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SECURITIESAND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM10-Q

(Mark One)

|                                                                                 |                                                                                       |
|---------------------------------------------------------------------------------|---------------------------------------------------------------------------------------|
|         X      | QUARTERLYREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934 |

For the quarterly period ended:June 30, 2004

OR

|                                                                                                  |                                                                                        |
|--------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------|
|                  | TRANSITIONREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934 |

For the transition period from           to            

Commission file number 333-23451

REV HOLDINGS LLC

(Exact name of registrant as specified in itscharter)

|                                                              |  |                                     |  |  |  |  |
|--------------------------------------------------------------|--|-------------------------------------|--|--|--|--|
| **Delaware**                                                 |  | **13-3933701**                      |
| (Stateor other jurisdiction of incorporation ororganization) |  | (I.R.S.Employer Identification No.) |
| **35 East 62ndStreet, New York, New York**                   |  | **10021**                           |
| (Address of principal executiveoffices)                      |  | (ZipCode)                           |
|                                                              |

Registrant'stelephone number, including area code:    **212-572-8600**

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

Indicate by check markwhether the registrant is an accelerated filer (as defined in Rule12b-2 of the Securities Exchange Act of 1934). Yes               No     X    

As of June 30, 2004, the registrant's membershipinterest is held by Revlon Holdings LLC.

TotalPages –44

    

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REV HOLDINGS LLC ANDSUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (dollars inmillions)

|                                                                    |  |             |          |                 |  |        |          |         |  |  |
|--------------------------------------------------------------------|--|-------------|----------|-----------------|--|--------|----------|---------|--|--|
|                                                               |  | June30,2004 |          | December31,2003 |
|                                                               |  | (Unaudited) |          |
| **ASSETS**                                                         |  |
| Currentassets:                                                     |  |
| Cash and cashequivalents                                           |  | $           | 51.7     |            |  | $      | 56.5     |    |
| Trade receivables, less allowances of $18.7 and $19.4,respectively |  |        | 170.4    |            |  |   | 182.5    |    |
| Inventories                                                        |  |        | 159.6    |            |  |   | 142.7    |    |
| Prepaid expenses andother                                          |  |        | 43.6     |            |  |   | 34.0     |    |
| Total current assets                                               |  |        | 425.3    |            |  |   | 415.7    |    |
| Property, plant and equipment,net                                  |  |        | 125.2    |            |  |   | 132.1    |    |
| Otherassets                                                        |  |        | 157.7    |            |  |   | 158.4    |    |
| Goodwill,net                                                       |  |        | 186.1    |            |  |   | 186.1    |    |
| Total assets                                                       |  | $           | 894.3    |            |  | $      | 892.3    |    |
| **LIABILITIES ANDMEMBER'SDEFICIENCY**                              |  |
| Currentliabilities:                                                |  |
| Short-term borrowings –third parties                         |  | $           | 33.7     |            |  | $      | 28.0     |    |
| Advances from affiliate                                            |  |        | —  |            |  |   | 23.9     |    |
| Accounts payable                                                   |  |        | 105.1    |            |  |   | 97.4     |    |
| Accrued expenses andother                                          |  |        | 289.0    |            |  |   | 329.2    |    |
| Total current liabilities                                          |  |        | 427.8    |            |  |   | 478.5    |    |
| Long-term debt – third parties                               |  |        | 1,184.9  |            |  |   | 1,803.8  |    |
| Long-term debt– affiliates                                   |  |        | 4.0      |            |  |   | 146.2    |    |
| Otherlong-term liabilities                                         |  |        | 300.2    |            |  |   | 306.3    |    |
| Member'sdeficiency:                                                |  |
| Member'sinterest                                                   |  |        | —  |            |  |   | —  |    |
| Additional paid-in-capital                                         |  |        | 938.1    |            |  |   | 370.0    |    |
| Accumulateddeficit                                                 |  |        | (1,822.4 | )          |  |   | (2,086.3 | )  |
| Deferredcompensation                                               |  |        | (15.7    | )          |  |   | (4.2     | )  |
| Accumulated other comprehensiveloss                                |  |        | (122.6   | )          |  |   | (122.0   | )  |
| Total member'sdeficiency                                           |  |        | (1,022.6 | )          |  |   | (1,842.5 | )  |
| Total liabilities and member'sdeficiency                           |  | $           | 894.3    |            |  | $      | 892.3    |    |
|                                                                    |

See Accompanying Notes toUnaudited Consolidated Condensed FinancialStatements.

2

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REV HOLDINGS LLC AND SUBSIDIARIESUNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (dollarsin millions)

|                                             |  |                           |         |                         |  |        |         |         |  |        |        |         |  |        |         |         |  |  |
|---------------------------------------------|--|---------------------------|---------|-------------------------|--|--------|---------|---------|--|--------|--------|---------|--|--------|---------|---------|--|--|
|                                        |  | ThreeMonths EndedJune 30, |         | Six Months EndedJune30, |
|                                        |  | 2004                      |         | 2003                    |  | 2004   |         | 2003    |
| Net sales                                   |  | $                         | 316.1   |                    |  | $      | 322.3   |    |  | $      | 624.5  |    |  | $      | 614.3   |    |
| Cost ofsales                                |  |                      | 118.4   |                    |  |   | 125.2   |    |  |   | 235.5  |    |  |   | 236.7   |    |
| Grossprofit                                 |  |                      | 197.7   |                    |  |   | 197.1   |    |  |   | 389.0  |    |  |   | 377.6   |    |
| Selling, general and administrativeexpenses |  |                      | 199.4   |                    |  |   | 200.2   |    |  |   | 371.3  |    |  |   | 384.4   |    |
| Restructuring costs(benefit)                |  |                      | 0.1     |                    |  |   | — |    |  |   | (0.6   | )  |  |   | 0.5     |    |
| Operating (loss)income                      |  |                      | (1.8    | )                  |  |   | (3.1    | )  |  |   | 18.3   |    |  |   | (7.3    | )  |
| Otherexpenses (income):                     |  |
| Interestexpense                             |  |                      | 29.5    |                    |  |   | 45.3    |    |  |   | 75.4   |    |  |   | 89.2    |    |
| Interestincome                              |  |                      | (1.1    | )                  |  |   | (1.7    | )  |  |   | (2.1   | )  |  |   | (2.2    | )  |
| Amortization of debt issuance costs         |  |                      | 3.3     |                    |  |   | 2.4     |    |  |   | 5.9    |    |  |   | 4.4     |    |
| Foreigncurrency losses (gains), net         |  |                      | 3.0     |                    |  |   | (2.7    | )  |  |   | 1.6    |    |  |   | (2.4    | )  |
| Loss onearly extinguishment of debt         |  |                      | — |                    |  |   | — |    |  |   | 32.6   |    |  |   | — |    |
| Gain on issuance ofsubsidiary stock         |  |                      | — |                    |  |   | — |    |  |   | (363.6 | )  |  |   | — |    |
| Miscellaneous,net                           |  |                      | 2.4     |                    |  |   | — |    |  |   | 2.5    |    |  |   | 0.4     |    |
| Other expenses (income),net                 |  |                      | 37.1    |                    |  |   | 43.3    |    |  |   | (247.7 | )  |  |   | 89.4    |    |
| (Loss) income beforeincome taxes            |  |                      | (38.9   | )                  |  |   | (46.4   | )  |  |   | 266.0  |    |  |   | (96.7   | )  |
| Provision (benefit) for incometaxes         |  |                      | 1.3     |                    |  |   | (6.1    | )  |  |   | 2.1    |    |  |   | (5.2    | )  |
| Net (loss)income                            |  | $                         | (40.2   | )                  |  | $      | (40.3   | )  |  | $      | 263.9  |    |  | $      | (91.5   | )  |
|                                             |

See Accompanying Notes toUnaudited Consolidated Condensed FinancialStatements.

3

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REV HOLDINGS LLC AND SUBSIDIARIESUNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF MEMBER'SDEFICIENCY AND COMPREHENSIVE INCOME (LOSS) (dollars inmillions)

|                                                          |  |                           |        |                    |  |                      |          |                                      |  |                         |        |         |  |        |        |         |  |        |          |         |  |  |
|----------------------------------------------------------|--|---------------------------|--------|--------------------|--|----------------------|----------|--------------------------------------|--|-------------------------|--------|---------|--|--------|--------|---------|--|--------|----------|---------|--|--|
|                                                     |  | AdditionalPaid-In-Capital |        | AccumulatedDeficit |  | DeferredCompensation |          | AccumulatedOtherComprehensiveLoss(a) |  | TotalMembers'Deficiency |
| Balance, January 1, 2003                                 |  | $                         | 316.2  |               |  | $                    | (1,919.1 | )                               |  | $                       | (6.4   | )  |  | $      | (132.7 | )  |  | $      | (1,742.0 | )  |
| Issuance of restricted stock,net                         |  |                      |   |               |  |                 |     |                                 |  |                    | 0.1    |    |  |   |   |    |  |   | 0.1      |    |
| Amortization of deferredcompensation                     |  |                      |   |               |  |                 |     |                                 |  |                    | 1.1    |    |  |   |   |    |  |   | 1.1      |    |
| Net proceeds from the Rights Offering                    |  |                      | 47.0   |               |  |                 |     |                                 |  |                    |   |    |  |   |   |    |  |   | 47.0     |    |
| Reductionof liabilities assumed from indirect parent (c) |  |                      | 6.9    |               |  |                 |     |                                 |  |                    |   |    |  |   |   |    |  |   | 6.9      |    |
| Comprehensiveloss:                                       |  |
| Netloss                                                  |  |                      |   |               |  |                 | (91.5    | )                               |  |                    |   |    |  |   |   |    |  |   | (91.5    | )  |
| Currency translationadjustment                           |  |                      |   |               |  |                 |     |                                 |  |                    |   |    |  |   | 5.5    |    |  |   | 5.5      |    |
| Net loss on foreign currency forwardexchangecontracts    |  |                      |   |               |  |                 |     |                                 |  |                    |   |    |  |   | (2.1   | )  |  |   | (2.1     | )  |
| Total comprehensiveloss                                  |  |                      |   |               |  |                 |     |                                 |  |                    |   |    |  |   |   |    |  |   | (88.1    | )  |
| Balance, June 30, 2003                                   |  | $                         | 370.1  |               |  | $                    | (2,010.6 | )                               |  | $                       | (5.2   | )  |  | $      | (129.3 | )  |  | $      | (1,775.0 | )  |
| Balance, January 1,2004                                  |  | $                         | 370.0  |               |  | $                    | (2,086.3 | )                               |  | $                       | (4.2   | )  |  | $      | (122.0 | )  |  | $      | (1,842.5 | )  |
| Debt Reduction Transactions (See Note 8)(b)              |  |                      | 464.1  |               |  |                 |     |                                 |  |                    |   |    |  |   |   |    |  |   | 464.1    |    |
| Capital contributions from affiliate (See Note 8)(d)     |  |                      | 90.4   |               |  |                 |     |                                 |  |                    |   |    |  |   |   |    |  |   | 90.4     |    |
| Issuance of restricted stock,net                         |  |                      | 13.6   |               |  |                 |     |                                 |  |                    | (13.6  | )  |  |   |   |    |  |   | —  |    |
| Amortization of deferredcompensation                     |  |                      |   |               |  |                 |     |                                 |  |                    | 2.1    |    |  |   |   |    |  |   | 2.1      |    |
| Comprehensiveincome:                                     |  |
| Net income (See Note 8)(b)                               |  |                      |   |               |  |                 | 263.9    |                                 |  |                    |   |    |  |   |   |    |  |   | 263.9    |    |
| Currency translationadjustment                           |  |                      |   |               |  |                 |     |                                 |  |                    |   |    |  |   | (2.5   | )  |  |   | (2.5     | )  |
| Net gain on foreign currency forward exchangecontracts   |  |                      |   |               |  |                 |     |                                 |  |                    |   |    |  |   | 1.9    |    |  |   | 1.9      |    |
| Total comprehensiveincome                                |  |                      |   |               |  |                 |     |                                 |  |                    |   |    |  |   |   |    |  |   | 263.3    |    |
| Balance, June 30, 2004                                   |  | $                         | 938.1  |               |  | $                    | (1,822.4 | )                               |  | $                       | (15.7  | )  |  | $      | (122.6 | )  |  | $      | (1,022.6 | )  |
|                                                          |

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|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
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| (a) | Accumulatedother comprehensive loss includes net unrealized gains (losses) onrevaluations of foreign currency forward exchange contracts of $0.2 and$(1.8) as of June 30, 2004 and 2003, respectively, net realized gains(losses) of $0.3 and $(0.3) on foreign currency forward exchangecontracts, as of June 30, 2004 and 2003, respectively, cumulative nettranslation losses of $11.0 and $13.6 as of June 30, 2004 and 2003,respectively, and adjustments for the minimum pension liability of$112.1 and $113.6 as of June 30, 2004 and 2003, respectively. |

|     |                                                                                                                                                                |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | The changes in AdditionalPaid-in-Capital and a portion of Accumulated Deficit are a result ofthe consummation of the Debt Reduction Transactions. (See Note8). |

|     |                                                                                                                                                                                                                                                                                                                                                   |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (c) | During thesecond quarter of 2003, the Company resolved various tax audits, whichresulted in a tax benefit of $13.9, of which $6.9 was recorded directlyto Additional Paid-In-Capital since it relates to liabilities assumedby Products Corporation in connection with the transfer agreementsrelated to Products Corporation's formation in1992. |

|     |                                                                   |
|-----|-------------------------------------------------------------------|
| (d) | Relates to the REVHoldings Exchange Offer and Keepwell Agreement. |

SeeAccompanying Notes to Unaudited Consolidated Condensed FinancialStatements.

4

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REV HOLDINGS LLC AND SUBSIDIARIESUNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (dollarsin millions)

|                                                                                                   |  |                         |         |         |  |        |         |         |  |  |
|---------------------------------------------------------------------------------------------------|--|-------------------------|---------|---------|--|--------|---------|---------|--|--|
|                                                                                              |  | SixMonths Ended June30, |
|                                                                                              |  | 2004                    |         | 2003    |
| **CASH FLOWS FROM OPERATINGACTIVITIES:**                                                          |  |
| Net income (loss)                                                                                 |  | $                       | 263.9   |    |  | $      | (91.5   | )  |
| Adjustments toreconcile net income (loss) to net cash (used for) provided byoperating activities: |  |
| Depreciation andamortization                                                                      |  |                    | 55.0    |    |  |   | 55.7    |    |
| Debtdiscount amortization                                                                         |  |                    | 1.6     |    |  |   | 2.7     |    |
| Loss on early extinguishment of debt                                                              |  |                    | 19.3    |    |  |   | — |    |
| Gain on issuance of subsidiarystock                                                               |  |                    | (363.6  | )  |  |   | — |    |
| Change in assets and liabilities, net ofacquisitions and dispositions:                            |  |
| Decrease intrade receivables                                                                      |  |                    | 11.0    |    |  |   | 11.0    |    |
| Increase ininventories                                                                            |  |                    | (17.8   | )  |  |   | (28.2   | )  |
| Increase in prepaid expenses and other currentassets                                              |  |                    | (10.5   | )  |  |   | (0.2    | )  |
| Increasein accounts payable                                                                       |  |                    | 8.0     |    |  |   | 4.9     |    |
| Decrease in accrued expenses and other currentliabilities                                         |  |                    | (32.4   | )  |  |   | (52.8   | )  |
| Purchase of permanentdisplays                                                                     |  |                    | (33.0   | )  |  |   | (40.9   | )  |
| Other,net                                                                                         |  |                    | (6.1    | )  |  |   | (0.3    | )  |
| Net cash used for operatingactivities                                                             |  |                    | (104.6  | )  |  |   | (139.6  | )  |
| **CASH FLOWS FROM INVESTINGACTIVITIES:**                                                          |  |
| Capitalexpenditures                                                                               |  |                    | (8.1    | )  |  |   | (13.2   | )  |
| Net cash used for investingactivities                                                             |  |                    | (8.1    | )  |  |   | (13.2   | )  |
| **CASH FLOWS FROM FINANCINGACTIVITIES:**                                                          |  |
| Net increase (decrease) inshort-term borrowings – third parties                             |  |                    | 6.3     |    |  |   | (0.4    | )  |
| Proceeds from the issuance of long-termdebt – third parties                                 |  |                    | 325.0   |    |  |   | 102.8   |    |
| Repayment of long-term debt – thirdparties                                                  |  |                    | (306.8  | )  |  |   | (100.5  | )  |
| Proceedsfrom the issuance of long-term debt –affiliates                                     |  |                    | 42.7    |    |  |   | 43.5    |    |
| Repayment oflong-term debt –affiliates                                                      |  |                    | (15.5   | )  |  |   | — |    |
| NetProceeds from the Rights Offering                                                              |  |                    | — |    |  |   | 47.0    |    |
| Issuance of Series C preferred stock byRevlon, Inc                                                |  |                    | — |    |  |   | 50.0    |    |
| Redemption of Series C preferred stock by Revlon,Inc                                              |  |                    | — |    |  |   | (50.0   | )  |
| Capitalcontribution from parent                                                                   |  |                    | 54.1    |    |  |   | — |    |
| Advances under the Keepwell Agreement                                                             |  |                    | 4.5     |    |  |   | 4.8     |    |
| Payment of financingcosts                                                                         |  |                    | (3.5    | )  |  |   | (3.4    | )  |
| Net cash provided by financingactivities                                                          |  |                    | 106.8   |    |  |   | 93.8    |    |
| Effect of exchange rate changes on cash and cashequivalents                                       |  |                    | 1.1     |    |  |   | 7.6     |    |
| Net decrease in cash and cashequivalents                                                          |  |                    | (4.8    | )  |  |   | (51.4   | )  |
| Cashand cash equivalents at beginning ofperiod                                                    |  |                    | 56.5    |    |  |   | 85.8    |    |
| Cash and cash equivalents at end ofperiod                                                         |  | $                       | 51.7    |    |  | $      | 34.4    |    |
| Supplemental schedule of cash flowinformation:                                                    |  |
| Cash paid duringthe period for:                                                                   |  |
| Interest                                                                                          |  | $                       | 81.3    |    |  | $      | 86.2    |    |
| Income taxes, net ofrefunds                                                                       |  |                    | 8.5     |    |  |   | 4.0     |    |
| Supplemental schedule ofnoncash investing and financingactivities:                                |  |
| Conversion of long-term debtand accrued interest as a result of the Debt ReductionTransactions    |  | $                       | 813.8   |    |  | $      | — |    |
| Noncash capital contribution from parent of REV Holdingsrelated to REV Holdings Exchange Offer    |  |                    | 7.9     |    |  |   | — |    |
| Issuance of New REV HoldingsNotes in exchange for REV Holdings Notes                              |  |                    | 18.5    |    |  |   | — |    |
| Noncash capital contribution fromparent of REV Holdings related to the KeepwellAgreement          |  |                    | 28.4    |    |  |   | — |    |
|                                                                                                   |

SeeAccompanying Notes to Unaudited Consolidated Condensed FinancialStatements.

5

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REVHOLDINGS LLC AND SUBSIDIARIESNOTES TO UNAUDITED CONSOLIDATEDCONDENSEDFINANCIAL STATEMENTS(dollars in millions,except per share data)

(1)    Basis ofPresentation

REV Holdings LLC("REV Holdings" and, together with itssubsidiaries, the "Company") is a Delawarelimited liability company. REV Holdings conducts its businessexclusively through its indirect subsidiary, Revlon Consumer ProductsCorporation and its subsidiaries ("ProductsCorporation"). Products Corporation is a wholly ownedsubsidiary of Revlon, Inc.

