10-Q 3QtrFY2016

10-Q 1 10q_3qtrfy16.htm FORM 10-Q - 3QTRFY16 (MAR 31, 2016) 10-Q 3QtrFY2016 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)
[x]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2016

[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________


Commission file number 1-6370

ELIZABETH ARDEN, INC.

(Exact name of registrant as specified in its charter)

Florida		59-0914138
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

2400 S.W. 145 Avenue, Miramar, Florida		33027
(Address of principal executive offices)		(Zip Code)

(954) 364-6900
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	[ ]	Accelerated filer	[X]
Non-accelerated filer	[ ] (Do not check if a smaller reporting company)	Smaller reporting company	[ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:

Class		Outstanding at May 3, 2016

Common Stock, $.01 par value per share		29,949,317

ELIZABETH ARDEN, INC.

INDEX TO FORM 10-Q

PART I	FINANCIAL INFORMATION

Item 1.	Financial Statements	Page No.

	Unaudited Consolidated Balance Sheets -- March 31, 2016 and June 30, 2015	3

	Unaudited Consolidated Statements of Operations -- Three and nine months ended March 31, 2016 and March 31, 2015	4

	Unaudited Consolidated Statements of Comprehensive Loss -- Three and nine months ended March 31, 2016 and March 31, 2015	5

	Unaudited Consolidated Statement of Shareholders' Equity -- Nine months ended March 31, 2016	6

	Unaudited Consolidated Statements of Cash Flow -- Nine months ended March 31, 2016 and March 31, 2015	7

	Notes to Unaudited Consolidated Financial Statements	8

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	25

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	46

Item 4.	Controls and Procedures	47

PART II	OTHER INFORMATION

Item 1.	Legal Proceedings	47

Item 1A.	Risk Factors	47

Item 6.	Exhibits	48

Signatures		52

Exhibit Index		53

- 2 -

PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

ELIZABETH ARDEN, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(Unaudited)

(Amounts in thousands, except shares and par value)

			As of

			March 31, 2016			June 30, 2015

ASSETS
Current Assets
	Cash and cash equivalents		$	41,130		$	46,085
	Accounts receivable, net			123,824			105,414
	Inventories			227,477			240,740
	Deferred income taxes			2,312			2,206
	Prepaid expenses and other assets			25,762			29,455

		Total current assets		420,505			423,900

Property and equipment, net				87,980			105,821
Exclusive brand licenses, trademarks and intangibles, net				227,700			224,895
Goodwill				31,607			31,607
Debt financing costs, net				7,018			7,396
Deferred income taxes				3,216			2,739
Other				15,904			16,866

		Total assets	$	793,930		$	813,224




LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
	Short-term debt		$	67,500		$	8,300
	Accounts payable - trade			72,027			92,699
	Other payables and accrued expenses			111,405			114,978

		Total current liabilities		250,932			215,977


Long-term Liabilities
	Long-term debt			354,997			355,634
	Deferred income taxes and other liabilities			53,617			54,901

		Total long-term liabilities		408,614			410,535

		Total liabilities		659,546			626,512


Redeemable noncontrolling interest (See Note 5)				2,395			4,222

Commitments and contingencies (See Note 11)

Redeemable Series A Serial Preferred Stock, $0.01 par value, 50,000 shares authorized: 50,000 shares issued and outstanding				50,000			50,000

Shareholders' Equity
	Common stock, $0.01 par value, 50,000,000 shares authorized; 34,790,625 and 34,652,963 shares issued, respectively			348			347
	Additional paid-in capital			380,182			375,796
	Accumulated deficit			(184,582	)		(133,989	)
	Treasury stock (4,841,308 shares at cost)			(93,169	)		(93,169	)
	Accumulated other comprehensive loss			(21,081	)		(16,586	)

		Total Elizabeth Arden shareholders' equity		81,698			132,399
		Noncontrolling interest (See Note 5)		291			91

		Total shareholders' equity		81,989			132,490

		Total liabilities, redeemable noncontrolling interest, redeemable preferred stock and shareholders' equity	$	793,930		$	813,224

The accompanying notes are an integral part of the unaudited consolidated financial statements.

- 3 -

ELIZABETH ARDEN, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Amounts in thousands, except per share data)

	Three Months Ended						Nine Months Ended

	March 31, 2016			March 31, 2015			March 31, 2016			March 31, 2015

Net sales	$	191,932		$	191,653		$	774,082		$	795,638
Cost of goods sold:
Cost of sales		106,287			110,058			431,934			460,146
Depreciation related to cost of goods sold		1,420			1,957			4,489			5,916

Total cost of goods sold		107,707			112,015			436,423			466,062


Gross profit		84,225			79,638			337,659			329,576

Operating expenses:
Selling, general and administrative		95,194			97,463			336,626			391,533
Depreciation and amortization		8,896			9,547			27,581			31,055

Total operating expenses		104,090			107,010			364,207			422,588

Loss from operations		(19,865	)		(27,372	)		(26,548	)		(93,012	)


Other expense
Interest expense, net		7,345			7,055			22,365			22,523
Debt Extinguishment charges		--			--			--			239

Other expense, net		7,345			7,055			22,365			22,762


Loss before income taxes		(27,210	)		(34,427	)		(48,913	)		(115,774	)
Provision for income taxes		529			500			1,433			1,557

Net loss		(27,739	)		(34,927	)		(50,346	)		(117,331	)
Net income (loss) attributable to noncontrolling interests (See Note 5)		39			(481	)		(1,690	)		(1,396	)

Net loss attributable to Elizabeth Arden shareholders		(27,778	)		(34,446	)		(48,656	)		(115,935	)
Less: Accretion and dividends on preferred stock (See Note 12)		624			615			1,937			21,700

Net loss attributable to Elizabeth Arden common shareholders	$	(28,402	)	$	(35,061	)	$	(50,593	)	$	(137,635	)




Net loss per common share attributable to Elizabeth Arden common shareholders:
Basic	$	(0.95	)	$	(1.18	)	$	(1.69	)	$	(4.62	)



Diluted	$	(0.95	)	$	(1.18	)	$	(1.69	)	$	(4.62	)




Weighted average number of common shares:
Basic		29,949			29,812			29,881			29,801



Diluted		29,949			29,812			29,881			29,801

The accompanying notes are an integral part of the unaudited consolidated financial statements.

- 4 -

ELIZABETH ARDEN, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
(Amounts in thousands)

		Three Months Ended						Nine Months Ended

		March 31, 2016			March 31, 2015			March 31, 2016			March 31, 2015

Net loss		$	(27,739	)	$	(34,927	)	$	(50,346	)	$	(117,331	)

Other comprehensive loss, net of tax:
Foreign currency translation adjustments ⁽¹⁾			1,158			(5,343	)		(2,881	)		(14,860	)
Net unrealized cash flow hedging (loss) gain ⁽²⁾			(2,370	)		783			(1,614	)		4,088

Total other comprehensive loss, net of tax			(1,212	)		(4,560	)		(4,495	)		(10,772	)

Comprehensive loss			(28,951	)		(39,487	)		(54,841	)		(128,103	)
Net income (loss) attributable to noncontrolling interests			39			(481	)		(1,690	)		(1,396	)

Comprehensive loss attributable to Elizabeth Arden shareholders		$	(28,990	)	$	(39,006	)	$	(53,151	)	$	(126,707	)




(1)	Foreign currency translation adjustments are not adjusted for income taxes since they relate to indefinite investments in non-U.S. subsidiaries.

(2)	Net of tax benefit of $236 for the three months ended March 31, 2016, and net of tax expense of $75 for the three months ended March 31, 2015. Net of tax benefit of $56 for the nine months ended March 31, 2016 and net of tax expense $698 for the nine months ended March 31, 2015.

The accompanying notes are an integral part of the unaudited consolidated financial statements.

- 5 -

ELIZABETH ARDEN, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

(Unaudited)

(Amounts in thousands)

	Common Stock			Additional Paid-In Capital		Accumulated Deficit			Treasury Stock					Accumulated Other Comprehensive Loss			Total Elizabeth Arden Shareholders'			Noncontrolling		Total Shareholders
	Shares	Amount		Additional Paid-In Capital		Accumulated Deficit			Shares		Amount			Accumulated Other Comprehensive Loss			Equity			Interests		Equity

Balance as of July 1, 2015	34,653	$	347	$	375,796	$	(133,989	)	(4,841	)	$	(93,169	)	$	(16,586	)	$	132,399		$	91	$	132,490
Issuance of restricted stock, net of forfeitures and tax withholdings	138		1		250		--		--			--			--			251			--		251
Amortization of share-based awards	--		--		4,136		--		--			--			--			4,136			--		4,136
Net (loss) income ⁽¹⁾	--		--		--		(48,656	)	--			--			--			(48,656	)		137		(48,519	)
Noncontrolling interest contribution at startup	--		--		--		--		--			--			--			--			63		63
Preferred stock dividends	--		--		--		(1,937	)	--			--			--			(1,937	)		--		(1,937	)
Foreign currency translation adjustments	--		--		--		--		--			--			(2,881	)		(2,881	)		--		(2,881	)
Net unrealized cash flow hedging gain	--		--		--		--		--			--			(1,614	)		(1,614	)		--		(1,614	)

Balance as of March 31, 2016	34,791	$	348	$	380,182	$	(184,582	)	(4,841	)	$	(93,169	)	$	(21,081	)	$	81,698		$	291	$	81,989

(1)	Excludes the net loss for the redeemable noncontrolling interest which is recorded in the mezzanine section of the consolidated balance sheet. See Note 5.

The accompanying notes are an integral part of the unaudited consolidated financial statements.

- 6 -

ELIZABETH ARDEN, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOW

(Unaudited)

(Dollars in thousands)

				Nine Months Ended

				March 31, 2016			March 31, 2015

Operating Activities:
	Net loss			$	(50,346	)	$	(117,331	)
	Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
		Depreciation and amortization			32,070			36,971
		Asset impairments			--			42,926
		Amortization of senior note offering and credit facility costs			1,248			1,200
		Amortization of senior note premium			(637	)		(599	)
		Amortization of share-based awards			4,136			4,028
		Debt extinguishment charges			--			239
		Deferred income taxes			489			(51	)
	Changes in assets and liabilities, net of acquisitions:
		(Increase) decrease in accounts receivable			(19,774	)		20,629
		Decrease in inventories			12,072			64,911
		(Increase) decrease in prepaid expenses and other assets			(106	)		16,344
		Decrease in accounts payable			(19,780	)		(23,707	)
		Decrease in other payables, accrued expenses and other liabilities			(1,555	)		(6,198	)
		Other			162			1,228

			Net cash (used in) provided by operating activities		(42,021	)		40,590


Investing Activities:
	Additions to property and equipment				(8,743	)		(19,120	)
	Acquisition of businesses, intangibles and other assets				(10,500	)		(6,264	)
	Cash received from consolidation of variable interest entity				63			55

			Net cash used in investing activities		(19,180	)		(25,329	)


Financing Activities:
	Proceeds from (payments on) short-term debt				59,200			(16,418	)
	Proceeds from the issuance of preferred stock and warrants, net of issuance costs				--			43,993
	Financing fees paid				(867	)		(1,959	)
	Preferred stock dividend				(973	)		(487	)
	Payments under capital lease obligations				(88	)		(88	)

			Net cash provided by financing activities		57,272			25,041

Effect of exchange rate changes on cash and cash equivalents					(1,026	)		(4,793	)
Net (decrease) increase in cash and cash equivalents					(4,955	)		35,509
Cash and cash equivalents at beginning of period					46,085			56,308

Cash and cash equivalents at end of period				$	41,130		$	91,817




Supplemental Disclosure of Non-Cash Information:
	Additions to property and equipment not paid for (not included above)			$	685		$	1,652



	Accretion on preferred stock (not included above)			$	--		$	20,151



	Dividends on preferred stock not paid for (not included above)			$	964		$	1,062

The accompanying notes are an integral part of the unaudited consolidated financial statements.

- 7 -

ELIZABETH ARDEN, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. BUSINESS AND BASIS OF PRESENTATION

Elizabeth Arden, Inc. (the "Company" or "our") is a global prestige beauty products company that sells fragrances, skin care and cosmetic products to retailers in the United States and approximately 120 countries internationally.

Basis of Consolidation. The unaudited consolidated financial statements include the accounts of the Company's wholly-owned domestic and international subsidiaries as well as variable interest entities ("VIEs") of which the Company is the primary beneficiary in accordance with consolidation accounting guidance. See Note 5 for information on the consolidated VIEs. All significant intercompany accounts and transactions have been eliminated in consolidation. The accompanying unaudited consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the "Commission") for interim financial information. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statement presentation and should be read in conjunction with the audited consolidated financial statements and related footnotes included in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2015 (the "2015 Annual Report"), filed with the Commission.

The consolidated balance sheet of the Company as of June 30, 2015, is derived from the financial statements included in the 2015 Annual Report but does not include all disclosures required by accounting principles generally accepted in the United States. The other consolidated financial statements presented in this quarterly report are unaudited but include all adjustments that are of a normal recurring nature that management considers necessary for the fair statement of the results for the interim periods. Results for interim periods are not necessarily indicative of results for the full fiscal year.

Liquidity. During fiscal 2014, the Company began a comprehensive review of its entire business model and cost structure to identify initiatives to reduce the size and complexity of its overhead structure and to exit low-return businesses, customers and brands, in order to improve gross margins and profitability in the long term. There are risks and uncertainties associated with the execution of the Company's business plan, including the general economic and retail environment. The Company's ability to fund operations and capital expenditures in the future is dependent upon the ability to generate cash from operations, maintain or improve margins and to borrow funds available under its credit facilities. As further described in Note 9 (Short Term Debt), the Company maintains a revolving bank credit facility (the "Credit Facility") and a second lien credit agreement (the "Second Lien Credit Agreement") with its lenders.

The Credit Facility has only one financial covenant, a debt service coverage ratio that applies only if the Company does not have the requisite average borrowing base capacity and borrowing availability. The debt service coverage ratio did not apply during the three months ended March 31, 2016. The Company's debt service coverage ratio was less than 1.1 to 1 as of March 31, 2016.

Based upon its business strategies and initiatives for fiscal 2016, the Company does not anticipate that its borrowing base capacity and/or borrowing availability will fall below the applicable thresholds in its Credit Facility. If the Company requires additional liquidity to fund operations, the Company believes it has the ability to postpone or reduce certain expenditures, such as capital expenditures, in a manner that the Company believes is sufficient to create the liquidity necessary to fund operations.

Deterioration in the economic and retail environment or continued challenges in the Company's operating performance, however, could cause the Company to default under its Credit Facility if it does not have the requisite average borrowing base capacity or borrowing availability and also fails to meet the financial maintenance covenant set forth in the Credit Facility. In such an event, the Company would not be allowed to borrow under these facilities and may not have access to the capital necessary to meet its operating and investing needs. In addition, a default under its Credit Facility or Second Lien Credit Agreement that causes acceleration of the debt under either facility could trigger a default under the Company's outstanding 7 3/8% Senior Notes due March 2021 (the "7 3/8% Senior Notes"). In the event the Company is not able to borrow under either borrowing facility, it would be required to develop an alternative source of liquidity. There is no assurance that the Company could obtain replacement financing or what the terms of such financing, if available, would be.

NOTE 2. ACCUMULATED OTHER COMPREHENSIVE LOSS

The Company's accumulated other comprehensive loss shown on the accompanying consolidated balance sheets consists of foreign currency translation adjustments, which are not adjusted for income taxes since they relate to indefinite investments in non-U.S. subsidiaries, and the unrealized losses, net of taxes, related to the Company's foreign currency contracts.

- 8 -

ELIZABETH ARDEN, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The components of accumulated other comprehensive loss were as follows:

(Amounts in thousands)	March 31, 2016			June 30, 2015


Cumulative foreign currency translation adjustments	$	(19,421	)	$	(16,540	)
Unrealized hedging losses, net of taxes ⁽¹⁾		(1,660	)		(46	)

Accumulated other comprehensive loss	$	(21,081	)	$	(16,586	)




(1) Net of tax expense of $56 as of June 30, 2015. There are no tax impacts for amounts shown as of March 31, 2016, as a the result of valuation allowances recorded against the Company's deferred tax assets for its U.S. and foreign operations.

NOTE 3. NET LOSS PER SHARE ATTRIBUTABLE TO ELIZABETH ARDEN COMMON SHAREHOLDERS

Basic net loss per share attributable to Elizabeth Arden common shareholders is computed by dividing the net loss attributable to Elizabeth Arden common shareholders by the weighted average number of shares of the Company's outstanding common stock, $.01 par value per share ("Common Stock"). The calculation of net loss attributable to Elizabeth Arden common shareholders per diluted share is similar to basic net loss per share attributable to Elizabeth Arden common shareholders except that the denominator includes potentially dilutive Common Stock, such as stock options, non-vested restricted stock units, and warrants to purchase common stock. For the three and nine months ended March 31, 2016 and 2015, diluted net loss per share equals basic net loss per share as the assumed exercise or vesting of stock options, non-vested restricted stock units, and warrants would have an anti-dilutive effect.

The following table represents the computation of net loss per share attributable to Elizabeth Arden common shareholders:

(Amounts in thousands, except per share data)		Three Months Ended						Nine Months Ended

		March 31, 2016			March 31, 2015			March 31, 2016				March 31, 2015

Basic
	Net loss attributable to Elizabeth Arden common shareholders	$	(28,402	)	$	(35,061	)	$	(50,593	)	$		(137,635	)



	Weighted average shares outstanding		29,949			29,812			29,881				29,801



	Net loss per basic share attributable to Elizabeth Arden common shareholders	$	(0.95	)	$	(1.18	)	$	(1.69	)	$		(4.62	)



Diluted
	Net loss attributable to Elizabeth Arden common shareholders	$	(28,402	)	$	(35,061	)	$	(50,593	)	$		(137,635	)




	Weighted average shares outstanding		29,949			29,812			29,881				29,801

	Potential common shares - treasury method		--			--			--				--

	Weighted average shares and potential dilutive common shares		29,949			29,812			29,881				29,801



	Net loss per diluted share attributable to Elizabeth Arden common shareholders	$	(0.95	)	$	(1.18	)	$	(1.69	)	$		(4.62	)

The following table shows the number of common stock equivalents for the three and nine months ended March 31, 2016 and 2015 that were not included in the net loss per diluted share attributable to Elizabeth Arden common shareholders calculation because to do so would have been anti-dilutive:

(Amounts in thousands)

Three Months Ended

Nine Months Ended

March 31,
2016

March 31,
2015

March 31,
2016

March 31,
2015

Number of shares

4,370

3,564

3,489

3,275

- 9 -

ELIZABETH ARDEN, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4. 2016 BUSINESS TRANSFORMATION PROGRAM

During the fourth quarter of fiscal 2015, the Company identified certain restructuring and cost savings initiatives that it expected to implement during fiscal 2016 (the "2016 Business Transformation Program"). The 2016 Business Transformation Program is intended to further align the Company's organizational structure and distribution arrangements with the current needs and demands of its business in order to improve the Company's go-to-market capability and execution and to streamline its organization.

The Company expects to incur approximately $23 million to $28 million in pre-tax charges, primarily during fiscal 2016, under the 2016 Business Transformation Program, of which an estimated $17 million to $22 million is expected to be comprised of cash expenditures. During the three and nine months ended March 31, 2016, the Company has incurred approximately $2.4 million and $17.7 million, respectively, of pre-tax charges under the 2016 Business Transformation Program. Since inception, the Company has incurred approximately $20.1 million of pre-tax charges under the 2016 Business Transformation Program. The pre-tax charges for the three and nine months ended March 31, 2016 and since inception consisted of the following:

Three Months Ended March 31, 2016:
(Amounts in thousands)	Cost of Goods Sold		Selling, General and Administrative		Depreciation		Total

Inventory Costs ⁽¹⁾	$	514	$	--	$	--	$	514
Severance and other employee-related costs ⁽²⁾		--		236		--		236
Other ⁽³⁾		--		1,578		--		1,578
Depreciation ⁽⁴⁾		--		--		114		114

Total	$	514	$	1,814	$	114	$	2,442

Nine Months Ended March 31, 2016:
(Amounts in thousands)	Cost of Goods Sold		Selling, General and Administrative		Depreciation		Total

Inventory Costs ⁽¹⁾	$	4,394	$	--	$	--	$	4,394
Severance and other employee-related costs ⁽²⁾		--		5,489		--		5,489
Other ⁽³⁾		--		7,435		--		7,435
Depreciation ⁽⁴⁾		--		--		342		342

Total	$	4,394	$	12,924	$	342	$	17,660

Since Inception:
(Amounts in thousands)		Cost of Goods Sold		Selling, General and Administrative		Depreciation		Total

Inventory Costs ⁽¹⁾		$	4,394	$	--	$	--	$	4,394
Severance and other employee-related costs ⁽²⁾			--		7,063		--		7,063
Other ⁽³⁾			--		8,266		--		8,266
Depreciation ⁽⁴⁾			--		--		342		342

Total		$	4,394	$	15,329	$	342	$	20,065




(1)	Amounts for the three months ended March 31, 2016, consists of inventory costs related to changes in certain distribution and customer arrangements. The amounts for the nine months ended March 31, 2016, and since inception, also include inventory costs related to the closing of the Company's Brazilian affiliate.
(2)	Severance and other employee-related costs associated with reduction in global headcount positions.
(3)	Consists primarily of transition expenses, including salaries for terminated employees during their remaining service period, and exit costs and rent expense related to leased space being vacated.
(4)	Consists of accelerated depreciation expense for leasehold improvements related to vacated leased space.

