SAVINGS PLAN, PENSION AND POST-RETIREMENT BENEFITS

Savings Plan:

The Company offers a qualified defined contribution plan for its U.S.-based employees, the Revlon Employees' Savings, Investment and Profit Sharing Plan (as amended, the "Savings Plan"), which allows eligible participants to contribute up to 25%, and highly compensated participants to contribute up to 6%, of eligible compensation through payroll deductions, subject to certain annual dollar limitations imposed by the Internal Revenue Service. The Company matches employee contributions at fifty cents for each dollar contributed up to the first 6% of eligible compensation (for a total match of 3% of employee contributions). The Company made cash matching contributions of $2.4 million to the Savings Plan during each of 2013, 2012 and 2011, respectively.

The Company’s qualified and non-qualified defined contribution savings plans for its U.S.-based employees contain a discretionary profit sharing component that enables the Company, should it elect to do so, to make discretionary profit sharing contributions. For 2013, the Company made discretionary profit sharing contributions to the Savings Plan and non-qualified defined contribution savings plan of $4.1 million (of which $3.2 million was paid in 2013 and $0.9 million was paid in January 2014), or 3% of eligible compensation, which was credited on a quarterly basis. For 2012, the Company made discretionary profit sharing contributions to the Savings Plan and non-qualified defined contribution savings plan of $3.9 million (of which $3.0 million was paid in 2012 and $0.9 million was paid in January 2013), or 3% of eligible compensation, which was credited on a quarterly basis.

Pension Benefits:

Effective December 31, 2012, the Company merged two of its qualified defined benefit pension plans; therefore, as of December 31, 2012, the Company sponsors two qualified defined benefit pension plans. The Company also has non-qualified pension plans which provide benefits for certain U.S. and non-U.S. employees, and for U.S. employees in excess of IRS limitations in the U.S. and in certain limited cases contractual benefits for designated officers of the Company. These non-qualified plans are funded from the general assets of the Company.

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

During 2012, the Company announced plans to exit its owned manufacturing facility in France and rightsize its organization in France as part of the September 2012 Program (as defined in Note 3, “Restructuring Charges”). As a result of the September 2012 Program, the Company recognized a curtailment gain of $1.7 million, partially offset by $0.2 million of prior service costs and accumulated actuarial losses previously reported within accumulated other comprehensive loss, for a net gain of $1.5 million, which was recorded within restructuring charges and other, net for the year ended December 31, 2012.

Other Post-retirement Benefits:

The Company previously sponsored an unfunded retiree benefit plan, which provides death benefits payable to beneficiaries of a very limited number of former employees. Participation in this plan was limited to participants enrolled as of December 31, 1993. The Company also administers an unfunded medical insurance plan on behalf of Revlon Holdings, certain costs of which have been apportioned to Revlon Holdings under the transfer agreements among Revlon, Inc., Products Corporation and MacAndrews & Forbes. (See Note 21, “Related Party Transactions - Transfer Agreements”).

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



	Pension Plans						Other Post-Retirement Benefit Plans
	December 31,
	2013			2012			2013			2012
Change in Benefit Obligation:
Benefit obligation - beginning of year	$	(744.6	)	$	(700.5	)	$	(16.5	)	$	(16.1	)
Service cost	(0.9		)	(1.6		)	—			—
Interest cost	(27.6		)	(30.0		)	(0.6		)	(0.7		)
Actuarial gain (loss)	65.5			(51.1		)	1.6			(0.5		)
Curtailment gain	—			1.7			—			—
Settlement gain	—			0.2			—			—
Benefits paid	39.1			39.0			0.8			0.8
Currency translation adjustments	(0.1		)	(2.3		)	0.3			—
Other	0.4			—			—			—
Benefit obligation - end of year	$	(668.2	)	$	(744.6	)	$	(14.4	)	$	(16.5	)
Change in Plan Assets:
Fair value of plan assets - beginning of year	$	520.2		$	463.8		$	—		$	—
Actual return on plan assets	58.1			64.2			—			—
Employer contributions	17.7			29.0			0.8			0.8
Benefits paid	(39.1		)	(39.0		)	(0.8		)	(0.8		)
Settlement gain	—			(0.2		)	—			—
Currency translation adjustments	0.7			2.4			—			—
Fair value of plan assets - end of year	$	557.6		$	520.2		$	—		$	—
Unfunded status of plans at December 31,	$	(110.6	)	$	(224.4	)	$	(14.4	)	$	(16.5	)