Until March 24, 2004, the Companyowned (a)  11,650,000 shares of Revlon, Inc. Class A common stock(the "Class A Common Stock"), (b)  allof the outstanding 31,250,000 shares of Revlon, Inc. Class B commonstock (the "Class B Common Stock" and,together with the Class A Common Stock, the "CommonStock"), (c)  all of the outstanding 546 shares ofRevlon, Inc. Series A preferred stock (the "Series APreferred Stock") and (d)  all of the outstanding4,333 shares of Revlon, Inc. Series B convertible preferred stock (the"Series B Preferred Stock") (which wereconvertible, in the aggregate, into 433,333 shares of Class A CommonStock). This ownership represented approximately 62% of theoutstanding shares of the Common Stock and approximately 92% ofthe combined voting power of the Common Stock.

On March 25,2004, in connection with the Revlon Exchange Transactions (ashereinafter defined), Revlon, Inc. issued 299,969,493 shares of Class ACommon Stock (**See Note 8 to the Unaudited Consolidated CondensedFinancial Statements)**, including 9,169,333 shares of Class A CommonStock to REV Holdings in exchange for all of the Series A PreferredStock and Series B Preferred Stock. As a result of consummating theRevlon Exchange Transactions, the Company owned, as March 25, 2004 andas of June 30, 2004, 20,819,333 shares of Class A Common Stock and31,250,000 shares of Class B Common Stock (representing approximately14% of the Common Stock and approximately 51% of thecombined voting power of the Common Stock). Accordingly, theconsolidated financial statements of the Company continue to includethe financial results of Revlon, Inc. and its subsidiaries on aconsolidated basis.

The REV Holdings membership interest isowned by its sole member, Revlon Holdings LLC("Holdings"), whose membership interest, inturn, is owned indirectly by Mafco Holdings Inc. ("MafcoHoldings" and, together with its affiliates,"MacAndrews & Forbes"), a corporationowned by Ronald O. Perelman. Until March 24, 2004, Mafco Holdingsbeneficially indirectly owned approximately 83% of the CommonStock (which represented approximately 97% of the combinedvoting power of the Common Stock), including shares held directly byits wholly owned subsidiary, MacAndrews & Forbes Holdings Inc.("MacAndrews Holdings"). As a result of theRevlon Exchange Transactions, Mafco Holdings beneficially indirectlyowned, as March 25, 2004 and as of June 30, 2004, approximately60% of the Common Stock (representing approximately 77%of the combined voting power of the Common Stock).

Theaccompanying Consolidated Condensed Financial Statements are unaudited.In management's opinion, all adjustments (consisting of onlynormal recurring adjustments) necessary for a fair presentation havebeen made.

The Unaudited Consolidated Condensed FinancialStatements include the accounts of the Company after elimination of allintercompany balances and transactions. The Company has made a numberof estimates and assumptions relating to the assets and liabilities,the disclosure of contingent assets and liabilities and the reportingof revenues and expenses to prepare these financial statements inconformity with accounting principles generally accepted in the UnitedStates. Actual results could differ from those estimates. The UnauditedConsolidated Condensed Financial Statements should be read inconjunction with the consolidated financial statements and relatednotes contained in the Company's Annual Report on Form 10-K forthe year ended December 31, 2003.

The results of operations andfinancial position, including working capital, for interim periods arenot necessarily indicative of those to be expected for a full year.

6

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REVHOLDINGS LLC AND SUBSIDIARIESNOTES TO UNAUDITED CONSOLIDATEDCONDENSEDFINANCIAL STATEMENTS**—(Continued)**(dollars in millions,except per share data)

Statement of Financial Accounting Standards("SFAS") No. 123, "Accountingfor Stock-Based Compensation," encourages, but does notrequire, companies to record compensation cost for stock-based employeecompensation plans at fair value. The Company has chosen to account forstock-based compensation plans using the intrinsic value methodprescribed in Accounting Principles Board("APB") Opinion No. 25,"Accounting for Stock Issued to Employees,"and related interpretations. Accordingly, compensation cost for stockoptions issued to employees is measured as the excess, if any, of thequoted market price of Class A Common Stock at the date of the grantover the amount an employee must pay to acquire such stock.

Thefollowing table illustrates the effect on net (loss) income as if theCompany had applied the fair value method to its stock-basedcompensation (including 23.1 million stock option awards and 4.5million restricted shares issued under the Amended and Restated Revlon,Inc. Stock Plan during the second quarter of 2004) under the disclosureprovisions of SFAS No.123:

|                                                                                                               |  |                           |       |                         |  |        |       |         |  |        |       |         |  |        |       |         |  |  |
|---------------------------------------------------------------------------------------------------------------|--|---------------------------|-------|-------------------------|--|--------|-------|---------|--|--------|-------|---------|--|--------|-------|---------|--|--|
|                                                                                                          |  | ThreeMonths EndedJune 30, |       | Six Months EndedJune30, |
|                                                                                                          |  | 2004                      |       | 2003                    |  | 2004   |       | 2003    |
| Net(loss) income as reported                                                                                  |  | $                         | (40.2 | )                  |  | $      | (40.3 | )  |  | $      | 263.9 |    |  | $      | (91.5 | )  |
| Add: Stock-based employee compensation included in reportednet (loss) income                                  |  |                      | 1.5   |                    |  |   | 0.4   |    |  |   | 2.1   |    |  |   | 1.1   |    |
| Deduct: Total stock-based employeecompensation expense determined under fair value based method for allawards |  |                      | (9.1  | )                  |  |   | (2.0  | )  |  |   | (10.5 | )  |  |   | (4.7  | )  |
| Proforma net (loss) income                                                                                    |  | $                         | (47.8 | )                  |  | $      | (41.9 | )  |  | $      | 255.5 |    |  | $      | (95.1 | )  |
|                                                                                                               |

Theeffects of applying SFAS No. 123 in this pro forma disclosure are notnecessarily indicative of future amounts.

(2)    Post-retirement Benefits

Pension:

Asubstantial portion of Products Corporation's employees in theU.S. are covered by defined benefit pension plans. The Company usesSeptember 30 as its measurement date for plan obligations andassets.

Other Post-retirement Benefits:

ProductsCorporation also has sponsored an unfunded retiree benefit plan, whichprovides death benefits payable to beneficiaries of a very limitednumber of employees and former employees. Participation in this plan islimited to participants enrolled as of December 31, 1993. ProductsCorporation also administers a medical insurance plan on behalf ofHoldings, the cost of which has been apportioned to Holdings under thereimbursement agreements among Revlon, Inc., Products Corporation andMacAndrews Holdings. The Company uses September 30 as its measurementdate for plan obligations and assets.

In December of 2003, theMedicare Prescription Drug Improvement and Modernization Act of 2003(the "Medicare Act") was enacted in the U.S.The Medicare Act introduced both a Medicare prescription-drug benefitand a federal subsidy to sponsors of retiree health-care plans thatprovide a benefit at least "actuariallyequivalent" to the Medicare benefit. Certain of theCompany's post-retirement benefit plans do provide for suchprescription-drug benefits. The Company has made a one-time election todefer accounting for the economic effects of the Medicare Act, aspermitted by the Financial Accounting Standards Board("FASB") Staff Position 106-1,"Accounting and Disclosure Requirements Related to theMedicare Prescription Drug Improvement and Modernization Act of2003".

7

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REVHOLDINGS LLC AND SUBSIDIARIESNOTES TO UNAUDITED CONSOLIDATEDCONDENSEDFINANCIAL STATEMENTS**—(Continued)**(dollars in millions,except per share data)

In May 2004, the FASB issued Staff Position106-2, "Accounting and Disclosure Requirements Related tothe Medicare Prescription Drug Improvement and Modernization Act of2003" which provides guidance on the accounting for theeffects of the Medicare Act. FASB Staff Position 106-2, which requiresmeasurement of the Accumulated Postretirement Benefit Obligation("APBO") and net periodic postretirementbenefit cost to reflect the effects of the Medicare Act, supercedesFASB Staff Position 106-1. FASB Staff Position 106-2 is effective forinterim or annual periods beginning after June 15, 2004. The Companyhas not fully evaluated the impact of the Medicare Act's benefitsand subsidies on the Company's accumulated benefit obligation forapplicable post-retirement benefits. The Company has also notdetermined what changes would be required to the current benefitsprovided to allow the Company to qualify for the federal subsidy.Management believes that the provisions of the Medicare Act will nothave a material effect on the Company's consolidated financialstatements.

The components of net periodic benefit cost for thepension and the other post-retirement benefit plans for the threemonths ended June 30, 2004 and 2003 are as follows:

|                                   |  |              |      |                                    |  |        |      |         |  |        |         |        |  |        |         |        |  |  |
|-----------------------------------|--|--------------|------|------------------------------------|--|--------|------|---------|--|--------|---------|--------|--|--------|---------|--------|--|--|
|                              |  | PensionPlans |      | Other Post-retirement BenefitPlans |
|                              |  | 2004         |      | 2003                               |  | 2004   |      | 2003    |
| Service cost                      |  | $            | 2.5  |                               |  | $      | 5.2  |    |  | $      | — |   |  | $      | 0.1     |   |
| Interest cost                     |  |         | 7.6  |                               |  |   | 7.4  |    |  |   | 0.2     |   |  |   | 0.2     |   |
| Expected return onplan assets     |  |         | (6.4 | )                             |  |   | (5.4 | )  |  |   | — |   |  |   | — |   |
| Amortization of prior servicecost |  |         | (0.1 | )                             |  |   | (0.2 | )  |  |   | — |   |  |   | — |   |
| Amortization of actuarialloss     |  |         | 2.1  |                               |  |   | 2.3  |    |  |   | — |   |  |   | — |   |
|                              |  |         | 5.7  |                               |  |   | 9.3  |    |  |   | 0.2     |   |  |   | 0.3     |   |
| Portion allocatedto Holdings      |  |         | (0.1 | )                             |  |   | (0.1 | )  |  |   | — |   |  |   | — |   |
|                              |  | $            | 5.6  |                               |  | $      | 9.2  |    |  | $      | 0.2     |   |  | $      | 0.3     |   |
|                                   |

The components of net periodicbenefit cost for the pension and the other post-retirement benefitplans for the six months ended June 30, 2004 and 2003 are asfollows:

|                                    |  |              |       |                                   |  |        |       |         |  |        |         |         |  |        |         |        |  |  |
|------------------------------------|--|--------------|-------|-----------------------------------|--|--------|-------|---------|--|--------|---------|---------|--|--------|---------|--------|--|--|
|                               |  | PensionPlans |       | Other Post-retirementBenefitPlans |
|                               |  | 2004         |       | 2003                              |  | 2004   |       | 2003    |
| Service cost                       |  | $            | 5.0   |                              |  | $      | 7.5   |    |  | $      | (1.9    | )  |  | $      | 0.2     |   |
| Interest cost                      |  |         | 15.2  |                              |  |   | 14.8  |    |  |   | (1.2    | )  |  |   | 0.4     |   |
| Expected return on planassets      |  |         | (12.8 | )                            |  |   | (10.8 | )  |  |   | — |    |  |   | — |   |
| Amortization of prior service cost |  |         | (0.2  | )                            |  |   | (0.4  | )  |  |   | — |    |  |   | — |   |
| Amortization of actuarial loss     |  |         | 4.2   |                              |  |   | 4.6   |    |  |   | — |    |  |   | — |   |
|                               |  |         | 11.4  |                              |  |   | 15.7  |    |  |   | (3.1    | )  |  |   | 0.6     |   |
| Portionallocated to Holdings       |  |         | (0.1  | )                            |  |   | (0.2  | )  |  |   | — |    |  |   | — |   |
|                               |  | $            | 11.3  |                              |  | $      | 15.5  |    |  | $      | (3.1    | )  |  | $      | 0.6     |   |
|                                    |

The Company recognized $3.3 ofincome in the first half of 2004 related to a reduction in theliability for an International post-retirement benefit arrangementwhose terms were modified.

Employer Contributions:

The Company previously disclosed in the notes to its financialstatements for the year ended December 31, 2003, that it expected tocontribute $40 in cash to its pension plans and $1 to its 

8

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REVHOLDINGS LLC AND SUBSIDIARIESNOTES TO UNAUDITED CONSOLIDATEDCONDENSEDFINANCIAL STATEMENTS**—(Continued)**(dollars in millions,except per share data)

post-retirement benefit plans in 2004. As ofJune 30, 2004, a total of $13 of contributions had been made. TheCompany presently anticipates contributing an additional $21 in 2004for a total of approximately $34 during all of2004.

(3)    Inventories

|                           |  |             |       |                  |  |        |       |        |  |  |
|---------------------------|--|-------------|-------|------------------|--|--------|-------|--------|--|--|
|                      |  | June30,2004 |       | December 31,2003 |
| Rawmaterials and supplies |  | $           | 51.1  |             |  | $      | 48.3  |   |
| Work-in-process           |  |        | 12.7  |             |  |   | 11.6  |   |
| Finished goods            |  |        | 95.8  |             |  |   | 82.8  |   |
|                      |  | $           | 159.6 |             |  | $      | 142.7 |   |
|                           |

(4)    OtherAssets

Included in other assets are trademarks, net, andpatents, net. The amounts outstanding for these intangible assets atJune 30, 2004 and December 31, 2003 were as follows: for trademarks,net, $7.6 and $7.5, respectively, and for patents, net, $3.6 and $3.9,respectively. Amortization expense for the second quarter and sixmonths ended June 30, 2004 and 2003 was $0.5 and $0.9, respectively,and $0.4 and $0.8, respectively. The Company's intangible assetsother than goodwill continue to be subject to amortization, which isanticipated to be approximately $1.5 annually through December 31,2009.

(5)    Restructuring and Other Costs, Net

During the third quarter of 2000, the Company initiated a newrestructuring program in line with the original restructuring plandeveloped in late 1998, designed to improve profitability by reducingpersonnel and consolidating manufacturing facilities. The 2000restructuring program focused on the Company's plans to close itsmanufacturing operations in Phoenix, Arizona and Mississauga, Canadaand to consolidate its cosmetics production into its plant in Oxford,North Carolina. The 2000 restructuring program also includes theremaining obligation for excess leased real estate in theCompany's headquarters, consolidation costs associated with theCompany closing its facility in New Zealand, and the elimination ofseveral domestic and international executive and operational positions,each of which were effected to reduce and streamline corporate overheadcosts.

During the second quarter and first half of 2004, theCompany revised its estimate of the cost to be incurred related to theprevious restructuring program. Additionally, during the second quarterof 2004 the Company recorded $0.3 for employee severance and otherpersonnel benefits. In 2003, the Company recorded separate charges of$5.9 ($0.5 of which was recorded in the first half of 2003) foremployee severance and other personnel benefits for 421 employees incertain International operations, as to which 333 employees had beenterminated as of June 30, 2004.

9

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REVHOLDINGS LLC AND SUBSIDIARIESNOTES TO UNAUDITED CONSOLIDATEDCONDENSEDFINANCIAL STATEMENTS**—(Continued)**(dollars in millions,except per share data)

Details of the activities described aboveduring the six-month period ended June 30, 2004 are as follows:

|                                                 |  |                     |         |        |  |               |         |                   |  |        |         |         |  |        |         |        |  |        |     |        |  |  |
|-------------------------------------------------|--|---------------------|---------|--------|--|---------------|---------|-------------------|--|--------|---------|---------|--|--------|---------|--------|--|--------|-----|--------|--|--|
|                                            |  | As ofJanuary 1,2004 |         |   |  | Utilized, Net |         | Asof June 30,2004 |
|                                            |  | Expenses, Net       |         | Cash   |  | Noncash       |         |
| Employee severance and otherpersonnel benefits: |  |
| 2000 program                                    |  | $                   | 1.8     |   |  | $             | — |              |  | $      | (0.9    | )  |  | $      | — |   |  | $      | 0.9 |   |
| 2003 program                                    |  |                | 5.0     |   |  |          | — |              |  |   | (0.4    | )  |  |   | 0.2     |   |  |   | 4.8 |   |
| 2004 program                                    |  |                | — |   |  |          | 0.3     |              |  |   | — |    |  |   | — |   |  |   | 0.3 |   |
|                                            |  |                | 6.8     |   |  |          | 0.3     |              |  |   | (1.3    | )  |  |   | 0.2     |   |  |   | 6.0 |   |
| Leases and equipment write-offs                 |  |                | 2.2     |   |  |          | (0.9    | )            |  |   | 0.7     |    |  |   | 0.1     |   |  |   | 2.1 |   |
|                                            |  | $                   | 9.0     |   |  | $             | (0.6    | )            |  | $      | (0.6    | )  |  | $      | 0.3     |   |  | $      | 8.1 |   |
|                                                 |

(6)    GeographicInformation

The Company manages its business on the basis ofone reportable operating segment. The Company's results ofoperations and the value of its foreign assets and liabilities may beadversely affected by, among other things, weak economic conditions,political uncertainties, military actions, terrorist activities,adverse currency fluctuations, competitive activities and changes inconsumer purchasing habits.

|                          |  |                            |       |                          |  |        |       |        |  |        |       |        |  |        |       |        |  |  |
|--------------------------|--|----------------------------|-------|--------------------------|--|--------|-------|--------|--|--------|-------|--------|--|--------|-------|--------|--|--|
|                     |  | ThreeMonths Ended June 30, |       | Six Months Ended June30, |
| Geographicareas:         |  | 2004                       |       | 2003                     |  | 2004   |       | 2003   |
| Netsales:                |  |
| United States            |  | $                          | 192.1 |                     |  | $      | 210.9 |   |  | $      | 382.7 |   |  | $      | 405.7 |   |
| Canada                   |  |                       | 14.7  |                     |  |   | 13.9  |   |  |   | 30.0  |   |  |   | 24.0  |   |
| United States and Canada |  |                       | 206.8 |                     |  |   | 224.8 |   |  |   | 412.7 |   |  |   | 429.7 |   |
| International            |  |                       | 109.3 |                     |  |   | 97.5  |   |  |   | 211.8 |   |  |   | 184.6 |   |
|                     |  | $                          | 316.1 |                     |  | $      | 322.3 |   |  | $      | 624.5 |   |  | $      | 614.3 |   |
|                          |

    

|                          |  |              |       |                  |  |                                                                          |       |                                                                          |  |  |  |  |  |  |  |  |  |  |
|--------------------------|--|--------------|-------|------------------|--|--------------------------------------------------------------------------|-------|--------------------------------------------------------------------------|--|--|--|--|--|--|--|--|--|--|
|                     |  | June 30,2004 |       | December 31,2003 |  |              |       |              |
| Long-lived assets:       |  |
| UnitedStates             |  | $            | 386.2 |             |  | $                                                                        | 392.9 |                                                                     |  |
| Canada                   |  |         | 4.5   |             |  |                                                                     | 3.9   |                                                                     |  |
| United States and Canada |  |         | 390.7 |             |  |                                                                     | 396.8 |                                                                     |  |
| International            |  |         | 78.3  |             |  |                                                                     | 79.8  |                                                                     |  |
|                     |  | $            | 469.0 |             |  | $                                                                        | 476.6 |                                                                     |  |
|                          |

    

|                                    |  |                            |       |                           |  |        |       |        |  |        |       |        |  |        |       |        |  |  |
|------------------------------------|--|----------------------------|-------|---------------------------|--|--------|-------|--------|--|--------|-------|--------|--|--------|-------|--------|--|--|
|                               |  | Three Months EndedJune 30, |       | Six Months Ended June 30, |
| Classes of similarproducts:        |  | 2004                       |       | 2003                      |  | 2004   |       | 2003   |
| Netsales:                          |  |
| Cosmetics, skin care andfragrances |  | $                          | 210.3 |                      |  | $      | 208.4 |   |  | $      | 417.2 |   |  | $      | 406.2 |   |
| Personal care                      |  |                       | 105.8 |                      |  |   | 113.9 |   |  |   | 207.3 |   |  |   | 208.1 |   |
|                               |  | $                          | 316.1 |                      |  | $      | 322.3 |   |  | $      | 624.5 |   |  | $      | 614.3 |   |
|                                    |

10

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REVHOLDINGS LLC AND SUBSIDIARIESNOTES TO UNAUDITED CONSOLIDATEDCONDENSEDFINANCIAL STATEMENTS**—(Continued)**(dollars in millions,except per share data)

(7)    Derivative FinancialInstruments

The Company uses derivative financial instruments,primarily foreign currency forward exchange contracts, to reduce theeffects of fluctuations in foreign currency exchange rates. Thesecontracts, which have been designated as cash flow hedges, were enteredinto primarily to hedge anticipated inventory purchases and certainintercompany payments denominated in foreign currencies, which havematurities of less than one year. Any unrecognized income (loss)related to these contracts are recorded in the Statement of Operationsprimarily in cost of goods sold when the underlying transactions hedgedare realized (e.g., when inventory is sold or intercompany transactionsare settled). Products Corporation enters into these contracts with acounterparty that is a major financial institution, and accordingly theCompany believes that the risk of counterparty nonperformance isremote. The notional amount of the foreign currency forward exchangecontracts outstanding at June  30, 2004 and 2003 was $54.1 and$31.9, respectively. The fair value of the foreign currency forwardexchange contracts outstanding at June 30, 2004 and 2003 was $0.2 and$(1.8), respectively.