- 10 -

ELIZABETH ARDEN, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

As of March 31, 2016, the related liability balance and activity for costs associated with the 2016 Business Transformation Program are as follows:

(Amounts in thousands)		Severance and Other Employee- Related Costs			Other			Total

Liability balance at June 30, 2015		$	1,415		$	832		$	2,247
Accruals⁽¹⁾			2,084			3,059			5,143
Cash payments			(2,680	)		(3,059	)		(5,739	)

Liability balance at September 30, 2015			819			832			1,651
Accruals⁽¹⁾			3,169			2,798			5,967
Cash payments			(1,763	)		(3,287	)		(5,050	)

Liability balance at December 31, 2015			2,225			343			2,568
Accruals⁽¹⁾			236			1,578			1,814
Cash payments			(1,923	)		(1,578	)		(3,501	)

Liability balance at March 31, 2016 ⁽²⁾		$	538		$	343		$	881




(1)	Included in selling, general and administrative expenses in the Company's consolidated statements of operations.
(2)	The Company expects to pay the balance of these liabilities during fiscal 2016.

As discussed in Note 16, none of the expenses discussed above have been attributed to any of the Company's reportable segments and are included in unallocated corporate expenses or depreciation expense.

NOTE 5. INVESTMENTS AND NONCONTROLLING INTERESTS

Since September 2012, the Company has invested $13.7 million for a minority investment in Elizabeth Arden Salon Holdings, LLC, an unrelated party whose subsidiaries operate the Elizabeth Arden Red Door Spas and the Mario Tricoci Hair Salons ("Salon Holdings"). The investment in Elizabeth Arden Salon Holdings, LLC, which is in the form of a collateralized convertible note bearing interest at 2%, has been accounted for using the cost method and at March 31, 2016, is included in other assets on the consolidated balance sheet.

Since July 2013, the Company, through a subsidiary (the "EA USC Subsidiary"), has invested $9.0 million in US Cosmeceutechs, LLC ("USC"), a skin care company that develops and sells skin care products for the professional dermatology and spa channels and separately purchased a 30% equity interest in USC from the sole equity member for $3.6 million. The investment, which is in the form of a collateralized convertible note (the "Convertible Note"), bears interest at 1.5%. Upon conversion of the Convertible Note, the Company will own 85.45% of the fully diluted equity interests in USC (inclusive of EA USC's current equity interest). The Company has a put/call agreement with the other USC equity member with respect to the remaining 14.55% interest in USC. As of March 31, 2016, the Convertible Note had not been converted.

Based on the investment in USC and the EA USC Subsidiary's controlling rights under the operating agreement, the Company has determined that USC is a VIE, of which the Company is the primary beneficiary, requiring consolidation of USC's financial statements in accordance with Topic 810, Consolidation.

The following provides an analysis of the change in the redeemable noncontrolling interest liability for the nine months ended March 31, 2016:

(Amounts in thousands)		Amount

Balance at June 30, 2015	$	4,222
Net loss attributable to redeemable noncontrolling interests		(1,827	)

Balance at March 31, 2016	$	2,395

Effective January 4, 2015, the Company, through a subsidiary, entered into a joint venture in the United Arab Emirates (the "UAE Joint Venture") with an unrelated third party for the sale, promotion and distribution of the Company's products primarily in the Middle East. Under the terms of the joint venture agreement, the Company's subsidiary has the option to purchase a 15% ownership interest from the third party after 15 years at a specified price based on the performance of the UAE Joint Venture and also has the option to purchase the entire ownership interest of the third party upon the termination or expiration of the joint venture agreement at a specified price based

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ELIZABETH ARDEN, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

on the performance of the UAE Joint Venture. Based on the capitalization of the UAE Joint Venture, the Company's subsidiary has a 60% ownership interest and the third party has a 40% ownership interest, and the Company's subsidiary has control of the board of managers and the power to direct activities that could have a substantial impact on the economic performance of the UAE Joint Venture, including those that could result in the obligation to absorb losses or the right to receive benefits that could potentially be significant to the joint venture. Based on such equity interests and controlling rights in the Middle East joint venture, the Company has determined that the UAE Joint Venture is a VIE, requiring consolidation of such joint venture's financial statements in accordance with Topic 810, Consolidation. The unrelated third party's interest in the UAE Joint Venture is classified as a "noncontrolling interest" in the shareholders' equity section of the Company's consolidated balance sheet.

Effective September 1, 2015, the Company, through a subsidiary, entered into a joint venture with an unrelated third party for the sale, promotion and distribution of the Company's products in Southeast Asia and, effective January 1, 2016, in Hong Kong ("the Southeast Asia Joint Venture"). Based on the capitalization of the Southeast Asia Joint Venture, the Company's subsidiary has a 60% ownership interest and the third party has a 40% ownership interest. Under the terms of the Southeast Asia Joint Venture agreement, the Company's subsidiary has the option to purchase the entire ownership interest of the third party upon the termination or expiration of the Southeast Asia Joint Venture agreement at a specified price based on the performance of the Southeast Asia Joint Venture.

Based on the terms of the Southeast Asia Joint Venture agreements, the Company's subsidiary has control of the board of managers and the power to direct activities that could have a substantial impact on the economic performance of the Southeast Asia Joint Venture, including those that could result in the obligation to absorb losses or the right to receive benefits that could potentially be significant to the joint venture. Based on such equity interests and controlling rights in the Southeast Asia joint venture, the Company has determined that the Southeast Asia Joint Venture is a VIE, requiring consolidation of such joint venture's financial statements in accordance with Topic 810, Consolidation. The unrelated third party's interest in the joint venture is classified as a "noncontrolling interest" in the shareholders' equity section of the Company's consolidated balance sheet.

NOTE 6. INVENTORIES

The components of inventory were as follows:

(Amounts in thousands)	March 31, 2016		June 30, 2015

Raw materials	$	23,625	$	19,943
Work in progress		12,964		13,915
Finished goods		190,888		206,882

Total	$	227,477	$	240,740

NOTE 7. EXCLUSIVE BRAND LICENSES, TRADEMARKS AND INTANGIBLES, NET AND GOODWILL

The following summarizes the cost basis amortization and weighted average estimated life associated with the Company's intangible assets:

(Amounts in thousands)	March 31, 2016			June 30, 2015			June 30, 2015 Weighted Average Estimated Life

Elizabeth Arden brand trademarks	$	122,415		$	122,415		Indefinite
Exclusive brand licenses and related trademarks		107,787			107,748		16
Exclusive brand trademarks and patents		117,944			106,458		16
Other intangibles ⁽¹⁾		18,588			18,588		18

Exclusive brand licenses, trademarks and intangibles, gross		366,734			355,209

Accumulated amortization:
Exclusive brand licenses and related trademarks		(71,626	)		(66,658	)
Exclusive brand trademarks and patents		(58,864	)		(55,894	)
Other intangibles		(8,544	)		(7,762	)

Exclusive brand licenses, trademarks and intangibles, net	$	227,700		$	224,895




(1) Primarily consists of customer relationships, customer lists and non-compete agreements.

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ELIZABETH ARDEN, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

During the third quarter of fiscal 2016, the Company acquired the U.S. and international trademarks for the Giorgio of Beverly Hills fragrance brands from the Procter & Gamble Company and certain of its affiliates for $10.5 million. Prior to the acquisition of the trademarks, the Company had been selling the Giorgio Beverly Hills fragrances under a license agreement with the Procter & Gamble Company and certain of its affiliates.

At March 31, 2016, the Company had goodwill of $31.6 million recorded on its consolidated balance sheet. The entire amount of the goodwill in all periods presented relates to the North America segment. The Company did not record any impairments during the three and nine months ended March 31, 2016, as there were no events that triggered an impairment analysis. During the second quarter of fiscal 2015, the Company recorded a total impairment charge of approximately $39.6 million to write off the carrying values of both the Justin Bieber and Nicki Minaj licenses.

Amortization expense was $3.0 million for both the three months ended March 31, 2016 and 2015, and $8.7 million and $12.1 million for the nine months ended March 31, 2016 and 2015, respectively. At March 31, 2016, the Company estimated annual amortization expense for the remainder of fiscal 2016 and for each of the next four fiscal years as shown in the following table. Future acquisitions, renewals or impairment events could cause these amounts to change.

(Amounts in millions)	2016		2017		2018		2019		2020

Amortization expense	$	3.0	$	10.8	$	10.7	$	10.6	$	10.5

NOTE 8. OTHER PAYABLES AND ACCRUED EXPENSES

A summary of the Company's other payables and accrued expenses is as follows:

(Amounts in thousands)	March 31, 2016		June 30, 2015

Accrued advertising, promotion and royalties	$	31,994	$	30,279
Accrued employee-related benefits		23,851		28,116
Accrued value added taxes		4,459		4,083
Accrued interest		1,427		7,855
Freight		3,186		2,815
Other accruals		46,488		41,830

Total other payables and accrued expenses	$	111,405	$	114,978

NOTE 9. SHORT-TERM DEBT

At March 31, 2016, the Company had a $300 million revolving Credit Facility with a syndicate of banks, for which JPMorgan Chase Bank is the administrative agent, which generally provides for borrowings on a revolving basis, with a sub-limit of $25 million for letters of credit. Under the terms of the Credit Facility, the Company may, at any time, increase the size of the Credit Facility up to $375 million without entering into a formal amendment requiring the consent of all of the banks, subject to the Company's satisfaction of certain conditions. The Credit Facility matures in December 2019.

The Credit Facility is guaranteed by all of the Company's U.S. subsidiaries and is collateralized by a first priority lien on all of the Company's U.S. accounts receivable and inventory. Borrowings under the Credit Facility are limited to 85% of eligible accounts receivable and 85% of the appraised net liquidation value of the Company's inventory, as determined pursuant to the terms of the Credit Facility; provided, however, that from August 15 to October 31 of each year the Company's borrowing base may be temporarily increased by up to $25 million.

The Credit Facility has only one financial maintenance covenant, which is a debt service coverage ratio that must be maintained at not less than 1.1 to 1 if (a) average borrowing base capacity (calculated on a rolling three-day basis) is equal to or less than ten percent (10%) of total borrowing availability under the Credit Facility, or (b) the Company's borrowing availability under the Credit Facility, plus domestic cash and cash equivalents, is less than $20 million at any time. The Company's average borrowing base capacity and borrowing availability for the quarter ended March 31, 2016, did not fall below the applicable thresholds noted above. Accordingly, the debt service coverage ratio did not apply for the quarter ended March 31, 2016. The Company's debt service coverage ratio was less than 1.1 to 1 as of March 31, 2016.

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ELIZABETH ARDEN, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Under the terms of the Credit Facility, the Company may pay dividends or repurchase common stock if (a) it maintains a debt service coverage ratio of not less than 1.1 to 1.0 and maintains borrowing base capacity plus domestic cash and cash equivalents, in each case after giving effect to the applicable payment, of (i) at least $30 million from February 1 to August 31, and (ii) at least $35 million from September 1 to January 31, or (b) it maintains borrowing base capacity plus domestic cash and cash equivalents of (i) at least $40 million from February 1 to August 31, and (ii) at least $45 million from September 1 to January 31.

Borrowings under the credit portion of the Credit Facility bear interest at a floating rate based on an "Applicable Margin" that is determined by reference to a debt service pricing ratio. At the Company's option, the Applicable Margin may be applied to either the London InterBank Offered Rate (LIBOR) or the base rate. The Applicable Margin charged on LIBOR loans ranges from 1.50% to 2.50% and ranges from 0% to 1.0% for base rate loans. The Applicable Margin on the first $25 million of borrowings from August 15 to October 31 of each year, while the temporary increase in the Company's borrowing base is in effect, is 1.0% higher. The unused commitment fee under the Credit Facility rate is 0.375% per annum and is based on quarterly average utilization.

At March 31, 2016, the Applicable Margin was 2.50% for LIBOR loans and 1.00% for base rate loans. For the nine months ended March 31, 2016 and 2015, the weighted average annual interest rate on borrowings under the Credit Facility was 2.9% and 2.7%, respectively.

During the nine months ended March 31, 2016, the Company entered into two amendments to the Second Lien Credit Agreement (the "Amendments"), to, among other things, extend the maturity date of the Second Lien Credit Agreement from January 2016 to October 16, 2017. On October 2, 2015, the Company borrowed $25 million in a single advance and used the proceeds to reduce outstanding borrowings under the Credit Facility.

The Second Lien Credit Agreement is collateralized by a second priority lien on all of the Company's U.S. accounts receivable and inventories. In October 2015, the Company also entered into security agreements (the "Security Agreements") in favor of JP Morgan Chase Bank, N.A. and the lenders under the Company's Credit Facility, granting a lien against the Company's U.S. trademarks relating to its Curve fragrance brand and certain related assets to secure the Company's obligations under both the Second Lien Credit Agreement and the Credit Facility (collectively, the "Curve Security Interest"). With respect to the Credit Facility, the Curve Security Interest will be released upon payment in full of the Company's obligations under the Second Lien Credit Agreement, provided that the Company's minimum debt service coverage ratio (as calculated pursuant to the Credit Facility) as of the end of the most recently ended fiscal quarter for the preceding twelve months is greater than 1.0 to 1.0 and no default or event of default exists immediately prior to or after giving effect to the release of such Curve Security Interest.

As amended, the Second Lien Credit Agreement provides that borrowings will bear interest at a floating rate based on an "Applicable Margin" that is determined by reference to a debt service pricing ratio. At the Company's option, the Applicable Margin may be applied to either the London InterBank Offered Rate (LIBOR) or the base rate. As amended, the Applicable Margin charged on LIBOR loans ranges from 3.00% to 5.00% and for base rate loans ranges from 1.5% to 3.5%. To the extent the Company borrows amounts under the Second Lien Credit Agreement, the Company has the option to prepay all or a portion of such borrowings, provided the borrowing base capacity under the Credit Facility is in excess of $35 million after giving effect to the applicable prepayment each day for the 30 day period ending on the date of the prepayment.

During fiscal 2016, the Company has incurred approximately $0.9 million of bank related costs related to the Amendments, and such amounts have been capitalized and are reflected in debt financing costs, net, on the consolidated balance sheet.

At March 31, 2016, the Company had $42.5 million in borrowings and $3.4 million in letters of credit outstanding under the Credit Facility, compared with $8.3 million in borrowings and $3.1 million in letters of credit outstanding under the Credit Facility at June 30, 2015. At March 31, 2016, the Company had $25 million in borrowings under the Second Lien Credit Agreement, compared with no outstanding borrowings at June 30, 2015. At March 31, 2016, based on eligible accounts receivable and inventory available as collateral, the aggregate borrowing availability under the Credit Facility and Second Lien Credit Agreement was $60.7 million. In periods when there are outstanding borrowings, the Company classifies the Credit Facility and Second Lien Credit Agreement as short term debt on its balance sheet because it expects to reduce outstanding borrowings over the next twelve months.

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ELIZABETH ARDEN, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10. LONG-TERM DEBT

The Company's long-term debt consisted of the following:

(Amounts in thousands)	March 31, 2016		June 30, 2015

7 3/8% Senior Notes due March 2021	$	350,000	$	350,000
Unamortized premium on long-term debt		4,997		5,634

Total long-term debt	$	354,997	$	355,634

As of March 31, 2016, the Company had $350 million aggregate principal amount of 7 3/8% Senior Notes outstanding. Interest on the 7 3/8% Senior Notes accrues at a rate of 7.375% per annum and is payable semi-annually on March 15 and September 15 of every year. The 7 3/8% Senior Notes rank pari passu in right of payment to indebtedness under the Credit Facility and any other senior debt, and will rank senior to any future subordinated indebtedness provided, however, that the 7 3/8% Senior Notes are effectively subordinated to the Credit Facility and the Second Lien Credit Agreement to the extent of the collateral securing the Credit Facility and the Second Lien Credit Agreement. The indenture applicable to the 7 3/8% Senior Notes (the "Indenture") generally permits the Company (subject to the satisfaction of a fixed charge coverage ratio and, in certain cases, also a net income test) to incur additional indebtedness, pay dividends, purchase or redeem its Common Stock or redeem subordinated indebtedness. The Indenture generally limits the Company's ability to create liens, merge or transfer or sell assets. The Indenture also provides that the holders of the 7 3/8% Senior Notes have the option to require the Company to repurchase their notes in the event of a change of control involving the Company (as defined in the Indenture). The 7 3/8% Senior Notes are not currently guaranteed by any of the Company's subsidiaries but could become guaranteed in the future by any domestic subsidiary of the Company that guarantees or incurs certain indebtedness in excess of $10 million. In addition, as part of the offering of the 7 3/8% Senior Notes, the Company incurred and capitalized approximately $6.0 million of related debt financing costs on the consolidated balance sheet, which will be amortized over the life of the 7 3/8% Senior Notes.

NOTE 11. COMMITMENTS AND CONTINGENCIES

The Company and its domestic subsidiaries file income tax returns with federal, state and local tax authorities within the United States. The Company also files tax returns for its international affiliates in various foreign jurisdictions. The statute of limitations for the Company's U.S. federal tax returns remains open for the year ended June 30, 2010 and subsequent fiscal years. The Internal Revenue Service ("IRS") began an examination of the Company's U.S. federal tax returns for the years ended June 30, 2010 ("Fiscal 2010"), June 30, 2011 ("Fiscal 2011"), and June 30, 2012 ("Fiscal 2012") during fiscal year 2014 and, in March 2016, issued an IRS letter 950-Z, known as a 30-day Letter, for Fiscal 2010, Fiscal 2011 and Fiscal 2012 relating to transfer pricing matters. In the 30-day Letter, the IRS proposes increases to the Company's U.S. taxable income for Fiscal 2010, Fiscal 2011 and Fiscal 2012 in an amount totaling approximately $99 million. Although the Company has recorded valuation allowances of approximately $141 million against its U.S. deferred tax assets through June 30, 2015, the resolution of the 30-day Letter, could be material to the Company's deferred tax assets and potentially to its consolidated statements of operations in the period in which resolved unless resolved favorably to the Company. The Company disagrees with the proposed adjustments and intends to vigorously contest them and pursue its available remedies. While any IRS examination contains an element of uncertainty, based on current facts and circumstances, the Company believes the ultimate outcome of any protest, appeals or judicial process will not have a material adverse effect on the Company's financial condition, business or prospects. In addition, if the examination is not resolved favorably, the Company has approximately $276 million of U.S. federal operating loss carryforwards through June 30, 2015, which would be available to offset any cash flow impact. It is reasonably possible that over the next twelve-month period the Company may experience an increase or decrease in its unrecognized tax benefits, but it is not possible to determine either the magnitude or range of any increase or decrease at this time.

The year ended June 30, 2010, and subsequent fiscal years remain subject to examination for various state tax jurisdictions. In addition, the Company has subsidiaries in various foreign jurisdictions that have statutes of limitations generally ranging from one to five years. The year ended June 30, 2010, and subsequent fiscal years remain subject to examination for various foreign jurisdictions.

NOTE 12. REDEEMABLE PREFERRED STOCK AND WARRANTS

On August 19, 2014, the Company entered into a securities purchase agreement (the "Securities Purchase Agreement") with Nightingale Onshore Holdings L.P. and Nightingale Offshore Holdings L.P. (each a "Purchaser" and together, the "Purchasers"),

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ELIZABETH ARDEN, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

investment funds affiliated with Rhône Capital L.L.C. Pursuant to the Securities Purchase Agreement, for aggregate cash consideration of $50 million, the Company issued to the Purchasers an aggregate of 50,000 shares of the Company's newly designated Series A Serial Preferred Stock, par value $0.01 per share (the "Preferred Stock"), with detachable warrants to purchase up to 2,452,267 shares of the Company's Common Stock (the "Warrants"). Concurrently with the execution of the Securities Purchase Agreement, the Company also entered into a Shareholders Agreement with the Purchasers (the "Shareholders Agreement"). The issuance and sale of the Preferred Stock and Warrants were exempt from the registration requirements of the Securities Act, pursuant to Section 4(2) of the Securities Act and/or Regulation D promulgated under the Securities Act.

Series A Serial Preferred Stock

Dividends on the Preferred Stock are due on January 1, April 1, July 1 and October 1 of each year, commencing on October 1, 2014. The Preferred Stock will also participate in dividends declared or paid, whether in cash, securities or other property, on the shares of Common Stock for which the outstanding Warrants are exercisable. Dividends are payable at the per annum dividend rate of 5% of the liquidation preference, which is initially $1,000 per share (the "Liquidation Preference"). If and to the extent that the Company does not pay the entire dividend to which holders of the Preferred Stock are entitled for a particular period in cash on the applicable dividend payment date, preferential cash dividends will accrue on such unpaid amounts (and on any unpaid dividends in respect thereof) at 5% per annum, and will compound on each dividend payment date, until paid. No cash dividend may be declared or paid on Common Stock or other classes of stock over which the Preferred Stock has preference unless full cumulative dividends have been or contemporaneously are declared and paid in cash on the Preferred Stock. The Preferred Stock has an aggregate liquidation preference of $50 million, and ranks junior to all of the Company's liabilities and obligations to creditors with respect to assets available to satisfy claims against the Company and senior to all other classes of stock over which the Preferred Stock has preference, including the Common Stock. The Preferred Stock will not be convertible into Common Stock at any time.

Pursuant to the Shareholders Agreement, each quarter the Company will declare and pay in cash no less than fifty percent (50%) of each dividend to which holders of Preferred Stock are entitled under the articles of amendment designating the rights of the Preferred Stock (the "Articles of Amendment"), unless payment of such dividend in cash (i) is prohibited by or would result in a default or event of default under the Company's indenture, credit facilities and certain other debt documents or (ii) would result in a breach of the legal or fiduciary obligations of the Board, in which case the Company will declare and pay in cash the maximum amount permitted to be paid in cash.

The Preferred Stock is redeemable at the option of the holder at 100% of the Liquidation Preference plus an amount per share equal to accrued but unpaid dividends on the Preferred Stock up to the date of redemption, at any time after August 19, 2022. The Preferred Stock is also redeemable at the option of the Company at the following redemption prices and times:

*Percentage of Liquidation Preference of each share of Preferred Stock to be redeemed()**		Timing of Redemption Right

103%		On or after August 19, 2016 but prior to August 19, 2019
102%		On or after August 19, 2019 but prior to August 19, 2020
101%		On or after August 19, 2020 but prior to August 19, 2021
100%		On or after August 19, 2021

(*) In each case, plus an amount per share equal to accrued but unpaid dividends on such share of Preferred Stock up to but excluding the earlier of the date of the redemption or the date of constructive redemption.