In respect of the Company's pension plans and other post-retirement benefit plans, amounts recognized in the Company’s Consolidated Balance Sheets at December 31, 2013 and 2012 consist of the following:



	Pension Plans						Other Post-Retirement Benefit Plans
	December 31,
	2013			2012			2013			2012
Accrued expenses and other	$	(5.9	)	$	(6.4	)	$	(0.8	)	$	(0.8	)
Pension and other post-retirement benefit liabilities	(104.7		)	(218.0		)	(13.6		)	(15.7		)
Total liability	(110.6		)	(224.4		)	(14.4		)	(16.5		)

Accumulated other comprehensive loss, gross	170.1			264.2			2.8			4.6
Income tax (benefit) expense	(1.8		)	(35.9		)	0.1			(0.5		)
Portion allocated to Revlon Holdings	(0.7		)	(0.9		)	—			—
Accumulated other comprehensive loss, net	$	167.6		$	227.4		$	2.9		$	4.1

With respect to the above accrued expenses and other, the Company has recorded receivables from affiliates of $2.6 million and $2.9 million at December 31, 2013 and 2012, respectively, relating to pension plan liabilities retained by such affiliates.

The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for the Company's pension plans are as follows:



	December 31,
	2013		2012
Projected benefit obligation	$	668.2	$	744.6
Accumulated benefit obligation	667.3		743.6
Fair value of plan assets	557.6		520.2

Net Periodic Benefit Cost:

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



	Pension Plans									Other Post-Retirement Benefit Plans
	Year Ended December 31,
	2013			2012			2011			2013			2012		2011
Net periodic benefit (income) costs:
Service cost	$	0.9		$	1.6		$	1.2		$	—		$	—	$	—
Interest cost	27.6			30.0			32.4			0.6			0.7		0.9
Expected return on plan assets	(38.3		)	(35.2		)	(35.0		)	—			—		—
Amortization of prior service cost (credit)	—			—			0.1			—			—		—
Amortization of actuarial loss	8.6			8.1			5.3			0.4			0.3		0.3
Curtailment gain	—			(1.5		)	—			—			—		—
	(1.2		)	3.0			4.0			1.0			1.0		1.2
Portion allocated to Revlon Holdings	(0.1		)	(0.1		)	(0.1		)	(0.1		)	—		(0.1		)
	$	(1.3	)	$	2.9		$	3.9		$	0.9		$	1.0	$	1.1

Of the total net periodic benefit income of $(0.4) million for the year ended December 31, 2013, $(2.3) million is recorded in cost of sales, $2.4 million is recorded in SG&A expenses and $(0.5) million is capitalized in inventory.

During 2013, the Company recognized net period benefit income of $(0.4) million, compared to net period benefit costs of $3.9 million in 2012, driven primarily by the increase in the fair value of pension plan assets at December 31, 2012.

During 2012, excluding the curtailment gain described above, net periodic benefit costs were flat compared to 2011, driven primarily by a decrease in the weighted-average discount rate, partially offset by the increase in the fair value of pension plan assets at December 31, 2011.

Amounts recognized in accumulated other comprehensive loss at December 31, 2013 in respect of the Company’s pension plans and other post-retirement plans, which have not yet been recognized as a component of net periodic benefit cost, are as follows:



	Pension Benefits			Post-Retirement Benefits		Total
Net actuarial loss	$	170.1		$	2.8	$	172.9
Prior service cost	—			—		—
Accumulated Other Comprehensive Loss, Gross	170.1			2.8		172.9
Income tax (benefit) expense	(1.8		)	0.1		(1.7		)
Portion allocated to Revlon Holdings	(0.7		)	—		(0.7		)
Accumulated Other Comprehensive Loss, Net	$	167.6		$	2.9	$	170.5

The total actuarial losses and prior service costs in respect of the Company’s pension plans and other post-retirement plans included in accumulated other comprehensive loss at December 31, 2013 and expected to be recognized in net periodic benefit cost during the fiscal year ended December 31, 2014, is $4.4 million and $0.2 million, respectively.

