BUSINESS COMBINATIONS (Tables)

12 Months Ended

Dec. 31, 2016

The components of the purchase price for the Elizabeth Arden Acquisition are as follows:



	As of September 7, 2016
Purchase price of Elizabeth Arden common stock ⁽¹⁾	$	431.5
Repayment of Elizabeth Arden senior notes ⁽²⁾	350.0
Repayment of Elizabeth Arden revolving credit facility, including accrued interest ⁽³⁾	142.5
Repayment of Elizabeth Arden Second lien credit facility, including accrued interest ⁽³⁾	25.0
Repurchase of Elizabeth Arden preferred stock ⁽⁴⁾	55.0
Payment of accrued interest and call premium on Elizabeth Arden Senior Notes ⁽⁵⁾	27.4
Payment of Elizabeth Arden dividends payable at Elizabeth Arden Acquisition Date ⁽⁶⁾	2.9
Total Purchase Price	$	1,034.3

(1)

All of Elizabeth Arden’s issued and outstanding common stock was canceled and extinguished on the Elizabeth Arden Acquisition Date and converted into the right to receive $14.00 in cash, without interest, less any required withholding taxes, that was paid by Products Corporation upon the completion of the Elizabeth Arden Acquisition. The $431.5 million purchase price for Elizabeth Arden common stock included the settlement of all outstanding Elizabeth Arden stock options and all outstanding Elizabeth Arden restricted share units at the Elizabeth Arden Acquisition Date for a total cash payment of $11.1 million.


(2)	The purchase price included the repurchase of the entire $350.0 million aggregate principal amount outstanding of Elizabeth Arden’s 7.375% senior notes due 2021 (the “Elizabeth Arden Old Senior Notes”).

(3)

The purchase price includes the repayment of the entire $142.0 million aggregate principal amount of borrowings outstanding as of the Elizabeth Arden Acquisition Date under Elizabeth Arden’s $300.0 million revolving credit facility and the entire $25.0 million aggregate principal amount of borrowings outstanding as of the Elizabeth Arden Acquisition Date under Elizabeth Arden's second lien credit facility, each of which facilities were terminated as of the Elizabeth Arden Acquisition Date;


(4)	The purchase price includes $55.0 million that was paid to retire the entire $55.0 million liquidation preference of all of the issued and outstanding 50,000 shares of Elizabeth Arden preferred stock, par value $0.01 per share (the “Elizabeth Arden Preferred Stock”), which amount included a $5.0 million change of control premium.

(5)

Interest on the Elizabeth Arden Old Senior Notes accrued at a rate of 7.375% per annum and was payable semi-annually on March 15 and September 15 of every year. The approximately $12.3 million of accrued and unpaid interest was calculated based on 176 days of accrued interest as of the Elizabeth Arden Acquisition Date. Pursuant to the terms of the indenture governing the Elizabeth Arden Old Senior Notes, upon a change in control, such notes were subject to repurchase at a price equal to 103.69% of their principal amount, plus accrued and unpaid interest and additional interest, if any, to the date of such repurchase. The repurchase of the Elizabeth Arden Old Senior Notes was consummated on October 7, 2016.


(6)	The purchase price includes the payment of approximately $2.9 million in accrued dividends payable at the Elizabeth Arden Acquisition Date to the holders of the Elizabeth Arden Preferred Stock.

Allocation of Consideration

The Company accounted for the Elizabeth Arden Acquisition as a business combination during the third quarter of 2016 and, accordingly, the total consideration of $1,034.3 million has been preliminary recorded based on the respective estimated fair values of the net assets acquired on the Elizabeth Arden Acquisition Date with resulting goodwill, as follows:



	Amounts recognized at September 7, 2016 (Provisional)^(a)			Measurement Period Adjustments			Amounts recognized at September 7, 2016 (Adjusted)
Cash	$	41.1		$	—		$	41.1
Accounts Receivable	132.6			—			132.6
Inventories ^(b)	342.5			(19.2		)	323.3
Prepaid expenses and other current assets	30.7			—			30.7
Property and equipment	91.2			—			91.2
Deferred taxes, net ^(c)	68.7			—			68.7
Intangible assets ^(d)	332.8			4.0			336.8
Goodwill	202.0			19.7			221.7
Other assets ^(e)	21.1			(4.5		)	16.6
Total assets acquired	1,262.7			—			1,262.7
Accounts payable	(116.0		)	—			(116.0		)
Accrued expenses	(109.3		)	—			(109.3		)
Other long-term liabilities	(3.1		)	—			(3.1		)
Total liabilities acquired	(228.4		)	—			(228.4		)
Total consideration transferred	$	1,034.3		$	—		$	1,034.3

^(a) As previously reported in Revlon's third quarter 2016 Form 10-Q.

