior management team, other key employees and a highly skilled and diverse workforce could adversely affect the Company’s institutional knowledge base and/or competitive advantage. If the Company is unable to attract, hire and/or retain talented and highly qualified senior management, other key employees and/or a highly skilled and diverse workforce, or if the Company is unable to effectively provide for the succession of its senior management team, it could adversely affect the Company’s business, prospects, results of operations, financial condition and/or cash flows.

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The Company's foreign operations are subject to a variety of social, political and economic risks and have been, and are expected to continue to be, affected by foreign currency exchange fluctuations, foreign currency controls, government-mandated pricing controls, duties, tariffs and/or other trade measures, which could have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows and the value of its foreign assets.
As of December 31, 2019, the Company had operations based in 25 foreign countries and its products were sold in approximately 150 countries. The Company is exposed to risks associated with social, political and economic conditions, including inflation, inherent in operating in foreign countries, including those in Asia (such as China and Hong Kong, which has been impacted by ongoing political unrest in that region), Australia, Canada, Eastern Europe (such as Russia), Mexico, South Africa and South America (such as Argentina), which could have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows. Such risks include hyperinflation, foreign currency devaluation, tariffs, foreign currency controls, government-mandated pricing controls, currency remittance restrictions, changes in tax laws, changes in consumer purchasing habits (including as to retailer preferences), as well as, to a lesser extent, changes in U.S. laws and regulations relating to foreign trade and investment.
The U.S. and the other countries in which the Company’s products are manufactured or sold have imposed and may impose additional duties, tariffs and other retaliatory or trade protection measures, or other restrictions or regulations, or may adversely adjust prevailing quota, duty or tariff levels, which can affect the cost and availability of materials that the Company uses to manufacture and package its products and the sale of finished products. For example, the E.U. has imposed tariffs on certain beauty products imported from the U.S., which would impact the sale in the E.U. of certain of the Company’s more prestige products that are manufactured in the U.S. Similarly, the tariffs imposed by the U.S. on goods and materials from China would impact any materials that the Company imports from that region for use in manufacturing or packaging in the U.S. Measures that the Company could be required to take to reduce the impact of tariff increases or trade restrictions, including shifts of production among countries and manufacturers, geographical diversification of the Company’s sources of supply, adjustments in product or packaging design and fabrication, or increased prices, could increase the Company’s costs and delay the Company’s time to bring its products to shelf. Other governmental actions related to tariffs or international trade agreements have the potential to adversely impact demand for the Company’s products, production costs, retail customers and suppliers. These risks, which could increase the Company’s costs and reduce the Company’s net sales and profitability, could have a material adverse effect on the Company’s business, prospects, results of operations, financial condition and/or cash flows.
These risks and limitations could also affect the ability of the Company's foreign subsidiaries to obtain sufficient capital to conduct their operations in the ordinary course of business. Limitations and the difficulties that certain of the Company's foreign subsidiaries may experience on the free flow of funds to and from these foreign subsidiaries could restrict the Company's ability to respond timely to challenging business conditions or changes in operations, which could have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows.
The Company's net sales outside of the U.S. for each of 2019 and 2018 represented approximately 53% and 52% of the Company's total consolidated net sales, respectively. Fluctuations in foreign currency exchange rates negatively affected the Company's results of operations and the value of the Company's foreign net assets in 2019 and they may adversely affect the Company's results of operations and the value of the Company's foreign net assets in future periods, which in turn could cause a material adverse effect on the Company's reported net sales and earnings and the comparability of period-to-period results of operations.
Products Corporation may, from time to time, enter into foreign currency forward exchange contracts to hedge certain net cash flows denominated in foreign currencies. The foreign currency forward exchange contracts may, from time to time, be entered into primarily for the purpose of hedging anticipated inventory purchases and certain intercompany payments denominated in foreign currencies and generally have maturities of less than one year. At December 31, 2019, the notional amount of Products Corporation's foreign currency forward exchange contracts was nil. These foreign currency forward exchange contracts may not adequately protect the Company against the negative effects of foreign currency fluctuations, which could adversely affect the Company's overall liquidity.
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Economic conditions could have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows and/or on the financial condition of its customers and suppliers.
Economic conditions in the U.S. and/or other countries where the Company operates have in the past contributed, and may in the future contribute, to lower consumer spending and/or reduced credit availability. Such economic conditions have impacted, and could in the future impact, business and consumer confidence, especially in relation to discretionary purchases. These conditions could have an impact on customer and/or consumer purchases of the Company's products, which could result in a reduction of the Company's net sales, operating income and/or cash flows. Additionally, disruptions in the credit and other financial markets and economic conditions could, among other things, impair the financial condition of one or more of the Company's customers or suppliers, thereby increasing the risk of customer bad debts or non-performance by suppliers. These conditions could have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows.
The U.K.’s ongoing withdrawal process from the European Union may have a negative effect on global economic conditions, financial markets and on the Company's business, prospects, results of operations, financial condition and/or cash flows.
The Company is a multinational company with worldwide operations, including material business operations in Europe. In June 2016, a majority of voters in the U.K. elected to withdraw from the European Union in a national referendum. In March 2017, the U.K. government invoked Article 50 of the Treaty on the European Union and the U.K. exited the European Union on January 31, 2020. The "Brexit" process has created significant ongoing uncertainty about the future relationship between the U.K. and the European Union and has given rise to calls for the governments of other European Union member states to consider withdrawal from the European Union. These developments, or the perception that any of them could occur, have had and may continue to have a material adverse effect on global economic conditions and the stability of global financial markets and could significantly reduce global market liquidity and restrict the ability of key market participants to operate in certain financial markets. Asset valuations, currency exchange rates and credit ratings may be especially subject to increased market volatility. Lack of clarity about future U.K. laws and regulations as the U.K. determines which European Union laws to replace or replicate as the withdrawal process proceeds, including financial laws and regulations, tax and free trade agreements, intellectual property rights, supply chain logistics, environmental, health and safety laws and regulations, immigration laws and employment laws, could decrease foreign direct investment in the U.K., increase costs, depress economic activity, restrict the Company’s access to capital and make regulatory compliance and the distribution, sourcing, manufacturing and sales and marketing of the Company’s products more difficult or costly. If the U.K. and the European Union are unable to negotiate acceptable withdrawal terms or if other European Union member states pursue withdrawal, barrier-free access between the U.K. and other European Union member states or among the European economic area overall could be diminished or eliminated. Similar adverse consequences could occur if regions such as Catalonia, where the Company's Spain businesses are headquartered, eventually succeed in withdrawing from their parent country. Approximately 4% of the Company's net sales are in the U.K. and approximately 16% of the Company's net sales are in the remainder of the European Union. Any of these factors could have a material adverse effect on the Company’s business, prospects, results of operations, financial condition and/or cash flows.
Terrorist attacks, acts of war or military actions and/or other civil unrest may adversely affect the territories in which the Company operates and the Company's business, prospects, results of operations, financial condition and/or cash flows.
On September 11, 2001, the U.S. was the target of terrorist attacks of unprecedented scope. These attacks contributed to major instability in the U.S. and other financial markets and reduced consumer confidence. These terrorist attacks, as well as subsequent terrorist attacks (such as those that have occurred in Berlin, Germany; Nice, France; Orlando, Florida; Istanbul, Turkey; Brussels, Belgium; Paris, France; Benghazi, Libya; Madrid, Spain; London, England and most recently the attack on the U.S. embassy in Baghdad, Iraq and the U.S.'s military response to such attack), attempted terrorist attacks, military responses to terrorist attacks, other military actions and/or civil unrest, such as that occurring in France, the Ukraine, Venezuela, Turkey, Syria, Iraq and surrounding areas and, most recently in Hong Kong, may adversely affect prevailing economic conditions, resulting in work stoppages, reduced consumer spending and/or reduced demand for the Company's products. These developments subject the Company's worldwide operations to increased risks and, depending on their magnitude, could reduce the Company's net sales and therefore could have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows.
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Declines in the financial markets may result in increased pension expense and increased cash contributions to the Company's pension plans.
Declines in the U.S. and global financial markets could result in significant declines in the Company's pension plan assets and result in increased pension expense and cash contributions to the Company's pension plans. Interest rate levels will affect the discount rate used to value the Company's year-end pension benefit obligations. One or more of these factors, individually or taken together, could impact future required cash contributions to the Company's pension plans and pension expense. Any one or more of these conditions could reduce the Company's available liquidity, which could have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows.
Extreme weather conditions and natural disasters could have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows.
Extreme weather conditions that impact the retail store locations of the Company’s customers, or the locations of the Company’s manufacturing facilities, distribution centers, overseas offices, third-party suppliers and/or other vendors, such as the recent fire disasters in Australia and California, could disrupt the supply and shipment of the Company’s products to consumers, which could have a material adverse effect on the Company's sales, business, prospects, results of operations, financial condition and/or cash flows. For the year ended December 31, 2019, the Company’s operations in Australia represented approximately 4% of the Company’s total net sales. Moreover, natural disasters, such as hurricanes, tsunamis and the recent earthquakes impacting Puerto Rico, whether occurring in the U.S. or abroad, and their related consequences and effects, including energy shortages and public health issues, could result in economic instability and/or disruptions to the Company’s operations and/or the operations of the Company’s retail customers, distributors, third-party-suppliers and other vendors, which could have a material adverse effect on the Company's sales, business, prospects, results of operations, financial condition and/or cash flows.
The ongoing occurrence of the coronavirus and any possible recurrence of other similar types of pandemics, or any other widespread public health problems, could result in decreased sales of the Company's products, which could have a material adverse effect on the Company's business, results of operations, financial condition and/or cash flows.

While the impact on the Company’s business from the recent outbreak of the coronavirus is unknown at this time and difficult to predict, various aspects of the Company’s business could be adversely affected by the outbreak and the possible recurrence of other similar pandemic public health problems. In early 2020, China began reporting on the spread of the coronavirus and thousands of cases of the disease have since been identified throughout the rest of Asia, as well as in Europe, the U.S., Latin America and other regions that are important to the Company’s business in terms of sales, manufacturing and other aspects of its supply chain. While there are many unknowns as to the duration and severity of the coronavirus outbreak, in 2020 there has been a significant decline in air travel and consumer traffic in key shopping and tourist areas around the globe, which may adversely affect the Company’s travel retail business, among others.

Any prolonged outbreak of the coronavirus could result in the imposition of quarantines or closures of retailer locations, office spaces, manufacturing facilities, travel and transportation restrictions and/or import and export restrictions, any of which could contribute to a general slowdown in the global economy.

Any extended pandemic outbreak, such as is occurring with the coronavirus, could cause the Company’s key third party suppliers or the Company itself to temporarily close one or more manufacturing facilities, which could lead to a shortage of raw materials, components and finished products. Also, if one or more of the Company’s key customers were required to close for an extended period, the Company might not be able to ship products to them and consumers may decrease their level of purchasing activity, which would adversely impact the Company’s net sales. In addition, governmental authorities may recommend or impose other measures that could cause significant disruptions to the Company’s business operations in the regions most impacted by the coronavirus, such as in Asia and Travel Retail globally. Any of the foregoing events or other unforeseen consequences of public health problems could materially adversely affect the Company’s business, results of operations, financial condition and/or cash flows.
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The Company's products are subject to federal, state and international regulations that could have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows.
The Company’s business is subject to numerous laws, regulations and trade policies. The Company is subject to regulation by the FTC and the FDA in the U.S., as well as various other federal, state, local and foreign regulatory authorities, including those in the EU, Canada and other countries in which the Company operates. The Company's Oxford, North Carolina manufacturing facility is registered with the FDA as a drug manufacturing establishment, permitting the manufacture of cosmetics and other beauty-care products that contain over-the-counter drug ingredients, such as sunscreens, anti-perspirant deodorants and anti-dandruff hair-care products. Regulations in the U.S., the EU, Canada and other countries in which the Company operates that are designed to protect consumers or the environment have an increasing influence on the Company's product claims, ingredients and packaging. To the extent federal, state, local and/or foreign regulatory changes occur in the future, whether due to changes in applicable laws or regulations or evolving interpretations and enforcement policies by regulatory authorities, they could require the Company to reformulate or discontinue certain of its products or revise its product packaging or labeling, any of which could result in, among other things, increased costs to the Company, delays in product launches, product returns or recalls and lower net sales, and therefore could have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows.
Any violation of the U.S. Foreign Corrupt Practices Act or other similar foreign anti-corruption laws could have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows.
A significant portion of the Company’s revenue is derived from operations outside the U.S. and the Company has significant facilities outside the U.S., which exposes the Company to complex foreign and U.S. regulations inherent in conducting international business transactions. The Company is subject to compliance with the U.S. Foreign Corrupt Practices Act ("FCPA") and other similar foreign anti-corruption laws, which generally prohibit companies and their intermediaries from making improper payments to foreign government officials for the purpose of obtaining or retaining business and other types of improper payments. While the Company’s employees and agents are required to comply with these laws and the Company has developed policies and procedures to facilitate compliance with such laws, there is no assurance that the Company’s policies and procedures will prevent all violations of these laws, despite the Company’s long-standing commitment to conducting its business and achieving its objectives by maintaining the highest level of ethical standards and legal compliance. The SEC and the U.S. Department of Justice, and their foreign counterparts, have continued to increase their enforcement activities with respect to the FCPA and similar foreign anti-corruption laws and any violation of these laws or allegations of such may result in severe criminal and civil sanctions, as well as other substantial costs and penalties, any of which could have a material adverse effect the Company’s business, prospects, results of operations, financial condition and/or cash flows.
Disruptions to the Company's information technology systems could disrupt the Company's business operations which could have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows.
The operation of the Company's business depends on the Company's information technology systems. The Company relies on its information technology systems to effectively manage, among other things, the Company's business data, communications, supply chain, inventory management, customer order entry and order fulfillment, processing transactions, summarizing and reporting results of operations, human resources benefits and payroll management, compliance with regulatory, legal and tax requirements and other processes and data necessary to manage the Company's business. Disruptions to the Company's information technology systems, including any disruptions to the Company's current systems and/or as a result of transitioning to additional or replacement information technology systems, as the case may be, could disrupt the Company's business and could result in, among other things, transaction errors, processing inefficiencies, loss of data and the loss of sales and customers, which could have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows. In addition, the Company's information technology systems may be vulnerable to damage or interruption from circumstances beyond the Company's control, including, without limitation, fire, natural disasters, power outages, systems disruptions, system conversions, security breaches, cyberattacks, phishing attacks, viruses and/or human error. In any such event, the Company could be required to make a significant investment to fix or replace its information technology systems, and the Company could experience interruptions in its ability to service its customers. Any such damage or interruption could have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows.
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In addition, as part of the Company's normal business activities, the Company collects and stores certain confidential information, including personal information with respect to customers, consumers and employees, as well as information related to intellectual property, and the success of its e-commerce operations depends on the secure transmission of confidential and personal data over public networks, including the use of cashless payments. The Company may share some of this information with vendors who assist the Company with certain aspects of its business. Moreover, the success of the Company’s e-commerce operations depends upon the secure transmission of confidential and personal data over public networks, including the use of cashless payments. Any failure on the part of the Company or its vendors to maintain the security of this confidential data and personal information, including via the penetration of the Company’s network security (or those if its vendors) and the misappropriation of confidential and personal information, could result in business disruption, damage to the Company’s reputation, financial obligations to third parties, fines, penalties, regulatory proceedings and private litigation, any or all of which could result in the Company incurring potentially substantial costs. Such events could also result in the deterioration of confidence in the Company by employees, consumers and customers and cause other competitive disadvantages. In addition, a security or data privacy breach could require the Company to expend significant additional resources to enhance its information security systems and could result in a disruption to the Company’s operations. Furthermore, third parties, such as the Company’s suppliers and retail customers, may also rely on information technology and be subject to such cybersecurity breaches. These breaches may negatively impact their businesses, which could in turn disrupt the Company’s supply chain and/or the Company’s business operations. Due to the potential significant costs, business disruption and reputational damage that typically accompany a cyberattack or cybersecurity breach, any such event could have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows.
The Company’s information technology systems, or those of its third-party service providers, may be accessed by unauthorized users such as cyber criminals as a result of a disruption, cyberattack or other security breach. Cyberattacks and other cybersecurity incidents are occurring more frequently, are constantly evolving in nature, are becoming more sophisticated and are being made by groups and individuals with a wide range of expertise and motives. Such cyberattacks and cyber incidents can take many forms, including cyber extortion, social engineering, password theft or introduction of viruses or malware, such as ransomware through phishing emails.  As techniques used by cyber criminals change frequently, a disruption, cyberattack or other security breach of the Company’s information technology systems or infrastructure, or those of its third-party service providers, may go undetected for an extended period and could result in the theft, transfer, unauthorized access to, disclosure, modification, misuse, loss or destruction of Company, employee, representative, customer, vendor, consumer and/or other third-party data, including sensitive or confidential data, personal information and/or intellectual property. The Company cannot guarantee that its security efforts will prevent breaches or breakdowns of the Company’s or its third-party service providers’ information technology systems. In addition, like most major corporations, the Company's information systems are a target of cyberattacks and although the incidents that the Company has experienced to date have not had a material effect, if the Company suffers a material loss or disclosure of confidential information as a result of a breach of its information technology systems, including those of its third-party service providers, the Company may suffer reputational, competitive and/or business harm, incur significant costs and be subject to government investigations, litigation, fines and/or damages, which could have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows.
Further, the Company is subject to an evolving body of federal, state and non-U.S. laws, rules, regulations, guidelines and principles regarding data privacy and security. Several governments, including the E.U., have regulations dealing with the collection and use of personal information obtained from their citizens, and regulators globally are also imposing greater monetary fines for privacy violations. As of May 2018, the European privacy regulation General Data Protection Regulation (“GDPR”) went into effect, strengthening and expanding the rules pertaining to how organizations are required to handle the personal data of individuals located in the EU at the time the data is collected. GDPR establishes new requirements regarding the handling of personal data, and non-compliance with the GDPR may result in monetary penalties of up to 4% of the Company’s worldwide revenue. In addition, the State of California recently enacted a data privacy law applicable to entities serving or employing California residents (the “CCPA”) that will require compliance by January 2020. The GDPR, the CCPA and other changes in federal, state and foreign laws, rules or regulations associated with the enhanced protection of certain types of sensitive data and other personal information, require the Company to evaluate its current operations, information technology systems and data handling practices and to implement enhancements and adaptations where necessary to comply with these new laws, rules and regulations, which could greatly increase the Company’s operational costs or require the Company to adapt certain operations or activities to comply with the stricter regulatory requirements. The Company's inability to comply with such laws, rules, regulations, guidelines and principles or to quickly adapt the Company's practices to reflect them as they develop, could potentially subject the Company to significant fines, damages, liabilities and reputational harm, which could have a material adverse effect on the Company’s business, prospects, results of operations, financial condition and/or cash flows.
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The Company previously identified a material weakness in its internal control over financial reporting, which has now been remediated. Any failure to maintain effective internal control over financial reporting could have a material adverse effect on the Company’s business, prospects, results of operations, financial condition and/or cash flows.
The Company previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2018, a material weakness in its internal control over financial reporting primarily related to control deficiencies within various aspects of its control environment. As a result of these control deficiencies, the Company concluded that its internal control over financial reporting was not effective for the fiscal year ended December 31, 2018. During 2019, the Company completed a series of actions and measures that effectively remediated the previously-disclosed material weakness and concluded that as of December 31, 2019 its internal control over financial reporting was effective. See Item 9A. – “Controls and Procedures” of this 2019 Form 10-K. The Company cannot provide assurances that material weaknesses or significant deficiencies will not occur in the future and that it will be able to remediate such weaknesses or deficiencies in a timely manner, which could have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows.
Furthermore, if the remediated material weakness recurs in the future or a new material weakness occurs, it could negatively impact the Company’s ability to prepare its future financial statements in conformity with U.S. GAAP. If the Company were unable to prepare its future financial statements in conformity with U.S. GAAP, such circumstances would expose the Company to potential events of default (if not cured or waived) under the financial and operating covenants contained in Products Corporation’s various debt instruments and cause the Company to seek any necessary consents, waivers or amendments from its lenders. Under such circumstances, Products Corporation faces the risk that it may not be able to obtain any such consents, waivers or amendments, that the terms of any such consents, waivers or amendments will be less favorable than the current terms of its indebtedness and/or Products Corporation may not be able to refinance its existing indebtedness to enable it to repay that indebtedness when it becomes due. See also Item 1A. Risk Factors - “Products Corporation’s substantial indebtedness could adversely affect the Company’s operations and flexibility and Products Corporation’s ability to service its debt,” “Products Corporation’s ability to pay the principal amount of its indebtedness depends on many factors” and “Restrictions and covenants in Products Corporation’s various debt instruments limit its ability to take certain actions and impose consequences in the event of failure to comply.” Also, if the Company is unable to prepare its future financial statements in conformity with U.S. GAAP, it could result in damage to the Company’s reputation, financial obligations to third parties, regulatory proceedings and private litigation, any or all of which could result in additional business disruptions and the Company incurring potentially substantial costs.
The Company may not realize the cost reductions and other benefits that it expects from its various restructuring programs that may be in effect from time to time, which could have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows.
From time to time, the Company implements restructuring program, such as the Revlon 2020 Restructuring Program (such programs as may be in effect from time to time being referred to as “Restructuring Programs”) that are generally designed to streamline the Company’s operations, reporting structures and business processes, with the objective of maximizing productivity and improving profitability, cash flows and liquidity. Events and circumstances may occur that are beyond the Company’s control, such as delays caused by third parties and unexpected costs, that could result in the Company not realizing all of the anticipated cost reductions and benefits or the Company not realizing the cost reductions or other benefits on its expected timetable. In addition, changes in foreign exchange rates, commodity costs and/or in tax, labor or other laws may result in the Company not achieving the anticipated cost reductions and benefits, as measured in U.S. dollars. If the Company is unable to realize the Restructuring Programs’ cost reduction objectives and other benefits, the Company’s ability to fund other initiatives and enhance its profitability may be adversely affected. In addition, some of the actions that the Company is taking in furtherance of the Restructuring Programs may become a distraction for the Company’s managers and employees and may disrupt the Company’s ongoing business operations; cause deterioration in employee morale which may make it more difficult for the Company to retain or attract qualified employees; disrupt or weaken the Company’s internal control structures; and/or give rise to negative publicity which could affect the Company’s business reputation. If the Company is unable to successfully implement the Restructuring Programs, in whole or in part, in accordance with the Company’s expectations, it could adversely affect its business, prospects, results of operations, financial condition and/or cash flows. For additional information regarding the 2018 Optimization Program, refer to Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Restructuring charges and other, net.” For additional information regarding the Revlon 2020 Restructuring Program, see Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Recent Developments - Revlon 2020 Restructuring Program.”
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Shares of Revlon Class A Common Stock and Products Corporation's capital stock are pledged to secure various of Revlon's and/or other of the Company's affiliates’ obligations and foreclosure upon these shares or dispositions of shares could result in the acceleration of debt under ProductProducts Corporation's 2016 Senior Credit Facilities, 2018 Foreign Asset-Based Term Facility, 2019 Term Loan Facility, Amended 2019 Senior Line of Credit Facility and/or its Senior Notes and could have other consequences.

All of Products Corporation's shares of common stock are pledged to secure Revlon’s guarantee under the 2016 Senior Credit Facilities. MacAndrews & Forbes has advised the Company that it has pledged shares of Revlon’s Class A Common Stock to secure certain obligations of MacAndrews & Forbes. Additional shares of Revlon and shares of common stock of intermediate holding companies between Revlon and MacAndrews & Forbes may from time-to-time be pledged to secure obligations of MacAndrews & Forbes. A default under any of these obligations that are secured by the pledged shares could cause a foreclosure with respect to such shares of Revlon's Class A Common Stock, Products Corporation's common stock or stock of intermediate holding companies between Revlon and MacAndrews & Forbes.
A foreclosure upon any such shares of common stock or dispositions of shares of Revlon’s Class A Common Stock, Products Corporation's common stock or stock of intermediate holding companies between Revlon and MacAndrews & Forbes that are beneficially owned by MacAndrews & Forbes could, in a sufficient amount, constitute a "change of control" under Products Corporation’s 2016 Credit Agreements, the 2018 Foreign Asset-Based Term Agreement, the 2019 Term Loan Facility and the Senior Notes Indentures. A change of control constitutes an event of default under the 2016 Credit Agreements, the 2018 Foreign Asset-Based Term Agreement and the 2019 Term Loan Facility that would permit Products Corporation's and its subsidiaries' lenders to accelerate amounts outstanding under such facilities. In addition, holders of the Senior Notes may require Products Corporation to repurchase their respective notes under those circumstances.
Products Corporation may not have sufficient funds at the time of any such change of control to repay in full or in part the borrowings under the 2016 Senior Credit Facilities, the 2018 Foreign Asset-Based Term Facility, the 2019 Term Loan Facility and the Amended 2019 Senior Line of Credit Facility (as a result of its cross-default provisions) and/or to repurchase or redeem some or all of the Senior Notes. (See also Item 1A. Risk Factors - "The Company's ability to service its debt and meet its cash requirements depends on many factors, including achieving anticipated levels of revenue and expenses. If such revenue or expense levels prove to be other than as anticipated, the Company may be unable to meet its cash requirements or Products Corporation may be unable to meet the requirements of the 2016 Credit Agreements, 2018 Foreign Asset-Based Term Loan Agreement, 2019 Term Loan Agreement and/or Amended 2019 Senior Line of Credit Agreement, which could have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows.")

Changes in tax laws or the examination of the Company's tax positions could increase (or decrease) the Company's tax obligations and effective tax rate, which could materially and adversely affect the Company's financial condition, results of operations and/or cash flows.

Tax laws in the various jurisdictions where the Company conducts business are dynamic and subject to change as new laws are passed and new interpretations of existing law are issued or applied (possibly with a retroactive effect). The Company is subject to taxes in the U.S. and numerous international jurisdictions. The Company records tax expense based on current tax payments and its estimates of future tax payments, which include reserves for estimates of probable settlements of international and domestic tax audits. At any one time, many tax years are subject to audit by various taxing jurisdictions. The results of these audits and negotiations with taxing authorities may affect the ultimate settlement of these issues. As a result, the Company expects that throughout the year there could be ongoing variability in its quarterly tax rates as taxable events occur and exposures are re-evaluated. Further, the Company's effective tax rate in a given financial statement period may be materially impacted by changes in tax laws, changes in the mix and level of earnings by taxing jurisdiction, changes to existing accounting rules or regulations or changes to the Company's ownership or capital structures. Fluctuations in the Company's tax obligations and effective tax rate could materially adversely affect its financial condition, results of operations and/or cash flows.

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Uncertainties in the interpretation and application of the U.S. income tax reform effortsprovisions could have a material impact on the Company's financial condition, results of operations and/or cash flows.

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act of 2017 (the "Tax Act"). The Tax Act makesmade broad changes to the existing U.S. federal income tax code, including

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REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES






reducing the federal corporate income tax rate from 35% to 21%, imposing limitations on the Company's ability to deduct interest expense for tax purposes and reducing U.S. tax on qualified dividends received from non-U.S. subsidiaries, amongst many other complex provisions. The ultimate impact of such tax reforms may differ from the Company's current estimates due to changes in interpretations and assumptions made by the Company as well asfrom the issuance of any further regulations or guidance. As additional regulatory and interpretative guidance is issued, the Company may refine its analysis and make adjustments that may alter the operation of the U.S. federal income tax code.differ from amounts initially recorded. Various uncertainties also exist in terms of how U.S. states and any foreign countries within which the Company operates will react to these U.S. federal income tax reforms, whichreforms. Any such developments could have a material impact on the Company's financial condition, results of operations and/or cash flows.

MacAndrews & Forbes has the power to direct and control the Company's business.

MacAndrews & Forbes is wholly-ownedbeneficially owned by Ronald O. Perelman. Mr. Perelman, through MacAndrews & Forbes, beneficially owned approximately 85%87.1% of Revlon's outstanding Class A Common Stock on December 31, 2017.2019. As a result, MacAndrews & Forbes is able to control the election of the entire Board of Directors of Revlon and of Products Corporation's Board of Directors (as it is a wholly owned subsidiary of Revlon) and controls the vote on all matters submitted to a vote of Revlon’s and Products Corporation's stockholders, including the approval of mergers, consolidations, sales of some, substantially all or all of the Company's assets, issuances of capital stock and similar transactions.




32

Item 1B. Unresolved Staff Comments


None.



Item 2. Properties


The following table sets forth, as of December 31, 2017,2019, the Company's major manufacturing, research and development and warehouse/distribution facilities by the segment that each facility primarily operates in, all of which are owned by the Company, except where otherwise noted.
LocationSegmentSegment(s)UseApproximate Floor Space Sq. Ft.
Oxford, North CarolinaConsumerRevlon, Portfolio, Elizabeth Arden, Fragrances
Manufacturing, warehousing, distribution and office (a)
1,012,000
Jacksonville, FloridaProfessionalRevlon, Portfolio
Manufacturing, warehousing, distribution and office(a) (b)
725,000731,000 
Salem, VirginiaElizabeth ArdenWarehousing and distribution (leased)482,000
Roanoke, VirginiaElizabeth ArdenWarehousing and distribution (leased)400,000399,000 
Mississauga, CanadaRevlonWarehousing, distribution and office (leased)195,000 
Tarragona, SpainProfessionalPortfolio, Elizabeth Arden, FragrancesManufacturing, warehousing, distribution and office300,000175,000 
Mississauga, CanadaBologna, ItalyConsumerRevlon, PortfolioWarehousing, distribution and office (leased)195,000
Queretaro, MexicoProfessionalManufacturing, warehousing, distribution and office128,000137,000 
Queretaro, MexicoPortfolio, Elizabeth ArdenManufacturing, warehousing, distribution and office128,000 
Canberra, AustraliaConsumerRevlonWarehousing and distribution125,000
Edison, New JerseyConsumerRevlon, Portfolio, Elizabeth ArdenResearch and development and office (leased)123,000124,000 
Rietfontein, South AfricaConsumerRevlonWarehousing, distribution and office (leased)120,000118,000 
Isando, South AfricaConsumerRevlonManufacturing, warehousing, distribution and office94,000
Stone, United KingdomConsumerRevlonWarehousing and distribution (leased)92,000
Bologna, ItalyProfessionalManufacturing, warehousing, distribution and office80,000
(a)
Property subject to liens under the 2016 Credit Agreements.

(a)Property subject to liens under the 2016 Credit Agreements.
(b)Owned: 512,000 Sq. Ft.; Leased: 219,000 Sq. Ft.

In addition to the facilities described above, the Company owns and leases additional facilities in various areas throughout the world, including the lease of the Company's executive offices in New York, New York (approximately 107,000153,000 square feet) and the office lease in Cornella, Spain (approximately 90,00089,000 square feet). Management considers the Company's facilities to be well-maintained and satisfactory for the Company's operations, and believes that the Company's facilities and third-party contractual supplier arrangements provide sufficient capacity for its current and expected production requirements.




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REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES






Item 3. Legal Proceedings
The Company is involved in various routine legal proceedings incidental to the ordinary course of its business. The Company believes that the outcome of all pending legal proceedings in the aggregate is not reasonably likely to have a material adverse effect on the Company’s business, prospects, results of operations, financial condition and/or cash flows. However, in light of the uncertainties involved in legal proceedings generally, the ultimate outcome of a particular matter could be material to the Company’s operating results for a particular period depending on, among other things, the size of the loss or the nature of the liability imposed and the level of the Company’s income for that particular period. See Note 19, "Commitments and Contingencies" to the Consolidated Financial Statements in this Form 10-K, for further discussion.
As previously disclosed, following the announcement of the execution of the Elizabeth Arden Merger Agreement, several putative shareholder class action lawsuits and a derivative lawsuit were filed challenging the Merger. In addition to the complaints filed on behalf of plaintiffs Parker, Christiansen, Ross and Stein on July 25, 2016, a lawsuit (Hutson v. Elizabeth Arden, Inc., et al., Case No. CACE-16-013566) (referred to as the "Hutson complaint") was filed in the Seventeenth Judicial Circuit in and for Broward County, Florida (the "Court") against Elizabeth Arden, the members of the board of directors of Elizabeth Arden, Revlon, Products Corporation and Acquisition Sub. In general, the Hutson complaint alleges that: (i) the members of Elizabeth Arden’s board of directors breached their fiduciary duties to Elizabeth Arden’s shareholders with respect to the Merger, by, among other things, approving the Merger pursuant to an unfair process and at an inadequate and unfair price; and (ii) Revlon, Products Corporation and Acquisition Sub aided and abetted the breaches of fiduciary duty by the members of Elizabeth Arden’s board of directors. The plaintiff seeks relief similar to that sought in the Parker case.
By Order dated August 4, 2016, all five cases were consolidated by the Court into a Consolidated Amended Class Action. Thereafter, on August 11, 2016, a Consolidated Amended Class Action Complaint was filed, seeking to enjoin defendants from consummating the Merger and/or from soliciting shareholder votes. To the extent that the Merger was consummated, the Consolidated Amended Class Action Complaint seeks to rescind the Merger or recover rescissory or other compensatory damages, along with costs and fees. The grounds for relief set forth in the Consolidated Amended Class Action Complaint in large part track those grounds as asserted in the five individual complaints, as previously disclosed. Class counsel advised that post-consummation of the Merger they were going to file a Second Consolidated Amended Class Action Complaint. The Second Consolidated Amended Class Action Complaint (which superseded the Consolidated Amended Class Action Complaint) was ultimately filed on or about January 26, 2017. Like the Consolidated Amended Class Action complaint, the grounds for relief set forth in the Second Consolidated Amended Class Action Complaint in large part track those grounds as asserted in the five individual complaints.
The defendants' motions to dismiss the Second Consolidated Amended Class Action Complaint were filed on March 28, 2017. Plaintiffs' response was filed on June 6, 2017 and defendants' replies were filed on July 13, 2017. A hearing on the defendants' motion to dismiss was held on September 19, 2017 and on November 20, 2017, the defendants' motion was granted and the case was dismissed, with leave to amend under limited circumstances. On December 8, 2017, plaintiffs filed a Third Amended Complaint, seeking relief on the same grounds sought in the First and Second Amended Complaints, but alleged as direct, as opposed to derivative, claims. On January 12, 2018, the defendants once again moved to dismiss. The Company anticipates briefing, followed by a hearing that is expected to occur in the next few months. The Company believes the allegations contained in the Third Consolidated Amended Class Action Complaint are without merit and intends to continue to vigorously defend against them. Additional lawsuits arising out of or relating to the Merger Agreement or the Merger may be filed in the future.
The Company believes that the outcome of all pending legal proceedings in the aggregate is not reasonably likely to have a material adverse effect on the Company’s business, prospects, results of operations, financial condition and/or cash flows. However, in light of the uncertainties involved in legal proceedings generally, the ultimate outcome of a particular matter could be material to the Company’s operating results for a particular period depending on, among other things, the size of the loss or the nature of the liability imposed and the level of the Company’s income for that particular period.


Item 4. Mine and Safety Disclosures


Not applicable.

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REVLON, CONSUMER PRODUCTS CORPORATIONINC. AND SUBSIDIARIES
(except where otherwise noted, all tabular amounts in millions)millions, except share and per share amounts)



PART II - OTHER INFORMATION


Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesSecurities.

Revlon beneficially owns allRevlon’s only class of the 5,260capital stock outstanding shares of Products Corporation's common stock, with par value of $1.00 per share.at December 31, 2019 is its Class A Common Stock. MacAndrews & Forbes, which is wholly-ownedbeneficially owned by Ronald O. Perelman, at December 31, 20172019 beneficially owned 44,573,18746,223,321 shares of Revlon'sRevlon’s Class A Common Stock, with a par value of $0.01 per share (the "Class A Common Stock"). Revlon's only class of capital stock outstanding at December 31, 2017 is2019 was its Class A Common Stock. As a result, at December 31, 2017,2019, Mr. Perelman, indirectly through MacAndrews & Forbes, beneficially owned approximately 85%87.1% of the issued and outstanding shares of Revlon's Class A Common Stock, which represented approximately 85%87.1% of the voting power of Revlon’s capital stock. The remaining 8,073,3776,846,511 shares of Class A Common Stock that were issued and outstanding at December 31, 20172019 were owned by the public.
ThereRevlon's Class A Common Stock is no established market for Products Corporation's common stock, as all 5,260 outstanding shares of Products Corporation's common stock were held by Revlon as oflisted on the New York Stock Exchange (the "NYSE") and traded under the symbol "REV" principally in the U.S. on the FINRA Alternative Display Facility, the NYSE, the EDGX Exchange and the NASDAQ Intermarket Trading System, among others. At December 31, 2017.2019, there were approximately 266 holders of record of Class A Common Stock (which does not include the number of beneficial owners holding indirectly through a broker, bank or other nominee). No cash dividends were declared or paid by Products Corporation to Revlon orduring 2019 and 2018 by Revlon on its Class A Common Stock. The terms of the 2016 Credit Agreements, the 2019 Term Loan Agreement and the Senior Notes Indentures currently restrict Products Corporation’s ability to pay dividends or make distributions to Revlon, except in limited circumstances.circumstances, which, in turn, limits Revlon's ability to pay dividends to its stockholders. See "Financial Condition, Liquidity and Capital Resources - Long Term— Long-Term Debt Instruments" and Note 11, "Long-Term Debt,9, "Debt," into the Company’sCompany's Audited Consolidated Financial Statements in this 2019 Form 10-K.

For information on securities authorized for issuance under the Company’s equity compensation plans, see "Item 12 - Security Ownership of Certain Beneficial Owners and Related Stockholder Matters."



Item 6. Selected Financial Data


The Consolidated Statements of Operations Data for each of the years in the 5-year period ended December 31, 2017 and the Consolidated Balance Sheet DataNot applicable, as of December 31, 2017, 2016, 2015, 2014 and 2013 are derived from the Company’s Consolidated Financial Statements, which have been audited by an independent registered public accounting firm. The results of operations related to the Elizabeth Arden Acquisition are included beginning on the Elizabeth Arden Acquisition Date of September 7, 2016. The results of operations related to the acquisition of the CBBeauty Group and certain of its related entities (collectively "CBB" and, such transaction, the "CBB Acquisition") are included beginning on the CBB acquisition date of April 21, 2015 (the "CBB Acquisition Date"). The results of the operations related to the Colomer Acquisition are included beginning on the Colomer Acquisition Date of October 9, 2013. The Selected Consolidated Financial Data should be read in conjunction with the Company's Consolidated Financial Statements and the Notes to the Consolidated Financial Statements and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this Form 10-K.a smaller reporting company.


34
  Year Ended December 31,
Statement of Operations Data: 
2017(a)
 
2016(b)
 
2015(c)
 
2014(d)
 
2013(e)
Net sales $2,693.7
 $2,334.0
 $1,914.3
 $1,941.0
 $1,494.7
Gross profit 1,542.4
 1,416.9
 1,246.5
 1,272.7
 949.6
Selling, general and administrative expenses 1,461.0
 1,151.6
 993.5
 999.7
 723.6
Acquisition and integration costs 52.9
 43.2
 8.0
 6.4
 25.4
Restructuring charges and other, net 33.4
 34.0
 10.5
 21.3
 3.5
Impairment charge 10.8
 23.4
 9.7
 —
 —
Operating (loss) income (15.7) 164.7
 224.8
 245.3
 197.1
Interest expense 149.8
 105.2
 83.3
 84.4
 78.6
Amortization of debt issuance costs 9.1
 6.8
 5.7
 5.5
 3.5
Loss on early extinguishment of debt, net —
 16.9
 —
 2.0
 29.7
Foreign currency (gains) losses, net (18.5) 18.5
 15.7
 25.0
 3.7
Provision for income taxes 23.9
 28.7
 54.4
 81.2
 48.6
(Loss) income from continuing operations, net of taxes (180.8) (10.8) 65.3
 46.0
 32.0
Income (loss) from discontinued operations, net of taxes 2.1
 (4.9) (3.2) 1.3
 (30.4)
Net (loss) income (178.7) (15.7) 62.1
 47.3
 1.6
           

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(except where otherwise noted, all tabular amounts in millions)



  Year Ended December 31,
Balance Sheet Data: 
2017(a)
 
2016
as adjusted(b)
 
2015
as adjusted(c)
 
2014
as adjusted(d)
 
2013
as adjusted(e)
Total current assets $1,281.1
 $1,252.5
 $926.3
 $820.8
 $828.7
Total non-current assets 1,894.6
 1,886.2
 1,136.9
 1,185.5
 1,238.3
Total assets $3,175.7
 $3,138.7
 $2,063.2
 $2,006.3
 $2,067.0
           
Total current liabilities(f)
 $936.0
 $708.5
 $515.0
 $464.9
 $552.6
Total other non-current liabilities 2,895.1
 2,937.0
 2,039.8
 2,098.4
 2,030.9
Total liabilities $3,831.1
 $3,645.5
 $2,554.8
 $2,563.3
 $2,583.5
           
Total indebtedness $2,836.3
 $2,692.0
 $1,825.0
 $1,845.6
 $1,905.8
Total stockholder's deficiency (655.4) (506.8) (491.6) (557.0) (516.5)
(a)
Comparability of results from continuing operations for 2017 are affected by: (1) $52.9 million of acquisition and integration costs incurred during 2017, primarily related to the Elizabeth Arden Acquisition; (2) $33.4 million in restructuring charges and other, net, primarily related to the EA Integration Restructuring Program (See Note 3, "Restructuring Charges," to the Consolidated Financial Statements in this Form 10-K); and (3) a $10.8 million non-cash impairment charge related to goodwill for the Company's GCB reporting unit (see Note 8, "Goodwill and Intangible Assets, Net," to the Consolidated Financial Statements in this Form 10-K).
(b)
Comparability of results from continuing operations for 2016 are affected by: (1) $43.2 million of acquisition and integration costs incurred during 2016, primarily related to the Elizabeth Arden Acquisition; (2) $34 million in restructuring charges and other, net, primarily related to the EA Integration Restructuring Program (See Note 3, "Restructuring Charges," to the Consolidated Financial Statements in this Form 10-K); (3) a $23.4 million non-cash impairment charge related to goodwill and acquired identifiable intangible assets for the Company's Other reporting unit (see Note 8, "Goodwill and Intangible Assets, Net," to the Consolidated Financial Statements in this Form 10-K); and (4) a $16.9 million aggregate loss on the early extinguishment of debt in connection withProducts Corporation entering into the 2016 Senior Credit Facilities and the corresponding complete refinancing and repayment of Products Corporation's Old Term Loan Facility.
(c)Comparability of results from continuing operations for 2015 are affected by: (1) a $20.7 million pension lump sum settlement charge related to a one-time lump sum payment option offered to certain former employees (See Note 14, "Savings Plan, Pension and Post-Retirement Benefits," to the Consolidated Financial Statements in this Form 10-K); (2) a decrease in the provision for income taxes, primarily driven by a non-cash benefit related to the net reduction of the Company's deferred tax valuation allowance on its net deferred tax assets for certain foreign jurisdictions (See Note 16, "Income Taxes," to the Consolidated Financial Statements in this Form 10-K); (3) $10.5 million in restructuring charges and other, net, primarily related to the 2015 Efficiency Program (See Note 3, "Restructuring Charges" to the Consolidated Financial Statements in this Form 10-K); (4) a $9.7 million non-cash goodwill impairment charge related to goodwill for the Company's Global Color Brands reporting unit (see Note 8, "Goodwill and Intangible Assets, Net," to the Consolidated Financial Statements in this Form 10-K); and (5) $8 million of acquisition and integration costs incurred during 2015 primarily related to costs incurred in connection with the 2015 CBB Acquisition and the 2014 Integration Program.
(d)
Comparability of results from continuing operations for 2014 are affected by: (1) $21.3 million in restructuring charges and other, net, primarily related to the 2014 Integration Program (See Note 3, "Restructuring Charges," to the Consolidated Financial Statements in this Form 10-K); (2) $6.4 million of acquisition and integration costs incurred during 2014 (see note (d)(3) below) related to the Colomer Acquisition; and (3) a $6 million foreign currency loss recognized in the second quarter of 2014 as a result of the re-measurement of Revlon Venezuela’s monetary assets and liabilities(See Note 1, "Description of Business and Summary of Significant Accounting Policies," to the Consolidated Financial Statements in this Form 10-K).
(e)
Comparability of results from continuing operations for 2013 are affected by: (1) a $29.7 million aggregate loss on the early extinguishment of debt, primarily in connection with Products Corporation’s issuance in February 2013 of $500 million aggregate principal amount of its 5¾% Senior Notes due February 15, 2021, of which Products Corporation used $491.2 million of the net proceeds (net of underwriters' fees) to repay and redeem all of the $330 million outstanding aggregate principal amount of its previous 9¾% Senior Secured Notes due November 2015 (the "9¾% Senior Secured Notes" and such transaction being the "2013 Senior Notes Refinancing"); (2) a $26.4 million gain from insurance proceeds due to the settlement of the Company's claims for business interruption and property losses as a result of the June 2011 fire at the Company's facility in Venezuela; (3) $25.4 million of acquisition and integration costs incurred in 2013 (see note (c)(2) above) related to the Colomer Acquisition; and (4) $21.4 million in restructuring and related charges, of which $20 million related to the Company's exit of its direct manufacturing, warehousing and sales business operations in mainland China within the Consumer segment in 2013 and was reflected in loss from discontinued operations, net of taxes. (See Note 3, "Restructuring Charges," and Note 4, "Discontinued Operations," to the Consolidated Financial Statements in this Form 10-K).
(f)
Total current liabilities at December 31, 2013 included $58.4 million related to a loan that was outstanding to various third parties that was prepaid in May 2014 (the "Non-Contributed Loan").

27
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
COMBINED MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(except where otherwise noted, all tabular amounts in millions)millions, except share and per share amounts)






Item 7. Combined Management’s Discussion and Analysis of Financial Condition and Results of Operations



Overview


Overview of the Business
Revlon, Consumer Products CorporationInc. ("Products Corporation"Revlon" and together with its subsidiaries, the "Company") is aconducts its business exclusively through its direct wholly-owned operating subsidiary, of Revlon whichConsumer Products Corporation ("Products Corporation"), and its subsidiaries. Revlon is an indirect majority-owned subsidiary of MacAndrews & Forbes Incorporated (together with certain of its affiliates other than Revlon and the Company, "MacAndrews & Forbes"), a corporation wholly-ownedbeneficially owned by Ronald O. Perelman.
The Company operates in four segments: the consumer division ("Consumer");### brand-centric reporting segments that are aligned with its organizational structure based on ### global brand teams: Revlon; Elizabeth Arden; the professional division ("Professional");Portfolio; and Other.Fragrances. The Company manufactures, markets and sells an extensive array of beauty and personal care products worldwide, including color cosmetics, fragrances,cosmetics; fragrances; skin care,care; hair color, hair care and hair treatments,treatments; beauty tools,tools; men's grooming products,products; anti-perspirant deodorantsdeodorants; and other beauty care products.
The Company remains focused on its 3 key strategic pillars to drive its future success and growth. First, strengthening its iconic brands through innovation and relevant product portfolios; second, building its capabilities to better communicate and connect with its consumers through media channels where they spend the most time; and third, ensuring availability of its products where consumers shop, both in-store and increasingly online. 

For additional information regarding ourthe Company's business, see "Part 1, Item 1 - Business" in this 2019 Form 10-K.

Certain capitalized terms used in this 2019 Form 10-K are defined throughout this Item 7.

Overview of Net Sales and Earnings Results
Consolidated net sales in 20172019 were $2,693.7$2,419.6 million, a $359.7$144.9 million increase,decrease, or 15.4%5.7%, as compared to $2,334$2,564.5 million in 2016.2018. Excluding the $6.3$55.7 million favorableunfavorable impact of foreign currency fluctuations (referred to herein as "FX", "XFX" or on an "XFX basis"), consolidated net sales increaseddecreased by $353.4$89.2 million, or 15.1%3.5%, during 2017.2019. The XFX increasenet sales decrease in 20172019 was primarily driven bydue to: a $509.1 million increase in net sales as a result of the Elizabeth Arden Acquisition completed in September 2016; partially offset by a $101.6$62.8 million, or 7.3%11.1%, decrease in ConsumerPortfolio segment net sales, a $52.1 million, or 10.2%, decrease in Fragrances segment net sales and a $49.3$17.5 million, or 10.3%1.8%, decrease in ProfessionalRevlon segment net sales; partially offset by a $43.2 million, or 8.8%, increase in Elizabeth Arden segment net sales.
Consolidated loss from continuing operations, net of taxes, in 20172019 was $180.8$165.2 million, compared to consolidated loss from continuing operations, net of taxes, of $10.8$294.1 million in 2016.2018. The $170.0$128.9 million increasedecrease in consolidated loss from continuing operations, net of taxes, in 20172019 was primarily due to:
•$309.4143.9 million of higherlower SG&A expenses, primarily driven by the inclusion of the SG&Alower brand support expenses within the Elizabeth Arden segment; and
a $44.6 million increase in interest expense incurred during 2017, primarily as a result of higher average debt outstandingplanned lower activity in 2019 and higher weighted average borrowing rates as lower general and administrative expenses, primarily driven by cost reductions related to the Company's cost optimization initiatives and lower incentive compensation;
•a result$46.7 million increase in gain on divested assets related to the gain of $27.4 million recorded in 2019 on the sale of certain assets, compared to a loss on disposal of minority investment of $20.1 million recorded in 2018;
•an $18.0 million decrease in non-cash impairment charges related to the goodwill impairment of the debt transactions completedCompany's Mass portfolio reporting unit within the Portfolio segment recorded in 2018, compared to no goodwill impairment in 2019;
•$10.0 million of lower acquisition, integration, and divestiture costs;
���a $7.4 million decrease in restructuring charges primarily related to lower expenditures under the 2018 Optimization Program in 2019 compared to 2018; and
•a $2.0 million decrease in the third quarterprovision from income taxes, primarily due to a decrease in foreign valuation allowances recorded in 2019, offset by additional tax expense resulting from changes in mix and level of 2016foreign earnings;
35
Table of Contents
REVLON, INC AND SUBSIDIARIES
COMBINED MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(all tabular amounts in connection with the Elizabeth Arden Acquisition;millions, except share and per share amounts)


with the foregoing partially offset by:
•$125.580.1 millionof higherlower gross profit, in 2017, primarily due to lower net sales; and
•a $20.0 million increase in interest expense, primarily due to higher average interest rates and higher borrowings under the inclusionAmended 2016 Revolving Credit Facility and higher indebtedness incurred under the 2019 Term Loan Facility entered into in August 2019 and under the 2018 Foreign Asset-Based Term Facility entered into in July 2018.
Recent Developments

2020 Refinancing Transactions

Committed Debt Financing

On March 9, 2020, Products Corporation entered into a binding commitment letter (the “Commitment Letter”) with Jefferies Finance LLC (the “Commitment Party”). Pursuant to the Commitment Letter and subject to the terms and conditions set forth therein, the Commitment Party has committed to provide senior secured term loan facilities in an aggregate principal amount of gross profit fromup to $850,000,000 (the “Facilities” and such transactions the “2020 Refinancing Transactions”).

The proceeds of the Facilities will be used (i) to repay in full indebtedness outstanding under Products Corporation’s 5.75% Senior Notes due February 2021 and Products Corporation’s Term Credit Agreement (the “2019 Term Loan Facility”) dated as of August 6, 2019 (the “Refinancing”), (ii) to pay fees and expenses in connection with the Facilities and the Refinancing and (iii) to the extent of any excess, for general corporate purposes.

The funding of the Facilities is contingent on the satisfaction of a limited number of customary conditions, including the execution of definitive loan documentation for the Facilities, absence of material adverse change and certain other customary conditions. The commitments under the Commitment Letter will be available to the Company until June 30, 2020, unless the Refinancing (as defined below) is consummated or the maturity of certain other material indebtedness of Products Corporation is accelerated prior to such date.

Principal and Maturity: The Facilities will consist of (i) a senior secured term loan facility in a principal amount of up to $300,000,000 (the “Brandco Facility”) and (ii) a senior secured term loan facility in a principal amount of up to $550,000,000 (the “Specified Brands Facility”). Jefferies Finance LLC will act as administrative agent and collateral agent in respect of the Facilities.

The Facilities will mature on the fifth anniversary of the closing date of the Facilities (the “Closing Date”), subject to a springing maturity 91 days prior to the maturity date of Products Corporation’s 6.25% Senior Notes due 2024 (the “2024 Notes”) if, on such date, $100,000,000 or more in aggregate principal amount of the 2024 Notes remains outstanding.

Borrowers, Guarantees and Security:

Brandco Facility. The borrower under the Brandco Facility will be Products Corporation, and the Brandco Facility will be guaranteed by certain indirect foreign subsidiaries of Products Corporation (the “Brandcos”), whose direct and indirect subsidiaries (the “Specified Brands Subsidiaries”) will be “Unrestricted Subsidiaries” for purposes of the existing debt agreements of Products Corporation and will hold various intellectual property assets related to the Elizabeth Arden segment, partially offset by lower gross profit withinand American Crew brands and certain other portfolio brands (the “Specified Brand Assets”). The Brandcos will not guarantee Products Corporation’s Term Credit Agreement dated as of September 7, 2016 and amended to date (as amended to date, the Consumer and Professional segments;
$37 million of favorable variance in foreign currency gains, resulting from $18.5 million in foreign currency gains during 2017, as compared to $18.5 million of foreign currency losses during 2016;
a $16.9 million aggregate loss on the early extinguishment of debt as a result“2016 Term Loan Facility”), but all guarantors of the debt-related transactions completed in 2016;2016 Term Loan Facility will guarantee the Brandco Facility. All of the assets of the Brandcos (including the equity of the first-tier Specified Brands Subsidiary) will be pledged to secure the Brandco Facility on a first-priority basis and will not secure the 2016 Term Loan Facility, but the Brandco Facility will be secured on a pari passu basis by the assets securing the 2016 Term Loan Facility.

Specified Brands Facility. The borrower of the Specified Brands Facility will be a $4.8 million decrease inSpecified Brands Subsidiary that is an indirect subsidiary of the provision for income taxes in 2017, primarily dueBrandcos (the “Specified Brands Borrower”). The Specified Brands Facility will be guaranteed by the direct parent of the Specified Brands Borrower and each of the subsidiaries of the Specified Brands Borrower. The Specified Brands Facility will be secured by substantially all of the assets of the Specified Brands Borrower and the other Specified Brands Subsidiaries, which will include the Specified Brand Assets.

Contribution and License Agreements: In connection with the pledge of the Specified Brand Assets, Products Corporation will enter into intercompany arrangements pursuant to which the Specified Brand Assets will be contributed to the pretax loss from continuing operations in 2017, partially offset by the $39.8 million non-cash expense associated with the impact of the Tax Act.Specified

36
Discontinued Operations Presentation
As a result of the Company's decision on December 30, 2013 to exit its direct manufacturing, warehousing and sales business operations in mainland China within its Consumer segment effective December 31, 2013, the Company is reporting the results of its former China operations within income (loss) from discontinued operations, net of taxes in the Company's Consolidated Statements of Operations and Comprehensive (Loss) Income. Unless otherwise stated, financial results discussed within "Overview" and "Results of Operations" refer only to continuing operations. See Note 4, "Discontinued Operations," to the Consolidated Financial Statements in this Form 10-K for further discussion.


REVLON, CONSUMER PRODUCTS CORPORATIONINC AND SUBSIDIARIES
COMBINED MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(except where otherwise noted, all tabular amounts in millions)millions, except share and per share amounts)






Brand Subsidiaries. Products Corporation and/or its operating subsidiaries will enter into license and royalty arrangements on arm’s length terms with the relevant Specified Brand Subsidiary to provide for their continued use of the Specified Brand Assets during the term of the Facilities.
Non-cash Impairment Charges
ForInterest and Fees: Interest will accrue on the Facilities at a rate per annum of adjusted LIBOR plus a fixed margin. Products Corporation is also obligated to pay customary fees and expenses in connection with the Facilities.

Affirmative and Negative Covenants: The Facilities will contain certain affirmative and negative covenants that, among other things, limit the Restricted Group’s (as defined below) ability to: (i) incur additional debt; (ii) incur liens; (iii) sell, transfer or dispose of assets; (iv) make investments; (v) make dividends and distributions on, or repurchases of, equity; (vi) make prepayments of contractually subordinated or junior lien debt; (vii) enter into certain transactions with their affiliates; (viii) enter into sale-leaseback transactions; (ix) change their lines of business; (x) restrict dividends from their subsidiaries or restrict liens; (xi) change their fiscal year; and (xii) modify the terms of certain debt. The “Restricted Group” means (a) with respect to the Brandco Facility, Products Corporation and its restricted subsidiaries under the Brandco Facility and (b) with respect to the Specified Brands Facility, the Specified Brands Subsidiaries.

Prepayments: The Facilities will be subject to certain mandatory prepayments, including from the net proceeds from the issuance of certain additional debt and asset sale proceeds of certain non-ordinary course asset sales or other dispositions of property, subject to certain exceptions. The Facilities may be repaid at any time, subject to customary prepayment premiums.

The Facilities will also contain certain customary representations, warranties and events of default.

Revlon 2020 Restructuring Program

Building upon its previously-announced 2018 Optimization Program, in March 2020 the Company announced that it is implementing a worldwide organizational restructuring (the “Revlon 2020 Restructuring Program”) designed to reduce the Company’s selling, general and administrative expenses, as well as cost of goods sold, improve the Company’s gross profit and Adjusted EBITDA and maximize productivity, cash flow and liquidity. The Revlon 2020 Restructuring Program includes rightsizing the organization and operating with more efficient workflows and processes. The leaner organizational structure is also expected to improve communication flow and cross-functional collaboration, leveraging the more efficient business processes.

As a result of the Revlon 2020 Restructuring Program, the Company expects to eliminate approximately 1,000 positions worldwide, including approximately 650 current employees and approximately 350 open positions. In March 2020, the Company began informing certain employees that will be affected by the Revlon 2020 Restructuring Program. While certain aspects of the Revlon 2020 Restructuring Program may be subject to consultations with employees, works councils, unions and/or governmental authorities, the Company currently expects to substantially complete the employee-related actions by the end of 2020 and the other consolidation and outsourcing actions during 2021 and 2022.

In connection with implementing the Revlon 2020 Restructuring Program, the Company expects to recognize during 2020 approximately $55 million to $65 million of total pre-tax restructuring and related charges (the “2020 Restructuring Charges”), consisting primarily of employee-related costs, such as severance, retention and other contractual termination benefits. In addition the Company expects, restructuring charges in the range of $65 million to $75 million to be charged and paid in the period of 2021 to 2022. The Company expects that substantially all of these restructuring charges will be paid in cash, with approximately $55 million to $65 million of the total charges expected to be paid in 2020, approximately $40 million to $45 million expected to be paid in 2021, with the balance expected to be paid in 2022.

As a result of the Revlon 2020 Restructuring Program, the Company expects to deliver in the range of $200 million to $230 million of annualized cost reductions by the end of 2022, with approximately 60% of these annualized cost reductions to be realized from the headcount reductions occurring in 2020. During 2020, the Company expects to realize approximately $105 million to $115 million of in-year cost reductions.

Strategic Review

In August 2019, it was disclosed that MacAndrews & Forbes and the Company determined to explore strategic transactions involving the Company and third parties. This review is ongoing and remains focused on exploring potential options for the Company's portfolio and regional brands (the “Strategic Review”).

37
REVLON, INC AND SUBSIDIARIES
COMBINED MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(all tabular amounts in millions, except share and per share amounts)


Recent Debt Transactions

2019 Term Loan Facility
Principal and Maturity: In August 2019, Products Corporation entered into a senior secured term loan facility among certain affiliated funds, investment vehicles or accounts managed or advised by Ares Management LLC, as lender, in an initial aggregate principal amount of $200 million (the “2019 Term Loan Facility” and such agreement being the “2019 Term Loan Agreement”), and Wilmington Trust, National Association (“Wilmington Trust”), as administrative agent and collateral agent. The approximate $188 million of net proceeds from the 2019 Term Loan Facility (after taking into account approximately $12 million of related fees and expenses) were used for general corporate purposes. The 2019 Term Loan Facility will mature on the earliest of: (x) August 6, 2023; (y) the 180th day prior to the stated maturity of Products Corporation’s existing 2016 Term Loan Facility, if any loans under the 2016 Term Loan Facility remain outstanding and have not been replaced or refinanced by such date; and (z) the date of any springing maturity of the 2016 Term Loan Facility (i.e., the 91st day prior to the maturity of the 5.75% Senior Notes due February 15, 2021 if any 5.75% Senior Notes remain outstanding by such date and certain liquidity thresholds are not met). See “Financial Condition, Liquidity and Capital Resources - 2019 Term Loan Facility” for additional details regarding the 2019 Term Loan Facility.
Guarantees and Security: Products Corporation and its restricted subsidiaries under the 2019 Term Loan Facility (collectively, the “Restricted Group”) are subject to the covenants under the 2019 Term Loan Agreement. The 2019 Term Loan Facility is guaranteed by each existing and future direct or indirect wholly-owned domestic restricted subsidiary of Products Corporation (subject to various exceptions), as well as by Revlon, on a limited recourse basis, and Elizabeth Arden (U.K.) Ltd., Revlon Canada Inc. and Elizabeth Arden (Canada) Limited. The obligations of Revlon, Products Corporation and the subsidiary guarantors under the 2019 Term Loan Facility are secured by pledges of the equity of Products Corporation and the equity of the Restricted Group held by Products Corporation and each subsidiary guarantor (subject to customary exceptions, including equity of first-tier foreign subsidiaries in excess of 66% of the voting equity interests of such entity) and by substantially all tangible and intangible personal and real property of Products Corporation and the subsidiary guarantors (subject to customary exclusions). The 2019 Term Loan Facility and the existing 2016 Term Loan Facility share the same guarantors and collateral, except that the 2019 Term Loan Facility is also secured by a first-priority lien on certain intellectual property of the American Crew business (the “Additional Collateral”) and is guaranteed by the entities established to hold such Additional Collateral. Pursuant to a first lien pari passu intercreditor agreement, dated August 6, 2019, among Revlon, Products Corporation, the subsidiary guarantors, Wilmington Trust and Citibank, N.A. (acting as administrative agent and collateral agent for the 2016 Term Loan Facility), the liens on the shared collateral securing the 2019 Term Loan Facility rank pari passu in priority with the liens on the shared collateral securing the 2016 Term Loan Facility.
License Agreement: In connection with the pledge of such Additional Collateral, Products Corporation entered into intercompany arrangements pursuant to which the Additional Collateral was contributed to a newly-formed subsidiary, Beautyge I, which then further contributed the Additional Collateral to its new wholly-owned subsidiary, Beautyge II, LLC. Products Corporation entered into a license and royalty arrangement on arm’s length terms with Beautyge II, LLC to provide for the Company’s continued use of the Additional Collateral during the term of the 2019 Term Loan Facility.
Interest and Fees: Interest accrues on the 2019 Term Loan Facility at a rate per annum of one-month adjusted LIBOR (which has a floor of 0%) plus a margin of 9.50%. Products Corporation is also obligated to pay customary fees and expenses in connection with the 2019 Term Loan Facility.
38
REVLON, INC AND SUBSIDIARIES
COMBINED MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(all tabular amounts in millions, except share and per share amounts)


Affirmative and Negative Covenants: The 2019 Term Loan Agreement contains certain affirmative and negative covenants that, among other things, limit the Restricted Group’s ability to: (i) incur additional debt; (ii) incur liens; (iii) sell, transfer or dispose of assets; (iv) make investments; (v) make dividends and distributions on, or repurchases of, equity; (vi) make prepayments of contractually subordinated or junior lien debt; (vii) enter into certain transactions with their affiliates; (viii) enter into sale-leaseback transactions; (ix) change their lines of business; (x) restrict dividends from their subsidiaries or restrict liens; (xi) change their fiscal year; and (xii) modify the terms of certain debt. The 2019 Term Loan Agreement also contains additional covenants: (i) restricting the activities of the entities established to hold the Additional Collateral; (ii) limiting the incurrence of additional secured debt by the Restricted Group to an aggregate principal amount of $50 million (excluding the Amended 2016 Revolving Credit Facility and any refinancing of the 5.75% Senior Notes due 2021); (iii) restricting the transfer by the Restricted Group of material intellectual property to non-guarantor restricted subsidiaries or other affiliates; and (iv) limiting additional investments by Products Corporation and its subsidiary guarantors in any non-guarantor subsidiary to an outstanding amount of $50 million plus $10 million for ordinary course investments consistent with past practice. These negative covenants are subject to various exceptions, including an “available amount basket” based on 50% of Products Corporation’s cumulative consolidated net income from October 1, 2016, subject to Products Corporation’s compliance with a 5.0 to 1.0 ratio of Products Corporation’s net debt to Consolidated EBITDA (as defined in the 2019 Term Loan Agreement), except such compliance is not required when such baskets are used to make investments.
Financial Covenants: The 2019 Term Loan Agreement contains financial covenants. First, Products Corporation cannot permit at any time both (x) the aggregate principal amount of secured and structurally senior debt to exceed $2.5 billion and (y) the ratio of Products Corporation's net secured and structurally senior debt to Consolidated EBITDA to be greater than 5.0 to 1.0, subject to a one-time equity cure right. Second, Products Corporation’s Consolidated EBITDA cannot be less than $250 million for any test period ending on or after March 31, 2021.
Prepayments: The 2019 Term Loan Facility is subject to mandatory prepayments from: (i) the net proceeds from the issuance by Products Corporation or any of its restricted subsidiaries of certain additional debt; (ii) commencing with the excess cash flow calculation with respect to fiscal year ending December 31, 2020, 50% of excess cash flow, with step-downs to 25% and 0% upon achievement of certain first lien leverage ratios and reduced by voluntary prepayments of the 2019 Term Loan Facility, the 2016 Term Loan Facility and revolving loans under the Amended 2016 Revolving Credit Facility (to the extent commitments thereunder are permanently reduced); and (iii) asset sale proceeds of certain non-ordinary course asset sales or other dispositions of property that have not been reinvested to the extent in excess of certain minimum amounts (subject to an aggregate reinvestment cap of $50 million). Products Corporation may voluntarily prepay the 2019 Term Loan Facility at any time. All voluntary prepayments, certain mandatory prepayments and repayments upon acceleration after an event of default of the 2019 Term Loan Facility must be accompanied by a fee in an amount equal to: (i) prior to January 1, 2021, a make-whole amount with respect to interest payments through December 31, 2020 plus 10% of the aggregate principal amount prepaid, repaid or required to be repaid; (ii) on and after January 1, 2021, but prior to January 1, 2022, 10% of the aggregate principal amount prepaid, repaid or required to be repaid; (iii) on and after January 1, 2022, but prior to January 1, 2023, 7.5% of the aggregate principal amount prepaid, repaid or required to be repaid; or (iv) thereafter, 5% of the aggregate principal amount prepaid, repaid or required to be repaid. A 5% exit fee is also payable upon the final scheduled maturity of the 2019 Term Loan Facility or if the loans thereunder are accelerated upon an event of default. The 2019 Term Loan Agreement also contains certain customary representations, warranties and events of default.
Events of Default: The 2019 Term Loan Agreement includes customary events of default, including a cross default provision making it an event of default under the 2019 Term Loan Agreement if there is an event of default under Products Corporation’s existing 2016 Credit Agreements, the 2018 Foreign Asset-Based Term Agreement, the Amended 2019 Senior Line of Credit Agreement or the Senior Notes Indentures. The lenders under the 2019 Term Loan Agreement may declare all outstanding loans under the 2019 Term Loan Agreement to be due and payable immediately upon an event of default. Under such circumstances, the lenders under the 2016 Credit Agreements, the Amended 2019 Senior Line of Credit Agreement and the 2018 Foreign Asset-Based Term Agreement may also declare all outstanding loans under such facilities to be due and payable immediately as a result of similar cross default provisions, and upon non-payment of any accelerated principal amount, the trustees or noteholders for the 5.75% Senior Notes and 6.25% Senior Notes may declare all outstanding notes to be due and payable immediately as a result of similar cross-acceleration provisions, subject to certain exceptions and limitations described in the relevant instruments.
Fees and expenses incurred in connection with consummating the 2019 Term Loan Agreement of approximately $14 million were capitalized and are being amortized to interest expense over the term of the 2019 Term Loan Agreement using the effective interest method. The aggregate principal amount outstanding under the 2019 Term Loan Facility Agreement at December 31, 2019 was $200 million.
39
REVLON, INC AND SUBSIDIARIES
COMBINED MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(all tabular amounts in millions, except share and per share amounts)


Amended 2019 Senior Line of Credit Agreement
In June 2019, Products Corporation entered into a 2019 Senior Unsecured Line of Credit Agreement, providing Products Corporation with a ### senior unsecured line of credit from MacAndrews & Forbes Group, LLC, a subsidiary of Revlon’s majority stockholder, which facility allows Products Corporation to request loans thereunder and to use the proceeds of such loans for working capital and other general corporate purposes until the facility matures. In November 2019, Products Corporation and MacAndrews & Forbes Group, LLC entered into the Amended and Restated 2019 Senior Unsecured Line of Credit Agreement (the “Amended 2019 Senior Line of Credit Agreement”) to extend the maturity of such facility by 1-year, expiring December 31, 2020 (the "Amended 2019 Senior Line of Credit Facility"). As of December 31, 2019 and as of the November 7, 2019 extension date, there were no borrowings outstanding or repayments under the Amended 2019 Senior Line of Credit Facility.
Any loans outstanding under the Amended 2019 Senior Line of Credit Facility shall bear interest at an annual rate of 8%, which is payable quarterly in arrears in cash. Products Corporation may, at its option, prepay any borrowings under the Amended 2019 Senior Line of Credit Facility, in whole or in part (together with accrued and unpaid interest), at any time prior to maturity, without premium or penalty.  Products Corporation is required to repay any outstanding loans under the Amended 2019 Senior Line of Credit Facility, together with accrued interest thereon, if for any reason Products Corporation or any of its subsidiaries has available unrestricted cash that Products Corporation determines, in its reasonable judgment, is not required to run their operations in the ordinary course of business, provided that such repayment would not result in material adverse tax consequences.
The Amended 2019 Senior Line of Credit Agreement includes customary events of default, including a cross default provision making it an event of default under the Amended 2019 Senior Line of Credit Agreement if there exists and continues an event default under Products Corporation’s 2016 Credit Agreements, the 2018 Foreign Asset-Based Term Agreement, the 2019 Term Loan Agreement or the Senior Notes Indentures. If any such event of default occurs, MacAndrews & Forbes Group, LLC may declare all outstanding loans under the Amended 2019 Senior Line of Credit Facility to be due and payable immediately. 
40
REVLON, INC AND SUBSIDIARIES
COMBINED MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(all tabular amounts in millions, except share and per share amounts)


March 2019 Amendment to the 2016 Revolving Credit Facility
In March 2019, Products Corporation, Revlon and certain of their subsidiaries entered into Amendment No. 2 (“Amendment No. 2”) to the 2016 Revolving Credit Agreement (as amended by Amendment No. 2, the “Amended 2016 Revolving Credit Agreement”) in respect of the 2016 Revolving Credit Facility (as in effect after Amendment No. 2, the “Amended 2016 Revolving Credit Facility”). Pursuant to the terms of Amendment No. 2, the maturity date applicable to the $41.5 million senior secured first in, last out Tranche B of the Amended 2016 Revolving Credit Facility was extended from April 17, 2019 to April 17, 2020. The 2016 Revolving Credit Agreement provided that the “Liquidity Amount” (defined in the Amended 2016 Revolving Credit Agreement as the sum of each borrowing base less the sum of (x) the aggregate outstanding extensions of credit under the Amended 2016 Revolving Credit Facility, and (y) any availability reserve in effect on such date) may exceed the aggregate commitments under the Amended 2016 Revolving Credit Facility by up to 5%. Amendment No. 2 limits the Liquidity Amount to no more than the aggregate commitments under the Amended 2016 Revolving Credit Facility. Under the 2016 Revolving Credit Agreement, a “Liquidity Event Period” generally occurred if Products Corporation’s Liquidity Amount fell below the greater of $35 million and 10% of the maximum availability under the 2016 Revolving Credit Facility. Amendment No. 2 changed these thresholds to $50 million and 15%, respectively, only for purposes of triggering certain notification obligations of Products Corporation, increased borrowing base reporting frequency and the annual goodwill impairment test, the Company's SinfulColors (acquired in 2011) and Pure Ice nail enamel (acquired in 2012) brands are included within the Company's Global Color Brands ("GCB") reporting unit. The shift in consumer behavior challenging the brick-and-mortar retail channel contributed to continued consumption and net sales declines, particularly in the nail category, which has disproportionately impacted GCB's financial results. Accordingly, in conjunction with the Company's annual impairment test, the Company recognized $10.8 million in non-cash impairment charges during the fourth quarter of 2017 related to GCB. These non-cash impairment charges are primarily due to the Company’s expectations regarding the future performanceability of the GCB reporting unitadministrative agent to apply amounts collected in relationcontrolled accounts for the repayment of loans under the Amended 2016 Revolving Credit Facility. After entering into Amendment No. 2, in March 2019 Products Corporation’s availability under the Amended 2016 Revolving Credit Facility was $37.3 million, which was less than the greater of $35 million and 10% of the maximum availability under the Amended 2016 Revolving Credit Facility, which at such date equated to $41.3 million. Accordingly, effective beginning in March 2019 Products Corporation is required to maintain a FCCR of a minimum of 1.0 to 1.0 (which it currently satisfies), the carryingadministrative agent may apply amounts collected in controlled accounts for the repayment of GCB's goodwill. See Note 8, "Goodwillloans under the Amended 2016 Revolving Credit Facility, which the administrative agent began applying in March 2019, and Intangible Assets,"Products Corporation is required to provide the Consolidated Financial Statementsadministrative agent with weekly borrowing base certificates. Products Corporation will be required to: (i) maintain such 1.0 to 1.0 minimum FCCR until such time that availability under the Amended 2016 Revolving Credit Facility equals or exceeds the greater of $35 million and 10% of the maximum availability under such facility for at least 20 consecutive business days; and (ii) Products Corporation will continue to provide the administrative agent with weekly borrowing base certificates and the administrative agent may continue to apply amounts collected in this Form 10-Kcontrolled accounts as set forth above in each case until such time that availability under such facility is equal or exceeds the greater of ### and ### of the maximum availability under such facility for further details on this non-cash goodwill impairment charge.at least ### consecutive business days. Amendment No. 2 also adjusts, among other things, the “payment conditions” required to make unlimited restricted payments.



Operating Segments


The Company operates in four reporting segments: the consumer division ("Consumer");Revlon; Elizabeth Arden; the Professional division ("Professional");Portfolio; and Other:Fragrances:
•Revlon - The ConsumerRevlon segment is comprised of the Company's consumer brands, whichflagship Revlon brands. Revlon segment products are primarily include Revlon, Almay, SinfulColorsmarketed, distributed and Pure Icesold in color cosmetics; Revlon ColorSilk in women’s hair color; Revlon in beauty tools; and Mitchum in anti-perspirant deodorants. The Company’s principal customers for its consumer products includethe mass retail channel, large volume retailers, chain drug and food stores, chemist shops, hypermarkets, general merchandise stores, e-commerce sites, television shopping, department stores, professional hair and nail salons, one-stop shopping beauty retailers and specialty cosmeticscosmetic stores and perfumeries in the U.S. and internationally. The Consumer segment also includes: (i) a skin care lineinternationally under the Natural Honey brand; (ii) abrands such as Revlon in color cosmetics; Revlon ColorSilk and Revlon Professional in hair color line under the Llongueras brand (licensed from a third party) sold to large volume retailerscolor; and other retailers, primarilyRevlon in Spain, which were acquired as part of the Colomer Acquisition; and (iii) Cutex nail care products, which (combined with other Cutex businesses that the Company acquired in 1998) were acquired as part of the October 2015 and May 2016 acquisitions of the Cutex businesses and related assets in the U.S. (the "Cutex U.S. Acquisition") and in certain international territories (the "Cutex International Acquisition" and together with the Cutex U.S. Acquisition, the "Cutex Acquisitions"), respectively.
beauty tools.
•Elizabeth Arden - The Elizabeth Arden segment includesis comprised of the operating results ofCompany's Elizabeth Arden branded products. The Elizabeth Arden segment markets, distributes and sells fragrances, skin care and color cosmetics primarily to prestige retailers, department and specialty stores, perfumeries, boutiques, e-commerce sites, the mass retail channel, travel retailers and distributors, as well as direct sales to consumers via its Elizabeth Arden branded retail stores and elizabetharden.com e-commerce business under brands such as Elizabeth Arden Ceramide, Prevage, Eight Hour, SUPERSTART, Visible Difference and Skin Illuminating in the Elizabeth Arden businessskin care brands; and related purchase accounting of the Elizabeth Arden Acquisition.White Tea, Elizabeth Arden is a global prestige beauty products company with an iconic portfolio of prestige fragrance, skin care and cosmetic brands, which includes the Red Door, Elizabeth Arden skin care brands, color cosmetics5th Avenue and fragrances; designer fragrances such as Juicy Couture, John Varvatos and Wildfox;Elizabeth Arden Green Tea in Elizabeth Arden fragrances.
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REVLON, INC AND SUBSIDIARIES
COMBINED MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(all tabular amounts in millions, except share and heritage fragrances such as Curve, Elizabeth Taylor, Britney Spears and Christina Aguilera.per share amounts)


The Professional segment is comprised primarily of the Company's professional brands, which include Revlon Professional in hair color, hair care and hair treatments; CND•Portfolio-branded productsin nail polishes and nail enhancements; and American Crew in men’s grooming products, all of which are sold worldwide to professional salons. The Company’s principal customers for its professionalPortfolio segment markets, distributes and sells a comprehensive line of premium, specialty and mass products includeprimarily to the mass retail channel, hair and nail salons and distributors to professional salonssalon distributors in the U.S. and internationally.internationally and large volume retailers, specialty and department stores under brands such as Almay and SinfulColors in color cosmetics; American Crew in men's grooming products (which are also sold direct-to-consumer on its americancrew.com website); CND in nail polishes, gel nail color and nail enhancements; Cutex in nail care products; and Mitchum in anti-perspirant deodorants. The ProfessionalPortfolio segment also includes a multi-cultural hair care line consisting ofCreme of Naturehair care products, which are sold toin both professional salons and in large volume retailers and other retailers, primarily in the U.S.
; and a hair color line under the Llongueras brand (licensed from a third party) that is sold in the mass retail channel, large volume retailers and other retailers, primarily in Spain.
•Fragrances - The OtherFragrances segment primarily includes the operating results related to the development, marketing and distribution of certain owned and licensed fragrances, as well as the distribution of prestige fragrance brands owned by third parties. These products are typically sold to retailers in the U.S. and internationally, including prestige retailers, specialty stores, e-commerce sites, the mass retail channel, travel retailers and other beauty products.international retailers. The results included within the Other segmentowned and licensed fragrances include brands such as: (i) Juicy Couture (which are not material to the Company’s consolidated financial results.also sold direct-to-consumer on its juicycouturebeauty.com website), John Varvatos and AllSaints in prestige fragrances; (ii) Britney Spears, Elizabeth Taylor, Christina Aguilera, Jennifer Aniston and Mariah Carey in celebrity fragrances; and (iii) Curve, Giorgio Beverly Hills, Ed Hardy, Charlie, Lucky Brand, ‹PS› (logo of former Paul Sebastian brand), Alfred Sung, Halston, Geoffrey Beene and White Diamonds in mass fragrances.






29
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REVLON, CONSUMER PRODUCTS CORPORATIONINC AND SUBSIDIARIES
COMBINED MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(except where otherwise noted, all tabular amounts in millions)millions, except share and per share amounts)






Results of Operations — Revlon, Inc.


Consolidated Net Sales:
Year-to-date results:
Consolidated net sales in 20172019 were $2,693.7$2,419.6 million, a $359.7$144.9 million, increase, or 15.4%5.7%, decrease compared to $2,334$2,564.5 million in 2016.2018. Excluding the $6.3 million favorable FX impact, consolidated net sales increased by $353.4 million, or 15.1%, during 2017.
Consolidated net sales in 2016 were $2,334 million, a $419.7 million increase, or 21.9%, compared to $1,914.3 million in 2015. Excluding the $43.9$55.7 million unfavorable FX impact, consolidated net sales increased on an XFX basisdecreased by $463.6$89.2 million, or 24.2%3.5%, during 2016.2019. The XFX net sales decrease in 2019 was due primarily to: a $62.8 million, or 11.1%, decrease in Portfolio segment net sales, a $52.1 million, or 10.2%, decrease in Fragrances segment net sales and a $17.5 million, or 1.8%, decrease in Revlon segment net sales; partially offset by a $43.2 million, or 8.8%, increase in Elizabeth Arden segment net sales.
Changes in consumer shopping patterns for beauty products in which consumers have continued to increasingly engage with beauty brands through e-commerce and other social media channels have resulted in slower retail traffic in brick-and-mortar stores in the mass retail channel in North America. This shift in consumer behavior has resulted in continuing declines in the brick-and-mortar retail channel, including store closures. To address the pace and impact of this new commercial landscape, the Company has shifted some of its brand marketing spend toward facilitating increased penetration of e-commerce and social media channels and is focused on the following e-commerce initiatives: (i) developing and implementing effective content to enhance the Company's online retail position; (ii) improving the Company's consumer engagement across social media platforms; and (iii) transforming the Company's technology and data to support efficient management of the Company's digital infrastructure.


See "Segment Results" below for further discussion.information on net sales by segment.


Segment Results:

The Company's management evaluates segment profit which is definedfor each of the Company's reportable segments. The Company allocates corporate expenses to each reportable segment to arrive at segment profit, as these expenses are included in the internal measure of segment operating performance. The Company defines segment profit as income from continuing operations before interest, taxes, depreciation, amortization, stock-based compensation expense, gains/losses on foreign currency fluctuations, gains/losses on the early extinguishment of debt and miscellaneous expenses, for each of the Company's reportable segments.expenses. Segment profit also excludes unallocated corporate expenses and the impact of certain items that are not directly attributable to the segments' underlying operating performance, which includes the impact of: (i) restructuring and related charges; (ii) acquisition and integration costs; (iii) deferred compensation costs; (iv) 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"); and (v) costs of sales resulting from a fair value adjustment to inventory acquired in the Elizabeth Arden Acquisition. Unallocated corporate expenses primarily include general and administrative expenses related to the corporate organization. These expenses are recorded in unallocated corporate expenses as these items are centrally directed and controlled and are not included in internal measures of segment operating performance. The Company does not have any material inter-segment sales. For a reconciliation of segment profit to incomeloss from continuing operations before income taxes, see Note 19,17, "Segment Data and Related Information," to the Company's Audited Consolidated Financial Statements in this 2019 Form 10-K.