(8)    Long-term Debt

OnFebruary 12, 2004, Revlon, Inc. announced that its Board of Directorshad approved agreements with Fidelity Management & Research Co.("Fidelity") and MacAndrews & Forbesintended to dramatically strengthen Products Corporation'sbalance sheet (the "Debt ReductionTransactions"). As a result, Products Corporation'sdebt was reduced by approximately $804 on March  25, 2004.(**See Note 10 to the Unaudited Consolidated Condensed FinancialStatements)**.

Fidelity and MacAndrews & Forbes agreed totender or to cause to be tendered for exchange in exchange offers(together with the other contemporaneously closed Debt ReductionTransactions described below, the "Revlon ExchangeTransactions") an aggregate of approximately $441 ofProducts Corporation's outstanding 8 1/8%Senior Notes, 9% Senior Notes and 8 5/8%Senior Subordinated Notes (each as hereinafter defined andcollectively, the "Revlon Exchange Notes")for shares of Class A Common Stock, at a ratio of 400 shares of Class ACommon Stock for each $1,000 principal amount of ProductsCorporation's 8 1/8% Senior Notes or9% Senior Notes tendered for exchange and 300 shares of Class ACommon Stock for each $1,000 principal amount of ProductsCorporation's 8 5/8% Senior SubordinatedNotes tendered for exchange. The agreements gave Fidelity the right toelect to receive cash or additional shares of Class A Common Stock inrespect of accrued interest payable on the notes it tendered.MacAndrews & Forbes received Class A Common Stock in respect of itsaccrued interest.

In the Revlon Exchange Transactions, whichcommenced on February 20, 2004, expired on March  19, 2004 and,as discussed in further detail below, closed on March 25, 2004, holdersother than MacAndrews & Forbes and Fidelity were offered theopportunity to exchange their Revlon Exchange Notes for (i) shares ofClass A Common Stock at the same exchange ratios or, under certainconditions, (ii) cash up to a maximum of $150 aggregate principalamount of tendered Revlon Exchange Notes, subject to proration. Notestendered for cash were to receive $830 per $1,000 principal amount forthe 8 1/8% Senior Notes, $800 per $1,000principal amount for the 9% Senior Notes and $620 per $1,000principal amount for the 8 5/8% SeniorSubordinated Notes. Accrued interest was also to be paid on tenderednotes in cash or additional shares of Class A Common Stock, at theholder's option. As discussed in more detail below, at the closeof the Revlon Exchange Transactions, no cash was paid for any principalamount of the Revlon Exchange Notes.

As part of the RevlonExchange Transactions, MacAndrews & Forbes also received Class ACommon Stock in respect of any and all outstanding amounts owing to it,as of the closing date of the Revlon Exchange Transactions, under theMafco $100 million term loan (which was approximately $109.7 at March25, 2004, including accrued interest), the 2004 Mafco $125 million termloan (which was approximately $38.9 at March 25, 2004, includingaccrued interest), the Mafco $65 million line of credit 

11

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REVHOLDINGS LLC AND SUBSIDIARIESNOTES TO UNAUDITED CONSOLIDATEDCONDENSEDFINANCIAL STATEMENTS**—(Continued)**(dollars in millions,except per share data)

(which was nil at March 25, 2004) (each assuch loan and line of credit is hereinafter defined) and approximately$24.1 of subordinated promissory notes (the "LoanConversion Transactions"). Each $1,000 principal amount ofindebtedness outstanding under the Mafco $100 million term loan and the2004 Mafco $125 million term loan was exchanged for 400 shares of ClassA Common Stock, and each $1,000 principal amount of indebtednessoutstanding under the subordinated promissory notes was exchanged for300 shares of Class A Common Stock. The portions of the 2004 Mafco $125million term loan and the Mafco $65 million line of credit notexchanged in the Loan Conversion Transaction remained available toProducts Corporation, subject to the "BorrowingLimitation" (as hereinafter defined), which BorrowingLimitation has subsequently been eliminated. (**See Note 10 to theUnaudited Consolidated Condensed Financial Statements)**.

Revlon, Inc. agreed with Fidelity not to permit Products Corporationto have outstanding aggregate borrowings, at any time following theclose of the Revlon Exchange Transactions and until the termination ofthe Stockholders Agreement (as described below), under the Mafco $65million line of credit and the 2004 Mafco $125 million term loan inexcess of approximately $87 (the "BorrowingLimitation"). Such Borrowing Limitation was subsequentlyeliminated. (**See Note 10 to the Unaudited Consolidated CondensedFinancial Statements).**

REV Holdings owned all of Revlon,Inc.'s outstanding Series A Preferred Stock, which had a parvalue of $0.01 per share with an aggregate liquidation preference of$54.6 and all of the Series B Preferred Stock. As part of the RevlonExchange Transactions, MacAndrews & Forbes agreed to cause REVHoldings to exchange each $1,000 of liquidation preference on itsshares of Series A Preferred Stock for 160 shares of Class A CommonStock and to convert its shares of Series B Preferred Stock into anaggregate of 433,333 shares of Class A Common Stock.

In anothercontemporaneous transaction to the Revlon Exchange Transactions,Revlon, Inc. and Fidelity entered into a stockholders agreement (the"Stockholders Agreement") pursuant to which,among other things, (i) Revlon, Inc. agreed to continue to maintain amajority of independent directors (as defined by New York StockExchange listing standards) on its Board of Directors, as it currentlydoes; and (ii) Revlon, Inc. would establish and maintain a Nominatingand Corporate Governance Committee of the Board of Directors, which itformed in March 2004. The Stockholders Agreement will terminate at suchtime as Fidelity ceases to be the beneficial holder of at least5% of Revlon, Inc.'s outstanding voting stock. Also, inconjunction with the Revlon Exchange Transactions, in February 2004,Products Corporation entered into various amendments to its 2001 CreditAgreement, one of which added a new $64.4 term loan facility to the2001 Credit Agreement (the "Exchange BankAmendments"), which agreement was subsequently refinanced.(**See Note 10 to the Unaudited Consolidated Condensed FinancialStatements**).

As a result of the consummation of the RevlonExchange Transactions, approximately $133.8 principal amount of the8 1/8% Senior Notes, approximately $174.5principal amount of the 9% Senior Notes and approximately $322.9principal amount of the 8 5/8% SeniorSubordinated Notes were exchanged for an aggregate of approximately224.1 million shares of Class A Common Stock, including such sharesissued in exchange for accrued interest on the Revlon Exchange Notes.Such amount of Revlon Exchange Notes exchanged included approximately$1.0 of the 9% Senior Notes and approximately $286.7 of the8 5/8% Senior Subordinated Notes tendered byMacAndrews & Forbes and other entities related to it; andapproximately $85.9 of the 9% Senior Notes, approximately $77.8of the 8 1/8% Senior Notes and approximately$32.1 of the 8 5/8% Senior Subordinated Notestendered by funds and accounts managed by Fidelity.

MacAndrews& Forbes also exchanged approximately $109.7 of existingindebtedness (including principal and accrued interest) under the Mafco$100 million term loan for approximately 43.9 million shares of Class ACommon Stock, approximately $38.9 of existing indebtedness (includingprincipal and 

12

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REVHOLDINGS LLC AND SUBSIDIARIESNOTES TO UNAUDITED CONSOLIDATEDCONDENSEDFINANCIAL STATEMENTS**—(Continued)**(dollars in millions,except per share data)

accrued interest) under the 2004 Mafco $125million term loan for approximately 15.6 million shares of Class ACommon Stock and approximately $24.1 of indebtedness under certainsubordinated promissory notes payable to MacAndrews & Forbes forapproximately 7.2 million shares of Class A Common Stock. REV Holdingsexchanged all of Revlon, Inc.'s previously outstanding Series APreferred Stock for an aggregate of approximately 8.7 million shares ofClass A Common Stock and converted all of its shares of Revlon,Inc.'s previously outstanding Series B Preferred Stock into433,333 shares of Class A Common Stock. In connection with closing theRevlon Exchange Transactions on March 25, 2004, Mafco Holdings executeda joinder agreement to the Revlon, Inc. registration rights agreementpursuant to which all Class A Common Stock beneficially owned by MafcoHoldings will be deemed to be registerable securities.

Theconsummation of the Revlon Exchange Transactions on March 25, 2004, inwhich Revlon, Inc. issued 299,969,493 shares of Class A Common Stock(and transferred the Revlon Exchange Notes and other exchangedindebtedness to Products Corporation for cancellation) resulted in (i)the reduction of indebtedness of $803.9 and accrued interest thereon of$9.9, (ii) the exchange of the Series A Preferred Stock, (iii) theconversion of the Series B Preferred Stock, (iv) an increase toadditional paid-in-capital of $414.2 which resulted from such issuanceof Class A Common Stock to MacAndrews & Forbes and other entitiesrelated to it, (v) a gain of $363.6 resulting from such issuance ofClass A Common Stock to third parties, (vi) an increase in additionalpaid-in-capital of $49.9 which resulted from the exchange ofindebtedness and accrued interest thereon by MacAndrews & Forbesand other entities related to it and represented the difference betweenthe market value at March 25, 2004 of the shares of Class A CommonStock issued and the principal amount of the indebtedness together withaccrued interest thereon and (vii) a loss on early extinguishment ofdebt of $15.5 which resulted from the exchange of indebtedness andaccrued interest thereon by third parties and represented thedifference between the market value at March 25, 2004 of the shares ofClass A Common Stock issued and the principal amount of theindebtedness exchanged together with accrued interest thereon.Additionally, the Company recognized a loss on early extinguishment ofdebt of $17.1 in connection with the write-off of unamortized debtissuance costs and debt discount, estimated fees and expenses.

In connection with consummating the Revlon Exchange Transactions,Revlon, Inc. announced that its previously announced plan to launch arights offering to reduce debt by a further $50 by year-end 2004 wasreduced to $9.7, as a result of $190.3 of Revlon Exchange Notes havingbeen exchanged in excess of the Revlon Exchange Notes committed to beexchanged by MacAndrews & Forbes and Fidelity under theirrespective support agreements. This $190.3 more than satisfied Revlon,Inc.'s plan to reduce debt through the Revlon Exchange Offers by$150 in addition to the Revlon Exchange Notes that were committed to beexchanged in the support agreements with MacAndrews & Forbes andFidelity. The $40.3 difference satisfied all but $9.7 of theCompany's plan to reduce debt by a further $50 by year-end 2004.Because the costs and expenses, as well as the use of organizationalresources, associated with a $9.7 rights offering would be undulydisproportionate, Revlon, Inc. indicated that its support andinvestment agreements with MacAndrews & Forbes and Fidelityrelating to the Company's debt reduction plan were amended toenable Revlon, Inc. to satisfy the remaining $9.7 of debt reduction aspart of the final stage of the Company's debt reduction plan.Therefore, the Company now intends to reduce debt by approximately $110by the end of March 2006. Consistent with agreements between MacAndrews& Forbes and Revlon, Inc. entered into contemporaneously with theagreements relating to the Revlon Exchange Transactions,MacAndrews  & Forbes agreed to back-stop the $110 equityoffering.

Prior to the Revlon Exchange Transactions, in December2003, Revlon, Inc.'s Board approved two loans from MacAndrewsHoldings, one to provide up to $100 million, if needed, to enable theCompany to continue to implement and refine its plan, and the other toprovide an additional $25  million to be used for generalcorporate purposes. In January 2004, such loans were consolidated intoone term loan agreement (the "2004 Mafco $125 million termloan"). In July 2004, in connection with the New CreditAgreement, the 2004 Mafco $125 million term loan and the Mafco $65million line of credit were 

13

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REVHOLDINGS LLC AND SUBSIDIARIESNOTES TO UNAUDITED CONSOLIDATEDCONDENSEDFINANCIAL STATEMENTS**—(Continued)**(dollars in millions,except per share data)

consolidated into a single 2004 SeniorUnsecured Supplemental Line of Credit (the "ConsolidatedMafco line of credit") with availability of $152,representing the balance of remaining principal available under the2004 Mafco $125 million term loan (after giving effect to the portionof such loan that was exchanged for equity) and the Mafco $65 millionline of credit following the Revlon Exchange Transactions. (**See Note10 to the Unaudited Consolidated Condensed Financial Statements)**.The 2004 Mafco $125 million term loan was a senior unsecuredmultiple-draw term loan with interest at a rate of 12% per annumnot payable in cash, but accrued and added to the principal amount eachquarter, and was to have been paid in full at final maturity onDecember 1, 2005. Principal and accrued interest of $38.9 under the2004 Mafco $125 million term loan was converted into shares of Class ACommon Stock in connection with the Revlon Exchange Transactions.(**See Note 10 to the Unaudited Consolidated Condensed FinancialStatements).**

EBITDA (as defined in the 2001 Credit Agreement)was $144.4 for the four consecutive fiscal quarters ended December 31,2003, which was less than the minimum of $230 required under the EBITDAcovenant of the 2001 Credit Agreement for that period and ProductsCorporation's leverage ratio was 1.66:1.00, which was in excessof the maximum ratio of 1.10:1.00 permitted under the leverage ratiocovenant of the 2001 Credit Agreement for that period. Accordingly,Products Corporation sought and on January 28, 2004 secured waivers ofcompliance with these covenants for the four quarters ended December31, 2003. In light of the Company's expectation that its planwould affect Products Corporation's ability to comply with thesecovenants during 2004, Products Corporation also secured an amendmentto eliminate the EBITDA and leverage ratio covenants under the 2001Credit Agreement for the first three quarters of 2004 and a waiver ofcompliance with such covenants for the four quarters ending December31, 2004, expiring on January 31, 2005 (the "January 2004Bank Amendment"). The January 2004 Bank Amendment to the2001 Credit Agreement included certain other amendments to allow forthe continued implementation of the Company's plan. (**See Note10 to the Unaudited Consolidated Condensed FinancialStatements).**

On October 17, 2003, REV Holdings filed aregistration statement on Form S-4 with the Securities & ExchangeCommission (the "Commission") with respect toan offer to exchange (the "REV Holdings ExchangeOffer") its 12% Senior Secured Notes due 2004 (the"REV Holdings Notes") for 13% SeniorSecured Notes due 2007 (the "New REV HoldingsNotes"). The REV Holdings Exchange Offer was consummatedon January 21, 2004. In connection therewith, REV Holdings issued $18.5principal amount of New REV Holdings Notes in exchange for a likeprincipal amount of REV Holdings Notes. In addition, at maturity onFebruary 1, 2004, the Company's parent contributed $7.9 principalamount of REV Holdings Notes it held and $54.1 of cash to retire theremaining outstanding REV Holdings Notes. Accordingly, the REV HoldingsNotes were classified as a long-term liability in the auditedconsolidated balance sheet at December 31, 2003.

The New REVHoldings Notes, which bear interest semi-annually and mature onFebruary 1, 2007, are secured by a pledge of 104 shares of Class ACommon Stock per $1,000 principal amount of New REV Holdings Notes,including all dividends, cash instruments and property and proceedsfrom time to time received in respect of the foregoing shares(collectively, the "Collateral"). Inaddition, the indenture governing the New REV Holdings Notes (the"New Indenture") contains covenants that,among other things, limit, subject to certain exceptions set forth inthe New Indenture, the following: (i) the issuance of additional debtand redeemable stock by REV Holdings, (ii) the creation of additionalliens on the Collateral (other than the lien created by the NewIndenture), (iii) the payment of dividends on capital stock of REVHoldings and the redemption of capital stock of REV Holdings or any ofits direct or indirect parents, (iv) the sale of assets and subsidiarystock (including by way of consolidations, mergers and similartransactions), and (v) transactions with affiliates.

Inconnection with the REV Holdings Exchange Offer, GSB Investments Corp.,an affiliate of the Company, entered into an agreement with REVHoldings (the "New Keepwell Agreement") which

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REVHOLDINGS LLC AND SUBSIDIARIESNOTES TO UNAUDITED CONSOLIDATEDCONDENSEDFINANCIAL STATEMENTS**—(Continued)**(dollars in millions,except per share data)

replaced the prior keepwell agreement (the"Keepwell Agreement"), pursuant to which GSBInvestments Corp. has agreed to provide REV Holdings with funds equalto any interest payment due on the New REV Holdings Notes, to theextent that REV Holdings does not have sufficient funds on hand to makesuch payment on the applicable due date. REV Holdings currentlyanticipates that it will use advances under the New Keepwell Agreementto pay interest when due under the New REV Holdings Notes.

TheNew Indenture contains customary events of default for debt instrumentsof such type. The New Indenture includes a cross-accelerationprovision, which provides that it shall be an event of default underthe New Indenture if any debt of REV Holdings or any of its significantsubsidiaries (as defined in the New Indenture), is not paid within anyapplicable grace period after final maturity or is accelerated by theholders of such debt because of a default and the total principalamount of the portion of such debt that is unpaid or acceleratedexceeds $25.0 and such default continues for 10 days after notice fromthe trustee under the New Indenture. If any such event of defaultoccurs, the trustee under the New Indenture or the holders of at least25% in principal amount of the outstanding New REV HoldingsNotes may declare all such notes to be due and payable immediately,provided that the holders of a majority in aggregate principal amountof the New REV Holdings Notes may, by notice to the trustee, waive anysuch default or event of default and its consequences under the NewIndenture.

GSB Investments Corp. has advised REV Holdings thatit expects either to have cash flow from dividends on its investmentsor to obtain capital contributions from its affiliates that, in theaggregate, will be sufficient to satisfy its obligations under the NewKeepwell Agreement. There can be no assurance, however, that GSBInvestments Corp. (a)  will have such cash flow, because, amongother things, a portion of its investments are pledged and itsinvestees are under no obligation to pay dividends, or (b)  couldobtain any such contribution or loan because, among other things, itsaffiliates are under no obligation to provide them to GSB InvestmentsCorp.

The New Keepwell Agreement will terminate at such time asthere are no New REV Holdings Notes outstanding, at which time GSBInvestments Corp. may require repayment of advances under the NewKeepwell Agreement. On February 1, 2004, GSB Investments Corp. made anon-interest bearing advance of $4.5 to REV Holdings under the KeepwellAgreement, which was used to make the interest payment on the REVHoldings Notes. The obligation under the Keepwell Agreement of $28.4 atmaturity on February 1, 2004 of the REV Holdings Notes was contributedto the capital of REV Holdings in April 2004.