^(b) The Measurement Period Adjustments to inventories during the three months ended December 31, 2016 relate to: (i) further evaluations of the inventory components at the Elizabeth Arden Acquisition Date, which resulted in a $16.6 million decrease in value of Elizabeth Arden's inventory on the Elizabeth Arden Acquisition Date; and (ii) a $2.6 million decrease in the step-up for the estimated fair value of Elizabeth Arden’s inventory, which was determined based upon the estimated selling price of the inventories less the remaining manufacturing and selling costs and normal profit margin on those manufacturing and selling efforts, based upon the adjusted acquisition date value. Following the Elizabeth Arden Acquisition, the step-up in fair value will increase cost of sales over approximately seven months, as the acquired inventory is sold. For 2016, the Company recognized a $20.7 million charge within cost of sales related to this step-up.

^(c)Deferred tax assets acquired in the Elizabeth Arden Acquisition primarily relate to approximately $107.3 million of tax loss carryforwards which the Company preliminarily estimates it will be able to realize in future periods, of which $0.5 million are foreign and $106.8 million are domestic (federal).

^(d)The Measurement Period Adjustments to intangible assets during the three months ended December 31, 2016 relate to a change in the fair value of acquired customer relationships and license agreement intangible assets, which increased the fair value of acquired customer relationship intangible assets by $6.0 million and decreased the fair value of acquired license agreement intangible assets by $2.0 million due to the decrease in the estimated fair value of Elizabeth Arden's inventory, as discussed above.

^(e)The Measurement Period Adjustments to other assets during the three months ended December 31, 2016 relate to a change in assumptions used to calculate the fair value of Elizabeth Arden’s minority investment in Elizabeth Arden Salon-Holdings, Inc., an unrelated party whose subsidiaries operate the Elizabeth Arden Red Door Spas and the Mario Tricoci Hair Salons, which resulted in a decrease in the estimated fair value of the from $20.3 million to $16.2 million.

Acquired Intangible Assets

The intangible assets acquired in the Elizabeth Arden Acquisition based on the estimate of the fair values of the identifiable intangible assets are as follows:



	Amounts Recognized at September 7, 2016		Remaining Useful Life at the Elizabeth Arden Acquisition Date (in years)
Trademarks, indefinite-lived	$	142.0	Indefinite
Trademarks, finite-lived	15.0		15.0
Technology	2.5		10.0
Customer relationships	123.0		16.0
License agreements	22.0		19.0
Distribution rights	31.0		18.0
Favorable lease commitments	1.3		3.0
Total acquired intangible assets	$	336.8

Pro Forma Results

The following table presents the Company's pro forma consolidated net sales and income from continuing operations, before income taxes for the years ended December 31, 2016 and 2015, respectively. The unaudited pro forma results include the historical consolidated statements of operations of the Company and Elizabeth Arden, giving effect to the Elizabeth Arden Acquisition and related financing transactions as if they had occurred at the beginning of the earliest period presented. As stated below, the Company also acquired certain international Cutex businesses, which primarily operate in Australia and the U.K., and related assets ("Cutex International"); however the Company has not included the Cutex International results prior to its acquisition date in these pro forma results as the impact would not have been material to the Company's financial results.



	Unaudited Pro Forma Results
	Year Ended December 31,
	2016			2015
Net sales	$	2,858.9		$	2,863.5
Income (loss) from continuing operations, before income taxes	$	(16.1	)	$	(74.6	)

Pro Forma Adjustments to Interest Expense

a pro forma increase in interest expense and amortization of debt issuance costs, related to financing the Elizabeth Arden Acquisition and related debt restructuring transactions as summarized in the following table. Refer to Note 11, "Long-Term Debt," for further details on financing the Elizabeth Arden Acquisition and related debt refinancing transactions.