The following tables provide a comparative summary of the Company's segment results for 2017, 2016 and 2015.the periods presented.
 Net Sales Segment Profit
 Year Ended December 31, Change 
XFX Change (a)
 Year Ended December 31, Change 
XFX Change (a)
 2017 2016 $ % $ % 2017 2016 $ % $ %
Consumer$1,288.5
 $1,389.8
 $(101.3) (7.3)% $(101.6) (7.3)% $239.6
 $349.2
 $(109.6) (31.4)% $(108.7) (31.1)%
Elizabeth Arden(b)
952.5
 441.4
 511.1
 115.8 % 509.1
 115.3 % 114.2
 68.2
 46.0
 67.4 % 45.5
 66.7 %
Professional432.2
 476.5
 (44.3) (9.3)% (49.3) (10.3)% 54.9
 99.4
 (44.5) (44.8)% (45.7) (46.0)%
Other20.5
 26.3
 (5.8) (22.1)% (4.8) (18.3)% (3.7) (2.7) (1.0) (37.0)% (1.1) (40.7)%
Total$2,693.7
 $2,334.0
 $359.7
 15.4 % $353.4
 15.1 % $405.0
 $514.1
 $(109.1) (21.2)% $(110.0) (21.4)%

Net SalesSegment Profit
Year Ended December 31,Change
XFX Change (a)
Year Ended December 31,Change
XFX Change (a)
20192018$%$%20192018$%$%
Revlon$958.8  $998.3  $(39.5) (4.0)%$(17.5) (1.8)%$101.2  $129.6  $(28.4) (21.9)%$(25.1) (19.4)%
Elizabeth Arden520.0  490.2  29.8  6.1 %43.2  8.8 %37.6  24.4  13.2  54.1 %15.3  62.7 %
Portfolio487.8  564.6  (76.8) (13.6)%(62.8) (11.1)%45.0  7.9  37.1  N.M.  38.0  N.M.  
Fragrances453.0  511.4  (58.4) (11.4)%(52.1) (10.2)%82.3  76.0  6.3  8.3 %7.1  9.3 %
Total$2,419.6  $2,564.5  $(144.9) (5.7)%$(89.2) (3.5)%$266.1  $237.9  $28.2  11.9 %$35.3  14.8 %

(a) XFX excludes the impact of foreign currency fluctuations.
(b) 2016 Net Sales andN.M. - Not meaningful

Revlon Segment Profit represent results for the partial period from the September 7, 2016 Elizabeth Arden Acquisition Date through December 31, 2016.


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REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(except where otherwise noted, all tabular amounts in millions)




 Net Sales Segment Profit
 Year Ended December 31, Change 
XFX Change (a)
 Year Ended December 31, Change 
XFX Change (a)
 2016 2015 $ % $ % 2016 2015 $ % $ %
Consumer$1,389.8
 $1,414.8
 $(25.0) (1.8)% $9.7
 0.7% $349.2
 $360.2
 $(11.0) (3.1)% $(8.3) (2.3)%
Elizabeth Arden(b)
441.4
 —
 441.4
 N.M.
 441.4
 N.M.
 68.2
 —
 68.2
 N.M.
 68.2
 N.M.
Professional476.5
 471.1
 5.4
 1.1 % 11.1
 2.4% 99.4
 103.9
 (4.5) (4.3)% (3.5) (3.4)%
Other26.3
 28.4
 (2.1) (7.4)% 1.4
 4.9% (2.7) 1.4
 (4.1) (292.9)% (4.3) (307.1)%
Total$2,334.0
 $1,914.3
 $419.7
 21.9 % $463.6
 24.2% $514.1
 $465.5
 $48.6
 10.4 % $52.1
 11.2 %
(a) XFX excludes the impact of foreign currency fluctuations.
(b) 2016 Net Sales and Segment Profit represent results for the partial period from the September 7, 2016 Elizabeth Arden Acquisition Date through December 31, 2016.
Consumer Segment
ConsumerRevlon segment net sales in 20172019 were $1,288.5$958.8 million, a $101.3$39.5 million, or 7.3%4.0%, decrease, compared to $1,389.8$998.3 million in 2016.2018. Excluding the $0.3 million favorable FX impact, total Consumer net sales in 2017 decreased by $101.6 million, or 7.3%, compared to 2016. This decrease was primarily driven by consumption declines as the Consumer segment continues to be impacted by shifts in consumer behavior resulting in continuing declines in core beauty categories in the mass retail channel in North America, which had a negative impact on net sales of Revlon color cosmetics, Almay color cosmetics and SinfulColors color cosmetics, as well as higher sales returns and incentives. These net sales decreases were partially offset by net sales growth internationally for Revlon color cosmetics.
Consumer segment profit in 2017 was $239.6 million, a $109.6 million, or 31.4%, decrease, compared to $349.2 million in 2016. Excluding the $0.9$22.0 million unfavorable FX impact, Consumertotal Revlon segment profitnet sales in 20172019 decreased by $108.7$17.5 million, or 31.1%1.8%, compared to 2016.2018. This decrease was primarily driven by lower gross profit, primarily as a result of the net sales declinesof Revlon ColorSilk hair color, as well as lower net sales of Revlon color cosmetics and Revlon-branded beauty tools primarily in North America, partially offset by increased net sales of Revlon-branded hair care and professional products.

Revlon segment profit in 2019 was $101.2 million, a $28.4 million, or 21.9%, decrease, compared to $129.6 million in 2018. Excluding the $3.3 million unfavorable FX impact, Revlon segment profit in 2019 decreased by $25.1 million, or 19.4%, compared to 2018. This decrease was primarily driven by the Revlon segment's lower net sales described above and lower gross profit margin, partially offset by lower brand support expenses.
Consumer
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REVLON, INC AND SUBSIDIARIES
COMBINED MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(all tabular amounts in millions, except share and per share amounts)


Elizabeth Arden Segment

Elizabeth Arden segment net sales in 20162019 were $1,389.8$520.0 million, a $25$29.8 million, or 1.8%6.1%, decrease,increase, compared to $1,414.8$490.2 million in 2015.2018. Excluding the $34.7$13.4 million unfavorable FX impact, total ConsumerElizabeth Arden segment net sales in 20162019 increased by $9.7$43.2 million, or 0.7%8.8%, compared to 2015.2018. This increase was primarily driven by higher net sales of Cutex nailCeramide and Prevage skin care products from the Company’s global consolidationand of the Cutex brand, which was completed with two separate acquisitions that closed for the U.S. in October 2015 and for the U.K., Australia and certain other International territories in May 2016, as well as higher net sales of Revlon beauty tools and Mitchum anti-perspirant deodorant products,Elizabeth Arden-branded fragrances, primarily internationally, partially offset by lower net sales of Almay Elizabeth Arden-branded color cosmetics. Netcosmetics and certain other skin care products.

Elizabeth Arden segment profit in 2019 was $37.6 million, a $13.2 million, or 54.1%, increase, compared to $24.4 million in 2018. Excluding the $2.1 million unfavorable FX impact, Elizabeth Arden segment profit in 2019 increased by $15.3 million, or 62.7%, compared to 2018. This increase was primarily driven by the Elizabeth Arden segment's higher net sales described above, partially offset by higher brand support expenses.

Portfolio Segment

Portfolio segment net sales in 2019 were $487.8 million, a $76.8 million, or 13.6%, decrease, compared to $564.6 million in 2018. Excluding the $14.0 million unfavorable FX impact, total Portfolio segment net sales in 2019 decreased by $62.8 million, or 11.1%, compared to 2018. This decrease was driven primarily by the Portfolio segment's lower net sales of RevlonCND nail products, Almay, Pure Ice and SinfulColors color cosmetics, Mitchum anti-perspirant deodorants, as well as lower net sales of local and regional brands. These decreases were essentially flat, as strongpartially offset by higher net sales growth internationallyof Cutex nail care products and American Crew men's grooming products.
Portfolio segment profit in 2019 was $45.0 million, a $37.1 million increase compared to $7.9 million in 2018. Excluding the $0.9 million unfavorable FX impact, Portfolio segment profit in 2019 increased by $38.0 million compared to 2018. This increase was primarily driven by the Portfolio segment's lower brand support expenses and lower other SG&A, partially offset by lower net sales, as described above, and lower gross profit margin.

Fragrances Segment

Fragrances segment net sales in North America due to softening trade conditions in core cosmetics categories.
Consumer segment profit in 2016 was $349.22019 were $453.0 million, a $11$58.4 million, or 3.1%11.4%, decrease, as compared to $360.2$511.4 million in 2015.2018. Excluding the $2.7$6.3 million unfavorable FX impact, Consumer segment profit in 2016 decreased by $8.3 million, or 2.3%, compared to 2015. This decrease was partially due to a 2015 gain of $3.5 million related to the sale of a non-core consumer brand. In addition, Consumer segment profit decreased due to the unfavorable impact of FX transaction within cost of sales, partially offset by decreased brand support on lower performing brands.

Elizabeth Arden Segment

The Elizabeth Arden segment is comprised of the operations that the Company acquired in the Elizabeth Arden Acquisition, which closed on the September 7, 2016 Elizabeth Arden Acquisition Date. As such, the results for 2016 reflect only amounts for the partial period of September 7, 2016 through December 31, 2016. Therefore, an analysis of net sales and segment profit for the Elizabeth Arden segment is not included in this Form 10-K, as the Company does not have full comparable prior period net sales or segment profit for the Elizabeth Arden segment.

Professional Segment
Professionaltotal Fragrances segment net sales in 2017 were $432.2 million, a $44.32019 decreased by $52.1 million, or 9.3%, decrease, as compared to $476.5 million in 2016. Excluding the $5 million favorable FX impact, total Professional segment net sales in 2017 decreased by $49.3 million, or 10.3%10.2%, compared to 2016.2018. This decrease was driven primarily by lower net sales of American Crew men's grooming products and CND nail products,in the Fragrances segment due to the ongoing overall weakness in the mass retail channel, including certain retail store closures in North America, partially offset by higher net sales attributable to new products launches in 2019, primarily internationally.
Fragrances segment profit in 2019 was $82.3 million, a $6.3 million, or 8.3%, increase, compared to $76.0 million in 2018. Excluding the $0.8 million unfavorable FX impact, Fragrances segment profit in 2019 increased by $7.1 million, or 9.3%, compared to 2018. This increase was primarily driven by the Fragrances segment's lower brand support expenses and lower other SG&A, partially offset by the impact of Revlon Professional hair products.

the segment's lower net sales, as described above, and lower gross profit margin.
31
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REVLON, CONSUMER PRODUCTS CORPORATIONINC AND SUBSIDIARIES
COMBINED MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(except where otherwise noted, all tabular amounts in millions)millions, except share and per share amounts)






Professional segment profit in 2017 was $54.9 million, a $44.5 million, or 44.8%, decrease, as compared to $99.4 million in 2016. Excluding the $1.2 million favorable FX impact, Professional segment profit in 2017 decreased by $45.7 million, or 46%, compared to 2016. This decrease was primarily driven by lower net sales, partially offset by lower brand support expenses and incentive compensation.

Professional segment net sales in 2016 were $476.5 million, a $5.4 million, or 1.1%, increase, compared to $471.1 million in 2015. Excluding the $5.7 million unfavorable FX impact, total Professional net sales in 2016 increased by $11.1 million compared to 2015. This increase was driven primarily by higher net sales of American Crew men’s grooming products as a result of the Elvis Presley branded marketing campaign (which ended in December 2017) and Revlon Professional hair products. These increases were partially offset by lower net sales of CND nail products.

Professional segment profit in 2016 was $99.4 million, a $4.5 million, or 4.3%, decrease, compared to $103.9 million in 2015, primarily driven by the absence in 2016 of a $3 million gain related to the sale of a non-core professional brand that was completed in 2015. Excluding the $1 million unfavorable FX impact, Professional segment profit in 2016 decreased by $3.5 million, or 3.4%, compared to 2015.

Geographic Results:
The following tables provide a comparative summary of the Company's North America and International net sales by region for 2017, 2016 and 2015:the periods presented:
Year Ended December 31,Change
XFX Change (a)
20192018$%$%
Revlon
North America$497.2  $522.3  $(25.1) (4.8)%$(24.2) (4.6)%
International461.6  476.0  (14.4) (3.0)%6.7  1.4 %
Elizabeth Arden
North America$120.4  $135.6  $(15.2) (11.2)%$(14.5) (10.7)%
International399.6  354.6  45.0  12.7 %57.7  16.3 %
Portfolio
North America$298.9  $350.4  $(51.5) (14.7)%$(51.1) (14.6)%
International188.9  214.2  (25.3) (11.8)%(11.7) (5.5)%
Fragrances
North America$309.2  $345.9  $(36.7) (10.6)%$(36.5) (10.6)%
International143.8  165.5  (21.7) (13.1)%(15.6) (9.4)%
        Total Net Sales$2,419.6  $2,564.5  $(144.9) (5.7)%$(89.2) (3.5)%
 Year Ended December 31,


Change 
XFX Change (a)
 2017 2016 $ % $ %
Consumer           
North America$750.8
 $882.4
 $(131.6) (14.9)% $(132.5) (15.0)%
International537.7
 507.4
 30.3
 6.0 % 30.9
 6.1 %
Elizabeth Arden(b)
           
North America$509.0
 $274.8
 $234.2
 85.2 % $233.6
 85.0 %
International443.5
 166.6
 276.9
 166.2 % 275.5
 165.4 %
Professional           
North America$173.5
 $223.9
 $(50.4) (22.5)% $(50.9) (22.7)%
International258.7
 252.6
 6.1
 2.4 % 1.6
 0.6 %
Other           
North America$—
 $—
 $—
 N.M.
(c) 
$—
 N.M.
International20.5
 26.3
 (5.8) (22.1)% (4.8) (18.3)%
        Total Net Sales$2,693.7
 $2,334.0
 $359.7
 15.4 % $353.4
 15.1 %

(a) XFX excludes the impact of foreign currency fluctuations.
(b) 2016 Net Sales represent results for the partial period from the September 7, 2016 Elizabeth Arden Acquisition Date through December 31, 2016.
(c) N.M. - Not meaningfulRevlon Segment


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REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(except where otherwise noted, all tabular amounts in millions)




 Year Ended December 31,


Change 
XFX Change (a)
 2016 2015 $ % $ %
Consumer           
North America$882.4
 $921.3
 $(38.9) (4.2)% $(36.9) (4.0)%
International507.4
 493.5
 13.9
 2.8 % 46.6
 9.4 %
Elizabeth Arden(b)
    
 
   
North America$274.8
 $—
 $274.8
 N.M.
 $274.8
 N.M.
International166.6
 —
 166.6
 N.M.
 166.6
 N.M.
Professional    —
 
   
North America$223.9
 $216.8
 $7.1
 3.3 % $7.9
 3.6 %
International252.6
 254.3
 (1.7) (0.7)% 3.2
 1.3 %
Other    
 
   
North America$—
 $—
 $—
 N.M.
(c) 
$—
 N.M.
International26.3
 28.4
 (2.1) (7.4)% 1.4
 4.9 %
        Total Net Sales$2,334.0
 $1,914.3
 $419.7
 21.9 % $463.6
 24.2 %
(a) XFX excludes the impact of foreign currency fluctuations.
(b) 2016 Net Sales represent results for the partial period from the September 7, 2016 Elizabeth Arden Acquisition Date through December 31, 2016.
(c) N.M. - Not meaningful

Consumer Segment


North America


In North America, ConsumerRevlon segment net sales in 20172019 decreased by $131.6$25.1 million, or 14.9%4.8%, to $750.8$497.2 million, compared to $882.4$522.3 million in 2016.2018. Excluding the $0.9 million favorableunfavorable FX impact, ConsumerRevlon segment net sales in North America in 20172019 decreased by $132.5$24.2 million, or 15%4.6%, as compared to 2016.2018. This decrease was primarily due to declines inthe Revlon segment's lower net sales of Revlon color cosmetics, as well as lower net sales of Revlon-branded beauty tools and Revlon ColorSilk hair color, partially offset by higher net sales of Revlon-branded hair care products within the U.S. mass retail channel driven by declines in consumption across several beauty categories. The net sales of Revlon color cosmetics, Almay color cosmetics and SinfulColors color cosmetics all declined in 2017 compared to 2016.channel.
Consumer
International

Internationally, Revlon segment net sales in 20162019 decreased by $38.9$14.4 million, or 4.2%3.0%, to $882.4$461.6 million, compared to $921.3$476.0 million in 2015.2018. Excluding the $2$21.1 million unfavorable FX impact, ConsumerRevlon segment International net sales in 2019 increased by $6.7 million, or 1.4%, compared to 2018. This increase was driven primarily by the Revlon segment's higher net sales of Revlon color cosmetics, primarily within the Company's Pacific, Latin America and Asia regions, due mainly to improved service levels from the Company's Oxford, N.C. facility, and higher net sales of Revlon-branded hair-care professional products, following new product launches in Europe. This increase was partially offset primarily by lower net sales of Revlon ColorSilk hair color products in the Company's EMEA region.

Elizabeth Arden Segment

North America

In North America, Elizabeth Arden segment net sales in 2019 decreased by $15.2 million, or 11.2%, to $120.4 million, compared to $135.6 million in 2018. Excluding the $0.7 million unfavorable FX impact, Elizabeth Arden segment net sales in North America in 20162019 decreased by $36.9$14.5 million, or 4%10.7%, compared to 2015.2018. This decrease was driven primarily driven by the resultsElizabeth Arden segment's lower net sales of softening trade conditions in core categories, which impacted Revlon certain Elizabeth Arden-branded skin care and color cosmetics and Almay color cosmetics, as well as increased competition impacting Revlon ColorSilk hair color. These decreases wereproducts resulting primarily from certain retail store closures, partially offset primarily by incremental net sales in connection with the Company completing the global consolidation of the Cutex nail care brand, as well as higher net sales of Revlon beauty tools.the segment's Ceramide skin care brand.

45
REVLON, INC AND SUBSIDIARIES
COMBINED MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(all tabular amounts in millions, except share and per share amounts)


International


Internationally, ConsumerElizabeth Arden segment net sales in 20172019 increased by $30.3$45.0 million, or 6%12.7%, to $537.7$399.6 million, compared to $507.4$354.6 million in 2016.2018. Excluding the $0.6$12.7 million unfavorable FX impact, ConsumerElizabeth Arden segment International net sales in 20172019 increased by $30.9$57.7 million, or 6.1%16.3%, as compared to 2016.2018. This increase was driven primarily by higher net sales of Revlon color cosmetics. From a geographic perspective, the increaseElizabeth Arden segment's Ceramide and Prevage skin care products, primarily within the Company's Asia region, particularly in International net sales was mainly driven by increased net salesChina, and in certain distributor territories,the Travel Retail business, as well as throughout the Asia-Pacific region.
Consumer International segment net sales in 2016 increased by $13.9 million, or 2.8%, to $507.4 million, compared to $493.5 million in 2015. Excluding the $32.7 million unfavorable FX impact, Consumer International segment net sales in 2016 increased by $46.6 million, or 9.4%, compared to 2015. This increase was primarily driven by higher net sales of Revlon color cosmetics and Revlon ColorSilk hair color, as well as incremental net sales of Cutex nail care products. The increase in International net sales was mainly driven by higher net sales in the U.K. and Mexico.

certain Elizabeth Arden Segment

The Elizabeth Arden segment is comprised of the operations that the Company acquired in the Elizabeth Arden Acquisition, which closed on the September 7, 2016 Elizabeth Arden Acquisition Date. As such, the results for 2016 reflect only amounts for the partial period of September 7, 2016 through December 31, 2016. Therefore, an analysis of net sales and segment profit for

33
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(except where otherwise noted, all tabular amounts in millions)




the Elizabeth Arden segment is not included in this Form 10-K, as the Company does not have full comparable prior period net sales or segment profit for the Elizabeth Arden segment.

Professional Segment

North America

In North America, Professional segment net sales in 2017 decreased by $50.4 million, or 22.5%, to $173.5 million, as compared to $223.9 million in 2016. Excluding the $0.5 million favorable FX impact, Professional segment net sales in North America in 2017 decreased by $50.9 million, or 22.7%, as compared to 2016. This decrease was primarily driven by declines in net sales of American Crew men's grooming products and CND nail products.

Professional segment net sales in North America in 2016 increased by $7.1 million, or 3.3%, to $223.9 million, compared to $216.8 million in 2015. Excluding the $0.8 million unfavorable FX impact, Professional segment net sales in North America in 2016 increased on an XFX basis by $7.9 million, or 3.6%, compared to 2015. This increase was primarily driven by increased net sales of American Crew men's grooming products as a result of the Elvis Presley branded marketing campaign, as well as Creme of Nature hair products, partially offset by lower net sales of CND nail products.

International

Internationally, Professional segment net sales in 2017 increased by $6.1 million, or 2.4%, to $258.7 million, compared to $252.6 million in 2016. Excluding the $4.5 million favorable FX impact, Professional segment International net sales increased by $1.6 million, or 0.6%, in 2017, as compared to 2016, primarily due to increases in net sales of Revlon Professional hair products, partially offset by lower net sales of CND nail products. From a geographic perspective, the increase in International net sales was mainly driven by increased net sales in France, Russia and Italy.
Internationally, Professional segment net sales in 2016 decreased by $1.7 million, or 0.7%, to $252.6 million, compared to $254.3 million in 2015. Excluding the $4.9 million unfavorable FX impact, Professional segment International net sales increased by $3.2 million, or 1.3%, in 2016, compared to 2015. This increase was primarily due to higher net sales of Revlon Professional hair products, as well as an increase in net sales of American Crew men’s grooming products throughout most of the International region.fragrance brands. These increases were partially offset by lower net sales of Elizabeth Arden-branded color cosmetics products. See Item 1A. Risk Factors - "The ongoing occurrence of the coronavirus and any possible recurrence of other similar types of pandemics, or any other widespread public health problems, could result in decreased sales of the Company's products, which could have a material adverse effect on the Company's business, results of operations, financial condition and/or cash flows.”

Portfolio Segment

North America

In North America, Portfolio segment net sales in 2019 decreased by $51.5 million, or 14.7%, to $298.9 million, as compared to $350.4 million in 2018. Excluding the $0.4 million unfavorable FX impact, Portfolio segment net sales in North America in 2019 decreased by $51.1 million, or 14.6%, compared to 2018. This decrease was driven primarily by the Portfolio segment's lower net sales of CND nail products and Almay color cosmetics, as well as lower net sales of Mitchum anti-perspirant deodorants, Pure Ice and SinfulColors color cosmetics and local and regional brands. These decreases were partially offset by higher net sales of American Crew men's grooming products.


International

Internationally, Portfolio segment net sales in 2019 decreased by $25.3 million, or 11.8%, to $188.9 million, compared to $214.2 million in 2018. Excluding the $13.6 million unfavorable FX impact, Portfolio segment International net sales decreased by $11.7 million, or 5.5%, in 2019, compared to 2018. This decrease was driven primarily by the Portfolio segment's lower net sales of local and regional brands and CND nail products, primarily in the Company's EMEA region, partially offset by higher net sales of Cutex nail care products primarily in Latin America and of Mitchum anti-perspirant deodorants in the EMEA region.

Fragrances Segment

North America

In North America, Fragrances segment net sales in 2019 decreased by $36.7 million, or 10.6%, to $309.2 million, as compared to $345.9 million in 2018. Excluding the $0.2 million unfavorable FX impact, Fragrances segment net sales in North America in 2019 decreased by $36.5 million, or 10.6%, compared to 2018. This decrease was primarily driven by the Fragrances segment's lower net sales due to weakness in the mass retail channel, as well as certain retail store closures in the prestige channel.

International

Internationally, Fragrances segment net sales in 2019 decreased by $21.7 million, or 13.1%, to $143.8 million, compared to $165.5 million in 2018. Excluding the $6.1 million unfavorable FX impact, Fragrances segment International net sales decreased by $15.6 million, or 9.4%, in 2019, compared to 2018, primarily due to the Fragrances segment's lower net sales of certain licensed fragrance brands primarily in the mass retail channel, partially offset by new product launches in the Company's EMEA region.

46
REVLON, INC AND SUBSIDIARIES
COMBINED MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(all tabular amounts in millions, except share and per share amounts)


Gross profit:
The table below shows the Company's gross profit and gross margin for 2017, 2016 and 2015:the periods presented:
Year Ended December 31,
20192018Change
Gross profit$1,367.4  $1,447.5  $(80.1) 
Percentage of net sales56.5 %56.4 %0.1 %
 Year Ended December 31, Change
 2017 2016 2015 2017 vs. 2016 2016 vs. 2015
Gross profit$1,542.4
 $1,416.9
 $1,246.5
 $125.5
 $170.4
Percentage of net sales57.3% 60.7% 65.1% (3.4)% (4.4)%


Gross profit increaseddecreased by $125.5$80.1 million in 2017,2019, as compared to 2016.2018. Unfavorable sales volume decreased gross profit in 2019 by approximately $41 million, compared to 2018, with no impact on gross margin. Gross profit decreased as a percentage of net sales (i.e., gross margin) in 20172019 increased by 3.40.1 percentage points, as compared to 2016.2018. The drivers of the decreaseincrease in gross margin in 2017,2019, as compared to 2016,2018, primarily included:

•the inclusionimpact of additional costs related to the service level disruptions at the Company's Oxford, N.C. manufacturing facility in 2018, which did not occur in 2019, resulting in increased gross profit for the Elizabeth Arden segment,margin of approximately 0.5 percentage points; and
•lower inventory obsolescence reserves, which decreasedincreased gross margin by 2.30.1 percentage points;
higher sales incentives, which decreased gross margin by 0.5 percentage points;with the foregoing partially offset primarily by:
•unfavorable product mix,FX impacts, which decreased gross margin by 0.4 percentage points; and
higher allowances for sales returns,•the impact of tariffs, which decreased gross margin by 0.2approximately 0.1 percentage points;points.
with the foregoing partially offset by:
favorable foreign currency fluctuations, which increased gross margin by 0.3 percentage points.
Excluding the impacts of sales volumes in the Elizabeth Arden segment, unfavorable sales volumes decreased gross profit by $89 million in 2017, compared to 2016, with no impact on gross margin.


34
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(except where otherwise noted, all tabular amounts in millions)




Gross profit increased by $170.4 million in 2016, as compared to 2015. Gross margin decreased in 2016 by 4.4 percentage points as compared to 2015. The drivers of the decrease in gross margin in 2016, as compared to 2015, primarily included:
the inclusion of gross profit from the Elizabeth Arden segment, which decreased gross margin by 2.4 percentage points;
unfavorable foreign currency fluctuations, which decreased gross margin by 1.0 percentage point;
higher promotional allowances, which decreased gross margin by 0.6 percentage points;
additional inventory costs as a result of the recognition of an increase in the fair value of inventory acquired in the Elizabeth Arden Acquisition, which decreased gross margin by 0.5 percentage points; and
unfavorable product mix, which decreased gross margin by 0.5 percentage points;
with the foregoing partially offset by:
the favorable impact in 2016 related to the portion of the 2015 pension lump sum settlement charge recorded in the fourth quarter of 2015 within cost of sales, which did not recur in 2016, which increased gross margin by 0.3 percentage points.
Favorable volume increased gross profit by $26 million in 2016, compared to 2015, with no impact on gross margin.


SG&A expenses:
The table below shows the Company's selling, general and administrative ("SG&A")&A expenses for 2017, 2016 and 2015:the periods presented:
Year Ended December 31,
20192018Change
SG&A expenses$1,316.6  $1,460.5  $(143.9) 
 Year Ended December 31, Change
 2017 2016 2015 2017 vs. 2016 2016 vs. 2015
SG&A expenses$1,461.0
 $1,151.6
 $993.5
 $309.4
 $158.1

SG&A expenses increaseddecreased by $309.4$143.9 million in 2017,2019, compared to 2016,2018, primarily driven by:
the inclusion of SG&A expenses in the Elizabeth Arden segment as a result of the Elizabeth Arden Acquisition, which contributed $303.7 million to the increase in SG&A expenses; and
higher•lower general and administrative expenses of $9.7approximately $66 million, primarily due to higher professional services fees related toassociated with the Company's digital transformation initiatives;
cost optimization initiatives and lower incentive compensation in 2019 and higher costs in 2018 associated with the foregoing partially offset by:departure of certain executives;
•a $4.4decrease of approximately $50 million decrease in brand support expenses, driven by planned lower activity and cost reduction activities in 2019, primarily in North America within the Consumer Segment, due to the decline in net sales;Portfolio segment and,
lower incentive compensation expense.
SG&A expenses increased by $158.1 million in 2016, compared to 2015, primarily driven by:
the inclusion of SG&A expenses in the Elizabeth Arden segment as a result of the Elizabeth Arden Acquisition, commencing on and after the Elizabeth Arden Acquisition Date, which contributed $184.2 million to the increase in SG&A expenses; and
$6.5 million of higher general and administrative expenses in 2016, primarily driven by higher compensation due to changes in senior executive management, higher professional and legal fees and a total of $6.5 million in gains recognized in 2015 related to the sales of certain non-core assets, partially offset by $10.2 million of charges recognized in 2015 related to a pension lump sum settlement recorded as a component of SG&A expenselesser extent, the Fragrances and lower non-restructuring severance;the Revlon segments; and
with the foregoing partially offset by:
$19.8 million of •favorable FX impacts; andimpact of approximately $26 million.
a $24.3 million decrease in brand support expenses for lower performing brands, primarily within the Consumer segment.


35
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(except where otherwise noted, all tabular amounts in millions)





Acquisition, integration and Integration Costs:divestiture costs:
The table below shows the Company's acquisition, integration, and integrationdivestiture costs for 2017, 2016 and 2015:the periods presented:
Year Ended December 31,
20192018Change
     Integration Costs$0.7  $13.9  $(13.2) 
     Divestiture Costs3.2  —  3.2  
Total acquisition, integration, and divestiture costs$3.9  $13.9  $(10.0) 
 Year Ended December 31, Change
 2017 2016 2015 2017 vs. 2016 2016 vs. 2015
     Acquisition Costs$3.6
 $21.5
 $5.9
 $(17.9) $15.6
     Integration Costs49.3
 21.7
 2.1
 27.6
 19.6
Total acquisition and integration costs$52.9
 $43.2
 $8.0
 $9.7
 $35.2


The Company incurred $52.9$3.2 million of acquisition and integrationdivestiture costs in 2017, consisting primarily2019 including $1.9 million in professional fees incurred in connection with the exploration of $49.2strategic transactions involving Revlon and third parties and approximately $1.3 million relating to the amortization of the cash-based awards under Tier 1 and Tier 2 of the Revlon 2019 Transaction Incentive Program (the "2019 TIP"; see Note 13, "Stock Compensation Plan," to the Company's Audited Consolidated Financial Statements in this 2019 Form 10-K for additional details on the 2019 TIP).

47
REVLON, INC AND SUBSIDIARIES
COMBINED MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(all tabular amounts in millions, except share and per share amounts)


The Company incurred $0.7 million and $13.9 million of integration costs related to the integration of Elizabeth Ardenin 2019 and $0.8 million of acquisition costs. The integration costs consisted of non-restructuring costs2018, respectively, primarily related primarily to the Company's integration of Elizabeth Arden's operations into the Company's business, including professional fees lease termination costs and employee relatedemployee-related costs. The acquisition costs primarily included legal fees directly attributable to the Elizabeth Arden Acquisition.
The Company incurred $43.2 million of acquisition and integration costs in 2016, consisting of $21.5 million of acquisition costs and $21.7 million of integration costs, primarily related to the Elizabeth Arden Acquisition. The acquisition costs primarily included legal and consulting fees related to the Elizabeth Arden Acquisition. Integration costs primarily included non-restructuring costs such as consulting fees related to the Company's integration of Elizabeth Arden's operations into the Company's business.


Restructuring charges and other, net:
The table below shows the Company's restructuring charges and other, net for 2017, 2016 and 2015:the periods presented:
Year Ended December 31,
20192018Change
Restructuring charges and other, net$12.8  $20.2  $(7.4) 
 Year Ended December 31, Change
 2017 2016 2015 2017 vs. 2016 2016 vs. 2015
Restructuring charges and other, net$33.4
 $34.0
 $10.5
 $(0.6) $23.5


EA Integration Restructuring Program

On the Elizabeth Arden Acquisition Date, the Company completed 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 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.

To reduce the Company’s cost of goods sold and SG&A expenses following the Elizabeth Arden Acquisition, the Company identified integration initiatives including consolidating offices, eliminating certain duplicative activities and streamlining back-office support (the "EA Integration Restructuring Program"), which began in December 2016. The Company realized approximately $69 million of annualized cost reductions in executing the EA Integration Restructuring Program during 2017, which primarily benefited the Elizabeth Arden segment results and reduced the Company's corporate-level SG&A expenses.

During 2017, the Company recorded charges totaling $37.7 million related to restructuring and related actions under the EA Integration Restructuring Program. Of these charges: (a) $36.1 million were recorded in restructuring charges and included approximately $4.8other, net decreased $7.4 million of lease termination costs; (b) $0.9 million were recorded in cost of sales;during 2019, compared to 2018, primarily due to lower charges and (c) $0.7 million were recorded in SG&A expenses.

During 2016, the Company recordedadjustments to previously accrued charges totaling $34.5 million related to the EA Integration Restructuring Program that were incurred in connection with integrating the Elizabeth Arden and Revlon organizations. Of the $34.5 million charge: (a) $31.7 million was recorded inCompany's restructuring charges and other, net; (b) $0.5 million was recorded in cost of goods sold; and (c) $2.3 million was recorded in SG&A expenses.

As of December 31, 2017, to further implementunder the EA Integration Restructuring Program and other immaterial programs, partially offset by higher charges under the 2018 Optimization Program. A discussion of the Company's restructuring costs,charges in relation to its restructuring initiatives follows. See also, “Recent Developments – Revlon 2020 Restructuring Program” in Item 7. “Combined Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

2018 Optimization Program
During 2018, the Company anticipates recognizingannounced a new 2018 Optimization Program designed to streamline the Company’s operations, reporting structures and business processes, with the objective of maximizing productivity and improving profitability, cash flows and liquidity. During 2019, the Company recorded $33.8 million of restructuring and related charges under the 2018 Optimization Program consisting of: (i) $16.1 million of severance, personnel benefits and other restructuring costs; and (ii) $17.7 million of other restructuring-related charges that were recorded within SG&A and cost of sales. The Company recognized approximately $90$39.5 million to $95 million of cumulative total pre-tax restructuring and related charges under the 2018 Optimization Program since its inception in November 2018, consisting of employee-related costs, such as severance, pension and other termination costs, as well as other related charges within SG&A and cost of sales and approximately $6.5 million of additional capital expenditures. As of December 31, 2019, restructuring and related charges to be paid in cash are approximately 88% of the total charges, of which approximately $25.9 million were already paid through December 31, 2019, with any residual balance expected to be paid in 2020. The 2018 Optimization Program resulted in approximately $95 million of in-year cost reductions during 2019, which equate to approximately $125 million of annualized cost reductions. The cost reductions were realized within cost of sales, selling, general and administrative expenses, and restructuring.

EA Integration Restructuring Program

The EA Integration Restructuring Program was completed in 2018. During 2019, the Company recorded an adjustment of $1.9 million to the charges previously recognized under this program related to a decrease in the amount of severance. During 2018, the Company recorded $10 million of charges under this program. As of December 31, 2019, the Company had recognized a total of $80.3 million of pre-tax restructuring and related charges since the inception in December 2016 of the EA Integration Restructuring Program consisting of: (i) approximately $65 million to $70$70.3 million of employee-related costs, including severance, retention and other

36
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(except where otherwise noted, all tabular amounts in millions)




contractual termination benefits; (ii) approximately $15$5.1 million of lease termination costs; and (iii) approximately $10$4.9 million of other related charges.

For further discussion on the Elizabeth Arden Acquisition and The Company paid $71.9 million through December 31, 2019 in connection with the EA Integration Restructuring Program, see Note 2, "Business Combinations," and Note 3, "Restructuring Charges -with any remaining balance expected to be paid after 2019.
For further information on the EA Integration Restructuring Program, the 2018 Optimization Program and on the Company's other restructuring initiatives, see Note 2, "Restructuring Charges," to the Company's Audited Consolidated Financial Statements in this 2019 Form 10-K. For further information on the Revlon 2020 Restructuring Program, see “Recent Developments – Revlon 2020 Restructuring Program” in Item 7. “Combined Management’s Discussion and Analysis of Financial Condition and Results of Operations.”


2015 Efficiency Program
48

REVLON, INC AND SUBSIDIARIES
In 2017,COMBINED MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(all tabular amounts in millions, except share and per share amounts)


(Gain) loss on divested assets:
The table below shows the Company's (gain) loss on divested assets for the periods presented:
Year Ended December 31,
20192018Change
(Gain) loss on divested assets$(26.6) $20.1  $(46.7) 

The $26.6 million gain recorded in 2019 primarily refers to the sale of certain assets during the year, consisting of the Company’s Natural Honey and Floid regional and local brands.
The $20.1 million loss recorded in 2018, of which $18.6 million was non-cash, related to the write-off of the Company’s minority investment in a licensee after agreeing to wind-down the contract and revert the trademark rights to the Company performedfollowing 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.

In 2016, the Company recognized $1.3 million of restructuring charges and other, net, in connection with the 2015 Efficiency Program, compared to $10.5 million of restructuring charges and other, net, in 2015.

brief transition period.
See Note 3, "Restructuring Charges,1, "Description of Business and Summary of Significant Accounting Policies," to the Company's Audited Consolidated Financial Statements in this 2019 Form 10-K for further discussion of the Company's restructuring initiatives.information.


Interest expense:
The table below shows the Company's interest expense for 2017, 2016 and 2015:the periods presented:
 Year Ended December 31, Change
 2017 2016 2015 2017 vs. 2016 2016 vs. 2015
Interest expense$149.8
 $105.2
 $83.3
 $44.6
 $21.9
Year Ended December 31,
20192018Change
Interest expense$196.6  $176.6  $20.0  
The $44.6$20.0 million increase in interest expense in 2017,2019, as compared to 2016, and the $21.9 million increase in interest expense in 2016, compared to 2015, were2018, was primarily due to higher average debt outstandinginterest rates and higher weighted average borrowing rates as a resultdebt balances resulting from the 2019 Term Loan Facility entered into in August 2019, the 2018 Foreign Asset-Based Term Facility entered into during the third quarter of the debt transactions completed in connection with the Elizabeth Arden Acquisition.

See Part II, Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations - Financial Condition, Liquidity and Capital Resources – Long-Term Debt Instruments" for further discussion of the above debt transactions.

Loss on early extinguishment of debt:
The table below shows the Company's loss on early extinguishment of debt for 2017, 2016 and 2015:
 Year Ended December 31, Change
 2017 2016 2015 2017 vs. 2016 2016 vs. 2015
Loss on early extinguishment of debt$—
 $16.9
 $—
 $(16.9) $16.9

The Company recognized a $16.9 million aggregate loss on the early extinguishment of debt during in 2016, primarily due to approximately $6 million of fees and expenses that were expensed as incurred in connection with entering into the 2016 Senior Credit Facilities,2018, as well as higher average borrowings under the write-off of $10.9 million of unamortized debt discount and deferred financing fees previously capitalized in connection with the SeptemberAmended 2016 repayment of the Old Term LoanRevolving Credit Facility.


Please refer to "Financial Condition, Liquidity and Capital Resources –- Long-Term Debt Instruments" in Item 7 of this 2019 Form 10-K for further discussion.information.


Foreign currency (gains) losses, net:
The table below shows the Company's foreign currency (gains) losses, net for 2017, 2016 and 2015:the periods presented:
Year Ended December 31,
20192018Change
Foreign currency (gains) losses, net$(1.9) $15.8  $(17.7) 
 Year Ended December 31, Change
 2017 2016 2015 2017 vs. 2016 2016 vs. 2015
Foreign currency (gains) losses, net$(18.5) $18.5
 $15.7
 $(37.0) $2.8

37
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(except where otherwise noted, all tabular amounts in millions)





The $18.5$1.9 million in foreign currency gains, net, during 2017,2019, compared to $18.5$15.8 million in foreign currency loss,losses, net, during 2016,2018, was primarily driven by:
by the favorableunfavorable impact of the revaluation offoreign currency fluctuations on certain U.S. Dollar denominated intercompany payables and foreign currency denominated receivables in the prior year.
partly offset by:
a $4.1 million foreign currency loss in 2017, compared to a $2.1 million foreign currency gain in 2016, in each case related to the Company's foreign currency forward exchange contracts.
The $2.8 million increase in foreign currency losses in 2016, compared to 2015, was primarily driven by:
a $2.1 million foreign currency gain in 2016, compared to a $3.8 million foreign currency gain in 2015, in each case related to the Company’s foreign currency forward exchange contracts; and
the net unfavorable impact of the revaluation of certain U.S. Dollar denominated intercompany payables and foreign currency denominated receivables.


Provision for income taxes:
The table below shows the Company's provision for income taxes for 2017, 2016the periods presented:
Year Ended December 31,
20192018Change
Provision for income taxes$0.2  $2.2  $(2.0) 

49
REVLON, INC AND SUBSIDIARIES
COMBINED MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(all tabular amounts in millions, except share and 2015:per share amounts)

 Year Ended December 31, Change
 2017 2016 2015 2017 vs. 2016 2016 vs. 2015
Provision for income taxes$23.9
 $28.7
 $54.4
 $(4.8) $(25.7)


The Company'sCompany recorded a provision for income taxes decreased by $4.8of $0.2 million in 2017, compared to 2016, primarily due to lower pre-tax incomeand $2.2 million for 2017, compared to 2016, partially offset by the $39.82019 and 2018, respectively. The $2.0 million non-cash expense associated with the reductiondecrease in the Company's deferred tax assets as a result of the Tax Act.
The provision for income taxes decreased by $25.7 million in 2016,for 2019 compared to 2015,2018, was primarily due to lower pre-tax income for 2016, compared to 2015, partiallya decrease in foreign valuation allowances recorded in 2019, offset by additional tax expense resulting from changes in mix and level of foreign earnings. For a further discussion, see Note 14, "Income Taxes," to the lack of benefitCompany's Audited Consolidated Financial Statements in 2016 from goodwillthis 2019 Form 10-K, and intangible assets impairment, as well asItem 1A. “Risk Factors-Uncertainties in the benefit in 2015 from the reductioninterpretation and application of the deferredU.S. income tax valuation allowance that did not exist in 2016.provisions could have a material impact on the Company's financial condition, results of operations and/or cash flows.”

The Company's effective tax rate for 20172019 was lower than the 35% federal statutory rate asof 21% primarily due to additional U.S. tax expense on foreign earnings and valuation allowances recorded in 2019, which includes a result of the level and mix of earnings between jurisdictions and the $39.8 million non-cash expense associated with the reduction in the Company's deferred tax assets as a result of the Tax Act.
The Company's effective tax rate for 2016 was higher than the 35% federal statutory rate as a result of: (i) state and local taxes; (ii) foreign dividends and earnings taxable in the U.S.; and (iii) the impairment related to the Company's Other segment for which there was no tax benefit.valuation allowance on interest deductions.
The Company expects that its tax provision and effective tax rate in any individual quarter and year-to-date period will vary and may not be indicative of the Company's tax provision and effective tax rate for the full year.
In assessingThe Company concluded that, based on its evaluation of objective verifiable evidence, it does not require a valuation allowance on its federal deferred tax assets, other than those associated with the recoverabilitylimitation on the deductibility of interest. The Company does have a valuation allowance on deferred tax assets associated with its activity in certain U.S. states and foreign jurisdictions. These conclusions regarding the establishment of valuation allowances on the Company's deferred tax assets as of the year ended December 31, 2019 are consistent with the Company's conclusions on such matters as of the year ended December 31, 2018. However, if the Company does not generate sufficient taxable income in future periods, its deferred tax assets management regularly considersmay not be realizable on a more-likely-than-not basis, which would result in the Company having to establish an additional valuation allowance against its deferred tax assets. The Company will continue to assess all available evidence, both negative and positive, to determine whether some portion such additional valuation allowance is warranted.

For a further discussion, see Note 14, "Income Taxes," to the Company's Audited Consolidated Financial Statements in this 2019 Form 10-K, and Item 1A. Risk Factors - "Uncertainties in the interpretation and application of the U.S. income tax provisions could have a material impact on the Company's financial condition, results of operations and/or cash flows.”

Results of Operations — Products Corporation

The condensed consolidated statements of income of Products Corporation are essentially identical to the condensed consolidated statements of income of Revlon, Inc. except for the following:

Year Ended December 31,
20192018
Net loss - Revlon, Inc.$(157.7) $(294.2) 
Selling, general and administrative expenses - public company's costs7.9  6.3  
Provision for income taxes(1.4) (1.2) 
Net loss - Products Corporation$(151.2) $(289.1) 

Refer to Revlon’s “Management Discussion and Analysis of Financial Condition and Results of Operations” herein.


50
REVLON, INC AND SUBSIDIARIES
COMBINED MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(all tabular amounts in millions, except share and per share amounts)


Financial Condition, Liquidity and Capital Resources
At December 31, 2019, the Company had a liquidity position of $278.7 million, consisting of: (i) $104.3 million of unrestricted cash and cash equivalents; (ii) $157.7 million in available borrowing capacity under Products Corporation's Amended 2016 Revolving Credit Facility (which had $272.4 million drawn at such date); (iii) $30 million in available borrowing capacity under the Amended 2019 Senior Line of Credit Facility, which had no borrowings at such date; and less (iv) $13.3 million of outstanding checks. Under the Amended 2016 Revolving Credit Facility, as Products Corporation’s consolidated fixed charge coverage ratio ("FCCR") was greater than 1.0 to 1.0 as of December 31, 2019, all of the deferred tax assets$157.7 million of availability under the Amended 2016 Revolving Credit Facility was available as of such date. See Note 9, "Debt," to the Company's Audited Consolidated Financial Statements in this 2019 Form 10-K and “Part 1, Item 2. Combined Management’s Discussion and Analysis of Financial Condition and Results of Operations--Recent Debt Transactions” for a discussion of the Company’s credit facilities and amendments entered into during 2019. See also, “Recent Developments – 2020 Refinancing Transactions” in this Item 7. “Combined Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

2019 Term Loan Facility
Principal and Maturity: In August 2019, Products Corporation entered into the 2019 Term Loan Facility, which is a senior secured term loan facility among certain affiliated funds, investment vehicles or accounts managed or advised by Ares Management LLC, as lender, in an initial aggregate principal amount of $200 million, and Wilmington Trust, as administrative and collateral agent. The approximate $188 million of net proceeds from the 2019 Term Loan Facility (after taking into account approximately $12 million of related fees and expenses) were used for general corporate purposes. The 2019 Term Loan Facility will mature on the earliest of: (x) August 6, 2023; (y) the 180th day prior to the stated maturity of Products Corporation’s existing 2016 Term Loan Facility, if any loans under the 2016 Term Loan Facility remain outstanding and have not be realizedbeen replaced or refinanced by such date; and (z) the date of any springing maturity of the 2016 Term Loan Facility (i.e., the 91st day prior to the maturity of the 5.75% Senior Notes due February 15, 2021 if any 5.75% Senior Notes remain outstanding by such date and certain liquidity thresholds are not met).
Guarantees and Security: Products Corporation and its restricted subsidiaries under the 2019 Term Loan Facility (collectively, the “Restricted Group”) are subject to the covenants under the 2019 Term Loan Agreement. The 2019 Term Loan Facility is guaranteed by each existing and future direct or indirect wholly-owned domestic restricted subsidiary of Products Corporation (subject to various exceptions), as well as by Revlon, on a limited recourse basis, and Elizabeth Arden (U.K.) Ltd., Revlon Canada Inc. and Elizabeth Arden (Canada) Limited. The obligations of Revlon, Products Corporation and the subsidiary guarantors under the 2019 Term Loan Facility are secured by pledges of the equity of Products Corporation and the equity of the Restricted Group held by Products Corporation and each subsidiary guarantor (subject to customary exceptions, including equity of first-tier foreign subsidiaries in excess of 66% of the voting equity interests of such entity) and by substantially all tangible and intangible personal and real property of Products Corporation and the subsidiary guarantors (subject to customary exclusions). The 2019 Term Loan Facility and the existing 2016 Term Loan Facility share the same guarantors and collateral, except that the 2019 Term Loan Facility is also secured by a first-priority lien on certain intellectual property of the American Crew business (the “Additional Collateral”) and is guaranteed by the entities established to hold such Additional Collateral. Pursuant to a first lien pari passu intercreditor agreement, dated August 6, 2019, among Revlon, Products Corporation, the subsidiary guarantors, Wilmington Trust and Citibank, N.A. (acting as administrative agent and collateral agent for the 2016 Term Loan Facility), the liens on the shared collateral securing the 2019 Term Loan Facility rank pari passu in priority with the liens on the shared collateral securing the 2016 Term Loan Facility.
License Agreement: In connection with the pledge of such Additional Collateral, Products Corporation entered into intercompany arrangements pursuant to which the Additional Collateral was contributed to a newly-formed subsidiary, Beautyge I, which then further contributed the Additional Collateral to its new wholly-owned subsidiary, Beautyge II, LLC. Products Corporation entered into a license and royalty arrangement on arm’s length terms with Beautyge II, LLC to provide for the Company’s continued use of the Additional Collateral during the term of the 2019 Term Loan Facility.
Interest and Fees: Interest accrues on the 2019 Term Loan Facility at a rate per annum of one-month adjusted LIBOR (which has a floor of 0%) plus a margin of 9.50%. Products Corporation is also obligated to pay customary fees and expenses in connection with the 2019 Term Loan Facility.
Affirmative and Negative Covenants: The 2019 Term Loan Agreement contains certain affirmative and negative covenants that, among other things, limit the Restricted Group’s ability to: (i) incur additional debt; (ii) incur liens; (iii) sell, transfer or dispose of assets; (iv) make investments; (v) make dividends and distributions on, or repurchases of, equity; (vi) make prepayments of contractually subordinated or junior lien debt; (vii) enter into certain transactions with their affiliates; (viii) enter into sale-leaseback transactions; (ix) change their lines of business; (x) restrict dividends from their subsidiaries or restrict liens; (xi) change their fiscal year; and (xii) modify the terms of certain debt. The 2019 Term Loan Agreement also contains additional covenants: (i) restricting the activities of the entities established to hold the Additional Collateral; (ii) limiting the incurrence of additional secured debt by the Restricted Group to an aggregate principal amount of $50 million (excluding the Amended 2016 Revolving Credit Facility and any refinancing of the 5.75% Senior Notes due 2021); (iii) restricting the transfer by the Restricted Group of material intellectual property to non-guarantor restricted subsidiaries or other affiliates; and (iv) limiting additional investments by Products Corporation and its subsidiary guarantors in any non-guarantor subsidiary to an outstanding amount of $50 million plus $10 million for ordinary course investments consistent with past practice. These negative covenants are subject to various exceptions, including an “available amount basket” based on 50% of Products Corporation’s cumulative consolidated net income from October 1, 2016, subject to Products Corporation’s compliance with a 5.0 to 1.0 ratio of Products Corporation’s net debt to Consolidated EBITDA (as defined in the recognition threshold2019 Term Loan Agreement), except such compliance is not required when such baskets are used to make investments.
Financial Covenants: The 2019 Term Loan Agreement contains financial covenants. First, Products Corporation cannot permit at any time both (x) the aggregate principal amount of secured and measurementstructurally senior debt to exceed $2.5 billion and (y) the ratio of Products Corporation's net secured and structurally senior debt to Consolidated EBITDA to be greater than 5.0 to 1.0, subject to a one-time equity cure right. Second, Products Corporation’s Consolidated EBITDA cannot be less than $250 million for any test period ending on or after March 31, 2021.
Prepayments: The 2019 Term Loan Facility is subject to mandatory prepayments from: (i) the net proceeds from the issuance by Products Corporation or any of its restricted subsidiaries of certain additional debt; (ii) commencing with the excess cash flow calculation with respect to fiscal year ending December 31, 2020, 50% of excess cash flow, with step-downs to 25% and 0% upon achievement of certain first lien leverage ratios and reduced by voluntary prepayments of the 2019 Term Loan Facility, the 2016 Term Loan Facility and revolving loans under the Amended 2016 Revolving Credit Facility (to the extent commitments thereunder are permanently reduced); and (iii) asset sale proceeds of certain non-ordinary course asset sales or other dispositions of property that have not been reinvested to the extent in excess of certain minimum amounts (subject to an aggregate reinvestment cap of $50 million). Products Corporation may voluntarily prepay the 2019 Term Loan Facility at any time. All voluntary prepayments, certain mandatory prepayments and repayments upon acceleration after an event of default of the 2019 Term Loan Facility must be accompanied by a fee (the “Applicable Premium”) in an amount equal to: (i) prior to January 1, 2021, a make-whole amount with respect to interest payments through December 31, 2020 plus 10% of the aggregate principal amount prepaid, repaid or required to be repaid; (ii) on and after January 1, 2021, but prior to January 1, 2022, 10% of the aggregate principal amount prepaid, repaid or required to be repaid; (iii) on and after January 1, 2022, but prior to January 1, 2023, 7.5% of the aggregate principal amount prepaid, repaid or required to be repaid; or (iv) thereafter, 5% of the aggregate principal amount prepaid, repaid or required to be repaid. A 5% exit fee is also payable upon the final scheduled maturity of the 2019 Term Loan Facility or if the loans thereunder are accelerated upon an event of default. The 2019 Term Loan Agreement also contains certain customary representations, warranties and events of default.
Events of Default: The 2019 Term Loan Agreement includes customary events of default, including a cross default provision making it an event of default under the 2019 Term Loan Agreement if there is an event of default under Products Corporation’s existing 2016 Credit Agreements, the 2018 Foreign Asset-Based Term Agreement, the Amended 2019 Senior Line of Credit Agreement or the Senior Notes Indentures. The lenders under the 2019 Term Loan Agreement may declare all outstanding loans under the 2019 Term Loan Agreement to be due and payable immediately upon an event of default. Under such circumstances, the lenders under the 2016 Credit Agreements, the Amended 2019 Senior Line of Credit Agreement and the 2018 Foreign Asset-Based Term Agreement may also declare all outstanding loans under such facilities to be due and payable immediately as a result of similar cross default provisions, and upon non-payment of any accelerated principal amount, the trustees or noteholders for the 5.75% Senior Notes and 6.25% Senior Notes may declare all outstanding notes to be due and payable immediately as a result of similar cross-acceleration provisions, subject to certain exceptions and limitations described in the relevant instruments. See Note 9, “Debt,” to the Company's Audited Consolidated Financial Statements in this 2019 Form 10-K for further information on the maturities of the Company’s long-term debt instruments.
Fees and expenses incurred in connection with consummating the 2019 Term Loan Agreement of approximately $14 million were capitalized and are being amortized to interest expense over the term of the 2019 Term Loan Agreement using the effective interest method. The aggregate principal amount outstanding under the 2019 Term Loan Facility Agreement at December 31, 2019 was $200 million.
Amended 2019 Senior Line of Credit Agreement
In June 2019, Products Corporation entered into a 2019 Senior Unsecured Line of Credit Agreement, providing Products Corporation with a $30 million senior unsecured line of credit from MacAndrews & Forbes Group, LLC, a subsidiary of Revlon’s majority stockholder, which facility allows Products Corporation to request loans thereunder and to use the proceeds of such loans for working capital and other general corporate purposes until the facility matures. In November 2019, Products Corporation and MacAndrews & Forbes Group, LLC entered into the Amended and Restated 2019 Senior Unsecured Line of Credit Agreement (the “Amended 2019 Senior Line of Credit Agreement”) to extend the maturity of such facility by 1-year, expiring December 31, 2020 (the "Amended 2019 Senior Line of Credit Facility"). As of December 31, 2019 and as of the November 7, 2019 extension date, there were no borrowings outstanding or repayments under the Amended 2019 Senior Line of Credit Facility.
Any loans outstanding under the Amended 2019 Senior Line of Credit Facility shall bear interest at an annual rate of 8%, which is payable quarterly in arrears in cash. Products Corporation may, at its option, prepay any borrowings under the Amended 2019 Senior Line of Credit Facility, in whole or in part (together with accrued and unpaid interest), at any time prior to maturity, without premium or penalty. Products Corporation is required to repay any outstanding loans under the Amended 2019 Senior Line of Credit Facility, together with accrued interest thereon, if for any reason Products Corporation or any of its subsidiaries has available unrestricted cash that Products Corporation determines, in its reasonable judgment, is not required to run their operations in the ordinary course of business, provided that such repayment would not result in material adverse tax consequences.
The Amended 2019 Senior Line of Credit Agreement includes customary events of default, including a cross default provision making it an event of default under the Amended 2019 Senior Line of Credit Agreement if there exists and continues an event default under Products Corporation’s 2016 Credit Agreements, the 2018 Foreign Asset-Based Term Agreement, the 2019 Term Loan Agreement or the Senior Notes Indentures. If any such event of default occurs, MacAndrews & Forbes Group, LLC may declare all outstanding loans under the Amended 2019 Senior Line of Credit Facility to be due and payable immediately.
March 2019 Amendment to the 2016 Revolving Credit Facility
In March 2019, Products Corporation, Revlon and certain of their subsidiaries entered into Amendment No. 2 (“Amendment No. 2”) to the 2016 Revolving Credit Agreement (as amended by Amendment No. 2, the “Amended 2016 Revolving Credit Agreement”) in respect of the 2016 Revolving Credit Facility (as in effect after Amendment No. 2, the “Amended 2016 Revolving Credit Facility”). Pursuant to the terms of Amendment No. 2, the maturity date applicable to the $41.5 million senior secured first in, last out Tranche B of the Amended 2016 Revolving Credit Facility was extended from April 17, 2019 to April 17, 2020. The 2016 Revolving Credit Agreement provided that the “Liquidity Amount” (defined in the Amended 2016 Revolving Credit Agreement as the sum of each borrowing base less the sum of (x) the aggregate outstanding extensions of credit under the Amended 2016 Revolving Credit Facility, and (y) any availability reserve in effect on such date) may exceed the aggregate commitments under the Amended 2016 Revolving Credit Facility by up to 5%. Amendment No. 2 limits the Liquidity Amount to no more than the aggregate commitments under the Amended 2016 Revolving Credit Facility. Under the 2016 Revolving Credit Agreement, a “Liquidity Event Period” generally occurred if Products Corporation’s Liquidity Amount fell below the greater of $35 million and 10% of the maximum availability under the 2016 Revolving Credit Facility. Amendment No. 2 changed these thresholds to $50 million and 15%, respectively, only for purposes of triggering certain notification obligations of Products Corporation, increased borrowing base reporting frequency and the ability of the administrative agent to apply amounts collected in controlled accounts for the repayment of loans under the Amended 2016 Revolving Credit Facility. After entering into Amendment No. 2, in March 2019 Products Corporation’s availability under the Amended 2016 Revolving Credit Facility was $37.3 million, which was less than the greater of $35 million and 10% of the maximum availability under the Amended 2016 Revolving Credit Facility, which at such date equated to $41.3 million. Accordingly, effective beginning in March 2019 Products Corporation is required to maintain a FCCR of a tax position. minimum of 1.0 to 1.0 (which it currently satisfies), the administrative agent may apply amounts collected in controlled accounts for the repayment of loans under the Amended 2016 Revolving Credit Facility, which the administrative agent began applying in March 2019, and Products Corporation is required to provide the administrative agent with weekly borrowing base certificates. Products Corporation will be required to: (i) maintain such 1.0 to 1.0 minimum FCCR until such time that availability under the Amended 2016 Revolving Credit Facility equals or exceeds the greater of $35 million and 10% of the maximum availability under such facility for at least 20 consecutive business days; and (ii) Products Corporation will continue to provide the administrative agent with weekly borrowing base certificates and the administrative agent may continue to apply amounts collected in controlled accounts as set forth above in each case until such time that availability under such facility is equal or exceeds the greater of $50 million and 15% of the maximum availability under such facility for at least 20 consecutive business days. Amendment No. 2 also adjusts, among other things, the “payment conditions” required to make unlimited restricted payments.
The ultimate realizationCompany’s foreign operations held $102.5 million out of deferred tax assetsits total $104.3 million in cash and cash equivalents as of December 31, 2019. While the cash held by the Company’s foreign subsidiaries is generally dependentprimarily used to fund their operations, the Company regularly assesses its global cash needs and the available sources of cash to fund these needs, which regularly includes repatriating foreign-held cash to settle historical intercompany loans and other intercompany payables. The Company believes that it has and will have sufficient liquidity to meet its cash needs for at least the next 12 months based upon the generationcash generated by its operations, cash on hand, availability under the Amended 2016 Revolving Credit Facility, the Amended 2019 Senior Line of future taxable incomeCredit Facility, the 2020 Refinancing Transactions and other permissible borrowings, along with the option to further settle historical intercompany loans and payables with certain foreign subsidiaries. See “Recent Developments – 2020 Refinancing Transactions” in Item 7. “Combined Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The Company also expects to generate additional liquidity from cost reductions resulting from the implementation of the Revlon 2020 Restructuring Program and the 2018 Optimization Program, which was initiated during the periodsfourth quarter of 2018, and cost reductions generated from other cost control initiatives, as well as funds provided by selling certain assets (such as the Natural Honey and Floid brands that were sold in which those temporary differences become deductible. Management considersDecember 2019) in connection with the scheduled reversalCompany’s ongoing Strategic Review. See “Recent Developments – Revlon 2020 Restructuring Program” in this Item 7. “Combined Management’s Discussion and Analysis of deferred tax liabilities, projected future taxable incomeFinancial Condition and tax planning strategiesResults of Operations.” See also, “2019 Term Loan Facility” above in making“Financial Condition, Liquidity and Capital Resources” within this assessment.2019 Form 10-K and Item 1A. Risk Factors - “Restrictions and covenants in Products Corporation’s various debt instruments limit its ability to take certain actions and impose consequences in the event of failure to comply.” During 2019, as part of continuing to effectively manage its working capital needs, the Company continued to repatriate funds to the U.S. using tax-effective methods, such as through the settlement of historical loans and payables due from certain foreign subsidiaries.
OnIn December 22, 2017, the U.S. government enacted the Tax Act, which makesmade broad and complex changes to the U.S. tax code, including a one-time transition tax on certain non-U.S. earnings, the current U.S. taxation of certain foreign earnings in 2018 and following years and limitations on tax deductions for interest expense in 2018 and following years. The Company currently expects that it willwas not have asubject to the one-time transition tax liability due to its deficit in foreign earnings andas of the applicable measurement dates. Additionally, the Company determined that the limitation on interest deductibility willdid not impact the Company's 2018 federal cash taxes due to its net operating loss carryover balance. Asposition. Further, as a result of the Company’s anticipated net operating loss carryover to 2019, the Company currently expects that the Tax Act will not have a material impact on itsthe Company's cash taxes or liquidity in 2018.
The2019. As of December 31, 2018, the Company's accounting for the Tax Act affected the Company’s financial statements for the year ending December 31, 2017, including, but not limitedwas complete. For a further discussion, see Note 14, "Income Taxes," to by (1) reducing the U.S. federal corporate tax rate, and (2) requiring a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries. The Company currently expects to have no transition tax liability, due to its deficit in foreign earnings, and it recorded an estimated non-cash expense of $39.8 million in 2017 associated with the reduction in the Company's deferred tax assets,Audited Consolidated Financial Statements in this 2019 Form 10-K, as a result of the reduction in the U.S. federal corporate tax rate.

38
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(except where otherwise noted, all tabular amounts in millions)




Seewell as Item 1A. Risk Factors - "U.S."Uncertainties in the interpretation and application of the U.S. income tax reform effortsprovisions could have a material impact on the Company's financial condition, results of operations and/or cash flows"flows."

Changes in this Form 10-K. See also Note 16, "Income Taxes," to the Consolidated Financial Statements in this Form 10-K for further discussion.Cash Flows
The SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cut and Jobs Act ("SAB 118"), which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides that companies are required to complete their accounting under Accounting Standards Codification Topic 740, “Income Taxes” ("ASC 740") over a measurement period that should not extend beyond one year from the Tax Act enactment date. In accordance with SAB 118, companies must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete in their financial statements for the fiscal period ended December 31, 2017. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete at the time such financial statements are filed, but it is able to determine a reasonable estimate for the income tax effects of the Tax Act, it must record a provisional estimate of such effects in its financial statements for the period ended December 31, 2017. If a company cannot determine a provisional estimate to be included in its financial statements for the fiscal period ended December 31, 2017, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the Tax Act.


Financial Condition, Liquidity and Capital Resources
At December 31, 2017, the Company had a liquidity position of $280.1 million, consisting of $87.1 million of unrestricted cash and cash equivalents, as well as $193 million in available borrowings under Products Corporation's $400 million 2016 Revolving Credit Facility, based upon the borrowing base of $381.9 million, less $10.1 million of outstanding undrawn letters of credit, $21.8 million of outstanding checks and $157 million of borrowings outstanding under the 2016 Revolving Credit Facility at such date. The Company believes that the cash generated by its operations, cash on hand, availability under the 2016 Revolving Credit Facility and other permitted lines of credit should be sufficient to meet its liquidity needs for at least the next 12 months from the issuance date of this Form 10-K.
The Company’s foreign operations held $83.2 million out of its total $87.1 million in cash and cash equivalents asAs of December 31, 2017. The cash held by the Company’s foreign operations is primarily used to fund such operations. The Company regularly assesses its cash needs and the available sources of cash to fund these needs. As part of this assessment, the Company determines the amount of foreign earnings, if any, that it intends to repatriate to help fund its domestic cash needs, including for the Company’s debt service obligations, and pays applicable U.S. income and foreign withholding taxes, if any, on such earnings to the extent repatriated, and otherwise records a tax liability for the estimated cost of repatriation in a future period. During 2017, the Company repatriated funds to the U.S. through the settlement of historical loans and payables due from certain foreign subsidiaries. The Company believes that the cash generated by its domestic operations, cash on hand, availability under the 2016 Revolving Credit Facility and other permitted lines of credit, as well as the option to further settle intercompany loans and payables with certain foreign subsidiaries, should be sufficient to meet its domestic liquidity needs for at least the next 12 months. Therefore, the Company currently anticipates that restrictions and/or taxes on repatriation of foreign earnings will not have a material effect on the Company’s liquidity during such period. On December 22, 2017, the U.S. government enacted the Tax Act, which makes broad and complex changes to the U.S. tax code, including a one-time transition tax on certain non-U.S. earnings, and limitations on tax deductions for interest expense in 2018 and following years. The Company currently expects that it will not have a transition tax liability due to its deficit in foreign earnings and that the limitation on interest deductibility will not impact the Company's 2018 federal cash taxes due to its net operating loss carryover balance. As a result, the Company currently expects that the Tax Act will not have a material impact on its cash taxes or liquidity in 2018. See Note 16, "Income Taxes," to the Consolidated Financial Statements and Item 1A. Risk Factors - "U.S. income tax reform efforts could have a material impact on the Company's financial condition, results of operations and/or cash flows" in this Form 10-K for a further discussion.


39
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(except where otherwise noted, all tabular amounts in millions)




Changes in Cash Flows
At December 31, 2017,2019, the Company had cash, cash equivalents and restricted cash of $87.4$104.5 million, compared with $186.8$87.5 million at December 31, 2016.2018. The following table summarizes the Company’s cash flows from operating, investing and financing activities in 2017, 2016 and 2015:for the periods presented:
Year Ended December 31,
20192018
Net cash used in operating activities$(68.3) $(170.8) 
Net cash provided by (used in) investing activities2.1  (57.2) 
Net cash provided by financing activities84.3  233.1  
Effect of exchange rate changes on cash and cash equivalents(1.1) (5.0) 
   Net increase in cash, cash equivalents and restricted cash17.0  0.1  
Cash, cash equivalents and restricted cash at beginning of period87.5  87.4  
Cash, cash equivalents and restricted cash at end of period$104.5  $87.5  
 Year Ended December 31,
 2017 2016 2015
Net cash (used in) provided by operating activities$(139.3) $117.4
 $158.1
Net cash used in investing activities(108.3) (1,087.5) (83.8)
Net cash provided by (used in) financing activities136.9
 832.6
 (14.9)
Effect of exchange rate changes on cash and cash equivalents11.3
 (2.6) (7.8)
Net (decrease) increase in cash, cash equivalents and restricted cash$(99.4) $(140.1) $51.6
Cash, cash equivalents and restricted cash at beginning of period186.8
 326.9
 275.3
Cash, cash equivalents and restricted cash at end of period$87.4
 $186.8
 $326.9


Operating Activities
Net cash used in operating activities was $139.3 million in 2017. Net cash provided by operating activities was $117.4$68.3 million and $158.1$170.8 million for 2016during 2019 and 2015,2018, respectively. The increasedecrease in cash used in 2017,operating activities during 2019, compared to 2016,2018, was primarily driven by higher inventory balances; higher interest paymentsfavorable working capital changes and lower net loss in 2019 compared to 2018, as well as a result of increased debtthe charges incurred in September 2016 in connection with financing and consummating2018 related to the Elizabeth Arden Acquisition, as well as higher borrowings undereffect of the 2016 Revolving Credit Facility; and higher payments for restructuring, acquisition and integration costs in connection with the EA Integration Restructuring Program, partially offset by favorable changes in working capital.Oxford, N.C. facility disruption.
The increase in cash used in 2016, as compared to 2015, was primarily driven by the payment of acquisition and integration costs in 2016, higher interest payments in 2016 as a result of increased debt incurred in connection with financing and consummating the Elizabeth Arden Acquisition, as well as the timing of certain accounts payable disbursements and accounts receivable collections at the end of 2015, compared to 2016.
Investing Activities
Net cash provided by investing activities was $2.1 million for 2019, compared to $57.2 million of net cash used in investing activities for 2018. The increase in cash provided by investing activities was $108.3 million, $1,087.5 million and $83.8 million for 2017, 2016 and 2015, respectively, which included $108.3 million, $59.3 million and $48.3related to $31.1 million of cash used for capital expenditures, respectively. Capital expenditures for 2017 included approximately $40 million for Elizabeth Arden integration-related investments.
Net cash used in investing activities in 2016 included $1,034.3 million in cash payments for the Elizabeth Arden Acquisition (partially offset by $41.1 million of cash acquired in the Elizabeth Arden Acquisition) and $29.1 million in cash payments for the May 2016 Cutex International Acquisition.
Net cash used in investing activities in 2015 included $41.7 million in cash payments, net of cash acquired, primarily for the Company's April 2015 CBB Acquisition, partially offset by $6.2 million in cash proceeds from the sale of certain immaterial, non-core assets.assets in 2019, consisting of the Company’s Natural Honey and Floid regional and local brands, and also by lower capital expenditures in 2019 compared to 2018.


Financing Activities
Net cash provided by (used in) financing activities was $136.9 million, $832.6$84.3 million and $(14.9)$233.1 million for 2017, 2016during 2019 and 2015,2018, respectively.
Net cash provided by financing activities in 2017during 2019 primarily included:
•$157200.0 million of borrowings under the 2019 Term Loan Facility;
with the foregoing partially offset by:
•$62.6 million of repayments under the Amended 2016 Revolving Credit Facility;
•$18.0 million of repayments under the 2016 Term Loan Facility;
•$17.3 million of decreases in short-term borrowings and overdraft; and
•$15.3 million of payments of financing costs incurred in connection with consummating the 2019 Term Loan Facility in August 2019 and the 2018 Foreign Asset-Based Term Facility, which were $14.0 million and $1.3 million, respectively.
Net cash provided by financing activities for the year ended December 31, 2018 primarily included:
•$178.0 million of borrowings under the 2016 Revolving Credit Facility; and
•$88.9 million of borrowings under the 2018 Foreign Asset-Based Term Facility;
with the foregoing partially offset by:
•$1818.0 million of repayments under the 2016 Term Loan Facility.Facility; and

40
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(except where otherwise noted, all tabular amounts in millions)




Net cash provided by financing activities in 2016 primarily included:
cash proceeds received in connection with originating the 2016 Term Loan Facility, in the aggregate principal amount of $1.8 billion, or $1.791 billion, net of discounts;
cash proceeds received in connection with issuance of the 6.25% Senior Notes, in the aggregate principal amount of $450 million; and
with the foregoing partially offset by:
•$658.69.7 million of cash used to repay allpayments of the aggregate principal balance outstanding under Products Corporation’s 2011 Term Loan;
$651.4 million of cash used to repay all of the aggregate principal balance outstanding under Products Corporation’s Old Acquisition Term Loan;
(i) $45 million of feesfinancing costs incurred in connection with originating the 20162018 Foreign Asset-Based Term Loan Facility; (ii) $5.7 million of fees incurred in connection with originating the 2016 Revolving Credit Facility; and (iii) $10.9 million of fees incurred in connection with issuing Products Corporation's 6.25% Senior Notes;
a $23.2 million required excess cash flow prepayment made under the Old Term Loan Facility as discussed below; and
$2.7 million utilized for the repurchase of shares from a former executive.
Net cash used in financing activities for 2015 primarily included:
a $24.6 million required excess cash flow prepayment made under the Old Term Loan Facility; and
$6.8 million of scheduled amortization payments on the Old Acquisition Term Loan;
with the foregoing partially offset by:
$23 million increase in short-term borrowings and overdrafts.
Refer below for further discussion of the debt instruments and related financing activities discussed above.

Long-Term Debt Instruments
Recent Debt Transactions
The Company completed several debt transactions during 2016, as described below:
2016 Debt-Related Transactions
In connection with and substantially concurrently with the closing of the Elizabeth Arden Acquisition, Products Corporation entered into: (i) the 7-year $1.8 billion 2016 Term Loan Facility (the "2016 Term Loan Facility" and such agreement being the "2016 Term Loan Agreement"); and (ii) the 5-year $400 million 2016 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"). Products Corporation also completed the issuance of $450 million aggregate principal amount of its 6.25% Senior Notes due 2024. The proceeds of Products Corporation's 6.25% Senior Notes offering and the 2016 Term Loan Facility, together with approximately $35 million of borrowings underAmendment No. 2 to the 2016 Revolving Credit Facility for $5.7 million and approximately $126.7$4.0 million, of cash on hand, were used: (A)respectively.

Long-Term Debt Instruments

See Note 9, "Debt," to fund the Elizabeth Arden Acquisition, including: (i) repurchasing the entire $350 million aggregate principal amount outstanding of the then-existing Elizabeth Arden Senior Notes (the "Elizabeth Arden Senior Notes"); (ii) repaying the entire $142 million aggregate principal amount of borrowings outstanding as of the Elizabeth Arden Acquisition Date under Elizabeth Arden’s $300 million revolving credit facility (which facility was terminated upon such repayment); (iii) repaying the entire $25 million aggregate principal amount of borrowings outstanding as of the Elizabeth Arden Acquisition Date under Elizabeth Arden's second lien credit facility (which facility was terminated upon such repayment); and (iv) retiring the entire $55 million liquidation preference of all 50,000 shares of Elizabeth Arden's then-issued and outstanding preferred stock (which amount included a $5 million change of control premium); and (B) to completely refinance and repay all of the $651.4 millionCompany's Audited Consolidated Financial Statements in aggregate principal balance outstanding underthis 2019 Form 10-K for information, including, without limitation, information regarding their respective maturities, regarding Products Corporation’s then-existing 2011 Term Loan (the "2011 Term Loan") and all of the $658.6 million in aggregate principal balance outstanding under Products Corporation’s Old Acquisition Term Loan (each of which facilities were terminated upon such repayment) (the "Old Acquisition Term Loan" and together with the 2011 Term Loan, the "Old Term Loan Agreement" and the "Old Term Loan Facility," respectively). The Company did not incur any material early termination penalties in connection with repaying the Old Term Loan Facility or the Elizabeth Arden indebtedness and preferred stock.

41
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(except where otherwise noted, all tabular amounts in millions)




2016 Term Loan Facility
Principal and Maturity: On the Elizabeth Arden Acquisition Date, Products Corporation entered into the 2016 Term Loan Agreement, for which Citibank, N.A. acts as administrative and collateral agent and which has an initial aggregate principal amount of $1.8 billion and matures on the earlier of: (x) the seventh anniversary of the Elizabeth Arden Acquisition Date (i.e., September 7, 2023); 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 million.  The loans under the 2016 Term Loan Facility, were borrowed at an original issue discount of 0.5% to their principal amount. The 2016 Term Loan Facility may be increased by an amount equal to the sum of (x) the greater of $450 million and 90% of Products Corporation’s pro forma consolidated EBITDA, plus (y) an unlimited amount to the extent that (1) the first lien leverage ratio (defined as the ratio of Products Corporation’s net senior secured funded debt that is not junior or subordinated to the liens of the Senior Facilities to EBITDA) is less than or equal to 3.5 to 1.0 (for debt secured pari passu with the 2016 Term Loan Facility) or (2) the secured leverage ratio (defined as the ratio of Products Corporation’s net senior secured funded debt to EBITDA) is less than or equal to 4.25 to 1.0 (for junior lien or unsecured debt), plus (z) up to an additional $400 million if theAmended 2016 Revolving Credit Facility, has been repaid and terminated.

Guarantees and Security: Products Corporation and the restricted subsidiaries under the 20162019 Term Loan Facility, which include Products Corporation’s domestic subsidiaries, including Elizabeth Arden and its domestic subsidiaries (collectively, the "Restricted Group"), are subject to the covenants under the 20162018 Foreign Asset-Based Term Loan Agreement.  The 2016 Term Loan Facility, is guaranteed by eachAmended 2019 Senior Line of Products Corporation's existing and future direct or indirect wholly-owned domestic restricted subsidiaries (subject to various exceptions), as well as by Revlon, on a limited recourse basis.  The obligations of Revlon, Products Corporation and the subsidiary guarantors under the 2016 Term Loan Facility are secured by pledges of the equity of Products Corporation held by Revlon and the equity of the Restricted Group held by Products Corporation and each subsidiary guarantor (subject to certain exceptions, including equity of first-tier foreign subsidiaries in excess of 65% of the voting equity interests of such entity) and by substantially all tangible and intangible personal and real property of Products Corporation and the subsidiary guarantors (subject to certain exclusions).  The obligors and guarantors under the 2016 Term Loan Facility and the 2016 Revolving Credit Facility, are identical.  The liens securing the 2016 Term Loan Facility on the accounts, inventory, equipment, chattel paper, documents, instruments, deposit accounts, real estate and investment property and general intangibles (other than intellectual property) related thereto (the "Revolving Facility Collateral") rank second in priority to the liens thereon securing the 2016 Revolving Credit Facility.  The liens securing the 2016 Term Loan Facility on all other property, including capital stock, intellectual property and certain other intangible property (the "Term Loan Collateral"), rank first in priority to the liens thereon securing the 2016 Revolving Credit Facility, while the liens thereon securing the 2016 Revolving Credit Facility rank second in priority to the liens thereon securing the 2016 Term Loan Facility.

Interest and Fees: Interest accrues on term loans under the 2016 Term Loan Facility at a rate per annum of Adjusted LIBOR (which has a floor of 0.75%) plus a margin of 3.5% or an alternate base rate plus a margin of 2.5%, at Products Corporation’s option, and is payable quarterly, at a minimum.  Products Corporation is obligated to pay certain fees and expenses in connection with the 2016 Term Loan Facility. 

Affirmative and Negative Covenants: The 2016 Term Loan Agreement contains certain affirmative and negative covenants that, among other things, limit the Restricted Group’s ability to: (i) incur additional debt; (ii) incur liens; (iii) sell, transfer or dispose of assets; (iv) make investments; (v) make dividends and distributions on, or repurchases of, equity; (vi) make prepayments of contractually subordinated or junior lien debt; (vii) enter into certain transactions with their affiliates; (viii) enter into sale-leaseback transactions; (ix) change their lines of business; (x) restrict dividends from their subsidiaries or restrict liens; (xi) change their fiscal year; and (xii) modify the terms of certain debt. The negative covenants are subject to various exceptions, including an "available amount basket" based on 50% of Products Corporation’s cumulative consolidated net income, plus a "starter" basket of $200 million, subject to Products Corporation’s compliance with a 5.0 to 1.0 ratio of Products Corporation’s net debt to Consolidated EBITDA (as defined in the 2016 Term Loan Agreement), except such compliance is not required when such baskets are used to make investments. While the 2016 Term Loan Agreement contains certain customary representations, warranties and events of default, it does not contain any financial maintenance covenants.

Prepayments: The 2016 Term Loan Facility is subject to mandatory prepayments from: (i) the net proceeds from the issuance by Products Corporation or any of its restricted subsidiaries of certain additional debt; (ii) commencing with the excess cash flow calculation with respect to fiscal year ending December 31, 2017, 50% of excess cash flow, with step-downs to 25% and 0% upon achievement of certain first lien leverage ratios and reduced by voluntary prepayments of loans under the 2016 Term Loan Facility and revolving loans under the 2016 Revolving Credit Facility to the extent commitments thereunder are permanently reduced; and (iii) asset sale proceeds of certain non-ordinary course asset sales or other dispositions of property that have not been reinvested

42
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(except where otherwise noted, all tabular amounts in millions)




to the extent in excess of certain minimum amounts. Products Corporation may voluntarily prepay the 2016 Term Loan Facility without premium or penalty.
2016 Revolving Credit Facility
Principal and Maturity: On the Elizabeth Arden Acquisition Date, Products Corporation entered into the 2016 Revolving Credit Agreement, for which Citibank, N.A. acts as administrative agent and collateral agent. The 2016 Revolving Credit Facility has an initial maximum availability of $400 million (with a $100 million sublimit for letters of credit and up to $70 million available for swing line loans), which availability is subject to the amount of the borrowing base.  The 2016 Revolving Credit Facility may be increased by the greater of (x) $50 million and (y) the excess of the borrowing base over the amounts of then-effective commitments.  The 2016 Revolving Credit Facility permits certain non-U.S. subsidiaries to borrow in local currencies. The borrowing base calculation under the 2016 Revolving Credit Facility is based on the sum of: (i) 85% of eligible accounts receivable; (ii) the lesser of 85% of the net orderly liquidation value and a percentage of the value specified in respect of different types of eligible inventory; (iii) qualified restricted cash (capped at $75 million); and (iv) a temporary increase amount between August 15 and October 31 of each year, which are collectively subject to certain availability reserves set by the administrative agent. The 2016 Revolving Credit Facility 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 million.

Guarantees and Security: The Restricted Group under the 2016 Revolving Credit Agreement (which is the same as the Restricted Group under the 2016 Term Loan Agreement) is subject to the covenants under the 2016 Revolving Credit Agreement.  The 2016 Revolving Credit Facility is guaranteed by each of Products Corporation's existing and future direct or indirect wholly-owned domestic restricted subsidiaries (subject to various exceptions), as well as by Revlon on a limited recourse basis.  The obligations of Revlon, Products Corporation and the subsidiary guarantors under the 2016 Revolving Credit Facility are secured by pledges of the equity of Products Corporation held by Revlon and the equity of Products Corporation’s restricted subsidiaries held by Products Corporation and each subsidiary guarantor (subject to certain exceptions, including equity of first-tier foreign subsidiaries in excess of 65% of the voting equity interests of such entity) and by substantially all tangible and intangible personal and real property of Products Corporation and the subsidiary guarantors (subject to certain exclusions).  The obligors and guarantors under the 2016 Revolving Credit Facility and the 2016 Term Loan Facility are identical.  The liens on the 2016 Revolving Facility Collateral securing the 2016 Revolving Credit Facility rank first in priority to the liens thereon securing the 2016 Term Loan Facility, which rank second in priority on such collateral.  The liens on the Term Loan Collateral securing the 2016 Revolving Credit Facility rank second in priority to the liens thereon securing the 2016 Term Loan Facility, which rank first in priority on such collateral.