(9)    TaxDeconsolidation

As a result of the closing of the RevlonExchange Transactions, as of the end of the day on March 25, 2004,Revlon Inc., Products Corporation and its U.S. subsidiaries were nolonger included in the Mafco Holdings consolidated group (the"Mafco Group") for federal income taxpurposes. The Internal Revenue Code of 1986, as amended (the"Code") and the Treasury regulations issuedthereunder govern both the calculation of the amount and allocation tothe members of the Mafco Group of any consolidated federal netoperating losses of the group ("CNOLs") thatwill be available to offset Revlon, Inc.'s taxable income and thetaxable income of its U.S. subsidiaries for the taxable years beginningafter March 25, 2004. It is impossible to estimate accurately theamount of CNOLs that will be allocated to Revlon, Inc. as of December31, 2004 because various factors could increase or decrease oreliminate these amounts. These factors include, but are not limited to,the amount and nature of the income, gains or losses that the othermembers of the Mafco Group recognize in the 2004 taxable year becauseany CNOLs are, pursuant to Treasury regulations, used to offset thetaxable income of the Mafco Group for the entire consolidated returnyear ending December 31, 2004. Only the amount of any CNOLs that theMafco Group does not absorb by December 31, 2004 will be available tobe allocated to Revlon, Inc. and its U.S. subsidiaries for taxableyears beginning on March  26, 2004. Subject to the foregoing, itis currently estimated that Revlon, Inc. and its U.S. subsidiaries willhave approximately $330 in U.S. federal net 

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REVHOLDINGS LLC AND SUBSIDIARIESNOTES TO UNAUDITED CONSOLIDATEDCONDENSEDFINANCIAL STATEMENTS**—(Continued)**(dollars in millions,except per share data)

operating losses and nil for alternativeminimum tax losses available to Revlon, Inc. and its U.S. subsidiariesas of March 25, 2004. Any losses that Revlon, Inc. and its U.S.subsidiaries may generate after March 25, 2004 will be available toRevlon, Inc. for its use and its U.S. subsidiaries' use and willnot be available for the use of the Mafco Group. Following the closingof the Revlon Exchange Transactions, Revlon, Inc. became the parent ofa new consolidated group for federal income tax purposes and ProductsCorporation's federal taxable income and loss will be included insuch group's consolidated tax returns. Accordingly, Revlon, Inc.and Products Corporation entered into a new tax sharing agreementpursuant to which Products Corporation will be required to pay toRevlon, Inc. amounts equal to the taxes that Products Corporation wouldotherwise have had to pay if Products Corporation were to file separatefederal, state or local income tax returns, limited to the amount, andpayable only at such times, as Revlon, Inc. will be required to makepayments to the applicable taxing authorities.

(10)    Subsequent Events

Tender Offer

On June22, 2004, Products Corporation commenced a cash tender offer (the"Tender Offer") to purchase any and all ofthe $363.0 aggregate principal amount outstanding of its 12%Senior Secured Notes, as part of a planned comprehensive debtrefinancing designed to extend the maturities of a significant amountof its debt which would otherwise be due in 2005.

On July 8,2004, Products Corporation announced that the total considerationpayable in the Tender Offer would be $1,122.24 for each $1,000principal amount of 12% Senior Secured Notes purchased in theTender Offer, plus accrued but unpaid interest up to, but notincluding, the settlement date. Such purchase price included a consentpayment of $20.00 per $1,000 principal amount of 12% SeniorSecured Notes payable to holders who validly tendered and did notwithdraw their 12% Senior Secured Notes before 5:00 p.m. EDT onJuly 8, 2004. Such purchase price was determined by reference to afixed spread of 75 basis points over the bid side yield (as quoted onBloomberg screen PX4 at 2:00 p.m. EDT on July 8, 2004) of the1.875% U.S. Treasury note due November 30, 2005.

On July9, 2004, in connection with the initial settlement of the Tender Offer(the "Initial Settlement"), ProductsCorporation purchased approximately $298 aggregate principal amount ofthe 12% Senior Secured Notes, representing approximately82% of the total outstanding principal amount of the 12%Senior Secured Notes, and equal to the notes tendered through 5:00 p.m.EDT on July 8, 2004 for a purchase price of approximately $338.3(including the applicable premium and accrued interest). In connectionwith the Tender Offer, on July 6, 2004, Products Corporation announcedthat it obtained sufficient consents from holders of the 12%Senior Secured Notes for certain amendments which eliminatedsubstantially all of the restrictive covenants and released theguarantees of Products Corporation's obligations, and thecollateral securing the obligations of Products Corporation and theguarantors, in each case under the indenture governing the 12%Senior Secured Notes (the "12% NotesIndenture"). A supplemental indenture incorporating suchamendments became operative as part of the July 9, 2004 InitialSettlement of the Tender Offer.

The Tender Offer expired at 5:00p.m. EDT on July 21, 2004. On July 22, 2004, Products Corporationpurchased approximately $0.4 aggregate principal amount of the12% Senior Secured Notes, which was the amount of such notestendered following the Initial Settlement through the expiration of theTender Offer, for a purchase price of approximately $0.5 (including theapplicable premium and accrued interest).

In connection with theexpiration of the Tender Offer, Products Corporation also announcedthat on August 23, 2004 it will redeem all of the approximately $64.5aggregate principal amount of its 12% Senior Secured Notes thatremained outstanding following the July 21, 2004 expiration of theTender Offer at the redemption price calculated in accordance with the12% Notes Indenture.

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REVHOLDINGS LLC AND SUBSIDIARIESNOTES TO UNAUDITED CONSOLIDATEDCONDENSEDFINANCIAL STATEMENTS**—(Continued)**(dollars in millions,except per share data)

New Credit Agreement

On July 9,2004, Products Corporation entered into a new credit agreement (the"New Credit Agreement") with certain of itssubsidiaries as local borrowing subsidiaries, a syndicate of lenders,whose individual members change from time to time, and Citicorp USA,Inc., as multi-currency administrative agent, term loan administrativeagent and collateral agent. The New Credit Agreement provides up to$960.0 and consists of a $800.0 term loan facility (the"Term Loan Facility") and a $160.0 assetbased multi-currency revolving credit facility (the"Multi-Currency Facility") (the Term LoanFacility and the Multi-Currency Facility are referred to as the"New Credit Facilities"). The Multi-CurrencyFacility is available to: (i) Products Corporation in revolving creditloans denominated in U.S. dollars, (ii) Products Corporation in standbyand commercial letters of credit denominated in U.S. dollars up to$50.0 and (iii) Products Corporation and certain of its internationalsubsidiaries designated from time to time in revolving credit loans andbankers' acceptances denominated in U.S. dollars and othercurrencies (the "Local Loans"), in each casesubject to borrowing base availability that is determined based on thevalue of eligible accounts receivable, eligible inventory and eligiblereal property and equipment from time to time. The Multi-CurrencyFacility will terminate on July 9, 2009 and the loans under the TermLoan Facility will mature on July 9, 2010; provided that the New CreditFacilities will terminate on October 31, 2005 if ProductsCorporation's 8 1/8% Senior Notes are notredeemed, repurchased or defeased in full on or before such date, onJuly 31, 2006 if Products Corporation's 9% Senior Notesare not redeemed, repurchased or defeased in full on or before suchdate, and on October 30, 2007 if Products Corporation's8 5/8% Senior Subordinated Notes are notredeemed, repurchased or defeased on or before such date such that notmore than $25.0 in aggregate principal amount of such8 5/8% Senior Subordinated Notes remainsoutstanding. Products Corporation used the proceeds of borrowings underthe New Credit Agreement to repay in full the $290.5 of outstandingindebtedness (including accrued interest) under ProductsCorporation's 2001 Credit Agreement, to purchase theapproximately $298 aggregate principal amount of the 12% SeniorSecured Notes tendered at the Initial Settlement of the Tender Offerfor a purchase price of approximately $338.3 (including the applicablepremium and accrued interest), to purchase the additional $0.4aggregate principal amount of the 12% Senior Secured Notestendered following the Initial Settlement through the expiration of theTender Offer for a purchase price of approximately $0.5 (including theapplicable premium and accrued interest), to set aside funds in acollateral account to redeem the $64.5 aggregate principal amount ofthe 12% Senior Secured Notes remaining outstanding after theexpiration of the Tender Offer, and to pay fees and expenses incurredin connection with the New Credit Agreement, the Tender Offer and theRevlon Exchange Transactions, including the payment of expenses relatedto a refinancing that Products Corporation launched in May 2004 but didnot consummate. The balance of such proceeds is available to ProductsCorporation for general corporate purposes.

Borrowings under theMulti-Currency Facility (other than loans in foreign currencies) bearinterest at a rate equal to, at Products Corporation's option,either (A) the Alternate Base Rate plus 1.50%; or (B) theEurodollar Rate plus 2.50%. Loans in foreign currencies bearinterest in certain limited circumstances or if mutually acceptable toProducts Corporation and the relevant foreign lenders at the LocalRate, and otherwise at the Eurocurrency Rate, in each case plus2.50%. The loans under the Term Loan Facility bear interest at arate equal to, at Products Corporation's option, either (A) theAlternate Base Rate plus 5.00%; or (B) the Eurodollar Rate plus6.00%. Products Corporation pays to those lenders under theMulti-Currency Facility a commitment fee of 0.50% of the averagedaily unused portion of the Multi-Currency Facility, which fee ispayable quarterly in arrears. Under the Multi-Currency Facility,Products Corporation pays (i) to foreign lenders a fronting fee of0.25% per annum on the aggregate principal amount of specifiedLocal Loans (which fee is retained by the foreign lenders out of theportion of the Applicable Margin payable to such foreign lender), (ii)to foreign lenders an administrative fee of 0.25% per annum onthe aggregate principal amount of specified Local Loans, (iii) to themulti-currency 

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REVHOLDINGS LLC AND SUBSIDIARIESNOTES TO UNAUDITED CONSOLIDATEDCONDENSEDFINANCIAL STATEMENTS**—(Continued)**(dollars in millions,except per share data)

lenders a letter of credit commission equalto (a) the Applicable Margin for revolving credit loans that areEurodollar Rate loans (adjusted for the term that the letter of creditis outstanding) times (b) the aggregate undrawn face amount of lettersof credit and (iv) to the issuing lender a letter of credit frontingfee of 0.25% per annum of the aggregate undrawn face amount ofletters of credit (which fee is paid out of the letter of creditcommission). Prior to the termination date of the Term Loan Facility,on October 15, January 15, April 15 and July 15 of each year(commencing October 15, 2005) Products Corporation shall repay $2.0 inaggregate principal amount of the term loans outstanding under the TermLoan Facility on each respective date. In addition, the loans under theTerm Loan Facility are required to be prepaid with: (i) the netproceeds in excess of $10.0 each year (subject to limited carryover tosubsequent years) received during such year from sales of Term LoanFirst Lien Collateral (as defined below) by Products Corporation or anyof its subsidiaries (and in excess of an additional $25.0 in theaggregate during the term of the New Credit Facilities with respect tocertain specified dispositions), subject to certain limited exceptions,(ii) certain net proceeds from equity offerings by Revlon, Inc. thatare not used to redeem, repurchase or defease the8 1/8% Senior Notes, the 9% Senior Notes,the 8 5/8% Senior Subordinated Notes or certainother indebtedness, (iii) the net proceeds from the issuance byProducts Corporation or any of its subsidiaries of certain additionaldebt and (iv) 50% of Products Corporation's Excess CashFlow (as defined in the New Credit Agreement) for any fiscal year.

The New Credit Facilities are supported by, among other things,guarantees from Revlon, Inc. and, subject to certain limitedexceptions, the domestic subsidiaries of Products Corporation. Theobligations of Products Corporation under the New Credit Facilities andthe obligations under the guarantees are secured by, subject to certainlimited exceptions, substantially all of the assets of ProductsCorporation and the subsidiary guarantors, including (i) mortgages onowned real property, including Products Corporation's facility inOxford, North Carolina; (ii) the capital stock of Products Corporationand the subsidiary guarantors and 66% of the capital stock ofProducts Corporation's and the subsidiary guarantors'first-tier foreign subsidiaries; (iii) intellectual property and otherintangible property of Products Corporation and the subsidiaryguarantors; and (iv) inventory, accounts receivable, equipment,investment property and deposit accounts of Products Corporation andthe subsidiary guarantors. The liens on inventory, accounts receivable,deposit accounts, investment property (other than the capital stock ofProducts Corporation and its subsidiaries), real property, equipment,fixtures and certain intangible property related thereto secure theMulti-Currency Facility on a first priority basis and the Term LoanFacility on a second priority basis, while the liens on the capitalstock of Products Corporation and its subsidiaries and intellectualproperty and certain other intangible property (the "TermLoan First Lien Collateral") secure the Term Loan Facilityon a first priority basis and the Multi-Currency Facility on a secondpriority basis, all as set forth in an Intercreditor and CollateralAgency Agreement by and among Products Corporation and the lenders,which also provides that the first priority liens referred to above maybe shared from time to time, subject to certain limitations, withspecified types of other obligations incurred or guaranteed by ProductsCorporation, such as foreign exchange and interest rate hedgingobligations and foreign working capital lines, provided that to theextent such obligations and lines share in the collateral, theborrowing base is reduced by a reserve established from time to time bythe bank agent in respect of such obligations and lines.

The NewCredit Agreement contains various restrictive covenants prohibitingProducts Corporation from (i) incurring additional indebtedness orguarantees, with certain exceptions, (ii) making dividend and otherpayments or loans to Revlon, Inc. or other affiliates, with certainexceptions, including among others, exceptions permitting ProductsCorporation to pay dividends or make other payments to Revlon, Inc. tofinance the actual payment by Revlon, Inc. of expenses and obligationsincurred by Revlon, Inc. to enable Revlon, Inc. to, among other things,pay expenses incidental to being a public holding company, including,among other things, professional fees such as legal and accountingfees, regulatory fees such as Commission filing fees and othermiscellaneous expenses related to being a public holding company and,

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REVHOLDINGS LLC AND SUBSIDIARIESNOTES TO UNAUDITED CONSOLIDATEDCONDENSEDFINANCIAL STATEMENTS**—(Continued)**(dollars in millions,except per share data)

subject to certain circumstances, to financethe purchase by Revlon, Inc. of its Class A Common Stock in connectionwith the delivery of such Class A Common Stock to grantees under theAmended and Restated Revlon, Inc. Stock Plan, and, subject to certainlimitations, to pay dividends or make other payments to finance thepurchase, redemption or other retirement for value by Revlon, Inc. ofstock or other equity interests or equivalents in Revlon, Inc. held byany current or former director, employee or consultant in his or hercapacity as such, (iii) creating liens or other encumbrances onProducts Corporation's or its subsidiaries' assets orrevenues, granting negative pledges or selling or transferring any ofProducts Corporation's or its subsidiaries' assets, exceptin the ordinary course of business, all subject to certain exceptions,(iv) with certain exceptions, engaging in merger or acquisitiontransactions, (v) prepaying indebtedness and modifying the terms ofcertain indebtedness and specified material contractual obligations,subject to certain exceptions (including, without limitation, prepayingone or more of the 8 1/8% Notes, 9% Notesor 8 5/8% Senior Subordinated Notes with the$110 equity offering to be backstopped by MacAndrews & Forbes),(vi) making investments, subject to certain exceptions, and (vii)entering into transactions with affiliates of Products Corporationother than upon terms no less favorable to Products Corporation or itssubsidiaries than it would obtain in an arms' length transaction.In addition to the foregoing, the Credit Agreement contains financialcovenants limiting the senior secured leverage ratio of ProductsCorporation (the ratio of Products Corporation's Senior SecuredDebt to EBITDA, as each such term is defined in the New CreditAgreement) to 5.50 to 1.00 from December 31, 2004 to September 30,2005; 5.00 to 1.00 from December 31, 2005 to December  31, 2006;and 4.50 to 1.00 from March 31, 2007 until the maturity date of the NewCredit Agreement, and, under circumstances when the excess borrowingbase under the Multi-Currency Facility is less than $30.0 for a periodof 30 consecutive days or more, requiring Products Corporation tomaintain a consolidated fixed charge coverage ratio (the ratio ofEBITDA minus Capital Expenditures to Cash Interest Expense for suchperiod, as each such term is defined in the New Credit Agreement) of1.00 to 1.00.

The events of default under the New CreditAgreement include a Change of Control (as defined in the New CreditAgreement) of Products Corporation and other customary events ofdefault for such types of agreements. Among such customary events ofdefault under the New Credit Agreement is a cross default provisionwhich provides that it is an event of default under the New CreditAgreement if Products Corporation or any of its subsidiaries (i)defaults in the payment of certain indebtedness when due (whether atmaturity or by acceleration) in excess of $5.0 in aggregate principalamount or (ii) defaults in the observance or performance of any otheragreement or condition relating to such debt, provided that the amountof debt involved is in excess of $5.0 in aggregate principal amount, orany other event occurs, the effect of such default or other event wouldcause or permit the holders of such debt to acceleratepayment.

Consolidated Mafco Line of Credit

On July 9,2004, Products Corporation and MacAndrews Holdings entered into anagreement, which effective as of August 10, 2004 amended, restated andconsolidated the facilities for the Mafco $65 million line of creditand the 2004 Mafco $125 million term loan (as to which after the RevlonExchange Transactions the total term loan availability was $87) intothe single Consolidated Mafco line of credit with availability of $152,the commitment under which reduces to $87 as of July 1, 2005 andterminates on December 1, 2005. Loans are available under theConsolidated Mafco line of credit if (i) the Multi-Currency Facilityunder the New Credit Agreement has been substantially drawn (aftertaking into account anticipated needs for Local Loans and letters ofcredit), (ii) such borrowing is necessary to cause the excess borrowingbase under the Multi-Currency Facility to remain greater than $30,(iii) additional revolving loans are not available under theMulti-Currency Facility or (iv) such borrowing is reasonably necessaryto prevent or to cure a default or event of default under the NewCredit Agreement. Loans under the Consolidated Mafco line of creditbear interest (which is not payable in cash but is capitalizedquarterly in arrears) at a rate per annum equal to the lesser of (a)12.0% and (b) 0.25% less than the rate 

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REVHOLDINGS LLC AND SUBSIDIARIESNOTES TO UNAUDITED CONSOLIDATEDCONDENSEDFINANCIAL STATEMENTS**—(Continued)**(dollars in millions,except per share data)

payable from time to time on Eurodollarloans under the Term Loan Facility under the New Credit Agreement whichon August 2, 2004 was 7.48%, provided, that at any time that theEurodollar Base Rate under the New Credit Agreement is equal to orgreater than 3.0%, the applicable rate to loans under theConsolidated Mafco line of credit will be equal to the lesser of (x)12.0% and (y) 5.25% over the Eurodollar Base Rate then ineffect. In connection with the Consolidated Mafco line of credit, onJuly 15, 2004, Revlon, Inc., Fidelity and MacAndrews & Forbesagreed to eliminate the Borrowing Limitation.

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REVHOLDINGS LLC AND SUBSIDIARIESMANAGEMENT'S DISCUSSION ANDANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS (dollars in millions, except per sharedata)

Overview

The Company isproviding this overview in accordance with the SEC's December2003 interpretive guidance regarding Management's Discussion andAnalysis of Financial Condition and Results of Operations.

TheCompany operates in a single segment and manufactures, markets andsells an extensive array of cosmetics and skin care, fragrances andpersonal care products. In addition, the Company has a licensinggroup.

The Company has accelerated the implementation of itsthree-part plan to rationalize costs and to grow the business. In 2002,the Company began the implementation of the stabilization and growthphase of its plan, which, following detailed evaluations and research,includes the following key actions and investments, among others: (i)increasing advertising and media spending and effectiveness; (ii)increasing the marketing effectiveness of the Company's walldisplays, by among other things, reconfiguring wall displays at itsexisting retail customers, streamlining its product assortment andreconfiguring product placement on its wall displays and rolling outthe new wall displays; (iii) enhancing the effectiveness of itsmerchandiser coverage to improve in-store stock levels and work withits retail customers to improve replenishment of the Company'sproducts on the wall displays and to minimize out-of-stocks at itsretail customers; (iv) selectively adjusting prices on certain SKUs (orstock keeping units); (v) further strengthening the Company's newproduct development process; and (vi) implementing a comprehensiveprogram to develop and train the Company's employees.