Pension Plan Assumptions:

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



	U.S. Plans				International Plans
	2013		2012		2013		2012
Discount rate	4.68	%	3.78	%	4.48	%	4.33	%
Rate of future compensation increases	3.00	%	3.00	%	3.40	%	2.97	%

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



	U.S. Plans						International Plans
	2013		2012		2011		2013		2012		2011
Discount rate	3.78	%	4.38	%	5.17	%	4.33	%	4.77	%	5.32	%
Expected long-term return on plan assets	7.75	%	7.75	%	8.00	%	6.00	%	6.22	%	6.25	%
Rate of future compensation increases	3.00	%	3.50	%	3.50	%	2.97	%	3.05	%	3.53	%

The 4.68% weighted-average discount rate used to determine the Company’s projected benefit obligation of the Company’s U.S. plans at the end of 2013 was derived by reference to appropriate benchmark yields on high quality corporate bonds, with terms which approximate the duration of the benefit payments and the relevant benchmark bond indices considering the individual plan’s characteristics. The rate selected approximates the rate at which the Company believes the U.S. pension benefits could have been effectively settled. The discount rates used to determine the Company’s projected benefit obligation of the Company’s primary international plans at the end of 2013 were derived from similar local studies, in conjunction with local actuarial consultants and asset managers.

In selecting its expected long-term rate of return on its plan assets, the Company considers a number of factors, including, without limitation, recent and historical performance of plan assets, the plan portfolios' asset allocations over a variety of time periods compared with third-party studies, the performance of the capital markets in recent years and other factors, as well as advice from various third parties, such as the plans' advisors, investment managers and actuaries. While the Company considered both the recent performance and the historical performance of plan assets, the Company’s assumptions are based primarily on its estimates of long-term, prospective rates of return. Using the aforementioned methodologies, the Company selected a 7.75% and 6.00% weighted-average long-term rate of return on plan assets assumption during 2013 for the U.S and International pension plans, respectively. Differences between actual and expected asset returns are recognized in the net periodic benefit cost over the remaining service period of the active participating employees.

The rate of future compensation increases is an assumption used by the actuarial consultants for pension accounting and is determined based on the Company’s current expectation for such increases.

Investment Policy:

The Investment Committee for the Company's U.S. pension plans (the “Investment Committee”) has adopted (and revises from time to time) an investment policy for the U.S. pension plans with the objective of meeting or exceeding, over time, the expected long-term rate of return on plan assets assumption, weighed against a reasonable risk level. In connection with this objective, the Investment Committee retains a professional investment advisor who recommends investment managers that invest plan assets in the following asset classes: common and preferred stock, mutual funds, fixed income securities, common and collective funds, hedge funds, group annuity contracts and cash and other investments. The Company’s international plans follow a similar methodology in conjunction with local actuarial consultants and asset managers.

The investment policy adopted by the Investment Committee provides for investments in a broad range of publicly-traded securities, among other things. The investments are in domestic and international stocks, ranging from small to large capitalization stocks, debt securities ranging from domestic and international treasury issues, corporate debt securities, mortgages and asset-backed issues. Other investments may include cash and cash equivalents and hedge funds. The investment policy also allows for private equity, not covered in investments described above, provided that such investments are approved by the Investment Committee prior to their selection. Also, global balanced strategies are utilized to provide for investments in a broad range of publicly-traded stocks and bonds in both domestic and international markets as described above. In addition, the global balanced strategies can include commodities, provided that such investments are approved by the Investment Committee prior to their selection.

The Investment Committee’s investment policy does not allow the use of derivatives for speculative purposes, but such policy does allow its investment managers to use derivatives for the purpose of reducing risk exposures or to replicate exposures of a particular asset class.