Interest and Fees: Under the 2016 Revolving Credit Facility, interest is payable quarterly and accrues on borrowings under such facility at a rate per annum equal to either: (i) the alternate base rate plus an applicable margin equal to 0.25%, 0.50% or 0.75%, depending on the average excess availability (based on the borrowing base as most recently reported by Products Corporation to the administrative agent from time-to-time); or (ii) the Eurocurrency rate plus an applicable margin equal to 1.25%, 1.50% or 1.75%, depending on the average excess availability (based on the borrowing base as most recently reported by Products Corporation to the administrative agent from time-to-time), at Products Corporation’s option. The applicable margin decreases as average excess availability under the 2016 Revolving Credit Facility increases.  Products Corporation is obligated to pay certain fees and expenses in connection with the 2016 Revolving Credit Facility, including a commitment fee of 0.25% for any unused amounts. Loans under the 2016 Revolving Credit Facility may be prepaid without premium or penalty.

Affirmative and Negative Covenants: The 2016 Revolving Credit Agreement contains affirmative and negative covenants that are similar to those in the 2016 Term Loan Agreement, other than the "available amount basket" (as described above in the description of the 2016 Term Loan Facility); provided, however, under the 2016 Revolving Credit Agreement the Restricted Group will be able to incur unlimited additional junior secured debt and unsecured debt, make unlimited asset sales and dispositions, make unlimited investments and acquisitions, prepay junior debt and make unlimited restricted payments to the extent that certain "payment conditions" for asset-based credit facilities are satisfied.  The 2016 Revolving Credit Agreement contains certain customary representations, warranties and events of default.  If Products Corporation’s "Liquidity Amount" (defined in the 2016 Revolving Credit Agreement as the Borrowing Base less the sum of (x) the aggregate outstanding extensions of credit under the 2016 Revolving Credit Facility, and (y) any availability reserve in effect on such date) falls below the greater of $35 million and 10% of the maximum availability under the 2016 Revolving Credit Facility (a "Liquidity Event Period"), then the Restricted Group will be required to maintain a consolidated fixed charge coverage ratio (the ratio of Products Corporation’s EBITDA minus capital expenditures to cash interest expense for such period) of a minimum of 1.0 to 1.0 until the first date after 20 consecutive business days for which the Liquidity Amount is equal to or greater than such threshold. If Products Corporation is in default under the consolidated fixed charge coverage ratio under the 2016 Revolving Credit Agreement, Products Corporation may cure such default

43
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(except where otherwise noted, all tabular amounts in millions)




by Products Corporation and/or Revlon issuing certain equity securities and Products Corporation receiving capital contributions from Revlon, with such cash being deemed to increase EBITDA for the purpose of calculating the applicable ratio. Products Corporation may exercise this cure right no more than two times in any four-quarter period, and no more than five times in total during the term of the 2016 Revolving Credit Facility.

Prepayments: Products Corporation must prepay borrowings under the 2016 Revolving Credit Facility to the extent that outstanding loans and letters of credit exceed availability.  During a Liquidity Event Period, the administrative agent may apply amounts collected in controlled accounts for the repayment of loans under the 2016 Revolving Credit Facility.  The above descriptions of the terms of the 2016 Term Loan Facility and the 2016 Revolving Credit Facility and the related security and collateral agreements are qualified in their entirety by reference to such agreements, which are attached as exhibits to this Form 10-K.
6.25% Senior Notes
On August 4, 2016, Revlon Escrow Corporation (the "Escrow Issuer"), which on such date was a wholly owned subsidiary of Products Corporation, completed the 6.25% Senior Notes Offering, pursuant to an exemption from registration under the Securities Act of 1933 (as amended, the "Securities Act"), of $450 million aggregate principal amount of the 6.25% Senior Notes. The 6.25% Senior Notes are unsecuredSee also, “Recent Developments – 2020 Refinancing Transactions” in this Item 7. “Combined Management’s Discussion and were issued by the Escrow Issuer to the initial purchasers under the 6.25% Senior Notes Indenture, between the Escrow IssuerAnalysis of Financial Condition and U.S. Bank National Association, as trustee (the "6.25% Senior Notes Trustee"). The 6.25% Senior Notes mature on August 1, 2024. Interest on the 6.25% Senior Notes accrues at 6.25% per annum, paid every six months through maturity on each February 1 and August 1. The proceeds from the 6.25% Senior Notes were released from escrow on the September 7, 2016 Elizabeth Arden Acquisition Date (the "Escrow Release"). On the Elizabeth Arden Acquisition Date, the Escrow Issuer was merged with and into Products Corporation and in connection with the Escrow Release, Products Corporation and certainResults of its direct and indirect wholly-owned domestic subsidiaries, including Elizabeth Arden and certain of its subsidiaries (collectively, the "6.25% Senior Notes Guarantors"), and the 6.25% Senior Notes Trustee entered into a supplemental indenture (the "6.25% Senior Notes Supplemental Indenture") to the 6.25% Senior Notes Indenture, pursuant to which Products Corporation assumed the obligations of the Escrow Issuer under the 6.25% Senior Notes and the 6.25% Senior Notes Indenture and the 6.25% Senior Notes Guarantors jointly and severally, fully and unconditionally guaranteed the 6.25% Senior Notes on a senior unsecured basis (the "6.25% Senior Notes Guarantees").  The 6.25% Senior Notes Guarantors are the same entities that are subsidiary guarantors under the 2016 Senior Credit Facilities.Operations.”

In December 2016, Products Corporation consummated an offer to exchange the original 6.25% Senior Notes for $450 million of new 6.25% Senior Notes, which have substantially the same terms as the original 6.25% Senior Notes, except that they are registered under the Securities Act (such registered new notes being the "6.25% Senior Notes").

Ranking: The 6.25% Senior Notes are Products Corporation’s senior, unsubordinated and unsecured obligations, ranking: (i) pari passu in right of payment with all of Products Corporation’s existing and future senior unsecured indebtedness; (ii) senior in right of payment to all of Products Corporation’s and the 6.25% Senior Notes Guarantors’ future subordinated indebtedness; and (iii) effectively junior to all of Products Corporation’s and the 6.25% Senior Notes Guarantors’ existing and future senior secured indebtedness, including indebtedness under Products Corporation’s 2016 Senior Credit Facilities, to the extent of the value of the assets securing such indebtedness. The 6.25% Senior Notes and the 6.25% Senior Notes Guarantees are: (i) structurally subordinated to all of the liabilities and preferred stock of any of the Company’s subsidiaries that do not guarantee the 6.25% Senior Notes; and (ii) pari passu in right of payment with liabilities of the 6.25% Senior Notes Guarantors other than expressly subordinated indebtedness. The 6.25% Senior Notes and the 6.25% Senior Notes Guarantees rank effectively junior to indebtedness and preferred stock of Products Corporation’s foreign and immaterial subsidiaries (the "6.25% Senior Notes Non-Guarantor Subsidiaries"), none of which guarantee the 6.25% Senior Notes.

Optional Redemption: Prior to August 1, 2019, Products Corporation may redeem the 6.25% Senior Notes at its option, at any time as a whole or from time-to-time in part, upon Products Corporation’s payment of an applicable make-whole premium based on the comparable treasury rate plus 50 basis points. Prior to August 1, 2019, up to 40% of the aggregate principal amount of 6.25% Senior Notes may also be redeemed at Products Corporation’s option at any time as a whole or from time-to-time in part, at a redemption price equal to 106.250% of the principal amount thereof, plus accrued and unpaid interest to (but not including) the date of redemption with the proceeds of certain equity offerings and capital contributions (so long as at least 60% of the 6.25% Senior Notes thereafter remain outstanding). On and after August 1, 2019, Products Corporation may redeem the 6.25% Senior Notes at its option, at any time as a whole, or from time-to-time in part, at the following redemption prices (expressed as percentages of principal amount), plus accrued interest to (but not including) the date of redemption, if redeemed during the 12-month period beginning on August 1 of the years indicated below:


44
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(except where otherwise noted, all tabular amounts in millions)




Period Optional Redemption Premium Percentage
2019 104.688%
2020 103.125%
2021 101.563%
2022 and thereafter 100.000%

All redemptions (and notices thereof) may be subject to various conditions precedent, and redemption dates specified in such notices may be extended so that such conditions precedent may be fulfilled (to the extent redemption on such dates is otherwise permitted by the 6.25% Senior Notes Indenture).

Change of Control: Upon the occurrence of specified change of control events, Products Corporation is required to make an offer to purchase all of the 6.25% Senior Notes at a purchase price of 101% of the outstanding principal amount of the 6.25% Senior Notes as of the date of any such repurchase, plus accrued and unpaid interest to (but not including) the date of repurchase.

Certain Covenants: The 6.25% Senior Notes Indenture imposes certain limitations on Products Corporation’s and the 6.25% Senior Notes Guarantors’ ability, and the ability of certain other subsidiaries, to: (i) incur or guarantee additional indebtedness or issue preferred stock; (ii) pay dividends, make certain investments and make repayments on indebtedness that is subordinated in right of payment to the 6.25% Senior Notes and make other "restricted payments;" (iii) create liens on their assets to secure debt; (iv) enter into transactions with affiliates; (v) merge, consolidate or amalgamate with another company; (vi) transfer and sell assets; and (vii) permit restrictions on the payment of dividends by Products Corporation's subsidiaries.

These covenants are subject to important qualifications and exceptions. The 6.25% Senior Notes Indenture also contains customary affirmative covenants and events of default. In addition, if during any period of time the 6.25% Senior Notes receive investment grade ratings from both Standard & Poor’s and Moody’s Investors Services, Inc. and no default or event of default has occurred and is continuing under the 6.25% Senior Notes Indenture, Products Corporation and its subsidiaries will not be subject to the covenants regarding limitations on debt, limitations on restricted payments, limitation on guarantees by restricted subsidiaries, limitation on transactions with affiliates, certain provisions of the successor company covenant, limitation on asset sales and limitation on dividends from restricted subsidiaries.
Amended Term Loan Facility - Excess Cash Flow Payment
In February 2016, Products Corporation prepaid $23.2 millionof indebtedness, representing 50% of its 2015 "excess cash flow" as defined under, and as required by, the Old Term Loan Agreement. The prepayment was applied on a ratable basis between the principal amounts outstanding at such time under the 2011 Term Loan and the Old Acquisition Term Loan. The amount of the prepayment that was applied to the 2011 Term Loan reduced the principal amount then outstanding by $11.5 million to $651.4 million (as all amortization payments under the 2011 Term Loan had been paid). The $11.7 million that was applied to the Old Acquisition Term Loan reduced Products Corporation's future annual amortization payments under such loan on a ratable basis from $6.9 million prior to the prepayment to $6.8 million after giving effect to the prepayment. The 2011 Term Loan and Old Acquisition Term Loan were completely refinanced and terminated in connection with Products Corporation’s completing the 2016 Senior Credit Facilities and issuing the 6.25% Senior Notes.


Covenants
Products Corporation was in compliance with all applicable covenants under the 2016 Credit Agreements, the 2019 Term Loan Agreement, the 2018 Foreign Asset-Based Term Agreement, the Amended 2019 Senior Line of Credit Agreement, as well as with all applicable covenants under its Senior Notes Indentures, as of December 31, 2017.2019. As of December 31, 2017,2019, the aggregate principal amounts outstanding and availability under the 2016 Term Loan Facility and the 2016 Revolving Credit FacilityProducts Corporation’s various revolving credit facilities were $1,777.5 million and $157 million, respectively.as follows:
CommitmentBorrowing BaseAggregate principal amount outstanding at December 31, 2019Availability at December 31, 2019 (a)
Tranche A of the Amended 2016 Revolving Credit Facility$400.0  $400.0  $230.9  $157.7  
Tranche B of the Amended 2016 Revolving Credit Facility41.5  41.5  41.5  —  
Total Tranche A & B of the Amended 2016 Revolving Credit Facility(a)$441.5  $441.5  $272.4  $157.7  
Amended 2019 Senior Line of Credit Facility$30.0  N/A  $—  $30.0  
(a) Availability under the $400 million 2016 Revolving Credit Facility as ofat December 31, 2017 was $193 million,2019 is based upon the calculated borrowing base then in effect of $381.9$441.5 million, less $10.1$11.4 million of outstanding undrawn letters of credit $21.8and $272.4 million then drawn. As Products Corporation’s consolidated fixed charge coverage ratio was greater than 1.0 to 1.0 as of December 31, 2019, all of the $157.7 million of outstanding checks and $157 million then drawn onavailability under the Amended 2016 Revolving Credit Facility.Facility was available as of such date.

Products Corporation was in compliance with all applicable covenants under its Senior Notes Indentures as of December 31, 2017.2019, with there being $500 million and $450 million in aggregate principal amount outstanding under the 5.75% Senior Notes and 6.25% Senior Notes, respectively, as of December 31, 2019.


Sources and Uses
The Company’s principal sources of funds are expected to be operating revenues, cash on hand and funds that may be available from time to time for borrowing under the Amended 2016 Revolving Credit Facility, the Amended 2019 Senior Line of Credit Facility, the 2020 Refinancing Transactions and other permitted lines of credit.permissible borrowings. The 2016 Credit Agreements, and the

45
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(except where otherwise noted, all tabular amounts in millions)




2019 Term Loan Agreement, the Senior Notes Indentures and the 2018 Foreign Asset-Based Term Agreement contain certain provisions that by their terms limit Products Corporation's and its subsidiaries’ ability to, among other things, incur additional debt.debt, subject to certain exceptions.
The Company’s principal uses of funds are expected to be the payment of operating expenses, including payments in connection with the Company's synergy and integration programs related to the Elizabeth Arden Acquisition (including, without limitation, for the EA Integration Restructuring Program); purchasespurchase of permanent wall displays; capital expenditure requirements; debt service payments and costs; cash tax payments; pension and other post-retirement benefit plan contributions; payments in connection with the Company’s restructuring programs, such as the EA Integration Restructuring Program, the 2018 Optimization Program and the Revlon 2020 Restructuring Program; severance not otherwise included in the Company’s restructuring programs; business and/or brand acquisitions (including, without limitation, through licensing transactions), if any; severance not otherwise included in the Company’s restructuring programs; debt and/or equity repurchases, if any; costs related to litigation; and payments in connection with discontinuing non-core business lines and/or exiting and/or entering certain territories and/or channels of trade. For a further discussion, see Item 1A. Risk Factors – “A substantial portion of Products Corporation's indebtedness is subject to floating interest rates and the potential discontinuation or replacement of LIBOR could result in an increase to our interest expense.”
The Company’s cash contributions to its pension and post-retirement benefit plans in 20172019 were $8.5$12.1 million. The Company expects that cash contributions to its pension and post-retirement benefit plans will be approximately $10$18 million in the aggregate for 2018.2020. The Company’s cash taxes paid in 20172019 were $0.4$9.9 million. The Company expects to pay cash taxes oftotaling approximately $10 million to $15 million in the aggregate during 2018. On December 22, 2017, the U.S. government enacted the Tax Act, which makes broad and complex changes to the U.S. tax code, including2020. For a one-time transition tax on certain non-U.S. earnings, and limitations on tax deductions for interest expense in 2018 and following years. The Company currently expects that it will not have a transition tax liability due to its deficit in foreign earnings and that the limitation on interest deductibility will not impact the Company's 2018 federal cash taxes due to its net operating loss carryover balance. As a result, the Company currently expects that the Tax Act will not have a material impact on its cash taxes or liquidity in 2018. Seefurther discussion, see Note 16,14, "Income Taxes," to the Company's Audited Consolidated Financial Statements in this 2019 Form 10-K and Item 1A. Risk Factors - "U.S."Uncertainties in the interpretation and application of the U.S. income tax reform effortsprovisions could have a material impact on the Company's financial condition, results of operations and/or cash flows" in this Form 10-K for a further discussion.flows."
The Company’s purchases of permanent wall displays and capital expenditures in 20172019 were $65.5$46.2 million and $108.3$29.0 million, respectively. Capital expenditures for 2017 included approximately $40 million of spend for the EA Integration Restructuring Program. The Company expects that purchases of permanent wall displays will betotal approximately $55$40 million to $70$50 million during 20182020 and expects that capital expenditures will betotal approximately $90$25 million to $110$35 million in 2018.during 2020.
The Company has undertaken, and continues to assess, refine and implement, a number of programs to efficiently manage its working capital, including, among other things, initiatives intended to optimize inventory levels over time; centralized procurement to secure discounts and efficiencies; prudent management of trade receivables and accounts payable; and controls on general and administrative spending. In the ordinary course of business, the Company’s source or use of cash from operating activities may vary on a quarterly basis as a result of a number of factors, including the timing of working capital flows.
Continuing to execute the Company’s business initiatives could include taking advantage of additional opportunities to reposition, repackage or reformulate one or more brands or product lines, launching additional new products, acquiring businesses or brands (including, without limitation, through licensing transactions), divesting or discontinuing non-core business lines (which may include exiting certain territories), further refining the Company’s approach to retail merchandising and/or taking further actions to optimize its manufacturing, sourcing and organizational size and structure, including optimizing the Colomer Acquisition, the Cutex Acquisitions and/or the Elizabeth Arden Acquisition.structure. Any of these actions, the intended purpose of which would be to create value through improving the Company's financial performance, could result in the Company making investments and/or recognizing charges related to executing against such opportunities. Any such activities may be funded with operating revenues, cash on hand, funds that may be available from time to time under the Amended 2016 Revolving Credit Facility, the Amended 2019 Senior Line of Credit Facility, other permissible borrowings, the 2020 Refinancing Transactions and/or other permitted additional sources of capital, which actions could increase the Company’s total debt.
The Company may also, from time-to-time, seek to retire or purchase its outstanding debt obligations and/or advance funds to Revlon to repurchase its equity in open market purchases, block trades, privately negotiated purchase transactions or otherwise and may seek to refinance some or all of its indebtedness based upon market conditions. Any such retirement or purchase of debt and/or equity may be funded with operating cash flows of the business or other sources and will depend upon prevailing market conditions, liquidity requirements, contractual restrictions and other factors, and the amounts involved may be material.
The Company expects that operating revenues, cash on hand and funds that may be available from time-to-time for borrowing under the Amended 2016 Revolving Credit Facility, the Amended 2019 Senior Line of Credit Facility, the 2020 Refinancing Transactions and other permitted lines of creditpermissible borrowings will be sufficient to enable the Company to pay its operating expenses for 2018,2020, including expenses in connection with payments in connection with the Company's synergy and integration programs related to the Elizabeth Arden Acquisition, purchasespurchase of permanent wall displays, capital expenditures, debt service payments and costs, cash tax payments, pension and other post-retirement plan contributions, payments in connection with the Company’s restructuring programs, such as the EA Integration Restructuring Program, the 2018 Optimization Program and the Revlon 2020 Restructuring Program, severance not otherwise included in the Company’s restructuring programs, business and/or brand acquisitions (including, without limitation, through licensing transactions), if any, severance not otherwise included in the Company’s restructuring programs, debt and/or equity repurchases, if any, costs related to litigation, discontinuing non-core business lines and/or entering and/or exiting certain territories and/or channels of trade. The Company also expects to generate additional liquidity from cost reductions resulting from the implementation of the Revlon 2020 Restructuring Program and the 2018 Optimization Program, as well as funds provided by selling certain assets (such as the Natural Honey and Floid brands that were sold in December 2019) in connection with the Company's ongoing Strategic Review.

46
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(except where otherwise noted, all tabular amounts in millions)




There can be no assurance that available funds will be sufficient to meet the Company’s cash requirements on a consolidated basis, as, among other things, the Company’s liquidity can be impacted by a number of factors, including its level of sales, costs and expenditures. expenditures, as well as accounts receivable and inventory, which serve as the principal variables impacting the amount of liquidity available under Products Corporation’s Amended 2016 Revolving Credit Facility and the 2018 Foreign Asset-Based Term Facility. For example, subject to certain exceptions, loans under the 2018 Foreign Asset-Based Term Facility must be prepaid to the extent that outstanding loans exceed the borrowing base, consisting of accounts receivable and inventory.
If the Company’s anticipated level of revenues is not achieved because of, among other things, decreased consumer spending in response to weak economic conditions or weakness in the consumption of beauty care products in one or more of the Company's segments; adverse changes in tariffs, foreign currency exchange rates, foreign currency controls and/or government-mandated pricing controls; decreased sales of the Company’s products as a result of increased competitive activities by the Company’s competitors and/or decreased performance by third-party suppliers;suppliers, whether due to shortages of raw materials or otherwise; changes in consumer purchasing habits, including with respect to retailer preferences and/or sales channels, such as due to the continuingany further consumption declines in core beauty categories inthat the mass retail channel in North America, which continues to have a negative impact on net sales of Revlon color cosmetics, Almay color cosmetics, SinfulColors color cosmetics and Mitchum anti-perspirant deodorant products;Company has experienced; inventory management by the Company's customers; space reconfigurations or reductions in display space by the Company's customers; retail store closures in the brick-and-mortar channels where the Company sells its products, as consumers continue to shift purchases to online and e-commerce channels; changes in pricing, marketing, advertising and/or promotional strategies by the Company's customers; or less than anticipated results from the Company’s existing or new products or from its advertising, promotional, pricing and/or marketing plans; or if the Company’s expenses, including, without limitation, for synergy and integration programs related to the Elizabeth Arden Acquisition,purchase of permanent displays, capital expenditures, debt service payments and costs, cash tax payments, pension and other post-retirement plan contributions, payments in connection with the Company’s restructuring programs (such as the EA Integration Restructuring Program, the 2018 Optimization Program and the Revlon 2020 Restructuring Program), severance costs, acquisition and integration costs,not otherwise included in the Company’s restructuring programs, business and/or brand acquisitions (including, without limitation, through licensing transactions), if any, debt and/or equity repurchases, if any, costs related to litigation, discontinuing non-core business lines and/or entering and/or exiting certain territories and/or channels of trade, advertising, promotional and marketing activities or for sales returns related to any reduction of space by the Company's customers, product discontinuances or otherwise, exceed the anticipated level of expenses, the Company’s current sources of funds may be insufficient to meet the Company’s cash requirements.
Any such developments, if significant, could reduce the Company’s revenues and operating income and could adversely affect Products Corporation’s ability to comply with certain financial and/or other covenants under the 2016 Credit Agreements, and/orthe 2019 Term Loan Agreement, the Senior Notes Indentures and/or the 2018 Foreign Asset-Based Term Agreement and in such event the Company could be required to take measures, including, among other things, reducing discretionary spending. (See Item 1A. "Risk Factors" for(For further discussion of certain risks associated with the Company's business and indebtedness.)
During February 2018, the Company launched its new ERP system in the U.S., which caused its Oxford, N.C. manufacturing facility to experience service level disruptions that have impacted the Company’s ability to manufacture certain quantities of finished goods and fulfill shipments to several large retail customers in the U.S. In response, the Company has implemented a robust service recovery plan and is making significant progress in resolving these issues. These disruptions have reduced the Company’s accounts receivable on a temporary basis, which has impacted the Company’s borrowing base under the 2016 Revolving Credit Facility. The Company continues to believe that its current sources of liquidity are sufficient. In addition, the Company is negotiating for an expansion of available liquidity with its lenders. Seeindebtedness, see Item 1A. "Risk Factors" regarding the Company’s implementation of its new ERP system and those related to the Company’s substantial indebtedness.in this 2019 Form 10-K.)


Derivative Financial Instruments
Foreign Currency Forward Exchange Contracts
Products Corporation enters into foreign currency forward exchange and option contracts ("FX Contracts") from time-to-time to hedge certain net cash flows denominated in currencies other than the local currencies of the Company’s foreign and domestic operations. The FX Contracts are entered into primarily for the purpose of hedging anticipated inventory purchases and certain 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. AtThe FX Contracts in the Company's hedging program matured in December 2018. The Company did not enter into any FX Contracts during the year ended December 31, 2017,2019. The U.S. Dollar notional amounts of the FX Contracts outstanding had a notional amountat each of $147.1 millionDecember 31, 2019 and a net liability fair value of $1.3 million.December 31, 2018 were nil.

47
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(except where otherwise noted, all tabular amounts in millions)





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 the Old Acquisition Term Loan. The 2013 Interest Rate Swap initially had a floor of 1%, 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, which expiresexpired in May 2018. The Company initially designatedRefer to Note 11, "Financial Instruments," in the 2013 Interest Rate Swap as a cash flow hedge of the variability of the forecasted three-month LIBORCompany’s Audited Consolidated Financial Statements in this 2019 Form 10-K for more information on this interest rate payments 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 through May 2018. Under the terms of the 2013 Interest Rate Swap, Products Corporation receives from the counterparty a floating interest rate based on the higher of 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% through May 2018). At December 31, 2017 and December 31, 2016, the fair value of the 2013 Interest Rate Swap was a liability of $0.9 million and $4.7 million, respectively.
As a result of completely refinancing the Old Acquisition Term Loan with a portion of the proceeds from Products Corporation's consummation of the 2016 Senior Credit Facilities and the 6.25% Senior Notes 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, or 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 $1.2 million, or $0.7 million net of tax, at December 31, 2017 that were previously recorded as a component of accumulated other comprehensive loss will be amortized into earnings through the expiration of the 2013 Interest Rate Swap in May 2018.swap transaction.
Credit Risk
Exposure to credit risk in the event of nonperformance by any of the counterparties to ourthe Company's outstanding hedging instruments is limited to the gross fair value of the derivative instruments in asset positions, which totaled $0.6 million and $2.3 millionnil as of December 31, 20172019 and December 31, 2016, respectively.2018. The Company attemptshas from time to time in the past attempted 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. TheIf applicable, the Company also periodically monitors any changes in the credit ratings of its counterparties. Given the current credit standing of the counterparties that the Company has used from time to the Company'stime to provide its derivative instruments, the Company believes the risk of loss arising from any non-performance by any of theits counterparties under thesethe derivative instruments isthat it has entered into from time to time would be remote.



Disclosures about Contractual Obligations and Commercial Commitments

The following table aggregates all contractual obligations and commercial commitments that affect the Company's financial condition and liquidity position as of December 31, 2017:
  Payments Due by Period
Contractual Obligations Total Less than 1 year 1-3 years 4-5 years After 5 years
Long-term debt, including current portion (a)   
 $2,885.0
 $175.1
 $36.2
 $536.2
 $2,137.5
Interest on long-term debt (b)    
 812.1
 151.3
 297.6
 247.4
 115.8
Capital lease obligations 2.9
 1.4
 1.3
 0.2
 —
Operating leases (c)
 245.4
 48.0
 70.6
 48.2
 78.6
Purchase obligations (d)
 329.6
 276.2
 32.6
 18.5
 2.3
Other long-term obligations (e)
 85.6
 52.2
 23.9
 8.5
 1.0
Total contractual obligations $4,360.6
 $704.2
 $462.2
 $859.0
 $2,335.2
(a)
Consists primarily of: (i) the $1,777.5 million in aggregate principal amount outstanding under the 2016 Term Loan Facility; (ii) the $450 million in aggregate principal amount outstanding under the 6.25% Senior Notes; and (iii) the $500 million in aggregate principal amount outstanding under the 5.75% Senior Notes, in each case as of December 31, 2017.
(b)
Consists of interest through the respective maturity dates on the outstanding debt discussed in (a) above; based on interest rates under such debt agreements as of December 31, 2017.

48
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(except where otherwise noted, all tabular amounts in millions)




(c)
Included in the obligations for operating leases as of December 31, 2017 is the lease for the Company's headquarters in New York City, which includes minimum lease payments in the aggregate of approximately $70 million over the 15-year term; a leased distribution and office facility in Roanoke, Virginia; and a leased warehouse and returns processing facility in Salem, Virginia.
(d)
Consists of purchase commitments for finished goods, raw materials, components, minimum royalty guarantees and services pursuant to enforceable and legally binding obligations which include all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transactions.
(e)
Consists primarily of media and advertising contracts, pension funding obligations (amount due within one year only, as subsequent pension funding obligation amounts cannot be reasonably estimated since the return on pension assets in future periods, as well as future pension assumptions, are not known), software licensing agreements and obligations related to third-party warehousing and distribution services. Such amounts exclude employment agreements, severance and other immaterial contractual commitments, which severance and other contractual commitments related to restructuring activities are discussed in Note 3, "Restructuring Charges," to the Consolidated Financial Statements in this Form 10-K.


Off-Balance Sheet Transactions


The Company does not maintain any off-balance sheet transactions, arrangements, obligations or other relationships with unconsolidated entities or others that are reasonably likely to have a material current or future effect on the Company's financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.



Discussion of Critical Accounting Policies
In the ordinary course of its business, the Company has made a number of estimates and assumptions relating to the reporting of results of operations and financial condition in the preparation of its financial statements in conformity with U.S. generally accepted accounting principles ("U.S. GAAP"). Actual results could differ significantly from those estimates and assumptions. It is also possible that other professionals, applying reasonable judgment to the same set of facts and circumstances, could develop a different conclusion. The Company believes that the following discussion addresses the Company's most critical accounting policies, which are those that are most important to the portrayal of the Company's financial condition and results of operations and require management's most difficult, subjective and complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.
Allowance for Doubtful Accounts:
The allowance for doubtful accounts is determined based on historical experience and ongoing evaluations of the Company’s receivables and evaluations of the risks of payment. The allowance for doubtful accounts is recorded against trade receivable balances when they are deemed uncollectible. Recoveries of trade receivables previously reserved are recorded in the consolidated statements of operations and comprehensive (loss) income when received.
Sales Returns:
The Company allows customers primarily within its Consumer and Elizabeth Arden segments, to return their unsold products when they meet certain company-established criteria as outlined in the Company’s trade terms. The Company regularly reviews and revises, when deemed necessary, the Company’sits estimates of sales returns based primarily upon historical rate of actual product returns, experience, planned product discontinuances, new product launches and estimates of customer inventory and promotional sales, which would permit customers to return products based upon the Company’s trade terms. The Company records estimated sales returns as a reduction to sales and cost of sales, and an increase in accrued liabilities and inventories.
51
REVLON, INC AND SUBSIDIARIES
COMBINED MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(all tabular amounts in millions, except share and per share amounts)


Returned products, which are recorded as inventories, are valued based upon the amount that the Company expects to realize upon their subsequent disposition. The physical condition and marketability of the returned products are the major factors the Company considers in estimating realizable value. Cost of sales includes the cost of refurbishment of returned products. Actual returns, as well as realized values on returned products, may differ significantly, either favorably or unfavorably, from the Company’s estimates if factors such as product discontinuances, customer inventory levels or competitive conditions differ from the Company’s estimates and expectations and, in the case of actual product returns, if economic conditions differ significantly from the Company’s estimates and expectations.
Trade Support Costs:
In order to support the retail trade, the Company has various performance-based arrangements with retailers to reimburse them for all or a portion of their promotional activities related to the Company's products. The Company regularly reviews and revises, when deemed necessary, estimates of costs to the Company for these promotions based on estimates of what has been

49
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(except where otherwise noted, all tabular amounts in millions)




incurred by the retailers. Actual costs incurred by the Company may differ significantly if factors such as the level and success of the retailers' programs, as well as retailer participation levels, differ from the Company's estimates and expectations.
Inventories:
Inventories are stated at the lower of cost or net realizable value. Cost is based on standard cost and production variances, which approximates actual cost on the first-in, first-out method. Cost components include direct materials, direct labor and direct overhead, as well as in-bound freight. The Company records adjustments to the value of inventory based upon its forecasted plans to sell its inventories, as well as planned discontinuances. The physical condition (e.g., age and quality) of the inventories is also considered in establishing its valuation. These adjustments are estimates, which could vary significantly, either favorably or unfavorably, from the amounts For returned products that the Company may ultimately realizeexpects to resell at a profit, the Company records, in addition to sales returns as a reduction to sales and cost of sales and an increase to accrued liabilities for the amount expected to be refunded to the customer, an increase to the asset account used to reflect the Company's right to recover products. The amount of the asset account is valued based upon the dispositionformer carrying amount of inventories if future economic conditions, customer inventory levels,the product discontinuances, sales return levels or competitive conditions differ from(i.e., inventory), less any expected costs to recover the products. As the estimated product returns that are expected to be resold at a profit do not comprise a significant amount of the Company's estimates and expectations.net sales or assets, the Company does not separately report these amounts.
Pension Benefits:
The Company sponsors both funded and unfunded pension and other retirement plans in various forms covering employees who meet the applicable eligibility requirements. The Company uses several statistical and other factors in an attempt to estimate future events in calculating the liability and net periodic benefit income/cost related to these plans. These factors include assumptions about the discount rate, expected long-term return on plan assets and rate of future compensation increases as determined annually by the Company, within certain guidelines, which assumptions would be subject to revisions if significant events occur during the year. The Company uses December 31st31st as its measurement date for defined benefit pension plan obligations and plan assets.
The Company applies the "full yield curve" approach, an alternative approach from the single weighted-average discount rate approach, to calculate the service and interest components of net periodic benefit cost for pension and other post-retirement benefits. Under this method, the discount rate assumption was built through the application of specific spot rates along the yield curve used in the determination of the benefit obligation to the relevant projected cash flows for each of the Company's pension and other retirement plans.
The Company utilized a 3.47%3.01% weighted-average discount rate in 20172019 for the Company's U.S. defined benefit pension plans, compared to a 3.92%4.13% weighted-average discount rate in 2016.2018. The Company utilized a 2.19%1.81% weighted-average discount rate for the Company’s international defined benefit pension plans in 2017,2019, compared to a 2.66%2.52% weighted-average discount rate selected in 2016.2018. The discount rates are used to measure the benefit obligations at the measurement date and the net periodic benefit income/cost for the subsequent calendar year and are reset annually using data available at the measurement date. The changes in the discount rates used for 20172019 were primarily due to observed decreases in long-term interest yields on high-quality corporate bonds during 2017.2019. At December 31, 2017,2019, the decrease in the discount rates from December 31, 20162018 had the effect of increasing the Company’s projected pension benefit obligation by approximately $24.1$65.5 million.
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REVLON, INC AND SUBSIDIARIES
COMBINED MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(all tabular amounts in millions, except share and per share amounts)


In selecting its expected long-term rate of return on its plan assets, the Company considers a number of factors, including, without limitation, recent and historical performance of plan assets, the plan portfolios' asset allocations over a variety of time periods compared with third-party studies, the performance of the capital markets in recent years and other factors, as well as advice from various third parties, such as the plans' advisors, investment managers and actuaries. While the Company considered both the recent performance and the historical performance of plan assets, the Company’s assumptions are based primarily on its estimates of long-term, prospective rates of return. The difference between actual and expected return on plan assets is reported as a component of accumulated other comprehensive (loss) income and the resulting gains or losses are amortized over future periods as a component of the net periodic benefit cost. For the Company’s U.S. defined benefit pension plans, the expected long-term rate of return on the pension plan assets used was 6.5%6.00% for 2017both 2019 and 7% for 2016.2018. The weighted-average expected long-term rate of return used for the Company’s international plans was 4.81%4.86% for 20172019 and 6%4.95% for 2016.2018. For 2017,2019, the actual return on pension plan assets was $53.5$61.3 million, as compared with expected return on plan assets of $28.6$25.1 million. The resulting $24.9 million difference, representing a net deferred gain of $36.2 million, when combined with gains and losses from previous years, will be amortized over periods ranging from approximately 10 to 30 years. The actual return on plan assets for 20172019 was above expectations, primarily due to higher returns from investments in developed equity markets, bank loans and bond yields.

50
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(except where otherwise noted, all tabular amounts in millions)





The table below reflects the Company’s estimates of the possible effects that changes in the discount rates and expected long-term rates of return would have had on its 20172019 net periodic benefit costs and its projected benefit obligation at December 31, 20172019 for the Company’s principal defined benefit pension plans, with all other assumptions remaining constant:

 Effect of Effect ofEffect ofEffect of
 25 basis points increase 25 basis points decrease25 basis points increase25 basis points decrease
 Net periodic benefit costs Projected pension benefit obligation Net periodic benefit costs Projected pension benefit obligationNet periodic benefit costsProjected pension benefit obligationNet periodic benefit costsProjected pension benefit obligation
Discount rate $1.1
 $(16.9) $0.8
 $17.7
Discount rate$1.7  $(15.6) $1.5  $16.3  
Expected long-term rate of return (2.0) —
 0.4
 —
Expected long-term rate of return$(0.4) $—  $1.8  $—  

The rate of future compensation increases is another assumption used by the Company’s third-party actuarial consultants for pension accounting. The rate of future compensation increases used for the Company’s projected pension benefit obligation in 2017both 2019 and 20162018 was 3.5%3.50% for the U.S. defined benefit pension plans. Such increase was not applied to the Revlon Employees’ Retirement Plan and the Revlon Pension Equalization Plan, as the rate of future compensation increases is no longer relevant to such plans due to plan amendments that effectively froze these plans as of December 31, 2009. During 2019, the UAW Plan was frozen and the rate of future compensation increase is no longer applicable.
In addition, the Company's actuarial consultants also use other factors such as withdrawal and mortality rates. The actuarial assumptions used by the Company may differ materially from actual results due to changing market and economic conditions, higher or lower withdrawal rates or longer or shorter life spans of participants, among other things. Differences from these assumptions could significantly impact the actual amount of net periodic benefit cost and liability recorded by the Company.
To determine the fiscal 20182020 net periodic benefit income/cost, the Company is using the "full yield curve" approach described above to separately calculate discount rates for each of the service and interest components. The following table represents the weighted average discount rates used in calculating each component of service and interest costs for the Company's U.S. and international defined benefit pension plans:
U.S.
Plans		International
Plans
Interest cost on projected benefit obligation2.58 %1.95 %
Service cost(a)
N/A  0.32 %
Interest cost on service cost(a)
N/A  0.16 %
 
U.S.
Plans
 
International
Plans
Interest cost on projected benefit obligation3.07% 2.26%
Service cost3.84% 0.69%
Interest cost on service cost3.59% 0.39%
(a) Service cost and interest on service cost are no longer applicable for the U.S. plans as the UAW Plan was frozen during 2019.
For 2018,2020, the Company is using long-term rates of return on pension plan assets of 6%5.50% and 4.95%3.39% for its U.S. and international defined benefit pension plans, respectively. The Company expects that the impact of the changes in discount rates and the return on plan assets in 20182020 will result in net periodic benefit cost of $2.5$5.1 million for 2018,2020, compared to $4.1$7.2 million of net periodic benefit cost in 2017, excluding the curtailment gain.2019.
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REVLON, INC AND SUBSIDIARIES
COMBINED MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(all tabular amounts in millions, except share and per share amounts)


Goodwill and Acquired Intangible Assets:
In determining the fair values of net assets acquired, including trade names, customer relationships and other intangible assets, and resulting goodwill related to the Company's business acquisitions, the Company considers, among other factors, the analyses of historical financial performance and an estimate of the future performance of the acquired business. The fair values of the acquired intangible assets are primarily calculated using a discounted cash flow approach.
Determining fair value requires significant estimates and assumptions based on evaluating a number of factors, such as marketplace participants, product life cycles, consumer awareness, brand history and future expansion expectations. There are significant judgments inherent in a discounted cash flow approach, including in selecting appropriate discount rates, hypothetical royalty rates, contributory asset capital charges, estimating the amount and timing of future cash flows and identifying appropriate terminal growth rate assumptions. The discount rates used in discounted cash flow analyses are intended to reflect the risk inherent in the projected future cash flows generated by the respective acquired intangible assets.
Determining an acquired intangible asset's useful life requires management judgment and is based on evaluating a number of factors, including the expected use of the asset, consumer awareness, trade name history and future expansion expectations, as well as any contractual provisions that could limit or extend an asset's useful life. The Company believes that an acquired trade name has an indefinite life if it has a history of strong revenue and cash flow performance, and the Company has the intent and ability to support the trade name with marketplace spending for the foreseeable future. If this indefinite-lived criteria is not met, acquired trade names are amortized over their expected useful lives, which generally range from 5 to 20 years.

51
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(except where otherwise noted, all tabular amountsEffective January 1, 2018, the Company implemented its brand-centric organizational structure which is built around four global brand teams: Revlon; Elizabeth Arden; Portfolio; and Fragrances, which also represent the Company's reporting segments. Concurrent with the change in millions)




reporting segments, goodwill was reassigned to the affected reporting units that have been identified within each reporting segment using a relative fair value allocation approach as outlined in Accounting Standards Codification ("ASC") 350, Intangibles - Goodwill and Other. Goodwill totaled $692.5$673.7 million and $689.5$673.9 million as of December 31, 20172019 and 2016,2018, respectively. As of December 31, 2017,2019, goodwill of $216.7$264.9 million, $234$171.1 million, $116.9 million and $241.8$120.8 million related to the Consumer,Revlon, Portfolio, Elizabeth Arden and ProfessionalFragrances segments, respectively. Indefinite-lived intangibles totaled $147.9$143.8 million and $243.3$145.2 million as of December 31, 20172019 and 2016,2018, respectively.
In accordance with Financial Accounting Standards Board ("FASB"), Accounting Standard Codification ("ASC") 350, Intangibles - Goodwill and Other ("ASC 350"), goodwill and indefinite-lived intangible assets are not amortized, but rather are reviewed annually for impairment using October 1st1st carrying values, or when there is evidence that events or changes in circumstances indicate that the current carrying amounts may not be recovered. Under this standard, the Company annually has the option to first assess qualitatively, based on relevant events and circumstances, whether it is more likely than not that there has been an impairment, or perform a quantitative analysis to assess the existence of any such impairment. If the qualitative analysis shows that it is more likely than not that the fair value of a reporting unit is higher than its carrying amount, the quantitative analysis is not required. If the qualitative analysis fails, the quantitative analysis is required. Per the simplified approach allowed under ASU No. 2017-04, "Simplifying the Test for Goodwill Impairment," adopted by the Company as of October 1, 2018, if the carrying value of the reporting unit exceeds itsthe fair value anof the reporting unit, the goodwill impairment losscharge is recognized in an amount equal to anythe amount of such excess.difference. The inputs and assumptions utilized in the analyses are classified as Level 3 inputs in the fair value hierarchy. Goodwill is tested for impairment at the reporting unit level.

The Company establishes its reporting units based on its current reporting structure, product characteristics and management. Within each of the Consumer segment,Elizabeth Arden and Portfolio segments, the Company has identified two reporting units:units. The two reporting units within the Elizabeth Arden segment are: (i) GCB,Elizabeth Arden Skin and Color, which includes Elizabeth Arden skin care and color cosmetics brands; and (ii) Elizabeth Arden Fragrances, which includes Elizabeth Arden branded fragrances. The two reporting units within the Portfolio segment are: (i) Mass Portfolio, which includes the SinfulColors and Pure Ice nail enamel brands;Company's brands sold primarily through the mass retail channel; and (ii) "Revlon, Almay and Other,"Professional Portfolio, which includes the remainder of the Company's Consumer brands and does not include brands of the Company's Elizabeth Arden and Other reportable segments.sold primarily through professional salons. The Company's otherRevlon and Fragrances reporting units are consistent with the reportable segments identified in Note 18,17, "Segment Data and Related Information.Information," in the Company’s Audited Consolidated Financial Statements in this 2019 Form 10-K. For purposes of testing goodwill for impairment, goodwill has been allocated to each reporting unit to the extent that goodwill relates to each reporting unit.
For
62
REVLON, INC AND SUBSIDIARIES
COMBINED MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(all tabular amounts in millions, except share and per share amounts)


Q1 2018 change in reporting segments and impairment analysis
Concurrent with the change in reporting segments described above, effective January 1, 2018, during the first quarter of 2018 the Company utilized the relative fair value allocation approach, as outlined in ASC 350, to reassign goodwill to the affected reporting units identified within each reporting segment, using December 31, 2017 thecarrying values. The Company utilized the two-step process as prescribed by Accounting Standards Codification ("ASC") 350, Intangibles - Goodwill and Other, to test the GCB reporting unitin assessing whether goodwill was impaired for impairment. The shift in consumer behavior challenging the brick-and-mortar retail channel contributed to continued consumption and net sales declines for both brands comprising the GCB reporting unit. In the first step of this test, the Company compared the fair value of GCB, determined based upon discounted estimated future cash flows, to its carrying amount, including goodwill. The resultseach of the step one test indicated that impairment indicators may have existed for the GCBCompany's six reporting unit.
In the second step, the Company measured the potential impairment of GCB reporting unit by comparing its implied fair value with the carrying amount of its goodwill at October 1, 2017. The implied fair value of the GCB reporting unit's goodwill was determined in the same manner as the amount of goodwill recognized in a business combination, where the estimated fair value of the GCB reporting unit was allocated to all the assetsunits: (i) Revlon; (ii) Elizabeth Arden Skin and liabilities of that reporting unit (including both recognizedColor; (iii) Elizabeth Arden Fragrances; (iv) Mass Portfolio; (v) Professional Portfolio; and unrecognized intangible assets) as if GCB had been acquired in a business combination and the estimated fair value of GCB reporting unit was the purchase price paid. When the carrying amount of the reporting unit's goodwill is greater than the implied fair value of that reporting unit's goodwill, an impairment loss is recognized within operations. The Company determined the fair value of the GCB reporting unit using discounted estimated future cash flows. The weighted-average cost of capital used in testing the GCB reporting unit for impairment was 12% with a perpetual growth rate of 2%.(vi) Fragrances. As a result of this annual impairment test,testing, the Company recognized an aggregate $10.8 million non-cash goodwilldetermined that it was more likely than not that the fair values of each of these reporting units exceeded their respective carrying amounts.
Annual impairment charge related to the GCB reporting unit in the fourth quarter of 2017. Following the recognition of this non-cash goodwill impairment charge, the GCB reporting unit had $14.8 million remaining goodwill as of December 31, 2017.testing
For 2017,2019, in assessing whether goodwill was impaired in connection with its annual impairment testtesting performed during the fourth quarter of 20172019 using October 1st, 20171st, 2019 carrying values, the Company, in accordance with ASC 350, performed qualitative assessments to determine whether it would be necessary to perform the two-step process to assess the Company's indefinite-lived intangible assets for indicators of impairment. its (i) Revlon, (ii) Elizabeth Arden Skin and Color and (iii) Fragrances reporting units and a quantitative assessment for its (x) Mass Portfolio, (y) Professional Portfolio and (z) Elizabeth Arden Fragrances reporting units.
In performing the 2019 qualitative assessments,assessment, the Company considered, among other factors, the financial performance of each of its Revlon, Elizabeth Arden Skin and Color and Fragrances reporting units, as well as the results of the step one testannual quantitative analysis performed in 2016 and the financial performance2018 for each of the (i) Revlon, Almay and Other; (ii) Elizabeth Arden; and (iii) Professionalthese reporting units. Based upon such assessment, the Company determined that it was more likely than not that the fair value of each of its Revlon, Elizabeth Arden Skin and Color and Fragrances reporting units exceeded their respective carrying amounts for 2019.
In performing the 2019 quantitative assessment, the Company used the simplified approach allowed under ASU No. 2017-04, "Simplifying the Test for Goodwill Impairment," which the Company early adopted in October 2018, to test its Mass Portfolio, Professional Portfolio and Elizabeth Arden Fragrances reporting units for impairment. Based upon such assessment, the Company determined that it was more likely than not that the fair values of theseeach of its Mass Portfolio, Professional Portfolio and Elizabeth Arden Fragrances reporting units exceeded their respective carrying amounts for 2019. The fair values of the Company’s reporting units exceeded their carrying amounts for 2017.
In conjunction withranging from approximately 8% to approximately 58% as of the 2017 annual impairment test, the Company reviewed finite-lived intangible assets for impairment whenever facts and circumstances indicated that their carrying values may not be fully recoverable. This test compares the current carryingOctober 1, 2019 valuation date. The fair values of the intangible assets to the undiscounted pre-tax cash flows expected to result from the useMass Portfolio, Professional Portfolio and Elizabeth Arden Fragrances reporting units are in excess of the assets. Based uponrespective carrying values by approximately 8%, 12%, and 12%, respectively. As of December 31, 2019, the Mass Portfolio, Professional Portfolio and Elizabeth Arden Fragrances reporting units had goodwill balances of $54.3 million, $116.8 million and $49.4 million, respectively.
The above-mentioned fair values were determined using a weighted average market and income approach. The income approach requires several assumptions including future sales growth, EBITDA (earnings before interest, taxes, depreciation and amortization) margins, and capital expenditures, which are the basis for the information used in the discounted cash flow model. The key assumptions used to determine the estimated fair value of the reporting unit are predicated on the success of future new product launches, the achievement of international expansion plans, and the realization of cost reduction and other efficiency efforts. If such plans do not materialize, or if there are further challenges in the business environment in which this reporting unit operates, a resulting change in the key assumptions (e.g., long-term financial projections) could have a negative impact on the estimated fair value of the reporting unit, and it is possible the Company could recognize an impairment charge.
For 2018, the Company first performed a qualitative assessment on all of its reporting units, which indicated that indicators of impairment existed for its Mass Portfolio reporting unit within the Portfolio segment. Subsequently, the Company used the simplified approach allowed under ASU No. 2017-04 to test its Mass Portfolio reporting unit for impairment. Following the results of such assessment, the annualCompany recognized an $18.0 million non-cash goodwill impairment test forcharge related to the GCBMass Portfolio reporting unit during 2017,within the Company performed anPortfolio segment in the fourth quarter of 2018. Following the recognition of this non-cash goodwill impairment reviewcharge, the Mass Portfolio reporting unit had $54.3 million in remaining goodwill as of the finite-lived intangible assets acquired as part of acquiring the SinfulColor and Pure Ice brands. For the year ended December 31, 2017,2018.
For each of 2019 and 2018, no impairment was recognized related to the carrying value of any of the GCB reporting unit'sCompany's finite or indefinite-lived intangible assets.
For 2016, the Company utilized the two-step process in assessing whether goodwill was impaired for each of the Company's then existing four reporting units: (i) Revlon, Almay and Other; (ii) GCB; (iii) Professional; and (iv) Other. Asassets as a result of the annual impairment testing for 2016, the Company recognized a $16.7 million non-cash goodwill impairment charge relatedtesting.
See Note 7, "Goodwill and Intangible Assets, Net," to the Other reporting unitCompany's Audited Consolidated Financial Statements in this 2019 Form 10-K for further information on the fourth quarter of 2016.
Based upon the results of the annualCompany's goodwill impairment test for the Other reporting unit during 2016, the Company performed an impairment review of the finite-livedand intangible assets acquired as part of the 2015 CBB Acquisition. As a result of this review, the Company recognized during the fourth quarter of 2016 within the Other reporting unit $4.2 million, $2.0 million and $0.5

assets.
52
63
REVLON, CONSUMER PRODUCTS CORPORATIONINC AND SUBSIDIARIES
COMBINED MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(except where otherwise noted, all tabular amounts in millions)millions, except share and per share amounts)






million of non-cash impairment charges as a result of the change in the fair value of customer relationships, distribution rights and trade names, respectively, in the aggregate amount of $6.7 million.
For 2015, the Company utilized the two-step process in assessing whether goodwill was impaired for each of the Company's then existing four reporting units: (i) Revlon, Almay and Other; (ii) GCB; (iii) Professional; and (iv) Other. As a result of the 2015 annual impairment test, the Company recognized a $9.7 million non-cash goodwill impairment charge related to the GCB reporting unit in the fourth quarter of 2015.
See Note 2, "Business Combinations," and Note 8, "Goodwill and Intangible Assets, Net," for further discussion of the Company's goodwill and intangible assets.
Income Taxes:
The Company records income taxes based on amounts payable with respect to the current year and includes the effect of deferred taxes. The effective tax rate reflects statutory tax rates, tax-planning opportunities that may be available in various jurisdictions in which the Company operates and the Company’s estimate of the ultimate outcome of various tax audits and issues. Determining the Company’s effective tax rate and evaluating tax positions requires significant judgment.
The Company recognizes deferred tax assets and liabilities for the future impact of differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases, as well as for operating loss and tax credit carryforwards. The Company measures deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which management expects that the Company will recover or settle those differences. The realization of the deferred tax assets is primarily dependent on forecasted future taxable income. The Company establishes a valuation allowance for deferred tax assets when management determines that it is more likely than not that the Company will not realize a tax benefit for the deferred tax assets. Any reduction in estimated forecasted future taxable income may require the Company to record valuation allowances against deferred tax assets on which a valuation allowance was not previously established. See "Management’s Discussion and Analysis of Financial Condition and Results of Operations - Provision for income taxes,Income Taxes," for further discussion.information.
The Company recognizes a tax position in its financial statements when management determines that it was more likely than not that the position will be sustained upon examination, based on the merits of such position. The Company recognizes liabilities for unrecognized tax positions in the U.S. and other tax jurisdictions based on an estimate of whether and the extent to which additional taxes will be due. If payment of these amounts is ultimately not required, the reversal of the liabilities would result in additional tax benefits recognized in the period in which the Company determines that the liabilities are no longer required. If the estimate of tax liabilities is ultimately less than the final assessment, this will result in a further charge to expense. The Company recognizes interest and penalties related to income tax matters in income tax expense.
TheAs of December 31, 2019, the Company provides for U.S.is indefinitely reinvested in the accumulated undistributed earnings of all of its foreign subsidiaries. If earnings are repatriated, any excess of financial reporting over tax basis could be subject to federal, income taxesstate and foreign withholding taxestaxes. At this time, the determination of deferred tax liabilities on foreign subsidiaries' cumulative undistributed earnings when itthe amount of financial reporting over tax basis is not the Company's intent to indefinitely reinvest such earnings overseas. No provision is made for U.S. income taxes where the Company's plan is to indefinitely reinvest such undistributed earnings from the Company's foreign operations in its overseas operations. If these future foreign earnings are repatriated to the U.S., or if the Company determines that such foreign earnings will be remitted to the U.S. in the foreseeable future, additional U.S. tax provisions may be required. Due to the complexities in the tax laws, including the implications of the Tax Act and the assumptions that would have to be made, it is not practicable to estimate the amounts of income tax provisions that may be required on account of these foreign undistributed earnings.practicable.
As previously noted, on December 22, 2017, with the enactment of the Tax Act, the U.S. government enacted comprehensive tax reform that makes broad and complex changes to the U.S. tax code affecting the Company’s fiscal year ended December 31, 2017, including, but not limited to:
1.reducing the U.S. federal corporate tax rate;
2.requiring a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries; and
3.imposing a new limitation on the deductibility of interest.

The impact of those changes to the Company's December 31, 2017 fiscal year is estimated to be a non-cash expense of $39.8 million.

The Tax Act also establishes other new tax laws that could affect the Company in future years, including, but not limited to:
1.a general elimination of U.S. federal income taxes on dividends from foreign subsidiaries;
2.a new provision designed to tax global intangible low-taxed income ("GILTI");
3.increased limitations on the deductibility of certain executive compensation; and
4.changes to net operating loss carryforward periods and annual utilization.

53
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(except where otherwise noted, all tabular amounts in millions)




For various reasons that are discussed in greater detail inSee Note 16,14, "Income Taxes," to the Company's Audited Consolidated Financial Statements in this 2019 Form 10-K the Company has not completed its accounting for the income tax effects of certain elements of the Tax Act. The Company recorded provisional adjustments in cases where the Company was able to make reasonable estimates of the effects of elements of the Tax Act for which its analysis is not yet complete. The Company has not recorded any adjustments for elements of the Tax Act for which the Company was not yet able to make reasonable estimates of the impact of those elements, and has continued accounting for such elements in accordance with ASC 740 on the basis of the tax laws in effect before the Tax Act.further information.


Recently Evaluated and/or Adopted Accounting Pronouncements
In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards 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 obligations, 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 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 $3.2 million and $2.8 million for 2016 and 2015, respectively, previously reported in the Consolidated Statement of Cash Flows as a component of cash flows from operating activities, which were reclassified as a component of cash flows from financing activities.
In August 2014, the FASB issued ASU No. 2014-15, "Disclosure of Uncertainties about and Entity's Ability to Continue as a Going Concern," which requires an entity to evaluate whether conditions or events, in the aggregate, raise substantial doubt about the entity's ability to continue as a going concern for one year from the date the financial statements are issued or are available to be issued. The Company adopted ASU 2014-15 on January 1, 2017 and the adoption of this guidance did not have a material impact on the Company's financial statement disclosures.
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.
In November 2016, the FASB issued ASU No. 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash," which provides specific guidance on the presentation of changes in restricted cash and restricted cash equivalents on the statement of cash flows. Under the new standard, the changes in restricted cash and restricted cash equivalents are required to be disclosed in reconciling the opening and closing balances on the statement of cash flows. The Company adopted ASU No. 2016-18 during the fourth quarter of 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, other than requiring the Company to reconcile its cash balances from its statements of financial position to its statements of cash flows and including restricted cash within the beginning and ending balances of cash within the Company's statement of cash flow.

Recently Issued Accounting Standards or Updates Not Yet Effective
In February 2018, the FASB issued ASU No. 2018-02, "Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income," which will permit entities to reclassify tax effects stranded in accumulated other comprehensive income as a result of tax reform to retained earnings. This new guidance can be applied retrospectively and provides entities with the option to reclassify the amounts. The new guidance is effective for annual and quarterly periods beginning after December 15, 2018, with early adoption permitted, and requires entities to make new disclosures regardless of whether they elect to reclassify tax effects. The Company is in the process of evaluating the impact that this new guidance is expected to have on its financial statements and/or financial statement disclosures.
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

54
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(except where otherwise noted, all tabular amounts in millions)




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 adopted ASU No. 2017-07 beginning as of January 1, 2018, and the Company expects that substantially all of the 2018 projected cost of approximately $9.0 million will be presented below operating income in the Company's 2018 Statement of Operations and Comprehensive (Loss) Income.
In January 2017, the FASB issued ASU No. 2017-04, "Simplifying the Test for Goodwill Impairment," which simplifies the annual goodwill impairment analysis test by eliminating Step 2 of the current two-step impairment test. Under the new guidance, an entity would continue to perform the first step of the annual impairment test by comparing the carrying amount of a reporting unit with its fair value. If the carrying value of the reporting unit exceeds the fair value of the reporting unit, the goodwill impairment charge would be equal to the amount of such difference. This guidance is effective for annual periods beginning after December 15, 2019, with early adoption permitted. The Company expects to adopt ASU No. 2017-04 beginning as of January 1, 2020 and is in the process of assessing the impact that this new guidance is expected to have on the Company’s results of operations, financial condition and/or financial statement disclosures.
In January 2017, the FASB issued ASU No. 2017-01, "Clarifying the Definition of a Business," which further clarifies the definition of a business in an effort to assist entities in evaluating whether a set of transferred assets constitutes a business. Under this new guidance, if substantially all of the fair value of gross assets acquired is concentrated in a single asset or similar asset group, the set of transferred assets would not meet the definition of a business and no further evaluation is necessary. If this threshold is not met, the entity would then evaluate whether the set of transferred assets and activities meets the requirement that a business include, at a minimum, an input and a process that together have the ability to create an output. This guidance is effective for annual and quarterly periods beginning after December 15, 2017, with early adoption permitted. The Company adopted ASU No. 2017-01 beginning as of January 1, 2018 and expects that this new guidance will not have a material impact on the Company’s results of operations, financial condition and/or financial statement disclosures.
In August 2016, the FASB issued ASU No. 2016-15, "Classification of Certain Receipts and Cash Payments," which aims to standardize how certain transactions are classified within the Statement of Cash Flows, including, among other issues, debt prepayment and extinguishment costs and contingent consideration payments made after a business combination. This guidance is effective for annual periods beginning after December 15, 2017, with early adoption permitted. The Company adopted ASU No. 2016-15 beginning as of January 1, 2018 and expects that this new guidance will not have a material impact on the Company’s results of operations, financial condition and/or financial statement disclosures.
In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)" ("ASU 2016-02" or "ASC 842")," which requires lessees to recognize a right-of-use asset and a related lease liability on the balance sheet for all leases, with the exception of short-term leases. The lease liability will be equal to the present value of lease payments and the right-of-use asset will be based on the lease liability, subject to adjustmentcertain adjustments, such as for initial direct costs. Leases will continue to be classified as either operating or finance leases in the income statement. This guidance is effective for annual periods beginning after December 15, 2018, with early adoption permitted. The Company will adoptadopted ASU No. 2016-02 beginning as of January 1, 2019, using a modified retrospective approach and applying the standard’s transition provisions at the effective date of January 1, 2019. In addition, the Company elected to apply the package of practical expedients identified under ASC 842. See Note 6, "Property, Plant and Equipment," to the Company’s Audited Consolidated Financial Statements in this 2019 Form 10-K for additional disclosures provided as a result of ASU No. 2016-02.

In February 2018, the FASB issued ASU No. 2018-02, "Income Statement - Reporting Comprehensive Income (Topic 220) - Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income," which gives entities the option to reclassify tax effects stranded in accumulated other comprehensive income as a result of the Tax Cuts and Jobs Act of 2017 (the "Tax Act") to retained earnings. This guidance was effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Entities are required to make additional disclosures, regardless of whether they elect to reclassify stranded amounts of tax effects. The Company has elected not to adopt this amendment and will include required financial statement disclosures, as applicable, and the Company does not expect any impact to its results of operations and/or financial condition as a result of such determination.

64
REVLON, INC AND SUBSIDIARIES
COMBINED MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(all tabular amounts in millions, except share and per share amounts)


Recently Issued Accounting Pronouncements
In December 2019, the FASB issued ASU No. 2019-12, "Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes," which removes certain exceptions for recognizing deferred taxes for investments, performing intra-period allocations and calculating income taxes in interim periods. This ASU also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. This guidance is effective for annual periods beginning after December 15, 2020, with early adoption permitted, including adoption in any interim period. An entity that elects to early adopt the amendments in an interim period should reflect any adjustments as of the beginning of the annual period that includes that interim period. Additionally, an entity that elects early adoption must adopt all the amendments in the same period. The amendments in this ASU that are related to separate financial statements of legal entities that are not subject to tax should be applied on a retrospective basis for all periods presented. The amendments in this ASU that are related to changes in ownership of foreign equity method investments or foreign subsidiaries should be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. The amendments in this ASU that are related to franchise taxes that are partially based on income should be applied on either a retrospective basis for all periods presented or a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. All other amendments under this ASU should be applied on a prospective basis. The Company is in the process of assessing the impact, if any, that this ASU is expected to have on the Company’s results of operations, financial condition and/or financial statement disclosures.
In August 2018, the FASB issued ASU No. 2018-15, "Internal Use Software (Subtopic 350-40) - Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract," which requires a customer in a cloud computing hosting arrangement that is a service contract to follow the existing guidance in ASC 350-40 on internal-use software to determine which implementation costs are to be deferred and recognized as an asset and which costs are to be expensed as incurred. This guidance is effective for annual periods beginning after December 15, 2019, with early adoption permitted, and may be applied either retrospectively or prospectively to all software implementation costs incurred after adoption. The Company adopted ASU No. 2018-15 prospectively, beginning as of January 1, 2020. The Company has completed its assessment and has determined that this new guidance will not have a material impact on the Company’s results of operations, financial condition and/or financial statement disclosures.
In August 2018, the FASB issued ASU No. 2018-14, "Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715): Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans.” This new guidance removes certain disclosures that are not considered cost beneficial, clarifies certain required disclosures and requires certain additional disclosures. This guidance is effective for annual periods beginning after December 15, 2020, with early adoption permitted. The Company will adopt this guidance (on a retrospective basis for certain new additional disclosures), beginning as of January 1, 2021. While the Company is currently assessing the impact of this new pronouncement, the new guidance, which only affects disclosure items, is not expected to have a material impact on the Company’s results of operations, financial condition and/or financial statement disclosures.
In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," which was subsequently amended in November 2018 through ASU No. 2018-19, "Codification Improvements to Topic 326, Financial Instruments - Credit Losses." ASU No. 2016-13 will require entities to estimate lifetime expected credit losses for trade and other receivables, net investments in leases, financing receivables, debt securities and other instruments, which will result in earlier recognition of credit losses. Further, the new credit loss model will affect how entities in all industries estimate their allowance for losses for receivables that are current with respect to their payment terms. ASU No. 2018-19 further clarifies that receivables arising from operating leases are not within the scope of Topic 326. Instead, impairment from receivables of operating leases should be accounted for in accordance with Topic 842, Leases. In November 2019, the FASB issued ASU No. 2019-10, which, among other things, deferred the application of the new guidance on credit losses for smaller reporting companies ("SRC") to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. This guidance will be applied through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (i.e., a modified-retrospective approach). Under the above-mentioned deferral, the Company expects to adopt ASU No. 2016-03, and the related ASU No. 2018-19 amendments, beginning as of January 1, 2023 and is in the process of assessing the impact, if any, that this new guidance is expected to have 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." This new standard will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective, as described below. The underlying principle of this new standard 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 to which the entity expects to be entitled in exchange for those goods or services. Entities may adopt this new standard 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 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 and permitted early adoption of ASU No. 2014-09, but not before the effective date of January 1, 2017.
The Company adopted ASU No. 2014-09 beginning as of January 1, 2018 using the modified retrospective method. While the Company is finalizing its assessment of all potential impacts of ASU No. 2014-09, given the nature of the Company's products and the terms and conditions applicable to sales to its customers, the timing and amount of revenue recognized based on the underlying principles of this new standard are consistent with the Company's revenue recognition policy under previous guidance. As a result, the Company does not currently expect that the adoption will have a material impact on its revenues, results of operations or financial position. The Company does, however, expect to expand its financial statement disclosures in order to comply with the new standard. The Company has drafted its accounting policy with respect to the new standard based on a review of its business. The new policy reflects updates to internal controls and processes to enable the preparation of financial information upon its adoption of ASU No. 2014-09.


55
65
REVLON, CONSUMER PRODUCTS CORPORATIONINC AND SUBSIDIARIES
COMBINED MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(except where otherwise noted, all tabular amounts in millions)millions, except share and per share amounts)







Inflation
The Company's costs are affected by inflation and the effects of inflation that the Company may experience in future periods. Management believes, however, that such effects have not been material to the Company during the past threetwo years in the U.S. and in foreign non-hyperinflationary countries. The Company operates in certain countries around the world, such as Argentina, which has experienced hyperinflation. In hyperinflationary foreign countries, the Company attempts to mitigate the effects of inflation by increasing prices in line with inflation, where possible, and efficiently managing its costs and working capital levels.



56
66
REVLON, CONSUMER PRODUCTS CORPORATIONINC. AND SUBSIDIARIES
(except where otherwise noted, all tabular amounts in millions)



Item 7A. Quantitative and Qualitative Disclosures about Market Risk


Interest Rate Sensitivity

The Company has exposure to changing interest rates, primarily under Products Corporation's 2016 Senior Credit Facilities. The Company manages interest rate risk through a combination of fixed-and-floating rate debt. From time-to-time, the Company makes use of derivative financial instruments to adjust its fixed-and-floating rate ratio, such as with the 2013 Interest Rate Swap, which expires in May 2018. The Company does not hold or issue financial instruments for speculative or trading purposes.
The table below provides information about the Company's indebtedness as of December 31, 2017 that is sensitive to changes in interest rates. The table presents cash flows with respect to principal on indebtedness and related weighted-average interest rates by expected maturity dates. Weighted-average variable rates are based on implied forward rates in the U.S. Dollar LIBOR yield curve at December 31, 2017. The information is presented in U.S. dollar equivalents, which is the Company's reporting currency:
 Expected Maturity Date for the Year Ended December 31,  
 (dollars in millions, except for rate information)  
  2018 2019 2020 2021 2022 Thereafter Total Fair Value December 31, 2017
Debt                
Short-term variable rate (third party - various currencies) $10.6
           $10.6
 $10.6
Average interest rate (a)    
 4.1%              
Short-term fixed rate (third party - EUR) $1.8
           $1.8
 $1.8
Average interest rate 11.8%              
Long-term fixed rate (third party - USD)       $500.0
   $450.0
 $950.0
 $649.8
Average interest rate       5.75%   6.25%    
Long-term fixed rate (third party - EUR) $0.1
 $0.1
 $0.1
 $0.1
 $0.1
 $—
 $0.5
 $0.5
Average interest rate —% —% —% —% —% —%    
Long-term variable rate (third party - USD) (b)
 $175.0
 $18.0
 $18.0
 $18.0
 $18.0
 $1,687.5
 $1,934.5
 $1,481.2
Average interest rate (a)(c)   
 3.5% 5.5% 5.6% 5.7% 5.7% 5.7%    
Total debt $187.5
 $18.1
 $18.1
 $518.1
 $18.1
 $2,137.5
 $2,897.4
 $2,143.9
(a)
Weighted average variable rates are based upon implied forward rates from the U.S. Dollar LIBOR and Euribor yield curves at December 31, 2017.
(b)
Includes total quarterly amortization payments required for each year under the 2016 Term Loan Facility and the borrowings under the 2016 Revolving Credit Facility.
(c)
At December 31, 2017, the interest rate for the 2016 Term Loan Facility was the Eurodollar Rate (as defined in the 2016 Term Loan Agreement) plus 3.5% per annum (with the Eurodollar Rate not to be less than 0.75%). See Note 11, "Long-Term Debt," to the Consolidated Financial Statements. At December 31, 2017, the interest rate for the 2016 Revolving Credit Facility was 3.2% per annum, which is based on the Eurodollar Rate plus theNot applicable margin, as described in this Form 10-K. See "Financial Condition, Liquidity and Capital Resources - 2016 Revolving Credit Facility - Interest and Fees."
If any of LIBOR, Euribor, the base rate, the U.S. federal funds rate or such equivalent local foreign currency rate increases, Products Corporation's debt service costs will increase to the extent that Products Corporation has elected such rates for its outstanding loans. Based on the amounts outstanding under the 2016 Senior Credit Facilities and other short-term borrowings (which, in the aggregate, are Products Corporation’s only debt currently subject to floating interest rates) as of December 31, 2017, a 1% increase in both the LIBOR and Euribor rates would increase the Company’s annual interest expense by approximately $15.7 million.
At December 31, 2017 and December 31, 2016, the fair value of the 2013 Interest Rate Swap was a liability of $0.9 million and $4.7 million, respectively. See "Financial Condition, Liquidity and Capital Resources - Derivative Financial Instruments" for additional detail on the 2013 Interest Rate Swap.
As a result of completely refinancing the Old Acquisition Term Loan in connection with 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.

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REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
(except where otherwise noted, all tabular amounts in millions)



At 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 $1.2 million, or $0.7 million net of tax, at December 31, 2017 that were previously recorded as a component of accumulated other comprehensive loss will be amortized to earnings over the remaining term of the 2013 Interest Rate Swap through its maturity.smaller reporting company.


Exchange Rate Sensitivity

The Company manufactures and sells its products in a number of countries throughout the world and, as a result, is exposed to movements in foreign currency exchange rates. In addition, a portion of the Company's borrowings are denominated in foreign currencies, which are also subject to market risk associated with exchange rate movement. The Company, from time-to-time, hedges major foreign currency cash exposures through foreign exchange forward and option contracts. Products Corporation enters into these contracts with major financial institutions in an attempt to minimize counterparty risk. These contracts generally have a duration of less than 12 months and are primarily against the U.S. Dollar. In addition, Products Corporation enters into foreign currency swaps to hedge intercompany financing transactions. The Company does not hold or issue financial instruments for speculative or trading purposes.

The table below shows the notional, contract and fair values of the forward contracts as of December 31, 2017:
Forward Contracts ("FC") 
Average Contractual Rate
$/FC
 U.S. Dollar Equivalent Notional Amount 
Contract Value
December 31, 2017
 
Asset (Liability) Fair Value
December 31, 2017
Sell British Pound/Buy USD 1.3228
 30.5
 29.8
 (0.7)
Sell Canadian Dollars/Buy USD 0.7856
 27.3
 27.0
 (0.3)
Sell Australian Dollars/Buy USD 0.7724
 23.5
 23.3
 (0.2)
Buy Euro/Sell USD 
1.1882


 17.7
 17.9
 0.2
Buy Mexican Peso/Sell USD 0.0524
 12.2
 11.6
 (0.6)
Sell USD/Buy Swiss Franc 1.0369
 9.6
 9.6
 —
Sell Japanese Yen/Buy USD 0.0091
 7.4
 7.5
 0.1
Buy Euro/Sell British Pound 0.8902
 6.2
 6.2
 —
Sell Danish Krone/Buy USD 0.1592
 4.0
 3.9
 (0.1)
Buy Australian Dollars/Sell NZ dollars 1.0961
 3.2
 3.2
 —
Sell USD/Buy South African Rand 0.0733
 2.0
 2.2
 0.2
Sell USD/Buy Australian Dollar 0.7708
 1.9
 2.0
 0.1
Sell USD/Buy British Pound 1.3417
 1.0
 1.0
 —
Sell Hong Kong Dollars/Buy USD 7.8108
 0.6
 0.6
 —
Total forward contracts   $147.1
 $145.8
 $(1.3)


Item 8. Financial Statements and Supplementary Data


Reference is made to the Index on page F-1 of the Company’s Consolidated Financial Statements and the Notes thereto. Supplementary Data not applicable as a smaller reporting company.




Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures


None.





58
67
REVLON, CONSUMER PRODUCTS CORPORATIONINC. AND SUBSIDIARIES
(except where otherwise noted, all tabular amounts in millions)



Item 9A. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures. The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company's reports under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to management, including the Company's PrincipalChief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. As of the date of filing this Form 10-K, Paul Meister, the Company’s Executive Vice Chairman, was performing the functions of the Company’s Principal Executive Officer. The Company's management, with the participation of the Company's PrincipalChief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company's disclosure controls and procedures as of the end of the fiscal period covered by this Annual Report on2019 Form 10-K. Based upon such evaluation, the Company’s PrincipalCompany's Chief Executive Officer and Chief Financial Officer have concluded that as of the end of such period, the Company's disclosure controls and procedures were effective.effective as of December 31, 2019. Please see section (b) below for a discussion of the Company’s remediation of a previously-reported material weakness.

(b) Management’s Annual Report on Internal Control over Financial Reporting. Reporting.The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control system wasis designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation and fair presentation of published financial statements in accordance with generally accepted accounting principlesU.S. GAAP and includes those policies and procedures that:
(i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of its assets;
(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of its financial statements in accordance with generally accepted accounting principles,U.S. GAAP, and that its receipts and expenditures are being made only in accordance with authorizations of its management and directors; and
(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on its financial statements.
Internal
Due to its inherent limitations, internal control over financial reporting may not prevent or detect misstatements due to its inherent limitations.misstatements. Management's projections of any evaluation of the effectiveness of internal control over financial reporting as to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The Company’s management, under the oversight of the Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 20172019 and in making this assessment used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission Internal Control-Integrated Framework (2013).
The Company's Based on this assessment, the Company’s management, under the oversight of the Chief Executive Officer and Chief Financial Officer, determined that the Company'sCompany’s internal control over financial reporting was effective as of December 31, 2017.2019. Please see below for a discussion of the Company’s remediation of a previously-reported material weakness.
As the Company is a non-accelerated filer, this Annual Report on Form 10-K does not include an attestation report of
KPMG LLP, the Company's independent registered public accounting firm regardingthat audited the Company's 2019 Consolidated Financial Statements for the period ended December 31, 2019 included in this 2019 Form 10-K, has issued a report on the Company's internal control over financial reporting. This Management's report appears on page F-3 of the 2019 Consolidated Financial Statements.

Remediation of Previously-Reported Material Weakness

As previously disclosed in “Part II, Item 9A – Controls and Procedures” in the Company’s 2018 Form 10-K, in connection with its assessment for the fiscal year ended December 31, 2018, the Company’s management identified the following deficiencies in its internal control over financial reporting that existed as of December 31, 2018, primarily as a result of the previously-disclosed implementation of the Company’s new ERP system in the U.S. during 2018:
i.the Company did not perform an effective continuous risk assessment process that adequately identified and assessed risks affecting the Company's internal controls over financial reporting associated with the implementation of its new ERP system in the U.S.;
ii.the Company did not maintain a sufficient number of knowledgeable, trained personnel in the U.S. operations impacted by the ERP system implementation and in various other operations across the Company who understood and were held accountable for their assigned responsibilities for the design, implementation and operation of internal controls over financial reporting; and
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REVLON, INC. AND SUBSIDIARIES
iii.as a result, the Company did not design, implement and consistently operate effective process-level controls to ensure that it appropriately (a) recorded and accounted for inventory, accounts receivable, net sales and cost of goods sold, (b) reconciled balance sheet accounts, (c) reviewed and approved the complete population of manual journal entries and (d) used complete and accurate information in performing manual controls.

While these control deficiencies that existed for the fiscal year ended December 31, 2018 did not result in any material misstatement of the Company’s 2018 Consolidated Financial Statements, the Company’s management concluded that these deficiencies represented a material weakness for the fiscal year ended December 31, 2018, and that the Company’s internal control over financial reporting was not subject to any attestation byeffective as of December 31, 2018. Notwithstanding that material weakness, in preparing its 2018 Consolidated Financial Statements, the Company'sCompany performed additional procedures, such as enhanced review procedures over key financial statement line items, enhanced quarterly certifications and enhanced disclosure processes throughout the Company, and determined that the Consolidated Financial Statements included in its 2018 Form 10-K were prepared in accordance with U.S. GAAP and fairly presented in all material respects the Company’s financial condition, results of operations and cash flow for the periods presented. Based on the material weakness that existed as of December 31, 2018, the Company’s independent registered public accounting firm, pursuantKPMG LLP, issued an adverse report on the Company’s 2018 internal control over financial reporting.

As a result of the foregoing, throughout 2019, to remediate the material weakness that impacted the fiscal year ended December 31, 2018, the Company: (i) implemented enhancements to company-wide risk assessment processes; (ii) implemented monitoring controls over IT implementations and other significant process changes and the related impact on the Company’s risk assessment and control environment; (iii) added staff focused on internal control oversight and delivered training for staff responsible for internal control over financial reporting; (iv) enhanced the Company’s process and control documentation; (v) implemented new processes and controls relative to the Dodd-Frank Wall Street Reformexecution and Consumer Protection Act,oversight of inventory, accounts receivable, net sales and cost of goods sold; (vi) enhanced processes and controls over account reconciliations and manual journal entries; (vii) implemented monitoring controls over employee accountability and compliance for control design and operation; and (viii) implemented new processes and controls to ensure the completeness and accuracy of information used in performing manual controls.

During the fourth quarter of 2019 and prior to the filing of the 2019 Form 10-K, the Company completed its testing of the newly-designed controls. In light of the foregoing remediation activities and testing of controls, the Company’s management determined that the Company’s internal control over financial reporting was effective as of December 31, 2019.

For further information, see Part I, Item 1A. Risk Factors – “The Company previously identified a material weakness in its internal control over financial reporting, which permanently exempts companies other than accelerated filers and large accelerated filers from providing such attestation.has now been remediated. Any failure to maintain effective internal control over financial reporting could have a material adverse effect on the Company’s business, prospects, results of operations, financial condition and/or cash flows.”


(c) Changes in Internal Control Over Financial Reporting ("ICFR").There Other than as described in section (b) above, there have not been any changes in the Company’s internal control over financial reporting during the quarter ended December 31, 20172019 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.






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REVLON, INC. AND SUBSIDIARIES
Item 9B. Other Information


Because this Form 10-K is being filed within four business days from the dateExtension of the following reportable events,E. Scott Beattie’s Consulting Agreement.

On March 11, 2020 (the “Effective Date”), the Company has made the foregoing disclosure in this Form 10-K rather than inand E. Scott Beattie, a Form 8-K under Item 5.02 (Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers).

Employment Agreement for Debra Perelman, Chief Operating Officer. On March 14, 2018, Revlon and RCPCdirector, entered into an employment agreement with Debra Perelman (the “COO Employment Agreement”), following her election as the Company’s Chief Operating Officer that became effective on January 28, 2018. Such appointment was previously reported on a Form 8-K filed with the SEC on January 30, 2018. The term of the COO Employment Agreement is at will.

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REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
(except where otherwise noted, all tabular amounts in millions)




The COO Employment Agreement provides that Ms. Perelman will serve as the Company’s Chief Operating Officer at an annual base salary of not less than $1,125,000, with a target annual bonus opportunity of 100% of her base salary (the “COO Target Bonus”) under the Revlon Amended and Restated Executive Incentive Compensation PlanConsulting Agreement (the “Incentive Compensation Plan”“2020 Consulting Agreement”), with the possibility of exceeding such amount based upon over-achievement of the Company’s performance objectives uppursuant to a maximum of 200% of her base salary.

Pursuantwhich he will continue to the COO Employment Agreement, Ms. Perelman is eligible during her employment with the Company to participate in the Company’s annual long-term incentive programs (“LTIP”) under the Incentive Compensation Plan, with a $1,250,000 target annual award (the “COO LTIP Award”).

Ms. Perelman is also eligible to participate in other benefit and perquisites plans generally made availableserve as Senior Advisor to the Company’s other senior executives at her level.

UponCEO for an additional year following the Effective Date, subject to automatic 1-year renewals, unless either party elects not to renew, and subject to certain standard termination rights (the “Term”). During the Term and commencing retroactive to the November 2019 expiration of Ms. Perelman’s employment due to her death or disability or in the eventhis 2016 consulting agreement, the Company terminates Ms. Perelman's employment without "cause", Ms. Perelman will be eligible to receive: (i) her annual bonus with respectpay Mr. Beattie a fee of $250,000 per year, supplemental to the year prior to the year of termination (if not already paid as of the termination date) (the “COO Prior Year Bonus”); (ii) her annual bonus with respect to the year of termination, based on actual performance and pro-ratedBoard’s compensation program for the number of days actually worked during such year (the “COO Pro-Rated Bonus”); and (iii) payment in respect of any outstanding LTIP awards, based on actual performance and pro-rated for the number of days actually worked during the applicable performance period (the “COO Pro-Rated LTIP”).

Ms. Perelman is the daughter of Ronald O. Perelman, the Chairman of the Company's Board of Directors.non-employee directors. The foregoing description of the 2020 Consulting Agreement is qualified in its entirety by reference to the full text of the COO Employment Agreement, which will be filed as an exhibit to the Company’s Form 10-Q for the fiscal quarter ending March 31, 2018.

Electionsuch agreement, a copy of Victoria Dolan as Chief Financial Officer. On March 1, 2018, the Company’s Board of Directors elected Victoria Dolan as its Chief Financial Officer (“CFO”), effective as of March 12, 2018. Ms. Dolan assumes such role from Chris Peterson, who will continue serving as the Company’s Chief Operating Officer, Operations, with oversight of the Company’s finance, supply chain and IT functions.