TheCompany intends to capitalize on the actions taken during thestabilization and growth phase of its plan, with the objective ofincreasing revenues and achieving profitability over the long term. TheCompany currently anticipates that the continued growth momentum andaccelerated growth stage of its plan will include various actions thatrepresent refinements of and additions to the actions taken during thestabilization and growth phase of its plan, with the objective ofimproving the Company's operating margins. These ongoinginitiatives include, among other things, actions to: (i) furtherimprove the new product development and implementation process; (ii)continue to increase the effectiveness and reduce the cost of theCompany's display walls; (iii) drive efficiencies across theCompany's overall supply chain, including reducing manufacturingcosts by streamlining components and sourcing strategically andrationalizing its supply chain in Europe, which could include movingcertain production for the European markets to ProductsCorporation's Oxford, North Carolina facility; and (iv) optimizethe effectiveness of the Company's marketing and promotions. Thisstage will also include strengthening the Company's balance sheetand capital structure, much of which, as discussed in **Notes 8 and 10to the Unaudited Consolidated Condensed Financial Statements**, hasbeen accomplished during the first half of 2004.

The Companybelieves that it has strengthened its organizational capability and itintends to continue doing so in 2004. The Company also strengthened itsrelationships with its key retailers in the U.S., which has led tospace gains and increased distribution for 2004 for certain of theCompany's products.

In the second quarter of 2004, netsales decreased $6.2, or 1.9%, to $316.1, as compared to $322.3in the second quarter of 2003, driven principally by lower shipments inthe U.S. (due in part to the mass color cosmetics category softness andless contribution from 2004 product introductions, as compared to 2003product introductions), partially offset by sales growth inInternational, including the benefits of favorable foreign currencytranslation, and the prepayment of certain minimum royalties by alicensee. In the first half of 2004, net sales increased $10.2, or1.7%, to $624.5, as compared to $614.3 in the first half of2003, with the increase in the first half of 2004 being driven by salesgrowth in International, including the benefits of favorable foreigncurrency translation, and the prepayment of certain minimum royaltiesand renewal fees by licensees, partially offset by lower shipments inthe U.S.

In the United States and Canada, in the second quarterof 2004, net sales decreased to $206.8 from $224.8 in the secondquarter of 2003, and in the first half of 2004, net sales decreased to$412.7 from $429.7 

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REVHOLDINGS LLC AND SUBSIDIARIESMANAGEMENT'S DISCUSSION ANDANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS**—(Continued)** (dollars in millions, except per sharedata)

in the first half of 2003. The decrease inthe second quarter and first half of 2004 was due to lower shipments(due in part to the mass color cosmetics category softness and lesscontribution from 2004 product introductions, as compared to 2003product introductions), higher returns and allowances (taken together),and the Company's increased brand support, partially offset bythe prepayment of certain minimum royalties and renewal fees bylicensees of $5.3 and $10.0 in the second quarter of 2004 and firsthalf of 2004, respectively. In International, in the second quarter of2004, net sales increased to $109.3 from $97.5 in the second quarter of2003, and in the first half of 2004, net sales increased to $211.8 from$184.6 in the first half of 2003. The increase in the second quarterand first half of 2004 was driven largely by increased unit sales andthe impact of foreign currency translation.

In terms of U.S.marketplace performance, according to ACNielsen, the U.S. colorcosmetics category for the second quarter of 2004 declinedapproximately 3.4% versus the same period last year. Combinedshare for the Revlon and Almay brands totaled 21.7% for thesecond quarter of 2004, compared with 22.5% in the secondquarter of 2003. For the first half of 2004, combined market share forthe Revlon and Almay brands totaled 21.9%, compared with22.7% for the first half of 2003. The share performancereflected less share contribution from new products this year, whilethe Company's market share on existing businesses advancedsolidly. In other categories, the Company gained market share in thesecond quarter of 2004, compared with the second quarter of 2003, inhair color and beauty tools, while market share was essentially evenfor anti-perspirants/deodorants.

Net sales in theCompany's domestic and international operations in the normalcourse are subject to the risk of being adversely affected by, amongother things, one or more of the following: weak economic conditions,political uncertainties, military actions, terrorist activities,adverse currency fluctuations, competitive activities and changes inconsumer purchasing habits.

Operating loss in the second quarterof 2004 was $1.8, as compared to an operating loss of $3.1 in thesecond quarter of 2003, and in the first half of 2004 operating incomewas $18.3, as compared to an operating loss of $7.3 in the first halfof 2003. The improvement primarily reflected the absence in the secondquarter of 2004 of approximately $15 of growth plan charges taken inthe second quarter of 2003, as well as the aforementioned higherlicensing revenues and lower cost of goods sold, partially offset byhigher returns and allowances (taken together) and lower shipments. Theimprovement in the first half of 2004 reflected the absence of growthplan charges, which increased the operating loss in the first half of2003 by approximately $26, the aforementioned higher licensingrevenues, which included the prepayment of $10.0 of minimum royaltiesand renewal fees by licensees in the first half of 2004 andfavorability relating to a $3.4 reduction in the first half of 2004 ofa liability associated with a modification to an International benefitarrangement.

On March 25, 2004 Revlon, Inc. consummated theRevlon Exchange Transactions and reduced Products Corporation'sdebt by approximately $804. Revlon, Inc. issued an additional299,969,493 shares of Class A Common Stock and currently hasoutstanding approximately 338,867,944 shares of Class A Common Stockand 31.25 million shares of Class B Common Stock. MacAndrews &Forbes beneficially owns approximately 221.4 million shares of theCommon Stock (representing approximately 59.8% of theoutstanding shares of the Common Stock and approximately 77.2%of the combined voting power of the Common Stock). Of the sharesbeneficially owned by MacAndrews & Forbes, REV Holdings currentlyowns approximately 20.8 million shares of Class A Common Stock and31.25 million shares of Class B Common Stock. Products Corporationreceived an additional commitment from MacAndrews & Forbes toprovide funds to support the Company's business plan for 2004 inthe form of the 2004 Mafco $125 million term loan, which loan wasconsolidated with the Mafco $65 million line of credit in July 2004into the Consolidated Mafco line of credit. In the first quarter of2004, Products Corporation also secured the January 2004 Bank Amendmentand the Exchange Bank Amendments. **(See Note 8 to the UnauditedConsolidated Condensed Financial Statements)**.

22

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REVHOLDINGS LLC AND SUBSIDIARIESMANAGEMENT'S DISCUSSION ANDANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS**—(Continued)** (dollars in millions, except per sharedata)

In June 2004, Products Corporationcommenced a cash tender offer for its 12% Senior Secured Notesand announced its intention to refinance its 2001 Credit Agreement. OnJuly 9, 2004, Products Corporation entered into the New CreditAgreement with certain of its subsidiaries as local borrowingsubsidiaries, a syndicate of lenders, whose individual members changefrom time to time, and Citicorp USA, Inc., as multi-currencyadministrative agent, term loan administrative agent and collateralagent. Products Corporation used the proceeds of borrowings under theNew Credit Agreement to repay in full the $290.5 of outstandingindebtedness (including accrued interest) under ProductsCorporation's 2001 Credit Agreement, to purchase approximately$298 aggregate principal amount of the 12% Senior Secured Notestendered at the Initial Settlement of the Tender Offer for a purchaseprice of approximately $338.3 (including the applicable premium andaccrued interest), to purchase the additional $0.4 aggregate principalamount of the 12% Senior Secured Notes tendered following theInitial Settlement through the expiration of the Tender Offer for apurchase price of approximately $0.5 (including the applicable premiumand accrued interest), to set aside funds in a collateral account toredeem the $64.5 aggregate principal amount of the 12% SeniorSecured Notes remaining outstanding after the expiration of the TenderOffer, and to pay fees and expenses incurred in connection with the NewCredit Agreement, the Tender Offer and the Revlon ExchangeTransactions, including the payment of expenses related to arefinancing that Products Corporation launched in May 2004 but did notconsummate. The balance of such proceeds is available to ProductsCorporation for general corporate purposes. **(See Note 10 to theUnaudited Consolidated Condensed FinancialStatements)**.

Discussion of Critical AccountingPolicies

For a discussion of the Company's criticalaccounting policies, see the Company's Annual Report on Form 10-Kfor the year ended December 31, 2003.

Results ofOperations

In the tables, numbers in parenthesis ( ) denoteunfavorable variances.

Netsales:

|                        |  |                           |       |        |  |        |       |        |  |        |       |         |  |        |            |            |  |  |
|------------------------|--|---------------------------|-------|--------|--|--------|-------|--------|--|--------|-------|---------|--|--------|------------|------------|--|--|
|                   |  | ThreeMonths Ended June30, |       |
|                   |  | 2004                      |       | 2003   |  | Change |       | Change |
| UnitedStates andCanada |  | $                         | 206.8 |   |  | $      | 224.8 |   |  | $      | (18.0 | )  |  |   | –8.0 | %     |
| International          |  |                      | 109.3 |   |  |   | 97.5  |   |  |   | 11.8  |    |  |   | 12.1       | %(1)  |
|                   |  | $                         | 316.1 |   |  | $      | 322.3 |   |  | $      | (6.2  | )  |  |   | –1.9 | %(2)  |
|                        |

|  |
|--|
|  |  |
|  |

|     |                                                                                      |
|-----|--------------------------------------------------------------------------------------|
| (1) | Excludingthe impact of currency fluctuations, International net sales increased6.2%. |

|     |                                                                                     |
|-----|-------------------------------------------------------------------------------------|
| (2) | Excluding the impact ofcurrency fluctuations, consolidated net sales decreased3.8%. |

|                        |  |                        |       |        |  |        |       |        |  |        |       |         |  |        |            |            |  |  |
|------------------------|--|------------------------|-------|--------|--|--------|-------|--------|--|--------|-------|---------|--|--------|------------|------------|--|--|
|                   |  | SixMonths EndedJune30, |       |
|                   |  | 2004                   |       | 2003   |  | Change |       | Change |
| UnitedStates andCanada |  | $                      | 412.7 |   |  | $      | 429.7 |   |  | $      | (17.0 | )  |  |   | –4.0 | %     |
| International          |  |                   | 211.8 |   |  |   | 184.6 |   |  |   | 27.2  |    |  |   | 14.7       | %(1)  |
|                   |  | $                      | 624.5 |   |  | $      | 614.3 |   |  | $      | 10.2  |    |  |   | 1.7        | %(2)  |
|                        |

|  |
|--|
|  |  |
|  |

|     |                                                                                      |
|-----|--------------------------------------------------------------------------------------|
| (1) | Excludingthe impact of currency fluctuations, International net sales increased5.3%. |

|     |                                                                                     |
|-----|-------------------------------------------------------------------------------------|
| (2) | Excluding the impact ofcurrency fluctuations, consolidated net sales decreased1.5%. |

23

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REVHOLDINGS LLC AND SUBSIDIARIESMANAGEMENT'S DISCUSSION ANDANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS**—(Continued)** (dollars in millions, except per sharedata)

United States and Canada.

Thedecrease in net sales in the U.S. and Canada in the second quarter of2004, as compared with the second quarter of 2003, was driven by lowercolor cosmetics shipments of $17.7 (due in part to the mass colorcosmetics category softness and less contribution from 2004 productintroductions, as compared to 2003 product introductions), higherreturns and allowances (taken together) of $5.1 (including the impactin the second quarter of 2003 of approximately $9 related to thestabilization and growth phase of the Company's plan, which beganin December 2002), partially offset by the favorable impact of Canadiandollar currency translation and increased licensing revenue of $5.4,primarily from the prepayment of certain minimum royalties by alicensee. The decrease in net sales in the U.S. and Canada in the firsthalf of 2004 was driven by lower color cosmetics shipments of $21.6(due in part to the mass color category softness and less contributionfrom 2004 product introductions, as compared to 2003 productintroductions), and higher returns and allowances (taken together) of$3.7 (including the impact in the first half of 2003 of approximately$14 related to the stabilization and growth phase of theCompany's plan, which began in December 2002), partially offsetby favorable impact of foreign currency translation and increasedlicensing revenue of $9.8, primarily from the prepayment of $10.0 ofcertain minimum royalties and renewal fees by licensees.

Interms of U.S. marketplace performance, according to ACNielsen, thecolor cosmetics category for the second quarter of 2004 declinedapproximately 3.4% versus the same period last year. Combinedshare for the Revlon and Almay brands totaled 21.7% for thesecond quarter of 2004, compared with 22.5% in the secondquarter of 2003. For the first half of 2004, combined market share forthe Revlon and Almay brands totaled 21.9%, compared with22.7% for the first half of 2003. The share performancereflected less share contribution from new products this year, whilethe Company's market share on existing businesses advancedsolidly. In other categories, the Company gained market share in thesecond quarter of 2004, compared to the second quarter of 2003, in haircolor and beauty tools, while market share was essentially even foranti-perspirants/deodorants. All U.S. market share and market positiondata herein for the Company's brands are based upon retail dollarsales, which are derived from ACNielsen data. ACNielsen measures retailsales volume of products sold in the U.S. mass-market distributionchannel. Such data represent ACNielsen's estimates based upondata gathered by ACNielsen from market samples and are thereforesubject to some degree of variance. Additionally, as of August 4, 2001,ACNielsen's data do not reflect sales volume from Wal-Mart, Inc.,which is the Company's largest customer, representingapproximately 20.6% of the Company's 2003 worldwide netsales.

International.

Net sales in the Company'sinternational operations were $109.3 for the second quarter of 2004,compared with $97.5 for the second quarter of 2003, an increase of$11.8 or 12.1%, and were $211.8 for the first half of 2004,compared with $184.6 for the first half of 2003, an increase of $27.2or 14.7%. Excluding the impact of foreign currency fluctuations,international sales increased by 6.2% and 5.3% in thesecond quarter and first half of 2004, as compared to the secondquarter and first half of 2003, respectively. Sales in theCompany's international operations are divided by the Companyinto three geographic regions.

In Europe, which is comprised ofEurope and the Middle East, net sales increased by $1.6, or5.6%, to $30.4 for the second quarter of 2004, as compared withthe second quarter of 2003. Excluding the impact of foreign currencyfluctuations, sales declined by $0.8 or 2.8% in the secondquarter of 2004, as compared to the second quarter of 2003. The declinein net sales net of foreign currency fluctuations was due to lowersales to distributors in Russia and Germany (which factor the Companyestimates contributed to an approximate 3.1% reduction in netsales for the region, as compared with the second quarter of 2003) andlower sales in the U.K., stemming in part from reduced customerinventory levels (which factor the Company estimates contributed to anapproximate 1.9% reduction in net sales for the 

24

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REVHOLDINGS LLC AND SUBSIDIARIESMANAGEMENT'S DISCUSSION ANDANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS**—(Continued)** (dollars in millions, except per sharedata)

region, as compared with the second quarterof 2003), which was partially offset by increased sales in Israel(which factor the Company estimates contributed to an approximate2.0% increase in net sales for the region in the second quarterof 2004, as compared with the second quarter of 2003).

In LatinAmerica, which is comprised of Mexico, Central America and SouthAmerica, net sales declined by $0.3, or 1.2%, to $25.0 for thesecond quarter of 2004, as compared with the second quarter of 2003.Excluding the impact of foreign currency fluctuations, sales increasedby $1.0 or 4.0% in the second quarter of 2004, as compared tothe second quarter of 2003. The increase in net sales net of foreigncurrency fluctuations is primarily due to increased sales in Venezuela,Brazil and Argentina (which factor the Company estimates contributed toan approximate 11.1% increase in net sales for the region in thesecond quarter of 2004, as compared with the second quarter of 2003)which was partially offset by lower sales in Mexico (which factor theCompany estimates contributed to an approximate 7.9% reductionin net sales for the region, as compared with the second quarter of2003).

In the Far East and Africa, net sales increased by $10.5,or 24.2%, to $53.9 for the second quarter of 2004, as comparedwith the second quarter of 2003. Excluding the impact of foreigncurrency fluctuations, sales increased $5.8 or 13.4% in thesecond quarter of 2004, as compared to the second quarter of 2003. Thisincrease in net sales net of foreign currency fluctuations was drivenby higher sales in South Africa, Australia, Hong Kong and Japan (whichfactor the Company estimates contributed to an approximate 10.0%increase in net sales for the region, as compared with the secondquarter of 2003).

For the first half of 2004, as compared withthe first half of 2003, net sales in Europe increased by $2.3, or3.9%, to $60.7. Excluding the impact of foreign currencyfluctuations, sales declined by $4.0 or 6.8% in the first halfof 2004, as compared to the first half of 2003. The decline in netsales net of foreign currency fluctuations was due to lower sales inthe U.K., stemming in part from reduced customer inventory levels(which factor the Company estimates contributed to an approximate4.8% reduction in net sales for the region, as compared with thefirst half of 2003) and lower sales to distributors in Russia andGermany (which factor the Company estimates contributed to anapproximate 4.4% reduction in net sales for the region, ascompared with the first half of 2003).

In Latin America, netsales increased by $4.8, or 11.7%, to $45.9 for the first halfof 2004, as compared with the first half of 2003. Excluding the impactof foreign currency fluctuations, sales increased by $5.1 or12.4% in the first half of 2004, as compared to the first halfof 2003. The increase in net sales net of foreign currency fluctuationsis primarily due to increased sales in Brazil, Venezuela and Argentina(which factor the Company estimates contributed to an approximate16.2% increase in net sales for the region in the first half of2004, as compared with the first half of 2003) due to improved localeconomic and business conditions, which was partially offset by lowersales in Mexico (which factor the Company estimates contributed to anapproximate 5.1% reduction in net sales for the region, ascompared with the first half of 2003).

In the Far East andAfrica, net sales increased by $20.1, or 23.6%, to $105.2 forthe first half of 2004, as compared with the first half of 2003.Excluding the impact of foreign currency fluctuations, sales increased$8.6 or 10.1% in the first half of 2004, as compared to thefirst half of 2003. This increase was driven by higher sales in SouthAfrica, Japan and Australia related to favorable economic conditions(which factor the Company estimates contributed to an approximate8.0% increase in net sales for the region, as compared with thefirst half of 2003).

25

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REVHOLDINGS LLC AND SUBSIDIARIESMANAGEMENT'S DISCUSSION ANDANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS**—(Continued)** (dollars in millions, except per sharedata)

Grossprofit:

|             |  |                           |       |        |  |                        |       |        |  |      |     |        |  |   |       |        |  |   |       |        |  |   |      |        |  |  |
|-------------|--|---------------------------|-------|--------|--|------------------------|-------|--------|--|------|-----|--------|--|---|-------|--------|--|---|-------|--------|--|---|------|--------|--|--|
|        |  | ThreeMonths EndedJune 30, |       |   |  | Six MonthsEndedJune30, |       |
|        |  | 2004                      |       | 2003   |  | Change                 |       | 2004   |  | 2003 |     | Change |
| Grossprofit |  | $                         | 197.7 |   |  | $                      | 197.1 |   |  | $    | 0.6 |   |  | $ | 389.0 |   |  | $ | 377.6 |   |  | $ | 11.4 |   |
|             |

The $0.6 increasein gross profit for second quarter of 2004, as compared to the secondquarter of 2003, is primarily due to higher licensing and other revenueof $5.7 (primarily from the prepayment of $5.3 for certain minimumroyalties by a licensee), lower cost of goods sold and favorableforeign currency exchange in 2004, partially offset by higher salesreturns, allowances and discounts (taken together) of $4.1 and lowersales volume. The second quarter of 2003 was adversely impacted byincreased returns in connection with the stabilization and growth phaseof the Company's plan. The $11.4 increase in gross profit for thefirst half of 2004, as compared to the first half of 2003, is primarilydue to the prepayment of certain minimum royalties and renewal fees bylicensees and other revenue of $10.6 in 2004, lower cost of goods soldand favorable foreign currency exchange, partially offset by increasedreturns, allowances and discounts (taken together) of $3.5. The firsthalf of 2003 was adversely impacted by increased returns in connectionwith the stabilization and growth phase of the Company'splan.