In the event of a Change of Control of the Company (as defined in the Company's Articles of Amendment) at a price per share of Common Stock below $24.00, the holders of the Preferred Stock will have the right to require the Company to repurchase each share of Preferred Stock held by such holder for cash at the following prices and times (provided that doing so does not cause a default or event of default under the Company's indenture, credit facilities and certain other debt documents and there are sufficient funds legally available therefor):

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ELIZABETH ARDEN, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

*Percentage of Liquidation Preference of each share of Preferred Stock to be repurchased()**		Change of Control Date

120%		Prior to August 19, 2015
110%		On or after August 19, 2015 but prior to August 19, 2016
105%		On or after August 19, 2016 but prior to August 19, 2017
101%		On or after August 19, 2017

(*) In each case, plus an amount per share equal to accrued but unpaid dividends on such share of Preferred Stock up to but excluding the earlier of the date of the redemption or the date of constructive redemption.

So long as the Purchasers (or their affiliates) beneficially own a majority of the outstanding shares of Preferred Stock, the holders of a majority of such outstanding shares, voting separately as a class, will have the right (the "Designation Rights") to elect the following number of directors to the Board of the Company at any meeting of shareholders of the Company (or by written consent) at which directors are to be elected, designated or appointed: (i) if the Percentage Interest (as defined in the Shareholders Agreement) as of the record date for such meeting (or action by written consent) is equal to or more than the percentage of Common Stock represented by the shares underlying the Warrants as of the date of issuance (approximately 7.6%) but less than 20%, one member of the Board; or (ii) if the Percentage Interest as of the record date for such meeting (or action by written consent) is equal to or greater than 20%, two members of the Board. As of March 31, 2016, the Purchasers' Percentage Interest was approximately 20.2%.

Except as required by law or otherwise provided in the Articles of Amendment, the holders of shares of Preferred Stock will be entitled to vote together as one class with holders of the Company's Common Stock on all matters submitted to a vote of the Company's shareholders. Each share of Preferred Stock is entitled to a number of votes (rounded down to the nearest whole number) equal to (i) the aggregate number of shares of Common Stock for which the outstanding Warrants are exercisable (regardless of whether or not such Warrants could legally be exercised at such time and regardless of whether the holder of the Preferred Stock is also the holder of Warrants) divided by (ii) the number of outstanding shares of Preferred Stock, determined as of the record date for the determination of holders of Common Stock entitled to vote on any such matter.

Warrants

The exercise price for the Warrants is $20.39 per share (the "Warrant Price"), and they mature on August 19, 2024. The Warrant Price may be paid, at the option of the holder, in cash or by surrendering to the Company shares of Preferred Stock having an aggregate liquidation preference plus accrued and unpaid dividends equal to the aggregate exercise price. Alternatively, subject to certain exceptions in the case of a Mandatory Exercise (as defined below), if the market price (as determined pursuant to the Warrant) (the "Market Price") of the Common Stock is greater than the Warrant Price, the holder may elect to surrender the Warrant and receive shares of Common Stock in respect of the Warrant equal to the value, as determined pursuant to the Warrant, of the Warrant, subject to certain restrictions.

After August 19, 2019, the Company may require the exercise of the Warrants if the volume weighted average sale price for the Common Stock, as determined pursuant to the Warrant, exceeds 150% of the exercise price for ten (10) consecutive trading days (a "Mandatory Exercise"). Payment of the exercise price in the case of a Mandatory Exercise is required to be made first by surrender of shares of Preferred Stock held by the Warrant holder.

The exercise price of the Warrants and the number of shares issuable upon exercise of the Warrants are subject to adjustment, as provided in the Warrants, including if the Company, on or after August 19, 2017, issues or sells Common Stock for a price lower than the Market Price of the Common Stock and the exercise price of the Warrants.

Shareholders Agreement

Under the terms of the Shareholders Agreement, from and after the date the Purchasers are no longer entitled, in their capacity as holders of Preferred Stock, to elect directors to the Board pursuant to their Designation Rights, the Purchasers will have the right to jointly designate for election one member to the Company's Board of Directors for so long as the Purchasers' Percentage Interest (as defined in the Shareholders Agreement) is equal to or more than the percentage of Common Stock represented by the shares

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ELIZABETH ARDEN, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

underlying the Warrants as of the date of issuance (approximately 7.6%) but less than 20%, and the right to designate for election an additional member to the Company's Board if the Purchasers have an aggregate Percentage Interest equal to or exceeding 20% of the Company's outstanding Common Stock.

The Shareholders Agreement also imposes restrictions under certain circumstances on the Company's ability to, among other things, (i) amend the Company's articles of incorporation and bylaws, (ii) prior to August 19, 2017, issue or sell any Common Stock at a price per share less than the Warrant Price, and (iii) make certain restricted payments under the Indenture relating to the Company's Senior Notes. In addition, the Purchasers are entitled to preemptive rights under certain circumstances, as well as customary demand and "piggyback" registration rights relating to the shares of Common Stock underlying the Warrants.

Financial Statement Presentation

Upon issuance, the Preferred Stock has been classified as mezzanine equity on the consolidated balance sheet. Based on its terms, the Preferred Stock is considered contingently redeemable. The accounting guidance under Topic 480, Distinguishing Liabilities from Equity, requires preferred securities that are redeemable for cash or other assets to be classified outside of permanent equity if they are redeemable at a fixed or determinable price on a fixed or determinable date, at the option of the holder, or upon the occurrence of an event that is not solely within the control of the issuer. The Warrants have been classified as equity on the balance sheet.

Under Topic 480, if preferred shares are issued in conjunction with other securities, such as warrants, and the other securities meet the requirements for equity classification, the sales proceeds from the issuance should be allocated to each security based on their relative fair values. The fair value of the Preferred Stock was based on the present value of the dividends expected to be paid at the 5% annual rate until August 19, 2022, the first date that the preferred stock may be redeemed at the option of the holder at par, as well as the payment of the redemption amount of $50 million and any unpaid dividends due on August 19, 2022. In determining the fair value of the Warrants, given the possibility that the Warrants may be exercised at the Company's discretion under certain circumstances after August 19, 2019, as discussed above, the Company utilized a Monte Carlo simulation model using the assumptions below:

	Assumptions

Expected dividend yield		0.00	%
Expected price volatility		43.20	%
Risk-free interest rate		2.40	%
Expected term in years		10

Based on the guidance under Topic 480, the initial value of the Preferred Stock and Warrants recorded on the consolidated balance sheet equaled the sales proceeds received from the issuance of the Preferred Stock, net of any direct issuance costs. The Company incurred approximately $6 million of costs directly associated with this transaction. The net proceeds of approximately $44 million were allocated to the Preferred Stock and Warrants as follows:

(Amounts in thousands)	Allocation of Net Proceeds

Preferred Stock	$	29,849
Warrants		14,144

Total	$	43,993

Under current accounting guidance, because the Preferred Stock is not redeemable currently, but because it is probable it will become redeemable, the Preferred Stock should be adjusted to its maximum redemption amount at each balance sheet date. In addition, the Company had the option to choose to either (i) accrete changes in the redemption value of the Preferred Stock over the period from the date of issuance to the earliest redemption date of the security, or (ii) recognize changes in the redemption value of the Preferred Stock immediately and adjust the carrying value of the Preferred Stock to equal the redemption value at the end of each reporting period (this method would view the end of the reporting period as if it were also the redemption date for the Preferred Stock). The Company selected the second option and recognized the accretion immediately and recorded the full accretion in the first quarter of fiscal 2015.

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ELIZABETH ARDEN, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Cumulatively through March 31, 2016, the Board has declared dividends of $4,118,330 on the Preferred Stock of which $1,747,264 have been paid as of March 31, 2016. Accrued dividends payable as of March 31, 2016, were $2,371,066 and dividend arrearage as of March 31, 2016, was $1,747,264. In April 2016, the Company paid 50%, or $334,535 of the dividend declared in January 2016. After giving effect to the April 2016 dividend payment, dividend arrearage was $2,059,165.

The following table sets forth the accretion and dividends on the redeemable Preferred Stock for the three and nine months ended March 31, 2016 and 2015:

(Amounts in thousands)	Three Months Ended				Nine Months Ended

	March 31, 2016		March 31, 2015		March 31, 2016		March 31, 2015

Preferred stock accretion to redemption value	$	--	$	--	$	--	$	20,151
Dividends		624		615		1,937		1,549

	$	624	$	615	$	1,937	$	21,700

NOTE 13. FAIR VALUE MEASUREMENTS

Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The accounting standards also have established a fair value hierarchy, which prioritizes the inputs to valuation techniques used in measuring fair value into three broad levels as follows:

Level 1 -	Quoted prices in active markets for identical assets or liabilities
Level 2 -	Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly
Level 3 -	Unobservable inputs based on the Company's own assumptions.

The Company's long-term debt consists of $350 million aggregate principal amount of its 7 3/8% Senior Notes. At March 31, 2016 and June 30, 2015, the estimated fair value of the 7 3/8% Senior Notes was as follows:

(Amounts in thousands)	March 31, 2016		June 30, 2015


7 3/8% Senior Notes due March 2021 (Level 2)	$	218,750	$	284,375

The Company determined the estimated fair value amounts by using available market information and commonly accepted valuation methodologies. However, considerable judgment is required in interpreting market data to develop estimates of fair value, primarily due to the illiquid nature of the capital markets in which the 7 3/8% Senior Notes are traded. The use of different assumptions and/or estimation methodologies may have a material effect on the estimated fair value.

The Company's derivative assets and liabilities are currently composed of foreign currency contracts. Fair values are based on market prices or determined using valuation models that use as their basis readily observable market data that is actively quoted and can be validated through external sources, including independent pricing services, brokers and market transactions.

The following table presents the fair value hierarchy for the Company's financial assets and liabilities that were measured at fair value on a recurring basis as of March 31, 2016 and June 30, 2015:

(Amounts in thousands)	March 31, 2016				June 30, 2015

	Asset		Liability		Asset		Liability

Level 2	$	694	$	2,354	$	767	$	757

Total	$	694	$	2,354	$	767	$	757

See Note 14 for a discussion of the Company's foreign currency contracts.

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ELIZABETH ARDEN, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Accounting standards require non-financial assets and liabilities to be recognized at fair value subsequent to initial recognition when they are deemed to be other-than-temporarily impaired. In prior fiscal years, the Company recorded asset impairment charges to write-off the carrying values of the Justin Bieber, Nicki Minaj and BCBGMAXAZRIA licenses. As of March 31, 2016, other than the carrying values of these licenses, the Company did not have any non-financial assets and liabilities measured at fair value.

NOTE 14. DERIVATIVE FINANCIAL INSTRUMENTS

The Company operates in several foreign countries, which exposes it to market risk associated with foreign currency exchange rate fluctuations. The Company's risk management policy is to enter into cash flow hedges to reduce a portion of the exposure of the Company's foreign subsidiaries' revenues to fluctuations in currency rates using foreign currency forward contracts. The Company also enters into cash flow hedges for a portion of its forecasted inventory purchases to reduce the exposure of its Canadian and Australian subsidiaries' cost of sales to such fluctuations, as well as cash flow hedges for a portion of its subsidiaries' forecasted Swiss franc operating costs. The principal currencies hedged are British pounds, Euros, Canadian dollars, Australian dollars and Swiss francs. The Company does not enter into derivative financial contracts for speculative or trading purposes.

The Company's derivative financial instruments are recorded in the consolidated balance sheets at fair value determined using pricing models based on market prices or determined using valuation models that use as their basis readily observable market data that is actively quoted and can be validated through external sources, including independent pricing services, brokers and market transactions. Cash flows from derivative financial instruments are classified as cash flows from operating activities in the consolidated statements of cash flows.

Foreign currency contracts used to hedge forecasted revenues are designated as cash flow hedges. These contracts are used to hedge forecasted revenues generally over approximately 12 to 24 months. Changes to fair value of the foreign currency contracts are recorded as a component of accumulated other comprehensive (loss) income within shareholders' equity to the extent such contracts are effective, and are recognized in net sales in the period in which the forecasted transaction affects earnings or the transactions are no longer probable of occurring. Changes to fair value of any contracts deemed to be ineffective would be recognized in earnings immediately. There were no amounts recorded in the three and nine months ended March 31, 2016 or in fiscal 2015 relating to foreign currency contracts used to hedge forecasted revenues resulting from hedge ineffectiveness.

Foreign currency contracts used to hedge forecasted cost of sales or operating costs are designated as cash flow hedges. These contracts are used to hedge the forecasted cost of sales of the Company's Canadian and Australian subsidiaries or operating costs of the Company's Swiss subsidiaries generally over approximately 12 to 24 months. Changes to fair value of the foreign currency contracts are recorded as a component of accumulated other comprehensive (loss) income within shareholders' equity, to the extent such contracts are effective, and are recognized in cost of sales or selling, general and administrative expenses in the period in which the forecasted transaction affects earnings or the transactions are no longer probable of occurring. Changes to fair value of any contracts deemed to be ineffective would be recognized in earnings immediately. There were no amounts recorded in the three and nine months ended March 31, 2016 or in fiscal 2015 relating to foreign currency contracts used to hedge forecasted cost of sales or forecasted operating costs resulting from hedge ineffectiveness.

As of March 31, 2016, the Company had open foreign currency contracts that expire between April 30, 2016 and May 31, 2017, with notional amounts of (i) 16.6 million Euros and 1.7 million British pounds used to hedge forecasted foreign subsidiary revenues, (ii) 26.8 million Australian dollars and 25.2 million Canadian dollars used to hedge forecasted cost of sales, and (iii) 16.8 million Swiss francs used to hedge forecasted operating costs.

When appropriate, the Company also enters into and settles foreign currency contracts for Euros, British pounds, Canadian dollars and Australian dollars to reduce exposure of the Company's foreign subsidiaries' balance sheets to fluctuations in foreign currency rates. These contracts are used to hedge balance sheet exposure generally over one month and are settled before the end of the month in which they are entered into. Changes to fair value of the forward contracts are recognized in selling, general and administrative expense in the period in which the contracts expire. For the three and nine months ended March 31, 2016, the Company recorded losses of $0.8 million and gains of $0.5 million, respectively in selling, general and administrative expenses related to these contracts. For the three and nine months ended March 31, 2015, the Company recorded gains of $1.4 million and $3.6 million, respectively in selling, general and administrative expenses related to these contracts. As of March 31, 2016, there were no such foreign currency contracts outstanding. There were no amounts recorded in the three and nine months ended March 31, 2016 or in fiscal 2015 relating to foreign currency contracts to hedge subsidiary balance sheets resulting from hedge ineffectiveness.

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ELIZABETH ARDEN, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The following tables illustrate the fair value of outstanding foreign currency contracts and the gains (losses) associated with the settlement of these contracts:

(Amounts in thousands)	Fair Value of Derivative Instruments Designated as Effective Hedges

Balance Sheet Location	March 31, 2016		June 30, 2015

Other assets	$	694	$	767




Other payables	$	2,354	$	757

Gain (Loss) Reclassified from Accumulated Other Comprehensive (Loss) Income into (Loss) Income, Net of Tax (Effective Portion)

(Amounts in thousands)		Three Months Ended						Nine Months Ended

		March 31, 2016			March 31, 2015			March 31, 2016			March 31, 2015

Currency Contracts - Net Sales ⁽¹⁾		$	121		$	897		$	100		$	1,294
Currency Contracts - Cost of Sales ⁽²⁾			330			357			762			378
Currency Contracts - Selling, General and Administrative Expenses ⁽³⁾			(102	)		(33	)		(139	)		(41	)

Total ⁽⁴⁾		$	349		$	1,221		$	723		$	1,631




(1)	Recorded in net sales on the consolidated statements of operations.
(2)	Recorded in cost of sales on the consolidated statements of operations.
(3)	Recorded in selling, general and administrative expenses on the consolidated statements of operations.
(4)	Net of tax expense of $134 and $255 for the three months ended March 31, 2016 and 2015, respectively. Net of tax expense of $307 and $338 for the nine months ended March 31, 2016 and 2015, respectively.

(Amounts in thousands)		Three Months Ended						Nine Months Ended

		March 31, 2016			March 31, 2015			March 31, 2016			March 31, 2015

Currency Contracts - Net Sales		$	(842	)	$	(548	)	$	(22	)	$	2,174
Currency Contracts - Cost of Sales			(2,483	)		(370	)		(2,562	)		265
Currency Contracts - Selling, General and Administrative Expenses			606			480			247			18

Total ⁽¹⁾		$	(2,719	)	$	(438	)	$	(2,337	)	$	2,457




(1)	Net of tax benefit of $370 and $180 for the three months ended March 31, 2016 and 2015, respectively. Net of tax benefit of $363 for the nine months ended March 31, 2016, and net of tax expense of $360 for the nine months ended March 31, 2015.

NOTE 15. NEW ACCOUNTING STANDARDS

In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update 2016-9, Improvements to Employee Share-Based Payment Accounting, which is intended to simplify several aspects of the accounting for share-based payment award transactions. The updated standard involves several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The new guidance is effective for the Company beginning July 1, 2017, including interim periods within that reporting period. The new guidance will be applied either retrospectively or prospectively depending on the particular topic of change, and early adoption is permitted. The Company is currently evaluating the impact of the new standard on its consolidated financial statements.

In February 2016, the FASB issued Accounting Standard Update 2016-2, Leases, which is intended to improve financial reporting about leasing transactions. The updated standard will require entities that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. Under the new guidance, a lessee will be required to recognize assets and liabilities for leases with lease terms of more than 12 months. Consistent with current GAAP, the recognition,

- 21 -

ELIZABETH ARDEN, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. However, unlike current GAAP, which requires only capital leases to be recognized on the balance sheet, the updated standard will require both types of leases to be recognized on the balance sheet. The new guidance is effective for the Company beginning July 1, 2019, including interim periods within that reporting period. The new standard is required to be applied retrospectively and early adoption is permitted. The Company is currently evaluating the impact of the new standard on its consolidated financial statements.

In November 2015, the FASB issued Accounting Standard Update 2015-17, Balance Sheet Classification of Deferred Taxes. Under current accounting, deferred taxes for each jurisdiction are presented as a net current asset or liability and net noncurrent asset or liability. This requires a jurisdiction-by-jurisdiction analysis generally based on the classification of the assets and liabilities to which the underlying temporary differences relate. The updated standard simplifies the presentation and requires that all deferred tax assets and liabilities be classified as noncurrent on the balance sheet. As a result, each jurisdiction will now only have one net noncurrent deferred tax asset or liability. The updated guidance does not change the existing requirement that prohibits companies from offsetting deferred tax liabilities from one jurisdiction against deferred tax assets of another jurisdiction. The new guidance is effective for the Company beginning July 1, 2017, including interim periods within that reporting period. The new guidance can be applied either prospectively or retrospectively, and early adoption is permitted. The adoption of this standard will not have a material impact on the Company's consolidated financial statements as it only pertains to a change in the balance sheet presentation of deferred taxes.

In July 2015, the FASB issued Accounting Standard Update 2015-11, Simplifying the Measurement of Inventory, which changes the measurement principle for inventory from the lower of cost or market to the lower of cost and net realizable value. Replacing the concept of market with the single measurement of net realizable value is intended to create efficiencies for preparers of financial statements. The updated standard defines net realizable value as estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The new guidance is effective for the Company beginning July 1, 2016, including interim periods within that reporting period. The new guidance must be applied on a prospective basis and early adoption is permitted. The Company does not believe the implementation of this standard will have a material impact on its consolidated financial statements.

On April 7, 2015, the FASB issued Accounting Standard Update 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires all debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability, consistent with the presentation of a debt discount. Prior to the issuance of the updated standard, debt issuance costs were required to be presented in the balance sheet as an asset. The guidance in the updated standard is limited to the presentation of debt issuance costs. The updated standard does not affect the recognition and measurement of debt issuance costs, and the amortization of such costs will continue to be calculated using the interest method and be reported as interest expense. The new guidance will require the Company to reclassify debt financing costs, currently recorded as assets, as a direct deduction from the carrying value of debt. The new guidance is effective for the Company beginning July 1, 2016, including interim periods within that reporting period. The new guidance is required to be applied retrospectively and early adoption is permitted. The adoption of this standard will not have a material impact on the Company's consolidated financial statements as it only pertains to a change in the balance sheet presentation of debt issuance costs.

In May 2014, the FASB and the International Accounting Standards Board jointly issued a converged standard, Topic 606, Revenue From Contracts With Customers. The new standard will require companies to recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods or services. The new standard also will result in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively and improve guidance for multiple-element arrangements.

In May 2015, the FASB issued a proposal to amend certain aspects of the new revenue standard, specifically the guidance on identifying performance obligations and accounting for licenses of intellectual property. The amendments clarify the guidance on determining if the promises in a contract are "distinct" goods or services and therefore, should be accounted for separately. The FASB's amendments also (1) clarify that entities are not required to identify promised goods or services that are immaterial in the context of the contract, and (2) allow entities to elect to account for shipping and handling activities that occur after the customer has obtained control of a good as a fulfillment cost rather than as an additional promised service.

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ELIZABETH ARDEN, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Subsequently in July 2015, based on the comments received, discussions with various stakeholders, and potential forthcoming amendments to the new revenue standard, the FASB decided to delay the effective date of the new revenue standard by one year. The new standard is effective for the Company beginning July 1, 2018, including interim periods within that reporting period. The FASB also decided that companies could choose to adopt the new standard one year earlier which would have been the original effective date. The new standard is required to be applied retrospectively. The Company is currently evaluating the impact of the new standard on its consolidated financial statements.

NOTE 16. SEGMENT DATA AND RELATED INFORMATION

Reportable operating segments, as defined by Codification Topic 280, Segment Reporting, include components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (the "Chief Executive") in deciding how to allocate resources and in assessing performance. As a result of the similarities in the procurement, marketing and distribution processes for all of the Company's products, much of the information provided in the consolidated financial statements is similar to, or the same as, that reviewed on a regular basis by the Chief Executive.