Ms. Dolan (58), most recently served as Chief Transformation Officer for The Colgate-Palmolive Company since October 2017. Prior to that role, Ms. Dolan served as Colgate-Palmolive’s Chief Transformation Officer and Corporate Controller from July 2016 to October 2017; Vice President, Corporate Controller and Principal Accounting Officer from February 2011 through July 2016; and Vice President, Finance and Strategic Planning, European and South Pacific Division, from November 2008 through January 2011. Prior to joining Colgate-Palmolive, Ms. Dolan held finance positions at Marriott International, Inc. from 2000 to 2008, The Coca-Cola Company from 1991 to 2000 and Arco Chemical Company from 1985 to 1991. Ms. Dolan received her B.A. in economics and M.B.A. in accounting and finance from the UCLA Anderson School of Management.

To reflect her roles and responsibilities, on March 12, 2018 the Company entered into an employment agreement with Ms. Dolan (the “CFO Employment Agreement”), which, among other things, provides that she will serve as the Company’s CFO at an annual base salary of not less than $600,000, with a target annual bonus under the Incentive Compensation Plan of 75% of her base salary, with the possibility of exceeding such amount based upon the Company’s and/or her over-achievement of the applicable performance objectives. Pursuant to the CFO Employment Agreement, Ms. Dolan’s annual bonus for 2018 will not be less than $450,000. During her employment with the Company, Ms. Dolan is eligible to participate in the Company’s annual LTIPs under the Incentive Compensation Plan. In connection with her election as the Company’s CFO, Revlon’s Compensation Committee approved a $500,000 LTIP target award opportunity for Ms. Dolan under the Company’s 2018 LTIP, which is payable in March 2021 based on the extent to which the Company achieves certain performance metrics over 2018, 2019 and 2020.

In connection with the CFO Employment Agreement, Revlon’s Compensation Committee approved a grant to Ms. Dolan of restricted shares of Revlon Class A Common Stock (the “CFO Restricted Stock Grant”), with the number of shares being in an amount equal to $1,500,000 divided by the NYSE closing price of Revlon Class A Common Stock on March 15, 2018 (the “CFO Grant Date”). The CFO Restricted Stock Grant is eligible for vesting ratably on each of the first 3 anniversaries of the CFO Grant Date, provided that Ms. Dolan remains employed by the Company on each applicable vesting date, and is subject to earlier vesting upon the occurrence of a “change of control.” Ms. Dolan is also eligible to participate in other benefit and perquisites plans generally made available to the Company’s other senior executives at her level.

While the term of the CFO Employment Agreement is indefinite, it may be terminated by the Company sooner pursuant to certain termination provisions in the CFO Employment Agreement. If the Company terminates Ms. Dolan’s employment for any reason other than for “cause,” she would be eligible to receive the greater of (a) the benefits provided under the Company’s Executive

60
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
(except where otherwise noted, all tabular amounts in millions)



Severance Pay Plan; and (b) payment of base salary and continuation of medical benefits at the active employee rate for 12 months; prior year bonus (if not already paid); annual bonus for the year of termination, based on actual performance results and pro-rated for the number of days employed during that year (the “Pro-Rated Annual Bonus”); payment of the 2018 LTIP, based on the Company’s actual performance results and pro-rated for the number of days employed during the performance period (the “Pro Rated LTIP”); and accelerated vesting of the next unvested tranche of the CFO Restricted Stock Grant, if any. The Executive Severance Pay Plan currently provides for base salary continuation for 12 months, plus an additional 2 weeks of base salary for each full year of service with the Company, up to a total of 18 months.

Upon a change of control, the term of the CFO Employment Agreement would be extended for 24 months from the effective date of such change of control and if, within such period, Ms. Dolan terminated her employment for “COC good reason” or if the Company terminated her employment other than for “cause,” she would receive: (i) 2 times the sum of (a) her base salary and (b) her average gross bonus earned over the previous 5 years; (ii) 24 months’ continuation of fringe benefits; and (iii) all of her unvested restricted shares would immediately vest.

Ms. Dolan does not have any family relationships with any of the Company’s directors or executive officers and is not a party to any transactions listed in Item 404(a) of Regulation S-K. The foregoing description is qualifiedincorporated by reference to the full text of the CFO Employment Agreement, which will be filedinto this Form 10-K as an exhibit to the Company’s Form 10-Q for the fiscal quarter ending March 31, 2018.Exhibit 10.20.



Forward-Looking Statements
This Annual Report on Form 10-K for the period ended December 31, 2017,2019, as well as the Company's other public documents and statements, may contain forward-looking statements that involve risks and uncertainties, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on the beliefs, expectations, estimates, projections, assumptions, forecasts, plans, anticipations, targets, outlooks, initiatives, visions, objectives, strategies, opportunities, drivers, focus and intents of the Company’sCompany's management. While the Company believes that its estimates and assumptions are reasonable, the Company cautions that it is very difficult to predict the impact of known and unknown factors, and, of course, it is impossible for the Company to anticipate all factors that could affect its results. The Company's actual results may differ materially from those discussed in such forward-looking statements. Such statements include, without limitation, the Company's expectations, plans and estimates (whether qualitative or quantitative) as to:
(i)the Company's future financial performance and/or sales growth;
(ii)the effect on sales of decreased consumer spending in response to weak economic conditions or weakness in the consumption of beauty care products in one or more of the Company's segments; adverse changes in foreign currency exchange rates, foreign currency controls and/or government-mandated pricing controls; decreased sales of the Company’s products as a result of increased competitive activities by the Company’s competitors and/or decreased performance by third-party suppliers, changes in consumer purchasing habits, including with respect to retailer preferences and/or among sales channels, such as due to the continuing consumption declines in core beauty categories in the mass retail channel in North America; inventory management by the Company's customers; inventory de-stocking by certain retail customers; space reconfigurations or reductions in display space by the Company's customers; store closures in the brick-and-mortar channels where the Company sells its products, as consumers continue to shift purchases to online and e-commerce channels; changes in pricing, marketing, advertising and/or promotional strategies by the Company's customers; less than anticipated results from the Company’s existing or new products or from its advertising, promotional, pricing and/or marketing plans; or if the Company’s expenses, including, without limitation, for pension expense under its benefit plans, acquisition and acquisition-related integration costs, capital expenditures, costs related to the Company’s synergy and integration programs in connection with the Elizabeth Arden Acquisition, restructuring and severance costs, costs related to litigation, advertising, promotional and marketing activities, or for sales returns related to any reduction of space by the Company's customers, product discontinuances or otherwise, exceed the anticipated level of expenses;
(iii)the Company's belief that continuing to execute its business initiatives could include taking advantage of additional opportunities to reposition, repackage or reformulate one or more brands or product lines, launching additional new products, acquiring businesses or brands (including through licensing transactions, if any), divesting or discontinuing non-core business lines (which may include exiting certain territories), further refining its approach to retail merchandising and/or taking further actions to optimize its manufacturing, sourcing and organizational size and structure, including optimizing the Colomer Acquisition, the Cutex Acquisitions and/or the Elizabeth Arden Acquisition, any of which, the intended purpose would be to create value through improving the Company's financial performance, could result in the Company making investments and/or recognizing charges related to executing against such opportunities, which activities may be funded with cash on hand, funds available under the 2016 Revolving

61
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES(i)the Company's future financial performance and/or sales growth;
(except(ii)the effect on sales of decreased consumer spending in response to weak economic conditions or weakness in the consumption of beauty products in one or more of the Company's segments; adverse changes in tariffs, foreign currency exchange rates, foreign currency controls and/or government-mandated pricing controls; decreased sales of the Company's products as a result of increased competitive activities by the Company's competitors and/or decreased performance by third-party suppliers, whether due to shortages of raw materials or otherwise, changes in consumer purchasing habits, including with respect to retailer preferences and/or among sales channels, such as due to the continuing consumption declines in core beauty categories in the mass retail channel in North America; inventory management by the Company's customers; inventory de-stocking by certain retail customers; space reconfigurations or reductions in display space by the Company's customers; retail store closures in the brick-and-mortar channels where the Company sells its products, as consumers continue to shift purchases to online and e-commerce channels; changes in pricing, marketing, advertising and/or promotional strategies by the Company's customers; less than anticipated results from the Company's existing or new products or from its advertising, promotional, pricing and/or marketing plans; or if the Company's expenses, including, without limitation, for the purchase of permanent displays, capital expenditures, debt service payments and costs, cash tax payments, pension and other post-retirement plan contributions, payments in connection with the Company's restructuring programs (such as the EA Integration Restructuring Program, the 2018 Optimization Program and the Revlon 2020 Restructuring Program), severance not otherwise noted, all tabular amountsincluded in millions)the Company's restructuring programs, business and/or brand acquisitions (including, without limitation, through licensing transactions), if any, debt and/or equity repurchases, if any, costs related to litigation, discontinuing non-core business lines and/or entering and/or exiting certain territories and/or channels of trade, advertising, promotional and marketing activities or for sales returns related to any reduction of space by the Company's customers, product discontinuances or otherwise, exceed the anticipated level of expenses;



(iii)the Company's belief that continuing to execute its business initiatives could include taking advantage of additional opportunities to reposition, repackage or reformulate one or more brands or product lines, launching additional new products, acquiring businesses or brands (including through licensing transactions, if any), divesting or discontinuing non-core business lines (which may include exiting certain territories), further refining its approach to retail merchandising and/or taking further actions to optimize its manufacturing, sourcing and organizational size and structure, any of which, the intended purpose would be to create value through improving the Company's financial performance, could result in the Company making investments and/or recognizing charges related to executing against such opportunities, which activities may be funded with operating revenues, cash on hand, funds available under the Amended 2016 Revolving Credit Facility, the Amended 2019 Senior Line of Credit Facility, the 2020 Refinancing Transactions, other permissible borrowings and/or other permitted additional sources of capital, which actions could increase the Company’sCompany's total debt;
(iv)certain beliefs and expectations regarding actions that the Company is pursuing to enhance and accelerate its e-commerce and social media penetration, such as the following: (a) the Company’s belief that changes in consumer shopping patterns for beauty products in which consumers have continued to increasingly engage with beauty brands through e-commerce and other social media channels have resulted in slower retail traffic in brick-and-mortar stores in the mass retail channel in North America, which has resulted in continuing declines in the brick-and-mortar retail channel, including store closures; (b) the Company’s expectation that, to address the pace and impact of this new commercial landscape, the Company’s shifting of its brand marketing spend toward facilitating increased penetration of e-commerce and social media channels and its focus on (1) developing and implementing effective content to enhance its online retail position; (2) improving its consumer engagement across social media platforms; and (3) transforming its technology and data to support efficient management of its digital infrastructure;
(v)the effect of restructuring activities, restructuring costs and charges, the timing of restructuring payments and the benefits from such activities, including, without limitation: in connection with implementing the EA Integration Restructuring Program: (1) consolidating offices, eliminating certain duplicative activities and streamlining back-office support (which are designed to reduce the Company’s SG&A expenses) and (2) recognizing approximately $90 million to $95 million of the EA Integration Restructuring Charges (all of which are expected to be cash payments), consisting of: (i) approximately $65 million to $70 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;
(vi)the Company’s expectation that operating revenues, cash on hand and funds available for borrowing under Products Corporation's 2016 Revolving Credit Facility and other permitted lines of credit will be sufficient to enable the Company to cover its operating expenses for 2018, including the cash requirements referred to in item (viii) below, and the Company's beliefs that (a) the cash generated by its operations, cash on hand, availability under the 2016 Revolving Credit Facility and other permitted lines of credit should be sufficient to meet its liquidity needs for at least the next 12 months from the issuance date of this Form 10-K, (b) the cash generated by its domestic operations, cash on hand, availability under the 2016 Revolving Credit Facility and other permitted lines of credit, as well as the option to further settle intercompany loans and payables with certain foreign subsidiaries, should be sufficient to meet its domestic liquidity needs for at least the next 12 months and (c) restrictions and/or taxes on repatriation of foreign earnings will not have a material effect on the Company's liquidity during such period;
(vii)the Company’s expected principal sources of funds, including operating revenues, cash on hand and funds available for borrowing under Products Corporation's 2016 Revolving Credit Facility and other permitted lines of credit, as well as the availability of funds from the Company taking certain measures, including, among other things, reducing discretionary spending;
(viii)the Company's expected principal uses of funds, including amounts required for the payment of operating expenses, including expenses incurred in connection with continuing to execute the Company’s business initiatives; payments in connection with the Company’s synergy and integration programs related to the Elizabeth Arden Acquisition (including, without limitation, for the EA Integration Restructuring Program); payments in connection with the Company's purchases of permanent wall displays; capital expenditure requirements; debt service payments and costs; cash tax payments; pension and other post-retirement benefit plan contributions; payments in connection with the Company's restructuring programs; business and/or brand acquisitions (including, without limitation, through licensing transactions, if any); severance not otherwise included in the Company’s restructuring programs; debt and/or equity repurchases, if any; costs related to litigation; and payments in connection with discontinuing non-core business lines and/or exiting and/or entering certain territories and/or channels of trade (including, without limitation, that the Company may also, from time-to-time, seek to retire or purchase its outstanding debt obligations and/or equity in open market purchases, block trades, privately negotiated purchase transactions or otherwise and may seek to refinance some or all of its indebtedness based upon market conditions and that any such retirement or purchase of debt and/or advancement of funds to Revlon to repurchase its equity may be funded with operating cash flows of the business or other sources and will depend upon prevailing market conditions, liquidity requirements, contractual restrictions and other factors, and the amounts involved may be material); and its estimates of the amount and timing of such operating and other expenses;
(ix)matters concerning the Company's market-risk sensitive instruments, including that any risk of loss under its derivative instruments arising from any non-performance by any of the counterparties is remote;
(x)the Company's expectation to efficiently manage its working capital, including, among other things, initiatives intended to optimize inventory levels over time; centralized procurement to secure discounts and efficiencies; prudent management of trade receivables and accounts payable; the effects of service level disruptions to the Company's

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REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES(iv)the Company's plans to remain focused on its 3 key strategic pillars to drive its future success and growth, including (1) strengthening its iconic brands through innovation and relevant product portfolios; (2) building its capabilities to better communicate and connect with its consumers through media channels where they spend the most time; and (3) ensuring availability of its products where consumers shop, both in-store and increasingly online;
(except where otherwise noted,(v)the effect of restructuring activities, restructuring costs and charges, the timing of restructuring payments and the benefits from such activities, including, without limitation: (A) in connection with implementing the EA Integration Restructuring Program, consolidating offices, eliminating certain duplicative activities and streamlining back-office support (which are designed to reduce the Company's SG&A expenses); (B) the Company's 2018 Optimization Program designed to streamline the Company's operations, reporting structures and business processes, with the objective of maximizing productivity and improving profitability, cash flows and liquidity, with the major initiatives underlying such program including: (1) optimizing its global supply chain and realizing manufacturing efficiencies and rationalizing its global warehouse network and office locations to drive greater efficiency, lower its cost base and enhance its speed-to-market capabilities for new innovations; (2) enhancing in-market execution and optimizing its commercial and organizational structures to create more efficient global and regional capabilities; and (3) reducing overhead costs and streamlining functions and workflows by leveraging technology and shared services and standardizing and simplifying its business processes, leading to greater agility and faster decision-making; (C) the Company's expectations regarding the amount and timing of the charges and payments related to the 2018 Optimization Program, including that: (1) it recognized approximately $39.5 million of cumulative total pre-tax restructuring and related charges, consisting of employee-related costs, such as severance, pension and other termination costs, as well as related third party expenses; (2) it incurred approximately $6.5 million of additional capital expenditures; (3) of the restructuring charges, it recorded pre-tax restructuring charges of $16.1 million in 2019 related to the 2018 Optimization Program; and (4) approximately 88% of the restructuring charges are to be paid in cash, with approximately $25.9 million already paid through December 31, 2019, and substantially all tabular amountsof the remaining balance is expected to be paid by the end of 2020; and (D) (1) the Company’s plans to begin the process of implementing the Revlon 2020 Restructuring Program; including its expectation and belief that the Revlon 2020 Restructuring Program will reduce the Company’s selling, general and administrative expenses, as well as cost of goods sold, improve the Company’s gross profit and Adjusted EBITDA and maximize productivity, cash flow and liquidity, as well as rightsizing the organization and operating with more efficient workflows and processes and that the leaner organizational structure will improve communication flow and cross-functional collaboration, leveraging the more efficient business processes; (2) the Company’s expectation that the Revlon 2020 Restructuring Program will result in millions)



manufacturing operationsthe elimination of approximately 1,000 positions worldwide including approximately 650 current employees and approximately 350 open positions; (3) the Company’s expectation that it will substantially complete the employee-related actions by the end of 2020 and the other consolidation and outsourcing actions during 2021 and 2022; (4) the Company’s expectations regarding the amount and timing of the 2020 Restructuring Charges and payments related to the Revlon 2020 Restructuring Program, including that: (a) it will recognize during 2020 approximately $55 million to $65 million of total pre-tax restructuring and related charges and in addition restructuring charges in the range of $65 million to $75 million to be charged and paid in the period of 2021 to 2022; and (b) substantially all of the 2020 Restructuring Charges will be paid in cash, generated by the business, with approximately $55 million to $65 million of the total charges expected to be paid in 2020, approximately $40 million to $45 million expected to be paid in 2021, with the balance expected to be paid in 2022; and (5) the Company’s expectations that as a result of the launchRevlon 2020 Restructuring Program, the Company will deliver in the range of $200 million to $230 million of annualized cost reductions by the end of 2022, with approximately 60% of these annualized cost reductions to be realized from the headcount reductions occurring in 2020, including the Company’s expectations that during 2020, the Company will realize approximately $105 million to $115 million of in-year cost reductions;
(vi)the Company's expectation that operating revenues, cash on hand and funds that may be available from time to time for borrowing under Products Corporation's Amended 2016 Revolving Credit Facility, the Amended 2019 Senior Line of Credit Facility, the 2020 Refinancing Transactions and other permissible borrowings will be sufficient to enable the Company to cover its new ERP systemoperating expenses for 2020, including the cash requirements referred to in item (viii) below, and actionsthe Company's belief that (a) it has and will have sufficient liquidity to meet its cash needs for at least the next 12 months based upon the cash generated by its operations, cash on hand, availability under the Amended 2016 Revolving Credit Facility, the Amended 2019 Senior Line of Credit Facility, the 2020 Refinancing Transactions and other permissible borrowings, along with the option to further settle intercompany loans and payables with certain foreign subsidiaries, and that such cash resources will be further enhanced as the Company implements its 2018 Optimization Program and its Revlon 2020 Restructuring Program and cost reductions generated from other cost control initiatives, as well as funds provided by selling certain assets (such as the Natural Honey and Floid brands that were sold in December 2019) in connection with the Company's ongoing Strategic Review, and (b) restrictions and/or taxes on repatriation of foreign earnings will not have a material effect on the Company's liquidity during such period;
(vii)the Company's expected principal sources of funds, including operating revenues, cash on hand and funds available for borrowing under Products Corporation's Amended 2016 Revolving Credit Facility, the Amended 2019 Senior Line of Credit Facility, the 2020 Refinancing Transactions and other permissible borrowings, as well as the availability of funds from the Company taking certain measures, including, among other things, reducing discretionary spending and the Company's expectation to generate additional liquidity from cost reductions
resulting from the implementation of the 2018 Optimization Program and the Revlon 2020 Restructuring Program and from other cost reduction initiatives, as well as funds provided by selling certain assets (such as the Natural Honey and Floid brands that were sold in December 2019) in connection with the Company's ongoing Strategic Review;
(viii)the Company's expected principal uses of funds, including amounts required for payment of operating expenses including in connection with the purchase of permanent wall displays; capital expenditure requirements; debt service payments and costs; cash tax payments; pension and other post-retirement benefit plan contributions; payments in connection with the Company's restructuring programs, such as the EA Integration Restructuring Program, the 2018 Optimization Program and the Revlon 2020 Restructuring Program; severance not otherwise included in the Company's restructuring programs; business and/or brand acquisitions (including, without limitation, through licensing transactions), if any; debt and/or equity repurchases, if any; costs related to litigation; and payments in connection with discontinuing non-core business lines and/or exiting and/or entering certain territories and/or channels of trade (including, without limitation, that the Company is takingmay also, from time-to-time, seek to implement a service recovery plan;retire or purchase its outstanding debt obligations and/or equity in open market purchases, block trades, privately negotiated purchase transactions or otherwise and may seek to refinance some or all of its indebtedness based upon market conditions and that any such retirement or purchase of debt and/or equity may be funded with operating cash flows of the business or other sources and will depend upon prevailing market conditions, liquidity requirements, contractual restrictions and other factors, and the amounts involved may be material); and its estimates of the amount and timing of such operating and other expenses;
(ix)matters concerning the impact on the Company from changes in interest rates and foreign exchange rates;
(x)the Company's expectation to efficiently manage its working capital, including, among other things, initiatives intended to optimize inventory levels over time; centralized procurement to secure discounts and efficiencies; prudent management of trade receivables, accounts payable and controls on general and administrative spendingspending; and the Company’sCompany's belief that in the ordinary course of business, its source or use of cash from operating activities may vary on a quarterly basis as a result of a number of factors, including the timing of working capital flows;
(xi)the Company’s expectations regarding its future net periodic benefit cost for its U.S. and international defined benefit plans;
(xii)the Company's expectation that its tax provision and effective tax rate in any individual quarter and year-to-date period will vary and may not be indicative of the Company's tax provision and effective tax rate for the full year and, with respect to the Tax Act, the Company’s expectation that it will not have a transition tax liability due to its deficit in foreign earnings, that the Tax Act’s limitation on interest deductibility will not impact the Company’s 2018 federal cash taxes due to its net operating loss carryover balance, and that the Tax Act will not have a material impact on its cash taxes or liquidity in 2018;
(xiii)the Company's belief that the allegations contained in the Third Consolidated Amended Class Action Complaint are without merit and its plans to continue to vigorously defend against them and its belief that the outcome of all pending legal proceedings in the aggregate is not reasonably likely to have a material adverse effect on the Company’s business, prospects, results of operations, financial condition and/or cash flows, but that in light of the uncertainties involved in legal proceedings generally, the ultimate outcome of a particular matter could be material to the Company’s operating results for a particular period depending on, among other things, the size of the loss or the nature of the liability imposed and the level of the Company’s income for that particular period;
(xiv)certain estimates used by management in estimating the fair value of the assets acquired in the Elizabeth Arden Acquisition and in valuing other assets and liabilities; and
(xv)the Company's expected benefits and other impacts from the Elizabeth Arden Acquisition.

(xi)the Company's expectations regarding its future net periodic benefit cost for its U.S. and international defined benefit plans;
(xii)the Company's expectation that its tax provision and effective tax rate in any individual quarter and year-to-date period will vary and may not be indicative of the Company's tax provision and effective tax rate for the full year and, with respect to the Tax Act, the Company's expectation that the Tax Act’s limitation on interest deductibility will not impact the Company's 2020 federal cash taxes due to its net operating loss carryover position, and that the Tax Act will not have a material impact on its cash taxes or liquidity in 2020, as well as the Company's expectations regarding whether it will be required to establish additional valuation allowances on its deferred tax assets;
(xiii)the Company's belief that the outcome of all pending legal proceedings in the aggregate is not reasonably likely to have a material adverse effect on the Company's business, prospects, results of operations, financial condition and/or cash flows, but that in light of the uncertainties involved in legal proceedings generally, the ultimate outcome of a particular matter could be material to the Company's operating results for a particular period depending on, among other things, the size of the loss or the nature of the liability imposed and the level of the Company's income for that particular period;
(xiv)the Company's plans to (A) consummate the 2020 Refinancing Transactions contemplated by the Commitment Letter; (B) to use the proceeds thereof to repay in full indebtedness outstanding under Products Corporation’s 5.75% Senior Notes due February 2021 and Products Corporation’s 2019 Term Loan Facility, to pay fees and expenses in connection with the Facilities and the Refinancing and to the extent of any excess, for general corporate purpose; and (C) the expected terms and conditions of the 2020 Refinancing Transactions; and
(xv)the Company's plans to explore certain strategic transactions pursuant to the Strategic Review.

Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements can be identified by, among other things, the use of forward-looking language such as "estimates," "objectives," "visions," "projects," "forecasts," "focus," "drive towards," "plans," "targets," "strategies," "opportunities," "assumptions," "drivers," "believes," "intends," "outlooks," "initiatives," "expects," "scheduled to," "anticipates," "seeks," "may," "will" or "should" or the negative of those terms, or other variations of those terms or comparable language, or by discussions of strategies, targets, long-range plans, models or intentions. Forward-looking statements speak only as of the date they are made, and except for the Company's ongoing obligations under the U.S. federal securities laws, the Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.
Investors are advised, however, to consult any additional disclosures the Company made or may make in its 2017the Company's 2019 Form 10-K and in its Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, in each case filed with the SEC in 20182020 and 20172019 (which, among other places, can be found on the SEC's website at http://www.sec.gov.)www.sec.gov, as well as on the Company's corporate website at www.revloninc.com). Except as expressly set forth in this 2019 Form 10-K, the information available from time-to-time on such websitewebsites shall not be deemed incorporated by reference into this 2019 Form 10-K. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. (See also Item 1A. "Risk Factors" in this 2019 Form 10-K for further discussion of risks associated with the Company's business). In addition to factors that may be described in the Company's filings with the SEC, including this filing, the following factors, among others, could cause the Company's actual results to differ materially from those expressed in any forward-looking statements made by the Company:
(i)
(i)unanticipated circumstances or results affecting the Company's financial performance and or sales growth, including: greater than anticipated levels of consumers choosing to purchase their beauty products through e-commerce and other social media channels and/or greater than anticipated declines in the brick-and-mortar retail channel, or either of those conditions occurring at a rate faster than anticipated; the Company's inability to address the pace and impact of the new commercial landscape, such as its inability to enhance its e-commerce and social media capabilities and/or increase its penetration of e-commerce and social media channels; the Company's inability to drive a successful long-term omni-channel strategy and significantly increase its e-commerce penetration; difficulties, delays and/or the Company's inability to (in whole or in part) develop and implement effective content to enhance its online retail position, improve its consumer engagement across social media platforms and/or transform its technology and data to support efficient management of its digital infrastructure; the Company incurring greater than anticipated levels of expenses and/or debt to facilitate the foregoing objectives, which could result in, among other things, less than anticipated revenues and/or profitability; decreased consumer spending in response to weak economic conditions or weakness in the consumption of beauty products in one or more of the Company's segments; adverse changes in tariffs, foreign currency exchange rates, foreign currency controls and/or government-mandated pricing controls; decreased sales of the Company's products as a result of increased competitive activities by the Company's competitors; decreased performance by third-party suppliers, whether due to shortages of raw materials or otherwise; and/or supply disruptions at the Company's manufacturing facilities; changes in consumer preferences, such as reduced consumer demand for the Company's color cosmetics and other current products, including new product launches; changes in consumer purchasing habits, including with respect to retailer preferences and/or among sales channels, such as due to the continuing consumption declines in core beauty categories in the mass retail channel in North America; lower than expected customer acceptance or consumer acceptance of, or less than anticipated results from, the Company's financial performance and or sales growth, including decreased consumer spending in response to weak economic conditions or weakness in the consumption of beauty care products in one or more of the Company's segments; adverse changes in foreign currency exchange rates, foreign currency controls and/or government-mandated pricing controls; decreased sales of the Company's products as a result of increased competitive activities by the Company's competitors, decreased performance by third-party suppliers and/or supply disruptions at the Company's manufacturing facilities; changes in consumer preferences, such as reduced consumer demand for the Company's color cosmetics and other current products, including new product launches; changes in consumer purchasing habits, including with respect to retailer preferences and/or among sales channels, such as due to the continuing consumption declines in core beauty categories in the mass retail channel in North America; lower than expected customer acceptance or consumer acceptance of, or less than anticipated results from, the Company’s existing or new products; higher than expected retail store closures in the brick-and-mortar channels where the Company sells its products, as consumers continue to shift purchases to online and e-commerce channels; higher than expected restructuring or severance costs, acquisition costs and/or acquisition-related integration costs and capital expenditures, including, without limitation, synergy and integration program costs and expenses related to the Elizabeth Arden Acquisition; higher than expected pension expense and/or cash contributions

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REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
(except where the Company sells its products, as consumers continue to shift purchases to online and e-commerce channels; higher than expected purchases of permanent displays, capital expenditures, debt service payments and costs, cash tax payments, pension and other post-retirement plan contributions, payments in connection with the Company's restructuring programs (such as the EA Integration Restructuring Program, the 2018 Optimization Program and the Revlon 2020 Restructuring Program), severance not otherwise noted, all tabular amountsincluded in millions)



under its benefit plans,the Company's restructuring programs, business and/or brand acquisitions (including, without limitation, through licensing transactions), if any, debt and/or equity repurchases, if any, costs related to litigation, discontinuing non-core business lines and/or entering and/or exiting certain territories and/or channels of trade, advertising, promotional and/and marketing activities or marketing expenses or lower than expected results from the Company’s advertising, promotional, pricing and/or marketing plans; higher than expectedfor sales returns related to any reduction of space by the Company's customers, product discontinuances or otherwise or lower than expected results from the Company's advertising, promotional, pricing and/or marketing plans; decreased sales of the Company’s existing or new products; actions by the Company’sCompany's customers, such as greater than expected inventory management and/or de-stocking, and greater than anticipated space reconfigurations or reductions in display space and/or product discontinuances or a greater than expected impact from pricing, marketing, advertising and/or promotional strategies by the Company's customers; and changes in the competitive environment and actions by the Company's competitors, including, among other things, business combinations, technological breakthroughs, implementation of new pricing strategies, new product offerings, increased advertising, promotional and marketing spending and advertising, promotional and/or marketing successes by competitors;
(ii)in addition to the items discussed in (i) above, the effects of and changes in economic conditions (such as volatility in the financial markets, inflation, monetary conditions and foreign currency fluctuations, foreign currency controls and/or government-mandated pricing controls, as well as in trade, monetary, fiscal and tax policies in international markets) and political conditions (such as military actions and terrorist activities);
(iii)unanticipated costs or difficulties or delays in completing projects associated with continuing to execute the Company’s business initiatives or lower than expected revenues or the inability to create value through improving our financial performance as a result of such initiatives, including lower than expected sales, or higher than expected costs, including as may arise from any additional repositioning, repackaging or reformulating of one or more brands or product lines, launching of new product lines, including higher than expected expenses, including for sales returns, for launching its new products, acquiring businesses or brands (including through licensing transactions, if any), divesting or discontinuing non-core business lines (which may include exiting certain territories or converting the Company's go-to-trade structure in certain countries to other business models), further refining its approach to retail merchandising and/or difficulties, delays or increased costs in connection with taking further actions to optimize the Company’s manufacturing, sourcing, supply chain or organizational size and structure, including optimizing the Colomer Acquisition, the Cutex Acquisitions and/or the Elizabeth Arden Acquisition (including difficulties or delays in and/or the Company’s inability to optimally integrate the Elizabeth Arden business which could result in less than expected synergies and/or cost reductions, more than expected costs to achieve the expected synergies and/or cost reductions or delays in achieving the expected synergies and/or cost reductions and/or less than expected benefits from the EA Integration Restructuring Program, more than expected costs in implementing such program and/or difficulties or delays, in whole or in part, in executing the EA Integration Restructuring Program), as well as the unavailability of cash generated by operations, cash on hand and/or funds under the 2016 Revolving Credit Facility or from other permitted additional sources of capital to fund such potential activities;

(iv)difficulties, delays in or less than expected results from the Company’s efforts to enhance and accelerate its e-commerce and social media penetration, such as: (a) greater than anticipated levels of consumers choosing to purchase their beauty products through e-commerce and other social media channels and/or greater than anticipated declines in the brick-and-mortar retail channel, or either of those conditions occurring at a rate faster than anticipated; (b) the Company’s inability to address the pace and impact of this new commercial landscape, such as its inability to enhance its e-commerce and social media capabilities and/or increase its penetration of e-commerce and social media channels; (c) the Company’s inability to drive a successful long-term omni-channel strategy and significantly increase its e-commerce penetration; (d) difficulties, delays and/or the Company's inability to (in whole or in part): (1) develop and implement effective content to enhance its online retail position; (2) improve its consumer engagement across social media platforms; and/or (3) transform its technology and data to support efficient management of its digital infrastructure; and/or (e) the Company incurring greater than anticipated levels of expenses and/or debt to facilitate the foregoing objectives, which could result in, among other things, less than anticipated revenues and/or profitability;
(v)difficulties, delays or unanticipated costs or charges or less than expected cost reductions and other benefits resulting from the Company's restructuring activities, such as (a) difficulties, delays or the inability of the Company to successfully complete the EA Integration Restructuring Program, in whole or in part, which could result in less than expected operating and financial benefits from such actions; (b) difficulties, delays or the inability of the Company to realize, in whole or in part, the anticipated benefits from the EA Integration Restructuring Program, such as difficulties with, delays in or the Company’s inability to generate certain reductions in its SG&A and/or eliminate certain positions; (c) delays in completing the EA Integration Restructuring Program, which could reduce the benefits realized from such activities; (d) higher than anticipated restructuring charges and/or payments in connection with completing the EA Integration Restructuring Program and/or changes in the expected timing of such charges and/or payments; and/or (e) greater than anticipated costs or charges or less than anticipated cost reductions or other benefits from the EA Integration Restructuring Program; and/or (g) the risk that such program may not satisfy the Company’s objectives;

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REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES(ii)in addition to the items discussed in (i) above, the effects of and changes in economic conditions (such as volatility in the financial markets, inflation, increasing interest rates, monetary conditions and foreign currency fluctuations, tariffs, foreign currency controls and/or government-mandated pricing controls, as well as in trade, monetary, fiscal and tax policies in international markets), political conditions (such as military actions and terrorist activities) and natural disasters, such as the devastating fires in Australia and the earthquakes in Puerto Rico;
(except(iii)unanticipated costs or difficulties or delays in completing projects associated with continuing to execute the Company's business initiatives or lower than expected revenues or the inability to create value through improving the Company's financial performance as a result of such initiatives, including lower than expected sales, or higher than expected costs, including as may arise from any additional repositioning, repackaging or reformulating of one or more brands or product lines, launching of new product lines, including higher than expected expenses, including for sales returns, for launching its new products, acquiring businesses or brands (including through licensing transactions, if any), divesting or discontinuing non-core business lines (which may include exiting certain territories or converting the Company's go-to-trade structure in certain countries to other business models), further refining its approach to retail merchandising and/or difficulties, delays or increased costs in connection with taking further actions to optimize the Company's manufacturing, sourcing, supply chain or organizational size and structure (including difficulties or delays in and/or the Company's inability to optimally implement the 2018 Optimization Program and/or the Revlon 2020 Restructuring Program and/or less than expected benefits from such programs and/or more than expected costs in implementing such programs, which could cause the Company not to realize the projected cost reductions), as well as the unavailability of cash generated by operations, cash on hand and/or funds under the Amended 2016 Revolving Credit Facility, the Amended 2019 Senior Line of Credit Facility, the 2020 Refinancing Transactions and/or other permissible borrowings and/or from other permissible additional sources of capital to fund such potential activities, as well as the unavailability of funds due to potential mandatory repayment obligations under the 2018 Foreign Asset-Based Term Facility;
(iv)difficulties, delays in or less than expected results from the Company's efforts to execute on its 3 key strategic pillars to drive its future success and growth, including, without limitation: (1) less than effective new product development and innovation, less than expected acceptance of its new products and innovations by the Company's consumers and/or customers in one or more of its segments and/or less than expected levels of execution vis-à-vis its new product launches with its customers in one or more of its segments or regions; (2) less than expected levels of advertising, promotional and/or marketing activities for its new product launches, less than expected acceptance of its advertising, promotional, pricing and/or marketing plans and/or brand communication by consumers and/or customers in one or more of its segments, less than expected investment in advertising, promotional and/or marketing activities or greater than expected competitive investment; and/or (3) difficulties or disruptions impacting the Company's ability to ensure availability of its products where consumers shop, both in-store and increasingly online;
(v)difficulties, delays or unanticipated costs or charges or less than expected cost reductions and other benefits resulting from the Company's restructuring activities, such as in connection with the 2018 Optimization Program and/or the Revlon 2020 Restructuring Program, higher than anticipated restructuring charges and/or payments and/or changes in the expected timing of such charges and/or payments; and/or less than expected additional sources of liquidity from such initiatives;
(vi)lower than expected operating revenues, cash on hand and/or funds available under the Amended 2016 Revolving Credit Facility, the Amended 2019 Senior Line of Credit Facility, the 2020 Refinancing Transactions and/or other permissible borrowings or generated from cost reductions resulting from the implementation of the Revlon 2020 Restructuring Program and the 2018 Optimization Program and/or other cost control initiatives and/or from selling certain assets (such as the Natural Honey and Floid brands that were sold in December 2019) in connection with the Company's ongoing Strategic Review; higher than anticipated operating expenses, such as referred to in clause (viii) below; and/or less than anticipated cash generated by the Company's operations or unanticipated restrictions or taxes on repatriation of foreign earnings;
(vii)the unavailability of funds under Products Corporation's Amended 2016 Revolving Credit Facility, the Amended 2019 Senior Line of Credit Facility, the 2020 Refinancing Transactions and/or other permissible borrowings; the unavailability of funds under the 2018 Foreign Asset-Based Term Facility, such as due to reductions in the applicable borrowing base that could require certain mandatory prepayments; the unavailability of funds from difficulties, delays in or the Company's inability to take other measures, such as reducing discretionary spending and/or less than expected liquidity from cost reductions resulting from the implementation of the Revlon 2020 Restructuring Program and the 2018 Optimization Program and from other cost reduction initiatives and/or from selling certain assets (such as the Natural Honey and Floid brands that were sold in December 2019) in connection with the Company's ongoing Strategic Review;
(viii)higher than expected operating expenses, such as higher than expected purchases of permanent displays, capital expenditures, debt service payments and costs, cash tax payments, pension and other post-retirement plan contributions, payments in connection with the Company's restructuring programs (such as the EA Integration Restructuring Program, the 2018 Optimization Program and/or the Revlon 2020 Restructuring Program), severance not otherwise noted, all tabular amountsincluded in millions)the Company's restructuring programs, business and/or brand acquisitions (including, without limitation, through licensing transactions), if any, debt and/or equity repurchases, if any, costs related to litigation, discontinuing non-core business lines and/or entering and/or exiting certain territories and/or channels of trade, advertising, promotional and marketing activities or for sales returns related to any reduction of space by the Company's customers, product discontinuances or otherwise;

(ix)unexpected significant impacts on the Company from changes in interest rates or foreign exchange rates;

(x)difficulties, delays or the inability of the Company to efficiently manage its cash and working capital;

(xi)lower than expected returns on pension plan assets and/or lower discount rates, which could result in higher than expected cash contributions, higher net periodic benefit costs and/or less than expected net periodic benefit income;
(vi)lower than expected operating revenues, cash on hand and/or funds available under the 2016 Revolving Credit Facility and/or other permitted lines of credit or higher than anticipated operating expenses, such as referred to in clause (viii) below, and/or less than anticipated cash generated by the Company's domestic operations or unanticipated restrictions or taxes on repatriation of foreign earnings;
(vii)the unavailability of funds under Products Corporation's 2016 Revolving Credit Facility or other permitted lines of credit; or from difficulties, delays in or the Company's inability to take other measures, such as reducing discretionary spending;
(viii)higher than expected operating expenses, sales returns, working capital expenses, integration and/or synergy costs related to the Elizabeth Arden Acquisition, permanent wall display costs, capital expenditures, debt service payments, cash tax payments, cash pension plan contributions, other post-retirement benefit plan contributions and/or net periodic benefit costs for the pension and other post-retirement benefit plans, restructuring costs, (including, without limitation, in connection with implementing the EA Integration Restructuring Program), severance and discontinued operations not otherwise included in the Company’s restructuring programs, debt and/or equity repurchases, costs related to litigation and/or payments in connection with business and/or brand acquisitions (including, without limitation, through licensing transactions, if any), and discontinuing non-core business lines and/or exiting and/or entering certain territories and/or channels of trade;
(ix)interest rate or foreign exchange rate changes affecting the Company and its market-risk sensitive financial instruments and/or difficulties, delays or the inability of the counterparty to perform such transactions;
(x)difficulties, delays or the inability of the Company to efficiently manage its cash and working capital;
(xi)lower than expected returns on pension plan assets and/or lower discount rates, which could result in higher than expected cash contributions, higher net periodic benefit costs and/or less than expected net periodic benefit income;
(xii)unexpected significant variances in the Company's tax provision, effective tax rate and/or unrecognized tax benefits, whether due to the enactment of the Tax Act or otherwise, such as due to the issuance of unfavorable guidance, interpretations, technical clarifications and/or technical corrections legislation by the U.S. Congress, the U.S. Treasury Department or the IRS, unexpected changes in foreign, state or local tax regimes in response to the Tax Act, and/or changes in estimates that may impact the calculation of the Company's tax provisions;
(xiii)unanticipated adverse effects on the Company’s business, prospects, results of operations, financial condition and/or cash flows as a result of unexpected developments with respect to the Company's legal proceedings;
(xiv)changes in the fair values of the assets acquired in the Elizabeth Arden Acquisition due to, among other things, unanticipated future performance of the acquired licenses and/or other brands; and/or
(xv)difficulties with, delays in and/or the Company’s inability to achieve, in whole or in part, or within the expected timeframe the expected benefits from the Elizabeth Arden Acquisition, such as (a) the Company’s or the Elizabeth Arden’s respective businesses experiencing disruptions due to management’s focus on executing the business integration activities and/or due to employee uncertainty during the integration transition period or other factors making it more difficult to maintain relationships with customers, suppliers, employees and other business partners; (b) the Company being unable to successfully implement, in whole or in part, its integration strategies, including the possibility that the expected synergies and cost reductions from the Elizabeth Arden Acquisition will not be realized or will not be realized within the expected time period.

(xii)unexpected significant variances in the Company's tax provision, effective tax rate and/or unrecognized tax benefits, whether due to the enactment of the Tax Act or otherwise, such as due to the issuance of unfavorable guidance, interpretations, technical clarifications and/or technical corrections legislation by the U.S. Congress, the U.S. Treasury Department or the IRS, unexpected changes in foreign, state or local tax regimes in response to the Tax Act, and/or changes in estimates that may impact the calculation of the Company's tax provisions, as well as changes in circumstances that could adversely impact the Company's expectations regarding the establishment of additional valuation allowances on its deferred tax assets;
(xiii)unanticipated adverse effects on the Company's business, prospects, results of operations, financial condition and/or cash flows as a result of unexpected developments with respect to the Company's legal proceedings;
(xiv)difficulties, delays or the inability of the Company to successfully complete the 2020 Refinancing Transactions, in whole or in part, greater than anticipated costs in completing such transactions and/or difficulties in using the proceeds of the 2020 Refinancing Transactions as intended; and/or
(xv)difficulties or delays that could affect the Company's ability to consummate one or more transactions pursuant to the Strategic Review, such as due to the Company's respective businesses experiencing disruptions due to transaction-related uncertainty or other factors.
Factors other than those listed above could also cause the Company's results to differ materially from expected results. This discussion is provided pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

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REVLON, CONSUMER PRODUCTS CORPORATIONINC. AND SUBSIDIARIES


PART III






Item 10. Directors, Executive Officers and Corporate Governance
Intentionally omittedA list of Revlon's directors and executive officers and biographical information and other information about them may be found under the caption "Proposal No. 1 - Election of Directors" and "Executive Officers," of Revlon's Proxy Statement for the 2020 Annual Stockholders' Meeting (the "2020 Proxy Statement"), which sections are incorporated by reference herein.
The information set forth under the caption "Code of Conduct and Business Ethics and Senior Financial Officer Code of Ethics" in accordance with General Instruction I(2)(c)the 2020 Proxy Statement is also incorporated herein by reference.
The information set forth under the caption "Delinquent Section 16(a) Reports" in the 2020 Proxy Statement is also incorporated herein by reference.
The information set forth under the captions "Executive Compensation," "Summary Compensation Table," "Outstanding Equity Awards at Fiscal Year-End," and "Director Compensation" in the 2020 Proxy Statement is also incorporated herein by reference.
Information regarding the Company's director nomination process, audit committee and audit committee financial expert matters may be found in the 2020 Proxy Statement under the captions "Corporate Governance-Board of Form 10-K.Directors and its Committees-Director Nominating Processes; Diversity" and "Corporate Governance-Board of Directors and its Committees-Audit Committee-Composition of the Audit Committee," respectively. That information is incorporated herein by reference.



Item 11. Executive Compensation
Intentionally omittedThe information set forth under the captions "Executive Compensation," "Summary Compensation Table," "Outstanding Equity Awards at Fiscal Year-End," and "Director Compensation" in accordance with General Instruction I(2)(c)the 2020 Proxy Statement is incorporated herein by reference. The information set forth under the caption "Corporate Governance-Board of Form 10-K.Directors and its Committees-Compensation Committee-Composition of the Compensation Committee" in the 2020 Proxy Statement is also incorporated herein by reference.




Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Intentionally omittedThe information set forth under the captions "Security Ownership of Certain Beneficial Owners and Management" and "Equity Compensation Plan Information" in accordance with General Instruction I(2)(c) of Form 10-K.the 2020 Proxy Statement is incorporated herein by reference.




Item 13. Certain Relationships and Related Transactions, and Director Independence
Intentionally omittedThe information set forth under the captions "Certain Relationships and Related Transactions" and "Corporate Governance-Board of Directors and its Committees-Controlled Company Exemption" and "Corporate Governance-Board of Directors and its Committees-Audit Committee-Composition of the Audit Committee," respectively, in accordance with General Instruction I(2)(c) of Form 10-K.the 2020 Proxy Statement is incorporated herein by reference.





77

Item 14. Principal Accounting Fees and Services
TheAUDIT FEES
Revlon’s Board of Directors of Revlon (Revlon owns 100% of Products Corporation's common stock) maintains an Audit Committee in accordance with applicable SEC rules and the NYSE's listing standards. In accordance with the charter of Revlon's Audit Committee,Committee’s charter, a printable and current copy of which is available at www.revloninc.com, Revlon'sthe Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the audit work of Revlon's and Products Corporation'sthe Company's independent auditors for the purpose of preparing and issuing its audit reportreports or performing other audit, review or attest services for Revlon and Products Corporation.the Company. The independent auditors, KPMG, LLP, report directly to Revlon'sthe Audit Committee and Revlon'sthe Audit Committee is directly responsible for, among other things, reviewing in advance, and granting anany appropriate pre-approvals of,of: (a) all auditing services to be provided by the independent auditorauditor; and (b) all non-audit services to be provided by the independent auditor (as permitted by the Exchange Act), and in connection with such services to approve all fees and other terms of engagement, as required by the applicable rules ofunder the Exchange Act and subject to the exemptions provided for in such rules. Revlon's Audit Committee hasThe Company maintains and updates annually an Audit Committee Pre-approvalPre-Approval Policy for pre-approving all permissible audit and non-audit services performed by KPMG LLP. In 2015,KPMG. During 2019, an electronic printable copy of the Audit Committee approved the2019 Audit Committee Pre-Approval Policy for 2016; in 2016,was available at www.revloninc.com. A copy of the Audit Committee approved the2020 Audit Committee Pre-Approval Policy for 2017;is attached to this 2019 Form 10-K as an exhibit and in 2017 thean electronic printable copy of such policy is currently available at www.revloninc.com. The Audit Committee pre-approvedalso has the Audit Committee Pre-Approval Policy for 2018, a printableauthority to approve services to be provided by KPMG at its meetings and current copy of which is available at www.revloninc.com.by unanimous written consents.
The aggregate fees billedincurred for professional services by KPMG LLP in 20172019 and 20162018 for these various services for Revlon and the Company in the aggregate were (in millions).are set forth in the table, below:

Types of Fees2017 2016
Types of Fees (USD in millions)Types of Fees (USD in millions)20192018
Audit Fees$6.4
 $5.2
Audit Fees$10.6  $8.8  
Audit-Related Fees0.1
 0.1
Audit-Related Fees0.4  0.2  
Tax Fees0.3
 0.2
Tax Fees0.5  0.6  
All Other Fees—
 —
All Other Fees—  —  
Total Fees$6.8
 $5.5
Total Fees$11.5  $9.7  
In the above table, in accordance with the SEC definitions and rules: (a) "audit fees"“audit fees” are fees the Company paid KPMG LLP for professional services rendered forfor: (i) the audits of (i) Revlon's and Products Corporation'sthe Company's annual financial statements (ii)and the effectiveness of Revlon'sRevlon’s internal control over financial reportingreporting; and (iii)(ii) the review of the financial statements included in Revlon's and Products Corporation'sthe Company's Quarterly Reports on Form 10-Q, and for services that are normally provided by the auditor in connection with statutory and regulatory filings or engagements; (b) "audit-related fees"“audit-related fees” are fees billed by KPMG LLP for assurance and related services that are traditionally performed by the auditor, including services performed by KPMG LLP related to employee benefit plan audits and certain transactions, as well as attestation services not required by statute or regulation; (c) "tax fees"“tax fees” are

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REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES






fees for permissible tax compliance, tax advice and tax planning; and (d) "all“all other fees"fees” are fees billed by KPMG LLP to the Company for any permissible services not included in the first three categories.
All of the services performed by KPMG LLP for the Company during 20172019 and 20162018 were either expressly pre-approved by Revlon'sthe Audit Committee or were pre-approved in accordance with Revlon, Inc.'sthe Audit Committee Pre-Approval Policy, and Revlon'sthe Audit Committee was provided with regular updates as to the nature of such services and fees paid for such services.


78
REVLON, INC. AND SUBSIDIARIES

Website Availability of Reports, Corporate Governance Information and Other Financial Information
Revlon, which owns 100% of Products Corporation's common stock,The Company maintains a comprehensive corporate governance program, including Corporate Governance Guidelines for Revlon’s Board of Directors, Revlon’s Board Guidelines for Assessing Director Independence and charters for Revlon’s Audit Committee and Compensation Committee. Revlon maintains a corporate investor relations website, www.revloninc.com, where stockholders and other interested persons may review, without charge, among other things, Revlon's corporate governance materials and certain SEC filings (such as Revlon's annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements, annual reports, Section 16 reports reflecting certain changes in the stock ownership of Revlon’s directors and Section 16 officers, and certain other documents filed with the SEC), each of which are generally available on the same business day as the filing date with the SEC on the SEC’s website http://www.sec.gov. Products Corporation's SEC filings are also available on the SEC's website http://www.sec.gov. In addition, under the section of the website entitled, "Corporate Governance," Revlon posts printable copies of the latest versions of its Corporate Governance Guidelines, Board Guidelines for Assessing Director Independence and charters for Revlon's Audit Committee and Compensation Committee, as well as Revlon's and the Company's Code of Conduct and Business Ethics, which includes Revlon's and the Company's Code of Ethics for Senior Financial Officers, and the Audit Committee Pre-Approval Policy. From time-to-time, the Company may post on www.revloninc.com certain presentations that may include material information regarding its business, financial condition and/or results of operations. The business and financial materials and any other statement or disclosure on, or made available through, the websites referenced herein shall not be deemed incorporated by reference into this report.


























67
79
REVLON, CONSUMER PRODUCTS CORPORATIONINC. AND SUBSIDIARIES
(except where otherwise noted, all tabular amounts in millions)



PART II - OTHER INFORMATION

IV
Item 15. Exhibits and Financial Statement SchedulesStatements


Exhibits
(a)List of documents filed as part of this Report:
(1) Consolidated Financial Statements and Reports of Independent Registered Public Accounting Firm included herein: See Index on page F-1.
(2) Financial Statement Schedule:Statements: See Index on page F-1.
All other schedules are omitted as they are inapplicable or the required information is furnished in the Company’s Consolidated Financial Statements or the Notes thereto.
(3) List of Exhibits:
2.Plan of acquisition, reorganization, arrangement, liquidation or successionsuccession.
2.1
2.2
3.Certificate of Incorporation and By-laws.
3.1
3.2 
3.24.Second Amended and Restated By-Laws of Products Corporation, dated as of May 1, 2009 (incorporated by reference to Exhibit 3.1 to Products Corporation's Current Report on Form 8-K filed with the SEC on April 29, 2009).
4.Instruments Defining the Rights of Security Holders, Including Indentures.
4.1
4.2
4.3
4.4
4.5
4.6
4.7


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4.8
4.9
4.10

4.11
4.12

4.13
4.14
4.15
4.16
4.17
4.18
4.19
4.20

4.21

4.22


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REVLON, CONSUMER PRODUCTS CORPORATIONINC. AND SUBSIDIARIES






10.4.23Material Contracts.
10.14.24
4.25
4.26
4.27
4.28
4.29
4.30
4.31
4.32
4.33
4.34
4.35
4.36
4.37
4.38
10.Material Contracts.
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REVLON, INC. AND SUBSIDIARIES
10.1
10.2
10.3Employment
10.4
10.5
10.510.6Employment Agreement, dated as of April 12, 2016, by and among Revlon, Products Corporation and Juan R. Figuereo (incorporated by reference to Exhibit 10.1 to Revlon's Current Report on Form 8-K filed with the SEC on April 12, 2016).
10.6Consulting Agreement by and among Revlon, Products Corporation and E. Scott Beattie, dated as of November 3, 2016 (incorporated by reference to Exhibit 10.1 to the Revlon Q3 2016 Form 10-Q).
10.7
10.8Employment Agreement, dated as of October 9, 2014, by and among Revlon, Products Corporation and Gianni Pieraccioni (incorporated by reference to Exhibit 10.11 to Revlon's Annual Report on Form 10-K for the fiscal year ended December 31, 2014 filed with the SEC on March 12, 2015 (the "Revlon 2014 Form 10-K")).
10.9First Amendment to Employment Agreement by and among Revlon, Products Corporation and Gianni Pieraccioni, dated as of February 26, 2016 (incorporated by reference to Exhibit 10.7 to Revlon’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015 filed with the SEC on February 26, 2016).
10.10Transition and Separation Agreement and Release dated March 1, 2016 by and among Revlon, Products Corporation and Lorenzo Delpani (incorporated by reference to Exhibit 10.1 to Revlon's Current Report on Form 8-K filed with the SEC on March 4, 2016).
10.11Amendment, dated April 21, 2016, to the Transition and Separation Agreement and Release by and among Revlon, Products Corporation and Lorenzo Delpani (incorporated by reference to Exhibit 10.1 to Revlon's Current Report on Form 8-K filed with the SEC on April 22, 2016).
10.12Fourth Amended and Restated Revlon, Inc. Stock Plan (as amended, the "Stock Plan") (incorporated by reference to Annex A to Revlon’s Definitive Information Statement on Schedule 14C filed with the SEC on July 3, 2014).
10.1310.8
10.1410.9Revlon Amended and Restated Executive Incentive Compensation Plan, dated as of March 24, 2016 (incorporated by reference to Annex D to Revlon's Annual Proxy Statement on Schedule 14A filed with the SEC on April 29, 2016).
10.1510.10Amended and Restated Revlon Pension Equalization Plan, amended and restated as of December 14, 1998 (the "PEP") (incorporated by reference to Exhibit 10.15 to Revlon’s Annual Report on Form 10-K for the fiscal year ended December 31, 1998 filed with the SEC on March 3, 1999).
10.1610.11
10.1710.12
10.1810.13Benefit Plans Assumption Agreement, dated as of July 1, 1992, by and among Revlon Holdings, Revlon and Products Corporation (incorporated by reference to Exhibit 10.25 to Products Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 1992 filed with the SEC on March 12, 1993).
10.1910.14

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REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES






10.2010.15
10.16
10.17

10.2110.18
10.19

21.10.20Subsidiaries.
21.Subsidiaries.
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*21.1
22.
22.Powers of Attorney.
*22.1
*22.2
*22.3
*22.4
*22.5
Power of Attorney executed by Barry F. SchwartzSchwartz.
*31.122.5
*31.1
*31.2
**32.1 (furnished herewith)
**32.2 (furnished herewith)
 *101.INS99.1
*101.INSInline XBRL Instance Document
 *101.SCH*101.SCHInline XBRL Taxonomy Extension Schema
 *101.CAL*101.CALInline XBRL Taxonomy Extension Calculation Linkbase
 *101.DEF*101.DEFInline XBRL Taxonomy Extension Definition Linkbase
 *101.LAB*101.LABInline XBRL Taxonomy Extension Label Linkbase
 *101.PRE*101.PREInline XBRL Taxonomy Extension Presentation Linkbase
*104Cover Page Interactive Data File, formatted in Inline XBRL and contained in Exhibit 101


*Filed herewith.

**Furnished herewith.

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[THIS PAGE INTENTIONALLY LEFT BLANK]


85

REVLON, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
Page

F-2F-2
Audited
F-3
F-4
Financial Statements:
Revlon, Inc. Consolidated Balance Sheets as of December 31, 20172019 and 2016

2018
F-4F-5
Revlon, Inc. Consolidated Statements of Operations and Comprehensive (Loss) Income for each of the years in the three-year period ended December 31, 20172019 and 2018
F-5F-6
Revlon, Inc. Consolidated Statements of Stockholder'sStockholders' Deficiency for each of the years in the three-year period ended December 31, 20172019 and 2018
F-6F-7
Revlon, Inc. Consolidated Statements of Cash Flows for each of the years in the three-year period ended December 31, 20172019 and 2018
F-7F-8
Revlon Consumer Products Corporation Consolidated Balance Sheets as of December 31, 2019 and 2018
F-9
Revlon Consumer Products Corporation Consolidated Statements of Operations and Comprehensive (Loss) Income for each of the years ended December 31, 2019 and 2018
F-10
Revlon Consumer Products Corporation Consolidated Statements of Stockholders' Deficiency for each of the years ended December 31, 2019 and 2018
F-11
Revlon Consumer Products Corporation Consolidated Statements of Cash Flows for each of the years ended December 31, 2019 and 2018
F-12
Notes to Consolidated Financial Statements

F-8F-13
Financial Statement Schedule:
Schedule II - Valuation and Qualifying Accounts
F-64




F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors and Stockholder
Revlon, Consumer Products Corporation:Inc.:
Opinion on the ConsolidatedFinancial Statements

We have audited the accompanying consolidated balance sheets of Revlon, Consumer Products CorporationInc. and subsidiaries (the Company) as of December 31, 20172019 and 2016,2018, the related consolidated statements of operations and comprehensive (loss) income, stockholder’sloss, stockholders’ deficiency, and cash flows for each of the years in the three-yeartwo-year period ended December 31, 2017,2019, and the related notes and financial statement schedule II (collectively, the "consolidatedconsolidated financial statements")statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 20172019 and 2016,2018, and the results of its operations and its cash flows for each of the years in the three‑yeartwo-year period ended December 31, 2017,2019, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 12, 2020 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.


/s/ KPMG LLP

We have served as the Company’s auditor since 1991.



/s/ KPMG LLP


New York, New York
March 15,12, 2020




F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors
Revlon, Inc.:
Opinion on Internal Control Over Financial Reporting
We have audited Revlon, Inc. and subsidiaries’(the Company) internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2019 and 2018, the related consolidated statements of operations and comprehensive loss, stockholders’ deficiency, and cash flows for each of the years in the two-year period ended December 31, 2019, and the related notes (collectively, the consolidated financial statements), and our report dated March 12, 2020 expressed an unqualified opinion on those consolidated financial statements.



Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.


/s/ KPMG LLP

New York, New York
March 12, 2020

F-3


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholder and Board of Directors
Revlon Consumer Products Corporation:
Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Revlon Consumer Products Corporation and subsidiaries (the Company) as of December 31, 2019 and 2018, the related consolidated statements of operations and comprehensive loss, stockholder’s deficiency, and cash flows for each of the years in the two-year period ended December 31, 2019, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2019, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ KPMG LLP

We have served as the Company’s auditor since 1991.


New York, New York
March 12, 2020

F-4

Item 1. Financial Statements of Revlon, Inc. and Subsidiaries

Audited Financial Statements



REVLON, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in millions, except share and per share amounts)
December 31, 2019December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents$104.3  $87.3  
Trade receivables, less allowance for doubtful accounts of $11.4 and $15.6 as of December 31, 2019 and December 31, 2018, respectively423.4  431.3  
Inventories448.4  523.2  
Prepaid expenses and other assets135.3  152.0  
Total current assets1,111.4  1,193.8  
Property, plant and equipment, net of accumulated depreciation of $488.1 and $425.2 as of December 31, 2019 and December 31, 2018, respectively408.6  354.5  
Deferred income taxes175.1  131.8  
Goodwill673.7  673.9  
Intangible assets, net of accumulated amortization of $226.4 and $187.3 as of December 31, 2019 and December 31, 2018, respectively490.7  532.0  
Other assets121.1  130.8  
Total assets$2,980.6  $3,016.8  
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
Current liabilities:
Short-term borrowings$2.2  $9.3  
Current portion of long-term debt288.0  348.1  
Accounts payable251.8  332.1  
Accrued expenses and other current liabilities414.9  430.9  
Total current liabilities956.9  1,120.4  
Long-term debt2,906.2  2,727.7  
Long-term pension and other post-retirement plan liabilities181.2  169.0  
Other long-term liabilities157.5  56.5  
Stockholders’ deficiency:
Class A Common Stock, par value $0.01 per share: 900,000,000 shares authorized; 56,470,490 and 55,556,466 shares issued as of December 31, 2019 and December 31, 2018, respectively0.5  0.5  
Additional paid-in capital1,071.9  1,063.8  
Treasury stock, at cost: 1,625,580 and 1,533,320 shares of Class A Common Stock as of December 31, 2019 and December 31, 2018, respectively(33.5) (31.9) 
Accumulated deficit(2,012.7) (1,855.0) 
Accumulated other comprehensive loss(247.4) (234.2) 
Total stockholders’ deficiency(1,221.2) (1,056.8) 
Total liabilities and stockholders’ deficiency$2,980.6  $3,016.8  







See Accompanying Notes to Consolidated Financial Statements
F-5
REVLON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(dollars in millions, except share and per share amounts)
Year Ended December 31,
20192018
Net sales$2,419.6  $2,564.5  
Cost of sales1,052.2  1,117.0  
      Gross profit1,367.4  1,447.5  
Selling, general and administrative expenses1,316.6  1,460.5  
Acquisition, integration and divestiture costs3.9  13.9  
Restructuring charges and other, net12.8  20.2  
Impairment charges—  18.0  
(Gain) loss on divested assets(26.6) 20.1  
      Operating income (loss)60.7  (85.2) 
Other expenses:
   Interest expense, net196.6  176.6  
   Amortization of debt issuance costs14.6  13.0  
   Foreign currency (gains) losses, net(1.9) 15.8  
   Miscellaneous, net16.4  1.3  
      Other expenses225.7  206.7  
Loss from continuing operations before income taxes(165.0) (291.9) 
Provision for income taxes0.2  2.2  
Loss from continuing operations, net of taxes(165.2) (294.1) 
Income (loss) from discontinued operations, net of taxes7.5  (0.1) 
Net loss$(157.7) $(294.2) 
Other comprehensive (loss) income:
   Foreign currency translation adjustments(a)
(2.9) (9.4) 
   Amortization of pension related costs, net of tax(b)(c)
9.0  8.4  
Pension re-measurement, net of tax (d)
(19.3) (5.5) 
Reclassification into earnings of accumulated losses from the de-designated 2013 Interest Rate Swap, net of tax(e)
—  0.7  
Other comprehensive loss, net(13.2) (5.8) 
Total comprehensive loss$(170.9) $(300.0) 
Basic and Diluted (loss) earnings per common share:
Continuing operations$(3.11) $(5.57) 
Discontinued operations0.14  —  
Net loss$(2.97) $(5.57) 
Weighted average number of common shares outstanding:
      Basic53,081,321  52,797,686  
      Diluted53,081,321  52,797,686  

(a) Net of tax expense of $1.8 million and a tax benefit of $0.1 million for 2019 and 2018, respectively.
(b) Net of tax expense of $1.1 million and $1.0 million for 2019 and 2018, respectively.
(c) This amount is included in the computation of net periodic benefit costs (income). See Note 12, "Pension and Post-Retirement Benefits," for additional information regarding net periodic benefit costs (income).
(d) Net of tax benefit of $5.2 million and $2.5 million for 2019 and 2018, respectively.
(e) Net of tax benefit of NaN and $0.5 million for 2019 and 2018, respectively.





See Accompanying Notes to Consolidated Financial Statements
F-6
REVLON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIENCY
(dollars in millions, except share and per share amounts)

Common StockAdditional Paid-In CapitalTreasury StockAccumulated DeficitAccumulated Other Comprehensive LossTotal Stockholders’ Deficiency
Balance, January 1, 2019$0.5  $1,063.8  $(31.9) $(1,855.0) $(234.2) $(1,056.8) 
Treasury stock acquired, at cost (a)
—  —  (1.6) —  —  (1.6) 
Stock-based compensation amortization—  8.1  —  —  —  8.1  
Net loss—  —  —  (157.7) —  (157.7) 
Other comprehensive loss, net (b)
—  —  —  —  (13.2) (13.2) 
Balance, December 31, 2019$0.5  $1,071.9  $(33.5) $(2,012.7) $(247.4) $(1,221.2) 

Common StockAdditional Paid-In CapitalTreasury StockAccumulated DeficitAccumulated Other Comprehensive LossTotal Stockholders’ Deficiency
Balance, January 1, 2018$0.5  $1,040.0  $(21.7) $(1,560.8) $(228.4) $(770.4) 
Treasury stock acquired, at cost (a)
—  6.6  (10.2) —  —  (3.6) 
Stock-based compensation amortization—  17.2  —  —  —  17.2  
Net loss—  —  —  (294.2) —  (294.2) 
Other comprehensive loss, net (b)
—  —  —  —  (5.8) (5.8) 
Balance, December 31, 2018$0.5  $1,063.8  $(31.9) $(1,855.0) $(234.2) $(1,056.8) 

(a) Pursuant to the share withholding provisions of the Fourth Amended and Restated Revlon, Inc. Stock Plan (as amended, the "Stock Plan"), the Company withheld an aggregate of 92,260 and 167,297 shares of Revlon Class A Common Stock during the years ended December 31, 2019 and 2018, respectively, to satisfy certain minimum statutory tax withholding requirements related to the vesting of restricted shares and restricted stock units for certain senior executives and employees. These withheld shares were recorded as treasury stock using the cost method, at a weighted-average price per share of $17.75 and $21.42 during the years ended December 31, 2019 and 2018, respectively, based on the closing price of Revlon Class A Common Stock as reported on the New York Stock Exchange (the "NYSE") consolidated tape on each respective vesting date, for a total of $1.6 million and $3.6 million during the years ended December 31, 2019 and 2018, respectively. In addition, during 2018, the Company transferred to treasury stock 251,495 unvested restricted shares and shares in respect of restricted stock units that were forfeited upon the departure of certain executives. These shares were recorded as treasury stock using the cost method, at a weighted average price of $26.26 per share, based on the grant date fair values of the forfeited shares, for a total of $6.6 million. See Note 13, "Stock Compensation Plan," for details regarding restricted stock awards under the Stock Plan.
(b) See Note 15, "Accumulated Other Comprehensive Loss," regarding the changes in the accumulated balances for each component of other comprehensive loss during 2019 and 2018, respectively.


















See Accompanying Notes to Consolidated Financial Statements
F-7
REVLON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in millions)
Year Ended December 31,
20192018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss$(157.7) $(294.2) 
Adjustments to reconcile net loss to net cash used in operating activities:
   Depreciation and amortization162.9  177.2  
   Foreign currency (gains) losses from re-measurement(1.9) 15.8  
   Amortization of debt discount1.6  1.4  
   Stock-based compensation amortization8.1  17.2  
Impairment charges—  18.0  
   (Benefit from) provision for deferred income taxes(29.8) 1.7  
   Amortization of debt issuance costs14.6  13.0  
   Non-cash loss (gain) on divested assets0.9  (0.7) 
   (Gain) loss on divested assets(26.6) 20.1  
   Pension and other post-retirement cost7.2  2.6  
   Change in assets and liabilities:
Decrease (increase) in trade receivables9.3  (0.3) 
Decrease (increase) in inventories74.5  (36.4) 
Decrease (increase) in prepaid expenses and other current assets16.8  (42.8) 
(Decrease) increase in accounts payable(73.2) 1.6  
(Decrease) increase in accrued expenses and other current liabilities(42.4) 23.9  
Pension and other post-retirement plan contributions(12.1) (8.8) 
Purchases of permanent displays(46.2) (80.7) 
Other, net25.7  0.6  
Net cash used in operating activities(68.3) (170.8) 
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures(29.0) (57.2) 
Proceeds from the sale of certain assets31.1  —  
Net cash provided by (used in) investing activities2.1  (57.2) 
CASH FLOWS FROM FINANCING ACTIVITIES:
Net decrease in short-term borrowings and overdraft(17.3) (1.1) 
Net (repayments) borrowings under the Amended 2016 Revolving Credit Facility(62.6) 178.0  
Net borrowings under the 2019 Term Loan Facility200.0  —  
Net borrowings under the 2018 Foreign Asset-Based Term Loan—  88.9  
Repayments under the 2016 Term Loan Facility(18.0) (18.0) 
Payment of financing costs(15.3) (9.7) 
Tax withholdings related to net share settlements of restricted stock units and awards(1.6) (3.6) 
Other financing activities(0.9) (1.4) 
Net cash provided by financing activities84.3  233.1  
Effect of exchange rate changes on cash, cash equivalents and restricted cash(1.1) (5.0) 
   Net increase in cash, cash equivalents and restricted cash
17.0  0.1  
   Cash, cash equivalents and restricted cash at beginning of period (a)
87.5  87.4  
   Cash, cash equivalents and restricted cash at end of period (a)
$104.5  $87.5  
Supplemental schedule of cash flow information:(b)
   Cash paid during the period for:
Interest$194.6  $163.7  
Income taxes, net of refunds9.9  16.0  
(a) These amounts include restricted cash of $0.2 million and $0.2 million as of December 31, 2019 and 2018, respectively, which represent cash on deposit in lieu of a mandatory prepayment under the 2018 Foreign Asset-Based Term Facility, and cash on deposit to support outstanding undrawn letters of credit, which were included within other assets in the Company's consolidated balance sheets.
(b) See Note 6, "Property, Plant, and Equipment," for supplemental disclosure of non-cash financing and investing activities in relation to the lease liabilities arising from obtaining right-of-use assets following the implementation of ASC Topic 842, Leases.



See Accompanying Notes to Consolidated Financial Statements

F-8
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in millions)millions, except share and per share amounts)
December 31, 2019December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents$104.3  $87.3  
Trade receivables, less allowance for doubtful accounts of $11.4 and $15.6 as of December 31, 2019 and December 31, 2018, respectively423.4  431.3  
Inventories448.4  523.2  
Prepaid expenses and other assets131.4  148.0  
Receivable from Revlon, Inc.161.2  151.7  
Total current assets1,268.7  1,341.5  
Property, plant and equipment, net of accumulated depreciation of $488.1 and $425.2 as of December 31, 2019 and December 31, 2018, respectively408.6  354.5  
Deferred income taxes158.1  114.8  
Goodwill673.7  673.9  
Intangible assets, net of accumulated amortization of $226.4 and $187.3 as of December 31, 2019 and December 31, 2018, respectively490.7  532.0  
Other assets121.1  130.8  
Total assets$3,120.9  $3,147.5  
LIABILITIES AND STOCKHOLDER'S DEFICIENCY
Current liabilities:
Short-term borrowings$2.2  $9.3  
Current portion of long-term debt288.0  348.1  
Accounts payable251.8  332.1  
Accrued expenses and other current liabilities418.2  434.7  
Total current liabilities960.2  1,124.2  
Long-term debt2,906.2  2,727.7  
Long-term pension and other post-retirement plan liabilities181.2  169.0  
Other long-term liabilities162.7  59.7  
Stockholder's deficiency:
Products Corporation Preferred stock, par value $1.00 per share; 1,000 shares authorized; 546 shares issued and outstanding as of December, 2019 and December 31, 2018, respectively54.6  54.6  
Products Corporation Common Stock, par value $1.00 per share; 10,000 shares authorized; 5,260 shares issued and outstanding as of December 31, 2019 and December 31, 2018, respectively—  —  
Additional paid-in capital996.5  988.4  
Accumulated deficit(1,893.1) (1,741.9) 
Accumulated other comprehensive loss(247.4) (234.2) 
Total stockholder's deficiency(1,089.4) (933.1) 
Total liabilities and stockholder's deficiency$3,120.9  $3,147.5  
 December 31, 2017 December 31, 2016
   
(as adjusted)(a)
ASSETS   
Current assets:   
Cash and cash equivalents$87.1
 $186.4
Trade receivables, less allowance for doubtful accounts of $13.5 and $11.1 as of December 31, 2017 and December 31, 2016, respectively444.8
 423.9
Inventories497.9
 424.6
Prepaid expenses and other109.5
 84.9
Receivable from Revlon, Inc.141.8
 132.7
Total current assets1,281.1
 1,252.5
Property, plant and equipment, net of accumulated depreciation of $385.5 and $304.7 as of December 31, 2017 and December 31, 2016, respectively372.7
 320.5
Deferred income taxes118.9
 136.1
Goodwill692.5
 689.5
Intangible assets, net of accumulated amortization of $130.9 and $84.8 as of December 31, 2017 and December 31, 2016, respectively592.1
 636.6
Other assets118.4
 103.5
Total assets$3,175.7
 $3,138.7
    
LIABILITIES AND STOCKHOLDER’S DEFICIENCY   
Current liabilities:   
Short-term borrowings$12.4
 $10.8
Current portion of long-term debt170.2
 18.1
Accounts payable336.9
 296.9
Accrued expenses and other416.5
 382.7
Total current liabilities936.0
 708.5
Long-term debt2,653.7
 2,663.1
Long-term pension and other post-retirement plan liabilities172.8
 184.1
Other long-term liabilities68.6
 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 December 31, 2017 and December 31, 2016, respectively54.6
 54.6
Common Stock, par value $0.01 per share; 10,000 shares authorized; 5,260 shares issued as of December 31, 2017 and December 31, 2016, respectively—
 —
Additional paid-in capital971.2
 964.4
Accumulated deficit(1,452.8) (1,274.1)
Accumulated other comprehensive loss(228.4) (251.7)
Total stockholder’s deficiency(655.4) (506.8)
Total liabilities and stockholder’s deficiency$3,175.7
 $3,138.7





(a)Adjusted as a result of the adoption of certain accounting pronouncements as of December 31, 2017. See Note 1, "Description of Business and Summary
of Significant Accounting Policies - Recently Adopted Accounting Pronouncements," for details of these adjustments.









See Accompanying Notes to Audited Consolidated Financial Statements


F-9
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOMELOSS
(dollars in millions)
 Year Ended December 31,
 2017 2016 2015
      
Net sales$2,693.7
 $2,334.0
 $1,914.3
Cost of sales1,151.3
 917.1
 667.8
      Gross profit1,542.4
 1,416.9
 1,246.5
Selling, general and administrative expenses1,461.0
 1,151.6
 993.5
Acquisition and integration costs52.9
 43.2
 8.0
Restructuring charges and other, net33.4
 34.0
 10.5
Impairment charges10.8
 23.4
 9.7
      Operating (loss) income(15.7) 164.7
 224.8
Other expenses:     
   Interest expense149.8
 105.2
 83.3
   Amortization of debt issuance costs9.1
 6.8
 5.7
   Loss on early extinguishment of debt—
 16.9
 —
   Foreign currency (gains) losses, net(18.5) 18.5
 15.7
   Miscellaneous, net0.8
 (0.6) 0.4
      Other expenses141.2
 146.8
 105.1
(Loss) income from continuing operations before income taxes(156.9) 17.9
 119.7
Provision for income taxes23.9
 28.7
 54.4
(Loss) income from continuing operations, net of taxes(180.8) (10.8) 65.3
Income (loss) from discontinued operations, net of taxes2.1
 (4.9) (3.2)
Net (loss) income$(178.7) $(15.7) $62.1
Other comprehensive income:    

   Foreign currency translation adjustments, net of tax (a)   
9.0
 (0.5) (18.1)
   Amortization of pension related costs, net of tax (b)(c)
8.1
 7.6
 7.2
Pension re-measurement, net of tax (d)
1.8
 (14.3) (6.9)
Pension settlement, net of tax (e)
—
 —
 17.3
Pension curtailment, net of tax(f)
2.1
 —
 —
Reclassification into earnings of accumulated losses from the de-designated 2013 Interest Rate Swap, net of tax(g)
2.3
 —
 —
Revaluation of derivative financial instruments, net of reclassifications into earnings, net of tax(h)
—
 0.8
 (1.6)
Other comprehensive income, net23.3
 (6.4) (2.1)
Total comprehensive (loss) income$(155.4) $(22.1) $60.0
Year Ended December 31,
20192018
Net sales$2,419.6  $2,564.5  
Cost of sales1,052.2  1,117.0  
      Gross profit1,367.4  1,447.5  
Selling, general and administrative expenses1,308.7  1,454.2  
Acquisition, integration and divestiture costs3.9  13.9  
Restructuring charges and other, net12.8  20.2  
Impairment charges—  18.0  
(Gain) loss on divested assets(26.6) 20.1  
      Operating income (loss)68.6  (78.9) 
Other expenses:
   Interest expense, net196.6  176.6  
   Amortization of debt issuance costs14.6  13.0  
   Foreign currency (gains) losses, net(1.9) 15.8  
   Miscellaneous, net16.4  1.3  
      Other expenses225.7  206.7  
Loss from continuing operations before income taxes(157.1) (285.6) 
Provision for income taxes1.6  3.4  
Loss from continuing operations, net of taxes(158.7) (289.0) 
Income (loss) from discontinued operations, net of taxes7.5  (0.1) 
Net loss$(151.2) $(289.1) 
Other comprehensive (loss) income:
   Foreign currency translation adjustments(a)
(2.9) (9.4) 
   Amortization of pension related costs, net of tax(b)(c)
9.0  8.4  
Pension re-measurement, net of tax (d)
(19.3) (5.5) 
Reclassification into earnings of accumulated losses from the de-designated 2013 Interest Rate Swap, net of tax(e)
—  0.7  
Other comprehensive loss, net(13.2) (5.8) 
Total comprehensive loss$(164.4) $(294.9) 
(a)
Net of tax (benefit) expense of $(0.4) million, $1.1 million and $(5.1) million for 2017, 2016 and 2015, respectively.
(b)
Net of tax expense of $1.6 million for 2017, and $1.3 million for each of 2016 and 2015.
(c)
This amount is included in the computation of net periodic benefit (income) costs. See Note 14, "Pension and Post-Retirement Benefits," for additional information regarding net periodic benefit (income) costs.
(d)
Net of tax benefit of $0.3 million, $4.1 million and $3.3 million for 2017, 2016 and 2015, respectively.
(e)
Net of tax expense of $3.7 million for 2015.
(f)
Net of tax expense of $0.3 million for 2017.
(g)
Net of tax benefit of $1.4 million for 2017.
(h)
Net of tax expense (benefit) of $0.5 million and $(1.0) million for 2016 and 2015, respectively.


(a)Net of tax expense of $1.8 million and a tax benefit of $0.1 million for 2019 and 2018, respectively.
(b)Net of tax expense of $1.1 million and $1.0 million for 2019 and 2018, respectively.
(c)This amount is included in the computation of net periodic benefit costs (income). See Note 12, "Pension and Post-Retirement Benefits," for additional information regarding net periodic benefit costs (income).
(d) Net of tax benefit of $5.2 million and $2.5 million for 2019 and 2018, respectively.
(e)Net of tax benefit of NaN and $0.5 million for 2019 and 2018, respectively.












See Accompanying Notes to Audited Consolidated Financial Statements


F-10
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDER’SSTOCKHOLDER'S DEFICIENCY
(dollars in millions)

 RCPC Preferred Stock Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Stockholder’s Deficiency
          
Balance, January 1, 2015$54.6
 $952.1
 $(1,320.5) $(243.2) $(557.0)
Stock-based compensation amortization  5.1
     5.1
Excess tax benefits from stock-based compensation  0.3
     0.3
Net income    62.1
   62.1
Other comprehensive loss, net (a)    
      (2.1) (2.1)
Balance, December 31, 2015$54.6
 $957.5
 $(1,258.4) $(245.3) $(491.6)
Stock-based compensation amortization  6.4
     6.4
Excess tax benefits from stock-based compensation  0.5
     0.5
Net loss    (15.7)   (15.7)
Other comprehensive loss, net (a)    
      (6.4) (6.4)
Balance, December 31, 2016$54.6
 $964.4
 $(1,274.1) $(251.7) $(506.8)
Stock-based compensation amortization—
 6.8
 —
 —
 6.8
Net loss—
 —
 (178.7) —
 (178.7)
Other comprehensive income, net (a)
—
 —
 —
 23.3
 23.3
Balance, December 31, 2017$54.6
 $971.2
 $(1,452.8) $(228.4) $(655.4)
Preferred StockAdditional Paid-In CapitalAccumulated DeficitAccumulated Other Comprehensive LossTotal Stockholder's Deficiency
Balance, January 1, 2019$54.6  $988.4  $(1,741.9) $(234.2) $(933.1) 
Stock-based compensation amortization—  8.1  —  —  8.1  
Net loss—  —  (151.2) —  (151.2) 
Other comprehensive income, net (a)
—  —  —  (13.2) (13.2) 
Balance, December 31, 2019$54.6  $996.5  $(1,893.1) $(247.4) $(1,089.4) 

(a)See Note 17, "Accumulated Other Comprehensive Loss," regarding the changes in the accumulated balances for each component of other comprehensive loss during 2017, 2016 and 2015.



Preferred StockAdditional Paid-In CapitalAccumulated DeficitAccumulated Other Comprehensive LossTotal Stockholder's Deficiency
Balance, January 1, 2018$54.6  $971.2  $(1,452.8) $(228.4) $(655.4) 
Stock-based compensation amortization—  17.2  —  —  17.2  
Net loss—  —  (289.1) —  (289.1) 
Other comprehensive income, net (a)
—  —  —  (5.8) (5.8) 
Balance, December 31, 2018$54.6  $988.4  $(1,741.9) $(234.2) $(933.1) 


(a)See Note 15, "Accumulated Other Comprehensive Loss," regarding the changes in the accumulated balances for each component of other comprehensive loss during 2019 and 2018, respectively.






























