|Edgar Online, Inc.|
Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity and certain other factors that may affect our future results. Our MD&A is presented as follows: • Overview; • Results of Operations; • Financial Condition, Liquidity and Capital Resources;
• Disclosures about Contractual Obligations and Commercial Commitments;
• Off-Balance Sheet Transactions (there are none); • Discussion of Critical Accounting Policies; • Recent Accounting Pronouncements; and • Inflation.
The Company (as defined below) is providing this overview in accordance with the
Overview of the Business
Revlon Consumer Products Corporation(" Products Corporation" and together with its subsidiaries, the "Company") is a wholly-owned operating subsidiary of Revlon, Inc., which is a direct and indirect majority-owned subsidiary of MacAndrews & Forbes Holdings Inc.(" MacAndrews & Forbes Holdings" and together with certain of its affiliates other than Revlon, Inc. and the Company, " MacAndrews& Forbes"), a corporation wholly-owned by Ronald O. Perelman. The Company's vision is glamour, excitement and innovation through high-quality products at affordable prices. The Company operates in a single segment and manufactures, markets and sells an extensive array of cosmetics, women's hair color, beauty tools, anti-perspirant deodorants, fragrances, skincare and other beauty care products. The Company is one of the world's leading cosmetics companies in the mass retail channel. The Company believes that its global brand name recognition, product quality and marketing experience have enabled it to create one of the strongest consumer brand franchises in the world. Effective beginning October 1, 2012, the Company is consolidating and reporting Latin Americaand Canada(previously reported separately) as the combined Latin Americaand Canadaregion. As a result, 2012 and all corresponding prior year amounts have been reclassified to conform to this presentation.
For additional information regarding our business, see "Part 1, Item 1 - Business" of this Annual Report on Form 10-K.
Overview of Net Sales and Earnings Results
Consolidated net sales in 2012 were
$1,426.1 million, an increase of $44.7 million, or 3.2%, compared to $1,381.4 millionin 2011. Excluding the unfavorable impact of foreign currency fluctuations of $21.2 million, consolidated net sales increased by $65.9 million, or 4.8% in 2012 compared to 2011, driven by higher net sales in the Company's U.S., Latin Americaand Canada, and Asia Pacificregions, partially offset by lower net sales in the Company's Europe, Middle Eastand Africaregion. Consolidated net income in 2012 was $71.2 million, compared to $64.0 millionin 2011. The increase in consolidated net income in 2012, compared to 2011, was primarily due to:
consolidated net sales, partially offset by a
cost of sales in 2012; • an
$11.2 millionloss on the early extinguishment of debt in 2011 as a
result of the 2011 Refinancings (as hereinafter defined) that did not recur in 2012; and 25
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lower weighted average borrowing rates as a result of the 2011 Term Loan
Facility Refinancing (as hereinafter defined);
with the foregoing partially offset by:
connection with the
expense primarily driven by higher insurance expense.