At March 31, 2016, the Company's operations were organized into the following two operating segments, which also comprise its reportable segments:

	Ÿ	North America -- The North America segment sells the Company's portfolio of owned, licensed and distributed brands, including the Elizabeth Arden products, to prestige retailers, mass retailers and distributors in the United States, Canada and Puerto Rico, and also includes the Company's direct to consumer business, which is composed of the Elizabeth Arden branded retail outlet stores and the Company's e-commerce business in North America. This segment also sells Elizabeth Arden products through the Red Door Spa beauty salons and spas which are owned and operated by a third party licensee in which the Company has a minority investment.

	Ÿ	International -- The International segment sells a portfolio of owned and licensed brands, including Elizabeth Arden products, to perfumeries, boutiques, department stores, travel retail outlets and distributors in approximately 120 countries outside of North America.

The Chief Executive evaluates segment profit based upon income from operations, which represents earnings before income taxes, interest expense and depreciation and amortization charges. The accounting policies for each of the reportable segments are the same as those described in the Company's 2015 Annual Report under Note 1 -- "General Information and Summary of Significant Accounting Policies."

The assets and liabilities of the Company 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 Chief Executive or included herein.

Segment net sales for the three and nine months ended March 31, 2015, exclude returns and markdowns related to the Company's previously disclosed 2014 Performance Improvement Plan. In addition, segment profit (loss) excludes depreciation and amortization, interest expense, debt extinguishment charges, and consolidation and elimination adjustments and unallocated corporate costs and expenses, which are shown in the table reconciling segment profit (loss) to consolidated loss before income taxes. Included in unallocated corporate costs and expenses are (i) restructuring charges that are related to an announced plan, (ii) restructuring costs for corporate operations, and (iii) costs and expenses related to the 2014 Performance Improvement Plan and the 2016 Business Transformation Program. 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 intersegment sales.

The following table is a comparative summary of the Company's net sales and segment (loss) profit by operating segment for the three and nine months ended March 31, 2016 and 2015:

- 23 -

ELIZABETH ARDEN, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands)			Three Months Ended						Nine Months Ended

			March 31, 2016			March 31, 2015			March 31, 2016			March 31, 2015

Segment Net Sales:
North America			$	107,731		$	107,511		$	482,920		$	507,145
International				84,201			83,853			291,162			303,465

Total			$	191,932		$	191,364		$	774,082		$	810,610




Reconciliation:
Segment Net Sales			$	191,932		$	191,364		$	774,082		$	810,610
Less:
Unallocated sales returns and markdowns				--			(289	)⁽²⁾		--			14,972	⁽⁵⁾

Net Sales			$	191,932		$	191,653		$	774,082		$	795,638




Segment Profit (Loss):
North America			$	8,030		$	1,500		$	54,587		$	44,886
International				(15,095	)		(17,245	)		(30,856	)		(26,791	)

Total			$	(7,065	)	$	(15,745	)	$	23,731		$	18,095




Reconciliation:
Segment (Loss) Profit			$	(7,065	)	$	(15,745	)	$	23,731		$	18,095
Less:
Depreciation and Amortization				10,316			11,504			32,070			36,971
Interest Expense, net				7,345			7,055			22,365			22,523
Consolidation and Elimination Adjustments				156			(14	)		892			1,501
Unallocated Corporate Expenses				2,328	⁽¹⁾		137	⁽³⁾		17,317	⁽⁴⁾		72,874	⁽⁶⁾

Loss Before Income Taxes			$	(27,210	)	$	(34,427	)	$	(48,913	)	$	(115,774	)




(1)	Amounts for the three months ended March 31, 2016, include $2.3 million in costs and expenses incurred with respect to the Company's 2016 Business Transformation Program, comprised of $0.5 million of inventory costs related to changes in certain distribution and customer arrangements and $1.8 million of severance and other employee-related expenses and related transition costs.

(2)	Amounts for the three months ended March 31, 2015, represent $(0.3) million of adjustments for returns and markdowns previously recorded under the Company's 2014 Performance Improvement Plan, primarily due to changes to the Company's customer and distribution arrangements.

(3)	In addition to the adjustments for returns and markdowns described above in Note 2, amounts for the three months ended March 31, 2015, include $0.5 million in costs and expenses under the 2014 Performance Improvement Plan comprised of $0.3 million of inventory write-downs due to discontinuation of certain products, and $0.2 million of severance, other employee-related expenses and related transition costs associated with the reduction in global headcount positions.

(4)	Amounts for the nine months ended March 31, 2016, include $17.3 million in costs and expenses with respect to the Company's 2016 Business Transformation Program, primarily comprised of $4.4 million of inventory costs related to the closing of the Company's Brazilian affiliate, as well as changes in certain distribution and customer arrangements, and $12.9 million of severance and other employee-related expenses and related transition costs.

(5)	Amounts for the nine months ended March 31, 2015, represent $15.0 million of returns and markdowns under the Company's 2014 Performance Improvement Plan, primarily due to changes to the Company's distribution strategy in China and other customer and distribution arrangements.

(6)	In addition to the returns and markdowns described above in Note 5, amounts for the nine months ended March 31, 2015, include:
	*	$13.9 million in costs and expenses under the 2014 Performance Improvement Plan comprised of $4.9 million of inventory write-downs due to discontinuation of certain products, $4.5 million comprised primarily of customer and vendor contract termination costs, $4.4 million of severance, other employee-related expenses and related transition costs associated with the reduction in global headcount positions, and $0.1 million in asset impairment charges;
	*	$43.8 million in asset impairment charges primarily related to the write-off of the Justin Bieber and Nicki Minaj licenses and other costs; and
	*	$0.2 million of debt extinguishment costs resulting from the December 2014 amendment to the Credit Facility.

- 24 -

ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This discussion should be read in conjunction with the Unaudited Consolidated Financial Statements and related notes contained in this quarterly report and the Consolidated Financial Statements and related notes and the Management's Discussion and Analysis of Financial Condition and Results of Operations appearing in our Annual Report on Form 10-K for the year ended June 30, 2015. The results of operations for an interim period may not give a true indication of results for the year. In the following discussion, all comparisons are with the corresponding items in the prior year period.

Overview

We are a global prestige beauty products company with an extensive portfolio of prestige fragrance, skin care and cosmetics brands. Our extensive product portfolio includes the following:

Elizabeth Arden Brand		* The Elizabeth Arden skin care brands: Visible Difference, Ceramide, Prevage, Eight Hour Cream, SUPERSTART and Elizabeth Arden Pro * Elizabeth Arden branded lipstick, foundation and other color cosmetics products * Elizabeth Arden fragrances: Red Door, Elizabeth Arden 5th Avenue, Elizabeth Arden Green Tea and UNTOLD

Designer Fragrances		Juicy Couture, John Varvatos, and Wildfox Couture

Heritage Fragrances		Curve, Elizabeth Taylor, Britney Spears, Halston, Ed Hardy, Geoffrey Beene, Alfred Sung, Giorgio Beverly Hills, Lucky, PS Fine Cologne, White Shoulders, BCBGMAXAZRIA, Rocawear and Jennifer Aniston

Celebrity Fragrances		The fragrance brands of Justin Bieber, Nicki Minaj, Mariah Carey and Taylor Swift

In addition to our owned and licensed fragrance brands, we distribute approximately 280 additional prestige fragrance brands, primarily in the United States, through distribution agreements and other purchasing arrangements.

Our business strategy remains focused on two important initiatives -- the global repositioning of the Elizabeth Arden brand and expanding the market penetration of our prestige fragrance portfolio in both the North America and international markets. For fiscal 2016, we will continue to focus on these initiatives and target our resources and efforts on those markets, channels and brands that we believe afford us the best opportunity for profitable growth. More specifically, our primary goal for fiscal 2016 is to improve our business and financial performance by (i) improving our go-to-market capability and execution by enhancing our distribution quality, and continuing to explore opportunities for distribution partnerships in certain markets, (ii) growing margins by simplifying and streamlining our organization to optimize costs and reduce complexity, and (iii) developing a more robust innovation pipeline.

Our top priority is to drive growth of the Elizabeth Arden brand, particularly in North America and in our key international markets, and we have taken several important steps towards that end. We expect to launch a higher level of new product innovation for the Elizabeth Arden brand in 2016 as well, including new skin care technologies. In fiscal 2015, we also began to reorganize our fragrance selling and marketing organizations to better develop and commercialize our prestige fragrance portfolio globally.

We have also taken several steps to improve our international go-to-market capability and improve distribution quality. For example, in China, we finalized changes in our distribution strategy, including in the e-commerce channel. In the Middle East, we entered into a joint venture in the United Arab Emirates with an unrelated third party that will be responsible for the sale, promotion and distribution of our fragrance, skincare and cosmetics products primarily in Middle Eastern countries. In July 2015, we entered into a similar joint venture with an unrelated third party that will be responsible for the sale, promotion and distribution of our fragrance, skincare and cosmetics products in certain markets within Southeast Asia and Hong Kong. This joint venture commenced operations in Southeast Asia in September 2015 and operations in Hong Kong commenced on January 1, 2016.

We manage our business by evaluating net sales, EBITDA (as defined later in this discussion), EBITDA margin, segment profit and working capital utilization (including monitoring our levels of inventory, accounts receivable, operating cash flow and return on invested capital). We encounter a variety of challenges that may affect our business and should be considered as described in Item1A"Risk Factors" of our Annual Report on Form 10-K for the year ended June 30, 2015 and in the section of this quarterly report captioned "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Cautionary Note Regarding Forward-Looking Information and Factors That May Affect Future Results."

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2014 Performance Improvement Plan and 2016 Business Transformation Program

During fiscal 2014, we began a comprehensive review of our entire business model and cost structure to identify initiatives to reduce the size and complexity of our overhead structure and to exit low-return businesses, customers and brands, in order to improve gross margins and profitability in the long term. As a result of this review, we implemented several restructuring and cost savings initiatives at the end of fiscal 2014 and during fiscal 2015 that we refer to as the "2014 Performance Improvement Plan."

During fiscal 2015 we completed the closure of our Puerto Rico affiliate; we exited a large, unprofitable customer in Canada; we improved our distribution quality; we made changes to our distribution strategy in China and other markets; we entered into a joint venture for the distribution of our products in the Middle East; we discontinued certain unprofitable products; we eliminated complexity in our supply chain; and we significantly reduced our global headcount. We also reviewed our portfolio of fragrance brands in light of the recent sales performance and forecasts of certain brands, as well as industry trends, in order to identify strategies to simplify, and optimize the performance of, our fragrance brand portfolio, which resulted in (i) adopting changes in our go-to-market strategy for certain fragrance brands, and (ii) reducing the number of stock-keeping units of certain brands. During fiscal 2014 and 2015, we incurred a total of approximately $150.5 million under the 2014 Performance Improvement Plan. All charges associated with the 2014 Performance Improvement Plan had been recorded as of June 30, 2015.

As we continue to look for ways of improving our business and financial performance and achieving our targeted goal of $40 million to $50 million in annualized savings, during the fourth quarter of fiscal 2015 we identified certain additional restructuring and cost savings initiatives that we expect to implement during fiscal 2016. We collectively refer to these initiatives as our "2016 Business Transformation Program." The 2016 Business Transformation Program is intended to further align our organizational structure and distribution arrangements with the current needs and demands of our business in order to improve our go-to-market capability and execution and to streamline our organization. We expect to incur approximately $23 million to $28 million in pre-tax charges, primarily during fiscal 2016, under the 2016 Business Transformation Program, of which an estimated $17 million to $22 million is expected to be comprised of cash expenditures. During the three and nine months ended March 31, 2016, we have incurred approximately $2.4 million and $17.7 million, respectively, of pre-tax charges under the 2016 Business Transformation Program and approximately $20.1 million of pre-tax charges since inception. For further discussion see "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 4 to the Notes to Unaudited Consolidated Financial Statements.

We currently expect that the actions and initiatives identified and executed, or to be executed, under the 2014 Performance Improvement Plan and the 2016 Business Transformation Program will result in approximately $47 million to $50 million of annualized savings, achieving the top end of our targeted range of annualized savings. In fiscal 2016, we intend to continue to work towards identifying ways to further simplify our go-to-market capabilities, including looking at alternative, more profitable commercial structures. These efforts may result in additional decisions that may impact net sales, operating margins and/or earnings in future periods. The specific facts and circumstances surrounding any such future decisions will impact the timing and amount of any costs or expenses that may be incurred.

Investment by Rhône Capital L.L.C. Affiliates

On August 19, 2014, we entered into a securities purchase agreement with Nightingale Onshore Holdings L.P. and Nightingale Offshore Holdings L.P. (which we call the Purchasers), investment funds affiliated with Rhône Capital L.L.C. Pursuant to the securities purchase agreement, for aggregate cash consideration of $50 million, we issued to the Purchasers an aggregate of 50,000 shares of our newly designated Series A Serial Preferred Stock, par value $0.01 per share, with detachable warrants to purchase up to 2,452,267 shares of the Company's common stock at an exercise price of $20.39 per share. See Note 12 to the Notes to Unaudited Consolidated Financial Statements.

Investments

We have an investment through a subsidiary in US Cosmeceutechs, LLC, a skin-care company that develops and sells skin care products into the professional dermatology and spa channels. Based on our investment in US Cosmeceutechs, LLC and our subsidiary's controlling rights under the operating agreement, we have determined that US Cosmeceutechs, LLC is a variable interest entity, or VIE, of which we are the primary beneficiary, requiring our consolidation of US Cosmeceutechs, LLC financial statements in accordance with Topic 810, Consolidation. In addition, based on the terms of a put-call agreement with the other equity member of US Cosmeceutechs, LLC, we are required to classify the noncontrolling interest in USC as a "redeemable noncontrolling interest" in the mezzanine section of our consolidated balance sheet. See Note 5 to the Notes to Unaudited Consolidated Financial Statements.

During fiscal 2015, through a subsidiary, we entered into a joint venture in the United Arab Emirates (the "UAE joint venture") with an unrelated third party for the sale, promotion and distribution of our fragrance, skincare and cosmetics products primarily in Middle Eastern countries. Effective September 1, 2015, we entered into a similar joint venture for the Southeast Asia region and,

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effective January 1, 2016 in Hong Kong (the "Southeast Asia joint venture"), with an unrelated third party for the sale, promotion and distribution of certain of our fragrance, skincare and cosmetics products in Southeast Asia.

Based on our equity interests and controlling rights in these joint ventures, we have determined that the UAE joint venture and the Southeast Asia joint venture are each VIEs, requiring consolidation of such joint ventures' financial statements in accordance with Topic 810, Consolidation. The respective unrelated third party's interest in each joint venture is classified as a "noncontrolling interest" in the shareholders' equity section of our consolidated balance sheet.

Seasonality

Our operations have historically been seasonal, with higher sales generally occurring in the first half of our fiscal year as a result of increased demand by retailers in anticipation of and during the holiday season. For the year ended June 30, 2015, approximately 62% of our net sales were made during the first half of our fiscal year. We also experience seasonality in our working capital, with peak inventory levels normally from July to October and peak receivable balances normally from September to December. Our short-term borrowings are also seasonal and are normally highest in the months of September, October and November. During the months of December, January and February of each year, cash is normally generated as customer payments on holiday season orders are received.

Due to product innovation and new product launches, the size and timing of certain orders from our customers, and additions or losses of brand distribution rights, sales, results of operations, working capital requirements and cash flows can vary significantly between quarters of the same and different years. As a result, we expect to experience variability in net sales, operating margin, net income, working capital requirements and cash flows on a quarterly basis. Increased sales of skin care and cosmetic products relative to fragrances may reduce the seasonality of our business.

Critical Accounting Policies and Estimates

As disclosed in our Annual Report on Form 10-K for the fiscal year ended June 30, 2015, the discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in conformity with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses reported in those financial statements. We base our estimates on historical experience and other factors that we believe are most likely to occur. Changes in facts and circumstances may result in revised estimates, which are recorded in the period in which they become known. Our most critical accounting policies relate to revenue recognition, provisions for inventory obsolescence, allowances for sales returns, markdowns and doubtful accounts, intangible and long-lived assets, income taxes, hedging contracts and share-based compensation. Since June 30, 2015, there have been no significant changes to the assumptions and estimates related to those critical accounting policies.

Foreign Currency Contracts

We operate in several foreign countries, which exposes us to market risk associated with foreign currency exchange rate fluctuations. Our risk management policy is to enter into cash flow hedges to reduce a portion of the exposure of our foreign subsidiaries' revenues to fluctuations in currency rates using foreign currency forward contracts. We also enter into cash flow hedges for a portion of our forecasted inventory purchases to reduce the exposure of our Canadian and Australian subsidiaries' cost of sales to such fluctuations, as well as cash flow hedges for a portion of our subsidiaries' forecasted Swiss franc operating costs. The principal currencies hedged are British pounds, Euros, Canadian dollars, Australian dollars and Swiss francs. We do not enter into derivative financial contracts for speculative or trading purposes.

Changes to fair value of the foreign currency contracts are recorded as a component of accumulated other comprehensive income (loss) within shareholders' equity, to the extent such contracts are effective, and are recognized in net sales or cost of sales in the period in which the forecasted transaction affects earnings or the transactions are no longer probable of occurring. Changes to fair value of any contracts deemed to be ineffective would be recognized in earnings immediately. There were no amounts recorded in the three and nine months ended March 31, 2016 or in fiscal 2015 relating to foreign currency contracts used to hedge forecasted revenues, forecasted cost of sales or forecasted operating costs resulting from hedge ineffectiveness.

When appropriate, we also enter into and settle foreign currency contracts for Euros, British pounds, Canadian dollars and Australian dollars to reduce exposure of our foreign subsidiaries' balance sheets to fluctuations in foreign currency rates. These contracts are used to hedge balance sheet exposure generally over one month and are settled before the end of the month in which they are entered into. Changes to fair value of the forward contracts are recognized in selling, general and administrative expense in the period in which the contracts expire.

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The following table summarizes the effect of the pre-tax (loss) gain from our settled foreign currency contracts on the specified line items in our consolidated statements of operations for the three and nine months ended March 31, 2016 and 2015.

(Amounts in thousands)	Three Months Ended					Nine Months Ended

	March 31, 2016			March 31, 2015		March 31, 2016		March 31, 2015

Net Sales	$	136		$	989	$	113	$	1,427
Cost of Sales		462			525		1,074		588
Selling, general and administrative		(869	)		1,382		380		3,606

Total pre-tax (loss) gain	$	(271	)	$	2,896	$	1,567	$	5,621

Results of Operations

The following discussion compares the historical results of operations for the three and nine months ended March 31, 2016 and 2015. Results of operations as a percentage of net sales were as follows (dollar amounts in thousands; percentages may not add due to rounding):

		Three Months Ended										Nine Months Ended

		March 31, 2016					March 31, 2015					March 31, 2016					March 31, 2015

Net sales		$	191,932		100.0	%	$	191,653	⁽⁴⁾	100.0	%	$	774,082		100.0	%	$	795,638	⁽⁵⁾	100.0	%
Cost of sales			106,287		55.4			110,058		57.4			431,934		55.8			460,146		57.8
Depreciation in cost of sales			1,420		0.7			1,957		1.0			4,489		0.6			5,916		0.8
	Gross profit		84,225	⁽¹⁾	43.9			79,638	⁽⁴⁾	41.6			337,659	⁽²⁾	43.6			329,576	⁽⁵⁾	41.4
Selling, general and administrative expenses			95,194		49.6			97,463		50.9			336,626		43.5			391,533		49.2
Depreciation and amortization			8,896		4.7			9,547		5.0			27,581		3.5			31,055		3.9
Loss from operations			(19,865	)⁽¹⁾	(10.4	)		(27,372	)⁽⁴⁾	(14.3	)		(26,548	)⁽²⁾	(3.4	)		(93,012	)⁽⁵⁾	(11.7	)
Interest expense, net			7,345		3.8			7,055		3.7			22,365		2.9			22,523		2.8
Debt extinguishment charges			--		--			--		--			--		--			239		--
	Loss before income taxes		(27,210	)	(14.2	)		(34,427	)	(18.0	)		(48,913	)	(6.3	)		(115,774	)	(14.5	)
Provision for income taxes			529		0.3			500		0.2			1,433		0.2			1,557		0.2
	Net loss		(27,739	)⁽³⁾	(14.5	)		(34,927	)⁽⁶⁾	(18.2	)		(50,346	)⁽³⁾	(6.5	)		(117,331	)⁽⁶⁾	(14.7	)
Net income (loss) attributable to noncontrolling interests⁽⁷⁾			39		--			(481	)	(0.2	)		(1,690	)	(0.2	)		(1,396	)	(0.1	)
Net loss attributable to Elizabeth Arden shareholders			(27,778	)	(14.5	)		(34,446	)	(18.0	)		(48,656	)	(6.3	)		(115,935	)	(14.6	)
Less: Accretion and dividends on preferred stock			624		0.3			615		0.3			1,937		0.2			21,700		2.7
Net loss attributable to Elizabeth Arden common shareholders			(28,402	)	(14.8	)		(35,061	)	(18.3	)		(50,593	)	(6.5	)		(137,635	)	(17.3	)

Other data
EBITDA and EBITDA margin⁽⁸⁾		$	(9,549	)	(5.0	)%	$	(15,868	)	(8.3	)%	$	5,522		0.7	%	$	(56,280	)	(7.1	)%

(1)	For the three months ended March 31, 2016, gross profit includes $0.5 million of inventory costs under our 2016 Business Transformation Program related to changes in certain distribution and customer arrangements.

	In addition to the items above, loss from operations includes:
	*	$1.8 million in expenses under the 2016 Business Transformation Program, primarily comprised of severance and other employee-related expenses and related transition costs; and
	*	$0.1 million for the acceleration of depreciation expense for leasehold improvements related to leased space vacated under the 2016 Business Transformation Program.
(2)	For the nine months ended March 31, 2016, gross profit includes $4.4 million of inventory costs under our 2016 Business Transformation Program primarily related to the closing of our Brazilian affiliate, as well changes in certain distribution and customer arrangements.