The Company’s U.S. and international pension plans have target ranges which are intended to be flexible guidelines for allocating the plans’ assets among various classes of assets. These target ranges are reviewed periodically and considered for readjustment when an asset class weighting is outside of its target range (recognizing that these are flexible target ranges that may vary from time to time) with the objective of achieving the expected long-term rate of return on plan assets assumption, weighed against a reasonable risk level. The target ranges per asset class are as follows:



	Target Ranges
	U.S. Plans	International Plans
Asset Class:
Common and preferred stock	0% - 10%	—
Mutual funds	20% - 30%	—
Fixed income securities	10% - 30%	—
Common and collective funds	25% - 55%	100%
Hedge funds	0% - 15%	—
Group annuity contract	0% - 5%	—
Cash and other investments	0% - 10%	—

Fair Value of Pension Plan Assets:

The following table presents information on the fair value of the U.S. and international pension plan assets at December 31, 2013 and 2012:



	U.S. Plans				International Plans
	2013		2012		2013		2012
Fair value of plan assets	$	492.5	$	461.9	$	65.1	$	58.3

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


•	Common and preferred stock: The fair values of the investments included in the common and preferred stock asset class generally reflect the closing price reported on the major market where the individual securities are traded. The Company classifies common and preferred stock investments within Level 1 of the fair value hierarchy.

•

Mutual funds: The fair values of the investments included in the mutual funds asset class are determined using net asset value (“NAV”) provided by the administrator of the funds. The NAV is based on the closing price reported on the major market where the individual securities within the mutual fund are traded. The Company classifies mutual fund investments within Level 1 of the fair value hierarchy.


•	Fixed income securities: The fair values of the investments included in the fixed income securities asset class are based on a compilation of primarily observable market information and/or broker quotes. The Company classifies fixed income securities investments primarily within Level 2 of the fair value hierarchy.

•

Common and collective funds: The fair values of the investments included in the common and collective funds asset class are determined using NAV provided by the administrator of the funds. The NAV is based on the value of the underlying assets owned by the common and collective fund, minus its liabilities, and then divided by the number of shares outstanding. The Company classifies common and collective fund investments within Level 2 of the fair value hierarchy.

•

Hedge funds: The hedge fund asset class includes hedge funds that primarily invest in a grouping of equities, fixed income instruments, currencies, derivatives and/or commodities. The fair value of investments included in the hedge funds class are determined using NAV provided by the administrator of the funds. The NAV is based on securities listed or quoted on a national securities exchange or market, or traded in the over-the-counter market, and is valued at the closing quotation posted by that exchange or trading system. Securities not listed or quoted on a national securities exchange or market are valued primarily through observable market information or broker quotes. The hedge fund investments generally can be sold on a quarterly or monthly basis and may employ leverage. The Company classifies hedge fund investments within Level 2 of the fair value hierarchy.

•

Group annuity contract: The group annuity contract asset class primarily invests in equities, corporate bonds and government bonds. The fair value of securities listed or quoted on a national securities exchange or market, or traded in the over-the-counter market, are valued at the closing quotation posted by that exchange or trading system. Securities not listed or quoted on a national securities exchange or market are valued primarily through observable market information or broker quotes. The Company classifies group annuity contract investments within Level 2 of the fair value hierarchy.


•	Cash and cash equivalents: Cash and cash equivalents are measured at cost, which approximates fair value. The Company classifies cash and cash equivalents within Level 1 of the fair value hierarchy.