See Accompanying Notes to Audited Consolidated Financial Statements


F-11
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in millions)
Year Ended December 31,
20192018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss$(151.2) $(289.1) 
Adjustments to reconcile net loss to net cash used in operating activities:
   Depreciation and amortization162.9  177.2  
   Foreign currency (gains) losses from re-measurement(1.9) 15.8  
   Amortization of debt discount1.6  1.4  
   Stock-based compensation amortization8.1  17.2  
Impairment charges—  18.0  
  (Benefit from) provision for deferred income taxes(30.0) 3.0  
   Amortization of debt issuance costs14.6  13.0  
   Non-cash loss (gain) on divested assets0.9  (0.7) 
   (Gain) loss on divested assets(26.6) 20.1  
   Pension and other post-retirement cost7.2  2.6  
   Change in assets and liabilities:
Decrease (increase) in trade receivables9.3  (0.3) 
Decrease (increase) in inventories74.5  (36.4) 
      Increase in prepaid expenses and other current assets7.4  (52.6) 
(Decrease) increase in accounts payable(73.2) 1.6  
(Decrease) increase in accrued expenses and other current liabilities(39.3) 27.5  
Pension and other post-retirement plan contributions(12.1) (8.8) 
Purchases of permanent displays(46.2) (80.7) 
Other, net25.7  0.4  
Net cash used in operating activities(68.3) (170.8) 
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures(29.0) (57.2) 
Proceeds from the sale of certain assets31.1  —  
Net cash provided by (used in) investing activities2.1  (57.2) 
CASH FLOWS FROM FINANCING ACTIVITIES:
Net decrease in short-term borrowings and overdraft(17.3) (1.1) 
Net (repayments) borrowings under the Amended 2016 Revolving Credit Facility(62.6) 178.0  
Net borrowings under the 2019 Term Loan Facility200.0  —  
Net borrowings under the 2018 Foreign Asset-Based Term Loan—  88.9  
Repayments under the 2016 Term Loan Facility(18.0) (18.0) 
Payment of financing costs(15.3) (9.7) 
Tax withholdings related to net share settlements of restricted stock units and awards(1.6) (3.6) 
Other financing activities(0.9) (1.4) 
Net cash provided by financing activities84.3  233.1  
Effect of exchange rate changes on cash, cash equivalents and restricted cash(1.1) (5.0) 
   Net increase in cash, cash equivalents and restricted cash17.0  0.1  
   Cash, cash equivalents and restricted cash at beginning of period (a)
87.5  87.4  
   Cash, cash equivalents and restricted cash at end of period (a)
$104.5  $87.5  
Supplemental schedule of cash flow information:(b)
   Cash paid during the period for:
Interest$194.6  $163.7  
Income taxes, net of refunds9.9  16.0  
 Year Ended December 31,
 2017 
2016
(as adjusted)(a)
 
2015
(as adjusted)(a)
CASH FLOWS FROM OPERATING ACTIVITIES:     
Net (loss) income$(178.7) $(15.7) $62.1
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:     
   Depreciation and amortization155.8
 123.2
 103.2
   Foreign currency (gains) losses from re-measurement(22.5) 20.6
 19.5
   Amortization of debt discount1.2
 1.4
 1.4
   Stock-based compensation amortization6.8
 6.4
 5.1
Impairment charge10.8
 23.4
 9.7
   Provision for (benefit from) deferred income taxes16.7
 (6.9) 31.5
   Loss on early extinguishment of debt—
 16.9
 —
   Amortization of debt issuance costs9.1
 6.8
 5.7
 Loss (gain) on sale of certain assets1.6
 0.4
 (6.4)
   Pension and other post-retirement cost (income)1.5
 (0.6) 19.0
   Change in assets and liabilities, net of acquisitions:     
      Increase in trade receivables(9.9) (59.5) (18.5)
      (Increase) decrease in inventories(63.0) 74.5
 (30.6)
      Increase in prepaid expenses and other current assets(30.2) (19.5) (25.4)
      Increase (decrease) in accounts payable26.8
 (12.6) 34.9
      Increase in accrued expenses and other current liabilities18.8
 14.7
 13.0
      Pension and other post-retirement plan contributions(8.5) (8.3) (18.1)
      Purchases of permanent displays(65.5) (52.1) (47.4)
      Other, net(10.1) 4.3
 (0.6)
Net cash (used in) provided by operating activities(139.3) 117.4
 158.1
CASH FLOWS FROM INVESTING ACTIVITIES:     
Capital expenditures(108.3) (59.3) (48.3)
Business acquisition, net of acquired cash—
 (1,028.7) (41.7)
Proceeds from the sale of certain assets—
 0.5
 6.2
Net cash used in investing activities(108.3) (1,087.5) (83.8)
CASH FLOWS FROM FINANCING ACTIVITIES:     
Net increase (decrease) in short-term borrowings and overdraft3.3
 —
 23.0
Net borrowings under the 2016 Revolving Credit Facility157.0
 —
 —
Repayments under the 2016 Term Loan Facility(18.0) (4.5) —
Prepayments under the Old Acquisition Term Loan—
 (15.1) (19.3)
Prepayments under the 2011 Term Loan—
 (11.5) (12.1)
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(1.2) (61.6) —
Tax withholdings related to net share settlements of restricted stock units and awards(2.5) (3.2) (2.8)
Other financing activities(1.7) (2.5) (3.7)
Net cash provided by (used in) financing activities136.9
 832.6
 (14.9)
Effect of exchange rate changes on cash and cash equivalents11.3
 (2.6) (7.8)
   Net (decrease) increase in cash, cash equivalents and restricted cash
(99.4) (140.1) 51.6
   Cash, cash equivalents and restricted cash at beginning of period186.8
 326.9
 275.3
   Cash, cash equivalents and restricted cash at end of period$87.4
 $186.8
 $326.9
Supplemental schedule of cash flow information:     
   Cash paid during the period for:     
Interest$149.1
 $91.7
 $79.9
Income taxes, net of refunds0.4
 21.9
 $25.2


(a)Adjusted These amounts include restricted cash of $0.2 million and $0.2 million as of December 31, 2019 and 2018, respectively, which represent cash on deposit in lieu of a resultmandatory prepayment under the 2018 Foreign Asset-Based Term Facility, and cash on deposit to support outstanding undrawn letters of credit, which were included within other assets in the adoption of certain accounting pronouncements beginning on January 1, 2017.Company's consolidated balance sheets.
(b) See Note 1, "Description of Business6, "Property, Plant, and Summary
of Significant Accounting Policies - Recently Adopted Accounting Pronouncements,Equipment," for detailssupplemental disclosure of these adjustments.

non-cash financing and investing activities in relation to the lease liabilities arising from obtaining right-of-use assets following the implementation of ASC Topic 842, Leases.
See Accompanying Notes to Audited Consolidated Financial Statements


F-6
F-12
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)millions, except share and per share amounts)




1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


Revlon, Consumer Products CorporationInc. ("Products Corporation"Revlon" and together with its subsidiaries, the "Company") is theconducts its business exclusively through its direct wholly-owned operating subsidiary, of Revlon whichConsumer Products Corporation ("Products Corporation") and its subsidiaries. Revlon is an indirect majority-owned subsidiary of MacAndrews & Forbes Incorporated (together with certain of its affiliates other than Revlon and the Company, "MacAndrews & Forbes"), a corporation wholly-ownedbeneficially owned by Ronald O. Perelman.

Mr. Perelman is Chairman of Revlon's and Product Corporation's Board of Directors.
The Company is a leading global beauty company with an iconic portfolio of brands. The Companybrands that develops, manufactures, markets, distributes and sells an extensive array of color cosmetics,cosmetics; hair color, hair care and hair treatments, fragrances,treatments; fragrances; skin care,care; beauty tools,tools; men’s grooming products,products; anti-perspirant deodorantsdeodorants; 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 brand-centric reporting segments: the consumer division ("Consumer");units that are aligned with its organizational structure based on 4 global brand teams: Revlon; Elizabeth Arden; Portfolio; and Fragrances, which represent the professional division ("Professional");Company's 4 reporting segments. Revlon segment products are primarily marketed, distributed and Other. The Company’s principal customers for its productssold in the Consumer segment includemass retail channel, large volume retailers, chain drug and food stores, chemist shops, hypermarkets, general merchandise stores, e-commerce sites, television shopping, department stores, professional hair and nail salons, one-stop shopping beauty retailers and specialty cosmeticscosmetic 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, e-commerce sites and travel retailers and distributors, as well as direct sales to consumers via Elizabeth Arden branded retail stores and e-commerce business. websites. During 2019, the Company re-acquired from its third-party licensee the rights to use the Elizabeth Arden products are also sold through the Elizabeth Arden and Red Door Spa trademarks in connection with operating beauty salons and spas. In 2018, the Company launched direct-to-consumer on-line selling capabilities through its elizabetharden.com, americancrew.com, juicycouturebeauty.com and fleshbeauty.com websites. The Company's principal customers for itsCompany’s Portfolio segment markets, distributes and sells a comprehensive line of premium, specialty and mass products inprimarily to the Professional segment includemass retail channel, hair and nail salons and distributors to professional salonssalon distributors in the U.S. and internationally.internationally and large volume retailers, specialty and department stores. The OtherFragrance segment primarily includesproducts are typically sold to retailers in the operating results relatedU.S. and internationally, including prestige retailers, specialty stores, e-commerce sites, the mass retail channel, travel retailers and other international retailers. For further information, refer to Note 17, "Segment Data and Related Information."
Unless the context otherwise requires, all references to the development, marketingCompany mean Revlon and distributionits subsidiaries, including, without limitation, its wholly-owned operating subsidiary, Products Corporation. Revlon as a public holding company, has no business operations of certain licensed fragrancesits own and other beauty products.owns, as its only material asset, all of the outstanding capital stock of Products Corporation. As such, its net income/(loss) has historically consisted predominantly of the net income/(loss) of Products Corporation, and in 2019 and 2018 included $7.9 million and $6.3 million, respectively, in expenses incidental to being a public holding company.
The accompanying Consolidated Financial Statements include the Company's accounts after the elimination of all material intercompany balances and transactions. Certain prior year amounts have been reclassified to conform to the current year presentation.
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,to: expected sales returns and allowances, trade support costs,returns; certain assumptions related to the valuation of acquired intangible and long-lived assets and the recoverability of goodwill, intangible and long-lived assets,assets; income taxes, including deferred tax valuation allowances and reserves for estimated tax liabilities, restructuring costs,liabilities; and 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.
F-13
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

Discontinued Operations Presentation
As a result of the Company's decision on December 30, 2013 to exit its direct manufacturing, warehousing and sales business operations in mainland China within the ConsumerRevlon segment effective December 31, 2013, the Company has reportedreports the results of its former China operations within income (loss) from discontinued operations, net of taxes in the Company's Consolidated Statements of Operations and Comprehensive (Loss) Income for all periods presented.Income. See Note 4,3, "Discontinued Operations," for further discussion.
Cash, Cash Equivalents and Restricted Cash
Cash and cash equivalents are primarilyinclude cash in banks and highly liquid investments in high-quality, short-term money market instruments with original maturitiesmaturity dates of three months or less and are carried at cost, which approximates fair value. Cash equivalents were $2.0 million and $2.5 million as of December 31, 2017 and 2016, respectively.less. Accounts payable include $21.8$13.3 million and $19.3$23.4 million of outstanding checks not yet presented for payment at December 31, 20172019 and 2016,2018, respectively. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the statements of financial position that sum to the total of the same such amounts shown in the statements of cash flows:

December 31,
20192018
Cash and cash equivalents$104.3  $87.3  
Restricted cash(a)
0.2  0.2  
Total cash, cash equivalents and restricted cash$104.5  $87.5  
F-7
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)


  December 31,
  2017 2016 2015
       
Cash and cash equivalents $87.1
 $186.4
 $326.9
Restricted cash(a)
 0.3
 0.4
 —
Total cash, cash equivalents and restricted cash $87.4
 $186.8
 $326.9

(a)Amounts included in restricted cash represent cash on deposit to support the Company's letters of credit and is included within other assets in the Company's consolidated balance sheets.

Trade Receivables
Trade receivables represent payments due to the Company for previously recognized net sales, reduced by an allowance for doubtful accounts for balances which are estimated to be uncollectible at period end. The Company grants credit terms in the normal course of business to its customers. Trade credit is extended based upon periodically updated evaluations of each customer's ability to perform its payment obligations. The Company does not normally require collateral or other security to support credit sales. The allowance for doubtful accounts is determined based on historical experience and ongoing evaluations of the Company's receivables and assessments of the risks of payment. The allowance for doubtful accounts is recorded against trade receivable balances when they are deemed uncollectible. Recoveries of trade receivables previously reserved are recorded in the consolidated statements of operations and comprehensive (loss) income when received. At December 31, 2017 and 2016, the Company's three largest customers accounted for an aggregate of approximately 31%33% and 27%, respectively,30% of the Company's outstanding trade receivables.

receivables at December 31, 2019 and 2018, respectively.
Inventories
Inventories are stated at the lower of cost or net realizable value. Cost is based on standard cost and production variances, which approximates actual cost on the first-in, first-out method. Cost components include direct materials, direct labor and direct overhead, as well as in-bound freight. The Company records adjustments to the value of its inventory based upon its forecasted plans to sell products included in inventory, as well as planned product discontinuances. The physical condition (e.g., age and quality) of the inventories is also considered in establishing its valuation. These adjustments are estimates, which could vary significantly, either favorably or unfavorably, from the amounts that the Company may ultimately realize upon the disposition of inventories if future economic conditions, customer inventory levels, product discontinuances, sales return levels or competitive conditions differ from the Company's estimates and expectations.
Property, Plant and Equipment and Other Assets
Property, plant and equipment is recorded at cost and is depreciated on a straight-line basis over the estimated useful lives of such assets as follows: land improvements, 20 to 30 years; buildings and improvements, 5 to 50 years; machinery and equipment, 3 to 15 years; counters and trade fixtures, 3 to 5 years; office furniture and fixtures, 3 to 15 years; and capitalized software, 2 to 10 years. Leasehold improvements and building improvements are amortized over their estimated useful lives or over the terms of the leases or remaining life of the original structure, whichever is shorter. Repairs and maintenance are charged to the statement of operations as incurred, and expenditures for additions and improvements are capitalized. Counters and trade fixtures are amortized over their estimated useful life of the in-store counter and display related assets. The estimated useful life may be subject to change based upon declines in net sales and/or changes in merchandising programs. See Note 7,6, "Property, Plant and Equipment," for further discussion.
F-14
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

Included in other assets are permanent wall displays amounting to $84.8$101.0 million and $64.1$110.6 million as of December 31, 20172019 and 2016,2018, respectively, which are amortized generally over a period of 1 to 3 years. In the event of product discontinuances, from time-to-time, the Company may accelerate the amortization of related permanent wall displays based on the estimated remaining useful life of the asset. Amortization expense for permanent wall displays was $55.4 million, $47.8$55.6 million and $41.3$50.7 million for 2017, 20162019 and 2015,2018, respectively.
The Company capitalizes deferred financing costs related to the issuance of its revolving credit facilities, which costs were $5 million and $6 million as of December 31, 2017 and 2016, respectively, and amortizes such costs over the terms of the related debt instruments using the effective-interest method.
Long-lived assets, such as property, plant and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. If events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable, the Company estimates the undiscounted future cash flows (excluding interest) resulting from the use of the asset and its ultimate disposition. If the sum of the undiscounted

F-8
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)


cash flows (excluding interest) is less than the carrying value, the Company recognizes an impairment loss, measured as the amount by which the carrying value exceeds the fair value of the asset. There were no significant0 impairment charges to long-lived assets during the years ended December 31, 2017, 20162019 and 2015.2018.
GoodwillDeferred Financing Costs
The Company capitalizes deferred financing costs related to the issuance of revolving lines of credit and amortizes such costs over the terms of the related debt instruments using the effective-interest method. Capitalized deferred financing costs were NaN and $4.0 million during 2019 and 2018, respectively.
Leases

The Company adopted Accounting Standards Update ("ASU") No. 2016-02, "Leases (Topic 842)" ("ASU No. 2016-02" or "ASC 842"), beginning as of January 1, 2019, using a modified retrospective approach and applying the standard’s transition provisions at the effective date of January 1, 2019. ASU No. 2016-02 requires that a lessee recognize, for both finance leases and operating leases, a liability to make lease payments (the lease liability) and a Right-of-Use (“ROU”) asset representing its right to use the underlying leased asset for the lease term. The lease liability is equal to the present value of the lease payments and the ROU asset is based on the lease liability, subject to certain adjustments, such as pre-payments, initial direct costs, lease incentives and accrued rent. In addition, upon adoption the Company elected the available practical expedients allowed by the guidance under:

•ASC 842-10-15-37, by not separating lease components from non-lease components and instead accounting for all components as a single lease component for all of its classes of underlying assets, i.e., for any type of equipment leases and real estate leases; and
•ASC 842-10-65-1, by not reassessing at the transition date: (i) whether any expired or existing contracts are or contain leases; (ii) lease classification for any expired or existing leases; and (iii) initial direct costs for any existing leases.
The Company determines if an arrangement is a lease at inception, considering whether the contract conveys a right to control the use of the identified asset for a period of time in exchange for consideration. Operating leases are included in ROU assets, recorded within “Property, Plant and Equipment,” and operating lease liabilities are recorded within either "Accrued expenses and other current liabilities" and/or "Other long-term liabilities" in the Company’s consolidated balance sheets. Finance leases are included in ROU assets recorded within “Property, Plant and Equipment,” and finance lease liabilities are recorded within either "Accrued expenses and other current liabilities" and/or "Other long-term liabilities" in the Company’s consolidated balance sheets, given their immateriality.

As most of the Company’s leases do not provide the lease implicit rates, the Company uses its incremental borrowing rates as the discount rate, adjusted as applicable, based on the information available at the lease commencement dates to determine the present value of lease payments. The Company may use the lease implicit rate, when readily determinable, as the discount rate to determine the present value of lease payments.

Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Operating lease expense is recognized on a straight-line basis over the applicable lease term.
At lease commencement, for initial measurement, variable lease payments that do not depend on an index or rate, if any, are excluded from lease payments. Subsequent to initial measurement, these variable payments are recognized when the event determining the amount of the variable consideration to be paid occurs. Leases with an initial lease term of 12 months or less are not included in the lease liability or ROU asset.
F-15
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

After adoption, ROU assets and lease liabilities for operating leases are measured in accordance with the guidance in ASC 842-20-35-3, and ROU assets and lease liabilities for finance leases are measured in accordance with the guidance in ASC 842-30-35-1. The Company’s ROU assets for operating or finance leases are subject to the impairment guidance in ASC 360, Property, Plant, and Equipment.
See Note 6, "Property, Plant and Equipment," for further information on the Company's leases.
Goodwill
Goodwill represents the excess purchase price for businesses acquired over the fair value of net assets acquired. Goodwill is not amortized, but rather it is reviewed annually for impairment at the reporting unit level using October 1st1st carrying values, or when there is evidence that events or changes in circumstances indicate that the Company’s carrying amount may not be recovered.

For 2017,2019, in assessing whether goodwill was impaired in connection with its annual impairment testtesting performed during the fourth quarter of 20172019 using October 1st, 20171st, 2019 carrying values, the Company, performed qualitative assessments to determine whether it would be necessary to perform the two-step process, as prescribed byin accordance with Financial Accounting Standards Board ("FASB"), Accounting Standard Codification ("ASC") 350, Intangibles - Goodwill and Other ("ASC 350"), to assess the Company's indefinite-lived intangible assetsperformed qualitative assessments for indicators of impairment. its (i) Revlon, (ii) Elizabeth Arden Skin and Color and (iii) Fragrances reporting units and a quantitative assessment for its (x) Mass Portfolio, (y) Professional Portfolio and (z) Elizabeth Arden Fragrances reporting units.

In performing the 2019 qualitative assessments,assessment, the Company considered, among other factors, the financial performance of each of its Revlon, Elizabeth Arden Skin and Color and Fragrances reporting units, as well as the results of the step one testannual quantitative analysis performed in 2016 and the financial performance2018 for each of the (i) Revlon, Almay and Other; (ii) Elizabeth Arden; and (iii) Professionalthese reporting units. Based upon such assessment, the Company determined that it was more likely than not that the fair valuesvalue of theseeach of its Revlon, Elizabeth Arden Skin and Color and Fragrances reporting units exceeded their respective carrying amounts for 2017.2019.
However, for 2017,
In performing the 2019 quantitative assessment, the Company determined that it would utilizeused the two-step processsimplified approach allowed under ASU No. 2017-04, "Simplifying the Test for Goodwill Impairment," which the Company early adopted in October 2018, to test its Mass Portfolio, Professional Portfolio and Elizabeth Arden Fragrances reporting units for impairment. ###

For 2018, the Global Color Brands ("GCB")Company first performed a qualitative assessment on all of its reporting units, which indicated that indicators of impairment existed for the Mass Portfolio reporting unit within the Portfolio segment. Subsequently, the Company used the simplified approach allowed under ASU No. 2017-04 to test its Mass Portfolio reporting unit for impairment. InFollowing the first step of this test, the Company compared the fair value of the GCB reporting unit, determined based upon its discounted estimated future cash flows, to its carrying amount, including goodwill. The results of the step one test indicated that impairment indicators existed for the GCB reporting unit due to continued net sales declines for both the SinfulColors and the Pure Ice brands and lower promotional activity for the Pure Ice brand.
In the second step, the Company measured the potential impairment of the GCB reporting unit by comparing the implied fair value with the carrying amount of its goodwill at October 1, 2017. The implied fair value of the GCB reporting unit's goodwill was determined in the same manner as the amount of goodwill recognized in a business combination, where the estimated fair value of the GCB reporting unit was allocated to all of the assets and liabilities of that reporting unit (including both recognized and unrecognized intangible assets) as if GCB had been acquired in a business combination and the estimated fair value of the GCB reporting unit was the purchase price paid. When the carrying amount of a reporting unit's goodwill is greater than the implied fair value of its goodwill, an impairment loss is recognized. The Company determined the fair value of the GCB reporting unit using discounted estimated future cash flows. The weighted-average cost of capital used in testing the reporting unit for impairment was 12% with a perpetual growth rate of 2%. As a result of this annual impairment test,such assessment, the Company recognized an aggregate $10.8$18.0 million non-cash goodwill impairment charge related to the GCBMass Portfolio reporting unit within the Portfolio segment in the fourth quarter of 2017.2018. Following the recognition of this non-cash goodwill impairment charge, the GCBMass Portfolio reporting unit had $14.8$54.3 million in remaining goodwill as of December 31, 2017.2018.
For 2016, the Company utilized the two-step process in assessing whether goodwill was impaired for each of the Company's then-existing four reporting units, namely (i) Revlon, Almay and Other; (ii) GCB; (iii) Professional; and (iv) Other (comprised of the CBB business). As a result of the annual impairment testing for 2016, the Company recognized a $16.7 million non-cash goodwill impairment charge related to the Other reporting unit in the fourth quarter of 2016.
For 2015, the Company utilized the two-step process in assessing whether goodwill was impaired for each of the Company's four reporting units. As a result of the 2015 annual impairment test, the Company recognized a $9.7 million non-cash goodwill impairment charge related to the GCB reporting unit in the fourth quarter of 2015.
See Note 2, "Business Combinations," and Note 8,7, "Goodwill and Intangible Assets, Net," for further discussion ofinformation on the Company's goodwill and annual impairment test.testing.
Intangible Assets, net
Intangible Assets, net, include trade names and trademarks, customer relationships, patents and internally developed intellectual property ("IP") and acquired licenses. Indefinite-lived intangible assets, consisting of certain trade names, are not amortized, but rather are tested for impairment annually during the fourth quarter using October 1st carrying values similar to goodwill, in accordance with ASC 350, and the Company recognizes an impairment if the carrying amount of its intangible assets exceeds its fair value. Intangible assets with finite useful lives are amortized over their respective estimated useful lives to their estimated residual values. The Company writes off the gross carrying amount and accumulated amortization for intangible assets in the year in which the asset becomes fully amortized.
Finite-lived intangible assets are considered for impairment under ASC 360-10, Impairment and Disposal of Long-Lived Assets ("ASC 360"), upon the occurrence of certain "triggering events" and the Company recognizes an impairment if the carrying amount of the long-lived asset group exceeds the Company's estimate of the asset group's undiscounted future cash flows. No
For each of 2019 and 2018, 0 impairment was recognized related to the carrying value of any of the Company's finite or indefinite-lived intangible assets as a result of the annual impairment test for the years ended December 31, 2017 and 2015.

F-9
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)


As a result of the 2016 annual impairment tests (described above), the Company also recognized a $6.7 million non-cash intangible assets impairment charge in the fourth quarter of 2016 related to the Other reporting unit.
testing. See Note 2, "Business Combinations," and Note 8,7, "Goodwill and Intangible Assets, Net," for further discussion of the Company's intangible assets, including a summary of finite-lived and indefinite-lived intangible assets.
F-16
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

Revenue Recognition and Sales Returns
TheOn January 1, 2018 the Company adopted ASU No. 2014-09, "Revenue from Contracts with Customers," using the modified retrospective method. Results for the reporting period beginning after January 1, 2018 are presented under this new guidance, while prior period amounts continue to be reported in accordance with the Company's historical accounting practices under previous guidance. However, given the nature of the Company's products and the terms and conditions applicable to sales to its customers, the timing and amount of revenue recognized based on the underlying principles of this guidance are consistent with the Company's revenue recognition policy under previous guidance.
In accordance with the new guidance, the Company's policy is to recognize revenue at an amount that reflects the consideration that the Company expects that it will be entitled to receive in exchange for transferring goods or services to its customers. The Company's policy is to record revenue when persuasive evidencecontrol of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collection is probable. The Company records revenue from the sale of its products when risk of loss and title to the productsgoods transfers to the customer. Net sales are comprised of gross revenues from sales of products less expected product returns, trade discounts and customer allowances, which include costs associated with off-invoice mark-downs and other price reductions, as well as trade promotions and coupons. These incentive costs are recognized at the later of the date on which the Company recognizes the related revenue or the date on which the Company offers the incentive.
The Company allows customers to return their unsold products if and when they meet certain Company-established criteria as set forth in the Company's trade terms. The Company regularly reviews and revises, when deemed necessary, its estimates of sales returns based primarily upon the historical rate of actual product returns, planned product discontinuances, new product launches and estimates of customer inventory and promotional sales. TheFor returned products that the Company expects to resell at a profit, the Company records, in addition to sales returns as a reduction to sales and cost of sales and an increase to accrued liabilities and inventories. Returned products, which are recorded as inventories, arefor the amount expected to be refunded to the customer, an increase to the asset account used to reflect the Company's right to recover products. The amount of the asset account is valued based upon the former carrying amount of the product (i.e., inventory), less any expected costs to recover the products. As the estimated product returns that are expected to be resold at a profit do not comprise a significant amount of the Company's net sales or assets, the Company expectsdoes not separately report these amounts.
The Company's revenues are also net of certain marketing arrangements with its retail customers. Pursuant to realize uponits trade terms with these retail customers, the Company reimburses them for a portion of their subsequent disposition. The physical conditionadvertising costs, which provide advertising benefits to the Company. These arrangements are in the form of marketing development funds and/or cooperative advertising programs and marketability of the returned products are the major factors consideredused by the Company in estimating their realizable value.to drive sales. The advertising programs follow an annual schedule of planned events that is continually updated based on the Company's perceived needs and contractual terms. As these marketing expenditures cannot be directly linked to product sales, the Company records these expenses as a reduction of revenue at the higher of actual spend or estimated costs based on a reserve rate methodology. In limited instances when products are sold under consignment arrangements, the Company does not recognize revenue until control over such products has transferred to the end consumer. Other revenues, primarily royalties, do not comprise a material amount of the Company's net sales.
Revenues derived from licensing arrangements, including any pre-payments, are recognized inThe Company incurs costs associated with product distribution, such as freight and handling costs. The Company has elected to treat these costs as fulfillment activities and recognizes these costs at the period in which they are earned, butsame time that it recognizes the underlying product revenue.
While the adoption of the new guidance under ASU No. 2014-09 did not beforehave a material impact on the initial license term commences.Company's revenues, results of operations or financial condition, the Company expanded its financial statement disclosures as required by this new standard. See Note 17, "Segment Data and Related Information," for additional disclosures provided as a result of this ASU.
Cost of Sales
Cost of sales includes all of the costs to manufacture the Company's products. For products manufactured in the Company's own facilities, such costs include raw materials and supplies, direct labor and factory overhead. For products manufactured for the Company by third-party contractors, such cost represents the amounts invoiced by the contractors. Cost of sales also includes the cost of refurbishing products returned by customers that will be offered for resale and the cost of inventory write-downs associated with adjustments of held inventories to their net realizable value. These costs are reflected in the Company’s consolidated statements of operations and comprehensive (loss) income when the product is sold and net sales revenues are recognized or, in the case of inventory write-downs, when circumstances indicate that the carrying value of inventories is in excess of their recoverable value. Additionally, cost of sales reflects the costs associated with anycertain free products included as sales and promotional incentives. These incentive costs are recognized onat the later of the datesame time that the Company recognizes the related revenue or the date on which the Company offers the incentive.revenue.
F-17
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

Selling, General and Administrative Expenses
Selling, general and administrative ("SG&A") expenses include expenses to advertise the Company's products, such as television advertising production costs and air-time costs, print advertising costs, digital marketing costs, promotional displays and consumer promotions. SG&A expenses also include the amortization of permanent wall displays and finite-lived intangible assets, depreciation of certain fixed assets, distribution costs (such as freight and handling), non-manufacturing overhead (principally personnel and related expenses), selling and trade educations fees, insurance and professional service fees.
Advertising
Advertising within SG&A expenses includes television, print, digital marketing and other advertising production costs that are expensed the first time the advertising takes place. The costs of promotional displays are expensed in the period in which they are shipped to customers. Advertising expenses were $550.0 million, $421.1$446.8 million and $368.7$507.0 million for 2017, 20162019 and 2015,2018, respectively, andwhich were included in SG&A expenses in the Company's consolidated statements of operations and comprehensive (loss) income. The Company also has various arrangements with customers pursuant to its trade terms to reimburse them for a portion of their advertising costs, which provide advertising benefits to the Company. Additionally, from time-to-time, the Company may pay fees to customers in order to expand or maintain shelf space for its products. The costs that the Company incurs for "cooperative" advertising programs, end cap placement, shelf placement costs, slotting fees and marketing development funds, if any, are expensed as incurred and are recorded as a reduction within net sales.
Distribution Costs
Costs associated with product distribution, such as freight and handling costs, are recorded within SG&A expenses when incurred. Distribution costs were $131.1 million, $98.4$135.7 million and $80.2$144.6 million for 2017, 20162019 and 2015,2018, respectively.

F-10
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)


Income Taxes
Income taxes are calculated using the asset and liability method. Under this method, the Company recognizes deferred tax assets and liabilities for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases, as well as for operating loss and tax credit carryforwards. The Company measures deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company recognizes the effect of a change in income tax rates on deferred tax assets and liabilities in income in the period that includes the enactment date. The Company records valuation allowances to reduce deferred tax assets when management determines that it was more likely than not that a tax benefit will not be realized.
The Company recognizes a tax position in its financial statements when management determines that it was more likely than not that the position will be sustained upon examination, based on the merits of such position. The Company recognizes liabilities for unrecognized tax positions in the U.S. and other tax jurisdictions based on an estimate of whether and the extent to which additional taxes will be due. If payment of these amounts is ultimately not required, the reversal of the liabilities would result in additional tax benefits recognized in the period in which the Company determines that the liabilities are no longer required. If the estimate of tax liabilities is ultimately less than the final assessment, this will result in a further charge to expense. The Company recognizes interest and penalties related to income tax matters in income tax expense. See Note 16,14, "Income Taxes," to the Consolidated Financial Statements in this 2019 Form 10-K for discussion of the Tax Act (as hereinafter defined).
Research and Development
Research and development expenditures are expensed as incurred and included within SG&A expenses. The amounts charged in 2017, 20162019 and 20152018 for research and development expenditures were $35.7 million, $37$40.3 million and $31.2$42.4 million, respectively.

Foreign Currency Translation
Assets and liabilities of foreign operations, whose functional currency is the local currency, are translated into U.S. Dollars at the rates of exchange in effect at the balance sheet date. Income and expense items are translated at the weighted-average exchange rates prevailing during each period presented. Gains and losses resulting from foreign currency transactions are included in the results of operations. Gains and losses resulting from translation of financial statements of foreign subsidiaries and branches operating in non-hyperinflationary economies are recorded as a component of accumulated other comprehensive loss until either the sale or upon the complete or substantially complete liquidation by the Company of its investment in a foreign entity. To the extent that foreign subsidiaries and branches operate in hyperinflationary economies, non-monetary assets and liabilities are translated at historical rates and translation adjustments are included in the Company's results of operations.
F-18
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

Basic and Diluted Earnings per Common Share and Classes of Stock
Products Corporation designated 1,000 shares of preferred stock as the "RCPC Preferred Stock," of which 546 shares were outstanding as of December 31, 2017 and all of which are held by Revlon. The holder of the RCPC Preferred Stock is not entitled to receive any dividends. The RCPC Preferred Stock is entitled to a liquidation preference of $100,000Shares used in basic earnings per share before any distribution is made toare computed using the holderweighted-average number of Products Corporation's common stock. The holdershares outstanding during each period. Shares used in diluted earnings per share include the dilutive effect of unvested restricted shares and restricted stock units ("RSUs") issued under the RCPC Preferred Stock does not have any voting rights, except as required by law. The RCPC Preferred Stock may be redeemed at any time by Products Corporation, at its option, for $100,000 per share. However,Plan using the terms of Products Corporation's various debt agreements currently restrict Products Corporation's ability to effect such redemption.treasury stock method. (See Note 18, "Revlon, Inc. Basic and Diluted Earnings (Loss) Per Common Share").
Stock-Based Compensation
The Company recognizes stock-based compensation costs for its restricted stock and restricted stock units, measured at the fair value of each award at the time of grant, as an expense over the period during which an employee is required to provide service. Upon the vesting of restricted stock and RSUs, any resulting tax benefits are recognized in the consolidated statements of operations and comprehensive (loss) income as the awards vest or are settled. The Company reflects such excess tax benefits as cash flows from financing activities in the consolidated statements of cash flows. The Company accounts for forfeitures as a reduction of compensation cost in the period when such forfeitures occur.
Derivative Financial Instruments
The Company is exposed to certain risks relating to its ongoing business operations. The Company usesmay, from time-to-time, use derivative financial instruments, including: (i) foreign currency forward exchange contracts ("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 intended for the purpose of managing interest rate risk associated with Products Corporation’s variable rate indebtedness.

F-11
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)


Foreign Currency Forward Exchange Contracts
Products Corporation entersmay, from time-to-time, enter into FX Contracts 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 Company does not apply hedge accounting to its FX Contracts. The Company records FX Contracts in its consolidated balance sheet at fair value and immediately recognizes changes in fair value in earnings. Fair value of the Company’s FX Contracts is determined by using observable market transactions of spot and forward rates. At December 31, 2019, the Company had 0 outstanding FX Contracts. See Note 13,11, "Financial Instruments," for further discussion ofinformation on the Company's FX Contracts.
Interest Rate Swap
As a result of the Company completing several debt transactions in connection with the September 7, 2016 acquisition of Elizabeth Arden, Inc. ("Elizabeth Arden," the "Elizabeth Arden Acquisition" and the "Elizabeth Arden Acquisition Date," respectively), the critical terms of the 2013 Interest Rate Swap (as hereinafter defined) no longer matched the terms of the underlying debt and the 2013 Interest Rate Swap was determined to no longer be highly effective. Accordingly, the Company discontinued hedge accounting for the 2013 Interest Rate Swap during the third quarter of 2016. Following thethis de-designation, of the 2013 Interest Rate Swap, changes in the fair value of the 2013 Interest Rate Swap have beenwere accounted for as a component of other non-operating expenses. Accumulated deferred losses on the 2013 Interest Rate Swap of $1.2$6.3 million, or $0.7$3.9 million net of tax, at December 31, 2017the De-designation Date, that were previously recorded as a component of accumulated other comprehensive loss, will bewere fully amortized into earnings over the remaining term of the 2013 Interest Rate Swap, which expiresexpired in May 2018. See Note 13,11, "Financial Instruments," for further discussion ofinformation on the Company's 2013 Interest Rate Swap. Refer to Note 11, "Long-Term Debt,9, "Debt," for further details related to financing the Elizabeth Arden Acquisition and related debt restructuring transactions.
Recently Adopted Accounting PronouncementsRecent Transactions
In August 2014,connection with the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") No. 2014-15, "DisclosureCompany's ongoing Strategic Review, during 2019 the divestiture from certain brands resulted in gains on sale of Uncertainties about and Entity's Ability to Continue as a Going Concern,"assets of approximately $27.4 million, which requires an entity to evaluate whether conditions or events,are recorded in the aggregate, raise substantial doubt about the entity's ability to continue as a going concern for one year from the date the financial statements are issued or are available to be issued. The Company adopted ASU 2014-15"(Gain) loss on January 1, 2017 and the adoption of this guidance did not have a material impactdivested assets" on the Company's financial statement disclosures.
In March 2016, the FASB issued 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 obligations, 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 guidance did not have a material impact on the Company’s results of operations, financial 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 $3.2 million and $2.8 million for 2016 and 2015, respectively, previously reported in the Consolidated Statement of Cash FlowsOperations and Comprehensive Loss as a component of cash flows from operating activities, to be reclassified as a component of cash flows from financing activities.December 31, 2019.
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.
In November 2016, the FASB issued ASU No. 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash," which provides specific guidance on the presentation of changes in restricted cash and restricted cash equivalents on the statement of cash flows. Under the new standard, the changes in restricted cash and restricted cash equivalents are required to be disclosed in reconciling the opening and closing balances on the statement of cash flows. The Company adopted ASU No. 2016-18 during the fourth quarter of 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, other than requiring the Company to reconcile its cash balances from its statements of financial position to its statements of cash flows and including restricted cash within the beginning and ending balances of cash within the Company's statement of cash flow.
Recently Issued Accounting Pronouncements
In February 2018, the FASB issued ASU No. 2018-02, "Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income," which will permit entities to reclassify tax effects stranded in accumulated other comprehensive income as a result of tax reform to retained earnings. This new guidance can be applied retrospectively and provides entities with the

See Note 22, “Subsequent Events” for more recent transactions.
F-12
F-19
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIESTable of Contents
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)millions, except share and per share amounts)



option to reclassify the amounts. The new guidance is effective for annual and quarterly periods beginning after December 15, 2018, with early adoption permitted, and requires entities to make new disclosures regardless of whether they elect to reclassify tax effects. The Company is in the process of evaluating the impact that this new guidance is expected to have on its financial statementsRecently Evaluated and/or financial statement disclosures.
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 adopted ASU No. 2017-07 beginning as of January 1, 2018, and the Company expects that substantially all of the 2018 projected cost of approximately $9.0 million will be presented below operating income in the Company's 2018 Statement of Operations and Comprehensive (Loss) Income.
In January 2017, the FASB issued ASU No. 2017-04, "Simplifying the Test for Goodwill Impairment," which simplifies the annual goodwill impairment analysis test by eliminating Step 2 of the current two-step impairment test. Under the new guidance, an entity would continue to perform the first step of the annual impairment test by comparing the carrying amount of a reporting unit with its fair value. If the carrying value of the reporting unit exceeds the fair value of the reporting unit, the goodwill impairment charge would be equal to the amount of such difference. This guidance is effective for annual periods beginning after December 15, 2019, with early adoption permitted. The Company expects to adopt ASU No. 2017-04 beginning as of January 1, 2020 and is in the process of assessing the impact that this new guidance is expected to have on the Company’s results of operations, financial condition and/or financial statement disclosures.
In January 2017, the FASB issued ASU No. 2017-01, "Clarifying the Definition of a Business," which further clarifies the definition of a business in an effort to assist entities in evaluating whether a set of transferred assets constitutes a business. Under this new guidance, if substantially all of the fair value of gross assets acquired is concentrated in a single asset or similar asset group, the set of transferred assets would not meet the definition of a business and no further evaluation is necessary. If this threshold is not met, the entity would then evaluate whether the set of transferred assets and activities meets the requirement that a business include, at a minimum, an input and a process that together have the ability to create an output. This guidance is effective for annual and quarterly periods beginning after December 15, 2017, with early adoption permitted. The Company expects to adopt ASU No. 2017-01 beginning as of January 1, 2018 and expects that this new guidance will not have an impact on the Company’s results of operations, financial condition and/or financial statement disclosures.
In August 2016, the FASB issued ASU No. 2016-15, "Classification of Certain Receipts and Cash Payments," which aims to standardize how certain transactions are classified within the Statement of Cash Flows, including, among other issues, debt prepayment and extinguishment costs and contingent consideration payments made after a business combination. This guidance is effective for annual periods beginning after December 15, 2017, with early adoption permitted. The Company will adopt ASU No. 2016-15 beginning as of January 1, 2018 and is in the process of assessing the impact that this new guidance is expected to have on the Company’s results of operations, financial condition and/or financial statement disclosures.Adopted Accounting Pronouncements
In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)," which requires lessees to recognize a right-of-use asset and a related lease liability on the balance sheet for all leases, with the exception of short-term leases. The lease liability will be equal to the present value of lease payments and the right-of-use asset will be based on the lease liability, subject to adjustmentcertain adjustments, such as for initial direct costs. Leases will continue to be classified as either operating or finance leases in the income statement. This guidance is effective for annual periods beginning after December 15, 2018, with early adoption permitted. The Company will adoptadopted ASU No. 2016-02 beginning as of January 1, 2019, using a modified retrospective approach and applying the standard’s transition provisions at the effective date of January 1, 2019. In addition, the Company elected to apply the package of practical expedients identified under ASC 842. As of January 1, 2019, the Company used an average discount rate of approximately 16%, based on an estimate of the Company's incremental borrowing rates. See Note 6, "Property, Plant and Equipment," for additional disclosures provided as a result of ASU 2016-02.
In February 2018, the FASB issued ASU No. 2018-02, "Income Statement - Reporting Comprehensive Income (Topic 220) - Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income," which gives entities the option to reclassify tax effects stranded in accumulated other comprehensive income as a result of the Tax Cuts and Jobs Act of 2017 (the "Tax Act") to retained earnings. The guidance was effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Entities are required to make additional disclosures, regardless of whether they elect to reclassify stranded amounts of tax effects. The Company has elected not to adopt this amendment and will include required financial statement disclosures, as applicable. No impact is expected to the Company’s results of operations and/or financial condition.

Recently Issued Accounting Pronouncements
In December 2019, the FASB issued ASU No. 2019-12, "Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes," which removes certain exceptions for recognizing deferred taxes for investments, performing intra-period allocations and calculating income taxes in interim periods. This ASU also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. This guidance is effective for annual periods beginning after December 15, 2020, with early adoption permitted, including adoption in any interim period. An entity that elects to early adopt the amendments in an interim period should reflect any adjustments as of the beginning of the annual period that includes that interim period. Additionally, an entity that elects early adoption must adopt all the amendments in the same period. The amendments in this ASU that are related to separate financial statements of legal entities that are not subject to tax should be applied on a retrospective basis for all periods presented. The amendments in this ASU that are related to changes in ownership of foreign equity method investments or foreign subsidiaries should be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. The amendments in this ASU that are related to franchise taxes that are partially based on income should be applied on either a retrospective basis for all periods presented or a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. All other amendments under this ASU should be applied on a prospective basis. The Company is in the process of assessing the impact, if any, that this ASU is expected to have on the Company’s results of operations, financial condition and/or financial statement disclosures.
In August 2018, the FASB issued ASU No. 2018-15, "Internal Use Software (Subtopic 350-40) - Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract," which requires a customer in a cloud computing hosting arrangement that is a service contract to follow the existing guidance in ASC 350-40 on internal-use software to determine which implementation costs are to be deferred and recognized as an asset and which costs are to be expensed as incurred. This guidance is effective for annual periods beginning after December 15, 2019, with early adoption permitted, and may be applied either retrospectively or prospectively to all software implementation costs incurred after adoption. The Company adopted ASU No. 2018-15 prospectively, beginning as of January 1, 2020. The Company has completed its assessment and has determined that this new guidance will not have a material impact on the Company’s results of operations, financial condition and/or financial statement disclosures.
In August 2018, the FASB issued ASU No. 2018-14, "Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715): Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans.” This new guidance removes certain disclosures that are not considered cost beneficial, clarifies certain required disclosures and requires certain additional disclosures. This guidance is effective for annual periods beginning after December 15, 2020, with early adoption permitted. The Company will adopt this guidance (on a retrospective basis for certain new additional disclosures), beginning as of January 1, 2021. While the Company is currently assessing the impact of this new pronouncement, the new guidance, which only affects disclosure items, is not expected to have a material impact on the Company’s results of operations, financial condition and/or financial statement disclosures.
F-20
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," which was subsequently amended in November 2018 through ASU No. 2018-19, "Codification Improvements to Topic 326, Financial Instruments - Credit Losses." ASU No. 2016-13 will require entities to estimate lifetime expected credit losses for trade and other receivables, net investments in leases, financing receivables, debt securities and other instruments, which will result in earlier recognition of credit losses. Further, the new credit loss model will affect how entities in all industries estimate their allowance for losses for receivables that are current with respect to their payment terms. ASU No. 2018-19 further clarifies that receivables arising from operating leases are not within the scope of Topic 326. Instead, impairment from receivables of operating leases should be accounted for in accordance with Topic 842, Leases. In November 2019, the FASB issued ASU No. 2019-10, which, among other things, deferred the application of the new guidance on credit losses for smaller reporting companies ("SRC") to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. This guidance will be applied through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (i.e., a modified-retrospective approach). Under the above-mentioned deferral, the Company expects to adopt ASU No. 2016-03, and the related ASU No. 2018-19 amendments, beginning as of January 1, 2023 and is in the process of assessing the impact, if any, that this new guidance is expected to have on the Company’s results of operations, financial condition and/or financial statement disclosures.

2. RESTRUCTURING CHARGES

2018 Optimization Restructuring Program

In May 2014,November 2018, the FASB issued ASU No. 2014-09, "Revenue from ContractsCompany announced that it was implementing the 2018 Optimization Restructuring Program (the "2018 Optimization Program") designed to streamline the Company’s operations, reporting structures and business processes, with Customers." This new standard will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective.the objective of maximizing productivity and improving profitability, cash flows and liquidity. The underlying principle2018 Optimization Program was substantially completed by December 31, 2019.

As of this new standard 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 expectsDecember 31, 2019, restructuring and related charges to be entitledpaid in exchange for those goods or services. Entities may adopt this new standard either retrospectively for all periodscash are approximately 88% of the total charges, of which approximately $25.9 million were already paid through December 31, 2019, with any residual balance expected to be paid in 2020.
A summary of the 2018 Optimization Restructuring Charges incurred since its inception in November 2018 and through December 31, 2019 is presented in the financial statements (i.e.,following table:
Restructuring Charges and Other, Net
Employee Severance and Other Personnel BenefitsOther CostsTotal Restructuring Charges
Inventory Adjustments(a)
Other Related Charges(b)
Total Restructuring and Related Charges
Charges incurred through December 31, 2018$4.5  $—  $4.5  $—  $1.2  $5.7  
Charges incurred during 201915.8  0.3  16.1  4.9  12.8  33.8  
Cumulative charges incurred through December 31, 2019$20.3  $0.3  $20.6  $4.9  $14.0  $39.5  
(a) Inventory adjustments are recorded within cost of sales in the full retrospective method) or as a cumulative-effect adjustment asCompany’s Consolidated Statement of Operations and Comprehensive Loss.
(b) Other related charges are recorded within SG&A in the Company’s Consolidated Statement of Operations and Comprehensive Loss.

A summary of the date of adoption (i.e.,2018 Optimization Restructuring Charges incurred since its inception in November 2018 and through December 31, 2019 by reportable segment is presented in the modified retrospective method), without applying to comparative years’ financial statements.following table:

Charges incurred during 2019Cumulative charges incurred through December 31, 2019
Revlon$6.9  $8.8  
Elizabeth Arden3.4  4.3  
Portfolio3.0  4.0  
Fragrances2.8  3.5  
     Total$16.1  $20.6  


F-13
F-21
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIESTable of Contents
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)millions, except share and per share amounts)



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 and permits early adoption of ASU No. 2014-09, but not before the effective date of January 1, 2017.
The Company adopted ASU No. 2014-09 beginning as of January 1, 2018 using the modified retrospective method. While the Company is finalizing its assessment of all potential impacts of ASU No. 2014-09, given the nature of the Company's products and the terms and conditions applicable to sales to its customers, the timing and amount of revenue recognized based on the underlying principles of this new standard are consistent with the Company's revenue recognition policy under previous guidance. As a result, the Company does not currently expect that the adoption will have a material impact on its revenues, results of operations or financial position. The Company does, however, expect to expand its financial statement disclosures in order to comply with the new standard. The Company has drafted its accounting policy with respect to the new standard based on a review of its business. The new policy reflects updates to internal controls and processes to enable the preparation of financial information upon its adoption of ASU No. 2014-09.


2. BUSINESS COMBINATIONS
The Elizabeth Arden Acquisition
On the Elizabeth Arden Acquisition Date, the Company completed 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.
In North America, Elizabeth Arden’s principal customers include prestige retailers, the mass retail channel, specialty stores, department stores and other retailers, distributors, e-commerce sites, as well as direct sales to consumers via its Elizabeth Arden 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 $1.8 billion senior secured term loan facility (the "2016 Term Loan Facility" and such agreement being the "2016 Term Loan Agreement"); (ii) $35 million of borrowings under a 5-year $400 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 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. Refer to Note 11, "Long Term Debt" for further details related to financing the Elizabeth Arden Acquisition and related debt restructuring transactions.

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

For the twelve months ended December 31, 2017, the Company incurred $50 million of acquisition and integration costs in its consolidated statement of operations and comprehensive (loss) income related to the Elizabeth Arden Acquisition, which consisted of $49.2 million of integration costs and $0.8 million of acquisition costs. The integration costs consisted of non-restructuring costs related to integrating Elizabeth Arden's operations into the Company's business, including professional fees, lease termination costs and employee related costs. The acquisition costs primarily included legal fees directly attributable to the Elizabeth Arden Acquisition.


F-14
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)


Purchase Price of the Elizabeth Arden Acquisition
The components of the purchase price for the Elizabeth Arden Acquisition were as follows:
 
As of
September 7, 2016
Purchase price of Elizabeth Arden common stock (1)
$431.5
Repayment of Elizabeth Arden senior notes (2)
350.0
Repayment of Elizabeth Arden revolving credit facility, including accrued interest (3)
142.5
Repayment of Elizabeth Arden second lien credit facility, including accrued interest (3)
25.0
Repurchase of Elizabeth Arden preferred stock (4)
55.0
Payment of accrued interest and call premium on Elizabeth Arden Senior Notes (5)
27.4
Payment of Elizabeth Arden dividends payable at Elizabeth Arden Acquisition Date (6) 
2.9
Total Purchase Price$1,034.3
(1)All of Elizabeth Arden’s then issued and outstanding common stock was canceled and extinguished on the Elizabeth Arden Acquisition Date and converted into the right to receive $14 in cash per share, without interest, less any required withholding taxes, that was paid by Products Corporation upon the completion of the Elizabeth Arden Acquisition. The $431.5 million purchase price for Elizabeth Arden common stock included the settlement of all then outstanding Elizabeth Arden stock options and all then outstanding Elizabeth Arden restricted share units at the Elizabeth Arden Acquisition Date for a total cash payment of $11.1 million.
(2)The purchase price included the repurchase of the entire $350 million aggregate principal amount then outstanding of Elizabeth Arden’s 7.375% senior notes due 2021 (the "Elizabeth Arden Old Senior Notes").
(3)The purchase price included the repayment of the entire $142 million aggregate principal amount of borrowings then outstanding as of the Elizabeth Arden Acquisition Date under Elizabeth Arden’s $300 million revolving credit facility and the entire $25 million aggregate principal amount of borrowings then outstanding as of the Elizabeth Arden Acquisition Date under Elizabeth Arden's second lien credit facility, each of which facilities were terminated as of the Elizabeth Arden Acquisition Date.
(4)The purchase price included $55 million that was paid to retire the entire $55 million liquidation preference of all of the then issued and outstanding 50,000 shares of Elizabeth Arden preferred stock, par value $0.01 per share (the "Elizabeth Arden Preferred Stock"), which amount included a $5 million change of control premium.
(5)Interest on the Elizabeth Arden Old Senior Notes accrued at a rate of 7.375% per annum and was payable semi-annually on March 15 and September 15 of every year. The approximately $12.3 million of accrued and unpaid interest was calculated based on 176 days of accrued interest as of the Elizabeth Arden Acquisition Date. Pursuant to the terms of the indenture governing the Elizabeth Arden Old Senior Notes, upon a change in control, such notes were repurchased at a price equal to 103.69% of their principal amount, plus accrued and unpaid interest and additional interest, if any, to the date of such repurchase. The repurchase of the Elizabeth Arden Old Senior Notes was consummated on October 7, 2016.
(6)The purchase price included the payment of approximately $2.9 million in accrued dividends payable at the Elizabeth Arden Acquisition Date to the holders of the then outstanding Elizabeth Arden Preferred Stock.


F-15
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)


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 previously-disclosed estimated fair value (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, both as previously reported and as adjusted by the measurement period adjustments.
 
Estimated Fair Value as Previously Reported(a)
 Measurement Period Adjustments Fair Value as Adjusted
Cash$41.1
 $—
 $41.1
Accounts Receivable132.6
 —
 132.6
Inventories323.3
 —
 323.3
Prepaid expenses and other current assets30.7
 —
 30.7
Property and equipment91.2
 —
 91.2
Deferred taxes, net (b)
68.7
 10.0
 78.7
Intangible assets (c)
336.8
 (15.4) 321.4
Goodwill221.7
 12.3
 234.0
Other assets16.6
 —
 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 Revlon'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.

(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, 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, which 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 consolidated statement of operations and comprehensive (loss) income in 2017 related to the amortization of the acquired trade names from the Elizabeth Arden Acquisition Date through December 31, 2016.

(d)The Measurement Period Adjustments to accrued expenses related to changes in estimated payments for acquisition-related costs.

(e)The Measurement Period Adjustments to other long-term liabilities related to the recognition of the projected benefit obligation of a certain foreign non-qualified benefit plan of Elizabeth Arden.


F-16
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)


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.

Goodwill of $234 million represents the excess of the purchase price paid by Products Corporation for the Elizabeth Arden Acquisition over the fair value of the identifiable net assets acquired by Products Corporation in the Elizabeth Arden Acquisition. Factors contributing to the purchase price resulting in the recognition of goodwill include estimated annualized synergies and cost reductions, expanded category mix, channel diversification and a broader geographic footprint.

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)
   As 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-lived15.0
 15 87.6
 102.6
 5 - 20
Technology2.5
 10 —
 2.5
 10
Customer relationships123.0
 16 —
 123.0
 16
License agreements22.0
 19 —
 22.0
 19
Distribution rights31.0
 18 —
 31.0
 18
Favorable lease commitments1.3
 3 —
 1.3
 3
     Total acquired intangible assets$336.8
   $(15.4)
(b) 
$321.4
  
(a)As previously reported in Revlon'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 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 notexpected to be deductible for income tax purposes.

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 years ended December 31, 2016 and 2015, 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
  Year Ended December 31,
  2016 2015
Net sales $2,858.9
 $2,863.5
Loss from continuing operations, before income taxes (47.7) (65.6)


F-17
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)


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 million increase in the fair value of acquired inventory at the Elizabeth Arden Acquisition Date, the Company recognized a $20.7 million increase in its cost of sales during 2016 in its consolidated financial statements. The pro forma adjustments include an adjustment to reverse the $20.7 million recognized in the year ended December 31, 2016 within cost of sales because it does not have a recurring impact;

(ii) the elimination of $68.0 million of acquisition and integration costs recognized by the Company and Elizabeth Arden in connection with consummating the Elizabeth Arden Acquisition during 2016;

(iii) a $1.4 million pro forma decrease in depreciation as a result of the fair value adjustments to property and equipment for the twelve months ended December 31, 2016;

(iv) a $5.6 million pro forma increase in amortization expense of acquired finite-lived intangible assets recorded in connection with the Elizabeth Arden Acquisition for the twelve months ended December 31, 2016; 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. Refer to Note 11, "Long Term Debt" for further details related to financing the Elizabeth Arden Acquisition and related debt restructuring transactions.
  Year Ended December 31,
($ in millions) 2016 2015
Interest Expense    
Pro forma interest on 2016 Senior Credit Facilities and 6.25% Senior Notes $121.9
 $106.4
Reversal of Elizabeth Arden’s historical interest expense (19.5) (26.2)
Company historical interest expense, as reflected in the historical consolidated financial statements (75.9) (50.9)
Total adjustment for pro forma interest expense $26.5
 $29.3
Debt issuance costs    
Pro forma amortization of debt issuance costs $8.1
 $8.1
Company historical amortization of debt issuance costs, as reflected in the historical consolidated financial statements (3.3) (4.4)
Reversal of Elizabeth Arden’s historical amortization of debt issuance costs (1.3) (1.5)
Total adjustment for pro forma amortization of debt issuance costs $3.5
 $2.2

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.

The Cutex International Acquisition
On May 31, 2016 (the "Cutex International Acquisition Date"), the Company completed the acquisition of Cutex International from Coty Inc. (the "Cutex International Acquisition") for total cash consideration of $29.1 million. Following the Company's October 2015 acquisition of the Cutex business and related assets in the U.S. from Cutex Brands, LLC (the "Cutex U.S. Acquisition" and together with the Cutex International Acquisition, the "Cutex Acquisitions"), combined with other Cutex businesses that the Company acquired in 1998, the Cutex International Acquisition completed the Company's global consolidation of the Cutex brand. Cutex International's results of operations are included in the Company’s Consolidated Financial Statements commencing on the Cutex International Acquisition Date. Pro forma results of operations have not been presented, as the impact of the Cutex International Acquisition on the Company’s consolidated financial results is not material.

F-18
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)


The Company accounted for the Cutex International Acquisition as a business combination in the second quarter of 2016. The table below summarizes the allocation of the total consideration paid:
 Amounts Recognized as of May 31, 2016
Inventory$0.8
Purchased Intangible Assets (a)
17.2
Goodwill11.1
        Total consideration transferred$29.1
(a) Purchased intangible assets include customer networks fair valued at $11.9 million and intellectual property fair valued at $0.8 million, which are amortized over useful lives of 15 and 10 years, respectively, and indefinite lived trade names fair valued at $4.5 million.
As part of the Cutex International Acquisition, the Company reacquired the Cutex trade name from Coty under an assignment of a license agreement, which had previously provided Coty with an exclusive right to manufacture, market and sell Cutex branded products for an initial term and perpetual automatic 20-year renewals. Based on the terms and conditions of the existing license agreement and other factors, the Cutex trade name was assigned an indefinite-life and, therefore, will not be amortized.
In determining the estimated fair values of net assets acquired and resulting goodwill related to the Cutex International Acquisition, the Company considered, among other factors, the analysis of Cutex International'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. Factors contributing to the purchase price resulting in the recognition of goodwill include the anticipated benefits that the Company expects to achieve through the expansion of its nail product portfolio. Neither the intangible assets nor goodwill acquired in the Cutex International Acquisition are deductible for income tax purposes.


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 iswas designed to reduce the Company’s cost of goods sold and selling, general and administrative ("SG&A")&A expenses. As a result of theThe EA Integration Restructuring Program the Company expects to eliminate approximately 425 positions worldwide.
was completed by December 31, 2018. In connection with implementing the EA Integration Restructuring Program, and since its inception in December 2016, the Company expects to recognize approximately $90 million to $95recognized $80.3 million of total pre-tax restructuring charges (the "EA Integration Restructuring Charges"), consisting of: (i) approximately $65 million to $70$70.3 million of employee-related costs, including severance, retention and other contractual termination benefits; (ii) approximately $15$5.1 million of lease termination costs; and (iii) approximately $10$4.9 million of other related charges.
A summary of the restructuring and related charges incurred The Company paid $71.9 million through December 31, 20172019 in connection with the EA Integration Restructuring Program, with any remaining balance expected to be paid after 2019.
A summary of the EA Integration Restructuring Charges incurred since its inception in December 2016 and through December 31, 2019 is presented in the following table:
Restructuring Charges and Other, Net
Employee Severance and Other Personnel Benefits(a)
Lease Termination and Other Costs(b)
Total Restructuring Charges
Inventory Adjustments(c)
Other Related Charges(d)
Total Restructuring and Related Charges
Cumulative charges incurred through December 31, 2018$72.2  $5.1  $77.3  $1.9  $3.0  $82.2  
Charges incurred during 2019(1.9) —  

(1.9) —  —  (1.9) 
Cumulative charges incurred through December 31, 2019$70.3  $5.1  $75.4  $1.9  $3.0  $80.3  
 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 year ended December 31, 201731.3
 4.8
 36.1
 0.9
 0.7
 37.7
Cumulative charges incurred through December 31, 2017$62.8
 $5.0
 $67.8
 $1.4
 $3.0
 $72.2
(a) Includes reversal due to true-up during 2019 of previously-accrued restructuring charges.

(a)(b) Includes primarily leaseLease termination costsliabilities related to certain exited Elizabeth Arden office space.space were adjusted following the implementation of ASC 842. See Note 6, "Property, Plant & Equipment," for additional information.
(b) (c)Inventory adjustments are recorded within cost of sales in the Company’s consolidated statementConsolidated Statement of operationsOperations and comprehensive (loss) income.Comprehensive Loss.
(c)(d) Other related charges are recorded within SG&A in the Company’s consolidated statementConsolidated Statement of operationsOperations and comprehensive (loss) income.Comprehensive Loss.

A summary of the EA Integration Restructuring Charges incurred since inception in December 2016 and through December 31, 2019 by reportable segment is presented in the following table:
Reversal of charges during 2019Cumulative charges incurred through December 31, 2019
Revlon$(0.8) $32.1  
Elizabeth Arden(0.2) 13.1  
Portfolio(0.4) 12.7  
Fragrances(0.5) 17.5  
     Total$(1.9) $75.4  

F-19
F-22
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIESTable of Contents
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)millions, except share and per share amounts)




A summary of the restructuring charges incurred through December 31, 2017 in connection with the EA Integration Restructuring Program by reportable segment is presented in the following table:
  Charges incurred during the twelve months ended December 31, 2017 Cumulative charges incurred through December 31, 2017
Elizabeth Arden $16.1
 $22.6
Consumer 12.1
 16.3
Professional 4.2
 9.8
Unallocated Corporate Expenses 3.7
 19.1
     Total $36.1
 $67.8

The Company expects that cash payments will total $90 million to $95 million in connection with the EA Integration Restructuring Charges, of which $42.5 million was paid in 2017. The remaining balance is expected to be substantially paid by the end of 2020.


F-20
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO 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, 2019
Expense, NetForeign Currency Translation

Cash

Non-cash
Liability Balance at December 31, 2019
2018 Optimization Program:
Employee severance and other personnel benefits$3.7  $15.8  $—  $(13.8) $—  $5.7  
Other—  0.3  —  (0.3) —  —  
Total 2018 Optimization Program3.7  16.1  —  (14.1) —  5.7  
EA Integration Restructuring Program:
Employee severance and other personnel benefits13.8  (1.9) (0.2) (7.7) —  4.0  
Other(a)
3.4  —  —  (0.3) (3.5) (0.4) 
Total EA Integration Restructuring Program17.2  (1.9) (0.2) (8.0) (3.5) 3.6  
Other immaterial actions:(b)
Employee severance and other personnel benefits4.6  (1.4) —  (1.8) (1.1) 0.3  
Other0.9  —  —  (0.5) —  0.4  
Total other immaterial actions5.5  (1.4) —  (2.3) (1.1) 0.7  
Total restructuring reserve$26.4  $12.8  $(0.2) $(24.4) $(4.6) $10.0  
       Utilized, Net  
Liability
Balance at January 1, 2017
 Expense (Income), Net Foreign Currency Translation 

Cash
 

Non-cash
 Liability Balance at December 31, 2017
2017           
EA Integration Restructuring Program:(a)
           
Employee severance and other personnel benefits$31.5
 $31.3
 $—
 $(37.0) $—
 $25.8
Other3.0
 6.4
 —
 (5.5) —
 3.9
2015 Efficiency Program:(b)
           
Employee severance and other personnel benefits4.5
 (3.2) —
 (1.0) —
 0.3
Other0.2
 —
 —
 —
 —
 0.2
December 2013 Program:(c)

 
 
 
 
  
Employee severance and other personnel benefits1.2
 —
 —
 (0.1) —
 1.1
Other immaterial actions: (d)

 
 
 
 
  
Employee severance and other personnel benefits1.4
 0.6
 —
 (0.9) —
 1.1
Other1.0
 1.1
 0.1
 (0.7) —
 1.5
Total restructuring reserve$42.8
 $36.2
 $0.1
 $(45.2) $—
 $33.9
            
 
Liability
Balance at January 1, 2016
 Expense (Income), Net Foreign Currency Translation 

Cash
 

Non-cash
 Liability Balance at December 31, 2016
2016           
EA Integration Restructuring Program:           
Employee severance and other personnel benefits$—
 $31.5
 $—
 $—
 $—
 $31.5
Other—
 3.0
       3.0
2015 Efficiency Program:           
Employee severance and other personnel benefits6.6
 0.6
 —
 (2.7) —
 4.5
Other0.1
 0.7
 —
 (0.6) —
 0.2
2014 Integration Program:(e)
           
Employee severance and other personnel benefits0.8
 —
 —
 (0.8) —
 —
Other0.1
 —
 —
 (0.1) —
 —
December 2013 Program:           
Employee severance and other personnel benefits1.2
 —
 —
 —
 —
 1.2
Other immaterial actions:           
Employee severance and other personnel benefits2.3
 2.1
 —
 (3.0) —
 1.4
Other0.7
 1.5
 —
 (1.5) 0.3
 1.0
Total restructuring reserve$11.8
 $39.4
 $—
 $(8.7) $0.3
 $42.8


(a)Includes $1.6 Non-cash utilization relates to approximately $3.5 million in chargesof lease termination liabilities related to inventory adjustmentscertain exited office space that were adjusted following the implementation of ASC 842. See Note 6, "Property, Plant, and Equipment," for additional information.
(b) Consists primarily of the Company's other individually and collectively immaterial restructuring initiatives, including those in Denmark, Norway and Sweden.
Utilized, Net
Liability
Balance at January 1, 2018		Expense, NetForeign Currency TranslationCash
Non-Cash(a)
Liability Balance at December 31, 2018
2018 Optimization Program:
Employee severance and other personnel benefits$—  $4.5  $—  $(0.8) $—  $3.7  
Other—  —  —  —  —  —  
Total 2018 Optimization Program—  4.5  —  (0.8) —  3.7  
EA Integration Restructuring Program:
Employee severance and other personnel benefits25.8  9.4  (0.3) (21.1) —  13.8  
Other3.9  0.1  —  (0.3) (0.3) 3.4  
Total EA Integration Restructuring Program29.7  9.5  (0.3) (21.4) (0.3) 17.2  
Other immaterial actions:
Employee severance and other personnel benefits2.5  5.1  —  (3.0) —  4.6  
Other1.7  1.1  (0.1) (1.8) —  0.9  
Total other immaterial actions4.2  6.2  (0.1) (4.8) —  5.5  
Total restructuring reserve$33.9  $20.2  $(0.4) $(27.0) $(0.3) $26.4  
(a) Relates to the reversal of excessive accrual of professional fees.

As of December 31, 2019 and 2018, all of the restructuring reserve balances were included within accrued expenses and other restructuring-related charges that were reflected within cost of sales and SG&A, respectively,current liabilities in the Company’s December 31, 2017Company's Consolidated Statement of Operations and Comprehensive (Loss) Income.Balance Sheets.



See Note 22, “Subsequent Events – Revlon 2020 Restructuring Program.”

F-21
F-23
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIESTable of Contents
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)millions, except share and per share amounts)



(b) In September 2015, the Company initiated restructuring actions to drive certain organizational efficiencies, including reducing general and administrative expenses, within the Company's Consumer and Professional segments (the "2015 Efficiency Program"). These actions were completed by the end of 2017. 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. Total cash payments made for the 2015 Efficiency Program were $7.1 million. A summary of the restructuring and related charges incurred through December 31, 2017 in connection with the 2015 Efficiency Program by reportable segment is presented in the following table:3. DISCONTINUED OPERATIONS

  2015 Efficiency Program cumulative charges incurred through December 31, 2017
Consumer $3.6
Professional 3.5
Unallocated Corporate Expenses 0.5
     Total $7.6

(c) In December 2013, the Company announced restructuring actions that primarily included exiting its direct manufacturing, warehousing and sales business operations in mainland China within the ConsumerRevlon segment (the "December 2013 Program"). The December 2013 Program resulted in the elimination of approximately 1,100 positions in 2014, primarily in China.

(d) Consists primarily With the implementation of $1.1 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").

(e) Following Products Corporation's October 2013 acquisition of The Colomer Group Participations, S.L. ("Colomer" and the "Colomer Acquisition"), the Company implemented actions to integrate Colomer's operations into the Company's business, which reduced costs across the Company's businesses and generated synergies and operating efficiencies within the Company's global supply chain and consolidated offices and back office support (all such actions, together, the "2014 Integration Program"). The 2014 Integration Program was substantially completed as of December 31, 2015.

At December 31, 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.


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, which relate entirely to the Revlon segment, are included within income (loss) from discontinued operations, net of taxes and relate entirely to. Notwithstanding this 2013 program, the Consumer segment. Company re-launched the Revlon brand in China in July 2019. The summary comparative financial results of discontinued operations were as follows:follows for the periods presented:
Year Ended December 31,
20192018
Net sales$—  $—  
Income (loss) from discontinued operations, before taxes7.5  (0.1) 
Provision for income taxes—  —  
Income (loss) from discontinued operations, net of taxes7.5  (0.1) 
 Year Ended December 31,
 2017 2016 2015
Net sales$—
 $—
 $—
Income (loss) from discontinued operations, before taxes2.4
 (4.9) (3.2)
Provision for income taxes0.3
 —
 —
Income (loss) from discontinued operations, net of taxes2.1
 (4.9) (3.2)



F-22
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)


AssetsAs of December 31, 2019 and December 31, 2018, assets and liabilities of the China discontinued operations included in the Consolidated Balance Sheets consisted of the following:
December 31,December 31,
20192018
Cash and cash equivalents$1.0  $1.1  
Trade receivables, net—  0.2  
Total current assets1.0  1.3  
Total assets$1.0  $1.3  
Accounts payable$—  $0.5  
Accrued expenses and other1.2  3.3  
Total current liabilities1.2  3.8  
Total liabilities$1.2  $3.8  

4. INVENTORIES
 December 31,
 2017 2016
Cash and cash equivalents$1.3
 $1.7
Trade receivables, net0.2
 0.2
Total current assets1.5
 1.9
Total assets$1.5
 $1.9
 
 
Accounts payable$0.5
 $0.5
Accrued expenses and other3.5
 3.3
Total current liabilities4.0
 3.8
Total liabilities$4.0
 $3.8


5. INVENTORIES
As of December 31, 20172019 and 2016,2018, the Company's inventory balances consisted of the following:
December 31,
20192018
Finished goods$326.5  $374.1  
Raw materials and supplies110.4  143.5  
Work-in-process11.5  5.6  
$448.4  $523.2  

F-24

 December 31,
 2017 2016
Raw materials and supplies$123.4
 $72.9
Work-in-process22.0
 33.5
Finished goods352.5
 318.2
 $497.9
 $424.6


6.5. PREPAID EXPENSES AND OTHER
As of December 31, 20172019 and 2016,2018, the Company's prepaid expenses and other balances were as follows:
December 31,
20192018
Prepaid expenses$68.9  $71.5  
Taxes (a)
40.4  46.9  
Other26.0  33.6  
$135.3  $152.0  

(a) Taxes for Products Corporation as of December 31, 2019 and December 31, 2018 were $36.5 million and $42.9 million, respectively.

6. PROPERTY, PLANT AND EQUIPMENT
 December 31,
 2017 2016
Prepaid expenses$43.3
 $34.6
Other66.2
 50.3
 $109.5
 $84.9


As of December 31, 2019 and 2018, the Company's property, plant and equipment balances consisted of the following:

December 31,
20192018
Land and improvements$11.0  $11.2  
Building and improvements113.0  103.2  
Machinery and equipment296.0  286.7  
Office furniture, fixtures and capitalized software241.5  220.0  
Counters and trade fixtures52.9  56.0  
Leasehold improvements50.1  51.5  
Construction-in-progress14.0  51.1  
Right-of-Use assets (a)
118.2  —  
Property, plant and equipment, gross896.7  779.7  
Accumulated depreciation and amortization(488.1) (425.2) 
Property, plant and equipment, net$408.6  $354.5  

(a) Following implementation of ASC 842 under the modified retrospective approach as of January 1, 2019, this caption includes the Company's ROU assets for operating and finance leases. Finance leases of approximately $5.5 million were included in machinery and equipment as of December 31, 2018. See discussion below for further information.
Depreciation and amortization expense on property, plant and equipment for December 31, 2019 and December 31, 2018 was $63.4 million and $66.8 million, respectively.

Leases
Products Corporation leases facilities for executive offices, warehousing, research and development and sales operations and leases various types of equipment under operating and finance lease agreements. The majority of Products Corporation’s real estate leases, in terms of total undiscounted payments, are located in the U.S.
The Company adopted ASU No. 2016-02 beginning as of January 1, 2019, using a modified retrospective approach and applying the standard’s transition provisions at the effective date of January 1, 2019. The comparative information has not been restated and continues to be reported under the lease accounting standard in effect for those periods.
The Company's adoption of ASU No. 2016-02 had a material impact on the Company’s consolidated balance sheets but did not have an impact on the Company’s statements of operations and comprehensive loss and cash flows.
F-23
25
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)millions, except share and per share amounts)



7. PROPERTY, PLANT AND EQUIPMENT
As of January 1, 2019, the Company's adoption of ASU No. 2016-02 resulted in:
•the recognition of ROU assets for operating leases and finance leases of approximately $109.3 million and $1.5 million, respectively;
•the recognition of lease liabilities for operating leases and finance leases of approximately $123.4 million and $1.4 million, respectively; and
•a decrease of approximately $11.3 million in accrued rent (of which $10.7 million was recorded in other long-term liabilities and $0.6 million was recorded in accrued expenses and other current liabilities), a decrease of approximately $3.5 million in lease termination liabilities and a decrease of approximately $0.7 million in prepaid rent, due to adjustments to balances previously recorded on the consolidated balance sheets upon transition from the legacy ASC 840 to ASC 842.

The following table includes disclosure related to the new ASC 842 lease standard, after application of the aforementioned practical expedients and short-term lease considerations:
Year Ended
December 31, 2019
Lease Cost:
Finance Lease Cost:
    Amortization of ROU assets$0.3 
    Interest on lease liabilities0.2 
Operating Lease Cost41.7 
Total Lease Cost$42.2 
Other Information:
Cash paid for amounts included in the measurement of lease liabilities:
    Operating cash flows from finance leases0.2 
    Operating cash flows from operating leases39.4 
    Financing cash flows from finance leases0.8 
ROU assets for finance leases1.0 
ROU assets for operating leases91.4 
Amortization on ROU assets for finance leases0.3 
Amortization on ROU assets for operating leases23.2 
Weighted-average remaining lease term - finance leases2.8 years
Weighted-average remaining lease term - operating leases6.2 years
Weighted-average discount rate - finance leases15.6 %
Weighted-average discount rate - operating leases15.8 %

F-26
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

Maturities of lease liabilities as of December 31, 2017 and 2016,2019 were as follows:
Operating LeasesFinance Leases
2020$34.0  $0.7  
202130.5  0.5  
202224.0  0.3  
202319.7  —  
202414.3  —  
Thereafter46.8  —  
Total undiscounted cash flows$169.3  $1.5  
Present value:
Short-term lease liability$14.0  $0.5  
Long-term lease liability92.8  0.5  
Total lease liability$106.8  $1.0  
Difference between undiscounted cash flows and discounted cash flows$62.5  $0.5  

The following table presents the minimum rental commitments under the Company's property, plantnon-cancelable leases, including those pertaining to idled facilities, as of December 31, 2018 under the guidance applicable prior to the adoption of ASC 842.
Minimum Rental Commitments20192020202120222023ThereafterTotal
Capital Leases$1.1  $0.6  $0.3  $0.2  $0.2  $0.2  $2.6  
Operating Leases42.533.829.822.618.557.5204.7

Products Corporation currently leases facilities for executive offices, warehousing, research and development and sales operations and leases various types of equipment under operating and capital lease agreements. Rental expense for these facilities and equipment balances consisted of the following:
 December 31,
 2017 2016
Land and improvements$11.6
 $10.4
Building and improvements97.0
 88.6
Machinery, equipment and capital leases275.1
 243.3
Office furniture, fixtures and capitalized software168.3
 122.7
Counters and trade fixtures62.0
 60.8
Leasehold improvements51.4
 46.0
Construction-in-progress92.8
 53.4
Property, plant and equipment, gross758.2
 625.2
Accumulated depreciation and amortization(385.5) (304.7)
Property, plant and equipment, net$372.7
 $320.5
Depreciation and amortization expense on property, plant and equipment for 2017, 2016 and 2015 was $54.4 million, $45$46.5 million and $37$41.6 million for 2018 and 2017, respectively.



8.7. GOODWILL AND INTANGIBLE ASSETS, NET

Goodwill


The following table presents the changes in goodwill by segment during 2019 and 2018:
Revlon  Portfolio  Elizabeth Arden  Fragrances  Total  
Balance at January 1, 2018(a)
$265.3  $189.5  $116.9  $120.8  $692.5  
Foreign currency translation adjustment(0.3) (0.3) —  —  (0.6) 
Goodwill impairment charge(a)
—  (18.0) —  —  (18.0) 
Balance at December 31, 2018$265.0  $171.2  $116.9  $120.8  $673.9  
Foreign currency translation adjustment(0.1) (0.1) —  —  (0.2) 
Balance at December 31, 2019$264.9  $171.1  $116.9  $120.8  $673.7  
Cumulative goodwill impairment charges(a)
$(55.2) 
(a) Amount refers to cumulative goodwill impairment charges related to impairments recognized in 2015, 2017 and 2016:2018; 0 impairment charges were recognized during 2019.

F-27
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

 Consumer Professional Elizabeth Arden  Other Total
Balance at January 1, 2016$210.1
 $240.7
 $—
 $18.9
 $469.7
Goodwill acquired (a)
17.4
 —
 221.7
 —
 239.1
Foreign currency translation adjustment—
 (0.4) —
 (2.2) (2.6)
Goodwill impairment charge—
 —
 —
 (16.7) (16.7)
Balance at December 31, 2016$227.5
 $240.3
 $221.7
 $—
 $689.5
Measurement Period Adjustments (b)
—
 —
 12.3
 —
 12.3
Foreign currency translation adjustment—
 1.5
 —
 —
 1.5
Goodwill impairment charge(10.8) —
 —
 —
 (10.8)
Balance at December 31, 2017$216.7
 $241.8
 $234.0
 $—
 $692.5
          
Cumulative goodwill impairment charges$(20.5) $—
 $—
 $(16.7) $(37.2)
Annual Impairment Testing
(a) The goodwill acquired during 2016 relates to: (i) $221.7 million of goodwill acquired in the Elizabeth Arden Acquisition; and (ii) $17.4 million of goodwill acquired in the Cutex Acquisitions. See Note 2, "Business Combinations," for further discussion of the Elizabeth Arden Acquisition and Cutex Acquisitions.
(b) Refer to Note 2, "Business Combinations," for more information on the Measurement Period Adjustments related to the Elizabeth Arden Acquisition.
For 2017,2019, in assessing whether goodwill was impaired in connection with its annual impairment testtesting performed during the fourth quarter of 20172019 using October 1st, 20171st, 2019 carrying values, the Company, in accordance with ASC 350, performed qualitative assessments to determine whether it would be necessary to perform the two-step process, as prescribed by ASC 350, Intangibles - Goodwillfor its (i) Revlon, (ii) Elizabeth Arden Skin and Other, to assess the Company's indefinite-lived intangible assetsColor and (iii) Fragrances reporting units and a quantitative assessment for indicators of impairment. its (x) Mass Portfolio, (y) Professional Portfolio and (z) Elizabeth Arden Fragrances reporting units.
In performing the 2019 qualitative assessments,assessment, the Company considered, among other factors, the financial performance of each of its Revlon, Elizabeth Arden Skin and Color and Fragrances reporting units, as well as the results of the step one testannual quantitative analysis performed in 2016 and the financial performance2018 for each of the (i) Revlon, Almay and Other; (ii) Elizabeth Arden; and (iii) Professionalthese reporting units. Based upon such assessment, the Company determined that it was more likely than not that the fair valuesvalue of theseeach of its Revlon, Elizabeth Arden Skin and Color and Fragrances reporting units exceeded their respective carrying amounts for 2017.2019.

F-24
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)


However,In performing the 2019 quantitative assessment, the Company used the simplified approach allowed under ASU No. 2017-04, which the Company early adopted as of October 1, 2018, to test its Mass Portfolio, Professional Portfolio and Elizabeth Arden Fragrances reporting units for 2017,impairment. Based upon such assessment, the Company determined that it would utilizewas more likely than not that the two-step processfair value of each of its Mass Portfolio, Professional Portfolio and Elizabeth Arden Fragrances reporting units exceeded their respective carrying amounts for 2019.
For 2018, the Company first performed a qualitative assessment on all of its reporting units indicating that indicators of impairment existed for the Mass Portfolio reporting unit within the Portfolio segment. Subsequently, the Company used the simplified approach allowed under ASU No. 2017-04, which the Company early adopted as of October 1, 2018, to test the GCBits Mass Portfolio reporting unit for impairment. InFollowing the first step of this test, the Company compared the fair value of the GCB reporting unit, determined based upon discounted estimated future cash flows, to the carrying amount, including goodwill. The results of the step one test indicated that impairment indicators existed for the GCB reporting unit due to continued net sales declines for both the SinfulColors and Pure Ice brands and lower promotional activity for the Pure Ice brand, and accordingly, the Company performed step two of the goodwill impairment test for the GCB reporting unit.
In the second step, the Company measured the potential impairment of the GCB reporting unit by comparing the implied fair value with the carrying amount of its goodwill at October 1, 2017. The implied fair value of the GCB reporting unit's goodwill was determined in the same manner as the amount of goodwill recognized in a business combination, where the estimated fair value of GCB reporting unit was allocated to all the assets and liabilities of that reporting unit (including both recognized and unrecognized intangible assets) as if the GCB had been acquired in a business combination and the estimated fair value of the GCB reporting unit was the purchase price paid. When the carrying amount of the reporting unit's goodwill is greater than the implied fair value of that reporting unit's goodwill, an impairment loss is recognized. The Company determined the fair value of the GCB reporting unit using discounted estimated future cash flows. The weighted-average cost of capital used in testing the GCB reporting unit for impairment was 12% with a perpetual growth rate of 2%. As a result of this annual impairment test,such assessment, the Company recognized an aggregate $10.8$18.0 million non-cash goodwill impairment charge related to the GCBMass Portfolio reporting unit within the Portfolio segment in the fourth quarter of 2017.2018. Following the recognition of this non-cash goodwill impairment charge, the GCBMass Portfolio reporting unit had $14.8$54.3 million in remaining goodwill as of December 31, 2017.2018.
For 2016 and 2015,Effective January 1, 2018, the Company implemented its brand-centric organizational structure built around its four global brand teams: Revlon; Elizabeth Arden; Portfolio; and Fragrances, which also represent the Company's reporting segments. Following this change in the Company's organizational structure, the Company identified its current 6 reporting units. Concurrent with the change in reporting segments, goodwill was reassigned to the affected reporting units that had been identified within each reporting segment using a relative fair value allocation approach outlined in ASC 350, using December 31, 2017 carrying values. The Company utilized the two-step process in assessing whether goodwill was impaired for each of the Company's then existing four6 reporting units (i.e., for 2016 (i) Revlon, Almay and Other; (ii) GCB; (iii) Professional; and (iv) Other). As a resultdetermined that it was more likely than not that the fair values of the annual impairment testing for 2016 and 2015, the Company recognized a $16.7 million non-cash goodwill impairment charge related to the Othereach of these reporting unit in the fourth quarter of 2016 and a $9.7 million non-cash goodwill impairment charge related to the GCB reporting unit in the fourth quarter of 2015.


F-25
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)


units exceeded their respective carrying amounts.
Intangible Assets, Net

The following tables present details of the Company's total intangible assets as of December 31, 20172019 and 2016:
 December 31, 2017
 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted-Average Useful Life (in Years)
Finite-lived intangible assets:       
Trademarks and licenses$271.4
 $(72.8) $198.6
 13
Customer relationships250.6
 (46.8) 203.8
 13
Patents and internally-developed IP20.8
 (8.4) 12.4
 7
Distribution rights31.0
 (2.3) 28.7
 17
Other1.3
 (0.6) 0.7
 2
Total finite-lived intangible assets$575.1
 $(130.9) $444.2
  
        
Indefinite-lived intangible assets:       
Trade names$147.9
 $—
 $147.9
  
Total indefinite-lived intangible assets$147.9
 $—
 $147.9
  
        
Total intangible assets$723.0
 $(130.9) $592.1
  
        
 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 relationships247.6
 (30.1) 217.5
 14
Patents and internally-developed IP20.3
 (6.1) 14.2
 8
Distribution rights31.0
 (0.5) 30.5
 18
Other1.3
 (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 $43.2 million, $27.5 million and $22.4 million for 2017, 2016, and 2015 respectively.
The Company reviews finite-lived intangible assets for impairment whenever facts and circumstances indicate that their carrying values may not be fully recoverable. This test compares the current carrying values of the intangible assets to the undiscounted pre-tax cash flows expected to result from the use of the assets.
Based upon the results of the annual goodwill impairment testing for the Company's GCB reporting unit during 2017, the Company performed an impairment review of the acquired finite-lived intangible assets. No impairment was recognized related to the carrying value of any of the finite or indefinite-lived intangible assets as a result of the annual impairment test for the year ended December 31, 2017.
Based upon the results of the annual goodwill impairment testing for the Company's Other reporting unit during 2016, the Company performed an impairment review of the finite-lived intangible assets acquired as part of the 2015 acquisition of CBBeauty

2018:
F-26
F-28
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIESTable of Contents
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)millions, except share and per share amounts)



December 31, 2019
Gross Carrying Amount  Accumulated Amortization  Net Carrying Amount  Weighted-Average Useful Life (in Years) 
Finite-lived intangible assets:
Trademarks and licenses$271.2  $(110.9) $160.3  13
Customer relationships248.3  (96.5) 151.8  11
Patents and internally-developed intellectual property21.5  (12.1) 9.4  5
Distribution rights31.0  (5.6) 25.4  15
Other1.3  (1.3) —  0
Total finite-lived intangible assets$573.3  $(226.4) $346.9  
Indefinite-lived intangible assets:
Trade names$143.8  N/A  $143.8  
Total indefinite-lived intangible assets$143.8  N/A  $143.8  
Total intangible assets$717.1  $(226.4) $490.7  
December 31, 2018
Gross Carrying Amount  Accumulated Amortization  Net Carrying Amount  Weighted-Average Useful Life (in Years) 
Finite-lived intangible assets:
Trademarks and licenses$272.3  $(94.3) $178.0  13
Customer relationships248.6  (77.9) 170.7  12
Patents and internally-developed intellectual property20.9  (10.1) 10.8  6
Distribution rights31.0  (4.0) 27.0  16
Other1.3  (1.0) 0.3  1
Total finite-lived intangible assets$574.1  $(187.3) $386.8  
Indefinite-lived intangible assets:
Trade names$145.2  N/A  $145.2  
Total indefinite-lived intangible assets$145.2  N/A  $145.2  
Total intangible assets$719.3  $(187.3) $532.0  
Group
Amortization expense for finite-lived intangible assets was $40.3 million and certain$57.1 million for 2019 and 2018, respectively. The variance was attributable to the accelerated amortization of its related entities (collectively "CBB" and, such transaction, the "CBB Acquisition"). AsPure Ice intangible assets as a result of thisthe revision of the brand’s intangible assets useful lives following the termination of a business relationship with its principal customer.
In accordance with ASC 360, and in conjunction with the annual impairment testing, the Company reviewed finite-lived intangible assets for impairment. In performing such review, the Company recognizedmakes judgments about the recoverability of purchased finite lived intangible assets whenever events or changes in circumstances indicate that an impairment may exist. The Company also considers several indicators of impairment, including, among other factors, the following: (i) a significant adverse change in the extent or manner in which a long-lived asset (or asset group) is being used; (ii) a projection or forecast that demonstrates losses associated with the use of a long-lived asset (or asset group); and (iii) whether there exists a current expectation that, more likely than not, a long-lived asset (or asset group) will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. The Company recognizes an impairment if the carrying amount of the long-lived asset group exceeds the Company's estimate of the asset group's undiscounted future cash flows.
Indefinite-lived intangible assets, consisting of certain trade names, were reviewed for the annual impairment assessment during the fourth quarter of 2016 within the Other reporting unit $4.2 million, $2.0 million2019 using October 1st carrying values similar to goodwill, in accordance with ASC 350.
For each of 2019 and $0.5 million of non-cash2018, 0 impairment charges as a result of the change in the fair value of customer relationships, distribution rights and trade names, respectively, in the aggregate amount of $6.7 million.
The Company did not recognize any impairment chargeswas recognized related to the carrying value of any of the Company's identifiablefinite or indefinite-lived intangible assets as a result of the annual impairment testing.

F-29
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in 2015.millions, except share and per share amounts)

The following table reflects the estimated future amortization expense for each period presented, a portion of which is subject to exchange rate fluctuations, for the Company's finite-lived intangible assets as of December 31, 2017:2019:
Estimated Amortization Expense  
2020$34.3  
202133.2  
202232.3  
202330.8  
202427.4  
Thereafter188.9  
Total$346.9  

 Estimated Amortization Expense
2018$40.2
201937.3
202036.5
202135.3
202234.1
Thereafter260.8
Total$444.2


9.8. ACCRUED EXPENSES AND OTHER

As of December 31, 20172019 and 2016,December 31, 2018, the Company's accrued expenses and other current liabilities consisted of the following:
December 31,December 31,
20192018
Sales returns and allowances$89.7  $97.7  
Advertising, marketing and promotional costs82.8  84.2  
Taxes (a)
54.3  38.9  
Compensation and related benefits42.1  56.2  
Interest34.0  33.8  
Professional services and insurance16.3  9.5  
Short term lease liability (b)
14.5  1.1  
Freight and distribution costs13.2  6.8  
Restructuring reserve10.0  26.4  
Software4.0  1.2  
Other (c)
54.0  75.1  
Total$414.9  $430.9  
 December 31,
 2017 2016
Compensation and related benefits$59.6
 $75.8
Advertising and promotional costs84.0
 66.7
Sales returns and allowances61.7
 51.9
Taxes52.1
 39.0
Restructuring reserve33.3
 38.0
Interest23.8
 24.4
Other102.0
 86.9
 $416.5
 $382.7


10. SHORT-TERM BORROWINGS
(a) Accrued Taxes for Products Corporation had outstanding short-term borrowings (excluding borrowings under the 2016 Senior Credit Facilities for 2016, which are reflected in Note 11, "Long-Term Debt"), aggregating to $12.4as of December 31, 2019 and December 31, 2018 were $57.6 million and $10.8$42.6 million, atrespectively.
(b) Balance for 2019 represents operating and finance leases following the implementation of ASC 842. Balance for 2018 represents finance leases. See Note 6, "Property, Plant, and Equipment," for additional information.
(c) Accrued Other as of December 31, 20172019 includes approximately $2.3 million of severance to Mr. Fabian Garcia, the Company's former President and 2016, respectively. The weighted average interest rate on these short-term borrowings outstanding at bothChief Executive Officer, which was paid in 2020. Accrued Other for Products Corporation as of December 31, 2017 and 20162018 was 5.0%.$75.2 million.




F-27
F-30
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)millions, except share and per share amounts)



9. DEBT
11. LONG-TERM DEBT
As of December 31, 20172019 and 2016,December 31, 2018, the Company's debt balances consisted of the following:
December 31,December 31,
20192018
2019 Term Loan Facility due 2023, net of discounts and debt issuance costs (see (a) below)$187.1  $—  
2018 Foreign Asset-Based Term Facility due 2021, net of discounts and debt issuance costs (see (e) below)82.3  82.7  
Amended 2016 Revolving Credit Facility due 2021, net of debt issuance costs (see (c) and (d) below)269.9  330.0  
2016 Term Loan Facility: 2016 Term Loan due 2023, net of discounts and debt issuance costs (see (f) below)1,713.6  1,724.6  
5.75% Senior Notes due 2021, net of debt issuance costs (see (g) below)498.1  496.6  
6.25% Senior Notes due 2024, net of debt issuance costs (see (h) below)
442.8  441.4  
Spanish Government Loan due 20250.4  0.5  
Debt$3,194.2  $3,075.8  
Less current portion(*)
(288.0) (348.1) 
Long-term debt$2,906.2  $2,727.7  
Short-term borrowings(**)
$2.2  $9.3  
 December 31,
 2017 2016
2016 Term Loan Facility: 2016 Term Loan due 2023, net of discounts and debt issuance costs (see (a) below)$1,735.9
 $1,747.8
2016 Revolving Credit Facility due 2021, net of debt issuance costs (see (b) below)152.1
 —
6.25% Senior Notes due 2024, net of debt issuance costs (see (c) below)440.3
 439.1
5.75% Senior Notes due 2021, net of debt issuance costs (see (d) below)495.1
 493.8
Spanish Government Loan due 20250.5
 0.5
 2,823.9
 2,681.2
Less current portion (*)   
(170.2) (18.1)
 $2,653.7
 $2,663.1

(*) At December 31, 2017,2019, the Company classified $170.2$288.0 million as its current portion of long-term debt, comprised primarily of $152.1$269.9 million of net borrowings under the Amended 2016 Revolving Credit Facility, net of debt issuance costs, and $18.1$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, 2016,2018, the Company classified $18.1$348.1 million as its current portion of long-term debt, comprised primarily of $18$330.0 million of net borrowings under the Amended 2016 Revolving Credit Facility, net of debt issuance costs, and $18.0 million of amortization payments on the 2016 Term Loan Facility.

(**) The weighted average interest rate on these short-term borrowings outstanding at December 31, 2019 and 2018 was 8.3% and 6.2%, respectively.

Current Year Debt Transactions
(a) 2019 Term Loan Facility
Principal and Maturity:In August 2019, Products Corporation entered into a senior secured term loan facility among certain affiliated funds, investment vehicles or accounts managed or advised by Ares Management LLC, as lender, in an initial aggregate principal amount of $200 million (the “2019 Term Loan Facility” and such agreement being the “2019 Term Loan Agreement”), and Wilmington Trust, National Association (“Wilmington Trust”), as administrative and collateral agent. The approximate $188 million of net proceeds from the 2019 Term Loan Facility (after taking into account approximately $12 million of related fees and expenses) were used for general corporate purposes. The 2019 Term Loan Facility will mature on the earliest of: (x) August 6, 2023; (y) the 180th day prior to the stated maturity of Products Corporation’s existing 2016 Term Loan Facility, if any loans under the 2016 Term Loan Facility remain outstanding and have not been replaced or refinanced by such date; and (z) the date of any springing maturity of the 2016 Term Loan Facility (i.e., the 91st day prior to the maturity of the 5.75% Senior Notes due February 15, 2021 if any 5.75% Senior Notes remain outstanding by such date and certain liquidity thresholds are not met).
Guarantees and Security: Products Corporation and its restricted subsidiaries under the 2019 Term Loan Facility (collectively, the “Restricted Group”) are subject to the covenants under the 2019 Term Loan Agreement. The 2019 Term Loan Facility is guaranteed by each existing and future direct or indirect wholly-owned domestic restricted subsidiary of Products Corporation (subject to various exceptions), as well as by Revlon, on a limited recourse basis, and Elizabeth Arden (U.K.) Ltd., Revlon Canada Inc. and Elizabeth Arden (Canada) Limited. The obligations of Revlon, Products Corporation and the subsidiary guarantors under the 2019 Term Loan Facility are secured by pledges of the equity of Products Corporation and the equity of the Restricted Group held by Products Corporation and each subsidiary guarantor (subject to customary exceptions, including equity of first-tier foreign subsidiaries in excess of 66% of the voting equity interests of such entity) and by substantially all tangible and intangible personal and real property of Products Corporation and the subsidiary guarantors (subject to customary exclusions). The 2019 Term Loan Facility and the existing 2016 Term Loan Facility share the same guarantors and collateral, except that the 2019 Term Loan Facility is also secured by a first-priority lien on certain intellectual property of the American Crew business (the “Additional Collateral”) and is guaranteed by the entities established to hold such Additional Collateral.
F-31
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

Pursuant to a first lien pari passu intercreditor agreement, dated August 6, 2019, among Revlon, Products Corporation, the subsidiary guarantors, Wilmington Trust and Citibank, N.A. (acting as administrative agent and collateral agent for the 2016 Term Loan Facility), the liens on the shared collateral securing the 2019 Term Loan Facility rank pari passu in priority with the liens on the shared collateral securing the 2016 Term Loan Facility.
License Agreement: In connection with the pledge of such Additional Collateral, Products Corporation entered into intercompany arrangements pursuant to which the Additional Collateral was contributed to a newly-formed subsidiary, Beautyge I, which then further contributed the Additional Collateral to its new wholly-owned subsidiary, Beautyge II, LLC. Products Corporation entered into a license and royalty arrangement on arm’s length terms with Beautyge II, LLC to provide for the Company’s continued use of the Additional Collateral during the term of the 2019 Term Loan Facility.
Interest and Fees: Interest accrues on the 2019 Term Loan Facility at a rate per annum of one-month adjusted LIBOR (which has a floor of 0%) plus a margin of 9.50%. Products Corporation is also obligated to pay customary fees and expenses in connection with the 2019 Term Loan Facility. 
Affirmative and Negative Covenants:The 2019 Term Loan Agreement contains certain affirmative and negative covenants that, among other things, limit the Restricted Group’s ability to: (i) incur additional debt; (ii) incur liens; (iii) sell, transfer or dispose of assets; (iv) make investments; (v) make dividends and distributions on, or repurchases of, equity; (vi) make prepayments of contractually subordinated or junior lien debt; (vii) enter into certain transactions with their affiliates; (viii) enter into sale-leaseback transactions; (ix) change their lines of business; (x) restrict dividends from their subsidiaries or restrict liens; (xi) change their fiscal year; and (xii) modify the terms of certain debt. The 2019 Term Loan Agreement also contains additional covenants: (i) restricting the activities of the entities established to hold the Additional Collateral; (ii) limiting the incurrence of additional secured debt by the Restricted Group to an aggregate principal amount of $50 million (excluding the Amended 2016 Revolving Credit Facility and any refinancing of the 5.75% Senior Notes due 2021); (iii) restricting the transfer by the Restricted Group of material intellectual property to non-guarantor restricted subsidiaries or other affiliates; and (iv) limiting additional investments by Products Corporation and its subsidiary guarantors in any non-guarantor subsidiary to an outstanding amount of $50 million plus $10 million for ordinary course investments consistent with past practice. These negative covenants are subject to various exceptions, including an “available amount basket” based on 50% of Products Corporation’s cumulative consolidated net income from October 1, 2016, subject to Products Corporation’s compliance with a 5.0 to 1.0 ratio of Products Corporation’s net debt to Consolidated EBITDA (as defined in the 2019 Term Loan Agreement), except such compliance is not required when such baskets are used to make investments.
Financial Covenants: The 2019 Term Loan Agreement contains financial covenants. First, Products Corporation cannot permit at any time both (x) the aggregate principal amount of secured and structurally senior debt to exceed $2.5 billion and (y) the ratio of Products Corporation's net secured and structurally senior debt to Consolidated EBITDA to be greater than 5.0 to 1.0, subject to a one-time equity cure right. Second, Products Corporation’s Consolidated EBITDA cannot be less than $250 million for any test period ending on or after March 31, 2021.
Prepayments:The 2019 Term Loan Facility is subject to mandatory prepayments from: (i) the net proceeds from the issuance by Products Corporation or any of its restricted subsidiaries of certain additional debt; (ii) commencing with the excess cash flow calculation with respect to fiscal year ending December 31, 2020, 50% of excess cash flow, with step-downs to 25% and 0% upon achievement of certain first lien leverage ratios and reduced by voluntary prepayments of the 2019 Term Loan Facility, the 2016 Term Loan Facility and revolving loans under the Amended 2016 Revolving Credit Facility (to the extent commitments thereunder are permanently reduced); and (iii) asset sale proceeds of certain non-ordinary course asset sales or other dispositions of property that have not been reinvested to the extent in excess of certain minimum amounts (subject to an aggregate reinvestment cap of $50 million). Products Corporation may voluntarily prepay the 2019 Term Loan Facility at any time. All voluntary prepayments, certain mandatory prepayments and repayments upon acceleration after an event of default of the 2019 Term Loan Facility must be accompanied by a fee in an amount equal to: (i) prior to January 1, 2021, a make-whole amount with respect to interest payments through December 31, 2020 plus 10% of the aggregate principal amount prepaid, repaid or required to be repaid; (ii) on and after January 1, 2021, but prior to January 1, 2022, 10% of the aggregate principal amount prepaid, repaid or required to be repaid; (iii) on and after January 1, 2022, but prior to January 1, 2023, 7.5% of the aggregate principal amount prepaid, repaid or required to be repaid; or (iv) thereafter, 5% of the aggregate principal amount prepaid, repaid or required to be repaid. A 5% exit fee is also payable upon the final scheduled maturity of the 2019 Term Loan Facility or if the loans thereunder are accelerated upon an event of default. The 2019 Term Loan Agreement also contains certain customary representations, warranties and events of default.
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COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

Events of Default: The 2019 Term Loan Agreement includes customary events of default, including a cross default provision making it an event of default under the 2019 Term Loan Agreement if there is an event of default under Products Corporation’s existing 2016 Credit Agreements, the 2018 Foreign Asset-Based Term Agreement, the Amended 2019 Senior Line of Credit Agreement or the Senior Notes Indentures. The lenders under the 2019 Term Loan Agreement may declare all outstanding loans under the 2019 Term Loan Agreement to be due and payable immediately upon an event of default. Under such circumstances, the lenders under the 2016 Credit Agreements, the Amended 2019 Senior Line of Credit Agreement and the 2018 Foreign Asset-Based Term Agreement may also declare all outstanding loans under such facilities to be due and payable immediately as a result of similar cross default provisions, and upon non-payment of any accelerated principal amount, the trustees or noteholders for the 5.75% Senior Notes and 6.25% Senior Notes may declare all outstanding notes to be due and payable immediately as a result of similar cross-acceleration provisions, subject to certain exceptions and limitations described in the relevant instruments.
Fees and expenses incurred in connection with consummating the 2019 Term Loan Agreement of approximately $14 million were capitalized and are being amortized to interest expense over the term of the 2019 Term Loan Agreement using the effective interest method. The aggregate principal amount outstanding under the 2019 Term Loan Facility Agreement at December 31, 2019 was $200 million.
(b) Amended 2019 Senior Line of Credit Agreement
In June 2019, Products Corporation entered into a 2019 Senior Unsecured Line of Credit Agreement, providing Products Corporation with a $30 million senior unsecured line of credit from MacAndrews & Forbes Group, LLC, a subsidiary of Revlon’s majority stockholder, which facility allows Products Corporation to request loans thereunder and to use the proceeds of such loans for working capital and other general corporate purposes until the facility matures. In November 2019, Products Corporation and MacAndrews & Forbes Group, LLC entered into the Amended and Restated 2019 Senior Unsecured Line of Credit Agreement (the “Amended 2019 Senior Line of Credit Agreement”) to extend the maturity of such facility by 1-year, expiring December 31, 2020 (the "Amended 2019 Senior Line of Credit Facility"). As of December 31, 2019 and as of the November 7, 2019 extension date, there were 0 borrowings outstanding or repayments under the Amended 2019 Senior Line of Credit Facility.
Any loans outstanding under the Amended 2019 Senior Line of Credit Facility shall bear interest at an annual rate of 8%, which is payable quarterly in arrears in cash. Products Corporation may, at its option, prepay any borrowings under the Amended 2019 Senior Line of Credit Facility, in whole or in part (together with accrued and unpaid interest), at any time prior to maturity, without premium or penalty. Products Corporation is required to repay any outstanding loans under the Amended 2019 Senior Line of Credit Facility, together with accrued interest thereon, if for any reason Products Corporation or any of its subsidiaries has available unrestricted cash that Products Corporation determines, in its reasonable judgment, is not required to run their operations in the ordinary course of business, provided that such repayment would not result in material adverse tax consequences.
The Amended 2019 Senior Line of Credit Agreement includes customary events of default, including a cross default provision making it an event of default under the Amended 2019 Senior Line of Credit Agreement if there exists and continues an event default under Products Corporation’s 2016 Credit Agreements, the 2018 Foreign Asset-Based Term Agreement, the 2019 Term Loan Agreement or the Senior Notes Indentures. If any such event of default occurs, MacAndrews & Forbes Group, LLC may declare all outstanding loans under the Amended 2019 Senior Line of Credit Facility to be due and payable immediately.
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COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

(c) March 2019 Amendment to the 2016 Revolving Credit Facility
In March 2019, Products Corporation, Revlon and certain of their subsidiaries entered into Amendment No. 2 (“Amendment No. 2”) to the 2016 Revolving Credit Agreement (as amended by Amendment No. 2, the “Amended 2016 Revolving Credit Agreement”) in respect of the 2016 Revolving Credit Facility (as in effect after Amendment No. 2, the “Amended 2016 Revolving Credit Facility”). Pursuant to the terms of Amendment No. 2, the maturity date applicable to the $41.5 million senior secured first in, last out Tranche B of the Amended 2016 Revolving Credit Facility was extended from April 17, 2019 to April 17, 2020. The 2016 Revolving Credit Agreement provided that the “Liquidity Amount” (defined in the Amended 2016 Revolving Credit Agreement as the sum of each borrowing base less the sum of (x) the aggregate outstanding extensions of credit under the Amended 2016 Revolving Credit Facility, and (y) any availability reserve in effect on such date) may exceed the aggregate commitments under the Amended 2016 Revolving Credit Facility by up to 5%. Amendment No. 2 limits the Liquidity Amount to no more than the aggregate commitments under the Amended 2016 Revolving Credit Facility. Under the 2016 Revolving Credit Agreement, a “Liquidity Event Period” generally occurred if Products Corporation’s Liquidity Amount fell below the greater of $35 million and 10% of the maximum availability under the 2016 Revolving Credit Facility. Amendment No. 2 changed these thresholds to $50 million and 15%, respectively, only for purposes of triggering certain notification obligations of Products Corporation, increased borrowing base reporting frequency and the ability of the administrative agent to apply amounts collected in controlled accounts for the repayment of loans under the Amended 2016 Revolving Credit Facility. After entering into Amendment No. 2, in March 2019 Products Corporation’s availability under the Amended 2016 Revolving Credit Facility was $37.3 million, which was less than the greater of $35 million and 10% of the maximum availability under the Amended 2016 Revolving Credit Facility, which at such date equated to $41.3 million. Accordingly, effective beginning in March 2019 Products Corporation is required to maintain a FCCR of a minimum of 1.0 to 1.0 (which it currently satisfies), the administrative agent may apply amounts collected in controlled accounts for the repayment of loans under the Amended 2016 Revolving Credit Facility, which the administrative agent began applying in March 2019, and Products Corporation is required to provide the administrative agent with weekly borrowing base certificates. Products Corporation will be required to: (i) maintain such 1.0 to 1.0 minimum FCCR until such time that availability under the Amended 2016 Revolving Credit Facility equals or exceeds the greater of $35 million and 10% of the maximum availability under such facility for at least 20 consecutive business days; and (ii) Products Corporation will continue to provide the administrative agent with weekly borrowing base certificates and the administrative agent may continue to apply amounts collected in controlled accounts as set forth above in each case until such time that availability under such facility is equal or exceeds the greater of $50 million and 15% of the maximum availability under such facility for at least 20 consecutive business days. Amendment No. 2 also adjusts, among other things, the “payment conditions” required to make unlimited restricted payments.
Previous Years Debt Related Transactions
(d) April 2018 Amendment to Original 2016 Revolving Credit Facility
In April 2018, Products Corporation amended the Original 2016 Revolving Credit Facility Agreement, as detailed below, to, among other things, add a new $41.5 million senior secured first in, last out "Tranche B," while the original $400 million tranche under such facility became a senior securedlast in, first out "Tranche A" ("Amendment No.1" and the Original 2016 Revolving Credit Facility as in effect after Amendment No. 1, the "2016 Revolving Credit Facility"). Tranche A matures on the earlier of: (x) September 7, 2021; 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 million. Tranche B was initially scheduled to mature on April 17, 2019, a date that was later extended to April 17, 2020 pursuant to Amendment No. 2. Total borrowings at face amount under Tranche A and Tranche B under the Amended 2016 Revolving Credit Facility at December 31, 2019 were $230.9 million (excluding $11.4 million of outstanding undrawn letters of credit) and $41.5 million, respectively (the 2016 Term Loan Facility and the Amended 2016 Revolving Credit Facility are collectively referred to as the "2016 Senior Credit Facilities" and the applicable agreements, as amended, being the “2016 Credit Agreements”).
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COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

Amendment No. 1 provided for the availability and repayment terms of each Tranche, as well as terms governing the payment priorities between the Tranches. Other amendments to the Original 2016 Revolving Credit Facility under Amendment No. 1 included: (i) a $15 million increase to the cap on amounts eligible for inclusion in the borrowing base relating to certain assets located in jurisdictions other than the U.S., Puerto Rico, Canada, and the U.K.; (ii) a reduction to the amount of additional debt generally permitted to be incurred; (iii) a reduction in the amount of incremental debt under 2016 Term Loan Agreement permitted to be incurred pursuant to the Original 2016 Revolving Credit Agreement; (iv) the removal of temporary increases to the borrowing base between August 15th and October 31st of each year; (v) an increase to threshold conditions in respect of the ability to make certain dividends and distributions on equity during the term of the Tranche B; and (vi) an amendment to the calculation of the financial covenant.
During 2018, the Company completedincurred approximately $4.0 million of fees and expenses in connection with consummating Amendment No. 1, which were capitalized and are being amortized over the followingremaining term of Amendment No. 1 using the effective interest method. The aggregate principal amount outstanding under Tranche A and Tranche B of the Amended 2016 Revolving Credit Facility at December 31, 2019 was $230.9 million and $41.5 million, respectively.
(e) 2018 Foreign Asset-Based Term Loan Credit Agreement
In July 2018, Revlon Holdings B.V. (the "Dutch Borrower"), a wholly owned indirect foreign subsidiary of Products Corporation, Revlon Finance LLC, a wholly owned direct subsidiary of the Dutch Borrower (the "U.S. Co-Borrower" and, together with the Dutch Borrower, the "Borrowers"), the other loan parties, the lenders party thereto and Citibank, N.A., acting as administrative agent and collateral agent (the "Agent"), entered into an Asset-Based Term Loan Credit Agreement (the "2018 Foreign Asset-Based Term Facility" and the "2018 Foreign Asset-Based Term Agreement," respectively) and related guarantee and security agreements.
Principal and Maturity: The 2018 Foreign Asset-Based Term Facility provides for a euro-denominated senior secured asset-based term loan facility in an aggregate principal amount of €77 million, the full amount of which was funded on the closing of the facility in July 2018. The 2018 Foreign Asset-Based Term Facility has an uncommitted incremental facility pursuant to which it may be increased from time to time by up to €43 million, subject to certain conditions and the agreement of the lenders providing such increase. The proceeds of the loans under the 2018 Foreign Asset-Based Term Facility were used for working capital and other general corporate purposes. The 2018 Foreign Asset-Based Term Facility matures on July 9, 2021.
The 2018 Foreign Asset-Based Term Agreement requires the maintenance of a borrowing base supporting the borrowing thereunder, to be evidenced with the delivery of monthly borrowing base certificates customary for facilities of this type, with more frequent reporting required upon the triggering of certain events. The borrowing base calculation under the 2018 Foreign Asset-Based Term Facility is based on the sum of: (i) 85% of eligible accounts receivable; and (ii) 90% of the net orderly liquidation value of eligible inventory, in each case with respect to certain of Products Corporation’s subsidiaries organized in Australia, Bermuda, Germany, Italy, Spain and Switzerland (the "Borrowing Base Guarantors" and, together with the Borrowers, the "Loan Parties"). The borrowing bases in each jurisdiction are subject to certain customary availability reserves set by the Agent.
Guarantees and Security: The 2018 Foreign Asset-Based Term Facility is guaranteed by the Borrowing Base Guarantors, as well as by the direct parent entities of each Borrowing Base Guarantor (not including Revlon or Products Corporation) on a limited recourse basis (the "Parent Guarantors"). The obligations of the Loan Parties and the Parent Guarantors under the 2018 Foreign Asset-Based Term Facility are secured by first-ranking pledges of the equity of each Loan Party, the inventory and accounts receivable of the Borrowing Base Guarantors, the material bank accounts of each Loan Party, the material intercompany indebtedness owing to any Loan Party (including any intercompany loans made with the proceeds of the 2018 Foreign Asset-Based Term Facility) and certain other material assets of the Borrowing Base Guarantors. The 2018 Foreign Asset-Based Term Facility includes a cash dominion feature customary for transactions of this type.
Interest and Fees: Interest is payable on each interest payment date as set forth in the 2018 Foreign Asset-Based Term Agreement, and in any event at least quarterly, and accrues on borrowings under the 2018 Foreign Asset-Based Term Facility at a rate per annum equal to the EURIBOR rate, with a floor of 0.50%, plus an applicable margin equal to 6.50%. The Borrowers are obligated to pay certain fees and expenses in connection with the 2018 Foreign Asset-Based Term Facility, including a fee payable to Citibank, N.A. for its services as Agent. Loans under the 2018 Foreign Asset-Based Term Facility may be prepaid without premium or penalty.
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COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

Affirmative and Negative Covenants: The 2018 Foreign Asset-Based Term Agreement contains certain affirmative and negative covenants that, among other things, limit the Loan Parties’ ability to, subject to various exceptions and qualifications: (i) incur additional debt; (ii) incur liens; (iii) sell, transfer or dispose of assets; (iv) make investments; (v) make dividends and distributions on, or repurchases of, equity; (vi) make prepayments of contractually subordinated or junior lien debt; (vii) enter into certain transactions with their affiliates, including amending certain material intercompany agreements or trade terms; (viii) enter into sale-leaseback transactions; (ix) change their lines of business; (x) restrict dividends from their subsidiaries or restrict liens; (xi) change their fiscal year; and (xii) modify the terms of certain debt. The Parent Guarantors are subject to certain customary holding company covenants. The ability of the Loan Parties to make certain intercompany asset sales, investments, restricted payments and prepayments of intercompany debt transactionsis contingent on certain "cash movement conditions" or "payment conditions" being met, which among other things, require a certain level of liquidity for the applicable Loan Party to effect such type of transactions. The 2018 Foreign Asset-Based Term Agreement also contains certain customary representations, warranties and events of default.
Prepayments: The Borrowers must prepay loans under the 2018 Foreign Asset-Based Term Facility to the extent that outstanding loans exceed the borrowing base. In lieu of a mandatory prepayment, the Loan Parties may deposit cash in an amount not to exceed 10% of the borrowing base into a designated U.S. bank account with the Agent that is subject to a control agreement (such cash, the "Qualified Cash"). If any such over-advance has not been cured within 60 days, the Qualified Cash may be applied, at the Agent’s option, to prepay the loans under the 2018 Foreign Asset-Based Term Facility. To the extent certain levels of availability are obtained during 2016:a certain period of time, the Borrowers can withdraw the Qualified Cash from such bank account. In addition, the 2018 Foreign Asset-Based Term Facility is subject to mandatory prepayments from the net proceeds from the incurrence by the Loan Parties of debt not permitted thereunder.

During 2018, the Company incurred approximately $5.7 million of fees and expenses in connection with consummating the 2018 Foreign Asset-Based Term Agreement, which were capitalized and are being amortized over the remaining term of the 2018 Foreign Asset-Based Term Facility using the effective interest method. The aggregate principal amount outstanding under the 2018 Foreign Asset-Based Term Agreement at December 31, 2019 was $86.3 million.
(f)2016 Debt-Related TransactionsSenior Credit Facilities
In connection with and substantially concurrently with the closing of the Elizabeth Arden Acquisition, Products Corporation entered intointo: (i) the 7-year $1.8 billion 2016 Term Loan Facility (the "2016 Term Loan Facility" and such agreement being the "2016 Term Loan Agreement"); and (ii) the 5-year $400 million 2016 Revolving Credit Facility (the "Original 2016 Revolving Credit Facility" and, as amended, together with the 2016 Term Loan Facility, the “2016 Senior Credit Facilities” and such agreement being the "Original 2016 Revolving Credit Facility. Additionally, as part of financing the Elizabeth Arden Acquisition, in August 2016Agreement"). Products Corporation also completed the issuance of $450 million aggregate principal amount of its 6.25% Senior Notes due August 1, 2024 (the "6.25% Senior Notes Offering"Notes"), which funds were released from escrow (the "Escrow Release") on the Elizabeth Arden Acquisition Date. In connection with entering into the 2016 Senior Credit Facilities, Products Corporation maintained on the 2016 Term Loan Facility its existing floating-to-fixed 2013 Interest Rate Swap (as hereinafter defined) based on a notional amount of $400 million that previously applied to Products Corporation’s Old Acquisition Term Loan, which loan was refinanced in full in connection with Products Corporation's consummation of the 2016 Senior Credit Facilities and the 6.25% Senior Notes Offering.. The proceeds of Products Corporation's issuance of the 6.25% Senior Notes Offering and the 2016 Term Loan Facility, together with approximately $35 million of borrowings under the Original 2016 Revolving Credit Facility and approximately $126.7 million of cash on hand, were used to:used: (A) to fund the Elizabeth Arden Acquisition, including: (i) repurchasing the entire $350 million aggregate principal amount then-outstandingoutstanding of the then-existing Elizabeth Arden Old Senior Notes;Notes (the "Elizabeth Arden Senior Notes"); (ii) repaying the entire $142 million aggregate principal amount of borrowings outstanding as of the Elizabeth Arden Acquisition Date under Elizabeth Arden’s $300 million revolving credit facility (which facility was terminated upon such repayment); (iii) repaying the entire $25 million aggregate principal amount of borrowings then outstanding as of the Elizabeth Arden Acquisition Date under Elizabeth Arden's second lien credit facility (which facility was terminated upon such repayment); and (iv) retiring the entire $55 million liquidation preference of all 50,000 shares of Elizabeth Arden's then issuedthen-issued and outstanding preferred stock which(which amount included a $5 million change of control premium;premium); and (B) to completely refinance and repay all of the $651.4 million in aggregate principal balance then outstanding under Products Corporation’s then-existing 2011 Term Loan (the "2011 Term Loan") and all of the $658.6 million in aggregate principal balance outstanding under Products Corporation’s Old Acquisition Term Loan (each of which facilities were terminated upon such prepayment)repayment) (together with the 2011 Term Loan, the "Old Term Loan Agreement" and the "Old Term Loan Facility," respectively). The Company did not incur any material early termination penalties in connection with repaying such facilitiesthe Old Term Loan Facility or the Elizabeth Arden indebtedness and preferred stock. See below for a summary
Following is an updated description of the agreements governing theProducts Corporation's 2016 Senior Credit Facilities, and 6.25% Senior Notes.
Amended Term Loan Facility - Excess Cash Flow Payment
In February 2016, Products Corporation prepaid $23.2 millionof indebtedness, then outstanding under its Old Term Loan Facility, representing 50% of its 2015 "excess cash flow" as defined by, and required under, Old Term Loan Agreement. The prepayment was applied on a ratable basis between the principal amounts outstanding under the 2011 Term Loan and the Old Acquisition Term Loan. The amount of the prepayment that was appliedafter giving effect to Amendment No. 2 to the 2011 Term Loan reduced the principal amount outstanding by $11.5 million to $651.4 million (as all amortization payments under the 2011 Term Loan had been paid). The $11.7 million that was applied to the Old Acquisition Term Loan reduced Products Corporation's future annual amortization payments

2016 Revolving Credit Facility:
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REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIESTable of Contents
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)millions, except share and per share amounts)



under such loan on a ratable basis from $6.9 million prior to the prepayment to $6.8 million after giving effect to the prepayment and through its maturity on October 8, 2019. The 2011 Term Loan and Old Acquisition Term Loan were completely refinanced and terminated in connection with financing the Elizabeth Arden Acquisition.

Long-Term Debt Agreements
(a) 2016 Term Loan Facility
Principal and Maturity: On the Elizabeth Arden Acquisition Date, Products Corporation entered into the 2016 Term Loan Agreement, for which Citibank, N.A. acts as administrative and collateral agent and which has an initial aggregate principal amount of $1.8 billion and matures on the earlier of: (x) the seventh anniversary of the Elizabeth Arden Acquisition DateSeptember 7, 2023; and (y) the 91st day prior to the maturity of Products Corporation’s 5.75% Senior Notes due February 15, 2021 (the "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 theits then outstanding 5.75% Senior Notes by at least $200 million. The loans under the 2016 Term Loan Facility were borrowed at an original issue discount of 0.5% to their principal amount. The 2016 Term Loan Facility may be increased by an amount equal to the sum of (x) the greater of $450 million and 90% of Products Corporation’s pro forma consolidated EBITDA, plus (y) an unlimited amount to the extent that (1) the first lien leverage ratio (defined as the ratio of Products Corporation’s net senior secured funded debt that is not junior or subordinated to the liens of the Senior Facilities to EBITDA) is less than or equal to 3.5 to 1.0 (for debt secured pari passu with the 2016 Term Loan Facility) or (2) the secured leverage ratio (defined as the ratio of Products Corporation’s net senior secured funded debt to EBITDA) is less than or equal to 4.25 to 1.0 (for junior lien or unsecured debt), plus (z) up to an additional $400 million if the 2016 Revolving Credit Facility has been repaid and terminated. The aggregate principal amount outstanding under the Amended 2016 Term Loan Facility at December 31, 2019 was $1,741.5 million.
Guarantees and Security:Security: Products Corporation and the restricted subsidiaries under the 2016 Term Loan Facility, which include Products Corporation’s domestic subsidiaries, including Elizabeth Arden and its domestic subsidiaries (collectively, the "Restricted Group"), are subject to the covenants under the 2016 Term Loan Agreement.�� The 2016 Term Loan Facility is guaranteed by each of Products Corporation's existing and future direct or indirect wholly-owned domestic restricted subsidiaries (subject to various exceptions), certain foreign subsidiaries, as well as by Revlon, on a limited recourse basis. The obligations of Revlon, Products Corporation and the subsidiary guarantors under the 2016 Term Loan Facility are secured by pledges of the equity of Products Corporation held by Revlon and the equity of the Restricted Group held by Products Corporation and each subsidiary guarantor (subject to certain exceptions, including equity of first-tier foreign subsidiaries in excess of 65% of the voting equity interests of such entity) and by substantially all tangible and intangible personal and real property of Products Corporation and the subsidiary guarantors (subject to certain exclusions). The obligors and guarantors under the 2016 Term Loan Facility and the Amended 2016 Revolving Credit Facility are identical. The liens securing the 2016 Term Loan Facility on the accounts, inventory, equipment, chattel paper, documents, instruments, deposit accounts, real estate and investment property and general intangibles (other than intellectual property) related thereto (the "Revolving Facility Collateral") rank second in priority to the liens thereon securing the Amended 2016 Revolving Credit Facility. The liens securing the 2016 Term Loan Facility on all other property, including capital stock, intellectual property and certain other intangible property (the "Term Loan Collateral"), rank first in priority to the liens thereon securing the Amended 2016 Revolving Credit Facility, while the liens thereon securing the Amended 2016 Revolving Credit Facility rank second in priority to the liens thereon securing the 2016 Term Loan Facility.
Interest and Fees:Fees: Interest accrues on term loans under the 2016 Term Loan Facility at a rate per annum of Adjustedadjusted LIBOR (which has a floor of 0.75%) plus a margin of 3.50%3.5% or an alternate base rate plus a margin of 2.50%2.5%, at Products Corporation’s option, and is payable quarterly, at a minimum. Products Corporation is obligated to pay certain fees and expenses in connection with the 2016 Term Loan Facility.
Affirmative and Negative Covenants:Covenants: The 2016 Term Loan Agreement contains certain affirmative and negative covenants that, among other things, limit the Restricted Group’s ability to: (i) incur additional debt; (ii) incur liens; (iii) sell, transfer or dispose of assets; (iv) make investments; (v) make dividends and distributions on, or repurchases of, equity; (vi) make prepayments of contractually subordinated or junior lien debt; (vii) enter into certain transactions with their affiliates; (viii) enter into sale-leaseback transactions; (ix) change their lines of business; (x) restrict dividends from their subsidiaries or restrict liens; (xi) change their fiscal year; and (xii) modify the terms of certain debt. The negative covenants are subject to various exceptions, including an "available amount basket" based on 50% of Products Corporation’s cumulative consolidated net income, plus a "starter" basket of $200 million, subject to Products Corporation’s compliance with a 5.0 to 1.0 ratio of Products Corporation’s net debt to Consolidated EBITDA (as defined in the 2016 Term Loan Agreement), except such compliance is not required when such baskets are used to make investments. While the 2016 Term Loan Agreement contains certain customary representations, warranties and events of default, it does not contain any financial maintenance covenants.
Prepayments: 
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COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

Prepayments: The 2016 Term Loan Facility is subject to mandatory prepayments from: (i) the net proceeds from the issuance by Products Corporation or any of its restricted subsidiaries of certain additional debt; (ii) commencing with the excess cash flow

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


calculation with respect to fiscal year ending December 31, 2017, 50% of excess cash flow for fiscal years ending December 31st, with step-downs to 25% and 0% upon achievement of certain first lien leverage ratios and reduced by voluntary prepayments of loans under the 2016 Term Loan Facility and revolving loans under the Amended 2016 Revolving Credit Facility to the extent commitments thereunder are permanently reduced; and (iii) asset sale proceeds of certain non-ordinary course asset sales or other dispositions of property that have not been reinvested to the extent in excess of certain minimum amounts. Products Corporation may voluntarily prepay the 2016 Term Loan Facility without premium or penalty. No excess cash flow payments were due and payable with respect to 2017.2019.
During 2016, the Company incurred approximately $45.2 million of fees and expenses in connection with consummating the 2016 Term Loan Facility, of which $39.3 million were capitalized and are being amortized over the remaining term of the 2016 Term Loan Credit Facility using the effective interest method. The Company expensed the remaining $6 million of fees and expenses and wrote-off $10.9 million of unamortized debt discount and deferred financing costs related to the Old Term Loan Facility. These amounts, totaling $16.9 million, were recognized within loss on early extinguishment of debt in the Company’s Consolidated Statements of Operations and Comprehensive (Loss) Income for the year ended December 31, 2016.
(b)Amended 2016 Revolving Credit Facility
Principal and Maturity: Maturity: On the Elizabeth Arden Acquisition Date, Products Corporation entered into the Original 2016 Revolving Credit Agreement, as subsequently amended pursuant to Amendment No. 1 and Amendment No. 2, and for which Citibank, N.A. acts as administrative agent and collateral agent. The Amended 2016 Revolving Credit Facility has an initialaggregate maximum availability of $400$441.5 million (with a $100 million sublimit for letters of credit and up to $70 million available for swing line loans), which availability is subject to the amount of the borrowing base. The Amended 2016 Revolving Credit Facility may be increased by the greater of (x) $50$33.5 million and (y) the excess of the borrowing base over the amounts of then-effective commitments. The Amended 2016 Revolving Credit Facility permits certain non-U.S. subsidiaries to borrow in local currencies. The borrowing base calculation in respect of the Tranche A under the Amended 2016 Revolving Credit Facility is based on the sum of: (i) 85% of eligible accounts receivable; (ii) the lesser of 85% of the net orderly liquidation value and a percentage of the value specified in respect of different types of eligible inventory; (iii) the lesser of (A) the sum of (x) 75% of the net orderly liquidation value in respect of eligible equipment and (y) 75% of the mortgage value of eligible real property and (B) $40 million; and (iv) qualified restricted cash (capped at $75 million); and (iv) a temporary increase amount between August 15 and October 31 of each year,, which are collectively subject to certain availability reserves set by the administrative agent. The borrowing base calculation in respect of the Tranche B under the Amended 2016 Revolving Credit Facility is based on the sum of: (i) 10% of eligible accounts receivable and (ii) the lesser of 10% of the net orderly liquidation value and a percentage of the value specified in respect of different types of eligible inventory, which are collectively subject to certain availability reserves set by the administrative agent. Tranche A under the Amended 2016 Revolving Credit Facility matures on the earlier of: (x) the fifth anniversary of the Elizabeth Arden Acquisition Date;September 7, 2021; and (y) the 91st day prior to the maturity of Products Corporation’s 5.75% Senior Notes due February 15, 2021 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 theits then outstanding 5.75% Senior Notes by at least $200 million. Tranche B under the Amended 2016 Revolving Credit Facility matures on April 17, 2020.
Guarantees and Security:Security: The Restricted Group under the Amended 2016 Revolving Credit Agreement (which is the same as the Restricted Group under the 2016 Term Loan Agreement) is subject to the covenants under the Amended 2016 Revolving Credit Agreement. The Amended 2016 Revolving Credit Facility is guaranteed by each of Products Corporation's existing and future direct or indirect wholly-owned domestic restricted subsidiaries (subject to various exceptions), certain foreign subsidiaries, as well as by Revlon on a limited recourse basis. The obligations of Revlon, Products Corporation and the subsidiary guarantors under the Amended 2016 Revolving Credit Facility are secured by pledges of the equity of Products Corporation held by Revlon and the equity of Products Corporation’s restricted subsidiaries held by Products Corporation and each subsidiary guarantor (subject to certain exceptions, including equity of first-tier foreign subsidiaries in excess of 65% of the voting equity interests of such entity) and by substantially all tangible and intangible personal and real property of Products Corporation and the subsidiary guarantors (subject to certain exclusions). The obligors and guarantors under the Amended 2016 Revolving Credit Facility and the 2016 Term Loan Facility are identical. The liens on the 2016 Revolving Facility Collateral securing the Amended 2016 Revolving Credit Facility rank first in priority to the liens thereon securing the 2016 Term Loan Facility, which rank second in priority on such collateral. The liens on the Term Loan Collateral securing the Amended 2016 Revolving Credit Facility rank second in priority to the liens thereon securing the 2016 Term Loan Facility, which rank first in priority on such collateral.
Interest and Fees: Under the Amended 2016 Revolving Credit Facility, interest is payable quarterly and accrues on borrowings under such facility at a rate per annum equal to either: (i) the alternate base rate plus an applicable margin equal to (A) in the case of the Tranche A, 0.25%, 0.50% or 0.75%, or (B) in the case of the Tranche B, 1.50%, 1.75% or 2.00%, in each case depending on the average excess availability (based on the borrowing base as most recently reported by Products Corporation to the administrative agent from time to time)time-to-time); or (ii) the Eurocurrency rate plus an applicable margin equal to (A) in the case of the Tranche A, 1.25%, 1.50% or 1.75%, or (B) in the case of the Tranche B, 2.50%, 2.75% or 3.00%, in each case depending on the average excess availability (based on the borrowing base as most recently reported by Products Corporation to the administrative agent from time to time)time-to-time), at Products Corporation’s option. The applicable margin decreases as the average excess availability under the Amended 2016 Revolving Credit Facility increases.
F-38
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

Products Corporation is obligated to pay certain fees and expenses in connection with the Amended 2016 Revolving Credit Facility, including a commitment fee of 0.25% for any unused amounts.amounts under the Tranche A and 0.50% for any unused amounts under the Tranche B Loans under the Amended 2016 Revolving Credit Facility may be prepaid without premium or penalty.
Affirmative and Negative Covenants: The Amended 2016 Revolving Credit Agreement contains affirmative and negative covenants that are similar to those in the 2016 Term Loan Agreement, other than the "available amount basket" (as described above in the description of the 2016 Term Loan Facility); provided, however, under the Amended 2016 Revolving Credit Agreement the Restricted Group will be able to incur unlimited additional junior secured debt and unsecuredamounts of certain types of debt, make unlimited asset sales and dispositions, make unlimited investments and acquisitions, prepay junior debt and make unlimited restricted payments to the extent that certain

F-30
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)


"payment "payment conditions" for asset-based credit facilities are satisfied. The Amended 2016 Revolving Credit Agreement contains certain customary representations, warranties and events of default. If Products Corporation’s "Liquidity Amount" (defined in the Amended 2016 Revolving Credit Agreement as the Borrowing Base (capped at 100% of the Revolving Commitment) less the sum of (x) the aggregate outstanding extensions of credit under the Amended 2016 Revolving Credit Facility, and (y) any availability reserve in effect on such date)date falls below the greater of $35 million and 10% of the maximum availability under the Amended 2016 Revolving Credit Facility (a "Liquidity Event Period"), then the Restricted Group will be required to maintain a consolidated fixed charge coverage ratio (the ratio of Products Corporation’s EBITDA minus capital expenditures to cash interest expense and scheduled principal payments under the 2016 Term Loan Agreement for such period)period, the "FCCR") of a minimum of 1.0 to 1.0 until the first date after 20 consecutive business days for which the Liquidity Amount is equal to or greater than such threshold. Under Amendment No. 2, such availability reserve amounts were set at $50 million and 15% in connection with triggering certain notification obligations, increased borrowing base reporting frequency, and the ability of the administrative agent to apply amounts collected in controlled accounts for the repayment of loans under the Amended 2016 Revolving Credit Facility. If Products Corporation is in default under the consolidated fixed charge coverage ratio under the Amended 2016 Revolving Credit Agreement, Products Corporation may cure such default by Products Corporation and/or Revlon issuing certain equity securities and Products Corporation receiving capital contributions from Revlon, with such cash being deemed to increase EBITDA for the purpose of calculating the applicable ratio. Products Corporation may exercise this cure right no more than two times in any four-quarter period, and no more than five times in total during the term of the Amended 2016 Revolving Credit Facility. As Products Corporation’s consolidated fixed charge coverage ratio was greater than 1.0 to 1.0 as of December 31, 2019, all of the $157.7 million of availability under the Amended 2016 Revolving Credit Facility was available as of such date.
Prepayments:Prepayments: Products Corporation must prepay (i) Tranche A borrowings under the Amended 2016 Revolving Credit Facility to the extent that outstanding loans thereunder and letters of credit exceed availability.the Tranche A availability and (ii) Tranche B borrowings under the Amended 2016 Revolving Credit Facility to the extent that outstanding loans thereunder exceed the Tranche B availability; provided that the Tranche A borrowings are required to be repaid prior to the repayment of the Tranche B borrowings. During a Liquidity Event Period, the administrative agent may apply amounts collected in controlled accounts for the repayment of loans under the Amended 2016 Revolving Credit Facility. The above descriptions ofAfter entering into Amendment No. 2, in March 2019 Products Corporation’s availability under the terms of the 2016 Term Loan Agreement and theAmended 2016 Revolving Credit Facility was $37.3 million, which was less than the greater of $35 million and 10% of the related security and collateral agreements are qualified in their entirety by reference to such agreements, which are incorporated by reference as exhibits to this Form 10-K.
During 2016,maximum availability under the Company incurred approximately $5.7 million of fees and expenses in connection with consummating theAmended 2016 Revolving Credit Facility, of which $5.6 million were capitalized as deferred financing costs and are being amortized over the remaining term of the 2016 Revolving Credit Facility using the effective interest method. The Company expensed the remaining $0.1 million of fees and expenses, which were recognized within loss on early extinguishment of debt in the Company’s Consolidated Statements of Operations and Comprehensive (Loss) Income for the year ended December 31, 2016.
(c) 6.25% Senior Notes
On August 4, 2016, Revlon Escrow Corporation (the "Escrow Issuer"), which onat such date was a wholly owned subsidiary of Products Corporation, completed the 6.25% Senior Notes offering, pursuantequated to an exemption from registration under the Securities Act of 1933 (as amended, the "Securities Act"), of $450 million aggregate principal amount of the 6.25% Senior Notes due 2024. The 6.25% Senior Notes are unsecured and were initially issued by the Escrow Issuer to the initial purchasers under an Indenture, dated as of August 4, 2016 (the "6.25% Senior Notes Indenture"), between the Escrow Issuer and U.S. Bank National Association, as trustee (the "6.25% Senior Notes Trustee"). The 6.25% Senior Notes mature on August 1, 2024. Interest on the 6.25% Senior Notes accrues at 6.25% per annum, paid every six months through maturity on each February 1 and August 1,$41.3 million. Accordingly, effective beginning on February 1, 2017. The proceeds from the 6.25% Senior Notes were released from escrow on the September 7, 2016 The Elizabeth Arden Acquisition Date (the "Escrow Release"). On the Elizabeth Arden Acquisition Date, the Escrow Issuer was merged with and into Products Corporation and in connection with the Escrow Release, Products Corporation and certain of its direct and indirect wholly-owned domestic subsidiaries, including Elizabeth Arden and certain of its subsidiaries (collectively, the "6.25% Senior Notes Guarantors"), and the 6.25% Senior Notes Trustee entered into a supplemental indenture (the "6.25% Senior Notes Supplemental Indenture") to the 6.25% Senior Notes Indenture, pursuant to which Products Corporation assumed the obligations of the Escrow Issuer under the 6.25% Senior Notes and the 6.25% Senior Notes Indenture and the 6.25% Senior Notes Guarantors jointly and severally, fully and unconditionally guaranteed the 6.25% Senior Notes on a senior unsecured basis (the "6.25% Senior Notes Guarantees").  The 6.25% Senior Notes Guarantors are the same entities that are subsidiary guarantors under the 2016 Senior Credit Facilities.
In December 2016, Products Corporation consummated an offer to exchange the original 6.25% Senior Notes for $450 million of new 6.25% Senior Notes, which have substantially the same terms as the original 6.25% Senior Notes, except that they are registered under the Securities Act (such registered new notes being the "6.25% Senior Notes").
Ranking: The 6.25% Senior Notes are Products Corporation’s senior, unsubordinated and unsecured obligations, ranking: (i) pari passu in right of payment with all of Products Corporation’s existing and future senior unsecured indebtedness; (ii) senior in right of payment to all of Products Corporation’s and the 6.25% Senior Notes Guarantors’ future subordinated indebtedness; and (iii) effectively junior to all of Products Corporation’s and the 6.25% Senior Notes Guarantors’ existing and future senior secured indebtedness, including, indebtedness under Products Corporation’s 2016 Senior Credit Facilities, to the extent of the value of the assets securing such indebtedness. The 6.25% Senior Notes and the 6.25% Senior Notes Guarantees are: (i) structurally subordinated to all of the liabilities and preferred stock of any of the Company’s subsidiaries that do not guarantee the 6.25% Senior Notes; and (ii) pari passu in right of payment with liabilities of the 6.25% Senior Notes Guarantors other than expressly subordinated indebtedness. The 6.25% Senior Notes and the 6.25% Senior Notes Guarantees rank effectively junior to indebtedness

F-31
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)


and preferred stock of Products Corporation’s foreign and immaterial subsidiaries (the "6.25% Senior Notes Non-Guarantor Subsidiaries"), none of which guarantee the 6.25% Senior Notes.
Optional Redemption: Prior to August 1,March 2019 Products Corporation may redeem the 6.25% Senior Notes at its option, at any time as a whole or from time to time in part, upon Products Corporation’s payment of an applicable make-whole premium based on the comparable treasury rate plus 50 basis points. Prior to August 1, 2019, up to 40% of the aggregate principal amount of 6.25% Senior Notes that have been issued may also be redeemed at Products Corporation’s option at any time as a whole or from time-to-time in part, at a redemption price equal to 106.250% of the principal amount thereof, plus accrued and unpaid interest to (but not including) the date of redemption with the proceeds of certain equity offerings and capital contributions (so long as at least 60% of the 6.25% Senior Notes that have been issued thereafter remain outstanding). On and after August 1, 2019, Products Corporation may redeem the 6.25% Senior Notes at its option, at any time as a whole, or from time to time in part, at the following redemption prices (expressed as percentages of principal amount), plus accrued interest to (but not including) the date of redemption, if redeemed during the 12-month period beginning on August 1 of the years indicated below:
Period Optimal Redemption Premium Percentage
2019 104.688%
2020 103.125%
2021 101.563%
2022 and thereafter 100.000%

All redemptions (and notices thereof) may be subject to various conditions precedent, and redemption dates specified in such notices may be extended so that such conditions precedent may be fulfilled (to the extent redemption on such dates is otherwise permitted by the 6.25% Senior Notes Indenture).
Change of Control: Upon the occurrence of specified change of control events, Products Corporation is required to make an offermaintain a FCCR of a minimum of 1.0 to purchase all1.0 (which it currently satisfies), the administrative agent may apply amounts collected in controlled accounts for the repayment of loans under the Amended 2016 Revolving Credit Facility, which the administrative agent began applying in March 2019, and Products Corporation is required to provide the administrative agent with weekly borrowing base certificates. Products Corporation will be required to: (i) maintain such 1.0 to 1.0 minimum FCCR until such time that availability under the Amended 2016 Revolving Credit Facility equals or exceeds the greater of $35 million and 10% of the 6.25% Senior Notesmaximum availability under such facility for at a purchase priceleast 20 consecutive business days; and (ii) Products Corporation will continue to provide the administrative agent with weekly borrowing base certificates and the administrative agent may continue to apply amounts collected in controlled accounts as set forth above in each case until such time that availability under such facility is equal or exceeds the greater of 101%$50 million and 15% of the outstanding principal amount ofmaximum availability under such facility for at least 20 consecutive business days. Amendment No. 2 also adjusts, among other things, the 6.25% Senior Notes as of the date of any such repurchase, plus accrued and unpaid interest“payment conditions” required to (but not including) the date of repurchase.make unlimited restricted payments.
Certain Covenants: The 6.25% Senior Notes Indenture imposes certain limitations on Products Corporation’s and the 6.25% Senior Notes Guarantors’ ability, and the ability of certain other subsidiaries, to: (i) incur or guarantee additional indebtedness or issue preferred stock; (ii) pay dividends, make certain investments and make repayments on indebtedness that is subordinated in right of payment to the 6.25% Senior Notes and make other "restricted payments"; (iii) create liens on their assets to secure debt; (iv) enter into transactions with affiliates; (v) merge, consolidate or amalgamate with another company; (vi) transfer and sell assets; and (vii) permit restrictions on the payment of dividends by Products Corporation's subsidiaries.
These covenants are subject to important qualifications and exceptions. The 6.25% Senior Notes Indenture also contains customary affirmative covenants and events of default. In addition, if during any period of time the 6.25% Senior Notes receive investment grade ratings from both Standard & Poor’s and Moody’s Investors Services, Inc. and no default or event of default has occurred and is continuing under the 6.25% Senior Notes Indenture, Products Corporation and its subsidiaries will not be subject to the covenants regarding limitations on debt, limitations on restricted payments, limitation on guarantees by restricted subsidiaries, limitation on transactions with affiliates, certain provisions of the successor company covenant, limitation on asset sales and limitation on dividends from restricted subsidiaries.
During 2016, in connection with consummating the 6.25% Senior Notes Offering, the Company incurred approximately $11.3 million of fees and expenses, all of which were capitalized and are being amortized over the remaining term of the 6.25% Senior Notes using the effective interest method.
(d)(g) 5.75% Senior Notes
OnIn February 8, 2013, Products Corporation completed its offering (the "2013 Senior Notes Refinancing"), pursuant to an exemption from registration under the Securities Act, of $500 million aggregate principal amount of the 5.75% Senior Notes. The 5.75% Senior Notes are unsecured and were issued to investors at par. The 5.75% Senior Notes mature on February 15, 2021. Interest on the 5.75% Senior Notes accrues at 5.75% per annum, paid every six months on February 15th15th and August 15th.15th.
F-39
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

The 5.75% Senior Notes were issued pursuant to the 5.75% Senior Notes Indenture (the "5.75% Senior Notes Indenture" and together with the 6.25% Senior Notes Indenture, the "Senior Notes Indentures"), dated as of February 8, 2013 (the "5.75% Senior Notes Closing Date"), by and among Products Corporation, Products Corporation’s domestic subsidiaries (the "5.75% Senior Notes Guarantors"), which also currently guarantee Products Corporation’s 2016 Senior Credit Facilities and the 6.25% Senior Notes, and U.S. Bank National Association, as trustee (the "5.75% Senior Notes Trustee"). The 5.75% Senior Notes Guarantors

F-32
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)


issued guarantees (the "5.75% Senior Notes Guarantees") of Products Corporation’s obligations under the 5.75% Senior Notes and the 5.75% Senior Notes Indenture on a joint and several, senior unsecured basis.
In December 2013, Products Corporation consummated an offer to exchange the original 5.75% Senior Notes for $500 million of new 5.75% Senior Notes, which have substantially the same terms as the original 5.75% Senior Notes, except that they are registered under the Securities Act (such registered new notes being the "5.75% Senior Notes").
Products Corporation used a portion of the $491.2 million of net proceeds from the issuance of the 5.75% Senior Notes (net of underwriters' fees) to repay and redeem all of the $330 million then outstanding aggregate principal amount of its 9.75% Senior Secured Notes, as well as to pay $8.6 million of accrued interest. Products Corporation incurred an aggregate of $19.4 million of fees for the applicable redemption and tender offer premiums, related fees and expenses in connection with redemption and repayment of the 9.75% Senior Secured Notes and other fees and expenses in connection with the issuance of the 5.75% Senior Notes. Products Corporation used a portion of the remaining proceeds from the issuance of the 5.75% Senior Notes, together with existing cash, to pay approximately $113 million of principal on its then outstanding 2011 Term Loan in conjunction with the February 2013 Term Loan Amendments. Products Corporation used the remaining balance available from the issuance of the 5.75% Senior Notes for general corporate purposes, including, without limitation, debt reduction transactions, such as repaying a loan to Revlon at its maturity on October 8, 2013, which proceeds Revlon used to pay the liquidation preference of Revlon's then outstanding Series A Preferred Stock, in connection with its mandatory redemption on such date.
Ranking:Ranking: The 5.75% Senior Notes are Products Corporation’s unsubordinated, unsecured obligations and rank senior in right of payment to any future subordinated obligations of Products Corporation and rank pari passu in right of payment with all existing and future senior debt of Products Corporation. Similarly, each 5.75% Senior Notes Guarantee is the relevant 5.75% Senior Notes Guarantor’s joint and several, unsubordinated and unsecured obligation, ranking senior in right of payment to any future subordinated obligations of such 5.75% Senior Notes Guarantor and ranking pari passu in right of payment with all existing and future senior debt of such 5.75% Senior Notes Guarantor. The 5.75% Senior Notes Guarantees were issued on a joint and several basis.
The 5.75% Senior Notes and the 5.75% Senior Notes Guarantees rank effectively junior to Products Corporation’s 2016 Senior Credit Facilities and 2019 Term Loan Facility which are secured, to the extent of the value of the assets securing such indebtedness, as well as indebtedness and preferred stock of Products Corporation’s foreign and immaterial subsidiaries (including the 2018 Foreign Asset-Based Term Facility) (the "5.75% Senior Notes Non-Guarantor Subsidiaries" and together with the 6.25% Senior Notes Non-Guarantor Subsidiaries, the "Non-Guarantor Subsidiaries"), none of which guarantee the 5.75% Senior Notes.
Optional Redemption:Redemption: The 5.75% Senior Notes may be redeemed at Products Corporation's option, at any time as a whole, or from time-to-time in part, at the following redemption prices (expressed as percentages100% of their principal amount),amount, plus accrued interest to the date of redemption, if redeemed during the 12-month period beginning on February 15th of the years indicated below:redemption.
Period Percentage
2017 102.875%
2018 101.438%
2019 and thereafter 100.000%
Change of Control:Control: Upon the occurrence of specified change of control events, Products Corporation is required to make an offer to purchase all of the 5.75% Senior Notes at a purchase price of 101% of the outstanding principal amount of the 5.75% Senior Notes as of the date of any such repurchase, plus accrued and unpaid interest to the date of repurchase.
Certain Covenants:Covenants: The 5.75% Senior Notes Indenture limits Products Corporation’s and the 5.75% Senior Notes Guarantors’ ability, and the ability of certain other subsidiaries, to:
• incur or guarantee additional indebtedness ("Limitation on Debt");
• pay dividends, make repayments on indebtedness that is subordinated in right of payment to the 5.75% Senior Notes and make other "restricted payments" ("Limitation on Restricted Payments");
• make certain investments;
• create liens on their assets to secure debt;
• enter into transactions with affiliates;
• merge, consolidate or amalgamate with another company ("Successor Company");

• transfer and sell assets ("Limitation on Asset Sales"); and
F-33
F-40
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIESTable of Contents
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)millions, except share and per share amounts)



transfer and sell assets ("Limitation on Asset Sales"); and
•permit restrictions on the payment of dividends by Products Corporation’s subsidiaries ("Limitation on Dividends from Subsidiaries").
These covenants are subject to important qualifications and exceptions. The 5.75% Senior Notes Indenture also contains customary affirmative covenants and events of default.
In addition, if during any period of time the 5.75% Senior Notes receive investment grade ratings from both Standard & Poor’s and Moody’s Investors Services, Inc. and no default or event of default has occurred and is continuing under the 5.75% Senior Notes Indenture, Products Corporation and its subsidiaries will not be subject to the covenants on Limitation on Debt, Limitation on Restricted Payments, Limitation on Asset Sales, Limitation on Dividends from Subsidiaries and certain provisions of the Successor Company covenant. The aggregate principal amount outstanding under the 5.75% Senior Notes at December 31, 2019 was $500.0 million.
(h) 6.25% Senior Notes
In August 2016, Revlon Escrow Corporation (the "Escrow Issuer"), which was a wholly owned subsidiary of Products Corporation, completed the 6.25% Senior Notes offering, pursuant to an exemption from registration under the Securities Act of 1933 (as amended, the "Securities Act"), of $450 million aggregate principal amount of the 6.25% Senior Notes due 2024. The 6.25% Senior Notes are unsecured and were initially issued by the Escrow Issuer to the initial purchasers under an Indenture, dated as of August 4, 2016 (the "6.25% Senior Notes Indenture"), between the Escrow Issuer and U.S. Bank National Association, as trustee (the "6.25% Senior Notes Trustee"). The 6.25% Senior Notes mature on August 1, 2024. Interest on the 6.25% Senior Notes accrues at 6.25% per annum, paid every six months through maturity on each February 1 and August 1. The proceeds from the 6.25% Senior Notes were released from escrow on the September 7, 2016 The Elizabeth Arden Acquisition Date (the "Escrow Release"). On the Elizabeth Arden Acquisition Date, the Escrow Issuer was merged with and into Products Corporation and in connection with the Escrow Release, Products Corporation and certain of its direct and indirect wholly-owned domestic subsidiaries, including Elizabeth Arden and certain of its subsidiaries (collectively, the "6.25% Senior Notes Guarantors"), and the 6.25% Senior Notes Trustee entered into a supplemental indenture (the "6.25% Senior Notes Supplemental Indenture") to the 6.25% Senior Notes Indenture, pursuant to which Products Corporation assumed the obligations of the Escrow Issuer under the 6.25% Senior Notes and the 6.25% Senior Notes Indenture and the 6.25% Senior Notes Guarantors jointly and severally, fully and unconditionally guaranteed the 6.25% Senior Notes on a senior unsecured basis (the "6.25% Senior Notes Guarantees"). The 6.25% Senior Notes Guarantors are the same entities that are subsidiary guarantors under the 2016 Senior Credit Facilities.
In December 2016, Products Corporation consummated an offer to exchange the original 6.25% Senior Notes for $450 million of new 6.25% Senior Notes, which have substantially the same terms as the original 6.25% Senior Notes, except that they are registered under the Securities Act (such registered new notes being the "6.25% Senior Notes").
Ranking: The 6.25% Senior Notes are Products Corporation’s senior, unsubordinated and unsecured obligations, ranking: (i) pari passu in right of payment with all of Products Corporation’s existing and future senior unsecured indebtedness; (ii) senior in right of payment to all of Products Corporation’s and the 6.25% Senior Notes Guarantors’ future subordinated indebtedness; and (iii) effectively junior to all of Products Corporation’s and the 6.25% Senior Notes Guarantors’ existing and future senior secured indebtedness, including indebtedness under Products Corporation’s 2016 Senior Credit Facilities and the 2019 Term Loan Facility, to the extent of the value of the assets securing such indebtedness. The 6.25% Senior Notes and the 6.25% Senior Notes Guarantees are: (i) structurally subordinated to all of the liabilities and preferred stock of any of the Company’s subsidiaries that do not guarantee the 6.25% Senior Notes; and (ii) pari passu in right of payment with liabilities of the 6.25% Senior Notes Guarantors other than expressly subordinated indebtedness. The 6.25% Senior Notes and the 6.25% Senior Notes Guarantees rank effectively junior to indebtedness and preferred stock of Products Corporation’s foreign and immaterial subsidiaries (including the 2018 Foreign Asset-Based Term Facility) (the "6.25% Senior Notes Non-Guarantor Subsidiaries"), none of which guarantee the 6.25% Senior Notes.
OptionalRedemption: Products Corporation may redeem the 6.25% Senior Notes at its option, at any time as a whole, or from time to time in part, at the following redemption prices (expressed as percentages of principal amount), plus accrued interest to (but not including) the date of redemption, if redeemed during the 12-month period beginning on August 1 of the years indicated below:
PeriodOptimal Redemption Premium Percentage
2020103.125%  
2021101.563%  
2022 and thereafter100.000%  

F-41
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

All redemptions (and notices thereof) may be subject to various conditions precedent, and redemption dates specified in such notices may be extended so that such conditions precedent may be fulfilled (to the extent redemption on such dates is otherwise permitted by the 6.25% Senior Notes Indenture).
Change of Control: Upon the occurrence of specified change of control events, Products Corporation is required to make an offer to purchase all of the 6.25% Senior Notes at a purchase price of 101% of the outstanding principal amount of the 6.25% Senior Notes as of the date of any such repurchase, plus accrued and unpaid interest to (but not including) the date of repurchase.
Certain Covenants: The 6.25% Senior Notes Indenture imposes certain limitations on Products Corporation’s and the 6.25% Senior Notes Guarantors’ ability, and the ability of certain other subsidiaries, to: (i) incur or guarantee additional indebtedness or issue preferred stock; (ii) pay dividends, make certain investments and make repayments on indebtedness that is subordinated in right of payment to the 6.25% Senior Notes and make other "restricted payments"; (iii) create liens on their assets to secure debt; (iv) enter into transactions with affiliates; (v) merge, consolidate or amalgamate with another company; (vi) transfer and sell assets; and (vii) permit restrictions on the payment of dividends by Products Corporation's subsidiaries.
These covenants are subject to important qualifications and exceptions. The 6.25% Senior Notes Indenture also contains customary affirmative covenants and events of default. In addition, if during any period of time the 6.25% Senior Notes receive investment grade ratings from both Standard & Poor’s and Moody’s Investors Services, Inc. and no default or event of default has occurred and is continuing under the 6.25% Senior Notes Indenture, Products Corporation and its subsidiaries will not be subject to the covenants regarding limitations on debt, limitations on restricted payments, limitation on guarantees by restricted subsidiaries, limitation on transactions with affiliates, certain provisions of the successor company covenant, limitation on asset sales and limitation on dividends from restricted subsidiaries.
The aggregate principal amount outstanding under the 6.25% Senior Notes at December 31, 2019 was $450.0 million.
See Note 22, “Subsequent Events –2020 Refinancing Transactions.”

Covenants

Products Corporation was in compliance with all applicable covenants under the 2016 Senior Credit Facilities as of December 31, 2017. At December 31, 2017,Agreements, the aggregate principal amounts outstanding under the 20162019 Term Loan Facility andAgreement, the 2016 Revolving2018 Foreign Asset-Based Term Agreement, the Amended 2019 Senior Line of Credit Facility were $1,777.5 million and $157 million, respectively. At December 31, 2017, availability under the $400 million 2016 Revolving Credit Facility was $193 million, based upon the calculated borrowing base of $381.9 million, less $10.1 million of outstanding undrawn letters of credit, $21.8 million in outstanding checks and $157 million then drawn on the 2016 Revolving Credit Facility.
Products Corporation was in complianceAgreement, as well as with all applicable covenants under its Senior Notes Indentures, as of December 31, 2017.2019. At December 31, 2019, the aggregate principal amounts outstanding and availability under Products Corporation’s various revolving credit facilities were as follows:

CommitmentBorrowing BaseAggregate principal amount outstanding at December 31, 2019
Availability at December 31, 2019 (a)
Tranche A of the Amended 2016 Revolving Credit Facility$400.0  $400.0  $230.9  $157.7  
Tranche B of the Amended 2016 Revolving Credit Facility41.5  41.5  41.5  —  
Total Tranche A & B of the Amended 2016 Revolving Credit Facility(a)
$441.5  $441.5  $272.4  $157.7  
Amended 2019 Senior Line of Credit Facility$30.0  N/A  $—  $30.0  
(a) Availability as of December 31, 2019 is based upon the borrowing base then in effect under the Amended 2016 Revolving Credit Facility of $441.5 million, less $11.4 million of outstanding undrawn letters of credit and $272.4 million then drawn. As Products Corporation’s consolidated fixed charge coverage ratio was greater than 1.0 to 1.0 as of December 31, 2019, all of the $157.7 million of availability under the Amended 2016 Revolving Credit Facility was available as of such date.

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COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

The Company’s foreign subsidiaries held $102.5 million out of the Company's total $104.3 million in cash and cash equivalents as of December 31, 2019. While the cash held by the Company’s foreign subsidiaries is primarily used to fund their operations, the Company regularly assesses its global cash needs and the available sources of cash to fund these needs, which regularly includes repatriating foreign-held cash to settle historical intercompany loans and other intercompany payables. The Company believes that it has and will have sufficient liquidity to meet its cash needs for at least the next 12 months based upon the cash generated by its operations, cash on hand, availability under the Amended 2016 Revolving Credit Facility, the Amended 2019 Senior Line of Credit Facility, the 2020 Refinancing Transactions and other permissible borrowings, along with the option to further settle historical intercompany loans and payables with certain foreign subsidiaries. The Company also expects to generate additional liquidity from cost reductions resulting from the implementation of the 2018 Optimization Program, which was initiated during the fourth quarter of 2018, and cost reductions generated from other cost control initiatives, as well as funds provided by selling certain assets (such as the Natural Honey and Floid brands that were sold in December 2019) in connection with the Company's ongoing Strategic Review. See Note 22, “Subsequent Events –2020 Refinancing Transactions.

Long-Term Debt Maturities

The aggregate amounts of contractual long-term debt maturities at December 31, 20172019 in the years 20182020 through 20222024 and thereafter are as follows:
Years Ended December 31,Long-Term Debt Maturities
2020$290.5  
(a)
2021604.4  
(b)
202218.1  
(c)
20231,887.6  
(d)
2024450.0  
(e)
Thereafter—  
Total long-term debt3,250.6  
Discounts and deferred finance charges(56.4) 
Total long-term debt, net of discounts and deferred finance charges$3,194.2  
Years Ended December 31, Long-Term Debt Maturities 
2018 $175.1
(a) 
2019 18.1
(b) 
2020 18.1
(b) 
2021 518.1
(c) 
2022 18.1
(b) 
Thereafter 2,137.5
 
Total long-term debt 2,885.0
 
Discounts and deferred finance charges (61.1) 
Total long-term debt, net of discounts and deferred finance charges $2,823.9
 


(a)
Amount consists primarily of $157 million in aggregate principal amount of borrowings under the 2016 Revolving Credit Facility and the quarterly amortization payments required under the 2016 Term Loan Facility.
(b)
Amount consists primarily of quarterly amortization payments described in (a) above.
(c)
Amount is primarily comprised of the $500 million in aggregate principal amount outstanding as of December 31, 2017 under the 5.75% Senior Notes, which mature on February 15, 2021, and the quarterly amortization payment described in (a) above.

(a) Amount consists primarily of: (i) $41.5 million in aggregate principal amount of borrowings under Tranche B of the Amended 2016 Revolving Credit Facility outstanding as of December 31, 2019, which is scheduled to mature in April 2020; (ii) $230.9 million in aggregate principal amount of borrowings under Tranche A of the Amended 2016 Revolving Credit Facility outstanding as of December 31, 2019, which is scheduled to mature on the earlier of: (x) September 7, 2021; and (y) the 91st day prior to the maturity of Products Corporation’s 5.75% Senior Notes due February 15, 2021 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 its then outstanding 5.75% Senior Notes by at least $200 million; and (iii) the quarterly amortization payments payable in 2020 under the 2016 Term Loan Facility.

(b) Amount consists primarily of: (i) the U.S. dollar equivalent of the €77 million in aggregate principal amount under the 2018 Foreign Asset-Based Term Facility outstanding as of December 31, 2019, which is scheduled to mature in July 2021; (ii) the $500 million in aggregate principal amount under the 5.75% Senior Notes, which are scheduled to mature in February 2021; and (iii) $18.0 million of the quarterly amortization payments described in (a)(iii) above payable in 2021.

(c) Amount consists of the $18.0 million quarterly amortization payments described in (a)(iii) above payable in 2022.
(d) Amount consists primarily of: (i) the $9.0 million of quarterly amortization payments due under the 2016 Term Loan Facility during 2023; (ii) the $1,678.5 million remaining aggregate principal amount outstanding at December 31, 2019, net of the amortization payments made in 2020 through 2023, under the 2016 Term Loan Facility, which is scheduled to mature in September 2023 (subject to a springing maturity in November 2020, as described above in this Note 9); and (iii) the $200 million aggregate principal amount outstanding at December 31, 2019 under the 2019 Term Loan Facility, which is scheduled to mature in August 2023 (subject to a springing maturity in November 2020, as described above in this Note 9).
(e) Amount consists of the $450 million aggregate principal amount outstanding at December 31, 2019 under the 6.25% Senior Notes, which are scheduled to mature in August 2024.


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F-43
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)millions, except share and per share amounts)



12.10. FAIR VALUE MEASUREMENTS

Assets and liabilities are required to be categorized into three levels of fair value based upon the assumptions used to pricevalue 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.
As of both December 31, 2017,2019 and December 31, 2018, the fair values of the Company’sCompany did 0t have any financial assets and liabilities that were required to be measured at fair value are categorized in the table below:value.
 Total Level 1 Level 2 Level 3
Assets:       
Derivatives:       
FX Contracts(a)     
$0.6
 $—
 $0.6
 $—
Total assets at fair value$0.6
 $—
 $0.6
 $—
Liabilities:       
Derivatives:       
FX Contracts(a)    
$1.9
 $—
 $1.9
 $—
2013 Interest Rate Swap(b)
0.9
 —
 0.9
 —
Total liabilities at fair value$2.8
 $—
 $2.8
 $—


As of December 31, 2016, the fair values of the Company’s financial assets and liabilities that were 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 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 13, "Financial Instruments."
(b)The fair value of Products Corporation's 2013 Interest Rate Swap, which expires in May 2018 (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 13, "Financial Instruments."


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


As of December 31, 2017,2019, 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:
December 31, 2019
Fair Value
Level 1Level 2Level 3TotalCarrying Value
Liabilities:
Long-term debt, including current portion(a)
$—  $2,522.2  $—  $2,522.2  $3,194.2  
 Fair Value  
 Level 1 Level 2 Level 3 Total Carrying Value
Liabilities:         
Long-term debt, including current portion$—
 $2,131.5
 $—
 $2,131.5
 $2,823.9


As of December 31, 2016,2018, 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:
December 31, 2018
Fair Value
Level 1Level 2Level 3TotalCarrying Value
Liabilities:
Long-term debt, including current portion(a)
$—  $2,259.5  $—  $2,259.5  $3,075.8  
 Fair Value  
 Level 1 Level 2 Level 3 Total Carrying Value
Liabilities:         
Long-term debt, including current portion$—
 $2,770.9
 $—
 $2,770.9
 $2,681.2
(a) 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 issuances and maturities.
The carrying amounts of the Company's cash and cash equivalents, trade receivables, notes receivable, accounts payable and short-term borrowings approximate their respective fair values.




13.11. FINANCIAL INSTRUMENTS

Letters of Credit

Products Corporation maintains standby and trade letters of credit for various corporate purposes under which Products Corporation is obligated, of which $10.1$11.4 million and $10.4$10.1 million (including amounts available under credit agreements in effect at that time) were maintained atas of December 31, 20172019 and December 31, 2016,2018, respectively. Included in these amounts are approximately $8.3 million and $7.3 million in standby letters of credit that support Products Corporation’s self-insurance programs, in each case as outstanding as of both December 31, 20172019 and 2016.December 31, 2018, respectively. The estimated liability under such programs is accrued by Products Corporation.


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COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

Derivative Financial Instruments

The Company usesmay, from time to time, use derivative financial instruments, primarily: (i)primarily FX Contracts, intended for the purpose of managingto manage 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.flows. The Company does not hold or issue financial instruments for speculative or trading purposes.

Foreign Currency Forward Exchange Contracts

The FX Contracts aremay, from time to time, be 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 Company did 0t enter into any FX Contracts during 2019. The U.S. Dollar notional amountamounts of the FX Contracts outstanding at each of December 31, 20172019 and December 31, 2016 was $147.1 million and $79.6 million, respectively.2018 were NaN.