	In addition to the items above, loss from operations includes:
	*	$12.9 million in expenses under the 2016 Business Transformation Program, primarily comprised of severance and other employee-related expenses and related transition costs; and
	*	$0.3 million for the acceleration of depreciation expense for leasehold improvements related to leased space vacated under the 2016 Business Transformation Program.

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(3)	For the three months ended March 31, 2016, the net loss includes items discussed in footnote (1) above, as well as (i) valuation allowances of $9.2 million against our U.S. deferred tax assets and $0.8 million against deferred tax assets in certain foreign operations recorded as non-cash charges to income tax expense. For the nine months ended March 31, 2016, the net loss includes items discussed in footnote (2) above, as well as valuation allowances of $10.4 million against our U.S. deferred tax assets and $3.2 million against deferred tax assets in certain foreign operations recorded as non-cash charges to income tax expense.

(4)	For the three months ended March 31, 2015, net sales include $(0.3) million of adjustments for returns and markdowns recorded under our 2014 Performance Improvement Plan primarily due to changes to our customer and distribution arrangements.

	In addition to the returns and markdowns described above, gross profit includes:
	*	$0.3 million of adjustments for inventory write-downs under our 2014 Performance Improvement Plan due to discontinuation of certain products.

	In addition to the items above, loss from operations includes:
	*	$0.2 million of severance, other employee-related expenses and related transition costs associated with the reduction in global headcount positions.

(5)	For the nine months ended March 31, 2015, net sales include $15.0 million of returns and markdowns under our 2014 Performance Improvement Plan primarily due to changes to our distribution strategy in China and other customer and distribution arrangements.

	In addition to the returns and markdowns described above, gross profit includes:
	*	$4.9 million of inventory write-downs under our 2014 Performance Improvement Plan due to discontinuation of certain products.

	In addition to the items above, loss from operations includes:
	*	$9.0 million in expenses under the 2014 Performance Improvement Plan primarily comprised of $4.5 million of customer and vendor contract termination costs, $4.4 million of severance, other employee-related expenses and related transition costs associated with the reduction in global headcount positions and $0.1 million in asset impairment charges;
	*	$43.8 million in asset impairment charges related to the write-off of the Justin Bieber and Nicki Minaj licenses and other costs; and
	*	$0.2 million of debt extinguishment costs resulting from the December 2014 amendment to our revolving credit facility.

(6)	For the three months ended March 31, 2015, the net loss includes items discussed in footnote (4) above, as well as valuation allowances of $11.2 million against our U.S. deferred tax assets recorded as non-cash charges to income tax expense. For the nine months ended March 31, 2015, the net loss includes items discussed in footnote (5) above, as well as valuation allowances of $37.2 million against our U.S. deferred tax assets and $2.5 million against deferred tax assets in certain foreign operations recorded as non-cash charges to income tax expense.

(7)	See Note 5 to Notes to Unaudited Consolidated Financial Statements.

(8)	For a definition of EBITDA and a reconciliation of net (loss) income to EBITDA, see "EBITDA" under Results of Operations -- Three Months Ended March 31, 2016 Compared to Three Months Ended March 31, 2015 and under Nine Months Ended March 31, 2016 compared to Nine Months Ended March 31, 2015. EBITDA margin represents EBITDA divided by net sales.

At March 31, 2016, our operations were organized into the following two operating segments, which also comprise our reportable segments:

	Ÿ	North America - Our North America segment sells our portfolio of owned, licensed and distributed brands, including the Elizabeth Arden products, to prestige retailers, mass retailers and distributors in the United States, Canada and Puerto Rico, and also includes our direct to consumer business, which is composed of our Elizabeth Arden branded retail outlet stores and our e-commerce business in North America. This segment also sells Elizabeth Arden products through the Red Door Spa beauty salons and spas, which are owned and operated by a third-party licensee in which we have a minority investment.

	Ÿ	International - Our International segment sells our portfolio of owned and licensed brands, including our Elizabeth Arden products, to perfumeries, boutiques, department stores, travel retail outlets and distributors in approximately 120 countries outside of North America.

Segment net sales for the three and nine months ended March 31, 2015, excludes returns and markdowns related to the 2014 Performance Improvement Plan. In addition, segment profit (loss) excludes depreciation and amortization, interest expense, debt extinguishment costs, and consolidation and elimination adjustments and unallocated corporate costs and expenses, which are shown in the table reconciling segment profit (loss) to consolidated loss before income taxes. Included in unallocated corporate costs and expenses are (i) restructuring charges that are related to an announced plan, (ii) restructuring costs for corporate operations, and (iii) costs and expenses related to the 2014 Performance Improvement Plan and the 2016 Business Transformation Program. 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. We do not have any intersegment sales.

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The following table is a comparative summary of our net sales and segment (loss) profit by operating segment for the three and nine months ended March 31, 2016 and 2015 and reflects the basis of presentation described in Note 16 -- "Segment Data and Related Information" to the Notes to Unaudited Consolidated Financial Statements for all periods presented.

(Amounts in thousands)			Three Months Ended						Nine Months Ended

			March 31, 2016			March 31, 2015			March 31, 2016			March 31, 2015

Segment Net Sales:
North America			$	107,731		$	107,511		$	482,920		$	507,145
International				84,201			83,853			291,162			303,465

Total			$	191,932		$	191,364		$	774,082		$	810,610




Reconciliation:
Segment Net Sales			$	191,932		$	191,364		$	774,082		$	810,610
Less
Unallocated sales returns and markdowns				--			(289	)⁽²⁾		--			14,972	⁽⁵⁾

Net Sales			$	191,932		$	191,653		$	774,082		$	795,638




Segment Profit (Loss):
North America			$	8,030		$	1,500		$	54,587		$	44,886
International				(15,095	)		(17,245	)		(30,856	)		(26,791	)
Less:
Depreciation and Amortization				10,316			11,504			32,070			36,971
Interest Expense, net				7,345			7,055			22,365			22,523
Consolidation and Elimination Adjustments				156			(14	)		892			1,501
Unallocated Corporate Expenses				2,328	⁽¹⁾		137	⁽³⁾		17,317	⁽⁴⁾		72,874	⁽⁶⁾

Loss Before Income Taxes			$	(27,210	)	$	(34,427	)	$	(48,913	)	$	(115,774	)




(1)	Amounts for the three months ended March 31, 2016, include $2.3 million in costs and expenses incurred with respect to our 2016 Business Transformation Program, comprised of $0.5 million of inventory costs related to changes in certain distribution and customer arrangements and $1.8 million of severance and other employee-related expenses and related transition costs.

(2)	Amounts for the three months ended March 31, 2015, represent $(0.3) million of adjustments for returns and markdowns previously recorded under our 2014 Performance Improvement Plan, primarily due to changes to our customer and distribution arrangements.

(3)	In addition to the adjustment for returns and markdowns described above in Note 2, amounts for the three months ended March 31, 2015, include:
	*	$0.5 million in costs and expenses under the 2014 Performance Improvement Plan comprised of $0.3 million of inventory write-downs due to discontinuation of certain products, and $0.2 million of severance, other employee-related expenses and related transition costs associated with the reduction in global headcount positions;

(4)	Amounts for the nine months ended March 31, 2016, include $17.3 million in costs and expenses with respect to our 2016 Business Transformation Program, primarily comprised of $4.4 million of inventory costs related to the closing of our Brazilian affiliate, as well as changes in certain distribution and customer arrangements, and $12.9 million of severance and other employee-related expenses and related transition costs.

(5)	Amounts for the nine months ended March 31, 2015, represent $15.0 million of returns and markdowns under our 2014 Performance Improvement Plan, primarily due to changes to our distribution strategy in China, and other customer and distribution arrangements.

(6)	In addition to the returns and markdowns described above in Note 5, amounts for the nine months ended March 31, 2015, include:
	*	$13.9 million in costs and expenses under the 2014 Performance Improvement Plan comprised of $4.9 million of inventory write-downs due to discontinuation of certain products, $4.5 million primarily comprised of customer and vendor contract termination costs, $4.4 million of severance, other employee-related expenses and related transition costs associated with the reduction in global headcount positions, and $0.1 million in asset impairment charges;
	*	$43.8 million in asset impairment charges primarily related to the write-off of the Justin Bieber and Nicki Minaj licenses and other costs; and
	*	$0.2 million of debt extinguishment costs resulting from the December 2014 amendment to our revolving credit facility.

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The following is additional net sales information relating to the following product categories: the Elizabeth Arden Brand (skin care, cosmetics and fragrances) and Designer, Heritage, Celebrity and Other Fragrances.

(Amounts in thousands)	Three Months Ended				Nine Months Ended

	March 31, 2016		March 31, 2015		March 31, 2016		March 31, 2015

Net Sales:
Elizabeth Arden Brand	$	88,856	$	88,711	$	299,343	$	295,902
Designer, Heritage, Celebrity and Other Fragrances		103,076		102,942		474,739		499,736

Total	$	191,932	$	191,653	$	774,082	$	795,638

Three Months Ended March 31, 2016 Compared to Three Months Ended March 31, 2015.

Net Sales Net sales increased by $0.3 million, for the three months ended March 31, 2016, compared to the three months ended March 31, 2015. Excluding the unfavorable impact of foreign currency, net sales increased by 3.1%, or $6.0 million. Net sales for the three months ended March 31, 2015 reflect $0.3 million of adjustments for returns and markdowns previously recorded under our 2014 Performance Improvement Plan primarily due to changes to our customer and distribution arrangements. These adjustments for returns and markdowns were not allocated to our segments. Pricing changes had an immaterial effect on net sales. The following is a discussion of net sales by segments and product categories.

Segment Net Sales:

North America

Net sales increased by $0.2 million, for the three months ended March 31, 2016, compared to the three months ended March 31, 2015. Excluding the unfavorable impact of foreign currency, net sales increased by 1.0%, or $1.1 million. Net sales of licensed and non-Elizabeth Arden branded, owned products increased by $1.3 million primarily due to higher sales of Justin Bieber, Juicy Couture and John Varvatos fragrances, partially offset by the lack of sales of True Religion due to the expiration of that license in the prior year. Net sales of Elizabeth Arden branded products were flat as higher sales of skin and color cosmetic products were offset by lower sales of fragrance products. Net sales of distributed brands were $1.0 million lower than the prior year period.

International

Net sales for the three months ended March 31, 2016, increased by $0.3 million compared to the prior year period. Excluding the unfavorable impact of foreign currency, net sales increased by 6.2%, or $5.2 million. Net sales of Elizabeth Arden branded products increased by $0.5 million as higher sales of fragrance products were partially offset by lower sales of skin care and color cosmetic products. Net sales of licensed and non-Elizabeth Arden-branded, owned products were relatively flat compared to the prior year period, as higher net sales of Juicy Couture and John Varvatos fragrances were offset by lower net sales of Britney Spears fragrances. Higher net sales in Europe and the Middle East were mostly offset by lower net sales in Greater China, Asia Pacific, Latin America and South Africa.

Product Category Net Sales:

Elizabeth Arden Brand

Net sales of Elizabeth Arden branded products for the three months ended March 31, 2016, increased by $0.1 million compared to the prior year period, excluding the unfavorable impact of foreign currency, net sales increased by 4.7%, or $4.2 million. Net sales for the three months ended March 31, 2015 reflect $0.3 million of adjustments for Elizabeth Arden branded products for returns and markdowns previously recorded under our 2014 Performance Improvement Plan. Net sales of fragrance products increased by $2.1 million, or 7.4% and net sales of color cosmetic products increased by $0.3 million, or 2.5%. Net sales of skin care products decreased by $2.2 million, or 4.6%.

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Designer, Heritage, Celebrity and Other Fragrances

Net sales for the three months ended March 31, 2016, increased by $0.1 million compared to the prior year period. Excluding the unfavorable impact of foreign currency, net sales increased by 1.8% or $1.8 million. Higher net sales of Juicy Couture, Justin Bieber and John Varvatos fragrances were partially offset by lower net sales of Britney Spears fragrances as well the lack of sales of True Religion fragrances due to the expiration of the license in the prior year. Sales of distributed brands were $1.2 million lower than the prior year period.

Gross Margin. For the three months ended March 31, 2016 and 2015, gross margins were 43.9% and 41.6%, respectively. The current year gross margin was favorably impacted primarily by a lower proportion of discounts and allowances and a higher proportion of sales of higher margin products. Gross margin in the current year period was negatively impacted by $0.5 million, or 30 basis points, of inventory costs related to changes in certain distribution and customer arrangements.

SG&A. Selling, general and administrative expenses decreased by 2.3%, or $2.3 million, for the three months ended March 31, 2016, compared to the three months ended March 31, 2015. The decrease was primarily due to lower general and administrative expenses totaling $4.7 million partially offset by a $2.5 million increase in marketing and sales expenses.

The decrease in general and administrative expenses in the current year period primarily resulted from the impact of foreign currency translation of our affiliates' balance sheets as the current year included gains of $0.6 million compared to losses of $2.9 million in the prior year period, and lower payroll, employee related and professional services expenses of $1.2 million.

General and administrative expenses for the three months ended March 31, 2016, included $1.8 million in expenses under our 2016 Business Transformation Program for severance and other employee-related expenses and related transition costs. For the three months ended March 31, 2015, general and administrative expenses included $0.2 million in expenses under our 2014 Performance Improvement Plan. For the three months ended March 31, 2016 and 2015, total share-based compensation costs charged against income for all stock plans were $1.4 million and $1.3 million, respectively.

The increase of $2.5 million in marketing and sales expenses for the three months ended March 31, 2016, was primarily due to $4.9 million in higher marketing and selling expenses (excluding royalties), partially offset by $1.6 million of lower royalty expense primarily due to lower net sales of certain licensed products in the current year period and lower marketing and sales overhead expenses of $0.8 million.

Segment Profit.

North America

Segment profit increased $6.5 million, as compared to the prior year. The increase in segment profit was due to higher gross profit and lower general and administrative expenses.

International

Segment loss was $15.1 million, as compared to a segment loss of $17.2 million in the prior year. The improvement in segment results was primarily due to lower general and administrative expenses.

Depreciation and Amortization Expense. Depreciation and amortization expense decreased by 6.8%, or $0.7 million, for the three months ended March 31, 2016, compared to the three months ended March 31, 2015. The decrease for the current year period was primarily due to lower depreciation expense for master tester units, leasehold improvements and in-store counters.

Interest Expense, Net. Interest expense, net of interest income, was 4.1%, or $0.3 million, higher for the three months ended March 31, 2016, compared to the three months ended March 31, 2015, as interest resulting from borrowings under our second lien credit agreement and higher interest rates were only partially offset by lower average borrowings under our revolving credit facility. See Note 9 to the Notes to Unaudited Consolidated Financial Statements.

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Provision for Income Taxes. The pre-tax loss from our domestic and international operations consisted of the following for the three months ended March 31, 2016 and 2015:

(Amounts in thousands)	Three Months Ended

	March 31, 2016			March 31, 2015

Domestic pre-tax loss	$	(24,559	)	$	(26,817	)
Foreign pre-tax loss		(2,651	)		(7,610	)

Total loss before income taxes	$	(27,210	)	$	(34,427	)

Effective tax rate		(1.9	)%		(1.5	)%

Commencing with the fourth quarter of 2014, we have recorded valuation allowances against our U.S. deferred tax assets as a non-cash charge to income tax expense. The valuation allowances for our net deferred tax assets have resulted in our inability to record tax benefits on future losses in our U.S. operations unless sufficient future taxable income is generated in such operations to support the realization of the deferred tax assets. As a result, we could not recognize a tax benefit on our U.S. pre-tax loss for either of the three months ended March 31, 2016 or 2015, and have instead recorded valuation allowances of $9.2 million and $11.2 million, respectively, for these periods. Additionally, commencing in the second quarter of fiscal 2015, we began recording valuation allowances against our deferred tax assets in certain of our foreign operations as non-cash charges to income tax expense. For the three months ended March 31, 2016, we recorded a valuation allowance of $0.8 million against our deferred tax assets in such foreign operations. The valuation allowance related to our foreign operations was not material for the three months ended March 31, 2015.

The valuation allowances for our net deferred tax assets will not impact our cash flow for a number of years; however, they did have a direct negative impact on net income and shareholders' equity for the three months ended March 31, 2016, and for the fiscal year ending June 30, 2015. In addition, they will result in our inability to record tax benefits on future losses in these jurisdictions unless sufficient future taxable income is generated in the applicable jurisdictions to support the realization of the deferred tax assets. Recording the valuation allowances does not restrict our ability to utilize net operating losses associated with the deferred tax assets assuming taxable income of the appropriate character is recognized in the applicable jurisdictions in periods prior to the expiration of such net operating losses. A return to sustained profitability in these jurisdictions is an example of objective positive evidence that could result in a potential reversal of all or a portion of the valuation allowances in future periods. However, there is no assurance that we will be able to reverse all or a portion of the valuation allowances in the future.

In general, we record income tax expense for interim periods based on our best estimate as to the full fiscal year's effective tax rate. For interim reporting, the effective tax rate is based on expected full year reported earnings and considers earnings contribution by tax jurisdiction. As facts and circumstances that could impact the full year expected earnings or the expected earnings contribution by tax jurisdiction change during the year, the effective tax rate is adjusted in the period in which such changes become known or are enacted into law. Additionally, discrete items that could impact the effective tax rate are reported in the interim period incurred. However, with the exception of deferred tax liabilities associated with indefinite-lived assets, which cannot be used as a source of taxable income, the U.S. and certain foreign jurisdictions were removed from the base calculation of our annual effective tax rate, as we expect these jurisdictions to generate losses for which no benefit will be recognized.

The effective tax rate in the current year period was lower as compared to the prior year period, primarily due to a shift in the ratio of earnings contributions between jurisdictions and the impact of the valuation allowances in the U.S. and certain foreign jurisdictions. The effective tax rate for the full fiscal year ended June 30, 2015 was (2.9)%.

A substantial portion of our consolidated taxable income (loss) is typically generated in Switzerland, where our international operations are headquartered and managed, and is taxed at a significantly lower effective tax rate than our domestic taxable income (loss). As a result, any material shift in the relative proportion of our consolidated taxable income (loss) that is generated between the United States and Switzerland could have a material effect on our consolidated effective tax rate.

Net Loss Attributable to Elizabeth Arden Common Shareholders. Net loss attributable to Elizabeth Arden common shareholders for the three months ended March 31, 2016, was $28.4 million, compared to $35.1 million for the three months ended March 31, 2015. The improvement in results compared to the prior year was primarily due to higher gross profit and lower general and administrative expenses.

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EBITDA. EBITDA (net income attributable to Elizabeth Arden common shareholders plus the provision for income taxes (or net loss less the benefit from or plus the provision for income taxes), plus interest expense, plus depreciation and amortization expense, plus net income (or net loss) attributable to noncontrolling interest, plus accretion and dividends on preferred stock) for the three months ended March 31, 2016, was $(9.5) million, and represents an improvement of $6.4 million compared to the prior year amount of $(15.9) million, due to higher gross profit and lower general and administrative expenses. EBITDA for the three months ended March 31, 2016, includes:

	*	$0.5 million of inventory costs under our 2016 Business Transformation Program primarily related to changes in certain distribution and customer arrangements; and
	*	$1.8 million of severance and other employee-related expenses and related transition costs under our 2016 Business Transformation Program.

EBITDA for the three months ended March 31, 2015, includes:

	*	$(0.3) million of adjustments for returns and markdowns previously recorded under our 2014 Performance Improvement Plan primarily due to changes to our customer and distribution arrangements;
	*	$0.3 million of inventory write-downs under our 2014 Performance Improvement Plan, due to discontinuation of certain products; and
	*	$0.2 million of severance, other employee-related expenses and related transition costs associated with the reduction in global headcount positions.

EBITDA should not be considered as an alternative to operating income (loss) or net income (loss) attributable to Elizabeth Arden common shareholders (as determined in accordance with generally accepted accounting principles) as a measure of our operating performance, or to net cash provided by operating, investing or financing activities (as determined in accordance with generally accepted accounting principles) or as a measure of our ability to meet cash needs. We believe that EBITDA is a measure commonly reported and widely used by investors and other interested parties as a measure of a company's operating performance and debt servicing ability because it assists in comparing performance on a consistent basis without regard to capital structure (particularly when acquisitions are involved), depreciation and amortization, preferred stock accretion or dividends or non-operating factors such as historical cost. Accordingly, as a result of our capital structure, we believe EBITDA is a relevant measure. This information has been disclosed here to permit a more complete comparative analysis of our operating performance relative to other companies and of our debt servicing ability. EBITDA may not, however, be comparable in all instances to other similar types of measures.

In addition, EBITDA has limitations as an analytical tool, including the fact that:

	Ÿ	it does not reflect our cash expenditures, future requirements for capital expenditures or contractual commitments;

	Ÿ	it does not reflect the significant interest expense or the cash requirements necessary to service interest or principal payments on our debt or the dividends or redemption value of our preferred stock;

	Ÿ	it does not reflect any cash income taxes that we may be required to pay; and

	Ÿ	although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future and these measures do not reflect any cash requirements for such replacements.

The following is a reconciliation of net loss attributable to Elizabeth Arden common shareholders, as determined in accordance with generally accepted accounting principles, to EBITDA:

(Amounts in thousands)	Three Months Ended

	March 31, 2016			March 31, 2015

Net loss attributable to Elizabeth Arden common shareholders	$	(28,402	)	$	(35,061	)
Plus:
Provision for income taxes		529			500
Interest expense, net		7,345			7,055
Depreciation in cost of sales		1,420			1,957
Depreciation and amortization		8,896			9,547
Net income (loss) applicable to noncontrolling interest (See Note 5 to Notes to Unaudited Consolidated Financial Statements)		39			(481	)
Dividends on preferred stock (See Note 12 to Notes to Unaudited Consolidated Financial Statements)		624			615

EBITDA	$	(9,549	)	$	(15,868	)

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Nine Months Ended March 31, 2016 Compared to Nine Months Ended March 31, 2015.