SG&Aexpenses:

|                  |  |                           |       |        |  |                          |       |        |  |      |     |        |  |   |       |        |  |   |       |        |  |   |      |        |  |  |
|------------------|--|---------------------------|-------|--------|--|--------------------------|-------|--------|--|------|-----|--------|--|---|-------|--------|--|---|-------|--------|--|---|------|--------|--|--|
|             |  | ThreeMonths EndedJune 30, |       |   |  | Six MonthsEnded June 30, |       |
|             |  | 2004                      |       | 2003   |  | Change                   |       | 2004   |  | 2003 |     | Change |
| SG&Aexpenses |  | $                         | 199.4 |   |  | $                        | 200.2 |   |  | $    | 0.8 |   |  | $ | 371.3 |   |  | $ | 384.4 |   |  | $ | 13.1 |   |
|                  |

The decrease inselling, general and administrative expenses("SG&A") for second quarter of 2004, ascompared to second quarter of 2003, is due primarily to lowerprofessional fees of $4.4 (the second quarter of 2003 includedprofessional fees and expenses related to the stabilization and growthphase of the Company's plan) and lower brand support of $1.1,partially offset by higher compensation and benefit costs primarilyrelated to restricted stock amortization, higher display amortizationof $0.7 and other selling and general expenses. The decrease inSG&A expenses for first half of 2004, as compared to first half of2003, is due primarily to lower professional fees of $8.3 (the firsthalf of 2003 included professional fees and expenses related to thestabilization and growth phase of the Company's plan), lowerbrand support of $6.1 and the reduction of $1.4 due to a reduction inthe liability for an International post-retirement benefit arrangementwhose terms were modified, partially offset by higher compensation andbenefit costs and distribution costs.

Restructuring costs(benefit):

|                             |  |                           |     |        |  |                        |         |        |  |      |      |         |  |   |      |         |  |   |     |        |  |   |     |        |  |  |
|-----------------------------|--|---------------------------|-----|--------|--|------------------------|---------|--------|--|------|------|---------|--|---|------|---------|--|---|-----|--------|--|---|-----|--------|--|--|
|                        |  | ThreeMonths EndedJune 30, |     |   |  | Six MonthsEndedJune30, |         |
|                        |  | 2004                      |     | 2003   |  | Change                 |         | 2004   |  | 2003 |      | Change  |
| Restructuringcosts(benefit) |  | $                         | 0.1 |   |  | $                      | — |   |  | $    | (0.1 | )  |  | $ | (0.6 | )  |  | $ | 0.5 |   |  | $ | 1.1 |   |
|                             |

Duringthe third quarter of 2000, the Company initiated a new restructuringprogram in line with the original restructuring plan developed in late1998, designed to improve profitability by reducing personnel andconsolidating manufacturing facilities. The 2000 restructuring programfocused on closing the Company's manufacturing operations inPhoenix, Arizona and Mississauga, Canada and to consolidate itscosmetics production into its plant in Oxford, North Carolina. The 2000restructuring program also 

26

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REVHOLDINGS LLC AND SUBSIDIARIESMANAGEMENT'S DISCUSSION ANDANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS**—(Continued)** (dollars in millions, except per sharedata)

includes the remaining obligation for excessleased real estate in the Company's headquarters, consolidationcosts associated with the Company closing its facility in New Zealand,and the elimination of several domestic and international executive andoperational positions, each of which were effected to reduce andstreamline corporate overhead costs.

During the second quarterand first half of 2004, the Company revised its estimate of the cost tobe incurred related to its 2000 restructuring program. Additionally,during the second quarter of 2004, the Company recorded $0.3 foremployee severance and other personnel benefits. In 2003, the Companyrecorded separate charges of $5.9 ($0.5 of which was recorded in thefirst half of 2003) for employee severance and other personnel benefitsfor employees in certain International operations.

Otherexpenses(income):

|                 |  |                           |      |        |  |                        |      |        |  |      |      |        |  |   |      |        |  |   |      |        |  |   |      |        |  |  |
|-----------------|--|---------------------------|------|--------|--|------------------------|------|--------|--|------|------|--------|--|---|------|--------|--|---|------|--------|--|---|------|--------|--|--|
|            |  | ThreeMonths EndedJune 30, |      |   |  | Six MonthsEndedJune30, |      |
|            |  | 2004                      |      | 2003   |  | Change                 |      | 2004   |  | 2003 |      | Change |
| Interestexpense |  | $                         | 29.5 |   |  | $                      | 45.3 |   |  | $    | 15.8 |   |  | $ | 75.4 |   |  | $ | 89.2 |   |  | $ | 13.8 |   |
|                 |

Thedecrease in interest expense for the second quarter and first half of2004, as compared to the second quarter and first half of 2003, isprimarily due to lower overall indebtedness during the second quarterand first half of 2004, resulting from the Revlon ExchangeTransactions. **(See Note 8 to the Unaudited Consolidated CondensedFinancialStatements)**.

|                                     |  |                           |         |        |  |                        |         |        |  |      |         |        |  |   |      |        |  |   |         |        |  |   |       |         |  |  |
|-------------------------------------|--|---------------------------|---------|--------|--|------------------------|---------|--------|--|------|---------|--------|--|---|------|--------|--|---|---------|--------|--|---|-------|---------|--|--|
|                                |  | ThreeMonths EndedJune 30, |         |   |  | Six MonthsEndedJune30, |         |
|                                |  | 2004                      |         | 2003   |  | Change                 |         | 2004   |  | 2003 |         | Change |
| Losson early extinguishment on debt |  | $                         | — |   |  | $                      | — |   |  | $    | — |   |  | $ | 32.6 |   |  | $ | — |   |  | $ | (32.6 | )  |
|                                     |

The loss on earlyextinguishment of debt in the first half of 2004 represents the loss onthe exchange of equity for certain indebtedness in the Revlon ExchangeTransactions (such loss was equal to the difference between the fairvalue of the equity securities issued and the book value of the relatedindebtedness exchanged by third parties other than MacAndrews &Forbes or related parties) and fees, expenses and the write-off ofdeferred financing costs related to the Revlon Exchange Transactions.**(See Note 8 to the Unaudited Consolidated Condensed FinancialStatements)**.

|                   |  |                           |     |        |  |                        |         |        |  |      |      |         |  |   |     |        |  |   |     |        |  |   |      |         |  |  |
|-------------------|--|---------------------------|-----|--------|--|------------------------|---------|--------|--|------|------|---------|--|---|-----|--------|--|---|-----|--------|--|---|------|---------|--|--|
|              |  | ThreeMonths EndedJune 30, |     |   |  | Six MonthsEndedJune30, |         |
|              |  | 2004                      |     | 2003   |  | Change                 |         | 2004   |  | 2003 |      | Change  |
| Miscellaneous,net |  | $                         | 2.4 |   |  | $                      | — |   |  | $    | (2.4 | )  |  | $ | 2.5 |   |  | $ | 0.4 |   |  | $ | (2.1 | )  |
|                   |

The increase in miscellaneous,net for the second quarter and first half of 2004, as compared to thecomparable 2003 periods, is primarily due to fees and expensesassociated with the refinancing that Products Corporation launched inMay 2004 but did not consummate.

27

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REVHOLDINGS LLC AND SUBSIDIARIESMANAGEMENT'S DISCUSSION ANDANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS**—(Continued)** (dollars in millions, except per sharedata)

Gain on issuance of subsidiarystock:

|                                     |  |                           |         |        |  |                        |         |        |  |      |         |        |  |   |        |         |  |   |         |        |  |   |       |        |  |  |
|-------------------------------------|--|---------------------------|---------|--------|--|------------------------|---------|--------|--|------|---------|--------|--|---|--------|---------|--|---|---------|--------|--|---|-------|--------|--|--|
|                                |  | ThreeMonths EndedJune 30, |         |   |  | Six MonthsEndedJune30, |         |
|                                |  | 2004                      |         | 2003   |  | Change                 |         | 2004   |  | 2003 |         | Change |
| Gainon issuance of subsidiary stock |  | $                         | — |   |  | $                      | — |   |  | $    | — |   |  | $ | (363.6 | )  |  | $ | — |   |  | $ | 363.6 |   |
|                                     |

REVHoldings recognized a gain on issuance of Class A Common Stock to thirdparties in connection with the Revlon Exchange Transactions. **(SeeNote 8 to the Unaudited Consolidated Condensed FinancialStatements).**

Provision (benefit) for incometaxes:

|                                    |  |                           |     |        |  |                        |      |         |  |      |      |         |  |   |     |        |  |   |      |         |  |   |      |         |  |  |
|------------------------------------|--|---------------------------|-----|--------|--|------------------------|------|---------|--|------|------|---------|--|---|-----|--------|--|---|------|---------|--|---|------|---------|--|--|
|                               |  | ThreeMonths EndedJune 30, |     |   |  | Six MonthsEndedJune30, |      |
|                               |  | 2004                      |     | 2003   |  | Change                 |      | 2004    |  | 2003 |      | Change  |
| Provision(benefit) for incometaxes |  | $                         | 1.3 |   |  | $                      | (6.1 | )  |  | $    | (7.4 | )  |  | $ | 2.1 |   |  | $ | (5.2 | )  |  | $ | (7.3 | )  |
|                                    |

Theincrease in the provision for income taxes in the second quarter andfirst half of 2004, as compared with the benefit for income taxes inthe second quarter and first half of 2003, was primarily attributableto higher taxable income in certain markets outside the U.S. The 2003period was benefited by the resolution of various taxaudits.

Financial Condition, Liquidity and CapitalResources

Net cash used for operating activities in the firsthalf of 2004 decreased to $104.6, as compared to $139.6 for the firsthalf of 2003. This improvement resulted primarily from higher operatingincome, lower inventories, lower purchases of permanent displays, loweraccrued expenses and lower cash spending in connection with thestabilization and growth phase of the Company's plan, partiallyoffset by higher prepaid expenses. Also, the Company received $10.0 inthe first half of 2004 related to the prepayment of certain minimumroyalties and renewal fees by licensees.

Net cash used forinvesting activities was $8.1 and $13.2 for the first half of 2004 and2003, respectively. Net cash used for investing activities for thefirst half of 2004 and 2003 consisted of capital expenditures.

Net cash provided by financing activities was $106.8 and $93.8 forthe first half of 2004 and 2003, respectively. Net cash provided byfinancing activities for the first half of 2004 included cash drawnunder the 2001 Credit Agreement, including the additional $64.4 termloan pursuant to the Exchange Bank Amendments, the 2004 $125 millionMafco Loan and the $65 million Mafco line of credit, a capitalcontribution from an affiliate to retire the REV Holdings Notes and anadvance under the Keepwell Agreement, partially offset by the repaymentof borrowings under the 2001 Credit Agreement and the Mafco $65 millionline of credit and payment of financing costs in connection with theJanuary 2004 Bank Amendment, the Exchange Bank Amendments, the RevlonExchange Transactions and the REV Holdings Exchange Offer. Net cashprovided by financing activities for the first half of 2003 includedcash drawn under the 2001 Credit Agreement and the MacAndrews &Forbes $100 million term loan, net proceeds from the 2003 RightsOffering and an advance under the Keepwell Agreement, partially offsetby the repayment of borrowings under the 2001 Credit Agreement andpayment of financing costs.

On November 30, 2001, ProductsCorporation entered into a credit agreement (as amended, the"2001 Credit Agreement") with a syndicate oflenders, which agreement amended and restated the credit 

28

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REVHOLDINGS LLC AND SUBSIDIARIESMANAGEMENT'S DISCUSSION ANDANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS**—(Continued)** (dollars in millions, except per sharedata)

agreement entered into by ProductsCorporation in May 1997 (as amended, the "1997 CreditAgreement"), and, until such agreement was fullyrefinanced on July 9, 2004 **(See Note 10 to the UnauditedConsolidated Condensed Financial Statements)**, was scheduled tomature on May 30, 2005. As of June 30, 2004, the 2001 Credit Agreementprovided up to $311.9, which was comprised of a $179.8 term loanfacility (the "2001 Term Loan Facility") anda $132.1 multi-currency revolving credit facility (the"2001 Multi-Currency Facility"). ProductsCorporation had utilized $289.9 under the 2001 Credit Agreement and hadapproximately $176 of available liquidity from available sources atJune  30, 2004.

New Credit Agreement

On July 9,2004, Products Corporation entered into the New Credit Agreement withcertain of its subsidiaries as local borrowing subsidiaries, asyndicate of lenders, and Citicorp USA, Inc., as multi-currencyadministrative agent, term loan administrative agent and collateralagent. Products Corporation used the proceeds of borrowings under theTerm Loan Facility of the New Credit Agreement to repay in full the$290.5 of outstanding indebtedness (including accrued interest) underProducts Corporation's 2001 Credit Agreement, to purchaseapproximately $298 aggregate principal amount of the 12% SeniorSecured Notes tendered at the Initial Settlement of the Tender Offer,for a purchase price of approximately $338.3 (including the applicablepremium and accrued interest), to purchase the additional $0.4aggregate principal amount of the 12% Senior Secured Notestendered following the Initial Settlement through the expiration of theTender Offer, for a purchase price of approximately $0.5 (including theapplicable premium and accrued interest), to set aside funds in acollateral account to redeem the $64.5 aggregate principal amount ofthe 12% Senior Secured Notes remaining outstanding after theexpiration of the Tender Offer, and to pay fees and expenses incurredin connection with the New Credit Agreement, the Tender Offer and theRevlon Exchange Transactions, including the payment of expenses relatedto a refinancing that Products Corporation launched in May 2004 but didnot consummate. The balance of such proceeds is available to ProductsCorporation for general corporate purposes. The Multi-Currency Facilitywas undrawn at the July 9, 2004 closing.

The New CreditAgreement provides up to $960.0 and consists of a $800.0 Term LoanFacility and a $160.0 asset-based Multi-Currency Facility. TheMulti-Currency Facility is available to: (i) Products Corporation inrevolving credit loans denominated in U.S. dollars, (ii) ProductsCorporation in standby and commercial letters of credit denominated inU.S. dollars and other currencies up to $50.0 and (iii) ProductsCorporation and certain of its international subsidiaries designatedfrom time to time in revolving credit loans and bankers'acceptances denominated in U.S. dollars and other currencies, in eachcase subject to borrowing base availability that is determined based onthe value of eligible accounts receivable, eligible inventory andeligible real property and equipment in the U.S. and the U.K. from timeto time. The Multi-Currency Facility will terminate on July 9, 2009 andthe loans under the Term Loan Facility will mature on July 9, 2010;provided that the New Credit Facilities will terminate on October 31,2005 if the 8 1/8% Senior Notes are notredeemed, repurchased or defeased in full on or before such date, onJuly 31, 2006 if the 9% Senior Notes are not redeemed,repurchased or defeased in full on or before such date, and on October30, 2007 if the 8 5/8% Senior Subordinated Notesare not redeemed, repurchased or defeased on or before such date suchthat not more than $25.0 in aggregate principal amount of the8 5/8% Senior Subordinated Notes remainoutstanding. **(See Note 10 to the Unaudited Consolidated CondensedFinancial Statements).**

The 2004 Debt ReductionTransactions

As a result of the Debt Reduction Transactions,Revlon, Inc. reduced Products Corporation's debt by approximately$804 on March 25, 2004.

As part of the Revlon ExchangeTransactions, MacAndrews & Forbes received Class A Common Stock inrespect of any and all outstanding amounts owing to it, as of theclosing date of the Revlon 

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REVHOLDINGS LLC AND SUBSIDIARIESMANAGEMENT'S DISCUSSION ANDANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS**—(Continued)** (dollars in millions, except per sharedata)

Exchange Transactions, under the Mafco $100million term loan (which was approximately $109.7 at March 25, 2004,including accrued interest), the 2004 Mafco $125 million term loan(which was approximately $38.9 at March 25, 2004, including accruedinterest), the Mafco $65 million line of credit (which was nil at March25, 2004) and approximately $24.1 of subordinated promissory notes. Theportions of the 2004 Mafco $125 million term loan and the Mafco $65million line of credit not exchanged in the Loan ConversionTransactions remained available to Products Corporation (which loanswere consolidated into the Consolidated Mafco line of credit in July2004), subject to the Borrowing Limitation, which was subsequentlyeliminated. **(See Note 10 to the Unaudited Consolidated CondensedFinancial Statements).**

Revlon, Inc. agreed to the BorrowingLimitation with Fidelity not to permit Products Corporation to haveoutstanding aggregate borrowings, at any time following the close ofthe Revlon Exchange Transactions and until the termination of theStockholders Agreement, under the Mafco $65 million line of credit andthe 2004 Mafco $125 million term loan in excess of approximately $87,which Borrowing Limitation was subsequently eliminated in July 2004.**(See Note 10 to the Unaudited Consolidated Condensed FinancialStatements).**

As a result of the consummation of the RevlonExchange Transactions, approximately $133.8 principal amount of the8 1/8% Senior Notes, approximately $174.5principal amount of the 9% Senior Notes and approximately $322.9principal amount of the 8 5/8% SeniorSubordinated Notes were exchanged for an aggregate of approximately224.1 million shares of Class A Common Stock, including such sharesissued in exchange for accrued interest on the Revlon Exchange Notes.Such amount of Revlon Exchange Notes exchanged included approximately$1.0 of the 9% Senior Notes and approximately $286.7 of the8 5/8% Senior Subordinated Notes tendered byMacAndrews & Forbes and other entities related to it; andapproximately $85.9 of the 9% Senior Notes, approximately $77.8of the 8 1/8% Senior Notes and approximately$32.1 of the 8 5/8% Senior Subordinated Notestendered by funds and accounts managed by Fidelity.

MacAndrews& Forbes also exchanged approximately $109.7 of existingindebtedness (including principal and accrued interest) under the Mafco$100 million term loan for approximately 43.9 million shares of Class ACommon Stock, approximately $38.9 of existing indebtedness (includingprincipal and accrued interest) under the 2004 Mafco $125 million termloan for approximately 15.6 million shares of Class A Common Stock andapproximately $24.1 of indebtedness under certain subordinatedpromissory notes payable to MacAndrews & Forbes for approximately7.2 million shares of Class A Common Stock. REV Holdings exchanged allof Revlon, Inc.'s previously outstanding Series A Preferred Stockfor an aggregate of approximately 8.7 million shares of Class A CommonStock and converted all of its shares of Revlon, Inc.'spreviously outstanding Series B Preferred Stock into 433,333 shares ofClass A Common Stock.

In connection with consummating the RevlonExchange Transactions, Revlon, Inc. announced that its previouslyannounced plan to launch a rights offering to reduce debt by a further$50 by year-end 2004 was reduced to $9.7, as a result of $190.3 ofRevlon Exchange Notes having been exchanged in excess of the RevlonExchange Notes committed to be exchanged by MacAndrews & Forbes andFidelity under their respective support agreements. This $190.3 morethan satisfied Revlon, Inc.'s plan to reduce debt through theRevlon Exchange Offers by $150 in addition to the Revlon Exchange Notesthat were committed to be exchanged in the support agreements withMacAndrews & Forbes and Fidelity. The $40.3 difference satisfiedall but $9.7 of the Company's plan to reduce debt by a further$50 by year-end 2004. Because the costs and expenses, as well as theuse of organizational resources, associated with a $9.7 rights offeringwould be unduly disproportionate, Revlon, Inc. indicated that itssupport and investment agreements with MacAndrews & Forbes andFidelity relating to the Company's debt reduction plan wereamended to enable Revlon, Inc. to satisfy the remaining $9.7 of debtreduction as part of the final stage of the Company's debtreduction plan. Therefore, the Company now intends to reduce debt by

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REVHOLDINGS LLC AND SUBSIDIARIESMANAGEMENT'S DISCUSSION ANDANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS**—(Continued)** (dollars in millions, except per sharedata)

approximately $110 by the end of March 2006.Consistent with agreements between MacAndrews & Forbes and Revlon,Inc. entered into contemporaneously with the agreements relating to theRevlon Exchange Transactions, MacAndrews & Forbes agreed toback-stop the $110 equity offering.