	Year Ended December 31,
($ in millions)	2016^(a)			2015
Interest Expense
Pro forma interest on 2016 Senior Credit Facilities and 6.25% Senior Notes	$	105.3		$	106.4
Reversal of Elizabeth Arden’s historical interest expense	(18.2		)	(26.2		)
Company historical interest expense, as reflected in the historical consolidated financial statements	(76.1		)	(50.9		)
Total Adjustment for Pro Forma Interest Expense	$	11.0		$	29.3
Debt issuance costs
Pro forma amortization of debt issuance costs	$	6.1		$	8.1
Company historical amortization of debt issuance costs, as reflected in the historical consolidated financial statements	(3.3		)	(4.4		)
Reversal of Elizabeth Arden’s historical amortization of debt issuance costs	(1.3		)	(1.5		)
Total Adjustment for Pro Forma Amortization of Debt Issuance Costs	$	1.5		$	2.2

^(a) 2016 pro forma adjustments are for the period January 1, 2016 through the Elizabeth Arden Acquisition Date of September 7, 2016.

Cutex International [Member]

Business Acquisition [Line Items]

Allocation of Consideration

The table below summarizes the allocation of the total consideration of $29.1 million paid on the Cutex International Acquisition Date, as well as adjustments that have been made to the preliminary estimate of fair values during the third quarter of 2016:



	Amounts Recognized at May 31, 2016 (Provisional) ^(a)		Measurement Period Adjustments			Amounts Recognized at May 31, 2016 (Adjusted)
Inventory	$	0.8	$	—		$	0.8
Purchased Intangible Assets ^(b)	19.7		(2.5		)	17.2
Goodwill	8.6		2.5			11.1
Total consideration transferred	$	29.1	$	—		$	29.1

^(a) As previously reported in Revlon's second quarter 2016 Form 10-Q.

^(b) Purchased intangible assets include customer networks fair valued at $11.9 million and intellectual property fair valued at $0.8 million, which are amortized over useful lives of 15 and 10 years, respectively, and indefinite lived trade names fair valued at $4.5 million.

2015 acquisitions [Member]

Business Acquisition [Line Items]

Components of Purchase Price

The Company completed the following acquisitions during 2015:



	Purchase Consideration		Total Net Assets Acquired		Purchased Intangible Assets		Goodwill
CBBeauty Group ⁽¹⁾	$	33.9	$	2.3	$	12.1	$	19.5
American Crew and Revlon Professional Distribution Rights - Australia ⁽²⁾	4.4		1.4		2.9		—
Cutex U.S. ⁽³⁾	14.4		1.0		5.2		8.2
Total	$	52.7	$	4.7	$	20.2	$	27.7

⁽¹⁾

In April 2015, the Company completed the acquisition of the CBBeauty Group and certain of its related entities, (collectively "CBB" and such transaction, the "CBB Acquisition") for total cash consideration of $48.6 million. On the CBB acquisition date, the Company used cash on hand to pay 70% of the total cash consideration, or $33.9 million, net of certain measurement period adjustments. The remaining $14.0 million of the total cash consideration was payable in equal installments over 4 years from the CBB acquisition date. The first installment was paid in April 2016 and the remaining installments have been recorded as a component of SG&A expenses ratably over the remaining 3-year installment period. Purchased intangible assets include customer networks valued at $7.0 million, distribution rights valued at $3.5 million and trade names valued at $1.6 million, with weighted average remaining useful lives at the CBB acquisition date of 14, 5 and 8 years, respectively. (See Note 8, “Goodwill and Intangible Assets, Net,” for discussion of the non-cash impairment charge recorded in 2016 in connection with CBB).


⁽²⁾	In March 2015, the Company re-acquired rights to distribute its American Crew and Revlon Professional brands in Australia. The Company acquired customer relationships valued at $2.9 million, with weighted average remaining useful lives of 10 years.

⁽³⁾

In October 2015, the Company completed the Cutex U.S. Acquisition. The Company acquired inventory at fair value of approximately $1.0 million, trade names valued at $3.6 million and customer relationships valued at $1.6 million, with weighted average remaining useful lives of 10 years. In August of 2016, the Company recorded an additional $6.3 million as a component of goodwill related to purchase price adjustments following the completion of the Cutex U.S. Acquisition.