Net Sales. Net sales decreased by 2.7%, or $21.6 million, for the nine months ended March 31, 2016, compared to the nine months ended March 31, 2015. Excluding the unfavorable impact of foreign currency, net sales increased by 1.6%, or $12.4 million. Net sales for the nine months ended March 31, 2015 reflect $15.0 million of returns and markdowns recorded under our 2014 Performance Improvement Plan primarily due to changes to our distribution strategy in China, and other customer and distribution arrangements. These returns and markdowns were not allocated to our segments. Pricing changes had an immaterial effect on net sales. The following is a discussion of net sales by segments and product categories.

Segment Net Sales:

North America

Net sales decreased by 4.8%, or $24.2 million, for the nine months ended March 31, 2016, compared to the nine months ended March 31, 2015. Excluding the unfavorable impact of foreign currency, net sales decreased by 3.8%, or $19.2 million. Net sales of licensed and non-Elizabeth Arden branded, owned products decreased by $9.0 million primarily due to (i) the lack of sales of Usher and True Religion fragrances due to the expiration of those licenses in the prior year, and (ii) lower sales of Britney Spears, Justin Bieber, Nicki Minaj and Ed Hardy fragrances, partially offset by higher net sales of Curve, John Varvatos, Elizabeth Taylor and Juicy Couture fragrances. Net sales of Elizabeth Arden branded products decreased by $8.5 million primarily due to lower sales of fragrances and skin care products. Net sales of distributed brands were $6.7 million lower than the prior year period, primarily due to lower sales of One Direction fragrances.

International

Net sales for the nine months ended March 31, 2016, decreased by 4.1%, or $12.3 million compared to the nine months ended March 31, 2015. Excluding the unfavorable impact of foreign currency, net sales increased by 5.5%, or $16.6 million. Net sales of licensed and non-Elizabeth Arden-branded, owned products decreased by $10.5 million from the prior year period, primarily due to lower sales of Britney Spears, Justin Bieber, Mariah Carey and Nicki Minaj fragrances, partially offset by higher net sales of John Varvatos and Juicy Couture fragrances. Net sales of Elizabeth Arden branded products decreased by $1.4 million as lower sales of skin care and color cosmetic products were partially offset by higher sales of fragrance products. Net sales in the Asia Pacific and Latin America regions decreased by an aggregate of $14.1 million, and were partially offset by higher sales in the Middle East and Greater China.

Product Category Net Sales:

Elizabeth Arden Brand

Net sales of Elizabeth Arden branded products for the nine months ended March 31, 2016, increased by 1.2%, or $3.4 million compared to the prior year period. Excluding the unfavorable impact of foreign currency, net sales increased by 8.4%, or $24.8 million. Net sales for the nine months ended March 31, 2015, reflect $13.6 million of unallocated returns and markdowns for Elizabeth Arden branded products recorded as a result of our 2014 Performance Improvement Plan. Net sales of fragrance products increased by 6.5%, or $7 million, and net sales of skin care products were $0.4 million higher in part due to the launch of SUPERSTART Skin Renewal. Net sales of color cosmetic products decreased by 9.4%, or $4.0 million.

Designer, Heritage, Celebrity and Other Fragrances

Net sales for the nine months ended March 31, 2016, decreased by 5.0% or $25.0 million. Excluding the unfavorable impact of foreign currency, net sales decreased by 2.5% or $12.4 million. The decrease in net sales was primarily due to (i) lower sales of Britney Spears, Justin Bieber and Nicki Minaj fragrances, and (ii) the lack of sales of Usher and True Religion fragrances due to the expiration of those licenses in the prior year, partially offset by higher net sales of John Varvatos, Curve, Juicy Couture and Elizabeth Taylor fragrances. Net sales of distributed brands were $7.1 million lower than the prior year period, primarily due to lower sales of One Direction fragrances.

Gross Margin. For the nine months ended March 31, 2016 and 2015, gross margins were 43.6% and 41.4%, respectively. Gross margin in the current year period was negatively impacted by $4.4 million, or 60 basis points, of inventory costs related to the closing of our Brazilian affiliate, as well as changes in certain distribution and customer arrangements. Gross margin in the prior year period was negatively impacted by $19.9 million, or 170 basis points, of returns, markdowns and inventory write-downs under our 2014 Performance Improvement Plan. The improvement in gross margin was also due to a higher proportion of sales of higher margin products in the current year as compared to our strategic decision in the prior year period to reduce levels of certain inventories at reduced margins.

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SG&A. Selling, general and administrative expenses decreased by 14.0%, or $54.9 million, for the nine months ended March 31, 2016, compared to the nine months ended March 31, 2015. The decrease was primarily due to lower general and administrative expenses totaling $51.0 million, as the prior year period included the asset impairment charges discussed below. In addition, marketing and sales expenses for the nine months ended March 31, 2016, decreased by $3.9 million, compared to the nine months ended March 31, 2015.

During the nine months ended March 31, 2015, we recorded $43.8 million in asset impairment charges primarily related to the write-off of the Justin Bieber and Nicki Minaj licenses and other costs. In addition, for the nine months ended March 31, 2015, general and administrative expenses included $9.0 million in expenses under our 2014 Performance Improvement Plan. General and administrative expenses for the nine months ended March 31, 2016, included $12.9 million in expenses under our 2016 Business Transformation Program for severance and other employee-related expenses and related transition costs.

In addition to the items discussed above, the decrease in general and administrative expenses in the current year period was also due to the impact of foreign currency translation of our affiliates' balance sheets as the current year included losses of $2.4 million compared to losses of $7.5 million in the prior year period, and lower payroll and employee related expenses, including lower incentive compensation costs, of $5.5 million. For the nine months ended March 31, 2016 and 2015, total share-based compensation costs charged against income for all stock plans were $4.1 million and $4.0 million, respectively.

The decrease of $3.9 million in marketing and sales expenses for the nine months ended March 31, 2016, was primarily due to $4.8 million of lower marketing and sales overhead expenses in part due to the overall simplification of our sales and marketing organizations under the 2014 Performance Improvement Plan, and $3.3 million of lower royalty expense primarily due to lower net sales of certain licensed products in the current year period, partially offset by $4.2 million in higher marketing and selling expenses (excluding royalties).

Segment Profit (Loss):

North America

Segment profit increased 21.6%, or $9.7 million, as compared to the prior year. The increase in segment profit was primarily due to lower general and administrative expenses, partially offset by lower net sales and gross profit.

International

Segment loss increased by $4.1 million, as compared to the prior year. The increase in segment loss was primarily due to lower sales and gross profit, partially offset by lower general and administrative expenses.

Depreciation and Amortization Expense. Depreciation and amortization expense decreased by11.2%, or $3.5 million, for the nine months ended March 31, 2016, compared to the nine months ended March 31, 2015. The decrease in depreciation and amortization expense for the current year period was primarily due to lower amortization expense for brand licenses, trademarks and intangibles as a result of the asset impairments recorded during the second quarter of fiscal 2015 for certain fragrance licenses.

Interest Expense, Net. Interest expense, net of interest income, was slightly lower for the nine months ended March 31, 2016, compared to the nine months ended March 31, 2015, as lower average borrowings under our revolving credit facility were partially offset by borrowings under our second lien credit agreement and higher interest rates.

Debt Extinguishment Charges. For the nine months ended March 31, 2015, we recorded approximately $0.2 million of debt extinguishment charges related to the December 2014 amendment of our revolving bank credit facility.

Provision for Income Taxes. The pre-tax loss from our domestic and international operations consisted of the following for the nine months ended March 31, 2016 and 2015:

(Amounts in thousands)	Nine Months Ended

	March 31, 2016			March 31, 2015

Domestic pre-tax loss	$	(40,277	)	$	(92,003	)
Foreign pre-tax loss		(8,636	)		(23,771	)

Total loss before income taxes	$	(48,913	)	$	(115,774	)

Effective tax rate		(2.9	)%		(1.3	)%

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Commencing with the fourth quarter of 2014, we have recorded valuation allowances against our U.S. deferred tax assets as a non-cash charge to income tax expense. The valuation allowances for our net deferred tax assets have resulted in our inability to record tax benefits on future losses in our U.S. operations unless sufficient future taxable income is generated in such operations to support the realization of the deferred tax assets. As a result, we could not recognize a tax benefit on our U.S. pre-tax loss for either of the nine months ended March 31, 2016 or 2015, and have instead recorded valuation allowances of $10.4 million and $37.2 million, respectively, for these periods. Additionally, commencing in the second quarter of fiscal 2015, we began recording valuation allowances against our deferred tax assets in certain of our foreign operations as non-cash charges to income tax expense. For the nine months ended March 31, 2016 and 2015, we recorded valuation allowances of $3.2 million and $2.5 million, respectively, against our deferred tax assets in such foreign operations.

The valuation allowances for our net deferred tax assets will not impact our cash flow for a number of years; however, they did have a direct negative impact on net income and shareholders' equity for the nine months ended March 31, 2016 and for the fiscal year ending June 30, 2015. In addition, they will result in our inability to record tax benefits on future losses in these jurisdictions unless sufficient future taxable income is generated in such jurisdictions to support the realization of the deferred tax assets. Recording the valuation allowances does not restrict our ability to utilize net operating losses associated with the deferred tax assets assuming taxable income of the appropriate character is recognized in the applicable jurisdictions in periods prior to the expiration of such net operating losses. A return to sustained profitability in these jurisdictions is an example of objective positive evidence that could result in a potential reversal of all or a portion of the valuation allowances in future periods. However, there is no assurance that we will be able to reverse all or a portion of the valuation allowances in the future.

In general, we record income tax expense for interim periods based on our best estimate as to the full fiscal year's effective tax rate. For interim reporting, the effective tax rate is based on expected full year reported earnings and considers earnings contribution by tax jurisdiction. As facts and circumstances that could impact the full year expected earnings or the expected earnings contribution by tax jurisdiction change during the year, the effective tax rate is adjusted in the period in which such changes become known or are enacted into law. Additionally, discrete items that could impact the effective tax rate are reported in the interim period incurred. However, with the exception of deferred tax liabilities associated with indefinite-lived assets, which cannot be used as a source of taxable income, the U.S and certain foreign jurisdictions were removed from the base calculation of our annual effective tax rate, as we expect these jurisdictions to generate losses for which no benefit will be recognized.

The effective tax rate in the current year period was lower as compared to the prior year period, primarily due to (i) a shift in the ratio of earnings contributions between jurisdictions, (ii) the impact of the valuation allowances in the U.S. and certain foreign jurisdictions, and (iii) a $0.7 million tax benefit related to tax adjustments for changes in estimates and other tax related items. The effective tax rate for the full fiscal year ended June 30, 2015 was (2.9)%.

Net Loss Attributable to Elizabeth Arden Common Shareholders. Net loss attributable to Elizabeth Arden common shareholders for the nine months ended March 31, 2016, was $50.6 million, compared to $137.6 million for the nine months ended March 31, 2015. The improvement in results compared to the prior year was primarily due to lower selling, general and administrative expenses in the current year period, as a result of the asset impairment charges recorded in the prior year period. The prior year amount also includes accretion of $20.1 million for the change in redemption value of preferred stock that we issued in August 2014. We decided to recognize the accretion immediately and recorded the full accretion in the first quarter of fiscal 2015. See Note 12 to Notes to Unaudited Consolidated Financial Statements.

EBITDA. EBITDA (net income attributable to Elizabeth Arden common shareholders plus the provision for income taxes (or net loss less the benefit from or plus the provision for income taxes), plus interest expense, plus depreciation and amortization expense, plus net income (or net loss) attributable to noncontrolling interest, plus accretion and dividends on preferred stock) for the nine months ended March 31, 2016, was $5.5 million and, represents an improvement of $61.8 million compared to the prior year amount of $(56.3) million primarily due to lower selling, general and administrative expenses. EBITDA for the nine months ended March 31, 2016, includes:

	*	$4.4 million of inventory costs under our 2016 Business Transformation Program primarily related to the closing of our Brazilian affiliate, as well as changes in certain distribution and customer arrangements, and
	*	$12.9 million primarily of severance and other employee-related expenses and related transition costs under our 2016 Business Transformation Program.

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EBITDA for the nine months ended March 31, 2015, includes:

	*	$15.0 million of returns and markdowns under our 2014 Performance Improvement Plan primarily as a result of changes to our distribution strategy in China and other customer and distribution arrangements;
	*	$4.9 million of inventory write-downs under our 2014 Performance Improvement Plan due to discontinuation of certain products;
	*	$9.0 million in expenses under the 2014 Performance Improvement Plan primarily comprised of $4.5 million for customer and vendor contract termination costs, $4.4 million of severance, other employee-related expenses and related transition costs associated with the reduction in global headcount positions and $0.1 million in asset impairment charges;
	*	$43.8 million in asset impairment charges primarily related to the write-off of the Justin Bieber and Nicki Minaj licenses and other costs; and
	*	$0.2 million of debt extinguishment costs resulting from the December 2014 amendment to our revolving credit facility.

In addition, EBITDA has limitations as an analytical tool, including the fact that:

	Ÿ	it does not reflect our cash expenditures, future requirements for capital expenditures or contractual commitments;

	Ÿ	it does not reflect the significant interest expense or the cash requirements necessary to service interest or principal payments on our debt or the dividends or redemption value of our preferred stock;

	Ÿ	it does not reflect any cash income taxes that we may be required to pay; and

	Ÿ	although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future and these measures do not reflect any cash requirements for such replacements.

The following is a reconciliation of net (loss) income attributable to Elizabeth Arden common shareholders, as determined in accordance with generally accepted accounting principles, to EBITDA:

(Amounts in thousands)	Nine Months Ended

	March 31, 2016			March 31, 2015

Net loss attributable to Elizabeth Arden common shareholders	$	(50,593	)	$	(137,635	)
Plus:
Provision for income taxes		1,433			1,557
Interest expense, net		22,365			22,523
Depreciation in cost of sales		4,489			5,916
Depreciation and amortization		27,581			31,055
Net loss applicable to noncontrolling interest (See Note 5 to Notes to Unaudited Consolidated Financial Statements)		(1,690	)		(1,396	)
Accretion and dividends on preferred stock (See Note 12 to Notes to Unaudited Consolidated Financial Statements)		1,937			21,700

EBITDA	$	5,522		$	(56,280	)

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The following is a reconciliation of net cash flow (used in) provided by operating activities, as determined in accordance with generally accepted accounting principles, to EBITDA:

(Amounts in thousands)	Nine Months Ended

	March 31, 2016				March 31, 2015

Net cash (used in) provided by operating activities	$	(42,021	)		$	40,590
Changes in assets and liabilities, net of acquisitions		28,981				(73,207	)
Interest expense, net		22,365				22,523
Amortization of senior note offering and credit facility costs		(1,248	)			(1,200	)
Amortization of senior note premium		637				599
Provision for income taxes		1,433				1,557
Deferred income taxes		(489	)			51
Amortization of share-based awards		(4,136	)			(4,028	)
Asset impairments		--				(42,926	)
Debt extinguishment charges		--				(239	)

EBITDA	$	5,522		$		(56,280	)

Liquidity and Capital Resources

The following chart summarizes our cash flows (outflows) from operating, investing and financing activities for the nine months ended March 31, 2016 and 2015:

(Amounts in thousands)	Nine Months Ended

	March 31, 2016			March 31, 2015

Net cash (used in) provided by operating activities	$	(42,021	)	$	40,590
Net cash used in investing activities		(19,180	)		(25,329	)
Net cash provided by financing activities		57,272			25,041
Net (decrease) increase in cash and cash equivalents		(4,955	)		35,509

Operating Activities

Cash (used in) provided by our operating activities is driven by net loss adjusted for non-cash expenses and changes in working capital. The following chart illustrates our net cash (used in) provided by operating activities for the nine months ended March 31, 2016 and 2015:

(Amounts in thousands)	Nine Months Ended

	March 31, 2016			March 31, 2015

Net loss	$	(50,346	)	$	(117,331	)
Net adjustments to reconcile net loss to net cash (used in) provided by operating activities		37,306			84,714
Net change in assets and liabilities, net of acquisitions ("working capital changes")		(28,981	)		73,207

Net cash (used in) provided by operating activities	$	(42,021	)	$	40,590

For the nine months ended March 31, 2016, net cash used in operating activities was $42.0 million, as compared to net cash provided by operating activities $40.6 million for the nine months ended March 31, 2015. Net loss was $50.3 million for the nine months ended March 31, 2016, as compared to net loss of $117.3 million for the prior year period, representing an improvement of $67.0 million. Net adjustments to reconcile net loss to cash (used in) provided by operating activities decreased by $47.4 million as compared to the prior year. Working capital changes reflected a use of cash of $29.0 million in the current year period as compared to a source of cash of $73.2 million in the prior year. Working capital changes in the current period as compared to the prior year period were primarily driven by (i) lower declines in inventory, (ii) an increase in account receivable balances compared to a decrease in the prior year period, and (iii) a decrease in prepaid expenses and other assets in the prior year period, partially offset by lower declines in payables and accruals in the aggregate in the current period compared to the prior year period.

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Investing Activities

The following chart illustrates our net cash used in investing activities for the nine months ended March 31, 2016 and 2015:

(Amounts in thousands)	Nine Months Ended

	March 31, 2016			March 31, 2015

Additions to property and equipment	$	(8,743	)	$	(19,120	)
Acquisition of businesses, intangibles and other assets		(10,500	)		(6,264	)
Cash received from consolidation of variable interest entity		63			55

Net cash used in investing activities	$	(19,180	)	$	(25,329	)

For the nine months ended March 31, 2016, net cash used in investing activities of $19.2 million was composed of (i) $8.7 million of capital expenditures, (ii) $10.5 million for the acquisition of the U.S and international trademarks associated with the Giorgio of Beverly Hills fragrance line, and (iii) $63,000 of cash received in connection with the formation of our joint venture in Southeast Asia and the requirement to consolidate its financial statements. For the nine months ended March 31, 2015, net cash used in investing activities of $25.3 million was composed of (i) $2.3 million for the acquisition of the trademark and patents for ingredients used in certain skin care products, (ii) $4.0 million paid to a minority investor who put their interest in Elizabeth Arden Salon Holdings, LLC to us, (iii) $19.1 million of capital expenditures principally for computer hardware and software related to implementation of the last phase of our Oracle global enterprise system and for in-store counters and displays, and (iv) $55,000 of cash received in connection with the formation of our joint venture in the United Arab Emirates and the requirement to consolidate its financial statements. The decrease in capital expenditures for the nine months ended March 31, 2016, is primarily due to lower spending for computer hardware and software.

Financing Activities

The following chart illustrates our net cash provided by financing activities for the nine months ended March 31, 2016 and 2015:

(Amounts in thousands)	Nine Months Ended

	March 31, 2016			March 31, 2015

Proceeds from (payments on) short-term debt	$	59,200		$	(16,418	)
Proceeds from the issuance of preferred stock and convertible warrants, net of issuance costs		--			43,993
Financing fees paid		(867	)		(1,959	)
Preferred stock dividend		(973	)		(487	)
All other financing activities		(88	)		(88	)

Net cash provided by financing activities	$	57,272		$	25,041

For the nine months ended March 31, 2016, net cash provided by financing activities was $57.3 million, as compared to $25.0 million for the nine months ended March 31, 2015. Net cash provided by financing activities for the nine months ended March 31, 2015, includes $44.0 million received in connection with the issuance of our preferred stock and convertible warrants, net of payments of approximately $6.0 million in issuance costs incurred as part of the transaction. See Note 12 to the Notes to Unaudited Consolidated Financial Statements.

During the nine months ended March 31, 2016, borrowings under our credit facility and second lien credit agreement increased by $59.2 million from a balance of $8.3 million at June 30, 2015. For the nine months ended March 31, 2016, net cash provided by financing activities includes financing fees paid of approximately $0.9 million related to fiscal 2016 amendments of our second lien credit agreement, as well as preferred dividends paid of $1.0 million. During the nine months ended March 31, 2015, borrowings under our credit facility decreased by $14.0 million from a balance of $78.0 million at June 30, 2014. During the nine months ended March 31, 2015, we also paid the outstanding borrowings under a credit facility agreement between a foreign subsidiary and HSBC Bank plc, representing a decrease of $2.4 million from the June 30, 2014 balance. For the nine months ended March 31, 2015, net cash provided by financing activities included financing fees paid of approximately $2.0 million related to the December 2014 amendment of our credit facility, as well as preferred dividends paid of $0.5 million.

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Interest paid during the nine months ended March 31, 2016, included $25.8 million of interest payments on the 7 3/8% senior notes due 2021 and $2.8 million of interest paid on the borrowings under our credit facility and second lien credit agreement. Interest paid during the nine months ended March 31, 2015, included $25.8 million of interest payments on the 7 3/8% senior notes due 2021 and $3.0 million of interest paid on the borrowings under our credit facility.

At March 31, 2016, we had approximately $41.1 million of cash, of which $39.7 million was held outside of the United States primarily in China, South Africa, the Netherlands, Switzerland, Australia, and Spain. During the fourth quarter of fiscal 2015, we finalized an intercompany loan agreement between a foreign subsidiary incorporated in Switzerland and a U.S. subsidiary. Under the terms of the intercompany loan agreement, our foreign subsidiary loaned $42 million to our U.S subsidiary. The intercompany loan is payable on or before June 30, 2020. The cash held outside the U.S. is needed to meet local working capital requirements and to fund the expansion of our international operations, and is therefore considered permanently reinvested outside the U.S.

Future Liquidity and Capital Needs. Our principal future uses of funds are for working capital requirements, including brand and product development and marketing expenses, new product launches, additional brand acquisitions or product licensing and distribution arrangements, capital expenditures, debt service and preferred stock dividends. In addition, we may use funds to repurchase material amounts of our common stock and senior notes through open market purchases, privately negotiated transactions or otherwise, depending upon prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. We have historically financed our working capital needs primarily through internally generated funds, our credit facilities and external financing. We collect cash from our customers based on our sales to them and their respective payment terms.

