Revlon Disputes Negative Standard & Poor’s Report
In a highly unusual statement, Revlon Inc. disputed a negative report by Wall Street credit rating company Standard & Poor’s and said its third-quarter operating income will rise by at least 100% from the year-ago period amid a 10% increase in sales.
Revlon President and Chief Executive Jerry W. Levin said Sunday that the Standard & Poor’s report issued Friday is “inaccurate.”
“S&P;'s actions compel us publicly to correct their errors and, departing from our usual practice, forecast third-quarter and nine-month results on the basis of the company’s performance thus far,” Levin said.
Revlon, a subsidiary of Ronald Perelman’s MacAndrews & Forbes Group Inc., is known for cosmetic and perfume products.
In a report on Friday, Standard & Poor’s analyst Lucy Patricola said the rating company’s outlook on $2.2 billion of debt of Revlon Worldwide Corp. and Revlon Consumer Products was revised to negative from positive.
Patricola attributed the revision to a disappointing pace of results since the cosmetics company restructured. The revamping began in 1991 with the closing of several plants, and continued with changes in manufacturing processes.
In its news release, Standard & Poor’s said Revlon’s “pre-depreciation operating income declined year over year, raising concerns as to the ultimate realization of Revlon’s restructuring goals.”
Revlon disputes Standard & Poor’s statement. “Contrary to S&P;'s assertion that pre-depreciation operating income declined, Revlon in fact saw a 14% increase in that measurement for the first six months of 1994 compared to the same period last year,” Revlon said.
In addition, Revlon said that “this misstatement of a key index of Revlon’s performance casts serious doubt on the validity of the report’s conclusions regarding the pace of Revlon’s growth.”
Revlon said that its operating income rose 30% in the first half of 1994 compared to that of 1993. Its operating income for the first nine months of 1994 will increase at least 50% over the same period last year, the company said.
“We are dismayed by the inaccurate aspects of the report and by S&P;'s failure to contact Revlon prior to its publication to verify the data being presented to the marketplace,” Revlon’s Levin said. Patricola wasn’t immediately available to comment.