The fair values of the U.S. and International pension plan assets at December 31, 2013, by asset categories were as follows:



	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Common and Preferred Stock:
U.S. small/mid cap equity	$	23.1	$	23.1	$	—	$	—
Mutual Funds^(a):
Corporate bonds	24.4		24.4		—		—
Government bonds	15.1		15.1		—		—
U.S. large cap equity	68.7		68.7		—		—
International equities	4.3		4.3		—		—
Emerging markets international equity	4.2		4.2		—		—
Other	0.9		0.9		—		—
Fixed Income Securities:
Corporate bonds	46.1		—		45.8		0.3
Government bonds	9.6		—		8.0		1.6
Common and Collective Funds^(a):
Corporate bonds	53.7		—		53.7		—
Government bonds	69.8		—		69.8		—
U.S. large cap equity	33.8		—		33.8		—
U.S. small/mid cap equity	23.0		—		23.0		—
International equities	92.1		—		92.1		—
Emerging markets international equity	17.3		—		17.3		—
Cash and cash equivalents	2.0		—		2.0		—
Other	2.9		—		2.9		—
Hedge Funds^(a):
Corporate bonds	11.8		—		11.8		—
Government bonds	24.5		—		24.5		—
U.S. large cap equity	4.3		—		4.3		—
International equities	6.1		—		6.1		—
Cash and cash equivalents	5.7		—		5.7		—
Other	4.1		—		4.1		—
Group Annuity Contract	2.6		—		2.6		—
Cash and Cash Equivalents	7.5		7.5		—		—
Fair value of plan assets at December 31, 2013	$	557.6	$	148.2	$	407.5	$	1.9

The fair values of the U.S. and International pension plan assets at December 31, 2012, by asset categories were as follows:



	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Common and Preferred Stock:
U.S. small/mid cap equity	$	18.9	$	18.9	$	—	$	—
Mutual Funds^(a):
Corporate bonds	19.4		19.4		—		—
Government bonds	16.0		16.0		—		—
U.S. large cap equity	63.2		63.2		—		—
International equities	4.6		4.6		—		—
Emerging markets international equity	5.0		5.0		—		—
Other	3.6		3.6		—		—
Fixed Income Securities:
Corporate bonds	49.8		—		49.2		0.6
Government bonds	9.9		—		9.9		—
Common and Collective Funds^(a):
Corporate bonds	57.0		—		57.0		—
Government bonds	70.2		—		70.2		—
U.S. large cap equity	27.0		—		27.0		—
U.S. small/mid cap equity	17.7		—		17.7		—
International equities	74.3		—		74.3		—
Emerging markets international equity	17.7		—		17.7		—
Cash and cash equivalents	3.0		—		3.0		—
Other	1.1		—		1.1		—
Hedge Funds^(a):
Corporate bonds	4.2		—		4.2		—
Government bonds	30.9		—		30.9		—
U.S. large cap equity	4.6		—		4.6		—
International equities	3.1		—		3.1		—
Foreign exchange contracts	—		—		—		—
Cash and cash equivalents	6.0		—		6.0		—
Other	3.8		—		3.8		—
Group Annuity Contract	2.3		—		2.3		—
Cash and Cash Equivalents	6.9		6.9		—		—
Fair value of plan assets at December 31, 2012	$	520.2	$	137.6	$	382.0	$	0.6


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

The following table sets forth a summary of changes in the fair values of the U.S. and International pension plans’ Level 3 assets for the years ended December 31, 2013 and 2012:



	Total			Fixed Income Securities
Balance, December 31, 2011	$	—		$	—
Purchases, sales, and settlements, net	0.6			0.6
Balance, December 31, 2012	0.6			0.6
Purchases, sales, and settlements, net	0.6			0.6
Loss on assets held during the period	(0.2		)	(0.2		)
Transfers into Level 3	0.9			0.9
Balance, December 31, 2013	$	1.9		$	1.9

Contributions:

The Company’s intent is to fund at least the minimum contributions required to meet applicable federal employee benefit and local laws, or to directly pay benefit payments where appropriate. During 2013, the Company contributed $17.7 million to its pension plans and $0.8 million to its other post-retirement benefit plans. During 2014, the Company expects to contribute approximately $25.0 million to its pension and other post-retirement benefit plans.

Estimated Future Benefit Payments:

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



	Total Pension Benefits		Total Other Benefits
2014	$	40.7	$	1.2
2015	41.2		1.2
2016	41.8		1.2
2017	43.0		1.2
2018	43.4		1.2
Years 2019 to 2023	225.0		5.8