We have a $300 million revolving bank credit facility with a syndicate of banks, for which JPMorgan Chase Bank is the administrative agent, which generally provides for borrowings on a revolving basis, with a sub-limit of $25 million for letters of credit. Under the terms of the credit facility, we may, at any time, increase the size of the credit facility up to $375 million without entering into a formal amendment requiring the consent of all of the banks, subject to satisfaction of certain conditions. The credit facility matures in December 2019. See Note 9 to the Notes to Unaudited Consolidated Financial Statements.

The credit facility is guaranteed by all of our U.S. subsidiaries and is collateralized by a first priority lien on all of our U.S. accounts receivable and inventory. Borrowings under the credit facility are limited to 85% of eligible accounts receivable and 85% of the appraised net liquidation value of our inventory, as determined pursuant to the terms of the credit facility; provided, however, that from August 15 to October 31 of each year, our borrowing base may be temporarily increased by up to $25 million.

The credit facility has only one financial maintenance covenant, which is a debt service coverage ratio that must be maintained at not less than 1.1 to 1 if (a) average borrowing base capacity (calculated on a rolling three-day basis) is equal to or less than ten percent (10%) of total borrowing availability under the credit facility, or (b) our borrowing availability under the credit facility, plus domestic cash and cash equivalents, is less than $20 million at any time. Our average borrowing base capacity and borrowing availability for the quarter ended March 31, 2016, did not fall below the applicable thresholds noted above. Accordingly, the debt service coverage ratio did not apply for the quarter ended March 31, 2016. We were in compliance with all applicable covenants under the credit facility for the quarter ended March 31, 2016.

Under the terms of the credit facility, we may pay dividends or repurchase common stock if (a) we maintain a debt service coverage ratio of not less than 1.1 to 1.0 and maintain borrowing base capacity plus domestic cash and cash equivalents, in each case after giving effect to the applicable payment, of (i) at least $30 million from February 1 to August 31, and (ii) at least $35 million from September 1 to January 31, or (b) maintain borrowing base capacity plus domestic cash and cash equivalents of (i) at least $40 million from February 1 to August 31, and (ii) at least $45 million from September 1 to January 31. The credit facility restricts us from incurring additional non-trade indebtedness (other than refinancings and certain small amounts of indebtedness).

Borrowings under the credit portion of the credit facility bear interest at a floating rate based on an "Applicable Margin" that is determined by reference to a debt service pricing ratio. At our option, the Applicable Margin may be applied to either the London InterBank Offered Rate (LIBOR) or the base rate. The Applicable Margin charged on LIBOR loans ranges from 1.50% to 2.50%, and ranges from 0% to 1.0% for base rate loans, except that the Applicable Margin on the first $25 million of borrowings from August 15 to October 31 of each year, while the temporary increase in our borrowing base is in effect, is 1.0% higher. We are required to pay an unused commitment fee of 0.375% per annum based on the quarterly average utilization. The interest rates payable by us on our 7 3/8% senior notes and on borrowings under our revolving credit facility and second lien credit agreement are not impacted by credit rating agency actions.

At March 31, 2016, the Applicable Margin was 2.50% for LIBOR loans and 1.00% for prime rate loans. For the nine months ended March 31, 2016 and 2015, the weighted average annual interest rate on borrowings under the credit facility was 2.9% and 2.7%, respectively.

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We also have a $25 million second lien credit agreement with JPMorgan Chase Bank, N.A. The second lien credit agreement matures on October 16, 2017. The second lien credit agreement is collateralized by a second priority lien on all our U.S. accounts receivable and inventories. In connection with an October 2015 amendment to the second lien credit agreement, we also entered into security agreements in favor of JP Morgan Chase Bank, N.A. and the lenders under our credit facility, granting a lien against our U.S. trademarks relating to our Curve fragrance brand and certain related assets to secure our obligations under both the second lien credit agreement and the credit facility. With respect to the credit facility, the security interest in these trademarks and related assets will be released upon payment in full of our obligations under the second lien credit agreement, provided that our minimum debt service coverage ratio (as calculated pursuant to the credit facility) as of the end of the most recently ended fiscal quarter for the preceding twelve months is greater than 1.0 to 1.0 and no default or event of default exists immediately prior to or after giving effect to the release of such security interest.

The second lien credit agreement provides that borrowings will bear interest at a floating rate based on an "Applicable Margin" that is determined by reference to a debt service pricing ratio. At our option, the Applicable Margin may be applied to either the LIBOR or the base rate. The Applicable Margin charged on LIBOR loans ranges from 3.00% to 5.00% and for base rate loans ranges from 1.5% to 3.5%. To the extent we borrow amounts under the second lien credit agreement, we have the option to prepay all or a portion of such borrowings, provided the borrowing base capacity under the credit facility is in excess of $35 million after giving effect to the applicable prepayment each day for the 30 day period ending on the date of the prepayment.

At March 31, 2016, we had $42.5 million in borrowings and $3.4 million in letters of credit outstanding under the credit facility and $25 million in borrowings under our second lien credit agreement. At March 31, 2016, based on eligible accounts receivable and inventory available as collateral, our aggregate borrowing availability under our credit facility and second lien credit agreement was $60.7 million. The borrowing base capacity under the credit facility typically declines in the second half of our fiscal year as our higher accounts receivable balances resulting from holiday season sales are likely to decline due to cash collections.

At March 31, 2016, we had outstanding $350 million aggregate principal amount of 7 3/8% senior notes due March 2021. Interest on the 7 3/8% senior notes accrues at a rate of 7.375% per annum and is payable semi-annually on March 15 and September 15 of every year. The 7 3/8% senior notes rank pari passu in right of payment to indebtedness under our credit facility and any other senior debt, and will rank senior to any future subordinated indebtedness; provided, however, that the 7 3/8% senior notes are effectively subordinated to the credit facility and the second lien credit agreement to the extent of the collateral securing the credit facility and second lien credit agreement. The indenture applicable to the 7 3/8% senior notes generally permits us (subject to the satisfaction of a fixed charge coverage ratio and, in certain cases, also a net income test) to incur additional indebtedness, pay dividends, purchase or redeem our common stock or redeem subordinated indebtedness. The indenture generally limits our ability to create liens, merge or transfer or sell assets. The indenture also provides that the holders of the 7 3/8% senior notes have the option to require us to repurchase their notes in the event of a change of control involving us (as defined in the indenture). The 7 3/8% senior notes are not guaranteed by any of our subsidiaries but could become guaranteed in the future by any domestic subsidiary of ours that guarantees or incurs certain indebtedness in excess of $10 million.

At March 31, 2016, we have outstanding 50,000 shares of our preferred stock, with detachable warrants to purchase up to 2,452,267 shares of our common stock at an exercise price of $20.39 per share. The preferred stock and detachable warrants were issued for aggregate cash consideration of $50 million under a securities purchase agreement we entered into with Nightingale Onshore Holdings L.P. and Nightingale Offshore Holdings L.P., investment funds affiliated with Rhône Capital L.L.C.

Dividends on the preferred stock are due on January 1, April 1, July 1 and October 1 of each year. The preferred stock will also participate in dividends declared or paid, whether in cash, securities or other property, on the shares of common stock for which the outstanding warrants are exercisable. Dividends are payable at the per annum dividend rate of 5% of the liquidation preference, which is initially $1,000 per share. Pursuant to a shareholders' agreement entered into concurrently with the securities purchase agreement, each quarter we will declare and pay in cash no less than fifty percent (50%) of each dividend to which holders of preferred stock are entitled, unless payment of such dividend in cash (i) is prohibited by or would result in a default or event of default under our indenture for the 7 3/8% senior notes, credit facilities and certain other debt documents or (ii) would result in a breach of the legal or fiduciary obligations of the board, in which case we will declare and pay in cash the maximum amount permitted to be paid in cash. If and to the extent that we do not pay the entire dividend to which holders of preferred stock are entitled for a particular period in cash on the applicable dividend payment date, preferential cash dividends will accrue on such unpaid amounts (and on any unpaid dividends in respect thereof) at 5% per annum, and will compound on each dividend payment date, until paid. No cash dividend may be declared or paid on our common stock or other classes of stock over which the preferred stock has preference unless full cumulative dividends have been or contemporaneously are declared and paid in cash on the preferred stock. Accrued dividends payable as of March 31, 2016, were $2,371,066, and dividend arrearage as of March 31, 2016, was $1,747,264. In April 2016, we paid 50%, or $334,535 of the dividend declared in January 2016. After giving effect to the April 2016 dividend payment, dividend arrearage was $2,059,165. See Note 12 to the Notes to Unaudited Consolidated Financial Statements.

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Based upon our internal projections, we believe that existing cash and cash equivalents, internally generated funds and borrowings under our credit facility and second lien credit agreement will be sufficient to cover debt service, preferred stock dividends, working capital requirements and capital expenditures for the next twelve months, other than additional working capital requirements that may result from further expansion of our operations through acquisitions of brands or licensing or distribution arrangements.

As noted above, our credit facility has only one financial covenant, a debt service coverage ratio that applies only if we do not have the requisite average borrowing base capacity and borrowing availability as set forth under the credit facility. Based upon our internal projections, we do not anticipate that our borrowing base capacity or borrowing availability will fall below the applicable thresholds during the next twelve months. Deterioration in the economic and retail environment or continued challenges in our operating performance, however, could cause us to default under our credit facility if we do not have the requisite average borrowing base capacity or borrowing availability and also fail to meet the financial maintenance covenant set forth in the credit facility. In such an event, we would not be allowed to borrow under the credit facility or second lien credit agreement and may not have access to the capital necessary for our business. In addition, a default under our credit facility or second lien credit agreement that causes acceleration of the debt under either facility could trigger a default under our outstanding 7 3/8% senior notes. In the event we are not able to borrow under our credit facility or second lien credit agreement, we would be required to develop an alternative source of liquidity. There is no assurance that we could obtain replacement financing or what the terms of such financing, if available, would be.

We have discussions from time to time with manufacturers and owners of prestige fragrance brands regarding our possible acquisition of trademark, exclusive licensing and/or distribution rights. We currently have no material agreements or commitments with respect to any such acquisition, although we periodically execute routine agreements to maintain the confidentiality of information obtained during the course of discussions with such manufacturers and brand owners. There is no assurance that we will be able to negotiate successfully for any such future acquisitions or that we will be able to obtain acquisition financing or additional working capital financing on satisfactory terms for further expansion of our operations.

Repurchases of Common Stock. We have an existing stock repurchase program pursuant to which our board of directors has authorized the repurchase of $120 million of common stock and that expires on November 30, 2016. There have been no share repurchases since December 2013. Since inception in November 2005, we have repurchased 4,517,309 shares of common stock on the open market under the stock repurchase program at an aggregate cost of $85.3 million, leaving approximately $34.7 million available for additional repurchases under the program. The acquisition of these shares was accounted for under the treasury method.

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Cautionary Note Regarding Forward-Looking Information and Factors That May Affect Future Results

The Securities and Exchange Commission encourages companies to disclose forward-looking information so that investors can better understand a company's future prospects and make informed investment decisions. This Quarterly Report on Form 10-Q and other written and oral statements that we make from time to time contain such forward-looking statements that set out anticipated results based on management's plans and assumptions regarding future events or performance. We have tried, wherever possible, to identify such statements by using words such as "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," "will" and similar expressions in connection with any discussion of future operating or financial performance. In particular, these include statements relating to future actions, prospective products, future operating or financial performance or results of current and anticipated products or sales efforts, expenses and/or cost savings, interest rates, foreign exchange rates, the outcome of contingencies, such as legal proceedings and tax audits, and financial results. A list of factors that could cause our actual results of operations and financial condition to differ materially is set forth below, and these factors are discussed in greater detail under Item 1A -- "Risk Factors" of our Annual Report on Form 10-K for the fiscal year ended June 30, 2015:

*	our ability to implement our 2014 Performance Improvement Plan and our 2016 Business Transformation Program or other restructuring or cost saving initiatives, our ability to realize the anticipated benefits of our 2014 Performance Improvement Plan, our 2016 Business Transformation Program and any other restructuring or cost saving initiatives and/or changes in the timing of such benefits;
*	whether we will incur higher than anticipated costs, expenses or charges related to the implementation of our 2016 Business Transformation Program or any additional restructuring or cost savings activities, and/or changes in the expected timing of such costs, expenses or charges;
*	decisions or actions resulting from our continued reexamination of our business, including implementing any additional restructuring activities, and the timing and amount of any costs, expenses or charges that may be incurred as a result or the benefits anticipated to result from any such decisions or actions;
*	our ability to realize benefits from the strategic investment made by affiliates of Rhône Capital L.L.C. in our company;
*	factors affecting our relationships with our customers or our customers' businesses, including the absence of contracts with customers, our customers' financial condition, reduction in consumer traffic or demand, and changes in the retail, fragrance and cosmetic industries, such as the consolidation of retailers and the closing of retail doors as well as retailer inventory control practices, including, but not limited to, levels of inventory carried at point of sale and practices used to control inventory shrinkage;
*	risks of international operations, including foreign currency fluctuations, hedging activities, restrictions on our ability to repatriate cash, economic and political consequences of terrorist attacks, disruptions in travel, unfavorable changes in U.S. or international laws or regulations, diseases and pandemics, and political instability in certain regions of the world;
*	our reliance on license agreements with third parties for the rights to sell many of our prestige fragrance brands;
*	our reliance on third-party manufacturers for our owned and licensed products and our absence of contracts with suppliers of distributed brands or raw materials and components for manufacturing of owned and licensed brands;
*	delays in shipments, inventory shortages and higher supply chain costs due to the loss of or disruption in our distribution facilities or at key third party manufacturing or fulfillment facilities that manufacture or provide logistic services for our products;
*	our ability to respond in a timely manner to changing consumer preferences and purchasing patterns and other international and domestic conditions and events that impact retailer and/or consumer confidence and demand, such as domestic or international recessions or economic uncertainty;
*	our ability to protect our intellectual property rights and to operate our business without infringing the intellectual property rights of others;
*	the success, or changes in the timing or scope, of our new product launches, advertising and merchandising programs;
*	our ability to successfully manage our inventories;
*	the quality, safety and efficacy of our products;
*	the impact of competitive products and pricing;
*	our ability to (i) implement our growth strategy and acquire or license brands or secure distribution arrangements, (ii) successfully and cost-effectively integrate acquired businesses or new brands, (iii) successfully expand our geographic presence and distribution channels, and (iv) finance our growth strategy and our working capital requirements;
*	our level of indebtedness, our ability to realize sufficient cash flows from operations to meet our debt service obligations and working capital requirements, and restrictive covenants in our revolving credit facility, second lien credit agreement, and the indenture for our 7 3/8% senior notes;
*	our ability to realize sufficient cash flows from operations to meet our dividend and redemption obligations under the terms of our preferred stock, and our ability to comply with our other obligations relating to our preferred stock, including those set forth in the shareholders agreement relating thereto;
*	changes in product mix to less profitable products;
*	the retention and availability of key personnel;

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*

changes in the legal, regulatory and political environment that impact, or will impact, our business, including changes to customs or trade regulations, laws or regulations relating to ingredients or other chemicals or raw materials contained in products, advertising or packaging, or accounting standards or critical accounting estimates;

*

the success of our Elizabeth Arden brand repositioning efforts and global business strategy;

*

the impact of tax audits, including the ultimate outcome of the pending Internal Revenue Service examination of our U.S. federal tax returns for the fiscal years ended June 30, 2010, 2011 and 2012, changes in tax laws or tax rates, and our ability to utilize our deferred tax assets, and/or the establishment of valuation allowances related thereto;

*

our ability to effectively implement, manage and maintain our global information systems and maintain the security of our confidential data and our employees' and customers' personal information;

*

our reliance on third parties for certain outsourced business services, including information technology operations, logistics management and employee benefit plan administration;

*

the potential for significant impairment charges relating to our trademarks, goodwill, investments in other entities or other intangible assets, including license agreements, that could result from a number of factors, including such entities' or brands' business performance or downward pressure on our stock price; and

*

other unanticipated risks and uncertainties.

We caution that the factors described herein and other factors could cause our actual results of operations and financial condition to differ materially from those expressed in any forward-looking statements we make and that investors should not place undue reliance on any such forward-looking statements. Further, any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. New factors emerge from time to time, and it is not possible for us to predict all of such factors. Further, we cannot assess the impact of each such factor on our results of operations or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

As of March 31, 2016, we had $42.5 million in borrowings and $3.4 million in letters of credit outstanding under our revolving credit facility and $25 million in borrowings outstanding under our second lien credit agreement. Borrowings under our revolving credit facility are seasonal, with peak borrowings typically in the months of September, October and November. Borrowings under the credit facility and second lien credit agreement are subject to variable rates and, accordingly, our earnings and cash flow will be affected by changes in interest rates. Based upon our average borrowings under our revolving credit facility and second lien credit agreement during the nine months ended March 31, 2016, and assuming there had been a two percentage point (200 basis point) change in the average interest rate for these borrowings, it is estimated that our interest expense for the nine months ended March 31, 2016 would have increased or decreased by approximately $1.1 million. See Note 9 to the Notes to Unaudited Consolidated Financial Statements.

Foreign Currency Risk

We sell our products in approximately 120 countries around the world. During the fiscal year ended June 30, 2015, we derived approximately 43% of our net sales from our international operations. We conduct our international operations in a variety of different countries and derive our sales in various currencies including the Euro, British pound, Swiss franc, Canadian dollar and Australian dollar, as well as the U.S. dollar. Most of our skin care and cosmetic products are produced in third-party manufacturing facilities located in the U.S. Our operations may be subject to volatility because of currency changes, inflation and changes in political and economic conditions in the countries in which we operate. With respect to international operations, our sales, cost of goods sold and expenses are typically denominated in a combination of local currency and the U.S. dollar. Our results of operations are reported in U.S. dollars. Fluctuations in currency rates can affect our reported sales, margins, operating costs and the anticipated settlement of our foreign denominated receivables and payables. A weakening of the foreign currencies in which we generate sales relative to the currencies in which our costs are denominated, which is primarily the U.S. dollar, may adversely affect our ability to meet our obligations and could adversely affect our business, prospects, results of operations, financial condition or cash flows. Our competitors may or may not be subject to the same fluctuations in currency rates, and our competitive position could be affected by these changes.

As of March 31, 2016, we had open foreign currency contracts that expire between April 30, 2016 and May 31, 2017, with notional amounts of (i) 16.6 million Euros and 1.7 million British pounds used to hedge forecasted foreign subsidiary revenues, (ii) 26.8 million Australian dollars and 25.2 million Canadian dollars used to hedge forecasted cost of sales, and (iii) 16.8 million Swiss francs used to hedge forecasted operating costs.

We have designated each qualifying foreign currency contract as a cash flow hedge. The gains and losses of these contracts will only be recognized in earnings in the period in which the forecasted transaction affects earnings or the transactions are no longer probable of occurring. The realized gain, net of taxes, recognized during the three and nine months ended March 31, 2016, from settled contracts was approximately $0.4 million and $0.7 million, respectively. At March 31, 2016, the unrealized loss, net of taxes, associated with these open contracts of approximately $1.7 million is included in accumulated other comprehensive loss in our consolidated balance sheet. See Notes 2 and 14 to the Notes to Unaudited Consolidated Financial Statements.

When appropriate, we also enter into and settle foreign currency contracts for Euros, British pounds, Canadian dollars and Australian dollars to reduce the exposure of our foreign subsidiaries' balance sheets to fluctuations in foreign currency rates. As of March 31, 2016, there were no such foreign currency contracts outstanding. The realized loss, net of taxes, recognized during the three months ended March 31, 2016, from the settlement of these contracts was $0.4 million and the realized gain, net of taxes, recognized during the nine months ended March 31, 2016, was $0.6 million.

We do not utilize foreign exchange contracts for trading or speculative purposes. There can be no assurance that our hedging operations or other exchange rate practices, if any, will eliminate or substantially reduce risks associated with fluctuating exchange rates.

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ITEM 4. CONTROLS AND PROCEDURES

E. Scott Beattie, our Chairman, President and Chief Executive Officer, and Rod R. Little, our Executive Vice President and Chief Financial Officer, who are our principal executive officer and principal financial officer, respectively, have evaluated the effectiveness and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended), as of the end of the period covered by this quarterly report (the "Evaluation Date"). Based upon such evaluation, they have concluded that, as of the Evaluation Date, our disclosure controls and procedures are functioning effectively.

There have been no changes in our internal control over financial reporting during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS

The Internal Revenue Service ("IRS") began an examination of the Company's U.S. federal tax returns for the years ended June 30, 2010 ("Fiscal 2010"), June 30, 2011 ("Fiscal 2011"), and June 30, 2012 ("Fiscal 2012") during fiscal year 2014 and, in March 2016, issued and IRS letter 950-Z, known as a 30- day Letter, for Fiscal 2010, Fiscal 2011 and Fiscal 2012 relating to transfer pricing matters. In the 30-day Letter, the IRS proposes increases to the Company's U.S. taxable income for Fiscal 2010, Fiscal 2011 and Fiscal 2012 in an amount totaling approximately $99 million. Although the Company has recorded valuation allowances of approximately $141 million against its U.S. deferred tax assets through June 30, 2015, the resolution of the 30-day Letter, could be material to the Company's deferred tax assets and potentially to its consolidated statements of operations in the period in which resolved unless resolved favorably to the Company. The Company disagrees with the proposed adjustments and intends to vigorously contest them and pursue its available remedies. While any IRS examination contains an element of uncertainty, based on current facts and circumstances, the Company believes the ultimate outcome of any protest, appeals or judicial process will not have a material adverse effect on the Company's financial condition, business or prospects. In addition, if the examination is not resolved favorably, the Company has approximately $276 million of U.S. federal operating loss carryforwards through June 30, 2015, which would be available to offset any cash flow impact.

ITEM 1A. RISK FACTORS

Risk factors describing the major risks to our business can be found under Item 1A, "Risk Factors," in our Annual Report on Form 10-K for the fiscal year ended June 30, 2015. There has been no material change in our risk factors from those previously discussed in our Annual Report on Form 10-K for the fiscal year ended June 30, 2015.