Also, in conjunction withthe Revlon Exchange Transactions, Products Corporation obtained theExchange Bank Amendments to provide an additional $64.4 term loanfacility, the proceeds of which were used to repay outstandingrevolving indebtedness under Products Corporation's 2001 CreditAgreement without a reduction in revolving credit commitments. Theseamendments also reduced the interest rates payable on such term loanfacility by 0.5%, as compared to the interest rates payable onloans under the existing term loan facility of ProductsCorporation's 2001 Credit Agreement. The Exchange Bank Amendmentsalso permitted various aspects of the transactions relating to theRevlon Exchange Transactions. **(See Note 10 to the UnauditedConsolidated Condensed Financial Statements).**

On June 22,2004, Products Corporation commenced the Tender Offer. On the July 9,2004 Initial Settlement, Products Corporation purchased approximately$298 aggregate principal amount of the 12% Senior Secured Notes,representing approximately 82% of the total outstandingprincipal amount of the 12% Senior Secured Notes, for a purchaseprice of approximately $338.3 (including the applicable premium andaccrued interest). Products Corporation also obtained sufficientconsents from holders of the 12% Senior Secured Notes that weretendered for certain amendments which eliminated substantially all ofthe restrictive covenants and released the guarantees of ProductsCorporation's obligations, and the collateral securing theobligations of Products Corporation and the guarantors, in each caseunder the 12% Notes Indenture. On July 22, 2004, ProductsCorporation purchased approximately $0.4 aggregate principal amount ofthe 12% Senior Secured Notes, the amount of such notes tenderedfollowing the Initial Settlement through the expiration of the TenderOffer, for a purchase price of approximately $0.5 (including theapplicable premium and accrued interest). In connection with theexpiration of the Tender Offer, Products Corporation also announcedthat on August 23, 2004 it will redeem all of the approximately $64.5aggregate principal amount of its 12% Senior Secured Notes thatremained outstanding following the July 21, 2004 expiration of theTender Offer at a redemption price calculated in accordance with the12% Notes Indenture. **(See Note 10 to the UnauditedConsolidated Condensed Financial Statements).**

EBITDA (asdefined in the 2001 Credit Agreement) was $144.4 for the fourconsecutive fiscal quarters ended December 31, 2003, which was lessthan the minimum of $230 required under the EBITDA covenant of the 2001Credit Agreement for that period and Products Corporation'sleverage ratio was 1.66:1.00, which was in excess of the maximum ratioof 1.10:1.00 permitted under the leverage ratio covenant of the 2001Credit Agreement for that period. Accordingly, Products Corporationsought and on January 28, 2004 secured the January 2004 Bank Amendmentthat included waivers of compliance with these covenants for the fourquarters ended December 31, 2003 and, in light of the Company'sexpectation that its plan would affect Products Corporation'sability to comply with these covenants under the 2001 Credit Agreementduring 2004, an amendment to eliminate the EBITDA and leverage ratiocovenants of the 2001 Credit Agreement for the first three quarters of2004 and a waiver of compliance with such covenants for the fourquarters ending December 31, 2004 expiring on January 31, 2005. TheJanuary 2004 Bank Amendment to the 2001 Credit Agreement includedcertain other amendments to allow for the continued implementation ofthe Company's plan.

The 2004 Mafco $125 million term loan,as discussed in Note 10, was consolidated with the Mafco $65 millionline of credit into the Consolidated Mafco line of credit in July 2004,with availability of $152. Until such consolidation, the 2004 Mafco$125 million term loan was a senior unsecured multiple-draw term loanat an interest rate of 12% per annum, and which was onsubstantially the same terms as the Mafco $100 million term loanprovided by MacAndrews & Forbes earlier in 2003 (the latter ofwhich was fully converted into equity in connection with the RevlonExchange Transactions), including that interest on such loans was notpayable in cash, but accrued and was added to the principal amount eachquarter 

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REVHOLDINGS LLC AND SUBSIDIARIESMANAGEMENT'S DISCUSSION ANDANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS**—(Continued)** (dollars in millions, except per sharedata)

and was to have been paid in full at finalmaturity on December 1, 2005. **(See Notes 8 and 10 to the UnauditedConsolidated Condensed Financial Statements)**.

2003Financing Transactions

In February 2003, Revlon, Inc. enteredinto an investment agreement with MacAndrews Holdings (the"2003 Investment Agreement") pursuant towhich Revlon, Inc. undertook and, on June 20, 2003, completed, a $50equity rights offering (the "2003 RightsOffering"), pursuant to which Revlon, Inc. issued anadditional 17,605,650 shares of its Class A Common Stock, including3,015,303 shares subscribed for by the public and 14,590,347 sharesissued to MacAndrews Holdings in a private placement (representing thenumber of shares of Class A Common Stock that MacAndrews Holdings wouldotherwise have been entitled to purchase pursuant to its basicsubscription privilege, which was approximately 83% of theshares of Class A Common Stock offered in the 2003 RightsOffering).

In addition, in connection with the 2003 InvestmentAgreement, MacAndrews Holdings also made available a $100 term loan toProducts Corporation (the "Mafco $100 million termloan"). Until it was exchanged for equity in connectionwith the Revlon Exchange Transactions, the Mafco $100 million term loanhad a final maturity date of December 1, 2005 and interest on such loanof 12.0% was not payable in cash, but accrued and was added tothe principal amount each quarter and was to have been paid in full atfinal maturity. **(See Note 8 to the Unaudited Consolidated CondensedFinancial Statements)**.

Additionally, MacAndrews Holdings alsoprovided Products Corporation with an additional $40 line of creditduring 2003, which amount was originally to increase to $65 on January1, 2004 (the "Mafco $65 million line ofcredit") (the Mafco $100 million term loan and the Mafco$65 million line of credit, each as amended, are referred to as the"2003 Mafco Loans") and which was originallyto be available to Products Corporation through December 31, 2004(which, as discussed in Note 10, was consolidated with the 2004 Mafco$125 million term loan into the Consolidated Mafco line of credit inJuly 2004). Until such consolidation, the Mafco $65 million line ofcredit bore interest payable in cash at a rate of the lesser of (i)12.0% and (ii) 0.25% less than the rate payable from timeto time on Eurodollar loans under Products Corporation's CreditAgreement (which rate was 8.50% as of June 30, 2004). However,in connection with the January 2004 Bank Amendment of ProductsCorporation's Credit Agreement, Products Corporation andMacAndrews Holdings agreed to extend the maturity of the Mafco $65million line of credit to June 30, 2005 and to subject the availabilityof funds under such line of credit to the condition that an aggregateprincipal amount of $100 have been drawn under the 2004 Mafco $125million term loan. **(See Notes 8and 10 to the Unaudited ConsolidatedCondensed Financial Statements)**.

Sources andUses

The Company's principal sources of funds areexpected to be operating revenues, cash on hand, funds available forborrowing under the New Credit Agreement, the Consolidated Mafco lineof credit, other permitted lines of credit and advances under the NewKeepwell Agreement. **(See Notes 8 and 10 to the UnauditedConsolidated Condensed Financial Statements)**. The New CreditAgreement, the Consolidated Mafco line of credit, ProductsCorporation's 8 5/8% Senior SubordinatedNotes due 2008 (the "8 5/8% SeniorSubordinated Notes"), Products Corporation's8 1/8% Senior Notes due 2006 (the"8 1/8% Senior Notes")and Products Corporation's 9% Senior Notes due 2006 (the"9% Senior Notes") contain certainprovisions that by their terms limit Products Corporation's andits subsidiaries' ability to, among other things, incuradditional debt. The New REV Holdings Notes contain certain provisionsthat by their terms limit REV Holdings' ability to, among otherthings, incur additional debt.

The Company's principaluses of funds are expected to be the payment of operating expenses,including expenses in connection with the continued implementation of,and refinement to, the Company's plan, purchases of permanentwall displays, capital expenditure requirements, payments in

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REVHOLDINGS LLC AND SUBSIDIARIESMANAGEMENT'S DISCUSSION ANDANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS**—(Continued)** (dollars in millions, except per sharedata)

connection with the Company'srestructuring programs referred to herein, debt service payments andcosts of the Company and its subsidiaries, including payments requiredunder Products Corporation's debt instruments and interestpayments under the New REV Holdings Notes. Cash contributions to theCompany's pension plans were $21 in 2003 and the Company expectsthem to be approximately $34 in 2004.

The Company has undertakena number of programs to efficiently manage its cash and working capitalincluding, among other things, programs to carefully manage inventorylevels, centralized purchasing to secure discounts and efficiencies inprocurement, and providing additional discounts to U.S. customers formore timely payment of receivables and careful management of accountspayable.

The Company previously estimated that charges relatedto the implementation of its plan for 2002, 2003 and 2004 would notexceed $160. The Company recorded charges of approximately $104 in 2002and approximately $31 in 2003 related to the implementation of thestabilization and growth phase of its plan. The Company currently doesnot expect to record any additional charges during 2004 in connectionwith its plan. The Company expects that cash payments related to theforegoing charges that it has previously recorded with respect to itsplan will be approximately $100 during 2003 and 2004, of which theCompany paid approximately $80 in 2003 and approximately $11 in thefirst half of 2004.

The Company developed a new design for itswall displays (which the Company is continuing to refine as part of theimplementation of its plan) and began installing them at certaincustomers' retail stores during 2002. While most of the new walldisplays were installed during 2002 and 2003, the Company is continuingto install the remainder of the new wall displays during 2004. TheCompany is also reconfiguring existing wall displays at its retailcustomers. Accordingly, the Company has accelerated the amortization ofits old wall displays. The Company estimates that purchases of walldisplays for 2004 will be approximately $50 to $60.

The Companyestimates that capital expenditures for 2004 will be approximately $20to $25. The Company estimates that cash payments related to therestructuring programs referred to in Note 5 to the UnauditedConsolidated Condensed Financial Statements and executive separationcosts will be approximately $10 to $15 in 2004.

The Companyexpects that operating revenues, cash on hand, funds available forborrowing under the New Credit Agreement, the Consolidated Mafco lineof credit and other permitted lines of credit and advances under theNew Keepwell Agreement will be sufficient to enable the Company tocover its operating expenses, including cash requirements in connectionwith the Company's operations, the continued implementation of,and refinement to, the Company's plan, cash requirements inconnection with the Company's restructuring programs referred toabove and the debt service requirements of the Company and itssubsidiaries for 2004, including without limitation, interest on theNew REV Holdings Notes. **(See Notes 8 and 10 to the UnauditedConsolidated Condensed Financial Statements)**. However, there can beno assurance that such funds will be sufficient to meet theCompany's cash requirements on a consolidated basis. If theCompany's anticipated level of revenue growth is not achievedbecause, for example, of decreased consumer spending in response toweak economic conditions or weakness in the cosmetics category,increased competition from the Company's competitors or theCompany's marketing plans are not as successful as anticipated,or if the Company's expenses associated with the continuedimplementation of, and refinement to, the Company's plan exceedthe anticipated level of expenses, the Company's current sourcesof funds may be insufficient to meet the Company's cashrequirements. The U.S. mass-market color cosmetics category during 2003and the first half of 2004 was softer than the Company expected.Despite this softness in the U.S. mass-market color cosmetics category,based upon the Company's belief that its continued implementationof its plan is proving effective, the Company intends to continue tosupport its plan. Additionally, in the event of a decrease in demandfor Products Corporation's products or reduced sales or lack ofincreases in demand and sales as a result of the 

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REVHOLDINGS LLC AND SUBSIDIARIESMANAGEMENT'S DISCUSSION ANDANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS**—(Continued)** (dollars in millions, except per sharedata)

continued implementation of, and refinementto, the Company's plan, any such development, if significant,could reduce Products Corporation's operating revenues and couldadversely affect Products Corporation's ability to achievecertain financial covenants under the New Credit Agreement and in suchevent the Company could be required to take measures, includingreducing discretionary spending. If the Company is unable to satisfyits cash requirements from the sources identified above, the Companycould be required to adopt one or more alternatives, such as delayingthe implementation of or revising aspects of its plan, reducing ordelaying purchases of wall displays or advertising or promotionalexpenses, reducing or delaying capital spending, delaying, reducing orrevising restructuring programs, restructuring its or itssubsidiaries' indebtedness, selling assets or operations, seekingadditional capital contributions or loans from MacAndrews & Forbes,the Company's other affiliates and/or third parties, sellingadditional equity or debt securities of Revlon, Inc. or selling itsequity securities or reducing other discretionary spending. There canbe no assurance that the Company would be able to take any of theactions referred to above because of a variety of commercial or marketfactors or constraints in the Company's debt instruments,including, for example, market conditions being unfavorable for anequity or debt offering, or that the transactions may not be permittedunder the terms of the Company's various debt instruments then ineffect, because of restrictions on the incurrence of debt, incurrenceof liens, asset dispositions and related party transactions. Inaddition, such actions, if taken, may not enable the Company to satisfyits cash requirements if the actions do not generate a sufficientamount of additional capital. The Company may have debt maturing in2005 if and to the extent Products Corporation draws under theConsolidated Mafco line of credit. The Company intends to refinanceProducts Corporation's 8 1/8% Senior Notesand 9% Senior Notes, with $116.1 and $75.5 aggregate principalamount outstanding, respectively, prior to their respective maturitiesin 2006, and to likewise refinance Products Corporation's8 5/8% Senior Subordinated Notes, with anaggregate principal amount outstanding of $327.0, prior to theirmaturity in 2008. As of July 30, 2004, Products Corporation had drawn$800.0 under the Term Loan Facility of the New Credit Agreement andnone of the Multi-Currency Facility and the Consolidated Mafco line ofcredit. **(See Notes 8 and 10 to the Unaudited Consolidated CondensedFinancial Statements)**.

Revlon, Inc., as a holding company,will be dependent on the earnings and cash flow of, and dividends anddistributions from, Products Corporation to pay its expenses and to payany cash dividend or distribution on Revlon, Inc.'s Class ACommon Stock that may be authorized by the Board of Directors ofRevlon, Inc. The terms of the New Credit Agreement, the ConsolidatedMafco line of credit, the 8 5/8% SeniorSubordinated Notes, the 8 1/8% Senior Notes andthe 9% Senior Notes generally restrict Products Corporation frompaying dividends or making distributions, except that ProductsCorporation is permitted to pay dividends and make distributions toRevlon, Inc. to enable Revlon, Inc., among other things, to payexpenses incidental to being a public holding company, including, amongother things, professional fees such as legal and accounting fees,regulatory fees such as Commission filing fees and other miscellaneousexpenses related to being a public holding company and, subject tocertain limitations, to pay dividends or make distributions in certaincircumstances to finance the purchase by Revlon, Inc. of its Class ACommon Stock in connection with the delivery of such Class A CommonStock to grantees under the Amended and Restated Revlon, Inc. StockPlan.

On October 17, 2003, REV Holdings filed a registrationstatement on Form S-4 with the Commission with respect to the REVHoldings Exchange Offer. The REV Holdings Exchange Offer wasconsummated on January 21, 2004. In connection therewith, REV Holdingsissued $18.5 principal amount of New REV Holdings Notes in exchange fora like principal amount of REV Holdings Notes. In addition, at maturityon February 1, 2004, the Company's parent contributed $7.9principal amount of REV Holdings Notes it held and $54.1 of cash toretire the remaining outstanding REV Holdings Notes.

The New REVHoldings Notes, which bear interest semi-annually and mature onFebruary 1, 2007, are secured by the Collateral. In addition, the NewIndenture contains covenants that, among other 

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REVHOLDINGS LLC AND SUBSIDIARIESMANAGEMENT'S DISCUSSION ANDANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS**—(Continued)** (dollars in millions, except per sharedata)

things, limit, subject to certain exceptionsset forth in the New Indenture, the following: (i) the issuance ofadditional debt and redeemable stock by REV Holdings, (ii) the creationof additional liens on the Collateral (other than the lien created bythe New Indenture), (iii) the payment of dividends on capital stock ofREV Holdings and the redemption of capital stock of REV Holdings or anyof its direct or indirect parents, (iv) the sale of assets andsubsidiary stock (including by way of consolidations, mergers andsimilar transactions), and (v) transactions with affiliates.

Inconnection with the REV Holdings Exchange Offer, GSB Investments Corp.,an affiliate of the Company, entered into the New Keepwell Agreement,pursuant to which GSB Investments Corp. has agreed to provide REVHoldings with funds equal to any interest payment due on the New REVHoldings Notes, to the extent that REV Holdings does not havesufficient funds on hand to make such payment on the applicable duedate. REV Holdings currently anticipates that it will use advancesunder the New Keepwell Agreement to pay interest when due under the NewREV Holdings Notes.

The New Indenture contains customary eventsof default for debt instruments of such type. The New Indentureincludes a cross-acceleration provision, which provides that it shallbe an event of default under the New Indenture if any debt of REVHoldings or any of its significant subsidiaries (as defined in the NewIndenture), is not paid within any applicable grace period after finalmaturity or is accelerated by the holders of such debt because of adefault and the total principal amount of the portion of such debt thatis unpaid or accelerated exceeds $25.0 and such default continues for10 days after notice from the trustee under the New Indenture. If anysuch event of default occurs, the trustee under the New Indenture orthe holders of at least 25% in principal amount of theoutstanding New REV Holdings Notes may declare all such notes to be dueand payable immediately, provided that the holders of a majority inaggregate principal amount of the New REV Holdings Notes may, by noticeto the trustee, waive any such default or event of default and itsconsequences under the New Indenture.

GSB Investments Corp. hasadvised REV Holdings that it expects either to have cash flow fromdividends on its investments or to obtain capital contributions fromits affiliates that, in the aggregate, will be sufficient to satisfyits obligations under the New Keepwell Agreement. There can be noassurance, however, that GSB Investments Corp. (a)  will havesuch cash flow, because, among other things, a portion of itsinvestments are pledged and its investees are under no obligation topay dividends, or (b)  could obtain any such contribution or loanbecause, among other things, its affiliates are under no obligation toprovide them to GSB Investments Corp.

The New Keepwell Agreementwill terminate at such time as there are no New REV Holdings Notesoutstanding, at which time GSB Investments Corp. may require repaymentof advances under the New Keepwell Agreement. On February 1, 2004, GSBInvestments Corp. made a non-interest bearing advance of $4.5 to REVHoldings under the Keepwell Agreement, which was used to make theinterest payment on the REV Holdings Notes. The obligation under theKeepwell Agreement of $28.4 at maturity on February 1, 2004 of the REVHoldings Notes was contributed to the capital of REV Holdings in April2004.

