
	Year Ended December 31,
	2021		2020
Loss from continuing operations before income taxes:
United States	$	(217.0)	$	(357.0)
Foreign	16.3		(103.2)
	$	(200.7)	$	(460.2)
Provision for income taxes:
United States federal	$	4.8	$	143.5
State and local	0.5		8.1
Foreign	0.9		7.2
	$	6.2	$	158.8
Current:
United States federal	$	4.8	$	3.5
State and local	1.4		1.8
Foreign	20.0		(2.0)
	$	26.2	$	3.3
Deferred:
United States federal	$	—	$	140.1
State and local	(0.9)		6.3
Foreign	(19.1)		9.1
	$	(20.0)	$	155.5





Total provision for income taxes	$	6.2	$	158.8

The Company's provision for income taxes represents federal, foreign, state and local income taxes. The Company’s tax provision changes quarterly based on various factors including, but not limited to, the geographical level and mix of earnings; enacted tax legislation; foreign, state and local income taxes; tax audit settlements; and the interaction of various global tax strategies.

The Company recorded a provision for income taxes of $6.2 million (Products Corporation - $3.2 million) for the year ended December 31, 2021 and a provision for income taxes of $158.8 million (Products Corporation - $140.5 million) for the year ended December 31, 2020. The $152.6 million decrease (Products Corporation - $137.3 million) in the provision from income taxes in the year ended December 31, 2021, compared to the year ended December 31, 2020, was primarily due to: the establishment of a valuation allowance on net federal deferred tax assets in the prior year.

The Company's effective tax rate for the year ended December 31, 2021 was lower than the federal statutory rate of 21% primarily due to losses for which no tax benefit can be recognized. On March 11, 2021, President Biden signed into law the “American Rescue Plan Act of 2021” (the "ARPA") which expands the Employee Retention Credit and the roster of ‘covered employees’ under §162(m) deduction limits. The ARPA did not have a significant impact on the Company’s financial results.

The Company's effective tax rate for the year ended December 31, 2020 was lower than the federal statutory rate of 21% primarily due to the increase in the valuation allowance recorded on the net federal deferred tax assets and the impact of non-deductible impairment charges, which was partially offset by the impact of the "Coronavirus Aid, Relief and Economic Security Act" (the "CARES Act"), signed into law on March 27, 2020 by President Trump, which resulted in a partial release of a valuation allowance on the Company's 2019 federal tax attributes associated with the limitation on the deductibility of interest. .

As of December 31, 2021, the Company is indefinitely reinvested in the accumulated undistributed earnings of all of its foreign subsidiaries. If earnings are repatriated, any excess of financial reporting over tax basis could be subject to federal, state and foreign withholding taxes. At this time, the determination of deferred tax liabilities on the amount of financial reporting over tax basis is not practicable.


	Year Ended December 31,
	2021		2020
Computed income tax benefit	$	(42.1)	$	(96.6)
State and local taxes, net of U.S. federal income tax benefit	0.2		1.8
Foreign rate differential and other foreign adjustments	7.9		23.8
Net establishment of valuation allowance	25.2		193.7
Net establishment of uncertain tax positions	4.8		4.4
Foreign dividends and earnings taxable in the U.S.	6.2		7.9
Impairment for which there is no tax benefit	—		17.0


Other	4.0		6.8
Total provision for income taxes	$	6.2	$	158.8


	December 31,
	2021		2020
Deferred tax assets:
Inventories	$	15.8	$	19.0
Net operating loss carryforwards - U.S. (a)	192.9		174.5
Net operating loss carryforwards - foreign	59.3		51.4
Disallowed Interest Carryover - U.S.	89.0		61.2
Employee benefits	43.8		58.1

Sales-related reserves	13.6		16.2
Lease liability	24.1		26.6
Deferred revenue	16.9		17.2
Restructuring - debt refinancing	13.0		14.2
Other	76.8		58.8
Total gross deferred tax assets	545.2		497.2
Less valuation allowance	(401.9)		(369.4)
Total deferred tax assets, net of valuation allowance	143.3		$	127.8
Deferred tax liabilities:
Plant, equipment and other assets	(32.1)		(34.9)
Intangibles	(61.5)		(62.8)
Other	(7.9)		(7.6)
Total gross deferred tax liabilities	(101.5)		(105.3)
Net deferred tax assets	41.8		$	22.5