[Remainder of page intentionally left blank.]

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ITEM 6. EXHIBITS

Exhibit Number		Description

3.1		Amended and Restated Articles of Incorporation of the Company dated November 17, 2005 (incorporated herein by reference to Exhibit 3.1 filed as part of the Company's Form 10-Q for the quarter ended December 31, 2005 (Commission File No. 1-6370)).

3.2		Articles of Amendment to the Amended and Restated Articles of Incorporation of Elizabeth Arden, Inc. Designating Series A Serial Preferred Stock (incorporated herein by reference to Exhibit 3.1 filed as part of the Company's Form 8-K dated August 19, 2014 (Commission File No. 1-6370)).

3.3		Amended and Restated By-laws of the Company (incorporated herein by reference to Exhibit 3.2 filed as part of the Company's Form 8-K dated August 19, 2014 (Commission File No. 1-6370)).

4.1		Indenture, dated as of January 21, 2011, respecting Elizabeth Arden, Inc.'s 7 3/8% Senior Notes due 2021, among Elizabeth Arden, Inc. and U.S. Bank National Association, as trustee (incorporated herein by reference to Exhibit 4.1 to the Company's Form 8-K dated January 21, 2011 (Commission File No. 1-6370)).

4.2		First Supplemental Indenture, dated as of January 30, 2014, to the Indenture dated January 21, 2011, respecting Elizabeth Arden, Inc.'s 7 3/8% Senior Notes due 2021, among Elizabeth Arden, Inc. and U.S. Bank National Association, as trustee (incorporated herein by reference to Exhibit 4.1 filed as part of the Company's Form 8-K dated January 30, 2014) (Commission File No. 1-6370)).

4.3		Shareholders Agreement dated as of August 19, 2014, by and among Elizabeth Arden, Inc., Nightingale Onshore Holdings L.P. and Nightingale Offshore Holdings L.P. (incorporated herein by reference to Exhibit 4.2 filed as part of the Company's Form 8-K dated August 19, 2014 (Commission File No. 1-6370)).

4.4		Form of Warrant to purchase Common Stock, issued pursuant to the Securities Purchase Agreement dated as of August 19, 2014, by and between Elizabeth Arden, Inc., Nightingale Onshore Holdings L.P. and Nightingale Offshore Holdings L.P. (incorporated herein by reference to Exhibit 4.1 filed as part of the Company's Form 8-K dated August 19, 2014 (Commission File No. 1-6370)).

10.1		Third Amended and Restated Credit Agreement, dated as of January 21, 2011, among Elizabeth Arden, Inc., as borrower, JP Morgan Chase Bank, N.A., as administrative agent, Bank of America, N.A., as collateral agent and syndication agent, Wells Fargo Capital Finance, LLC, HSBC Bank USA, N.A. and U.S. Bank National Association, as co-documentation agents, JPMorgan Chase Bank, N.A., and Bank of America, N.A. as joint lead arrangers, and the other lenders party thereto (incorporated herein by reference to Exhibit 10.1 filed as part of the Company's Form 8-K dated January 21, 2011 (Commission File No. 1-6370)).

10.2		Amended and Restated Security Agreement dated as of January 29, 2001, made by the Company and certain of its subsidiaries in favor of Fleet National Bank (n/k/a Bank of America, N.A.), as administrative agent (incorporated herein by reference to Exhibit 4.5 filed as part of the Company's Form 8-K dated January 23, 2001 (Commission File No. 1-6370)).

10.3		Letter Agreement dated September 18, 2013, amending that certain Amended and Restated Security Agreement dated as of January 29, 2001, made by the Company and certain of its subsidiaries in favor of Fleet National Bank (n/k/a Bank of America, N.A.), as administrative agent (incorporated herein by reference to Exhibit 10.3 filed as part of the Company's Form 10-Q for the quarter ended September 30, 2013 (Commission File No. 1-6370)).

10.4		First Amendment to Third Amended and Restated Credit Agreement dated as of June 12, 2012, among Elizabeth Arden, Inc., as Borrower, JPMorgan Chase Bank, N.A., as the administrative agent, Bank of America, N.A., as the collateral agent, and the other banks party thereto (incorporated by reference to Exhibit 10.3 filed as part of the Company's Form 10-K for the year ended June 30, 2012 (Commission File No. 1-6370)).

10.5		Second Amendment to Third Amended and Restated Credit Agreement dated as of January 16, 2014, among Elizabeth Arden, Inc., as Borrower, JPMorgan Chase Bank, N.A., as the administrative agent, Bank of America, N.A., as the collateral agent, and the other banks party thereto (incorporated by reference to Exhibit 10.5 filed as part of the Company's Form 10-Q for the quarter ended December 31, 2013 (Commission File No. 1-6370)).

10.6		Third Amendment to the Third Amended and Restated Credit Agreement, dated as of December 17, 2014, among Elizabeth Arden, Inc., as borrower, JP Morgan Chase Bank, N.A., as administrative agent, Bank of America, N.A., as collateral agent and the other banks party thereto (incorporated by reference to Exhibit 4.1 filed as part of the Company's Form 8-K dated December 17, 2014 (Commission File No. 1-6370)).

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Exhibit
Number

Description

10.7

Increased Commitment Supplement, dated as of January 8, 2015, among Elizabeth Arden, Inc., as Borrower, Goldman Sachs Bank USA as New Bank and JPMorgan Chase Bank, N.A. as Administrative Agent, in respect of the Third Amended and Restated Credit Agreement dated as of January 21, 2011, as amended (incorporated by reference to Exhibit 10.7 filed as part of the Company's Form 10-Q for the quarter ended December 31, 2014 (Commission File No. 1-6370)).

10.8

Credit Agreement (Second Lien) dated as of June 12, 2012, between Elizabeth Arden, Inc. and JPMorgan Chase Bank, N.A. (incorporated by reference to Exhibit 10.4 filed as part of the Company's Form 10-K for the year ended June 30, 2012 (Commission File No. 1-6370)).

10.9

First Amendment to Credit Agreement (Second Lien) dated as of February 11, 2013, between Elizabeth Arden, Inc. and JPMorgan Chase Bank N.A. (incorporated by reference to Exhibit 10.5 filed as part of the Company's Form 10-Q for the quarter ended March 31, 2013 (Commission File No. 1-6370)).

10.10

Second Amendment to Credit Agreement (Second Lien) dated as of January 16, 2014, between Elizabeth Arden, Inc. and JPMorgan Chase Bank N.A. (incorporated by reference to Exhibit 10.5 filed as part of the Company's Form 10-Q for the quarter ended December 31, 2013 (Commission File No. 1-6370)).

10.11

Third Amendment to Credit Agreement (Second Lien) dated as of March 28, 2014, between Elizabeth Arden, Inc. and JPMorgan Chase Bank N.A. (incorporated by reference to Exhibit 10.9 filed as part of the Company's Form 10-Q for the quarter ended March 31, 2014 (Commission File No. 1-6370)).

10.12

Fourth Amendment to Credit Agreement (Second Lien) dated as of October 2, 2015, between Elizabeth Arden, Inc. and JPMorgan Chase Bank N.A. (incorporated by reference to Exhibit 10.1 filed as part of the Company's Form 8-K dated October 2, 2015 (Commission File No. 1-6370)).

10.13

Fifth Amendment to Credit Agreement (Second Lien) dated as of March 25, 2016, between Elizabeth Arden, Inc. and JPMorgan Chase Bank N.A. (incorporated by reference to Exhibit 10.1 filed as part of the Company's Form 8-K dated March 25, 2016 (Commission File No. 1-6370)).

10.14

Security Agreement, dated as of October 2, 2015, granted by Elizabeth Arden, Inc. in favor of JPMorgan Chase Bank, N.A., in connection with the Credit Agreement (Second Lien), dated as of June 12, 2012 (as amended, supplemented, or otherwise modified from time to time) (incorporated herein by reference to Exhibit 10.2 filed as part of the Company's Form 8-K dated October 2, 2015 (Commission File No. 1-6370)).

10.15

Security Agreement, dated as of October 2, 2015, granted by Elizabeth Arden, Inc. in favor of JPMorgan Chase Bank, N.A., as administrative agent, Bank of America, N.A., as collateral agent and syndication agent, Wells Fargo Capital Finance, LLC, HSBC Bank USA, N.A. and U.S. Bank National Association, as co-documentation agents, JPMorgan Chase Bank, N.A., and Bank of America, N.A. as joint lead arrangers, and the other lenders party thereto. (incorporated herein by reference to Exhibit 10.3 filed as part of the Company's Form 8-K dated October 2, 2015 (Commission File No. 1-6370)).

10.16

Amended and Restated Deed of Lease dated as of January 17, 2003, between the Company and Liberty Property Limited Partnership (incorporated herein by referenced to Exhibit 10.5 filed as a part of the Company's Form 10-Q for the quarter ended April 26, 2003 (Commission File No. 1-6370)).

10.17

Amendment to the Amended and Restated Deed of Lease dated as of June 30, 2012, between the Company and Liberty Property Limited Partnership (incorporated by reference to Exhibit 10.6 filed as part of the Company's Form 10-K for the year ended June 30, 2012 (Commission File No. 1-6370)).

10.18 +

2004 Stock Incentive Plan, as amended and restated (incorporated herein by reference to Exhibit 10.12 filed as part of the Company's Form 10-Q for the quarter ended December 31, 2007 (Commission File No. 1-6370)).

10.19 +

2004 Non-Employee Director Stock Option Plan, as amended and restated (incorporated herein by reference to Exhibit 10.13 filed as part of the Company's Form 10-Q for the quarter ended September 30, 2014 (Commission File No. 1-6370)).

10.20 +

Elizabeth Arden, Inc. 2011 Employee Stock Purchase Plan (incorporated herein by reference to Exhibit 4.3 filed as part of the Company's Form S-8, Registration No. 333-177839, dated November 9, 2011 (Commission File No. 1-6370)).

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Exhibit
Number

Description

10. 21 +

Form of Stock Option Agreement for stock option awards under the Company's 2004 Non-Employee Director Stock Option Plan (incorporated herein by reference to Exhibit 10.14 filed as a part of the Company's Form 10-Q for the quarter ended March 31, 2005 (Commission File No. 1-6370)).

10.22 +

Form of Stock Option Agreement for stock option awards under the Company's 2004 Stock Incentive Plan (incorporated herein by reference to Exhibit 10.19 filed as a part of the Company's Form 10-K for the year ended June 30, 2005 (Commission File No. 1-6370)).

10.23 +

Elizabeth Arden, Inc. Severance Policy, as amended and restated on February 3, 2014 (incorporated by reference to Exhibit 10.5 filed as part of the Company's Form 10-Q for the quarter ended December 31, 2013 (Commission File No. 1-6370)).

10.24 +

Form of Indemnification Agreement for Directors and Officers of Elizabeth Arden, Inc. (incorporated by reference to Exhibit 10.1 filed as part of the Company's Form 8-K dated August 11, 2009 (Commission File No. 1-6370)).

10.25 +

Form of Restricted Stock Unit Agreement for restricted stock unit awards under the Company's 2010 Stock Award and Incentive Plan (incorporated herein by reference to Exhibit 10.22 filed as part of the Company's Form 10-Q for the quarter ended September 30, 2011 (Commission File No. 1-6370)).

10.26 +

Form of Stock Option Agreement for stock option awards under the Company's 2010 Stock Award and Incentive Plan. (incorporated herein by reference to Exhibit 10.25 filed as part of the Company's Form 10-Q for the quarter ended September 30, 2015 (Commission File No. 1-6370)).

10.27

Securities Purchase Agreement dated as of August 19, 2014, by and between Elizabeth Arden, Inc., Nightingale Onshore Holdings L.P. and Nightingale Offshore Holdings L.P. (incorporated herein by reference to Exhibit 10.1 filed as part of the Company's Form 8-K dated August 19, 2014 (Commission File No. 1-6370)).

10.28 +

Elizabeth Arden, Inc. 2010 Stock Award and Incentive Plan, as amended and restated (incorporated herein by reference to Exhibit 10.27 filed as part of the Company's Form 10-Q for the quarter ended September 30, 2015 (Commission File No. 1-6370)).

10.29 +

Elizabeth Arden, Inc. 2014 Non-Employee Director Stock Award Plan (incorporated by reference to Exhibit 10.1 filed as part of the Company's Form S-8, Registration No. 333-200700, dated December 3, 2014 (Commission File No. 1-6370)).

10.30 +

Form of Stock Option Grant for stock option awards under the Company's 2014 Non-Employee Director Stock Award Plan (incorporated by reference to Exhibit 10.26 filed as part of the Company's Form 10-Q for the quarter ended December 31, 2014 (Commission File No. 1-6370)).

10.31 +

Form of Performance-Based Restricted Stock Unit Award Agreement for August 2015 awards under the Company's 2010 Stock Award and Incentive Plan, as amended and restated (incorporated herein by reference to Exhibit 10.30 filed as part of the Company's Form 10-Q for the quarter ended September 30, 2015 (Commission File No. 1-6370)).

10.32+

Form of Service-Based Restricted Stock Unit Award Agreement for August 2015 awards under the Company's 2010 Stock Award and Incentive Plan, as amended and restated (incorporated herein by reference to Exhibit 10.31 filed as part of the Company's Form 10-Q for the quarter ended September 30, 2015 (Commission File No. 1-6370)).

10.33+

Form of Stock Option Award Agreement for August 2015 awards under the Company's 2010 Stock Award and Incentive Plan, as amended and restated (incorporated herein by reference to Exhibit 10.32 filed as part of the Company's Form 10-Q for the quarter ended September 30, 2015 (Commission File No. 1-6370)).

10.34 +

Form of Restricted Stock Unit Award Agreement under the Company's 2014 Non-Employee Director Stock Award Plan. (incorporated herein by reference to Exhibit 10.33 filed as part of the Company's Form 10-Q for the quarter ended December 31, 2015 (Commission File No. 1-6370)).

31.1 *

Section 302 Certification of Chief Executive Officer.

31.2 *

Section 302 Certification of Chief Financial Officer.

32 *

Section 906 Certifications of the Chief Executive Officer and the Chief Financial Officer.

- 50 -

101.INS **

XBRL Instance Document

101.SCH **

XBRL Taxonomy Extension Schema Document

101.CAL **

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF **

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB **

XBRL Taxonomy Extension Label Linkbase Document

101.PRE **

XBRL Taxonomy Extension Presentation Linkbase Document

+

Management contract or compensatory plan or arrangement.

*

Filed herewith.

**

Filed herewith as Exhibit 101 are the following documents formatted in XBRL (Extensible Business Reporting Language): (i) unaudited condensed consolidated balance sheets as of March 31, 2016 and June 30, 2015, (ii) unaudited condensed consolidated statements of operations for the three and nine months ended March 31, 2016 and 2015, respectively, (iii) unaudited condensed consolidated statements of comprehensive loss for the three and nine months ended March 31, 2016 and 2015, respectively, (iv) unaudited condensed consolidated statements of cash flows for the nine months ended March 31, 2016 and 2015, respectively, and (v) the notes to the unaudited condensed consolidated financial statements. Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability.

[Remainder of page intentionally left blank.]

- 51 -

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		ELIZABETH ARDEN, INC.

Date: May 5, 2016		/s/ E. Scott Beattie

		E. Scott Beattie
		Chairman, President and Chief Executive Officer


Date: May 5, 2016		/s/ Rod R. Little

		Rod R. Little
		Executive Vice President and Chief Financial Officer

- 52 -

EXHIBIT INDEX

Exhibit Number		Description

31.1		Section 302 Certification of Chief Executive Officer.

31.2		Section 302 Certification of Chief Financial Officer.

32		Section 906 Certifications of the Chief Executive Officer and the Chief Financial Officer.

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

- 53 -

*	changes in the legal, regulatory and political environment that impact, or will impact, our business, including changes to customs or trade regulations, laws or regulations relating to ingredients or other chemicals or raw materials contained in products, advertising or packaging, or accounting standards or critical accounting estimates;
*	the success of our Elizabeth Arden brand repositioning efforts and global business strategy;
*	the impact of tax audits, including the ultimate outcome of the pending Internal Revenue Service examination of our U.S. federal tax returns for the fiscal years ended June 30, 2010, 2011 and 2012, changes in tax laws or tax rates, and our ability to utilize our deferred tax assets, and/or the establishment of valuation allowances related thereto;
*	our ability to effectively implement, manage and maintain our global information systems and maintain the security of our confidential data and our employees' and customers' personal information;
*	our reliance on third parties for certain outsourced business services, including information technology operations, logistics management and employee benefit plan administration;
*	the potential for significant impairment charges relating to our trademarks, goodwill, investments in other entities or other intangible assets, including license agreements, that could result from a number of factors, including such entities' or brands' business performance or downward pressure on our stock price; and
*	other unanticipated risks and uncertainties.

Exhibit Number		Description

10. 21 +		Form of Stock Option Agreement for stock option awards under the Company's 2004 Non-Employee Director Stock Option Plan (incorporated herein by reference to Exhibit 10.14 filed as a part of the Company's Form 10-Q for the quarter ended March 31, 2005 (Commission File No. 1-6370)).

10.22 +		Form of Stock Option Agreement for stock option awards under the Company's 2004 Stock Incentive Plan (incorporated herein by reference to Exhibit 10.19 filed as a part of the Company's Form 10-K for the year ended June 30, 2005 (Commission File No. 1-6370)).

10.23 +		Elizabeth Arden, Inc. Severance Policy, as amended and restated on February 3, 2014 (incorporated by reference to Exhibit 10.5 filed as part of the Company's Form 10-Q for the quarter ended December 31, 2013 (Commission File No. 1-6370)).

10.24 +		Form of Indemnification Agreement for Directors and Officers of Elizabeth Arden, Inc. (incorporated by reference to Exhibit 10.1 filed as part of the Company's Form 8-K dated August 11, 2009 (Commission File No. 1-6370)).

10.25 +		Form of Restricted Stock Unit Agreement for restricted stock unit awards under the Company's 2010 Stock Award and Incentive Plan (incorporated herein by reference to Exhibit 10.22 filed as part of the Company's Form 10-Q for the quarter ended September 30, 2011 (Commission File No. 1-6370)).

10.26 +		Form of Stock Option Agreement for stock option awards under the Company's 2010 Stock Award and Incentive Plan. (incorporated herein by reference to Exhibit 10.25 filed as part of the Company's Form 10-Q for the quarter ended September 30, 2015 (Commission File No. 1-6370)).

10.27		Securities Purchase Agreement dated as of August 19, 2014, by and between Elizabeth Arden, Inc., Nightingale Onshore Holdings L.P. and Nightingale Offshore Holdings L.P. (incorporated herein by reference to Exhibit 10.1 filed as part of the Company's Form 8-K dated August 19, 2014 (Commission File No. 1-6370)).

10.28 +		Elizabeth Arden, Inc. 2010 Stock Award and Incentive Plan, as amended and restated (incorporated herein by reference to Exhibit 10.27 filed as part of the Company's Form 10-Q for the quarter ended September 30, 2015 (Commission File No. 1-6370)).

10.29 +		Elizabeth Arden, Inc. 2014 Non-Employee Director Stock Award Plan (incorporated by reference to Exhibit 10.1 filed as part of the Company's Form S-8, Registration No. 333-200700, dated December 3, 2014 (Commission File No. 1-6370)).

10.30 +		Form of Stock Option Grant for stock option awards under the Company's 2014 Non-Employee Director Stock Award Plan (incorporated by reference to Exhibit 10.26 filed as part of the Company's Form 10-Q for the quarter ended December 31, 2014 (Commission File No. 1-6370)).

10.31 +		Form of Performance-Based Restricted Stock Unit Award Agreement for August 2015 awards under the Company's 2010 Stock Award and Incentive Plan, as amended and restated (incorporated herein by reference to Exhibit 10.30 filed as part of the Company's Form 10-Q for the quarter ended September 30, 2015 (Commission File No. 1-6370)).

10.32+		Form of Service-Based Restricted Stock Unit Award Agreement for August 2015 awards under the Company's 2010 Stock Award and Incentive Plan, as amended and restated (incorporated herein by reference to Exhibit 10.31 filed as part of the Company's Form 10-Q for the quarter ended September 30, 2015 (Commission File No. 1-6370)).

10.33+		Form of Stock Option Award Agreement for August 2015 awards under the Company's 2010 Stock Award and Incentive Plan, as amended and restated (incorporated herein by reference to Exhibit 10.32 filed as part of the Company's Form 10-Q for the quarter ended September 30, 2015 (Commission File No. 1-6370)).

10.34 +		Form of Restricted Stock Unit Award Agreement under the Company's 2014 Non-Employee Director Stock Award Plan. (incorporated herein by reference to Exhibit 10.33 filed as part of the Company's Form 10-Q for the quarter ended December 31, 2015 (Commission File No. 1-6370)).

31.1 *		Section 302 Certification of Chief Executive Officer.

31.2 *		Section 302 Certification of Chief Financial Officer.

32 *		Section 906 Certifications of the Chief Executive Officer and the Chief Financial Officer.

101.INS **		XBRL Instance Document

101.SCH **		XBRL Taxonomy Extension Schema Document

101.CAL **		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF **		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB **		XBRL Taxonomy Extension Label Linkbase Document

101.PRE **		XBRL Taxonomy Extension Presentation Linkbase Document

+	Management contract or compensatory plan or arrangement.
*	Filed herewith.

**	Filed herewith as Exhibit 101 are the following documents formatted in XBRL (Extensible Business Reporting Language): (i) unaudited condensed consolidated balance sheets as of March 31, 2016 and June 30, 2015, (ii) unaudited condensed consolidated statements of operations for the three and nine months ended March 31, 2016 and 2015, respectively, (iii) unaudited condensed consolidated statements of comprehensive loss for the three and nine months ended March 31, 2016 and 2015, respectively, (iv) unaudited condensed consolidated statements of cash flows for the nine months ended March 31, 2016 and 2015, respectively, and (v) the notes to the unaudited condensed consolidated financial statements. Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability.