887921--2/25/2010--REVLON_INC

related topics

{debt, indebtedness, cash}

{stock, price, share}

{operation, natural, condition}

{customer, product, revenue}

{provision, law, control}

{product, market, service}

{operation, international, foreign}

{condition, economic, financial}

{cost, contract, operation}

{regulation, change, law}

Revlon, Inc. 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, Inc. s wholly-owned operating subsidiary, are pledged by Revlon, Inc. to secure its obligations under the 2006 Credit Agreements and the 9 3 / 4 % Senior Secured Notes. 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 of its indebtedness depends on many factors. Restrictions and covenants in Products Corporation s debt agreements limit its ability to take certain actions and impose consequences in the event of failure to comply. Limits on Products Corporation s borrowing capacity under the 2006 Revolving Credit Facility may affect the Company s ability to finance its operations. A substantial portion of Products Corporation s indebtedness is subject to floating interest rates. The Company depends on its Oxford, North Carolina facility for production of a substantial portion of its products. Disruptions to this facility, or at other third party facilities at which the Company s products are manufactured, could affect the Company s business, financial condition and/or results of operations. The Company s new product introductions may not be as successful as the Company anticipates, which could have a material adverse effect on the Company s business, financial condition and/or results of operations. 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 financial covenants under the 2006 Credit Agreements, which could have a material adverse effect on the Company s business, financial condition and/or results of operations. Economic conditions and the state of the financial markets could have a material adverse effect on the Company s business, financial condition and/or results of operations or on the financial condition of its customers and suppliers. 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, financial condition and/or results of operations. Declines in the financial markets may result in increased pension expense and increased cash contributions to the Company s pension plans. The Company may be unable to increase its sales through the Company s primary distribution channels, which could have a material adverse effect on the Company s business, financial condition and/or results of operations. Competition in the cosmetics and beauty care products business could materially adversely affect the Company s net sales and its share of the mass retail channel and could have an adverse effect on the Company s business, financial condition and/or results of operations. 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 fluctuations, which could adversely affect the results of the Company s business, financial condition and/or results of operations and the value of its foreign assets. Terrorist attacks, acts of war or military actions may adversely affect the markets in which the Company operates and the Company s business, financial condition and/or results of operations. The Company s products are subject to federal, state and international regulations that could adversely affect the Company s business, financial condition and/or results of operations. Shares of Revlon, Inc. Class A Common Stock and Products Corporation s capital stock are pledged to secure various of Revlon, Inc. 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 the 2006 Credit Agreements and the 9 3 / 4 % Senior Secured Notes and could have other consequences. MacAndrews Forbes has the power to direct and control the Company s business. Delaware law, provisions of the Company s governing documents and the fact that the Company is a controlled company could make a third-party acquisition of the Company difficult. Future sales or issuances of Common Stock or the Company s issuance of other equity securities may depress the Company s stock price or dilute existing stockholders. There can be no assurance that any trading market for Revlon, Inc. s Preferred Stock will develop or be maintained. Revlon, Inc. may be restricted by the terms of the applicable provisions of Delaware law from paying dividends on the Preferred Stock and/or redeeming the Series A Preferred Stock. Holders of Preferred Stock will only participate on a limited basis in any future earnings or growth of the Company s business or the proceeds from one of certain specified change of control transactions. The Preferred Stock ranks senior to Revlon, Inc. s Common Stock and is subordinate to the Company s indebtedness. However, pursuant to the Senior Subordinated Term Loan Agreement, the Preferred Stock is senior in right of payment to the payment of principal under such loan prior to its maturity dates.

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887921--2/25/2010--REVLON_INC_/DE/