In assessing the recoverability of its deferred tax assets, the Company continually evaluates all available positive and negative evidence to assess the amount of deferred tax assets for which it is more likely than not to realize a benefit. For any deferred tax asset in excess of the amount for which it is more likely than not that the Company will realize a benefit, the Company establishes a valuation allowance. A valuation allowance is a non-cash charge, and it in no way limits the Company's ability to utilize its deferred tax assets, including its ability to utilize tax loss and credit carryforward amounts.

As of December 31, 2021, the Company concluded that, based on its evaluation of objectively verifiable evidence, it is not more likely than not that its net federal deferred tax assets are recoverable and has recorded valuation allowance against them. In assessing the realizability of deferred tax assets, the key assumptions used to determine positive and negative evidence included the Company’s cumulative taxable loss for the past three years, future reversals of existing taxable temporary differences, the Company's cost reduction initiatives and efficiency efforts, as well as the ongoing and prolonged impact COVID-19 pandemic on the Company. As of December 31, 2021, the Company recorded a charge of $25.2 million (2020 - $189.5 million) as a reserve against its net federal deferred tax assets.

A valuation allowance has been established for those deferred tax assets for which, in the opinion of the Company's management, it was more likely than not that a benefit will not be realized. At December 31, 2021, the deferred tax valuation allowance primarily represented amounts for its net U.S. federal deferred tax assets for which the Company has determined it is more likely than not they will not be recoverable, foreign jurisdictions where, as of the end of 2021, the Company had a three-year cumulative loss, and for certain U.S. state jurisdictions where the Company had tax loss carryforwards and other tax attributes which may expire prior to being utilized. The deferred tax valuation allowance increased by $32.5 million and $206.1 million during 2021 and 2020, respectively. The increase in the deferred tax valuation allowance during 2021 was primarily associated with the assessment of the realizability of the federal deferred tax assets for which the Company has determined it is more likely than not that it will not receive a benefit.

As of December 31, 2021, the Company had domestic (federal) and foreign net operating loss carryforwards of $1,060.1 million, of which $296.3 million are foreign and $763.9 million are domestic (federal). These losses expire in future years as follows: 2022- $1.6 million; 2023- $0.6 million; 2024 and beyond- $724.7 million; and no expiration- $333.2 million. The Company also has certain state net operating loss carryforwards that expire between 2022 and 2039. The Company could receive the benefit of such tax loss carryforwards only to the extent it has taxable income during the carryforward periods in the applicable tax jurisdictions. As of December 31, 2021, there were no consolidated federal net operating losses available from the MacAndrews & Forbes Group (as hereinafter defined) from periods prior to the March 25, 2004 deconsolidation (as described below). The Company has acquired entities that had carryforward balances for tax losses, tax credits and other tax attributes at the time of the acquisition. U.S. federal and certain state and foreign jurisdictions impose limitations on the amount of these tax losses, tax credits and other carryforward balances that may be utilized after an acquisition. The Company has evaluated the impact of these limitations and has established a valuation allowance to reduce the deferred tax assets to the amount that the Company expects will be realized.

The Company remains subject to examination of its income tax returns in various jurisdictions, including: the U.S. (federal) for the tax years ended December 31, 2019 and forward; Spain for the tax years ended December 31, 2016 and forward; Canada for the tax years ended December 31, 2015 and forward; Australia for the tax years ended December 31, 2018 and forward; Switzerland for the tax years ended June 30, 2017 and forward; Japan for the tax years ended December 31, 2017 and forward; and the U.K. for the tax years ended December 31, 2019 and forward.

At December 31, 2021 and 2020, the Company had unrecognized tax benefits of $87.0 million and $84.4 million, respectively, including $16.1 million and $15.6 million, respectively, of accrued interest and penalties. Of the $87.0 million of unrecognized tax benefits as of December 31, 2021, $17.1 million would affect the Company's effective tax rate, if recognized, and the remaining $69.9 million would affect the Company's deferred tax accounts. The Company classifies interest and penalties as a component of the provision for income taxes. The Company recognized in the Consolidated Statements of Operations and Comprehensive (Loss) Income an expense of $0.5 million and $3.9 million in 2021 and 2020, respectively.