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 bank term loan that was incurred in connection with completing the October 2013 acquisition of The Colomer AcquisitionGroup (the "Old Acquisition Term Loan") and the "Colomer Acquisition," respectively). The 2013 Interest Rate Swap, which initially had a floor of 1.00% that in December 2016 was amended to 0.75%., expired in May 2018. In connection with entering into the 2016 Term Loan Facility, the 2013 Interest Rate 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, which expires in May 2018.swap. The Company initially designated the 2013 Interest Rate Swap as a cash flow hedge of the variability of the forecasted three-month3-month LIBOR interest rate payments initially related to the $400 million notional amount under the Old Acquisition Term Loan over the three-year3-year term of the 2013 Interest Rate Swap (and subsequently to the $400 million notional

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


amount under the 2016 Term Loan Facility for the remaining balance of the term of such swap, which expires in May 2018)Facility). Under the terms of the 2013 Interest Rate Swap, commencing in May 2015, Products Corporation receivesreceived from the counterparty a floating interest rate based on the higher of the three-month3-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 fixesfixed the interest rate on such notional amount at 5.5709% through May 2018). At December 31, 2017, the fair value of the 2013 Interest Rate Swap was a liability of $0.9 million and the accumulated loss recorded in accumulated other comprehensive loss was $0.7 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 issuance of its 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 have beenof such swap were 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 bewere fully amortized into earnings over the remaining term of the 2013 Interest Rate Swap, which expiresexpired in May 2018. At December 31, 2017, $1.2 million, or $0.7 million net of tax, remains as a component of accumulated other comprehensive loss related to the 2013 Interest Rate Swap, all of which will be amortized into earnings over the next 12 months. See "Quantitative Information – Derivative Financial Instruments" below.below for additional information on the balance sheet balances related to this swap.
Credit Risk

Exposure to credit risk in the event of nonperformance by any of the counterparties to the Company's derivative instruments is limited to the gross fair value of thethese derivative instruments in asset positions, which totaled $0.6 million and $2.3 million aswas nil at each of December 31, 20172019 and December 31, 2016, respectively.2018. 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
As of December 31, 2017 and 2016, the fair values of the Company's derivative financial instruments in its Consolidated Balance Sheets were as follows:
F-45
 Fair Values of Derivative Instruments
 Assets Liabilities
 Balance Sheet December 31,
2017		 December 31,
2016		 Balance Sheet December 31,
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 $0.6
 $2.3
 Accrued Expenses $1.9
 $1.1
2013 Interest Rate Swap(b)
Prepaid expenses and other —
 —
 Accrued expenses and other 0.9
 3.7
 Other assets —
 —
 Other long-term liabilities —
 1.0

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

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


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REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIESTable of Contents
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)millions, except share and per share amounts)



Quantitative Information – Derivative Financial Instruments

As of December 31, 2019 and December 31, 2018, the Company did 0t have any derivative financial instruments.
The effects of the Company's derivative financial instruments on its Consolidated Statements of Operations and Comprehensive (Loss) IncomeLoss were as follows for the periods presented:
Derivative InstrumentsStatement of Operations ClassificationAmount of Gain (Loss) Recognized in Net (Loss) Income
Year Ended December 31,
20192018
Derivative financial instruments:
2013 Interest Rate SwapInterest Expense  $—  $(1.2) 
FX ContractsForeign currency gain, net  —  0.2  
2013 Interest Rate SwapMiscellaneous, net  —  0.2  
 Amount of Gain (Loss) Recognized in Other Comprehensive (Loss) Income
Year Ended December 31,
2017 2016 2015
Derivatives previously designated as hedging instruments:     
2013 Interest Rate Swap, net of tax (a)
$2.3
 $0.8
 $(1.6)


Amount of Gain Recognized in Other Comprehensive Loss
Year Ended December 31,
20192018
Derivatives previously designated as hedging instruments:
2013 Interest Rate Swap, net of tax (a)
$—  $0.7  
(a) Net of tax (benefit) expensebenefits of $(1.4) million, $0.5 million and $(1.0) million for 2017, 2016 and 2015, respectively.the year ended December 31, 2018.


Derivative Instruments Statement of Operations Classification Amount of Gain (Loss) Recognized in Net (Loss) Income
 Year Ended December 31,
 2017 2016 2015
Derivatives designated as hedging instruments:      
2013 Interest Rate Swap Interest Expense $(3.7) $(4.3) $(2.6)
Derivatives not designated as hedging instruments:      
FX Contracts Foreign currency gain (loss), net $(4.1) $2.1
 $3.8
2013 Interest Rate Swap Miscellaneous, net 0.1
 0.7
 —


14.12. PENSION AND POST-RETIREMENT BENEFITS

Savings Plan:

The Company offers a qualified defined contribution plan for its U.S.-based employees, the Revlon Employees' Savings, Investment and Profit Sharing Plan (as amended, the "Savings Plan"), which allows eligible participants to contribute up to 25%, and highly compensated participants to contribute up to 8%10%, of eligible compensation through payroll deductions, subject to certain annual dollar limitations imposed by the Internal Revenue Service (the "IRS"). The Company matches employee contributions at fifty50 cents for each dollar contributed up to the first 6% of eligible compensation. The Company made cash matching contributions to the Savings Plan of $3 million, $2.6$5.5 million and $2.5$5.3 million during 2017, 20162019 and 2015,2018, respectively. In addition, the Company made cash contributions of $2.5 million and $0.8 million during 2017 and 2016, respectively, to the Elizabeth Arden defined contribution plan, which it acquired in the 2016 Elizabeth Arden Acquisition. Effective January 1, 2018, the Company merged the Elizabeth Arden defined contribution plan into the Company's Savings Plan. The Company also offers a non-qualified defined contribution plan (the "Excess Savings Plan") providing benefits for certain U.S. employees who are in excess of IRS limitations. These non-qualified defined contribution benefits are funded from the Company's general assets.

The Company’s qualified and non-qualified defined contribution savings plans for its U.S.-based employees contain a discretionary profit sharingprofit-sharing component that enables the Company, should it elect to do so, to make discretionary profit sharingprofit-sharing contributions. For 2017,2019, the Company made discretionary profit sharingprofit-sharing contributions to the Savings Plan and Excess Savings Plan of $5.1$7.2 million (of which $4.0$5.6 million was paid in 20172019 and $1.1$1.6 million was paid in January 2018)2020), or up to 3% of eligible compensation, which was credited on a quarterly basis. For 2016,2018, the Company made discretionary profit sharingprofit-sharing contributions to the Savings Plan and Excess Savings Plan of $5$6.8 million (of which $3.9$5.3 million was paid in 20162018 and $1.1$1.5 million was paid in January 2017)2019), or 3% of eligible compensation, which was credited on a quarterly basis. For 2015, the Company made discretionary profit sharing contributionsup to the Savings Plan and Excess Savings Plan of $4.8 million (of which $3.7 million was paid in 2015 and $1.1 million was paid in January 2016), or 3% of eligible compensation, which was credited on a quarterly basis.

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COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

Pension Benefits:

In 2009, Products Corporation’s U.S. qualified defined benefit pension plan (the Revlon Employees’ Retirement Plan, which covered a substantial portion of the Company's employees in the U.S.) and its non-qualified pension plan (the Revlon Pension Equalization Plan) were amended to cease future benefit accruals under such plans after December 31, 2009. No additional benefits have accrued since December 31, 2009, other than interest credits on participant account balances under the cash balance program of the Company’s U.S. pension plans. Also, service credits for vesting and early retirement eligibility will continue to accrue in accordance with the terms of the respective plans. In 2010, the Company amended its Canadian defined benefit pension plan (the Affiliated Revlon Companies Employment Plan) to reduce future benefit accruals under such plan after December 31, 2010.

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


Additionally, while the Company closed its U.K. defined pension plan to new entrants in 2002, then-existing participants continue to accrue pension benefits.
Effective December 31, 2012,
Products Corporation merged two of itsalso sponsors 2 U.S. qualified defined benefit pension plans; therefore, as of December 31, 2012, Products Corporation sponsors two U.S. qualified defined benefit pension plans. The Company alsoplans, has non-qualified pension plans that provide benefits for certain U.S. and non-U.S. employees, and for U.S. employees in excess of IRS limitations in the U.S. and in certain limited cases contractual benefits for certain former officers of the Company. These non-qualified plans are funded from the Company's general assets.
In the fourth quarter of 2015, the Company offered certain former employees who had vested benefits in the Revlon Employees’ Retirement Plan the option of receiving the present value of the participant’s pension benefit in a one-time cash lump sum payment, an annuity form of benefit or the ability to maintain their deferred vested status in the pension plan. Based upon the participants' acceptance of that offer, $53.4 million was paid from the plan's assets in December 2015, with a corresponding decrease in the plan's benefit obligation. As a result of such program, the Company recorded a $20.7 million charge as a result of the pension lump sum settlement in the fourth quarter of 2015. Of this charge, $10.3 million and $10.4 million was included in cost of sales and SG&A expenses, respectively.
Other Post-retirement Benefits:

The Company previously sponsored an unfunded retiree benefit plan, which provides death benefits payable to beneficiaries of a very limited number of former employees. Participation in this plan was limited to participants enrolled as of December 31, 1993. The Company also administers an unfunded medical insurance plan on behalf of Revlon Holdings, certain costs of which have been apportioned to Revlon Holdings under the transfer agreements among Revlon, Products Corporation and MacAndrews & Forbes. (See Note 22,20, "Related Party Transactions - Transfer Agreements"Transactions").

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


The following table provides an aggregate reconciliation of the projected benefit obligations, plan assets, funded status and amounts recognized in the Company’s Consolidated Financial Statements related to the Company's significant pension and other post-retirement benefit plans:

 Pension Plans Other Post-Retirement Benefit Plans
 December 31,
 2017 2016 2017 2016
Change in Benefit Obligation:       
Benefit obligation - beginning of year$(640.5) $(649.4) $(13.4) $(13.0)
Service cost(3.0) (0.5) —
 —
Interest cost(19.6) (20.7) (0.4) (0.4)
Actuarial (loss) gain(22.3) (21.6) (1.1) (1.0)
Curtailment gain3.3
 —
 —
 —
Other pension settlements3.6
 —
 —
 —
Benefits paid43.2
 42.8
 0.9
 1.0
Other (a)
(18.4) —
 —
 —
Plan participant contributions(0.7) —
 —
 —
Foreign currency translation adjustments(7.0) 8.9
 —
 —
Benefit obligation - end of year$(661.4) $(640.5) $(14.0) $(13.4)
Change in Plan Assets:       
Fair value of plan assets - beginning of year$464.0
 $473.9
 $—
 $—
Actual return on plan assets53.5
 35.8
 —
 —
Employer contributions7.6
 7.3
 0.9
 1.0
Other pension settlements(3.6) —
 —
 —
Benefits paid(43.2) (42.8) (0.9) (1.0)
Other (a)
11.6
      
Plan participant contributions0.7
      
Foreign currency translation adjustments6.6
 (10.2) —
 —
Fair value of plan assets - end of year$497.2
 $464.0
 $—
 $—
Unfunded status of plans at December 31,$(164.2) $(176.5) $(14.0) $(13.4)
(a)
Other includes the addition of a foreign non-qualified defined benefit plan assumed in connection with the Elizabeth Arden Acquisition.

Pension PlansOther Post-Retirement Benefit Plans
December 31,
2019201820192018
Change in Benefit Obligation:
Benefit obligation - beginning of year$(591.0) $(661.4) $(12.2) $(14.0) 
Service cost(1.9) (2.0) —  —  
Interest cost(20.0) (18.6) (0.4) (0.4) 
Actuarial (loss) gain(59.3) 42.0  (1.5) 1.4  
Benefits paid43.6  45.2  0.7  0.8  
Plan Amendments(1.2) —  —  —  
Plan participant contributions(0.6) (0.6) —  —  
Foreign currency translation adjustments0.7  4.4  —  —  
Benefit obligation - end of year$(629.7) $(591.0) $(13.4) $(12.2) 
Change in Plan Assets:
Fair value of plan assets - beginning of year$432.4  $497.2  $—  $—  
Actual return (loss) on plan assets61.3  (24.2) —  —  
Employer contributions11.4  8.0  0.7  0.8  
Benefits paid(43.6) (45.2) (0.7) (0.8) 
Plan participant contributions0.6  0.6  —  —  
Foreign currency translation adjustments0.3  (4.0) —  —  
Fair value of plan assets - end of year$462.4  $432.4  $—  $—  
Unfunded status of plans at December 31, 2019$(167.3) $(158.6) $(13.4) $(12.2) 



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REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIESTable of Contents
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)millions, except share and per share amounts)



With respect to the Company's pension plans and other post-retirement benefit plans, amounts recognized in the Company’s Consolidated Balance Sheets at December 31, 20172019 and 20162018 consisted of the following:

Pension Plans Other Post-Retirement Benefit PlansPension PlansOther Post-Retirement Benefit Plans
December 31,December 31,
2017 2016 2017 20162019201820192018
Other long-term assets$1.5
 $—
 $—
 $—
Other long-term assets$3.6  $4.8  $—  $—  
       
Accrued expenses and other(6.2) (6.1) (0.7) (0.8)Accrued expenses and other(2.7) (5.9) (0.4) (0.7) 
Pension and other post-retirement benefit liabilities(159.5) (170.4) (13.3) (12.6)Pension and other post-retirement benefit liabilities(168.2) (157.5) (13.0) (11.5) 
Total liability$(164.2) $(176.5) $(14.0) $(13.4)Total liability$(167.3) $(158.6) $(13.4) $(12.2) 
       
Accumulated other comprehensive loss, gross$253.2
 $266.6
 $4.5
 $3.6
Accumulated other comprehensive loss, gross$266.1  $252.6  $4.0  $2.7  
Income tax (benefit) expense(43.3) (44.3) (0.9) (0.4)
Income tax benefitIncome tax benefit(48.7) (44.4) (1.0) (0.6) 
Portion allocated to Revlon Holdings(0.9) (0.9) (0.2) (0.2)Portion allocated to Revlon Holdings(0.8) (0.8) 0.2  —  
Accumulated other comprehensive loss, net$209.0
 $221.4
 $3.4
 $3.0
Accumulated other comprehensive loss, net$216.6  $207.4  $3.2  $2.1  

With respect to the above accrued expenses and other, the Company has recorded receivables from affiliates of $2.6$2.3 million and $2.7$2.4 million at December 31, 20172019 and 2016,2018, respectively, relating to pension plan liabilities retained by such affiliates.

As of December 31, 20172019 and 2016,2018, the projected benefit obligation, accumulated benefit obligation and fair value of plan assets for the Company's pension plans are as follows:
December 31,
20192018
Projected benefit obligation$629.7  $591.0  
Accumulated benefit obligation627.9  589.1  
Fair value of plan assets462.4  432.4  
 December 31,
 2017 2016
Projected benefit obligation$661.4
 $640.5
Accumulated benefit obligation661.1
 640.2
Fair value of plan assets497.2
 464.0


Net Periodic Benefit Cost

The components of net periodic benefit costs for the Company's pension and the other post-retirement benefit plans for the years ended December 31, 2019 and 2018, respectively, were as follows:

Pension PlansOther
Post-Retirement Benefit Plans
Year Ended December 31,
2019201820192018
Net periodic benefit costs:
Service cost$1.9  $2.0  $—  $—  
Interest cost20.0  18.6  0.4  0.4  
Expected return on plan assets(25.1) (27.8) —  —  
Amortization of actuarial loss9.9  9.2  0.2  0.4  
Curtailment gain—  (0.1) —  —  
Total net periodic benefit costs prior to allocation$6.7  $1.9  $0.6  $0.8  
Portion allocated to Revlon Holdings(0.1) (0.1) —  —  
Total net periodic benefit costs$6.6  $1.8  $0.6  $0.8  
In the year ended December 31, 2019, the Company recognized net periodic benefit cost of $7.2 million, compared to net periodic benefit cost of $2.6 million in the year ended December 31, 2018, primarily due to lower expected returns on plan assets and higher interest costs.
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COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)millions, except share and per share amounts)



Net Periodic Benefit Cost:
The components of net periodic benefit costs (income) for the Company's pension and the other post-retirement benefit plans are as follows:
 

Pension Plans		 Other
Post-Retirement
Benefit Plans
 Year Ended December 31,
 2017 2016 2015 2017 2016 2015
Net periodic benefit costs (income):   
Service cost$3.0
 $0.5
 $0.7
 $—
 $—
 $—
Interest cost19.6
 20.7
 28.6
 0.4
 0.4
 0.5
Expected return on plan assets(28.6) (31.0) (40.3) —
 —
 —
Amortization of actuarial loss9.5
 8.8
 8.4
 0.3
 0.2
 0.1
Lump sum settlement charge—
 —
 20.7
 —
 —
 —
Curtailment gain(a)
(2.6) —
 —
 —
 —
 —
Other pension settlements charge—
 —
 0.3
 —
 —
 —
Total net periodic benefit costs (income) prior to allocation$0.9
 $(1.0) $18.4
 $0.7
 $0.6
 $0.6
Portion allocated to Revlon Holdings(0.1) (0.1) (0.1) —
 (0.1) (0.1)
Total net periodic benefit costs (income)$0.8
 $(1.1) $18.3
 $0.7
 $0.5
 $0.5
(a)
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.
For 2017, the Company recognized net periodic benefit cost of $1.5 million, compared to net periodic benefit income of $0.6 million in 2016, primarily due to the lower return on plan assets and higher service costs during 2017, partially offset by a curtailment gain resulting from a certain foreign non-qualified benefit plan of Elizabeth Arden.
For 2016, the Company recognized net periodic benefit income of $0.6 million, compared to net periodic benefit cost of $18.8 million in 2015, primarily due to the pension lump sum settlement charge recorded in the fourth quarter of 2015, which was not repeated in 2016, as well as the Company's adoption of the alternative approach to calculating the service and interest components of net periodic benefit cost for pension and other post-retirement benefits (the "full yield curve" approach), which was adopted by the Company at December 31, 2015, discussed below.
Net periodic benefit costs (income) are reflected in the Company's Consolidated Financial Statements as follows:follows for the periods presented:
Year Ended December 31,
20192018
Net periodic benefit costs:
Cost of sales$—  $0.1  
Selling, general and administrative expense1.9  1.9  
Miscellaneous, net5.3  0.6  
Total net periodic benefit costs$7.2  $2.6  
 Year Ended December 31,
 2017 2016
Net periodic benefit (income) costs:   
Cost of sales$(1.0) $(2.5)
Selling, general and administrative expense2.5
 1.9
Total net periodic benefit costs (income)$1.5
 $(0.6)


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



Amounts recognized in accumulated other comprehensive loss at December 31, 20172019 with respect to the Company’s pension plans and other post-retirement plans, which have not yet been recognized as a component of net periodic benefit cost, were as follows:

Pension Benefits Post-Retirement Benefits TotalPension BenefitsPost-Retirement BenefitsTotal
Net actuarial loss$253.2
 $4.5
 $257.7
Net actuarial loss$265.0  $4.0  $269.0  
Prior service costPrior service cost1.1  —  1.1  
Accumulated Other Comprehensive Loss, Gross253.2
 4.5
 257.7
Accumulated Other Comprehensive Loss, Gross266.1  4.0  270.1  
Income tax benefit(43.3) (0.9) (44.2)Income tax benefit(48.7) (1.0) (49.7) 
Portion allocated to Revlon Holdings(0.9) (0.2) (1.1)
Portion allocated (to) from Revlon HoldingsPortion allocated (to) from Revlon Holdings(0.8) 0.2  (0.6) 
Accumulated Other Comprehensive Loss, Net$209.0
 $3.4
 $212.4
Accumulated Other Comprehensive Loss, Net$216.6  $3.2  $219.8  

The total actuarial losses and prior service costs with respect to the Company’s pension plans and other post-retirement plans included in accumulated other comprehensive loss at December 31, 20172019 expected to be recognized in net periodic benefit cost during the fiscal year ending December 31, 2018,2020, is $9.0$10.8 million and $0.4 million, respectively.

Pension Plan Assumptions:
The following weighted average assumptions were used to determine the Company’s projected benefit obligation of the Company’s U.S. and International pension plans at the end of the respective years:

U.S. Plans International PlansU.S. PlansInternational Plans
2017 2016 2017 20162019201820192018
Discount rate3.47% 3.92% 2.19% 2.66%Discount rate3.01 %4.13 %1.81 %2.52 %
Rate of future compensation increases3.50% 3.50% 1.75% 2.20%Rate of future compensation increases3.50 %3.50 %2.02 %2.02 %

The following weighted average assumptions were used to determine the Company’s net periodic benefit (income) cost of the Company’s U.S. and International pension plans during the respective years:

U.S. PlansInternational Plans
2019201820192018
Discount rate4.13 %3.47 %2.52 %2.19 %
Expected long-term return on plan assets6.00 %6.00 %4.86 %4.95 %
Rate of future compensation increases3.50 %3.50 %2.02 %1.75 %

F-49
 U.S. Plans International Plans
 2017 2016 2015 2017 2016 2015
Discount rate3.92% 4.15% 3.89% 2.24% 3.68% 3.74%
Expected long-term return on plan assets6.50% 7.00% 7.50% 4.81% 6.00% 6.00%
Rate of future compensation increases3.50% 3.50% 3.50% 2.01% 2.22% 2.33%
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

Effective December 31, 2015, the Company adopted the "full yield curve" method as an alternative approach to calculating the service and interest components of net periodic benefit cost for the Company's pension and other post-retirement benefits. Under the "full yield curve" method, the discount rate assumption was built through the application of specific spot rates along the yield curve used in the determination of the benefit obligation to the relevant projected cash flows for each of the Company's pension and other post-retirement plans. Prior to December 31, 2015, the Company estimated the service and interest cost components utilizing a single weighted-average discount rate derived from the yield curve used to measure the projected benefit obligation at the beginning of the period. The change did not affect the measurement of the Company's total projected benefit obligations, as the change in service and interest costs was exactly offset in the actuarial loss (gain) recognized for each year. The Company made this change to provide a more precise measurement of service and interest costs by improving the correlation between projected benefit cash flows to the corresponding spot yield curve rates. The change to the "full yield curve" method was accounted for as a change in accounting estimate that was inseparable from a change in accounting principle, and accordingly, was accounted for prospectively.
In selecting its expected long-term rate of return on its pension plan assets, the Company considers a number of factors, including, without limitation, recent and historical performance of pension plan assets, the pension plan portfolios' asset allocations over a variety of time periods compared with third-party studies, the performance of the capital markets in recent years and other factors, as well as advice from various third parties, such as the pension plans' advisors, investment managers and actuaries. While the Company considered both the recent performance and the historical performance of pension plan assets, the Company’s assumptions are based primarily on its estimates of long-term, prospective rates of return. Using the aforementioned methodologies, the Company selected a 6.5%6.00% and 4.81%4.86% weighted-average long-term rate of return on plan assets assumption during 20172019 for the

F-43
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)


U.S. and International pension plans, respectively. Differences between actual and expected asset returns are recognized in the net periodic benefit cost over the remaining service period of the active participating employees.
The rate of future compensation increases is an assumption used by the actuarial consultants for pension accounting and is determined based on the Company’s current expectation for such increases.
Investment Policy:
The Investment Committee for the Company's U.S. pension plans (the "Investment Committee") has adopted (and revises from time-to-time) an investment policy for the Company's U.S. pension plans with the objective of realizing a long-term rate of return on pension plan assets that meets or exceeds, over time, the expected long-term rate of return on plan assets assumption, weighed against a reasonable risk level. In connection with this objective, the Investment Committee retains a professional investment advisor who recommends investment managers that invest plan assets in the following asset classes: common and preferred stock, mutual funds, fixed income securities, common and collective funds, hedge funds, group annuity contracts and cash and other investments. The Company’s International plans follow a similar methodology in conjunction with local actuarial consultants and asset managers.
The investment policy adopted by the Investment Committee provides for investments in a broad range of publicly-traded securities, among other things. The investments are in domestic and international stocks, ranging from small to large capitalization stocks, debt securities ranging from domestic and international treasury issues, corporate debt securities, mortgages and asset-backed issues. Other investments may include cash and cash equivalents and hedge funds. The investment policy also allows for investments in private equity funds that are not covered in investments described above, provided that the Investment Committee approves any such investments prior to their selection. Also, global balanced strategies are utilized to provide for investments in a broad range of publicly-traded stocks and bonds in both domestic and international markets, as described above. In addition, the global balanced strategies can include commodities, provided that the Investment Committee approves any such investments prior to their selection.
The Investment Committee’s investment policy does not allow the use of derivatives for speculative purposes, but such policy does allow its investment managers to use derivatives for the purpose of reducing risk exposures or to replicate exposures of a particular asset class.
The Company’s U.S. and International pension plans have target asset allocation ranges that are intended to be flexible guidelines for allocating the plans’ assets among various classes of assets. These target ranges are reviewed periodically and considered for readjustment when an asset class weighting is outside of its target range (recognizing that these are flexible target ranges that may vary from time-to-time) with the objective of meeting or exceeding the expected long-term rate of return on plan assets assumption, weighed against a reasonable risk level. The target ranges per asset class in effect for 20172019 were as follows:

F-50
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

Target Ranges
U.S. PlansInternational Plans
Asset Class:
Common and preferred stock0% - 10%—
Mutual funds20%10% - 30%—
Fixed income securities10%0% - 20%—
Common and collective funds30%50% - 50%70%100%
Hedge funds5% - 15%—
Cash and other investments0% - 10%—


Fair Value of Pension Plan Assets:

The following table presents information on the fair value of the Company's U.S. and International pension plan assets at December 31, 20172019 and 2016:2018:

 U.S. Plans International Plans
 2017 2016 2017 2016
Fair value of plan assets$413.6
 $400.5
 $83.6
 $63.5
U.S. PlansInternational Plans
2019201820192018
Fair value of plan assets$380.6  $358.3  $81.8  $74.1  

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



The Company determines the fair values of the Company’s U.S. and International pension plan assets as follows:

•Common and preferred stock: The fair values of the investments included in the common and preferred stock asset class generally reflect the closing price reported on the major market where the individual securities are traded. The CompanyPlan classifies common and preferred stock investments within Level 1 of the fair value hierarchy.
•Mutual funds: The fair values of the investments included in the mutual funds asset class are determined using net asset value ("NAV"(“NAV”) provided by the applicable fund administrators.administrator of the funds. The NAV is based on the closing price reported on the major market where the individual securities within the mutual fund are traded. The Company classifies mutual fund investments within Level 1 of the fair value hierarchy.
•Fixed income securities: The fair values of the investments included in the fixed income securities asset class are based on a compilation of primarily observable market information and/or broker quotes. The Company classifies fixed income securities investments primarily within Level 2 of the fair value hierarchy.
•Common and collective funds: The fair values of the investments included in the common and collective funds asset class are determined using NAV provided by the applicable fund administrators.administrator of the funds. The NAV is based on the value of the underlying assets owned by the common and collective fund, minus its liabilities, and then divided by the number of shares outstanding. The redemption frequencies for the investments in the common and collective funds asset class range from daily to monthly, with redemption notice periods that range from 2 to 10 business days. The Company classifies common and collective fund investments within Level 1 or Level 2 of the fair value hierarchy.hierarchy, depending on whether certain criteria are met. Some common and collective funds for which fair value is not readily determinable are recorded using NAV per share or its equivalent, as permitted by the practical expedient, provided by ASU No. 2015-07, Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset per Share (or Its Equivalent) (the “ASU No. 2015-07 practical expedient”). These investments are not assigned a fair value hierarchy level.
•Hedge funds: The hedge fundfunds asset class includes investments in hedge funds that in turn, primarily invest in a grouping of equities, fixed income instruments, currencies, derivatives and/or commodities. The fair values of investments included in the hedge funds class are determined using NAV provided by the applicable fund administrators. The NAV is based on securities listed or quoted on a national securities exchange or market, or traded inadministrator of the over-the-counter market, and is valued at the closing quotation posted by that exchange or trading system. Securities not listed or quoted on a national securities exchange or market are valued primarily through observable market information or broker quotes.funds. The hedge fund investments in the hedge funds asset class may employ leverage, generally can be sold on a quarterly or monthly basis and may employ leverage. The Company classifies hedgehave redemption notice periods that range up to 90 business days. Hedge fund investments within Level 2 ofare generally recorded using NAV per share or its equivalent, as permitted by the ASU No. 2015-07 practical expedient, and are not assigned a fair value hierarchy.hierarchy level.
Group annuity contract: The group annuity contract asset class primarily invests in equities, corporate bonds and government bonds. The fair values of securities listed or quoted on a national securities exchange or market, or traded in the over-the-counter market, are valued at the closing quotation posted by that exchange or trading system. Securities not listed or quoted on a national securities exchange or market are valued primarily through observable market information or broker quotes. The Company classifies group annuity contract investments within Level 2 of the fair value hierarchy.
•Cash and cash equivalents: Cash and cash equivalents are measured at cost, which approximates fair value. The Company classifies cash and cash equivalents within Level 1 of the fair value hierarchy.



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REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIESTable of Contents
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)millions, except share and per share amounts)



The fair values of the assets within the Company's U.S. and International pension plan assetsplans at December 31, 20172019 by asset category were as follows:

 Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Observable Inputs (Level 2) 
Significant Unobservable Inputs
 (Level 3)
Common and Preferred Stock:       
U.S. small/mid cap equity$18.3
 $18.3
 $—
 $—
Mutual Funds(a):
       
Corporate bonds17.7
 17.7
 —
 —
Government bonds8.4
 8.4
 —
 —
U.S. large cap equity0.1
 0.1
 —
 —
International equities3.8
 3.8
 —
 —
Emerging markets international equity7.4
 7.4
 —
 —
Other4.5
 4.5
 —
 —
Fixed Income Securities:       
Corporate bonds46.7
 —
 46.7
 —
Government bonds15.4
 —
 15.4
 —
Common and Collective Funds(a):
       
Corporate bonds51.5
 42.3
 9.2
 —
Government bonds55.3
 44.1
 11.2
 —
U.S. large cap equity78.6
 68.7
 9.9
 —
U.S. small/mid cap equity16.1
 16.1
 —
 —
International equities77.9
 42.8
 35.1
 —
Emerging markets international equity18.9
 12.8
 6.1
 —
Cash and cash equivalents13.0
 13.0
 —
 —
Other6.6
 1.8
 4.8
 —
Hedge Funds(a):
       
Corporate bonds10.3
 —
 10.3
 —
Government bonds0.7
 —
 0.7
 —
U.S. large cap equity1.2
 —
 1.2
 —
Cash and cash equivalents3.3
 3.3
 —
 —
Other (b)
33.3
 —
 33.3
 —
Group Annuity Contract—
 —
 —
 —
Cash and cash equivalents8.2
 8.2
 —
 —
Fair value of plan assets at December 31, 2017$497.2
 $313.3
 $183.9
 $—
(a)
The investments in mutual funds, common and collective funds and hedge funds are disclosed above within the respective underlying investments’ class (i.e., various equities, corporate bonds, government bonds and other investment classes), while the fair value hierarchy levels of the investments are based on the Company’s direct ownership unit of account.

(b)
Comprised of investments in equities, fixed income instruments, currencies, derivatives and/or commodities.

Quoted Prices in Active Markets for Identical AssetsSignificant Observable InputsSignificant Unobservable Inputs
TotalLevel 1Level 2Level 3
Common and Preferred Stock:
U.S. Small/Mid Cap Equity—  —  —  —  
Mutual Funds (a):
Corporate Bonds10.8  10.8  —  —  
Government Bonds15.8  15.8  —  —  
U.S. Large Cap Equity0.2  0.2  —  —  
International Equities16.3  16.3  —  —  
Emerging Markets International Equity5.9  5.9  —  —  
Cash and Cash Equivalents1.6  1.6  —  —  
Other (b)
2.0  2.0  —  —  
Fixed Income Securities:
Corporate Bonds—  —  —  —  
Government Bonds72.2  —  72.2  —  
Common and Collective Funds (a):
Corporate Bonds33.6  19.4  14.2  —  
Government Bonds38.9  9.1  29.8  —  
U.S. Large Cap Equity55.5  48.7  6.8  —  
U.S. Small/Mid Cap Equity18.2  18.2  —  —  
International Equities70.8  3.4  67.4  —  
Emerging Markets International Equity18.1  13.0  5.1  —  
Cash and Cash Equivalents1.7  1.7  —  —  
Other (b)
2.9  —  2.9  —  
Cash and Cash Equivalents12.9  12.9  —  —  
Total Plan Assets in the fair value hierarchy$377.4  $179.0  $198.4  —  
Investments measured at Net Asset Value (c)
Common and Collective Funds52.4  
Hedge Funds32.6  
Total Plan Assets measured at Net Asset Value$85.0  
Total Plan Assets at Fair Value$462.4  $179.0  $198.4  —  



(a) The investments in mutual funds and common and collective funds are disclosed above within the respective underlying investments’ class (i.e., various equities, corporate bonds, government bonds and other investment classes), while the fair value hierarchy levels of the investments are based on the respective trust’s direct ownership unit of account.

(b) Comprised of investments in equities, fixed income instruments, currencies, derivatives and/or commodities.

(c) These investments are presented for reconciliation purposes, but are not required to be categorized in the fair value hierarchy as they are measured at fair value using the net asset per share or its equivalent, as permitted by the ASU No. 2015-07 practical expedient.


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REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIESTable of Contents
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)millions, except share and per share amounts)



The fair values of the assets within the Company's U.S. and International pension plan assetsplans at December 31, 20162018 by asset category were as follows:
Quoted Prices in Active Markets for Identical AssetsSignificant Observable InputsSignificant Unobservable Inputs
TotalLevel 1Level 2Level 3
Common and Preferred Stock:
U.S. Small/Mid Cap Equity7.0  7.0  —  —  
Mutual Funds (a):
Corporate Bonds10.6  10.6  —  —  
Government Bonds13.4  13.4  —  —  
U.S. Large Cap Equity0.2  0.2  —  —  
International Equities9.4  9.4  —  —  
Emerging Markets International Equity5.3  5.3  —  —  
Cash and Cash Equivalents2.2  2.2  —  —  
Other (b)
1.8  1.8  —  —  
Fixed Income Securities:
Corporate Bonds—  —  —  —  
Government Bonds70.0  —  70.0  —  
Common and Collective Funds (a):
Corporate Bonds40.7  19.6  21.1  —  
Government Bonds43.0  6.6  36.4  —  
U.S. Large Cap Equity54.5  38.8  15.7  —  
U.S. Small/Mid Cap Equity6.9  6.9  —  —  
International Equities58.4  5.5  52.9  —  
Emerging Markets International Equity14.9  8.5  6.4  —  
Cash and Cash Equivalents1.7  1.7  —  —  
Other (b)
(1.6) —  (1.6) —  
Cash and Cash Equivalents22.2  22.2  —  —  
Total Plan Assets in the fair value hierarchy$360.6  $159.7  $200.9  —  
Investments measured at Net Asset Value (c)
Common and Collective Funds36.3  
Hedge Funds35.5  
Total Plan Assets measured at Net Asset Value$71.8  
Total Plan Assets at Fair Value$432.4  $159.7  $200.9  —  
 Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Observable Inputs (Level 2) 
Significant Unobservable Inputs
 (Level 3)
Common and Preferred Stock:       
U.S. small/mid cap equity$15.5
 $15.5
 $—
 $—
Mutual Funds(a):
       
Corporate bonds14.3
 14.3
 —
 —
Government bonds11.9
 11.9
 —
 —
U.S. large cap equity0.1
 0.1
 —
 —
International equities3.9
 3.9
 —
 —
Emerging markets international equity6.3
 6.3
 —
 —
Other3.0
 3.0
 —
 —
Fixed Income Securities:       
Corporate bonds41.0
 —
 41.0
 —
Government bonds13.9
 —
 13.9
 —
Common and Collective Funds(a):
       
Corporate bonds56.0
 54.3
 1.7
 —
Government bonds68.4
 57.0
 11.4
 —
U.S. large cap equity68.8
 67.5
 1.3
 —
U.S. small/mid cap equity20.0
 20.0
 —
 —
International equities67.0
 34.9
 32.1
 —
Emerging markets international equity15.3
 9.4
 5.9
 —
Cash and cash equivalents4.8
 4.8
 —
 —
Other(7.2) (10.3) 3.1
 —
Hedge Funds(a):
       
Corporate bonds4.5
 —
 4.5
 —
Government bonds6.5
 —
 6.5
 —
U.S. large cap equity2.1
 —
 2.1
 —
Cash and cash equivalents2.4
 —
 2.4
 —
Other(b)
31.9
 —
 31.9
 —
Group Annuity Contract3.0
 —
 3.0
 —
Cash and cash equivalents10.6
 10.6
 —
 —
Fair value of plan assets at December 31, 2016$464.0
 $303.2
 $160.8
 $—
(a)
The investments in mutual funds, common and collective funds and hedge funds are disclosed above within the respective underlying investments’ class (i.e., various equities, corporate bonds, government bonds and other investment classes), while the fair value hierarchy levels of the investments are based on the Company’s direct ownership unit of account.
(b)
Comprised of investments in equities, fixed income instruments, currencies, derivatives and/or commodities.



(a) The investments in mutual funds and common and collective funds are disclosed above within the respective underlying investments’ class (i.e., various equities, corporate bonds, government bonds and other investment classes), while the fair value hierarchy levels of the investments are based on the respective trust’s direct ownership unit of account.

(b) Comprised of investments in equities, fixed income instruments, currencies, derivatives and/or commodities.

(c) These investments are presented for reconciliation purposes, but are not required to be categorized in the fair value hierarchy as they are measured at fair value using the net asset per share or its equivalent, as permitted by the ASU No. 2015-07 practical expedient.
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REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)



There were no transfers into or out of Level 3 assets in the Company's U.S. and International pension plan's fair value hierarchy during 20172019 or 2016.2018.

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COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

Estimated Future Benefit Payments:

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid out of the Company’s pension and other post-retirement benefit plans:

Total Pension BenefitsTotal Other Benefits
2020$47.7  $1.4  
2021$42.4  $1.3  
2022$42.2  $1.3  
2023$41.5  $1.2  
2024$40.6  $1.2  
Years 2025 to 2029$189.9  $4.7  

Contributions:

The Company’s intent is to fund at least the minimum contributions required to meet applicable federal employee benefit laws and local laws, or to directly pay benefit payments where appropriate. During 2017, $7.62019, $11.4 million and $0.9$0.7 million were contributed to the Company’s pension plans and other post-retirement benefit plans, respectively. During 2018,2020, the Company expects to contribute approximately $10$18 million in the aggregate to its pension and other post-retirement benefit plans.
Estimated Future Benefit Payments:
The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid out of the Company’s pension and other post-retirement benefit plans:
 Total Pension Benefits Total Other Benefits
2018$46.9
 $1.2
201943.6
 1.2
202045.3
 1.2
202142.7
 1.2
202243.0
 1.2
Years 2023 to 2027202.6
 5.1


15.13. STOCK COMPENSATION PLAN
Revlon maintains the Fourth Amended and Restated Revlon, Inc. Stock Plan (the(as amended, the "Stock Plan"), which provides for awards of stock options, stock appreciation rights, restricted or unrestricted stock and restricted stock units ("RSUs") to eligible employees and directors of Revlon and its affiliates, including Products Corporation. An aggregate of 6,565,000 shares were reserved for issuance as Awards under the Stock Plan, of which there remained approximately 3.41.8 million shares available for grant as of December 31, 2017 for grant as stock options, stock appreciation rights, restricted or unrestricted stock and/or restricted stock units.2019. In July 2014, the Stock Plan was amended to renew the Stock Plan for a 7-year renewal term expiring on April 14, 2021. In September 2019 the Stock Plan was amended in connection with the 2019 TIP, described below, to: (1) allow the Compensation Committee to delegate to Revlon’s Chief Executive Officer the authority to grant RSUs to the Company’s employees, other than its officers who are subject to Section 16 of the Securities Exchange Act of 1934, as amended (i.e., the Company’s Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer & Controller); (2) allow for accelerated vesting of equity awards upon a termination without cause; (3) change the minimum vesting period for specified equity awards from 3 years to 2 years; and (4) to increase by 250,000 shares the number of shares of Revlon common stock that are not subject to the Stock Plan’s minimum vesting requirements.

Stock options:

Non-qualified stock options granted under the Stock Plan, if granted, are granted at prices that equal or exceed the fair market value of Class A Common Stock on the grant date and have a term of 7 years. Option grants generally vest over service periods that range from 1 year to 4 years.
At December 31, 2017, 20162019 and 2015,2018, there were no0 options exercisable under the Stock Plan and there was no stock option activity for 2017, 20162019 and 2015.2018.

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COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

Restricted stock awards and restricted stock units:

A summary of the restricted stock and RSU activity for each of 2019 and 2018 is presented in the following table:

Restricted Stock (000's)Weighted Average Grant Date Fair Value Per Share
Outstanding at January 1, 2018795.0  $29.87  
Granted(a)
1,303.9  19.39
Vested(b)
(388.7) 33.04
Forfeited(a)
(303.5) 25.08
Outstanding at December 31, 20181,406.7  20.32
Granted(a)
1,163.5  21.72
Vested(b)
(299.1) 21.80
Forfeited(249.5) 20.11
Outstanding at December 31, 20192,021.6  20.93

(a) The 2018 grants include 69,767 restricted stock awards and 1,234,116 RSUs, the latter granted pursuant to the Long-Term Incentive Program under the Stock Plan, as discussed below. 2018 forfeited shares include 251,495 restricted stock awards and 52,022 RSUs. The 2019 grants include 67,214 restricted stock awards and 1,096,324 RSUs, the latter granted pursuant to the Long-Term Incentive Program and the 2019 Transaction Incentive Program under the Stock Plan, as discussed below.
(b)Of the amounts that vested during 2019 and 2018, 92,260 and 167,297 shares, respectively, were withheld by the Company to satisfy certain grantees’ minimum withholding tax requirements, which withheld shares became Revlon treasury stock and are not sold on the open market. (See discussion under "Treasury Stock" in Note 16, "Stockholders' Deficiency").

The Company recognizes non-cash compensation expense related to restricted stock awards and RSUs under the Stock Plan using the straight-line method over the remaining service period. The Company recorded compensation expense under the Stock Plan of $8.1 million and $17.2 million during 2019 and 2018, respectively. The 2019 total compensation expense consisted of $2.7 million related to restricted stock awards and $0.4 million and $5.0 million related to the Revlon 2019 Transaction Incentive Program and the Long-Term Incentive Program, respectively, discussed below. The total fair value of restricted stock and RSUs that vested during 2019 and 2018 was $6.5 million and $12.8 million, respectively. The deferred stock-based compensation balance related to restricted stock awards was $32.2 million at December 31, 2019. Of this balance, $3.5 million related to restricted stock awards and $28.7 million related to RSUs granted under the Revlon 2019 Transaction Incentive Program and the Long-Term Incentive Program, and they will be amortized ratably to compensation expense over a weighted-average remaining vesting period of 1.79 years.
The Stock Plan allows for awards of restricted stock and restricted stock unitsRSUs to employees and directors of Revlon and its affiliates, including Products Corporation. The restricted stock awards granted under the Stock Plan vest over service periods that generally range from 2 years to 5 years. The Company granted 853,11167,214 shares of restricted stock to certain executives in during 2017,2019, which vest ratably over a range of 2 years to 5 years,3-year period, with the first tranche of such grants having vested in April 2017.January 2020. The Company granted 125,54069,767 shares of restricted stock to certain executives in 2016,during 2018, which vest ratably over a range of 3 years to 4 years, with the first tranche having vested in March 2016. The Company granted 220,635 shares of restricted stock to certain executives in 2015, which vest over a range of 4 years to 5 years,3-year period, with the first tranche of such grants having vested in March 2016.2019.
Pursuant
Revlon 2019 Transaction Incentive Program

In August 2019, it was disclosed that MacAndrews & Forbes and Revlon have determined to explore strategic transactions involving Revlon and third parties (the "Strategic Review"). In light of this, the Company’s employment agreement with Mr. Fabian Garcia,Compensation Committee of Revlon’s Board of Directors approved a Revlon 2019 Transaction Incentive Program (the “2019 TIP”) that enables the Company’s PresidentCompany to award cash-based and Chief Executive Officer, on April 15, 2017 (the "Garcia Grant Date"), Revlon granted to Mr. Garcia 270,489RSU-based retention grants and transaction bonus awards, as well as providing for the accelerated vesting of time-based RSUs and restricted shares of Revlon Class A Common Stock (the "Garcia Restricted Stock Grant"), being the number of shares equalfollowing a termination without cause or due to $10 million divided by the $36.97 NYSE closing price of Revlon Class A Common Stock on the April 15, 2016 commencement date of his employment (the "Garcia Effective Date"). One-fifth of the Garcia Restricted Stock Grant vested on the Garcia Grant Date (provided that the Company withheld 30,197 shares for the payment of withholding taxes due upon such vesting event pursuant to the terms of the Stock Plan).death or disability.


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REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIESTable of Contents
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)millions, except share and per share amounts)



Pursuant to the terms of his separation agreement, dated January 29, 2018, the remaining four-fifths of the Garcia Restricted Stock Grant will vestEach Tier 1 participant’s 2019 TIP award is payable two-thirds in full during March 2018. See Note 24, "Subsequent Events" for more information.
Pursuant to the Company's employment agreement with Mr. Christopher Peterson, the Company's Chief Operating Officer, Operations & Principal Financial Officer, on April 17, 2017 (the "Peterson Grant Date"), Revlon granted Mr. Peterson 192,307 restricted shares of Revlon Class A Common Stock (the "Peterson Restricted Stock Grant"), being the number of shares equal to $5,000,000 divided by the $26.00 NYSE closing price of Revlon Class A Common Stock on the April 17, 2017 commencement date of his employment (the "Peterson Effective Date"). One-fifth of the Restricted Stock Grant will vestcash and one-third in RSUs vesting in 50% tranches on each of the first 5 anniversaries of the Peterson Effective Date, so long as Mr. Peterson remains employed with the CompanyDecember 31, 2020 and December 31, 2021, while Tier 2 awards are payable 100% in cash in one lump-sum on December 31, 2020, in each applicable vesting date,case subject to certain earlier paymentvesting for a change of control or vesting provisions.
A summarytermination of employment without cause, as described below. As of September 5, 2019, the Company approved a total of 206,812 time-based RSUs under Tier 1 of the restricted stock and restricted stock unit activity for2019 TIP, which are scheduled to vest in equivalent amounts on each of 2017, 2016December 31, 2020 and 2015December 31, 2021, subject to continued employment (the “2019 TIP RSUs”). As of December 31, 2019, a total of 204,151 time-based RSUs under Tier 1 of the 2019 TIP had been granted. The Company’s President and Chief Executive Officer declined an award under the retention program and will receive a transaction bonus only if the Company completes a transaction.

The 2019 TIP RSUs vest in full upon an involuntary termination, other than if due to cause; provided that if a change of control occurs or a brand or business segment is presentedsold and (i) the impacted grantee accepts an offer of employment from the buyer, then: (A) if the buyer assumes the 2019 TIP RSUs, the grantee will continue to vest in the following table:assumed awards (with the grantee having the continued right to accelerated vesting upon an involuntary termination, other than if due to cause); and (B) if the buyer does not assume the 2019 TIP RSUs, the grantee’s 2019 TIP RSUs will vest upon closing the change of control; and (ii) the impacted grantee declines an offer of employment from the buyer for substantially comparable total compensation and benefits, the grantee will forfeit their unvested 2019 TIP RSUs (collectively, the “Special Vesting Rules”).
 Restricted Stock (000's) Weighted Average Grant Date Fair Value Per Share
Outstanding at January 1, 2015773.4
 $30.37
Granted220.6
 29.46
Vested(a)
(171.7) 29.09
Forfeited(57.5) 30.44
Outstanding at December 31, 2015764.8
 30.39
Granted125.5
 31.86
Vested(a)
(221.7) 29.51
Forfeited(257.6) 31.05
Outstanding at December 31, 2016(b)
411.0
 30.78
Granted853.1
 30.94
Vested(a)
(216.0) 32.63
Forfeited(253.1) 32.60
Outstanding at December 31, 2017795.0
 29.87

(a)
Of the amounts vested during 2017, 2016 and 2015, 89,620, 92,092 and 82,740, respectively, were withheld by the Company to satisfy certain grantees’ minimum withholding tax requirements, which withheld shares became Revlon treasury stock and are not sold on the open market.


The 2019 TIP also provides for the following cash-based awards payable to certain employees, subject to continued employment through the respective vesting dates: (i) Tier 1 - $6.8 million payable in two equal installments as of December 31, 2020 and December 31, 2021; and (ii) Tier 2 - $2.5 million payable in one installment as of December 31, 2020. Such cash-based awards follow the Special Vesting Rules following a termination without cause or due to death or disability. During 2019, the Company recognizes non-cash compensation expense related to restricted stockgranted $6.6 million and $2.1 million cash-based awards, net of forfeitures, under Tier 1 and restricted stock units underTier 2 of the Stock Plan using the straight-line method2019 TIP, respectively, which are being amortized over the remaining service period. The Company recorded compensation expense relatedperiod from the grant dates to restricted stock awards under the Stock Plan of $6.8 million, $6.4 millionDecember 31, 2021 and $5.1 million during 2017, 2016 and 2015,December 31, 2020, respectively. The total amount amortized for these cash-based awards through December 31, 2019 is approximately $1.3 million and is recorded in "Acquisition, integration and divestiture costs" in the Company's Consolidated Statements of Operations and Comprehensive Loss.

Long-Term Incentive Program

The Company's LTIP RSUs consist of time-based RSUs and performance-based RSUs. Time-based RSUs are scheduled to vest ratably over a 3-year service period, while performance-based RSUs are scheduled to vest based on the achievement of certain Company performance metrics and cliff-vest at the completion of a 3-year performance period.
The fair value of restricted stockthe LTIP and restricted stock unitsTIP RSUs is determined based on the NYSE closing share price on the grant date.
In connection with the announcement of the 2019 TIP, in August 2019 the Company also approved applying the Special Vesting Rules to outstanding, pre-existing LTIP RSUs, except that vested during 2017accelerated vesting in the case of termination of employment without cause will apply only to any tranche of outstanding, pre-existing LTIP RSUs scheduled to vest in the 12-month period following termination, with any future tranches being forfeited. Prior to the approval of these Special Vesting Rules, while the outstanding, pre-existing LTIP RSUs would generally have accelerated vesting upon a change of control, they did not feature accelerated vesting for termination and, 2016 was $7 million and $6.5 million, respectively. The deferred stock-based compensation related to restricted stock awards was $19.4 million atin such cases, they were entirely forfeited upon termination.
As of December 31, 20172019, 5,462 LTIP RSUs and will be amortized ratably to compensation expense over a weighted-average remaining vesting periodNaN 2019 TIP RSUs were vested on an accelerated basis under the above-mentioned provisions, resulting in accelerated amortization of 3.25 years.approximately $0.1 million.





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



During 2019, the activity related to time-based and performance-based RSUs previously granted to eligible employees and the grant date fair value per share related to these RSUs were as follows under the LTIP and 2019 TIP plans, respectively:
16.
Time-Based LTIPPerformance-Based LTIP
RSUs (000's)Weighted-Average Grant Date Fair Value per RSURSUs (000's)Weighted-Average Grant Date Fair Value per RSU
Outstanding as of December 31, 2018
LTIP RSUs:
2018434.7  $19.11  434.7  $19.11  
2017 (a)
156.4  19.70  156.4  19.70  
Total LTIP RSUs Outstanding as of December 31, 2018591.1  591.1  
Granted
2019 TIP RSUs Granted (b)
204.1  16.44  n/a  —  
LTIP RSUs Granted:
2019446.0  22.55  446.1  22.55  
Total LTIP RSUs Granted446.0  446.1  
Vested
2019 TIP RSUs Vested (b)
—  —  n/a  —  
LTIP RSUs Vested:
2019 (c)
(1.2) 22.55  —  —  
2018 (c)
(135.1) 19.07  —  —  
2017 (a)(c)
(69.4) 19.70  —  —  
Total LTIP RSUs Vested(205.7) —  
Forfeited/Canceled
2019 TIP RSUs Forfeited/Canceled (b)
(3.5) 16.44  n/a  —  
LTIP RSUs Forfeited/Canceled:
2019(19.2) 22.55  (20.5) 22.55  
2018(57.7) 19.70  (70.0) 19.70  
2017 (a)
(33.0) 19.70  (45.5) 19.70  
Total LTIP RSUs Forfeited/Canceled(109.9) (136.0) 
Outstanding as of December 31, 2019
2019 TIP RSUs (b)
200.6  16.44  n/a  —  
LTIP RSUs:
2019425.6  22.55  425.6  22.55  
2018241.9  19.00  364.7  19.00  
2017 (a)
54.0  19.70  110.9  19.70  
Total LTIP RSUs721.5  901.2  
Total LTIP and TIP RSUs Outstanding as of December 31, 2019922.1  901.2  
(a) The 2017 time-based and performance-based LTIP RSUs are recognized over a 2-year service and performance periods, respectively.
(b) The 2019 TIP provides for RSU awards that are only time-based.
(c) Includes acceleration of vesting of 5,462 RSUs under the 2019, 2018 and 2017 LTIPs upon involuntary termination.

F-57
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

Time-Based LTIP and TIP RSUs
The Company recognized a net adjustment to compensation expense related to the time-based LTIP and TIP RSUs of $5.0 million for the year ended December 31, 2019. As of December 31, 2019, the Company had $13.3 million of total deferred compensation expense related to non-vested, time-based LTIP and TIP RSUs. The cost is recognized over the vesting period of the awards, as described above.

Performance-based LTIP RSUs
The Company recognized a net adjustment to compensation expense related to the performance-based LTIP RSUs of $0.4 million for the year ended December 31, 2019. As of December 31, 2019, the Company had $15.3 million of total deferred compensation expense related to non-vested, performance-based LTIP RSUs. The cost is recognized over the service period of the awards, as described above. NaN performance-based LTIP RSUs vested during the year ended December 31, 2019.


14. INCOME TAXES
The Company's income before income taxes and the applicable provision for income taxes are as follows:

Year Ended December 31,
Year Ended December 31,20192018
2017 2016 2015
(Loss) income from continuing operations before income taxes:     
Loss from continuing operations before income taxes:Loss from continuing operations before income taxes:
United States$(184.1) $13.6
 $123.4
United States$(293.0) $(298.5) 
Foreign27.2
 4.3
 (3.7)Foreign128.0  6.6  
$(156.9) $17.9
 $119.7
$(165.0) $(291.9) 
Provision for income taxes:     Provision for income taxes:
United States federal$9.3
 $11.0
 $40.9
United States federal$(23.2) $(27.2) 
State and local8.8
 2.1
 16.7
State and local7.0  (3.6) 
Foreign5.8
 15.6
 (3.2)Foreign16.4  33.0  
$23.9
 $28.7
 $54.4
$0.2  $2.2  
Current:     Current:
United States federal$(12.0) $13.1
 $(2.7)United States federal$5.8  $(8.9) 
State and local1.7
 2.3
 3.9
State and local(1.8) (0.8) 
Foreign17.5
 20.2
 21.7
Foreign26.0  10.2  
7.2
 35.6
 22.9
$30.0  $0.5  
Deferred:     Deferred:
United States federal$21.3
 $(2.1) $43.6
United States federal$(29.0) $(18.3) 
State and local7.1
 (0.2) 12.8
State and local8.8  (2.8) 
Foreign(11.7) (4.6) (24.9)Foreign(9.6) 22.8  
$16.7
 $(6.9) $31.5
$(29.8) $1.7  
Total provision for income taxes$23.9
 $28.7
 $54.4
Total provision for income taxes$0.2  $2.2  

The Company classifies interest and penalties as a component of theCompany's provision for income taxes represents federal, foreign, state and local income taxes. The Company’s tax provision changes quarterly based on various factors including, but not limited to, the geographical level and mix of earnings; enacted tax legislation; foreign, state and local income taxes; tax audit settlements; and the interaction of various global tax strategies.
The Company recognizedrecorded a provision for income taxes of $0.2 million (Products Corporation - provision for income taxes of $1.6 million) for 2019 and a provision for income taxes of $2.2 million (Products Corporation - provision for income taxes of $3.4 million) for 2018, respectively. The $2.0 million decrease (Products Corporation - $1.8 million) in the Consolidated Statements of Operations and Comprehensive (Loss) Income a benefit of $1.6 million and $1.0 million during 2017 and 2015, respectively, and an expense of $0.3 million during 2016 in accrued interest and penalties.
The Company has not providedprovision for U.S. federal income taxes for 2019 compared to 2018, was primarily due to a decrease in foreign valuation allowances recorded in 2019, offset by additional tax expense resulting from changes in mix and foreign withholding taxes on $353.7 millionlevel of foreign subsidiaries' cumulative undistributed earnings as of December 31, 2017 because such earnings are intended to be indefinitely reinvested overseas. If these foreign earnings are repatriated to the U.S., or if the Company determines that such earnings will be remitted in a future period, additional tax provisions may be required. Due to the complexities in the tax laws, including the implications of the Tax Cuts and Jobs Act of 2017 (the "Tax Act"), which is discussed below, and the assumptions that would have to be made, it is not practicable to estimate the amounts of income tax provisions that may be required on account of these foreign undistributed earnings.

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REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIESTable of Contents
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)millions, except share and per share amounts)



The Company's effective tax rate for 2019 was lower than the federal statutory rate of 21% primarily due to additional U.S. tax expense on foreign earnings and valuation allowances recorded in 2019, which includes a valuation allowance on interest deductions.
As of December 31, 2019, the Company is indefinitely reinvested in the accumulated undistributed earnings of all of its foreign subsidiaries. If earnings are repatriated, any excess of financial reporting over tax basis could be subject to federal, state and foreign withholding taxes. At this time, the determination of deferred tax liabilities on the amount of financial reporting over tax basis is not practicable.
The actual tax on income before income taxes is reconciled to the applicable statutory federal income tax rate in the following table:
Year Ended December 31,
20192018
Computed income tax benefit$(34.6) $(61.3) 
State and local taxes, net of U.S. federal income tax benefit(3.3) (2.9) 
Foreign rate differential and other foreign adjustments(5.4) (9.3) 
Net establishment of valuation allowance19.1  75.0  
Net release of uncertain tax positions0.7  (4.3) 
Foreign dividends and earnings taxable in the U.S.23.2  12.8  
Impairment for which there is no tax benefit—  4.3  
Impact of the Tax Act—  (7.7) 
Other0.5  (4.4) 
Total provision for income taxes$0.2  $2.2  
 Year Ended December 31,
 2017 2016 2015
Computed income tax (benefit) expense$(54.9) $6.3
 $41.9
State and local taxes, net of U.S. federal income tax benefit5.9
 1.7
 10.9
Foreign and U.S. tax effects attributable to operations outside the U.S.(6.5) 3.1
 13.6
Net establishment (release) of valuation allowance(1.2) 2.0
 (15.5)
Foreign dividends and earnings taxable in the U.S.1.8
 1.7
 3.2
Impairment for which there is no tax benefit0.4
 8.9
 —
Tax effect of basis reclassification23.7
 —
 —
Impact of the Tax Act (a)
39.8
 —
 —
Other14.9
 5.0
 0.3
Total provision for income taxes$23.9
 $28.7
 $54.4
(a) Refer to the discussion that follows.

On December 22, 2017, with the enactment of the Tax Act, the U.S. government enacted comprehensive tax reform that makes broad and complex changes to the U.S. tax code affecting the Company’s fiscal year ended December 31, 2017, by, among other things:
reducing the U.S. federal corporate tax rate;
requiring a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries; and
imposing a new limitation on the deductibility of interest.

The impact of those changes to the Company's December 31, 2017 fiscal year is estimated to be a non-cash expense of $39.8 million.

The Tax Act also establishes other new tax laws that could affect the Company in future years, including, but not limited to:
a general elimination of U.S. federal income taxes on dividends from foreign subsidiaries;
a new provision designed to tax global intangible low-taxed income ("GILTI");
increased limitations on the deductibility of certain executive compensation; and
changes to net operating loss carryforward periods and annual utilization.

The SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cut and Jobs Act ("SAB 118"), which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides that companies are required to complete their accounting under ASC 740, “Income Taxes” ("ASC 740") over a measurement period that should not extend beyond one year from the Tax Act enactment date. In accordance with SAB 118, companies must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete in its financial statements for the fiscal period ended December 31, 2017. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete at the time such financial statements are filed, but it is able to determine a reasonable estimate for the income tax effects of the Tax Act, it must record a provisional estimate of such effects in its financial statements for the fiscal period ended December 31, 2017. If a company cannot determine a provisional estimate to be included in its financial statements for the fiscal period ended December 31, 2017, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the Tax Act.

For various reasons that are discussed in greater detail below, the Company has not completed its accounting for the income tax effects of certain elements of the Tax Act. The Company recorded provisional adjustments in cases where the Company was able to make reasonable estimates of the effects of elements of the Tax Act for which its analysis is not yet complete. The Company has not recorded any adjustments for elements of the Tax Act for which the Company was not yet able to make reasonable estimates of the impact of those elements, and has continued accounting for such elements in accordance with ASC 740 on the basis of the tax laws in effect before the Tax Act.


F-51
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)


The Company's accounting for the following elements of the Tax Act is incomplete. However, the Company was able to make reasonable estimates of certain effects and, therefore, recorded provisional adjustments of $39.8 million, which reflect the Company's initial estimate of the following impacts of the Tax Act:

Reduction of U.S. federal corporate tax rate: As a result of enactment of the Tax Act, the Company reduced the carrying value of its federal deferred tax assets to reflect reduction from 35% to 21% in the federal tax rate applicable for future periods. This resulted in a one-time, non-cash charge of $39.8 million, with $29.4 million relating to deferred balances carried as of January 1, 2017 and the remaining $10.4 million related to the deferred activity in the year ended December 31, 2017.

Transition Tax: The Company has estimated that is has a net deficit in its non-U.S. earnings subject to the transition tax, so the Company does not have a liability for this tax. As such, no provision was recorded for the transition tax.

Limitation on the deductibility of interest: Starting in 2018, the Tax Act limits the Company's deduction for interest to:
interest income plus 30% of taxable income before interest, tax, depreciation and amortization for years through 2021; and
•interest income plus 30% of taxable income before interest and taxes for years 2022 and thereafter.

Any reduction in deductible interest in any year can be carried forward indefinitely and added to the potential interest deduction in subsequent years. While the Company's deduction for interest expense may be limited in future periods, the Company has estimated that this has no impact on its deferred assets and liability balances as of December 31, 2017. In assessing the Company's need for a valuation allowance as of December 31, 2017, the Company did account for the reduced interest deduction in future periods when the Company scheduled the utilization of deferred assets in future periods.

While the Company has been able to come to an estimate for the above items, amounts included in the tax expense and the associated balance sheet accounts (and related disclosures) are provisional and are subject to modification within the period provided for in SAB 118.

The Company's accounting for the following elements of the Tax Act is incomplete, and the Company was not able to make reasonable estimates of the effects. Therefore, no provisional adjustments were recorded for the following elements:

Accounting Principles Board ("APB") 23 Indefinite Reinvestment Assertion: The Company is in the process of assessing the impact of the Tax Act on its indefinite reinvestment assertion and any associated impact on its financial statements. This assessment includes, but is not limited to, assessing how the Tax Act will impact the consequence of indefinitely reinvesting the Company's foreign earnings and evaluating how the Company having no liability for the transition tax will impact the taxability of future repatriations. Therefore, no adjustments have been made in the Company's financial statements with respect to its indefinite reinvestment assertion.

GILTI: The Tax Act creates a new requirement that certain income earned by controlled foreign corporations ("CFC") must be included currently in the gross income of the CFC's U.S. shareholder. GILTI is the excess of the shareholder’s “net CFC tested income” over the net deemed tangible income return, which is currently defined as the excess of: (1) 10% of the aggregate of the U.S. shareholder’s pro rata share of the qualified business asset investment of each CFC with respect to which it is a U.S. shareholder; over (2) the amount of certain interest expense taken into account in the determination of net CFC-tested income. The Company will not be subject to the GILTI provisions until 2018.

Because of the complexity of the new GILTI tax rules, the Company is continuing to evaluate this provision of the Tax Act and the application of ASC 740. Under U.S. GAAP, the Company is allowed to make an accounting policy choice of either: (1) treating taxes due on future U.S. inclusions in taxable income related to GILTI as a current-period expense when incurred (the “period cost method”); or (2) factoring such amounts into the Company’s measurement of its deferred taxes (the “deferred method”). The Company’s selection of an accounting policy with respect to the new GILTI tax rules will depend, in part, on analyzing the Company's global income to determine whether the Company expects to have future U.S. inclusions in taxable income related to GILTI and, if so, what the impact is expected to be. Because whether the Company expects to have future U.S. inclusions in taxable income related to GILTI depends not only on the Company's current structure and estimated future results of global operations, but also on the Company’s intent and ability to modify its structure and/or its business, the Company is not yet able to reasonably estimate the effect of this provision of the Tax Act. Therefore, the Company has not made any adjustments related to the GILTI tax in its financial statements and has not made a policy decision regarding whether to record deferred taxes on GILTI, or to include the tax impact in the year it arises.


F-52
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)


Executive Compensation Limitation: The Tax Act expands the definition under Section 162(m) of the Internal Revenue Code (“Section 162(m)”) of covered employee and provides that the status as a covered employee continues for all subsequent tax years, including years after the death of the individual, and, among other modifications, repeals the exception for performance-based compensation and commissions from the $1 million deduction limitation, subject to certain transitional "grandfathering" provisions. The Tax Act's transitional guidance allows certain payments made under written and binding agreements entered into prior to November 2, 2017 to be treated as if they were made under the provisions of Section 162(m) that were in effect prior to enactment of the Tax Act. The Company is in the process of gathering information on existing compensation arrangements for covered employees, as well as assessing the impact of transitional guidance on the realizability of existing deferred tax assets related to compensation arrangements of its covered employees. As a result, the Company has not made any adjustments related to impacts of the new executive compensation limitations in its financial statements.

Net Operating Loss Carryforward rules: The Company has $446.8 million of federal net operating loss carryforwards as of December 31, 2017. These carryforwards have a life of up to 20 years and can be used to reduce the Company's federal taxable income to zero, potentially eliminating any federal income tax liability for the periods in which they are used. If the Company was to incur a federal net operating loss in 2018 or a subsequent year, such losses would have an unlimited carryforward period, but they would only be available to offset 80% of the taxable income of the Company in any given year.


Deferred taxes are the result of temporary differences between the bases of assets and liabilities for financial reporting and income tax purposes. The Company's deferred tax assets and liabilities at December 31, 20172019 and 20162018 were comprised of the following:
December 31,
20192018
Deferred tax assets:
Inventories$19.8  $23.6  
Net operating loss carryforwards - U.S. (a)
165.5  160.8  
Net operating loss carryforwards - foreign55.0  69.7  
Disallowed Interest Carryover - U.S.63.1  42.8  
Employee benefits64.3  53.6  
Sales-related reserves20.4  21.1  
Lease liability20.3  —  
Foreign currency translation adjustment—  1.1  
Other55.5  50.4  
Total gross deferred tax assets463.9  423.1  
Less valuation allowance (b)
(163.3) (165.7) 
Total deferred tax assets, net of valuation allowance$300.6  $257.4  
Deferred tax liabilities:
Plant, equipment and other assets$(43.9) $(32.6) 
Intangibles(73.3) (81.5) 
Other(8.1) (12.1) 
Total gross deferred tax liabilities(125.3) (126.2) 
Net deferred tax assets$175.3  $131.2  
(a)Net operating loss carryforwards - U.S. for Products Corporation as of December 31, 2019 and December 31, 2018 were $146.1 million and $143.8 million, respectively.
F-59
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

 December 31,
 2017 2016
Deferred tax assets:   
Inventories$21.2
 $30.9
Net operating loss carryforwards - U.S.143.7
 133.0
Net operating loss carryforwards - foreign47.0
 50.5
Employee benefits54.5
 91.7
Sales-related reserves19.1
 23.9
Foreign currency translation adjustment10.3
 9.9
Other67.7
 85.2
Total gross deferred tax assets363.5
 425.1
Less valuation allowance(90.7) (81.4)
Total deferred tax assets, net of valuation allowance272.8
 343.7
Deferred tax liabilities:   
Plant, equipment and other assets(21.7) (26.0)
Intangibles(95.0) (132.4)
Other(36.0) (57.6)
Total gross deferred tax liabilities(152.7) (216.0)
Net deferred tax assets$120.1
 $127.7
(b) The change in the valuation allowance for 2019 from 2018 includes activity of $19.1 million primarily related to valuation allowances for the limitation on the deductibility of interest, offset by write-offs of prior year valuation allowances.

In assessing the recoverability of its deferred tax assets, management regularly considers whether for some portion or allthe Company continually evaluates the available positive and negative evidence to assess the amount of the deferred tax assets for which it wasis more likely than not to realize a benefit. For any deferred tax asset in excess of the amount for which it is more likely than not that the Company will realize a benefit, will not be realized for these assets. The ultimate realization ofthe Company establishes a valuation allowance. A valuation allowance is a non-cash charge, and it in no way limits the Company's ability to utilize its deferred tax assets, is generally dependent uponincluding its ability to utilize tax loss and credit carryforward amounts. As of 2019, the generationCompany concluded that, based on the weight of future taxable income during the periods in which those temporary differences may become deductible. In assessing the need for a valuation allowance, management evaluates the available pertinent positive and negative evidence, such as the Company's history of earnings, the scheduled reversal ofit does not require a valuation allowance on its federal deferred tax assets, other than those associated with the limitation on the deductibility of interest. The Company does have a valuation allowance on deferred tax assets associated with its activity in certain U.S. states and liabilities, projected earnings,foreign jurisdictions. These conclusions regarding the establishment of valuation allowances on the Company's deferred tax assets as of the end of 2019 are consistent with the Company's conclusions on such matters as of the end of 2018. However, if the Company does not generate sufficient taxable income in future periods, its deferred tax assets may not be realizable on a more-likely-than-not basis. In such event, the Company may be required to establish an additional valuation allowance against its deferred tax assets in future periods, which would materially increase the Company's tax expense in the period in which the allowance is recognized and incomewould adversely impact the Company's results of operations and statement of financial condition in such period. The Company will continue to monitor the circumstances that would require it to establish an additional valuation allowance on its deferred tax assets. Accordingly, depending on future evidence that may become available, tax planning strategies.the Company's assessments regarding its valuation allowance position may change.
A valuation allowance has been provided for those deferred tax assets for which, in the opinion of the Company's management, it was more likely than not that a benefit will not be realized. At December 31, 2017,2019, the deferred tax valuation allowance primarily represented amounts for foreign jurisdictions where, as of the end of 2017,2019, the Company had a three-year cumulative loss, and for certain U.S. state jurisdictions where the Company had tax loss carryforwards and other tax attributes which may expire prior to being utilized. The deferred tax valuation allowance decreased by $2.4 million and increased by $9.3 million and $34.3$75.0 million during 20172019 and 2016,2018, respectively.

F-53
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)


The increasedecrease in the deferred tax valuation allowance during 20172019 was primarily associated with the write-off of valuation allowances on deferred tax assets no longer available and a release in foreign valuation allowance no longer required, offset by valuation allowances required on interest deduction limitations and foreign and state tax loss carryforwards for which the Company has determined it is more likely than not that it will not receive a benefit. The increase in the deferred tax valuation allowance during 20162018 was primarily associated with deferred taxes added asthe interest deduction limitation and foreign and state tax loss carryforwards for which the Company has determined it is more likely than not that it will not receive a result of the Elizabeth Arden Acquisition, the majority of which were established through purchase accounting.benefit.
As of December 31, 2017,2019, the Company hashad domestic (federal) and foreign net operating loss carryforwards of approximately $655.4$939.7 million, of which $208.6$310.6 million are foreign and $446.8$629.1 million are domestic (federal). These losses expire in future years as follows: 2018- $0.12020- $4.5 million; 2019- $1.22021- $2.8 million; 2020- $1.0 million; 20212022 and beyond- $461.0$615.4 million; and unlimited- $192.1$317.0 million. The Company also has certain state net operating loss carryforwards that expire between 20182020 and 2036.2038. The Company could receive the benefit of such tax loss carryforwards only to the extent it has taxable income during the carryforward periods in the applicable tax jurisdictions. As of December 31, 2017,2019, there were no0 consolidated federal net operating losses available from the MacAndrews & Forbes Group (as hereinafter defined) from periods prior to the March 25, 2004 deconsolidation (as described below). The Company has acquired entities that had carryforward balances for tax losses, tax credits and other tax attributes at the time of the acquisition. U.S. federal and certain state and foreign jurisdictions impose limitations on the amount of these tax losses, tax credits and other carryforward balances that may be utilized after an acquisition. The Company has evaluated the impact of these limitations and has established a valuation allowance to reduce the deferred tax assets to the amount that the Company expects will be realized.
The Company remains subject to examination of its income tax returns in various jurisdictions, including, without limitation:including: Spain for the tax years ended December 31, 20072009 and forward; the U.S. (federal) for the tax years ended June 30, 20102016 and forward; Canada for the tax years ended December 31, 20102012 and forward; Australia for the tax years ended December 31, 20132015 and forward; Switzerland for the tax years ended June 30, 2014 and forward; Japan for the tax years ended December 31, 2013 and South Africaforward; and the U.K. for the tax years ended December 31, 20142016 and forward.
At December 31, 20172019 and 2016,2018, the Company had unrecognized tax benefits of $87.3$78.0 million and $93.3$74.7 million, respectively, including $9$11.7 million and $10.6$9.8 million, , respectively, of accrued interest and penalties. Of the $87.3$78.0 million of unrecognized tax benefits as of December 31, 2017, $50.82019, $46.1 million would affect the Company's effective tax rate, if recognized, and the remaining $36.5$31.9 million would affect the Company's deferred tax accounts. The Company classifies interest and penalties as a component of the provision for income taxes. The Company recognized in the Consolidated Statements of Operations and Comprehensive (Loss) Income an expense of $1.9 million and $0.8 million in 2019 and 2018, respectively.
F-60
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

A reconciliation of the beginning and ending amounts of the unrecognized tax benefits is provided in the following table:

TaxInterest and PenaltiesTotal
Tax Interest and Penalties Total
Balance at January 1, 2016$54.7
 $10.3
 $65.0
Balance at January 1, 2018Balance at January 1, 2018$75.9  $9.0  $84.9  
Increase based on tax positions taken in a prior year24.4
 1.5
 25.9
Increase based on tax positions taken in a prior year2.8  5.4  8.2  
Decrease based on tax positions taken in a prior year(1.2) (0.1) (1.3)Decrease based on tax positions taken in a prior year(15.5) (3.8) (19.3) 
Increase based on tax positions taken in the current year9.1
 0.2
 9.3
Increase based on tax positions taken in the current year6.5  0.2  6.7  
Decrease resulting from the lapse of statutes of limitations(4.3) (1.3) (5.6)Decrease resulting from the lapse of statutes of limitations(4.8) (1.0) (5.8) 
Balance at December 31, 201682.7
 10.6
 93.3
Balance at December 31, 2018Balance at December 31, 2018$64.9  $9.8  $74.7  
Increase based on tax positions taken in a prior year9.1
 1.5
 10.6
Increase based on tax positions taken in a prior year0.3  3.4  3.7  
Decrease based on tax positions taken in a prior year (a)
(17.2) (1.5) (18.7)
Decrease based on tax positions taken in a prior yearDecrease based on tax positions taken in a prior year(2.2) (0.3) (2.5) 
Increase based on tax positions taken in the current year11.0
 0.2
 11.2
Increase based on tax positions taken in the current year7.1  —  7.1  
Decrease resulting from the lapse of statutes of limitations(7.3) (1.8) (9.1)Decrease resulting from the lapse of statutes of limitations(3.8) (1.2) (5.0) 
Balance at December 31, 2017$78.3
 $9.0
 $87.3
Balance at December 31, 2019Balance at December 31, 2019$66.3  $11.7  $78.0  
(a)

Includes a provisional amount for the expected impact of the Tax Act on the Company’s unrecognized tax benefits.
In addition, the Company believes that it is reasonably possible that its unrecognized tax benefits during 2018 will decrease in 2020 by approximately $6.4$4.1 million due to the resolution of audits and the expiration of statutes of limitation.
As a result of the closing of the 2004 Revlon Exchange Transactions (as hereinafter defined in Note 22,20, "Related Party Transactions - Tax Sharing Agreements"), as of March 25, 2004, Revlon, Products Corporation and their U.S. subsidiaries were no longer included in the affiliated group of which MacAndrews & Forbes was the common parent (the "MacAndrews & Forbes Group") for federal income tax purposes. Revlon Holdings (as hereinafter defined in Note 22,20, "Related Party Transactions - Transfer Agreements"), Revlon, Products Corporation and certain of its subsidiaries, and MacAndrews & Forbes Incorporated entered into a tax sharing agreement (as subsequently amended and restated, the "MacAndrews & Forbes Tax Sharing Agreement"), for taxable periods beginning on or after January 1, 1992 through and including March 25, 2004, during which Revlon and Products Corporation or a subsidiary of Products Corporation was a member of the MacAndrews & Forbes Group. In these taxable periods, Revlon's and Products Corporation's federal taxable income and loss were included in such group's consolidated tax return filed by

F-54
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)


MacAndrews & Forbes Incorporated. During such period, Revlon and Products Corporation were also included in certain state and local tax returns of MacAndrews & Forbes Incorporated or its subsidiaries. Revlon and Products Corporation remain liable under the MacAndrews & Forbes Tax Sharing Agreement for all such taxable periods through and including March 25, 2004 for amounts determined to be due as a result of a redetermination arising from an audit or otherwise, equal to the taxes that Revlon or Products Corporation would otherwise have had to pay if it were to have filed separate federal, state or local income tax returns for such periods.
MacAndrews & Forbes’ current ownership does not require the Company to file a U.S. federal consolidated tax return with them. However, in certain U.S. states and in certain local and foreign jurisdictions the Company is required to file consolidated, combined, unitary or similar returns. The liability for these state, local and localforeign liabilities is also governed by the MacAndrews & Forbes Tax Sharing Agreement. The Company accounts for its tax liabilities in these jurisdictions as if it were a separate filer, and the Company's tax accounts are presented as if it were a separate filer. During 2017,2019, the Company's cash tax payments included $2.8$2.3 million of payments made to MacAndrews & Forbes in connection with these filings, and the Company's ending tax liability,asset, which is a component of prepaid and other current liabilities, included $0.9 millionassets, includes an insignificant amount related to future payments to be made toreceived from MacAndrews & Forbes in connection with these filings.
Following the closing of the 2004 Revlon Exchange Transactions, Revlon became the parent of a new consolidated group for federal income tax purposes and Products Corporation's federal taxable income and loss are included in such group's consolidated tax returns. Accordingly, Revlon and Products Corporation entered into a tax sharing agreement (the "Revlon Tax Sharing Agreement") pursuant to which Products Corporation is required to pay to Revlon amounts equal to the taxes that Products Corporation would otherwise have had to pay if Products Corporation were to file separate federal, state or local income tax returns, limited to the amount, and payable only at such times, as Revlon will be required to make payments to the applicable taxing authorities.
F-61
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

There were no0 U.S. federal tax payments or payments in lieu of taxes from Revlon to Revlon Holdings pursuant to the MacAndrews & Forbes Tax Sharing Agreement in 20172019 or 20162018 with respect to periods covered by the MacAndrews & Forbes Tax Sharing Agreement, and the Company expects that there will not be any such payments in 2018.2020. During 2017,2019, there were no0 federal tax payments from Products Corporation to Revlon pursuant to the Revlon Tax Sharing Agreement with respect to 20172019 or 2016.2018. During 2016,2018, there were no0 federal tax payments from Products Corporation to Revlon pursuant to the Revlon Tax Sharing Agreement with respect to 20162018 or 2015.2017. The Company expects that there will be no0 U.S. federal tax payments from Products Corporation to Revlon pursuant to the Revlon Tax Sharing Agreement during 20182020 with respect to 2017.2019.

Pursuant to the asset transfer agreement referred to in Note 22,20, "Related Party Transactions - Transfer Agreements," Products Corporation assumed all tax liabilities of Revlon Holdings other than (i) certain income tax liabilities arising prior to January 1, 1992 to the extent such liabilities exceeded the reserves on Revlon Holdings' books as of January 1, 1992 or were not of the nature reserved for and (ii) other tax liabilities to the extent such liabilities are related to the business and assets retained by Revlon Holdings.




F-55
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)


17.15. ACCUMULATED OTHER COMPREHENSIVE LOSS

A roll-forward of the Company's accumulated other comprehensive loss as of December 31, 2019 is as follows:
Foreign Currency TranslationActuarial (Loss) Gain on Post-retirement BenefitsDeferred Gain (Loss) - HedgingOtherAccumulated Other Comprehensive Loss
Balance at January 1, 2018$(15.0) $(212.4) $(0.7) $(0.3) $(228.4) 
Foreign currency translation adjustment, net of tax of $0.1 million(9.4) —  —  —  (9.4) 
Amortization of pension related costs, net of tax of $(1.0) million (a)
—  8.4  —  —  8.4  
Pension re-measurement, net of tax of $2.5 million—  (5.5) —  —  (5.5) 
Amortization of deferred losses related to the de-designated 2013 Interest Rate Swap, net of tax of $0.5 million (b)
—  —  0.7  —  0.7  
Other comprehensive (loss) income$(9.4) $2.9  $0.7  $—  $(5.8) 
Balance at January 1, 2019$(24.4) $(209.5) $—  $(0.3) $(234.2) 
Foreign currency translation adjustment, net of tax of $(1.8) million(2.9) —  —  —  (2.9) 
Amortization of pension related costs, net of tax of $(1.1) million (a)
—  9.0  —  —  9.0  
Pension re-measurement, net of tax of $5.2 million—  (19.3) —  —  (19.3) 
Other comprehensive (loss) income$(2.9) $(10.3) $—  $—  $(13.2) 
Balance at December 31, 2019$(27.3) $(219.8) $—  $(0.3) $(247.4) 
 Foreign Currency Translation Actuarial (Loss) Gain on Post-retirement Benefits Deferred Gain (Loss) - Hedging Other Accumulated Other Comprehensive Loss
Balance at January 1, 2015$(5.4) $(235.6) $(2.2) $(0.3) $(243.2)
Currency translation adjustment, net of tax of $5.1 million(18.1) —
 —
 —
 (18.1)
Amortization of pension related costs, net of tax of $(1.3) million(a)     
—
 7.2
 —
 —
 7.2
Pension re-measurement, net of tax of $3.3 million—
 (6.9) —
 —
 (6.9)
Settlement of certain pension liabilities, net of tax of $(3.7) million(b)
—
 17.3
 —
 —
 17.3
Revaluation of derivative financial instrument, net of amounts reclassified into earnings and tax of $1.0 million(c)
—
 —
 (1.6) —
 (1.6)
Other comprehensive (loss) income$(18.1) $17.6
 $(1.6) $—
 $(2.1)
Balance at December 31, 2015$(23.5) $(217.7) $(3.8) $(0.3) $(245.3)
Currency translation adjustment, net of tax of $(1.1) million(0.5) —
 —
 —
 (0.5)
Amortization of pension related costs, net of tax of $(1.3) million(a)     
—
 7.6
 —
 —
 7.6
Pension re-measurement, net of tax of $4.1 million—
 (14.3) —
 —
 (14.3)
Revaluation of derivative financial instrument, net of amounts reclassified into earnings and tax of $(0.5) million(b)
—
 —
 0.8
 —
 0.8
Other comprehensive (loss) income$(0.5) $(6.7) $0.8
 $—
 $(6.4)
Balance at December 31, 2016$(24.0) $(224.4) $(3.0) $(0.3) $(251.7)
Currency translation adjustment, net of tax of $0.4 million9.0
 —
 —
 —
 9.0
Amortization of pension related costs, net of tax of $(1.6) million(a)
—
 8.1
 —
 —
 8.1
Pension re-measurement, net of tax of $0.3 million—
 1.8
 —
 —
 1.8
Amortization of deferred losses related to the de-designated 2013 Interest Rate Swap, net of tax of $1.4 million(c)
—
 —
 2.3
 —
 2.3
Curtailment gain, net of tax of $(0.3) million(d)
—
 2.1
 —
 —
 2.1
Other comprehensive income$9.0
 $12.0
 $2.3
 $—
 $23.3
Balance at December 31, 2017$(15.0) $(212.4) $(0.7) $(0.3) $(228.4)
(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 12, "Pension and Post-retirement Benefits," for further discussion of the Company’s pension and other post-retirement plans.
(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 14, "Pension and Post-retirement Benefits," for further discussion of the Company’s pension and other post-retirement plans.
(b)
Represents the after-tax effective portion of the changes in fair value of the Company’s 2013 Interest Rate Swap, net of amounts reclassified into earnings during 2016 and 2015. See Note 13,
(b) See Note 11, "Financial Instruments," for further discussion of the 2013 Interest Rate Swap.