	Tax		Interest and Penalties		Total
Balance at January 1, 2020	$	66.3	$	11.7	78.0
Increase based on tax positions taken in a prior year	3.5		6.4		9.9
Decrease based on tax positions taken in a prior year	(3.3)		(1.0)		(4.3)
Increase based on tax positions taken in the current year	5.5		—		5.5
Decrease resulting from the lapse of statutes of limitations	(3.2)		(1.5)		(4.7)
Balance at December 31, 2020	$	68.8	$	15.6	$	84.4
Increase based on tax positions taken in a prior year	1.6		3.5		5.1
Decrease based on tax positions taken in a prior year	(3.0)		(1.0)		(4.0)
Increase based on tax positions taken in the current year	7.1		—		7.1
Decrease resulting from the lapse of statutes of limitations	(3.6)		(2.0)		(5.6)
Balance at December 31, 2021	$	70.9	$	16.1	$	87.0

As a result of the closing of the 2004 Revlon Exchange Transactions (as hereinafter defined in Note 19, "Related Party Transactions - Tax Sharing Agreements"), as of March 25, 2004, Revlon, Products Corporation and their U.S. subsidiaries were no longer included in the affiliated group of which MacAndrews & Forbes was the common parent (the "MacAndrews & Forbes Group") for federal income tax purposes. Revlon Holdings (as hereinafter defined in Note 19, "Related Party Transactions - Transfer Agreements"), Revlon, Products Corporation and certain of its subsidiaries, and MacAndrews & Forbes Incorporated entered into a tax sharing agreement (as subsequently amended and restated, the "MacAndrews & Forbes Tax Sharing Agreement"), for taxable periods beginning on or after January 1, 1992 through and including March 25, 2004, during which Revlon and Products Corporation or a subsidiary of Products Corporation was a member of the MacAndrews & Forbes Group. In these taxable periods, Revlon's and Products Corporation's federal taxable income and loss were included in such group's consolidated tax return filed by MacAndrews & Forbes Incorporated. During such period, Revlon and Products Corporation were also included in certain state and local tax returns of MacAndrews & Forbes Incorporated or its subsidiaries. Revlon and Products Corporation remain liable under the MacAndrews & Forbes Tax Sharing Agreement for all such taxable

periods through and including March 25, 2004 for amounts determined to be due as a result of a redetermination arising from an audit or otherwise, equal to the taxes that Revlon or Products Corporation would otherwise have had to pay if it were to have filed separate federal, state or local income tax returns for such periods.

MacAndrews & Forbes’ current ownership does not require the Company to file a U.S. federal consolidated tax return with them. However, in certain U.S. states and in certain local and foreign jurisdictions the Company is required to file consolidated, combined, unitary or similar returns. The liability for these state, local and foreign liabilities is also governed by the MacAndrews & Forbes Tax Sharing Agreement. The Company accounts for its tax liabilities in these jurisdictions as if it were a separate filer, and the Company's tax accounts are presented as if it were a separate filer. During 2021, the Company's cash tax payments included less than $0.1 million of payments made to MacAndrews & Forbes in connection with these filings, and the Company's ending tax asset, which is a component of prepaid and other current assets, includes an insignificant amount related to future payments to be received from MacAndrews & Forbes in connection with these filings.

Following the closing of the 2004 Revlon Exchange Transactions, Revlon became the parent of a new consolidated group for federal income tax purposes and Products Corporation's federal taxable income and loss are included in such group's consolidated tax returns. Accordingly, Revlon and Products Corporation entered into a tax sharing agreement (the "Revlon Tax Sharing Agreement") pursuant to which Products Corporation is required to pay to Revlon amounts equal to the taxes that Products Corporation would otherwise have had to pay if Products Corporation were to file separate federal, state or local income tax returns, limited to the amount, and payable only at such times, as Revlon will be required to make payments to the applicable taxing authorities.