F-56
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)


(c)
See Note 10, "Financial Instruments," for further discussion of the 2013 Interest Rate Swap.
(d)
As a result of the Elizabeth Arden Acquisition, the Company recognized $2.1 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, priorwhich expired in May 2018.

For 2019, the Company did 0t have any activity related to financial instruments. As the 2013 Interest Rate Swap expired in May 2018 and had been fully amortized into earnings as of June 30, 2018, there was no activity related to the De-designation Date. Following2013 Interest Rate Swap for 2019. The following is a roll-forward of the amounts reclassified out of accumulated other comprehensive loss into earnings during 2017 and 2016:2018 related to the 2013 Interest Rate Swap:
  
2013
Interest Rate Swap
Beginning accumulated losses at December 31, 2015 $(3.8)
Reclassifications into earnings (net of $1.6 million tax expense)(a)
 2.7
Change in fair value (net of $1.1 million tax benefit) (1.9)
Ending accumulated losses at December 31, 2016 $(3.0)
Reclassifications into earnings (net of $1.4 million tax benefit)(a)
 2.3
Ending accumulated losses at December 31, 2017 $(0.7)
2013
Interest Rate Swap
Beginning accumulated losses at January 1, 2018:$(0.7)
Reclassifications into earnings (net of $0.5 million tax benefit) (a)
Reclassified to interest expense.0.7 
Ending accumulated losses at December 31, 2018$— 


(a) Reclassified to interest expense.
18.
F-62
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

16. STOCKHOLDERS' DEFICIENCY
Information about the Company's common and treasury stock issued and/or outstanding is presented in the following table:
Class A Common StockTreasury Stock
Balance, January 1, 201854,556,100  1,114,528  
    Restricted stock grants (a)
1,303,883  —  
    Restricted stock forfeitures (b)
(303,517) 251,495  
 Withholding of restricted stock to satisfy taxes—  167,297  
Balance, December 31, 201855,556,466  1,533,320  
    Restricted stock grants (a)
1,163,538  —  
    Restricted stock forfeitures(249,514) —  
    Withholding of restricted stock to satisfy taxes—  92,260  
Balance, December 31, 201956,470,490  1,625,580  
(a) The 2018 and 2019 grants include 69,767 and 67,214 restricted stock awards, respectively, and 1,234,116 and 1,096,324 RSUs, respectively, the latter granted pursuant to the 2019 TIP and LTIP programs under the Stock Plan. See Note 13, "Stock Compensation Plan," for further discussion of the Company's Stock Plan.
(b) 2018 restricted stock forfeitures include 251,495 unvested restricted stock awards and 52,022 unvested RSUs.

Common Stock
As of December 31, 2019, Revlon's authorized common stock consisted of 900 million shares of Class A Common Stock, with a par value of $0.01 per share (the "Class A Common Stock"), and 200 million shares of Class B common stock, par value $0.01 per share ("Class B Common Stock" and together with the Class A Common Stock, the "Common Stock").
As of December 31, 2019, MacAndrews & Forbes beneficially owned approximately 87.1% of Revlon's Class A Common Stock, which at such date was Revlon's only class of capital stock outstanding.
Treasury Stock
Pursuant to the share withholding provisions of the Stock Plan, during 2019 the Company withheld a total of 92,260 shares of Revlon Class A Common Stock to satisfy its minimum statutory tax withholding requirements related to the vesting of shares of restricted stock and RSUs. These shares were recorded as treasury stock using the cost method, at a weighted average of $17.75 per share, based on the NYSE closing price per share on each applicable vesting date, for a total of $1.6 million. During 2018 the Company withheld a total of 167,297 shares of Revlon Class A Common Stock to satisfy its minimum statutory tax withholding requirements related to the vesting of shares of restricted stock. These shares were recorded as treasury stock using the cost method, at a weighted average of $21.42 per share, based on the NYSE closing price per share on each applicable vesting date, for a total of $3.6 million. In addition, during 2018, the Company transferred to treasury stock 251,495 unvested restricted shares and RSUs forfeited upon the departure of certain executives. These shares were recorded as treasury stock using the cost method, at a weighted average price of $26.26 per share, based on the grant date fair values of the forfeited shares, for a total of $6.6 million.



F-63
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

17. SEGMENT DATA AND RELATED INFORMATION
Operating Segments
Operating segments include components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (the Company's "Principal"Chief Executive Officer") in deciding how to allocate resources and in assessing the Company's performance. As a result of the similarities in the procurement, manufacturing and distribution processes for the Company’s products, much of the information provided in the Consolidated Financial Statements and provided in the segment table below is similar to, or the same as, that reviewed on a regular basis by the Company's PrincipalChief Executive Officer.
As of December 31, 2017, and since the Elizabeth Arden Acquisition Date, the Elizabeth Arden organization has continued to operate and be evaluated on a stand-alone basis.
At December 31, 2017,2019, the Company’s operations are organized into the following reportable segments:
Consumer •Revlon - The Company’s ConsumerRevlon segment is comprised of the Company's flagship Revlon brands. Revlon segment products that are primarily marketed, distributed and sold in the mass retail channel, large volume retailers, chain drug and food stores, chemist shops, hypermarkets, general merchandise stores, e-commerce sites, television shopping, department stores, professional hair and nail salons, one-stop shopping beauty retailers and specialty cosmetic stores and perfumeries in the U.S. and internationally under brands such as Revlon, Almay, SinfulColors in color cosmetics; Revlon ColorSilk and Pure Ice in cosmetics; Revlon ColorSilkProfessional in women’s hair color; and Revlon in beauty tools; and Mitchum in anti-perspirant deodorants.tools.
•Elizabeth Arden - The ConsumerElizabeth Arden segment also includes a skin care line underis comprised of the Natural Honey brand and hair color line under the Llongueras brand (licensed from a third party) that are sold in large volume retailers and other retailers, primarily in Spain, as well as Cutex nail care products.
Company's Elizabeth Arden - branded products. The Elizabeth Arden segment markets, distributes and sells fragrances, skin care and color cosmetics primarily to prestige retailers, department and specialty stores, perfumeries, boutiques, e-commerce sites, the mass retail channel, specialty stores, perfumeries, department stores, boutiques, e-commerce, travel retailers and distributors, as well as direct sales to consumers via its Elizabeth Arden branded retail stores and ElizabethArden.comelizabetharden.com e-commerce businesswebsite, in the U.S. and internationally, under brands such as Skin Illuminating, SUPERSTART,Elizabeth Arden Ceramide, Prevage, Eight Hour, Elizabeth Arden Ceramide and SUPERSTART, Visible Difference and Skin Illuminating in the Elizabeth Arden skin care brands; and Elizabeth Arden White Tea, Elizabeth Arden Red Door, Elizabeth Arden 5th Avenue, andElizabeth Arden Green Tea and UNTOLD in Elizabeth Arden fragrances; Juicy Couture, John Varvatos, All Saints, La Perla and Wildfox in designer fragrances; and Curve, Elizabeth Taylor, Britney Spears, Christina Aguilera, ShawnMendes, Halston,Ed Hardy, Geoffrey Beene, Alfred Sung, Giorgio Beverly Hills, Lucky Brand, PS Fine Cologne for Men, White Shoulders and Jennifer Anistonin heritage fragrances.
Professional•Portfolio - The Company’s ProfessionalPortfolio segment markets, distributes and sells professionala comprehensive line of premium, specialty and mass products primarily to the mass retail channel, hair and nail salons and professional salon distributors in the U.S. and internationally and large volume retailers, specialty and department stores under brands such as Revlon Professional Almay and SinfulColors in hair color hair care and hair treatments; cosmetics; American Crew in men's grooming products (which are also sold direct-to-consumer on its americancrew.com website); CND in nail polishes, gel nail color and nail enhancements, including CND Shellacenhancements; Cutex nail care products; and CND Vinylux nail polishes; and American Crew Mitchumin men’s grooming products.anti-perspirant deodorants. The ProfessionalPortfolio segment also includes a multi-cultural hair care line consisting of Creme of Nature hair care products, which are sold in both professional salons and in large volume retailers and other retailers, primarily in the U.S.
; and a hair color line under the Llongueras brand (licensed from a third party) that is sold in the mass retail channel, large volume retailers and other retailers, primarily in Spain.

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


Other•Fragrances - The OtherFragrances segment includes the operating results related to the development, marketing and distribution of certain owned and licensed fragrances as well as the distribution of prestige fragrance brands owned by third parties. These products are typically sold to retailers in the U.S. and internationally, including prestige retailers, specialty stores, e-commerce sites, the mass retail channel, travel retailers and other beauty products.international retailers. The results included within the Other segmentowned and licensed fragrances include brands such as: (i) JuicyCouture (which are not material to the Company’s consolidated resultsalso sold direct-to-consumer on its juicycouturebeauty.com website), JohnVarvatos and AllSaints in prestige fragrances; (ii) BritneySpears, ElizabethTaylor, ChristinaAguilera, JenniferAniston and MariahCarey in celebrity fragrances; and (iii) Curve, GiorgioBeverlyHills, Ed Hardy, Charlie, Lucky Brand, ‹PS› (logo of operations.
former Paul Sebastian brand), AlfredSung, Halston, GeoffreyBeene and WhiteDiamonds in mass fragrances.
The Company's management evaluates segment profit which is definedfor each of the Company's reportable segments. The Company allocates corporate expenses to each reportable segment to arrive at segment profit, and these expenses are included in the internal measure of segment operating performance. The Company defines segment profit as income from continuing operations before interest, taxes, depreciation, amortization, stock-based compensation expense, gains/losses on foreign currency fluctuations, gains/losses on the early extinguishment of debt and miscellaneous expenses, for each of the Company's reportable segments.expenses. Segment profit also excludes unallocated corporate expenses and the impact of certain items that are not directly attributable to the reportable segments' underlying operating performance, which includes the impacts of: (i) restructuring and related charges; (ii) acquisition and integration costs; (iii) deferred compensation costs; (iv) costs of sales resulting from a fair value adjustment to inventory acquired in the Elizabeth Arden Acquisition; and (v) charges related to the Elizabeth Arden 2016 Business Transformation Program.performance. Such items are shown below in the table reconciling segment profit to consolidated income from continuing operations before income taxes. Unallocated corporate expenses primarily include general and administrative expenses related to the corporate organization. These expenses are recorded in unallocated corporate expenses, as these items are centrally directed and controlled and are not included in internal measures of segment operating performance. The Company does not have any material inter-segment sales.
F-64
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

The accounting policies for each of the reportable segments are the same as those described in Note 1, "Description of Business and Summary of Significant Accounting Policies." The Company's assets and liabilities are managed centrally and are reported internally in the same manner as the Consolidated Financial Statements; thus, no additional information regarding assets and liabilities of the Company’s reportable segments is produced for the Company's Chief Executive Officer or included in these Consolidated Financial Statements.








F-58
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)


The following table is a comparative summary of the Company’s net sales and segment profit for Revlon and Products Corporation by reportable segment for 2017, 2016 and 2015:the periods presented.

Revlon, Inc.
Year Ended December 31,
20192018
Segment Net Sales:
Revlon$958.8  $998.3  
Elizabeth Arden520.0  490.2  
Portfolio487.8  564.6  
Fragrances453.0  511.4  
Total$2,419.6  $2,564.5  
Segment Profit:
Revlon$101.2  $129.6  
Elizabeth Arden37.6  24.4  
Portfolio45.0  7.9  
Fragrances82.3  76.0  
Total$266.1  $237.9  
Reconciliation:
Total Segment Profit$266.1  $237.9  
Less:
Depreciation and amortization162.9  177.2  
Non-cash stock compensation expense8.1  17.2  
Non-Operating items:
Restructuring and related charges30.5  23.1  
Acquisition, integration and divestiture costs3.9  13.9  
(Gain) loss on divested assets(26.6) 20.1  
Financial control remediation actions and related charges13.4  —  
Excessive coupon redemption in dispute13.2  —  
Oxford ERP system disruption-related charges—  53.6  
Impairment charge—  18.0  
Operating income (loss)60.7  (85.2) 
Less:
Interest Expense196.6  176.6  
Amortization of debt issuance costs14.6  13.0  
Foreign currency (gains) losses, net(1.9) 15.8  
Miscellaneous, net16.4  1.3  
Loss from continuing operations before income taxes$(165.0) $(291.9) 



F-65
 Year Ended December 31,
 2017 2016 2015
Segment Net Sales:     
Consumer$1,288.5
 $1,389.8
 $1,414.8
Elizabeth Arden952.5
 441.4
 —
Professional432.2
 476.5
 471.1
Other20.5
 26.3
 28.4
Total$2,693.7
 $2,334.0
 $1,914.3
      
Segment Profit:     
Consumer$239.6
 $349.2
 $360.2
Elizabeth Arden114.2
 68.2
 —
Professional54.9
 99.4
 103.9
Other(3.7) (2.7) 1.4
Total$405.0
 $514.1
 $465.5
      
Reconciliation:     
Segment Profit$405.0
 $514.1
 $465.5
Less:

    
Unallocated corporate expenses139.6
 89.4
 79.0
Depreciation and amortization155.8
 123.2
 103.2
Non-cash stock compensation expense6.8
 6.4
 5.1
Non-Operating items:     
Restructuring and related charges34.5
 36.8
 11.6
Acquisition and integration costs52.9
 43.2
 8.0
Elizabeth Arden 2016 Business Transformation Program1.1
 2.6
 —
Elizabeth Arden inventory purchase accounting adjustment, cost of sales17.2
 20.7
 —
Inventory purchase accounting adjustment, cost of sales—
 0.2
 0.9
Pension lump-sum settlement—
 —
 20.7
Impairment charge10.8
 23.4
 9.7
Deferred compensation2.0
 3.5
 2.5
Operating (loss) income(15.7) 164.7
 224.8
Less:     
Interest Expense149.8
 105.2
 83.3
Amortization of debt issuance costs9.1
 6.8
 5.7
Loss on early extinguishment of debt—
 16.9
 —
Foreign currency (gains) losses, net(18.5) 18.5
 15.7
Miscellaneous, net0.8
 (0.6) 0.4
(Loss) income from continuing operations before income taxes$(156.9) $17.9
 $119.7




F-59
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIESTable of Contents
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)millions, except share and per share amounts)



Products Corporation
Year Ended December 31,
20192018
Segment Net Sales:
Revlon$958.8  $998.3  
Elizabeth Arden520.0  490.2  
Portfolio487.8  564.6  
Fragrances453.0  511.4  
Total$2,419.6  $2,564.5  
Segment Profit:
Revlon$104.3  $132.0  
Elizabeth Arden39.3  25.6  
Portfolio46.6  9.3  
Fragrances83.8  77.3  
Total$274.0  $244.2  
Reconciliation:
Total Segment Profit$274.0  $244.2  
Less:
Depreciation and amortization162.9  177.2  
Non-cash stock compensation expense8.1  17.2  
Non-Operating items:
Restructuring and related charges30.5  23.1  
Acquisition, integration and divestiture costs3.9  13.9  
(Gain) loss on divested assets(26.6) 20.1  
Financial control remediation actions and related charges13.4  —  
Excessive coupon redemption in dispute13.2  —  
Oxford ERP system disruption-related charges—  53.6  
Impairment charge—  18.0  
Operating income (loss)68.6  (78.9) 
Less:
Interest Expense196.6  176.6  
Amortization of debt issuance costs14.6  13.0  
Foreign currency losses, net(1.9) 15.8  
Miscellaneous, net16.4  1.3  
Loss from continuing operations before income taxes$(157.1) $(285.6) 

As of December 31, 2017, after giving effect to the Elizabeth Arden Acquisition,2019, the Company had operations established in 27approximately 25 countries outside of the U.S. and its products are sold throughout the world. Generally, net sales by geographic area are presented by attributing revenues from external customers on the basis of where the products are sold. Walmart and its affiliates worldwide accounted for approximately 16%, 17% and 18%15% of the Company’s worldwide net sales in 2017, 2016both 2019 and 2015, respectively,2018, and such sales are primarily included within the net sales of the Consumer segment.

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COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

 Year Ended December 31,
 2017 2016 2015
Geographic area:           
   Net sales:           
United States$1,315.1
 49% $1,290.2
 55% $1,058.7
 55%
International1,378.6
 51% 1,043.8
 45% 855.6
 45%
 $2,693.7
   $2,334.0
   $1,914.3
  
The following tables present the Company's segment net sales by geography and total net sales by classes of similar products for the periods presented:

Year Ended December 31, 2019
RevlonElizabeth ArdenPortfolioFragrancesTotal
Geographic Area:
 Net Sales
   North America$497.2  $120.4  $298.9  $309.2  $1,225.7  
   EMEA*205.3  203.5  150.4  108.1  667.3  
   Asia107.2  164.7  4.2  12.1  288.2  
   Latin America*70.8  7.7  21.6  9.0  109.1  
   Pacific*78.3  23.7  12.7  14.6  129.3  
$958.8  $520.0  $487.8  $453.0  $2,419.6  

Year Ended December 31, 2018
RevlonElizabeth ArdenPortfolioFragrancesTotal
Geographic Area:
 Net Sales
   North America$522.3  $135.6  $350.4  $345.9  $1,354.2  
   EMEA*226.0  201.0  170.6  120.0  717.6  
   Asia105.1  119.5  4.0  12.9  241.5  
   Latin America*70.5  11.4  25.7  15.6  123.2  
   Pacific*74.4  22.7  13.9  17.0  128.0  
$998.3  $490.2  $564.6  $511.4  $2,564.5  

* The EMEA region includes Europe, the Middle East, Africa and the Company's international Travel Retail business; the Latin America region includes Mexico; and the Pacific region includes Australia and New Zealand.

Year Ended December 31,
20192018
Classes of similar products:
   Net sales:
Color cosmetics$769.9  32%  $848.7  33%  
Fragrance611.7  26%  679.2  26%  
Hair care513.8  21%  529.3  21%  
Beauty care176.9  7%  200.4  8%  
Skin care347.3  14%  306.9  12%  
$2,419.6  $2,564.5  
The following table presents the Company's long-lived assets by geographic area as of December 31, 2019 and December 31, 2018:
December 31, 2019December 31, 2018
Long-lived assets, net:
United States$1,414.0  83%  $1,416.2  84%  
International280.1  17%  275.0  16%  
$1,694.1  $1,691.2  

F-67
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

 December 31, 2017 December 31, 2016
Long-lived assets, net:      
United States$1,480.1
 83% $1,494.3
 85%
International295.6
 17% 255.4
 15%
 $1,775.7
  $1,749.7
  
18. REVLON, INC. BASIC AND DILUTED EARNINGS (LOSS) PER COMMON SHARE
Shares used in calculating Revlon's basic loss per share are computed using the weighted-average number of Revlon's common shares outstanding during each period. Shares used in diluted loss per share include the dilutive effect of unvested restricted stock, LTIP RSUs and TIP RSUs under the Company’s Stock Plan using the treasury stock method. For 2019 and 2018, Revlon's diluted loss per share equals basic loss per share, as the assumed vesting of restricted stock, LTIP RSUs and TIP RSUs would have an anti-dilutive effect. As of December 31, 2019 and 2018, there were 0 outstanding stock options under the Company's Stock Plan. See Note 13, "Stock Compensation Plan," for information on the LTIP and TIP RSUs.
 Year Ended December 31,
 2017 2016 2015
Classes of similar products:           
   Net sales:           
Color cosmetics$955.3
 35% $998.3
 43% $1,022.4
 53%
Fragrance731.3
 27% 408.4
 17% 80.8
 4%
Hair care517.3
 19% 544.3
 23% 522.1
 27%
Beauty care262.4
 10% 294.4
 13% 277.5
 15%
Skin care227.4
 8% 88.6
 4% 11.5
 1%
 $2,693.7
   $2,334.0
   $1,914.3
  


Following are the components of Revlon's basic and diluted loss per common share for the periods presented:

Year Ended December 31,
20192018
Numerator:
Loss from continuing operations, net of taxes$(165.2) $(294.1) 
Income (loss) from discontinued operations, net of taxes7.5  (0.1) 
Net loss$(157.7) $(294.2) 
Denominator:
Weighted-average common shares outstanding – Basic53,081,321  52,797,686  
Effect of dilutive restricted stock and RSUs—  —  
Weighted-average common shares outstanding – Diluted53,081,321  52,797,686  
Basic and Diluted (loss) earnings per common share:
Continuing operations$(3.11) $(5.57) 
Discontinued operations0.14  —  
Net loss per common share$(2.97) $(5.57) 
Unvested restricted stock and RSUs under the Stock Plan(a)
478,202  272,298  
(a) These are outstanding common stock equivalents that were not included in the computation of Revlon's diluted earnings per common share because their inclusion would have had an anti-dilutive effect.


19. CONTINGENCIES
Products Corporation currently leases facilities for executive offices, warehousing, research and development and sales operations and leases various types of equipment under operating and capital lease agreements. Rental expense was $20.1 million, $18.5 million and $18.6 million for 2017, 2016 and 2015, respectively. Minimum rental commitments under all non-cancelable leases, including those pertaining to idled facilities, are presented in the following table:
Minimum Rental Commitments Total 2018 2019 2020 2021 2022 Thereafter
Capital leases $2.9
 $1.4
 $0.9
 $0.4
 $0.1
 $0.1
 $—
Operating leases 245.4
 48.0
 39.3
 31.3
 27.1
 21.1
 78.6

The Company is involved in various routine legal proceedings incidental to the ordinary course of its business. The Company believes that the outcome of all pending legal proceedings in the aggregate is not reasonably likely to have a material adverse effect on the Company’s business, prospects, results of operations, financial condition and/or cash flows.
As previously disclosed, following the announcement of the execution of the Elizabeth Arden Merger Agreement, several putative shareholder class action lawsuits and a derivative lawsuit were filed challenging the Merger. In addition to the complaints filed on behalf of plaintiffs Parker, Christiansen, Ross and Stein on July 25, 2016, a lawsuit (Hutson v. Elizabeth Arden, Inc., et al., Case No. CACE-16-013566) (referred to as the "Hutson complaint") was filed in the Seventeenth Judicial Circuit in and for

F-60
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)


Broward County, Florida (the "Court") against Elizabeth Arden, the members of the board of directors of Elizabeth Arden, Revlon, Products Corporation and Acquisition Sub. In general, the Hutson complaint alleges that: (i) the members of Elizabeth Arden’s board of directors breached their fiduciary duties to Elizabeth Arden’s shareholders with respect to the Merger, by, among other things, approving the Merger pursuant to an unfair process and at an inadequate and unfair price; and (ii) Revlon, Products Corporation and Acquisition Sub aided and abetted the breaches of fiduciary duty by the members of Elizabeth Arden’s board of directors. The plaintiff seeks relief similar to that sought in the Parker case.
By Order dated August 4, 2016, all five cases were consolidated by the Court into a Consolidated Amended Class Action. Thereafter, on August 11, 2016, a Consolidated Amended Class Action Complaint was filed, seeking to enjoin defendants from consummating the Merger and/or from soliciting shareholder votes. To the extent that the Merger was consummated, the Consolidated Amended Class Action Complaint seeks to rescind the Merger or recover rescissory or other compensatory damages, along with costs and fees. The grounds for relief set forth in the Consolidated Amended Class Action Complaint in large part track those grounds as asserted in the five individual complaints, as previously disclosed. Class counsel advised that post-consummation of the Merger they were going to file a Second Consolidated Amended Class Action Complaint. The Second Consolidated Amended Class Action Complaint (which superseded the Consolidated Amended Class Action Complaint) was ultimately filed on or about January 26, 2017. Like the Consolidated Amended Class Action complaint, the grounds for relief set forth in the Second Consolidated Amended Class Action Complaint in large part track those grounds as asserted in the five individual complaints.
The defendants' motions to dismiss the Second Consolidated Amended Class Action Complaint were filed on March 28, 2017. Plaintiffs' response was filed on June 6, 2017 and defendants' replies were filed on July 13, 2017. A hearing on the defendants' motion to dismiss was held on September 19, 2017 and on November 20, 2017, the defendants’ motion was granted and the case was dismissed, with leave to amend under limited circumstances. On December 8, 2017, plaintiffs filed a Third Amended Complaint, seeking relief on the same grounds sought in the First and Second Amended Complaints, but alleged as direct, as opposed to derivative, claims. On January 12, 2018, the defendants once again moved to dismiss. The Company anticipates briefing, followed by a hearing that is expected to occur in the next few months. The Company believes the allegations contained in the Third Consolidated Amended Class Action Complaint are without merit and intends to continue to vigorously defend against them. Additional lawsuits arising out of or relating to the Merger Agreement or the Merger may be filed in the future.
The Company believes that the outcome of all pending legal proceedings in the aggregate is not reasonably likely to have a material adverse effect on the Company’s business, prospects, results of operations, financial condition and/or cash flows. However, in light of the uncertainties involved in legal proceedings generally, the ultimate outcome of a particular matter could be material to the Company’s operating results for a particular period depending on, among other things, the size of the loss or the nature of the liability imposed and the level of the Company’s income for that particular period.



20. RELATED PARTY TRANSACTIONS

As of December 31, 2017,2019, MacAndrews & Forbes beneficially owned approximately 85%87.1% of Revlon's Class A Common Stock, representing approximately 85%which at such date was Revlon's only class of Revlon’s outstanding shares of voting capital stock. Revlon in turn directly owns all 5,260 outstanding shares of Products Corporation's common stock.stock outstanding. As a result, MacAndrews & Forbes is able to elect theRevlon’s entire Board of Directors of Revlon and Products Corporation and control the vote on all matters submitted to a vote of Revlon's and Products Corporation's stockholders. MacAndrews & Forbes is wholly-ownedbeneficially owned by Ronald O. Perelman. Mr. Perelman is Chairman of Revlon'sRevlon’s and ProductsProduct Corporation's Board of Directors.

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COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

Transfer Agreements

In June 1992, Revlon and Products Corporation entered into an asset transfer agreement with Revlon Holdings LLC, a Delaware limited liability company and formerly a Delaware corporation known as Revlon Holdings Inc. ("Revlon Holdings"), and which is an affiliate and an indirect wholly-owned subsidiary of MacAndrews & Forbes, and certain of Revlon Holdings’ wholly-owned subsidiaries. Revlon and Products Corporation also entered into a real property asset transfer agreement with Revlon Holdings. Pursuant to such agreements, in June 1992, Revlon Holdings transferred certain assets to Products Corporation and Products Corporation assumed all of the liabilities of Revlon Holdings, other than certain specifically excluded assets and liabilities (the liabilities excluded are referred to as the "Excluded Liabilities"). Certain consumer products lines sold in demonstrator-assisted retailers considered not integral to the Company's business and that historically had not been profitable and certain other assets and liabilities were retained by Revlon Holdings. Revlon Holdings agreed to indemnify Revlon and Products Corporation against losses arising from the Excluded Liabilities, and Revlon and Products Corporation agreed to indemnify Revlon Holdings against losses arising from the liabilities assumed by Products Corporation. The amounts reimbursed by Revlon Holdings to Products Corporation for the Excluded Liabilities was $0.2 million for each of 2019 and 2018. As of both December 31, 2019 and December 31, 2018, a receivable balance of $0.1 million from MacAndrews & Forbes was included in the Company’s Consolidated Balance Sheets for the Excluded Liabilities. The net activity related to transactions subject to the Transfer Agreements during 2019 and 2018 was $0.3 million $0.5expense and $0.9 million income, respectively. As of December 31, 2019 and $0.3 million for 2017, 2016 and 2015, respectively. ADecember 31, 2018, a payable balance of $0.2 million to, and nil toa receivable balance of $0.4 million from, MacAndrews & Forbes, respectively, was included within accrued expenses and other in the

F-61
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)


Company’s Consolidated Balance Sheets for transactions subject to the Transfer Agreements at December 31, 2017 and 2016, respectively.Agreements.

Reimbursement Agreements

Revlon, Products Corporation and MacAndrews & Forbes Inc. (a wholly-owned subsidiary of MacAndrews & Forbes) have entered into reimbursement agreements (the "Reimbursement Agreements") pursuant to which: (i) MacAndrews & Forbes is obligated to provide (directly or through its affiliates) certain professional and administrative services, including, without limitation, employees, to the Company, and to purchase services from third-party providers, such as insurance, legal, accounting and air transportation services, on behalf of the Company, to the extent requested by Products Corporation; and (ii) Products Corporation is obligated to provide certain professional and administrative services, including, without limitation, employees, to MacAndrews & Forbes and to purchase services from third-party providers, such as insurance, legal and accounting services, on behalf of MacAndrews & Forbes, to the extent requested by MacAndrews & Forbes, provided that in each case the performance of such services does not cause an unreasonable burden to MacAndrews & Forbes or Products Corporation, as the case may be.
The Company reimburses MacAndrews & Forbes for the allocable costs of the services that MacAndrews & Forbes purchases for or provides to the Company and for the reasonable out-of-pocket expenses that MacAndrews & Forbes incurs in connection with the provision of such services. MacAndrews & Forbes reimburses Products Corporation for the allocable costs of the services that Products Corporation purchases for or provides to MacAndrews & Forbes and for the reasonable out-of-pocket expenses incurred by Products Corporation in connection with the purchase or provision of such services. Each of the Company, on the one hand, and MacAndrews & Forbes, on the other, has agreed to indemnify the other party for losses arising out of the services provided by it under the Reimbursement Agreements, other than losses resulting from its willful misconduct or gross negligence.
The Reimbursement Agreements may be terminated by either party on 90 days' notice. The Company does not intend to request services under the Reimbursement Agreements unless their costs would be at least as favorable to the Company as could be obtained from unaffiliated third parties.
Revlon and theThe Company participateparticipates in MacAndrews & Forbes' directors and officers liability insurance program (the "D&O Insurance Program"), as well as its other insurance coverages, such as property damage, business interruption, liability and other coverages, which cover Revlon and the Company, as well as MacAndrews & Forbes and its subsidiaries. The limits of coverage for certain of the policies are available on an aggregate basis for losses to any or all of the participating companies and their respective directors and officers. The Company reimburses MacAndrews & Forbes from time-to-time for their allocable portion of the premiums for such coverage or the Company pays the insurers directly, which premiums the Company believes are more favorable than the premiums that the Company would pay were it to secure stand-alone coverage. Any amounts paid by the Company directly to MacAndrews & Forbes in respect of premiums are included in the amounts paid under the Reimbursement Agreements.
The net activity related to services purchased under the Reimbursement Agreements during each 2017, 20162019 and 20152018 was $3.8$0.5 million $1.5expense and $0.6 million and $2.1 million, respectively, which primarily included partial payments made by the Company to MacAndrews & Forbes during the first quarter of 2017, 2016 and 2015 for premiums related to the Company's allocable portion of the 5-year renewal of the D&O Insurance Program for the period from January 31, 2012 through January 31, 2017 (which insurance coverage was renewed in January 2017 through January 2020).income, respectively. As of December 31, 20172019 and December 31, 2016,2018, a payable balance of $0.2 million to, and a receivable balance of $0.3 million and $0.2 million, respectively, tofrom, MacAndrews & Forbes, waswere included in the Company's Consolidated Balance Sheet for transactions subject to the Reimbursement Agreements.Agreements, respectively.

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COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and per share amounts)

Tax Sharing Agreements

As a result of a debt-for-equity exchange transaction completed in March 2004 (the "2004 Revlon Exchange Transactions"), as of March 25, 2004, Revlon, Products Corporation and their U.S. subsidiaries were no longer included in the MacAndrews & Forbes Group for U.S. federal income tax purposes. See Note 16,14, "Income Taxes," for further discussion on these agreements and related transactions in 2017, 20162019 and 2015.2018.
Other
PursuantRegistration Rights Agreement

Prior to the termsconsummation of Mr. Delpani’s Transition and Separation Agreement and Release withRevlon's initial public equity offering in February 1996, Revlon and ProductsRevlon Worldwide Corporation dated March 1, 2016 (as amended on April 21, 2016)(which subsequently merged into REV Holdings LLC, a Delaware limited liability company and a wholly-owned subsidiary of MacAndrews & Forbes ("REV Holdings")), in April 2016, the Company (i) repurchased from Mr. Delpani 72,895 sharesthen direct parent of Revlon entered into a registration rights agreement (the "Registration Rights Agreement"). In February 2003, MacAndrews & Forbes executed a joinder agreement to the Registration Rights Agreement, pursuant to which REV Holdings, MacAndrews & Forbes and certain transferees of Revlon's Common Stock held by REV Holdings (the "Holders") have the right to require Revlon to register under the Securities Act all or part of the Class A Common Stock (representing vested, formerly restrictedowned by such Holders, including, without limitation, the shares that Revlon granted to Mr. Delpani) for an aggregate purchase price of $2.7 million, based on the $36.83 NYSE per share closing price of Revlon Class A Common Stock on April 20, 2016;purchased by MacAndrews & Forbes in connection with Revlon's 2003 $50.0 million equity rights offering and (ii) paid Mr. Delpani $1.6 million as consideration for canceling his 65,703 restrictedthe shares of Revlon Class A Common Stock which were issued to REV Holdings upon its conversion of all 3,125,000 shares of its Class B Common Stock in October 2013 (a "Demand Registration"). In connection with closing the 2004 Revlon Exchange Transactions and pursuant to the 2004 Investment Agreement, MacAndrews & Forbes executed a joinder agreement that were otherwise scheduledprovided that MacAndrews & Forbes would also be a Holder under the Registration Rights Agreement and that all shares acquired by MacAndrews & Forbes pursuant to vestthe 2004 Investment Agreement are deemed to be registrable securities under the Registration Rights Agreement. This included all of the shares of Class A Common Stock acquired by MacAndrews & Forbes in connection with Revlon’s March 2006 $110 million rights offering of shares of its Class A Common Stock and related private placement to MacAndrews & Forbes, and Revlon’s January 2007 $100 million rights offering of shares of its Class A Common Stock and related private placement to MacAndrews & Forbes. Pursuant to the Registration Rights Agreement, in 2009 Revlon registered under the Securities Act all 9,336,905 shares of Class A Common Stock issued to MacAndrews & Forbes in the 2009 Exchange Offer, in which, among other things, Revlon issued to MacAndrews & Forbes shares of Class A Common Stock at a ratio of one share of Class A Common Stock for each $5.21 of outstanding principal amount of the then-outstanding Senior Subordinated Term Loan that MacAndrews & Forbes contributed to Revlon.
Revlon may postpone giving effect to a Demand Registration for a period of up to 30 days if Revlon believes such registration might have a material adverse effect on March 15, 2017. Mr. Delpani ceased employmentany plan or proposal by Revlon with respect to any financing, acquisition, recapitalization, reorganization or other material transaction, or if Revlon is in possession of material non-public information that, if publicly disclosed, could result in a material disruption of a major corporate development or transaction then pending or in progress or could result in other material adverse consequences to Revlon. In addition, the Company on March 31, 2016Holders have the right to participate in registrations by Revlon of its Class A Common Stock (a "Piggyback Registration"). The Holders will pay all out-of-pocket expenses incurred in connection with any Demand Registration. Revlon will pay any expenses incurred in connection with a Piggyback Registration, except for underwriting discounts, commissions and ceasedexpenses attributable to serve as Director in June 2016.the shares of Class A Common Stock sold by such Holders.


F-62
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIESAmended 2019 Senior Line of Credit Facility
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)See Note 9, "Debt," regarding the Amended 2019 Senior Line of Credit Agreement between Products Corporation and MacAndrews & Forbes Group, LLC.



Other

Certain of Products Corporation’s debt obligations, including the 2016 Credit Agreements and Products Corporation's Senior Notes, have been, and may in the future be, supported by, among other things, guarantees from all of Products Corporation's domestic subsidiaries (subject to certain limited exceptions) and, for the 2016 Credit Agreements, guarantees from Revlon. The obligations under such guarantees are secured by, among other things, all of the capital stock of Products Corporation and, its domestic subsidiaries (subject to certain limited exceptions) and 66% of the capital stock of Products Corporation's and its domestic subsidiaries' first-tier foreign subsidiaries. See Note 11, "Long Term Debt,9, "Debt," for a discussion of the terms of the 2016 Credit Agreements and Senior Notes.
Effective January 28, 2018, the Board
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COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions, except share and research & development functions. See Part II, Item 9B, Other Information, in this Form 10-K for a description of Ms. Perelman’s employment terms. Ms. Perelman is the daughter of Ronald O. Perelman, the Chairman of the Company's Board of Directors. Ms. Perelman's former position as EVP Strategy, Digital Content and New Business Development of the Company, which began in December 2017, was carried out pursuant to a secondment arrangement between the Company and M&F, pursuant to which her compensation and benefits were paid directly by M&F and not by the Company, except that the Company was responsible for applicable business and travel expenses incurred by Ms. Perelman.per share amounts)

During 20172019 and 2016,2018, the Company engaged several companies in which MacAndrews & Forbes had a controlling interest to provide the Company with various ordinary course business services. These services included processing approximately $27.5$55.1 million and $40.9$18.9 million of coupon redemptions for the Company's retail customers for 2017the years ended December 31, 2019 and 2016,2018, respectively, for which the Company paidincurred fees of approximately $1.0 million and $0.2 million for 2019 and $0.4 million in 2017 and 2016,2018, respectively, and other similar advertising, coupon redemption and raw material supply services, for which the Company paid feeshad net payables aggregating to approximately $0.5 million and less than $0.1$0.9 million for 2019 and 2018, respectively. As of December 31, 2019 and December 31, 2018, a payable balance of approximately $5.5 million and NaN, respectively, were included in 2017 and 2016, respectively.the Company's Consolidated Balance Sheet for the aforementioned coupon redemption services. The Company believes that its engagement of each of these affiliates was on arm's length terms, taking into account each firm's expertise in its respective field, and that the fees paid or received were at least as favorable as those available from unaffiliated parties.

As previously disclosed, the Board of Directors elected Ms. Debra Perelman as the Company’s Chief Operating Officer in January 2018 and then in May 2018 as its President and Chief Executive Officer. Ms. Perelman is the daughter of Ronald O. Perelman, the Chairman of the Company’s Board of Directors. Ms. Perelman’s compensation is disclosed in Revlon’s Annual Proxy Statement. Also, as previously disclosed, E. Scott Beattie and Mitra Hormozi, each of whom are directors of Revlon, earned consulting fees. For Mr. Beattie consulting fees totaled $0.4 million and $0.5 million for 2019 and 2018, respectively. Ms. Hormozi earned consulting fees of approximately $0.1 million for 2019. The Company believes that its engagement of Mr. Beattie and Ms. Hormozi provide the Company with the ongoing expertise insight of these former Company executives and that each such agreement was entered into on arm's length terms and that the fees paid were at least as favorable as those available from unaffiliated parties.



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



21. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

The following is a summary of the Company’s unaudited quarterly results of operations for 2017 and 2016:
 Year Ended December 31, 2017
 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Net sales$594.9
 $645.7
 $666.5
 $786.6
Gross profit329.8
 377.5
 376.2
 458.9
Loss from continuing operations, net of taxes(a)
(36.1) (35.6) (31.2) (77.9)
Income from discontinued operations, net of taxes(c)
0.3
 0.6
 0.4
 0.8
Net loss(a)(c)
(35.8) (35.0) (30.8) (77.1)
        

 Year Ended December 31, 2016
 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Net sales$439.6
 $488.9
 $604.8
 $800.7
Gross profit285.7
 317.4
 361.4
 452.4
(Loss) Income from continuing operations, net of taxes(b)
12.6
 11.8
 (3.0) (32.2)
(Loss) from discontinued operations, net of taxes(c)
0.4
 (2.5) (0.2) (2.6)
Net (loss) income(b)(c)
13.0
 9.3
 (3.2) (34.8)
        
(a)
Loss from continuing operations and net loss for the fourth quarter of 2017 were impacted by: (i) a $59.3 million provision for income taxes, primarily due to the impact of the Tax Act (See Note 16, "Income Taxes" for more information); (ii) $22.1 million of restructuring charges, primarily related to the EA Integration Restructuring Program (See Note 3, "Restructuring Charges" for more information); and (iii) $12.7 million of acquisition and integration costs primarily related to the Elizabeth Arden Acquisition.
(b)Income from continuing operations and net income for the fourth quarter of 2016 were unfavorably impacted by: (i) $31.7 million of restructuring charges related to the EA Integration Restructuring Charges (See Note 3, "Restructuring Charges"); and (ii) $16.7 million and $6.7 million of non-cash impairment charges on goodwill and intangible assets, respectively, within the Other reporting unit (see Note 8, "Goodwill and Intangible Assets, Net").
(c)
Income (loss) from discontinued operations includes the results of the Company's former China operations within the Consumer segment (See Note 4, "Discontinued Operations").


22.PRODUCTS CORPORATION AND SUBSIDIARIES GUARANTOR FINANCIAL INFORMATION


Products Corporation's 5.75% Senior Notes and 6.25% Senior Notes are fully and unconditionally guaranteed on a senior basis by the 5.75%certain of Products Corporation’s direct and indirect wholly-owned domestic subsidiaries (the "5.75% Senior Notes GuarantorsGuarantors" and the 6.25%"6.25% Senior Notes Guarantors, (together" respectively, and together the "Guarantor Subsidiaries").


The following Condensed Consolidating Financial Statements present the financial information as of December 31, 20172019 and December 31, 2016,2018, and for each of the years ended December 31, 2017, 20162019 and 20152018 for (i) Products Corporation on a stand-alone basis; (ii) the Guarantor Subsidiaries on a stand-alone basis; (iii) the subsidiaries of Products Corporation that do not guarantee Products Corporation's 5.75% Senior Notes and 6.25% Senior Notes (the "Non-Guarantor Subsidiaries") on a stand-alone basis; and (iv) Products Corporation, the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries on a consolidated basis. The Condensed Consolidating Financial Statements are presented on the equity method, under which the investments in subsidiaries are recorded at cost and adjusted to the applicable share of the subsidiary's cumulative results of operations, capital contributions, distributions and other equity changes. The principal elimination entries eliminate investments in subsidiaries and intercompany balances and transactions.


Products Corporation and Subsidiaries Condensed Consolidating Balance Sheets
As of December 31, 2019
Products CorporationGuarantor SubsidiariesNon-Guarantor SubsidiariesEliminationsConsolidated
ASSETS
Cash and cash equivalents$0.8  $6.4  $97.1  $—  $104.3  
Trade receivables, less allowances for doubtful accounts95.5  92.3  235.6  —  423.4  
Inventories131.0  151.5  165.9  —  448.4  
Prepaid expenses and other219.7  26.4  46.5  —  292.6  
Intercompany receivables2,857.7  2,854.6  452.7  (6,165.0) —  
Investment in subsidiaries1,598.3  30.7  —  (1,629.0) —  
Property, plant and equipment, net208.7  89.5  110.4  —  408.6  
Deferred income taxes165.0  (37.8) 30.9  —  158.1  
Goodwill159.9  264.0  249.8  —  673.7  
Intangible assets, net13.0  346.9  130.8  —  490.7  
Other assets67.8  16.2  37.1  —  121.1  
      Total assets$5,517.4  $3,840.7  $1,556.8  $(7,794.0) $3,120.9  
LIABILITIES AND STOCKHOLDER’S DEFICIENCY
Short-term borrowings$—  $—  $2.2  $—  $2.2  
Current portion of long-term debt287.9  —  0.1  —  288.0  
Accounts payable108.4  39.9  103.5  —  251.8  
Accrued expenses and other124.1  70.0  224.1  —  418.2  
Intercompany payables3,030.3  2,668.7  466.0  (6,165.0) —  
Long-term debt2,822.2  —  84.0  —  2,906.2  
Other long-term liabilities220.4  118.2  5.3  —  343.9  
      Total liabilities6,593.3  2,896.8  885.2  (6,165.0) 4,210.3  
Stockholder’s deficiency(1,075.9) 943.9  671.6  (1,629.0) (1,089.4) 
Total liabilities and stockholder’s deficiency$5,517.4  $3,840.7  $1,556.8  $(7,794.0) $3,120.9  


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REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIESTable of Contents
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)millions, except share and per share amounts)



Products Corporation and Subsidiaries Condensed Consolidating Balance Sheets
As of December 31, 2018
Products CorporationGuarantor SubsidiariesNon-Guarantor SubsidiariesEliminationsConsolidated
ASSETS
Cash and cash equivalents$7.3  $6.6  $73.4  $—  $87.3  
Trade receivables, less allowances for doubtful accounts89.7  103.5  238.1  —  431.3  
Inventories150.7  196.5  176.0  —  523.2  
Prepaid expenses and other214.7  25.0  60.0  —  299.7  
Intercompany receivables2,225.4  2,177.2  266.1  (4,668.7) —  
Investment in subsidiaries1,627.4  30.4  —  (1,657.8) —  
Property, plant and equipment, net197.1  57.5  99.9  —  354.5  
Deferred income taxes105.9  (6.9) 15.8  —  114.8  
Goodwill159.9  263.9  250.1  —  673.9  
Intangible assets, net21.2  412.2  98.6  —  532.0  
Other assets71.8  23.4  35.6  —  130.8  
      Total assets$4,871.1  $3,289.3  $1,313.6  $(6,326.5) $3,147.5  
LIABILITIES AND STOCKHOLDER’S DEFICIENCY
Short-term borrowings$—  $—  $9.3  $—  $9.3  
Current portion of long-term debt348.0  —  0.1  —  348.1  
Accounts payable148.8  88.6  94.7  —  332.1  
Accrued expenses and other152.6  87.0  195.1  —  434.7  
Intercompany payables2,226.8  2,028.9  413.0  (4,668.7) —  
Long-term debt2,644.6  —  83.1  —  2,727.7  
Other long-term liabilities153.4  11.2  64.1  —  228.7  
      Total liabilities5,674.2  2,215.7  859.4  (4,668.7) 4,080.6  
Stockholder’s deficiency(803.1) 1,073.6  454.2  (1,657.8) (933.1) 
Total liabilities and stockholder’s deficiency$4,871.1  $3,289.3  $1,313.6  $(6,326.5) $3,147.5  



F-73
Condensed Consolidating Balance Sheets
As of December 31, 2017
 Products Corporation Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated
ASSETS         
Cash and cash equivalents$0.3
 $5.3
 $81.5
 $—
 $87.1
Trade receivables, less allowances for doubtful accounts103.1
 99.7
 242.0
 —
 444.8
Inventories121.8
 160.7
 215.4
 —
 497.9
Prepaid expenses and other164.9
 24.0
 62.4
 —
 251.3
Intercompany receivables1,422.0
 1,309.4
 154.5
 (2,885.9) —
Investment in subsidiaries1,637.9
 35.4
 —
 (1,673.3) —
Property, plant and equipment, net186.5
 73.8
 112.4
 —
 372.7
Deferred income taxes13.8
 —
 105.1
 —
 118.9
Goodwill177.9
 264.0
 250.6
 —
 692.5
Intangible assets, net44.1
 438.5
 109.5
 —
 592.1
Other assets50.8
 30.3
 37.3
 —
 118.4
      Total assets$3,923.1
 $2,441.1
 $1,370.7
 $(4,559.2) $3,175.7
LIABILITIES AND STOCKHOLDER’S (DEFICIENCY) EQUITY
Short-term borrowings$—
 $—
 $12.4
 $—
 12.4
Current portion of long-term debt170.1
 —
 0.1
 —
 170.2
Accounts payable130.2
 85.7
 121.0
 —
 336.9
Accrued expenses and other187.0
 48.4
 181.1
 —
 416.5
Intercompany payables1,240.2
 1,185.1
 460.6
 (2,885.9) —
Long-term debt2,653.2
 —
 0.5
 —
 2,653.7
Other long-term liabilities197.8
 10.4
 33.2
 —
 241.4
      Total liabilities4,578.5
 1,329.6
 808.9
 (2,885.9) 3,831.1
Stockholder’s deficiency(655.4) 1,111.5
 561.8
 (1,673.3) (655.4)
Total liabilities and stockholder’s deficiency$3,923.1
 $2,441.1
 $1,370.7
 $(4,559.2) $3,175.7


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REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIESTable of Contents
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)millions, except share and per share amounts)



Products Corporation and Subsidiaries Condensed Consolidating Statement of Operations and Comprehensive (Loss) Income
Year Ended December 31, 2019
Products CorporationGuarantor SubsidiariesNon-Guarantor SubsidiariesEliminationsConsolidated
Net Sales$590.1  $622.1  $1,210.8  $(3.4) $2,419.6  
Cost of sales282.6  306.5  466.5  (3.4) 1,052.2  
Gross profit307.5  315.6  744.3  —  1,367.4  
Selling, general and administrative expenses430.6  331.9  546.2  —  1,308.7  
Acquisition, integration and divestiture costs0.7  0.1  3.1  —  3.9  
Restructuring charges and other, net3.3  4.0  5.5  —  12.8  
Gain on divested assets—  —  (26.6) —  (26.6) 
Operating (loss) income(127.1) (20.4) 216.1  —  68.6  
Other (income) expense:
Intercompany interest, net(4.3) 2.6  1.7  —  —  
Interest expense189.5  —  7.1  —  196.6  
Amortization of debt issuance costs14.6  —  —  —  14.6  
Foreign currency losses, net(0.6) (1.2) (0.1) —  (1.9) 
Miscellaneous, net(31.6) (36.3) 84.3  —  16.4  
Other expense (income), net167.6  (34.9) 93.0  —  225.7  
(Loss) income from continuing operations before income taxes(294.7) 14.5  123.1  —  (157.1) 
(Benefit from) provision for income taxes(55.6) 40.8  16.4  —  1.6  
(Loss) income from continuing operations, net of taxes(239.1) (26.3) 106.7  —  (158.7) 
Income from discontinued operations, net of taxes—  —  7.5  —  7.5  
Equity in loss (income) of subsidiaries144.5  19.0  —  (163.5) —  
Net (loss) income$(94.6) $(7.3) $114.2  $(163.5) $(151.2) 
Other comprehensive (loss) income(13.3) (6.9) 1.3  5.7  (13.2) 
Total comprehensive (loss) income$(107.9) $(14.2) $115.5  $(157.8) $(164.4) 

F-74
Condensed Consolidating Balance Sheets
As of December 31, 2016
 Products Corporation Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated
ASSETS         
Cash and cash equivalents$20.0
 $34.3
 $132.1
 $—
 $186.4
Trade receivables, less allowances for doubtful accounts104.6
 104.8
 214.5
 —
 423.9
Inventories96.8
 150.5
 177.3
 —
 424.6
Prepaid expenses and other155.3
 15.1
 47.2
 —
 217.6
Intercompany receivables790.1
 635.7
 127.8
 (1,553.6) —
Investment in subsidiaries1,610.1
 3.0
 —
 (1,613.1) —
Property, plant and equipment, net142.1
 84.0
 94.4
 —
 320.5
Deferred income taxes26.2
 (1.1) 111.0
 —
 136.1
Goodwill188.7
 251.7
 249.1
 —
 689.5
Intangible assets, net49.0
 149.1
 438.5
 —
 636.6
Other assets50.8
 29.4
 23.3
 —
 103.5
      Total assets$3,233.7
 $1,456.5
 $1,615.2
 $(3,166.7) $3,138.7
LIABILITIES AND STOCKHOLDER’S (DEFICIENCY) EQUITY
Short-term borrowings$—
 $—
 $10.8
 $—
 $10.8
Current portion of long-term debt18.0
 —
 0.1
 —
 18.1
Accounts payable99.7
 90.7
 106.5
 —
 296.9
Accrued expenses and other183.0
 63.5
 136.2
 —
 382.7
Intercompany payables554.5
 530.9
 468.2
 (1,553.6) —
Long-term debt2,662.6
 —
 0.5
 —
 2,663.1
Other long-term liabilities222.7
 20.3
 30.9
 —
 273.9
      Total liabilities3,740.5
 705.4
 753.2
 (1,553.6) 3,645.5
Stockholder’s (deficiency) equity(506.8) 751.1
 862.0
 (1,613.1) (506.8)
Total liabilities and stockholder’s (deficiency) equity$3,233.7
 $1,456.5
 $1,615.2
 $(3,166.7) $3,138.7





F-66
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIESTable of Contents
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)millions, except share and per share amounts)



Products Corporation and Subsidiaries Condensed Consolidating Statement of Operations and Comprehensive (Loss) Income
Year Ended December 31, 2018
Products CorporationGuarantor SubsidiariesNon-Guarantor SubsidiariesEliminationsConsolidated
Net Sales$644.6  $707.1  $1,213.4  $(0.6) $2,564.5  
Cost of sales300.9  343.6  473.1  (0.6) 1,117.0  
Gross profit343.7  363.5  740.3  —  1,447.5  
Selling, general and administrative expenses441.0  421.5  591.7  —  1,454.2  
Acquisition, integration and divestiture costs8.5  1.6  3.8  —  13.9  
Restructuring charges and other, net5.2  3.1  11.9  —  20.2  
Impairment charges18.0  —  —  18.0  
Loss on divested assets20.1  —  —  —  20.1  
Operating (loss) income(149.1) (62.7) 132.9  —  (78.9) 
Other (income) expenses:
Intercompany interest, net(7.0) 2.5  4.5  —  —  
Interest expense172.7  —  3.9  —  176.6  
Amortization of debt issuance costs13.0  —  —  —  13.0  
Foreign currency losses, net3.5  0.6  11.7  —  15.8  
Miscellaneous, net(44.4) (45.3) 91.0  —  1.3  
Other expense (income), net137.8  (42.2) 111.1  —  206.7  
(Loss) income from continuing operations before income taxes(286.9) (20.5) 21.8  —  (285.6) 
(Benefit from) provision for income taxes(10.4) 7.3  6.5  —  3.4  
(Loss) income from continuing operations, net of taxes(276.5) (27.8) 15.3  —  (289.0) 
Loss from discontinued operations, net of taxes—  —  (0.1) —  (0.1) 
Equity in (income) loss of subsidiaries(12.6) (6.6) —  19.2  —  
Net (loss) income$(289.1) $(34.4) $15.2  $19.2  $(289.1) 
Other comprehensive (loss) income(5.8) (1.0) (12.8) 13.8  (5.8) 
Total comprehensive (loss) income$(294.9) $(35.4) $2.4  $33.0  $(294.9) 

F-75
Condensed Consolidating Statement of Operations and Comprehensive (Loss) Income
Twelve Months Ended December 31, 2017
 Products Corporation Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated
Net Sales$693.9
 $761.9
 $1,240.0
 $(2.1) $2,693.7
Cost of sales254.1
 376.0
 523.3
 (2.1) 1,151.3
Gross profit439.8
 385.9
 716.7
 —
 1,542.4
Selling, general and administrative expenses455.4
 405.3
 600.3
 —
 1,461.0
Acquisition and integration costs42.6
 6.1
 4.2
 —
 52.9
Restructuring charges and other, net—
 19.0
 14.4
 —
 33.4
Impairment Charge10.8
 —
 —
 —
 10.8
Operating (loss) income(69.0) (44.5) 97.8
 —
 (15.7)
Other expenses (income):         
Intercompany interest, net(7.9) 1.7
 6.2
 —
 —
Interest expense149.1
 —
 0.7
 —
 149.8
Amortization of debt issuance costs9.1
 —
 —
 —
 9.1
Foreign currency (gains) losses, net(4.2) 1.1
 (15.4) —
 (18.5)
Miscellaneous, net(56.1) (25.9) 82.8
 —
 0.8
Other expenses (income), net90.0
 (23.1) 74.3
 —
 141.2
(Loss) income from continuing operations before income taxes(159.0) (21.4) 23.5
 —
 (156.9)
Provision for (benefit from) income taxes6.3
 (0.9) 18.5
 —
 23.9
(Loss) income from continuing operations(165.3) (20.5) 5.0
 —
 (180.8)
Income from discontinued operations, net of taxes—
 —
 2.1
 —
 2.1
Equity in (loss) income of subsidiaries(13.4) 6.8
 —
 6.6
 —
Net (loss) income$(178.7) $(13.7) $7.1
 $6.6
 $(178.7)
Other comprehensive income (loss)23.3
 (7.1) 1.6
 5.5
 23.3
Total comprehensive (loss) income$(155.4) $(20.8) $8.7
 $12.1
 $(155.4)


F-67
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIESTable of Contents
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)millions, except share and per share amounts)



Products Corporation and Subsidiaries Condensed Consolidating Statements of Cash Flows
Year Ended December 31, 2019
Products CorporationGuarantor SubsidiariesNon-Guarantor SubsidiariesEliminationsConsolidated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash (used in) provided by operating activities$(83.9) $1.9  $13.7  $—  $(68.3) 
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash (used in) provided by investing activities(17.1) (2.0) 21.2  —  2.1  
CASH FLOWS FROM FINANCING ACTIVITIES:
Net decrease in short-term borrowings and overdraft(7.1) (3.7) (6.5) —  (17.3) 
Repayments under the Amended 2016 Revolving Credit Facility(62.6) —  —  —  (62.6) 
Net borrowings under the 2019 Term Loan Facility200.0  —  —  —  200.0  
Repayments under the 2016 Term Loan Facility(18.0) —  —  —  (18.0) 
Payment of financing costs(15.3) —  —  —  (15.3) 
Tax withholdings related to net share settlements of restricted stock units and awards(1.6) —  —  —  (1.6) 
Other financing activities(0.6) (0.1) (0.2) —  (0.9) 
Net cash provided by (used in) financing activities94.8  (3.8) (6.7) —  84.3  
Effect of exchange rate changes on cash, cash equivalents and restricted cash—  3.7  (4.8) —  (1.1) 
Net (decrease) increase in cash, cash equivalents and restricted cash(6.3) (0.2) 23.6  —  17.0  
Cash, cash equivalents and restricted cash at beginning of period$7.3  $6.6  $73.6  $—  $87.5  
Cash, cash equivalents and restricted cash at end of period$1.0  $6.4  $97.2  $—  $104.5  

F-76
Condensed Consolidating Statement of Operations and Comprehensive (Loss) Income
Twelve Months Ended December 31, 2016
 Products Corporation Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated
Net Sales$826.6
 $596.9
 $919.4
 $(8.9) $2,334.0
Cost of sales261.4
 273.5
 391.1
 (8.9) 917.1
Gross profit565.2
 323.4
 528.3
 —
 1,416.9
Selling, general and administrative expenses467.0
 245.1
 439.5
 —
 1,151.6
Acquisition and integration costs42.0
 0.5
 0.7
 —
 43.2
Restructuring charges and other, net29.8
 1.8
 2.4
 —
 34.0
Impairment Charge—
 —
 23.4
 —
 23.4
Operating income26.4
 76.0
 62.3
 —
 164.7
Other expenses (income):        —
Intercompany interest, net(7.9) 0.4
 7.5
 —
 —
Interest expense104.6
 —
 0.6
 —
 105.2
Amortization of debt issuance costs6.8
 —
 —
 —
 6.8
Loss on early extinguishment of debt16.9
 —
 —
 —
 16.9
Foreign currency losses (gains), net4.2
 (1.5) 15.8
 —
 18.5
Miscellaneous, net(56.5) 17.3
 38.6
 —
 (0.6)
Other expenses, net68.1
 16.2
 62.5
 —
 146.8
(Loss) income from continuing operations before income taxes(41.7) 59.8
 (0.2) —
 17.9
(Benefit from) provision for income taxes(19.6) 40.3
 8.0
 —
 28.7
(Loss) income from continuing operations(22.1) 19.5
 (8.2) —
 (10.8)
Loss from discontinued operations, net of taxes—
 —
 (4.9) —
 (4.9)
Equity in income (loss) of subsidiaries6.4
 (9.5) —
 3.1
 —
Net (loss) income$(15.7) $10.0
 $(13.1) $3.1
 $(15.7)
Other comprehensive (loss) income(6.4) (3.6) (1.8) 5.4
 (6.4)
Total comprehensive (loss) income$(22.1) $6.4
 $(14.9) $8.5
 $(22.1)




F-68
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIESTable of Contents
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)millions, except share and per share amounts)



Products Corporation and Subsidiaries Condensed Consolidating Statements of Cash Flows
Year Ended December 31, 2018
Products CorporationGuarantor SubsidiariesNon-Guarantor SubsidiariesEliminationsConsolidated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash used in operating activities$(102.3) $(0.7) $(67.8) $—  $(170.8) 
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash used in investing activities(35.0) (5.3) (16.9) —  (57.2) 
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (decrease) increase in short-term borrowings and overdraft(5.5) 7.0  (2.6) —  (1.1) 
Net borrowings under the Amended 2016 Revolving Credit Facility178.0  —  —  —  178.0  
Repayments under the 2016 Term Loan Facility(18.0) —  —  —  (18.0) 
Net Borrowings under the 2018 Foreign Asset-Based Term Loan—  —  88.9  88.9  
Payments of financing costs(5.4) —  (4.3) —  (9.7) 
Tax withholdings related to net share settlements of restricted stock units and awards(3.6) —  —  —  (3.6) 
Other financing activities(1.2) —  (0.2) —  (1.4) 
Net cash provided by financing activities144.3  7.0  81.8  —  233.1  
Effect of exchange rate changes on cash, cash equivalents and restricted cash—  0.3  (5.3) —  (5.0) 
Net increase (decrease) in cash, cash equivalents and restricted cash7.0  1.3  (8.2) —  0.1  
Cash, cash equivalents and restricted cash at beginning of period$0.3  $5.3  $81.8  $—  87.4  
Cash, cash equivalents and restricted cash at end of period$7.3  $6.6  $73.6  $—  $87.5  


F-77
Condensed Consolidating Statement of Operations and Comprehensive (Loss) Income
Twelve Months Ended December 31, 2015
 Products Corporation Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated
Net Sales$1,049.4
 $340.4
 $730.7
 $(206.2) $1,914.3
Cost of sales466.0
 129.4
 278.6
 (206.2) 667.8
Gross profit583.4
 211.0
 452.1
 —
 1,246.5
Selling, general and administrative expenses495.0
 131.2
 367.3
 —
 993.5
Acquisition and integration costs7.1
 —
 0.9
 —
 8.0
Restructuring charges and other, net6.6
 0.4
 3.5
 —
 10.5
Impairment Charge9.7
 —
 —
 —
 9.7
Operating income65.0
 79.4
 80.4
 —
 224.8
Other expenses (income):         
Intercompany interest, net(8.2) (0.1) 8.3
 —
 —
Interest expense82.5
 —
 0.8
 —
 83.3
Amortization of debt issuance costs5.7
 —
 —
 —
 5.7
Foreign currency losses (gains), net0.4
 (0.6) 15.9
 —
 15.7
Miscellaneous, net(54.2) (0.1) 54.7
 —
 0.4
Other expenses (income), net26.2
 (0.8) 79.7
 —
 105.1
Income from continuing operations before income taxes38.8
 80.2
 0.7
 —
 119.7
Provision for income taxes16.0
 36.2
 2.2
 —
 54.4
Income (loss) from continuing operations22.8
 44.0
 (1.5) —
 65.3
Loss from discontinued operations, net of taxes—
 —
 (3.2) —
 (3.2)
Equity in income of subsidiaries39.3
 43.1
 —
 (82.4) —
Net income (loss)$62.1
 $87.1
 $(4.7) $(82.4) $62.1
Other comprehensive (loss) income(2.1) (1.5) (18.8) 20.3
 (2.1)
Total comprehensive income (loss)$60.0
 $85.6
 $(23.5) $(62.1) $60.0



F-69
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIESTable of Contents
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)millions, except share and per share amounts)



22. SUBSEQUENT EVENTS

2020 Refinancing Transactions

Committed Debt Financing

On March 9, 2020, Products Corporation entered into a binding commitment letter (the “Commitment Letter”) with Jefferies Finance LLC (the “Commitment Party”). Pursuant to the Commitment Letter and subject to the terms and conditions set forth therein, the Commitment Party has committed to provide senior secured term loan facilities in an aggregate principal amount of up to $850,000,000 (the “Facilities” and the “2020 Refinancing Transactions”).

The proceeds of the Facilities will be used (i) to repay in full indebtedness outstanding under Products Corporation’s 5.75% Senior Notes due February 2021 and Products Corporation’s Term Credit Agreement (the “2019 Term Loan Facility”) dated as of August 6, 2019 (the “Refinancing”), (ii) to pay fees and expenses in connection with the Facilities and the Refinancing and (iii) to the extent of any excess, for general corporate purposes.

The funding of the Facilities is contingent on the satisfaction of a limited number of customary conditions, including the execution of definitive loan documentation for the Facilities, absence of material adverse change and certain other customary conditions. The commitments under the Commitment Letter will be available to the Company until June 30, 2020, unless the Refinancing (as defined below) is consummated or the maturity of certain other material indebtedness of Products Corporation is accelerated prior to such date.

Principal and Maturity: The Facilities will consist of (i) a senior secured term loan facility in a principal amount of up to $300,000,000 (the “Brandco Facility”) and (ii) a senior secured term loan facility in a principal amount of up to $550,000,000 (the “Specified Brands Facility”). Jefferies Finance LLC will act as administrative agent and collateral agent in respect of the Facilities.

The Facilities will mature on the fifth anniversary of the closing date of the Facilities (the “Closing Date”), subject to a springing maturity 91 days prior to the maturity date of Products Corporation’s 6.25% Senior Notes due 2024 (the “2024 Notes”) if, on such date, $100,000,000 or more in aggregate principal amount of the 2024 Notes remains outstanding.

Borrowers, Guarantees and Security:

Brandco Facility. The borrower under the Brandco Facility will be Products Corporation, and the Brandco Facility will be guaranteed by certain indirect foreign subsidiaries of Products Corporation (the “Brandcos”), whose direct and indirect subsidiaries (the “Specified Brands Subsidiaries”) will be “Unrestricted Subsidiaries” for purposes of the existing debt agreements of Products Corporation and will hold various intellectual property assets related to the Elizabeth Arden and American Crew brands and certain other portfolio brands (the “Specified Brand Assets”). The Brandcos will not guarantee Products Corporation’s Term Credit Agreement dated as of September 7, 2016 and amended to date (as amended to date, the “2016 Term Loan Facility”), but all guarantors of the 2016 Term Loan Facility will guarantee the Brandco Facility. All of the assets of the Brandcos (including the equity of the first-tier Specified Brands Subsidiary) will be pledged to secure the Brandco Facility on a first-priority basis and will not secure the 2016 Term Loan Facility, but the Brandco Facility will be secured on a pari passu basis by the assets securing the 2016 Term Loan Facility.

Specified Brands Facility. The borrower of the Specified Brands Facility will be a Specified Brands Subsidiary that is an indirect subsidiary of the Brandcos (the “Specified Brands Borrower”). The Specified Brands Facility will be guaranteed by the direct parent of the Specified Brands Borrower and each of the subsidiaries of the Specified Brands Borrower. The Specified Brands Facility will be secured by substantially all of the assets of the Specified Brands Borrower and the other Specified Brands Subsidiaries, which will include the Specified Brand Assets.

Contribution and License Agreements: In connection with the pledge of the Specified Brand Assets, Products Corporation will enter into intercompany arrangements pursuant to which the Specified Brand Assets will be contributed to the Specified Brand Subsidiaries. Products Corporation and/or its operating subsidiaries will enter into license and royalty arrangements on arm’s length terms with the relevant Specified Brand Subsidiary to provide for their continued use of the Specified Brand Assets during the term of the Facilities.

Interest and Fees: Interest will accrue on the Facilities at a rate per annum of adjusted LIBOR plus a fixed margin. Products Corporation is also obligated to pay customary fees and expenses in connection with the Facilities.

F-78
Condensed Consolidating Statement of Cash Flows
Twelve Months Ended December 31, 2017
 Products Corporation Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:         
Net cash used in operating activities$(91.4) $(22.0) $(25.9) $—
 $(139.3)
CASH FLOWS FROM INVESTING ACTIVITIES:         
Capital expenditures(63.8) (7.4) (37.1) —
 (108.3)
   Net cash used in investing activities(63.8) (7.4) (37.1) —
 (108.3)
CASH FLOWS FROM FINANCING ACTIVITIES:         
Net increase in short-term borrowings and overdraft1.6
 0.3
 1.4
 —
 3.3
Net borrowings under the 2016 Revolving Credit Facility157.0
 —
 —
 —
 157.0
Repayments under the 2016 Term Loan Facility(18.0) —
 —
 —
 (18.0)
Payment of financing costs(1.2) —
 —
 —
 (1.2)
Tax withholdings related to net share settlements of restricted stock units and awards(2.5) —
 —
 —
 (2.5)
Other financing activities(1.4) —
 (0.3) —
 (1.7)
Net cash provided by financing activities135.5
 0.3
 1.1
 —
 136.9
Effect of exchange rate changes on cash and cash equivalents—
 0.1
 11.2
 —
 11.3
Net decrease in cash, cash equivalents and restricted cash(19.7) (29.0) (50.7) —
 (99.4)
Cash, cash equivalents and restricted cash at beginning of period20.0
 34.3
 132.5
 —
 186.8
Cash, cash equivalents and restricted cash at end of period$0.3
 $5.3
 $81.8
 $—
 $87.4


F-70
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIESTable of Contents
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)millions, except share and per share amounts)



Condensed Consolidating Statement of Cash Flows
Twelve Months Ended December 31, 2016
 Products Corporation Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:         
Net cash provided by (used in) operating activities$88.3
 $(56.8) $85.9
 $—
 $117.4
CASH FLOWS FROM INVESTING ACTIVITIES:         
Capital expenditures(38.6) (5.4) (15.3) —
 (59.3)
Business acquisitions, net of cash acquired(993.2) —
 (35.5) —
 (1,028.7)
Proceeds from the sale of certain assets0.1
 0.4
 —
 —
 0.5
   Net cash used in investing activities(1,031.7) (5.0) (50.8) —
 (1,087.5)
CASH FLOWS FROM FINANCING ACTIVITIES:         
Net (decrease) increase in short-term borrowings and overdraft(11.1) 3.5
 7.6
 —
 —
Repayments under the Old Acquisition Term Loan(15.1) —
 —
 —
 (15.1)
Prepayments under the 2011 Term Loan(11.5) —
 —
 —
 (11.5)
Repayment of Old Acquisition Term Loan(658.6) —
 —
 —
 (658.6)
Repayment of 2011 Term Loan(651.4) —
 —
 —
 (651.4)
Borrowings under the 2016 Term Loan Facility1,791.0
 —
 —
 —
 1,791.0
Repayments under the 2016 Term Loan Facility(4.5) —
 —
 —
 (4.5)
Proceeds from the issuance of the 6.25% Senior Notes, net450.0
 —
 —
 —
 450.0
Payment of financing costs(61.6) —
 —
 —
 (61.6)
Tax withholdings related to net share settlements of restricted stock units and awards(3.2) —
 —
 —
 (3.2)
Other financing activities(2.1) —
 (0.4) —
 (2.5)
Net cash provided by financing activities821.9
 3.5
 7.2
 —
 832.6
Effect of exchange rate changes on cash and cash equivalents—
 (0.4) (2.2) —
 (2.6)
Net (decrease) increase in cash, equivalents and restricted cash(121.5) (58.7) 40.1
 —
 (140.1)
Cash, cash equivalents and restricted cash at beginning of period141.5
 93.0
 92.4
 —
 326.9
Cash, cash equivalents and restricted cash at end of period$20.0
 $34.3
 $132.5
 $—
 $186.8


F-71
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)


Condensed Consolidating Statement of Cash Flows
Twelve Months Ended December 31, 2015
 Products Corporation Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:         
Net cash provided by operating activities$91.9
 $7.9
 $58.3
 $—
 $158.1
CASH FLOWS FROM INVESTING ACTIVITIES:         
Capital expenditures(29.5) (5.5) (13.3) —
 (48.3)
Business acquisitions, net of cash and cash required(8.1) —
 (33.6) —
 (41.7)
Proceeds from the sale of certain assets3.5
 2.7
 —
 —
 6.2
   Net cash used in investing activities(34.1) (2.8) (46.9) —
 (83.8)
CASH FLOWS FROM FINANCING ACTIVITIES:         
Net increase in short-term borrowings and overdraft17.3
 —
 5.7
 —
 23.0
Repayments under the Old Acquisition Term Loan(19.3) —
 —
 —
 (19.3)
Prepayments under the 2011 Term Loan(12.1) —
 —
 —
 (12.1)
Tax withholdings related to net share settlements of restricted stock units and awards(2.8) —
 —
 —
 (2.8)
Other financing activities(3.6) —
 (0.1) —
 (3.7)
Net cash (used in) provided by financing activities(20.5) —
 5.6
 —
 (14.9)
Effect of exchange rate changes on cash and cash equivalents—
 (0.2) (7.6) —
 (7.8)
Net increase in cash, cash equivalents and restricted cash37.3
 4.9
 9.4
 —
 51.6
Cash, cash equivalents and restricted cash at beginning of period104.2
 88.1
 83.0
 —
 275.3
Cash, cash equivalents and restricted cash at end of period$141.5
 $93.0
 $92.4
 $—
 $326.9


23. SUBSEQUENT EVENTS

Change in Leadership
On January 30, 2018, the Company filed a Current Report on Form 8-K with the SEC disclosing,Affirmative and Negative Covenants: The Facilities will contain certain affirmative and negative covenants that, among other things, limit the resignationRestricted Group’s (as defined below) ability to: (i) incur additional debt; (ii) incur liens; (iii) sell, transfer or dispose of Fabian T. Garciaassets; (iv) make investments; (v) make dividends and distributions on, or repurchases of, equity; (vi) make prepayments of contractually subordinated or junior lien debt; (vii) enter into certain transactions with their affiliates; (viii) enter into sale-leaseback transactions; (ix) change their lines of business; (x) restrict dividends from their subsidiaries or restrict liens; (xi) change their fiscal year; and (xii) modify the terms of certain debt. The “Restricted Group” means (a) with respect to the Brandco Facility, Products Corporation and its restricted subsidiaries under the Brandco Facility and (b) with respect to the Specified Brands Facility, the Specified Brands Subsidiaries.

Prepayments: The Facilities will be subject to certain mandatory prepayments, including from the net proceeds from the issuance of certain additional debt and asset sale proceeds of certain non-ordinary course asset sales or other dispositions of property, subject to certain exceptions. The Facilities may be repaid at any time, subject to customary prepayment premiums.

The Facilities will also contain certain customary representations, warranties and events of default.

Revlon 2020 Restructuring Program (Unaudited)

Building upon its previously-announced 2018 Optimization Program, in March 2020 the Company announced that it is implementing a worldwide organizational restructuring (the “Revlon 2020 Restructuring Program”) designed to reduce the Company’s selling, general and administrative expenses, as well as cost of goods sold, improve the Company's PresidentCompany’s gross profit and Chief Executive Officer effective as of January 28, 2018. Mr. GarciaAdjusted EBITDA and maximize productivity, cash flow and liquidity. The Revlon 2020 Restructuring Program includes rightsizing the organization and operating with more efficient workflows and processes. The leaner organizational structure is also resigned asexpected to improve communication flow and cross-functional collaboration, leveraging the more efficient business processes.

As a directorresult of the Company. Mr. Garcia continued as an employeeRevlon 2020 Restructuring Program, the Company expects to eliminate approximately 1,000 positions worldwide, including approximately 650 current employees and approximately 350 open positions. In March 2020, the Company began informing certain employees that will be affected by the Revlon 2020 Restructuring Program. While certain aspects of the Revlon 2020 Restructuring Program may be subject to consultations with employees, works councils, unions and/or governmental authorities, the Company in an advisory role throughcurrently expects to substantially complete the employee-related actions by the end of February 2018 to assist2020 and the other consolidation and outsourcing actions during 2021 and 2022.

In connection with implementing the Revlon 2020 Restructuring Program, the Company expects to recognize during 2020 approximately $55 million to $65 million of total pre-tax restructuring and related charges (the “2020 Restructuring Charges”), consisting primarily of employee-related costs, such as severance, retention and other contractual termination benefits. In addition the Company expects, restructuring charges in the range of $65 million to $75 million to be charged and paid in the period of 2021 to 2022. The Company expects that substantially all of these restructuring charges will be paid in cash, with approximately $55 million to $65 million of the total charges expected to be paid in 2020, approximately $40 million to $45 million expected to be paid in 2021, with the transitionbalance expected to be paid in 2022.

As a result of his duties and responsibilities. The Form 8-K also disclosed thatthe Revlon 2020 Restructuring Program, the Company and Mr. Garcia entered into a separation agreement memorializingexpects to deliver in the termsrange of his transition and separation$200 million to $230 million of employment (the "Garcia Separation Agreement"). The Garcia Separation Agreement provides that Mr. Garcia will receive certain separation pay and benefits that he is otherwise entitledannualized cost reductions by the end of 2022, with approximately 60% of these annualized cost reductions to receive under his employment agreement dated March 27, 2016be realized from the headcount reductions occurring in respect2020. During 2020, the Company expects to realize approximately $105 million to $115 million of a termination without cause, which agreement was previously disclosed in a Current Report on Form 8-K filed with the SEC on March 28, 2016.in-year cost reductions.
With Mr. Garcia’s departure, the Board of Directors elected Paul M. Meister as the Company’s Executive Vice Chairman, effective January 28, 2018. In this position, Mr. Meister serves as the Company's principal executive officer until such time as Mr. Garcia’s full-time successor as President and Chief Executive Officer is appointed.


F-72
F-79
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(except where otherwise noted, all tabular amounts in millions)



The Company has evaluated subsequent events through the filing of this Form 10-K, and determined that there have been no events that have occurred that would require adjustments to our disclosures in the consolidated financial statements.


Item 16. Form 10-K Summary
None.


SCHEDULE II

REVLON, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 2017, 2016 and 2015
(dollars in millions)


F-80
 Balance at Beginning of Year Charged to Cost and Expenses Other Deductions Balance at End of Year
Allowance for Doubtful Accounts:       
2017$11.1
 $3.0
 $(0.6) $13.5
201610.5
 2.2
 (1.6) 11.1
20159.3
 2.8
 (1.6) 10.5
        
Allowance for Volume and Early Payment Discounts:       
2017$23.0
 $100.4
 $(92.7) $30.7
201622.6
 80.1
 (79.7) 23.0
201523.4
 51.6
 (52.4) 22.6
        
Allowance for Sales Returns:       
2017$47.2
 $68.3
 $(55.7) $59.8
201639.3
 64.5
 (56.6) 47.2
201545.4
 48.5
 (54.6) 39.3


F-74
REVLON CONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES


S I G N A T U R E S
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, theeach Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Dated: March 15, 201812, 2020


Revlon, Inc.
(Registrant)
Revlon Consumer Products CorporationBy: /s/ Debra PerelmanBy: /s/ Victoria DolanBy: /s/ Pamela Bucher
(Registrant)Debra PerelmanVictoria DolanPamela Bucher
President, Chief Executive Officer &Chief Financial OfficerVice President,
By: /s/ Paul MeisterDirectorBy: /s/ Christopher H. PetersonBy: /s/ Wendel F. Kralovich
Paul MeisterChristopher H. PetersonWendel F. Kralovich
Executive Vice Chairman & DirectorChief Operating Officer, OperationsSenior Vice President,
& Principal Financial OfficerChief Accounting Officer
& Controller



Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the RegistrantRevlon, Inc. on March 15, 201812, 2020 and in the capacities indicated.
SignatureTitle
*Chairman of the Board and Director
(Ronald O. Perelman)
*Director
(Nicole A. Avant)
*Vice Chairman of the Board and Director
(E. Scott Beattie)
*Director
(Alan S. Bernikow)
*Director
(Kristin Dolan)
*Director
(Mitra Hormozi)
*Director
(Ceci Kurzman)
SignatureTitle
*Director
*(Victor Nichols)Chairman of the Board
*President, Chief Executive Officer and Director
(Ronald O.Debra G. Perelman)
*Director
(Alan S. Bernikow)Paul Savas)
*Director
(Robert K. Kretzman)
*Director
(Barry F. Schwartz)
*Director
(Jonathan Schwartz)
*Director
(Cristiana Falcone Sorrell)
F-81

* Mitra Hormozi,Michael T. Sheehan, by signing herhis name hereto, does hereby sign this report on behalf of the directors of the registrant above whose typed names asterisks appear, pursuant to powers of attorney duly executed by such directors and filed with the Securities and Exchange Commission.
By: /s/ Michael T. Sheehan
Michael T. Sheehan
Attorney-in-fact



Revlon Consumer Products Corporation
(Registrant)
By: /s/ Mitra HormoziDebra PerelmanBy: /s/ Victoria DolanBy: /s/ Pamela Bucher
Mitra HormoziDebra PerelmanVictoria DolanPamela Bucher
Attorney-in-factPresident, Chief Executive Officer &Chief Financial OfficerVice President,
DirectorChief Accounting Officer
& Controller

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of Revlon Consumer Products Corporation on March 12, 2020 and in the capacities indicated.


SignatureTitle
*Chairman of the Board and Director
(Ronald O. Perelman)
*Director
(Alan S. Bernikow)
*Director
(Ceci Kurzman)
*President, Chief Executive Officer and Director
(Debra G. Perelman)
*Director
(Barry F. Schwartz)
*Director
(Jonathan Schwartz)

* Michael T. Sheehan, by signing his name hereto, does hereby sign this report on behalf of the directors of the registrant above whose typed names asterisks appear, pursuant to powers of attorney duly executed by such directors and filed with the Securities and Exchange Commission.
By: /s/ Michael T. Sheehan
Michael T. Sheehan
Attorney-in-fact

F-75
F-82