REV Holdings, as a holding company, will be dependent onadvances from affiliates to pay its expenses and will also be dependentupon advances under the New Keepwell Agreement to pay interest when dueon the New REV Holdings Notes. The Company anticipates that it will berequired to adopt one or more alternatives to pay the principal amountat maturity of the New REV Holdings Notes, such as refinancing itsindebtedness, repaying its indebtedness with the proceeds from the saleof assets or operations of Revlon, Inc., selling its equity securitiesor equity securities of Revlon, Inc. or seeking additional capitalcontributions or loans from MacAndrews & Forbes, theCompany's other affiliates and/or third parties. There can be noassurance that any of the foregoing actions could be effected onsatisfactory terms, that any of the foregoing actions would enable theCompany to pay the principal amount at maturity of the New REV HoldingsNotes or that any of such actions would be permitted by 

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REVHOLDINGS LLC AND SUBSIDIARIESMANAGEMENT'S DISCUSSION ANDANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS**—(Continued)** (dollars in millions, except per sharedata)

the terms of the New Indenture or any otherdebt instrument of the Company and the Company's subsidiariesthen in effect, because, among other reasons, market conditions may beunfavorable for an equity or debt offering or the transactions may notbe permitted under the terms of the Company's various debtinstruments then in effect, because of restrictions on the incurrenceof debt, incurrence of liens, asset dispositions and related partytransactions. In addition, such actions, if taken, may not enable theCompany to satisfy its cash requirements if the actions do not generatea sufficient amount of additional capital. None of the Company'saffiliates, including MacAndrews & Forbes, is required to make anycapital contribution, loan or other payment to REV Holdings withrespect to principal or interest on the New REV Holdings Notes (otherthan as provided in the New Keepwell Agreement).

REV Holdings,as a single-member limited liability company, is a disregarded entityfor federal and state income tax purposes. REV Holdings' incomeand loss are included in the consolidated federal income tax returnfiled by the affiliated group of which Mafco Holdings is the commonparent (the "Mafco Group"). In March 1993,REV Holdings and Mafco Holdings entered into a tax sharing agreement(as amended, the "1993 Tax SharingAgreement") pursuant to which, for all taxable periodsbeginning on or after January 1, 1993, REV Holdings will pay to MafcoHoldings amounts equal to the taxes that REV Holdings would otherwisehave had to pay if it were to file separate federal, state and localincome tax returns for itself, excluding Revlon, Inc. and itssubsidiaries (including any amount determined to be due as a result ofa redetermination arising from an audit or otherwise of the taxliability relating to any such period that is attributable to REVHoldings). In connection with the conversion of REV Holdings Inc. intoa limited liability company in December 2002, the 1993 Tax SharingAgreement was amended to provide that REV Holdings will make any taxsharing payment to Mafco Holdings as if it were a taxable corporation.No tax sharing payment was required to be paid for 2004 pursuant to the1993 Tax Sharing Agreement.

As a result of the closing of theRevlon Exchange Transactions, as of the end of the day on March 25,2004, Revlon Inc., Products Corporation and its U.S. subsidiaries wereno longer included in the Mafco Group for federal income tax purposes.The Code and the Treasury regulations issued thereunder govern both thecalculation of the amount and allocation to the members of the MafcoGroup of any CNOLs that will be available to offset Revlon,Inc.'s taxable income and the taxable income of its U.S.subsidiaries for the taxable years beginning after March 25, 2004. Itis impossible to estimate accurately the amount of CNOLs that will beallocated to Revlon, Inc. as of December 31, 2004 because variousfactors could increase or decrease or eliminate these amounts. Thesefactors include, but are not limited to, the amount and nature of theincome, gains or losses that the other members of the Mafco Grouprecognize in the 2004 taxable year because any CNOLs are, pursuant toTreasury regulations, used to offset the taxable income of the MafcoGroup for the entire consolidated return year ending December 31, 2004.Only the amount of any CNOLs that the Mafco Group does not absorb byDecember 31, 2004 will be available to be allocated to Revlon, Inc. andits U.S. subsidiaries for Revlon, Inc.'s taxable years beginningon March 26, 2004. Subject to the foregoing, it is currently estimatedthat Revlon, Inc. will have approximately $330 in U.S. federal netoperating losses and nil for alternative minimum tax losses availableto Revlon, Inc. and its U.S. subsidiaries as of March 25, 2004. Anylosses that Revlon, Inc. and its U.S. subsidiaries may generate afterMarch 25, 2004 will be available to Revlon, Inc. for its use and itsU.S. subsidiaries' use and will not be available for the use ofthe Mafco Group. Following the closing of the Revlon ExchangeTransactions, Revlon, Inc. became the parent of a new consolidatedgroup for federal income tax purposes and Products Corporation'sfederal taxable income and loss will be included in such group'sconsolidated tax returns. Accordingly, Revlon, Inc. and ProductsCorporation entered into a new tax sharing agreement pursuant to whichProducts Corporation will be required to pay to Revlon, Inc. amountsequal to the taxes that Products Corporation would otherwise have hadto pay if Products Corporation were to file separate federal, state orlocal income tax returns, limited to the amount, and payable only atsuch times, as Revlon, Inc. will be required to make payments to theapplicable taxing authorities.

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REVHOLDINGS LLC AND SUBSIDIARIESMANAGEMENT'S DISCUSSION ANDANALYSIS OF FINANCIALCONDITION AND RESULTS OFOPERATIONS(dollars in millions, except per sharedata)

Asa result of dealing with suppliers and vendors in a number of foreigncountries, Products Corporation enters into foreign currency forwardexchange contracts and option contracts from time to time to hedgecertain cash flows denominated in foreign currencies. There wereforeign currency forward exchange contracts with a notional amount of$54.1 outstanding at June 30, 2004. The fair value of foreign currencyforward exchange contracts outstanding at June 30, 2004 was $0.2.

Disclosures about Contractual Obligations and CommercialCommitments

As of June 30, 2004, there had been no materialchanges (with the exception of the elimination of approximately $804 indebt in conjunction with the Revlon Exchange Transactions) outside theordinary course of the Company's business to the Company'stotal contractual cash obligations which are set forth in the tableincluded in the Company's Annual Report on Form 10-K for the yearended December 31, 2003. **(See Notes 8 and 10 to the UnauditedConsolidated Condensed Financial Statements)**. The following tablereflects the materially reduced long-term debt obligations after theRevlon Exchange Transactions as of June 30,2004:

|                                           |  |                                           |  |                 |  |           |  |           |  |              |  |  |  |  |  |  |  |  |  |  |  |  |
|-------------------------------------------|--|-------------------------------------------|--|-----------------|--|-----------|--|-----------|--|--------------|--|--|--|--|--|--|--|--|--|--|--|--|
|                                      |  | PaymentsDue by Period(dollars inmillions) |
| ContractualObligationsAs of June 30, 2004 |  | Total                                     |  | Less than 1year |  | 1-3 years |  | 4-5 years |  | After 5years |
| **Long-termDebt**                         |  | $1,188.9                                  |  | Nil             |  | $861.9    |  | $327.0    |  | Nil          |
|                                           |

Thetable below sets forth the Company's long-term debt as of June30, 2004, as adjusted to give effect to: (i) the repayment ofborrowings by Products Corporation under its 2001 Credit Agreement of$289.9; (ii) borrowings by Products Corporation under its Term LoanFacility of the New Credit Agreement of $800.0; and (iii) the repaymentby Products Corporation of $363.0 aggregate principal amount of its12% Senior Secured Notes ($64.5 of which will be completed onAugust 23, 2004) **(See Notes 8 and 10 to the Unaudited ConsolidatedCondensed FinancialStatements)**:

|                                                                                 |  |                                           |  |                  |  |          |  |           |  |              |  |  |  |  |  |  |  |  |  |  |  |  |
|---------------------------------------------------------------------------------|--|-------------------------------------------|--|------------------|--|----------|--|-----------|--|--------------|--|--|--|--|--|--|--|--|--|--|--|--|
|                                                                            |  | PaymentsDue by Period(dollars inmillions) |
| ContractualObligationsAs of June 30, 2004 (AdjustedOn the Basis SetForth Above) |  | Total                                     |  | Less than 1 year |  | 1-3years |  | 4-5 years |  | After 5years |
| **Long-termDebt**                                                               |  | $1,337.1                                  |  | Nil              |  | $210.1   |  | $327.0    |  | $800.0       |
|                                                                                 |

Off-BalanceSheet Transactions

The Company does not maintain anyoff-balance sheet transactions, arrangements, obligations or otherrelationships with unconsolidated entities or others that arereasonably likely to have a material current or future effect on theCompany's financial condition, changes in financial condition,revenues or expenses, results of operations, liquidity, capitalexpenditures or capital resources.

Effect of ProposedAccounting Standard

In April 2003, the FASB announced it willrequire all companies to expense the fair value of employeeequity-based awards. The FASB issued an exposure draft in the firstquarter of 2004 that could become effective in 2005. Until a newstatement is issued, the provisions of APB Opinion No. 25 and SFAS No.123 will remain in effect. The Company will evaluate the impact of anynew statement regarding employee equity-based awards when a newstatement is issued.

Item 3.    Quantitative and QualitativeDisclosures About Market Risk

The Company has exposure tomarket risk both as a result of changing interest rates and movementsin foreign currency exchange rates. The Company's policy is tomanage market risk through a 

37

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REVHOLDINGS LLC AND SUBSIDIARIESMANAGEMENT'S DISCUSSION ANDANALYSIS OF FINANCIALCONDITION AND RESULTS OFOPERATIONS**—(Continued)**(dollars in millions, except per sharedata)

combination of fixed and floating rate debt,the use of derivative financial instruments and foreign exchangeforward and option contracts. The Company does not hold or issuefinancial instruments for trading purposes. The qualitative andquantitative information presented in Item 7A of the Company'sAnnual Report on Form 10-K for the year ended December 31, 2003("Item 7A") describes significant aspects ofthe Company's financial instrument programs that have materialmarket risk as of December 31, 2003. The following table presents theinformation required by Item 7A as of June 30, 2004 **(See Notes 8 and10 to the Unaudited Consolidated Condensed FinancialStatements)**:

|                                                                |  |                                                       |        |         |  |                        |        |           |  |        |        |            |  |        |        |         |  |        |        |         |  |        |                                 |        |  |        |         |        |  |        |         |        |  |  |
|----------------------------------------------------------------|--|-------------------------------------------------------|--------|---------|--|------------------------|--------|-----------|--|--------|--------|------------|--|--------|--------|---------|--|--------|--------|---------|--|--------|---------------------------------|--------|--|--------|---------|--------|--|--------|---------|--------|--|--|
|                                                           |  | Expectedmaturity date for the year ended December 31, |        | Total   |  | Fair ValueJune 30,2004 |
|                                                           |  | 2004                                                  |        | 2005    |  | 2006                   |        | 2007      |  | 2008   |        | Thereafter |  |
|                                                           |  | (dollars inmillions)                                  |
| Debt                                                           |  |                                                  |        |    |  |                   |        |      |  |   |        |       |  |   |        |    |
| Short-termvariable rate (various currencies)                   |  | $                                                     | 33.7   |    |  |                   |   |      |  |   |   |       |  |   |   |    |  |   |   |    |  |   |                            |   |  | $      | 33.7    |   |  | $      | 33.7    |   |
| Average interest rate (a)                                      |  |                                                  | 4.6    | %  |  |                   |   |      |  |   |   |       |  |   |   |    |  |   |   |    |  |   |                            |   |  |   |    |   |  |   |    |   |
| Long-termfixed rate – third party ($US)                  |  |                                                  |   |    |  | $                      | 357.9  | (a)  |  | $      | 191.6  |       |  | $      | 18.5   |    |  | $      | 327.0  |    |  |   |                            |   |  |   | 895.0   |   |  |   | 904.9   |   |
| Average interest rate                                          |  |                                                  |   |    |  |                   | 12.0   | %    |  |   | 8.5    | %     |  |   | 13.0   | %  |  |   | 8.6    | %  |  |   |                            |   |  |   |    |   |  |   |    |   |
| Long-termvariable rate – third party($US)                |  |                                                  |   |    |  |                   | 288.7  | (b)  |  |   |   |       |  |   |   |    |  |   |   |    |  |   |                            |   |  |   | 288.7   |   |  |   | 288.7   |   |
| Average interest rate(a)                                       |  |                                                  |   |    |  |                   | 8.4    | %    |  |   |   |       |  |   |   |    |  |   |   |    |  |   |                            |   |  |   |    |   |  |   |    |   |
| Long-termvariable rate – third party (variouscurrencies) |  |                                                  |   |    |  |                   | 1.2    | (b)  |  |   |   |       |  |   |   |    |  |   |   |    |  |   |                            |   |  |   | 1.2     |   |  |   | 1.2     |   |
| Average interest rate (a)                                      |  |                                                  |   |    |  |                   | 8.5    | %    |  |   |   |       |  |   |   |    |  |   |   |    |  |   |                            |   |  |   |    |   |  |   |    |   |
| Long-termfixed rate – affiliates ($US)                   |  |                                                  |   |    |  |                   | 4.0    |      |  |   |   |       |  |   |   |    |  |   |   |    |  |   |                            |   |  |   | 4.0     |   |  |   | 4.2     |   |
| Average interest rate                                          |  |                                                  |   |    |  |                   | 12.0   | %    |  |   |   |       |  |   |   |    |  |   |   |    |  |   |                            |   |  |   |    |   |  |   |    |   |
| Totaldebt                                                      |  | $                                                     | 33.7   |    |  | $                      | 651.8  |      |  | $      | 191.6  |       |  | $      | 18.5   |    |  | $      | 327.0  |    |  | $      |     — |   |  | $      | 1,222.6 |   |  | $      | 1,232.7 |   |
|                                                                |

|                                                |  |                            |        |                                                  |  |                                                  |        |                                                  |  |                                                  |        |                                 |  |                          |        |                        |  |        |        |        |  |        |      |        |  |        |      |        |  |        |         |         |  |  |
|------------------------------------------------|--|----------------------------|--------|--------------------------------------------------|--|--------------------------------------------------|--------|--------------------------------------------------|--|--------------------------------------------------|--------|---------------------------------|--|--------------------------|--------|------------------------|--|--------|--------|--------|--|--------|------|--------|--|--------|------|--------|--|--------|---------|---------|--|--|
| ForwardContracts                               |  | AverageContractualRate$/FC |        |          |  |          |        |          |  |          |        | OriginalUSDollarNotional Amount |  | ContractValueJune30,2004 |        | Fair ValueJune 30,2004 |
| Sell Hong Kong Dollars/Buy USD                 |  |                       | 0.1283 |                                             |  |                                             |   |                                             |  |                                             |   |                            |  |                     |   |                   |  |   |   |   |  | $      | 0.2  |   |  | $      | 0.2  |   |  | $      | — |    |
| Buy Euros/Sell USD                             |  |                       | 1.2003 |                                             |  |                                             |   |                                             |  |                                             |   |                            |  |                     |   |                   |  |   |   |   |  |   | 4.6  |   |  |   | 4.7  |   |  |   | 0.1     |    |
| Sell British Pounds/BuyUSD                     |  |                       | 1.7884 |                                             |  |                                             |   |                                             |  |                                             |   |                            |  |                     |   |                   |  |   |   |   |  |   | 6.9  |   |  |   | 6.9  |   |  |   | — |    |
| Sell Australian Dollars/Buy USD                |  |                       | 0.7283 |                                             |  |                                             |   |                                             |  |                                             |   |                            |  |                     |   |                   |  |   |   |   |  |   | 13.1 |   |  |   | 13.9 |   |  |   | 0.8     |    |
| Sell Canadian Dollars/BuyUSD                   |  |                       | 0.7506 |                                             |  |                                             |   |                                             |  |                                             |   |                            |  |                     |   |                   |  |   |   |   |  |   | 14.6 |   |  |   | 14.7 |   |  |   | 0.1     |    |
| Sell South African Rand/Buy USD                |  |                       | 0.1423 |                                             |  |                                             |   |                                             |  |                                             |   |                            |  |                     |   |                   |  |   |   |   |  |   | 6.9  |   |  |   | 6.2  |   |  |   | (0.7    | )  |
| Buy Australian Dollars/SellNew Zealand Dollars |  |                       | 1.1220 |                                             |  |                                             |   |                                             |  |                                             |   |                            |  |                     |   |                   |  |   |   |   |  |   | 3.7  |   |  |   | 3.6  |   |  |   | (0.1    | )  |
| Buy British Pounds/Sell Euros                  |  |                       | 0.6758 |                                             |  |                                             |   |                                             |  |                                             |   |                            |  |                     |   |                   |  |   |   |   |  |   | 4.1  |   |  |   | 4.1  |   |  |   | — |    |
| Totalforward contracts                         |  |                       |   |                                             |  |                                             |   |                                             |  |                                             |   |                            |  |                     |   |                   |  |   |   |   |  | $      | 54.1 |   |  | $      | 54.3 |   |  | $      | 0.2     |    |
|                                                |

|  |
|--|
|  |  |
|  |

|     |                                                                                                            |
|-----|------------------------------------------------------------------------------------------------------------|
| (a) | Weighted average variable rates are basedupon implied forward rates from the yield curves at June 30,2004. |

|     |                                                                                                                                                                                                                                     |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | Represents ProductsCorporation's 2001 Credit Agreement, which until such agreementwas refinanced as of July 9, 2004, was to have matured in May 2005.**(See Note 10 to the Unaudited Consolidated Condensed FinancialStatements).** |

38

----

REVHOLDINGS LLC AND SUBSIDIARIESMANAGEMENT'S DISCUSSION ANDANALYSIS OF FINANCIALCONDITION AND RESULTS OFOPERATIONS**—(Continued)**(dollars in millions, except per sharedata)

The following table presents theinformation required by Item 7A as of June 30, 2004, as adjusted togive effect to: (i) the repayment of borrowings by Products Corporationunder its 2001 Credit Agreement of $289.9; (ii) borrowings by ProductsCorporation under the Term Loan Facility of its New Credit Agreement of$800.0; and (iii) the repayment by Products Corporation of $363.0aggregate principal amount of its 12% Senior Secured Notes($64.5 of which will be completed on August 23, 2004) **(See Notes 8and 10 to the Unaudited Consolidated Condensed FinancialStatements)**:

|                                                 |  |                                                                   |        |                                    |  |        |                                 |        |  |        |        |            |  |        |        |         |  |        |        |         |  |        |        |           |  |        |         |           |  |        |         |        |  |  |
|-------------------------------------------------|--|-------------------------------------------------------------------|--------|------------------------------------|--|--------|---------------------------------|--------|--|--------|--------|------------|--|--------|--------|---------|--|--------|--------|---------|--|--------|--------|-----------|--|--------|---------|-----------|--|--------|---------|--------|--|--|
|                                            |  | Asadjusted expected maturity date for the year ended December 31, |        | As AdjustedFair ValueJune 30, 2004 |
|                                            |  | 2004                                                              |        | 2005                               |  | 2006   |                                 | 2007   |  | 2008   |        | Thereafter |  | Total  |        |
|                                            |  | (dollars inmillions)                                              |
| Debt                                            |  |                                                              |        |                               |  |   |                                 |   |  |   |        |       |  |   |        |    |
| Short-termvariable rate (various currencies)    |  | $                                                                 | 33.7   |                               |  |   |                            |   |  |   |   |       |  |   |   |    |  |   |   |    |  |   |   |      |  | $      | 33.7    |      |  | $      | 33.7    |   |
| Average interest rate (a)                       |  |                                                              | 4.6    | %                             |  |   |                            |   |  |   |   |       |  |   |   |    |  |   |   |    |  |   |   |      |  |   |    |      |  |   |    |   |
| Long-termfixed rate – third party ($US)   |  |                                                              |   |                               |  |   |                            |   |  | $      | 191.6  |       |  | $      | 18.5   |    |  | $      | 327.0  |    |  |   |   |      |  |   | 537.1   |      |  |   | 504.1   |   |
| Averageinterest rate                            |  |                                                              |   |                               |  |   |                            |   |  |   | 8.5    | %     |  |   | 13.0   | %  |  |   | 8.6    | %  |  |   |   |      |  |   |    |      |  |   |    |   |
| Long-termvariable rate – third party($US) |  |                                                              |   |                               |  |   |                            |   |  |   |   |       |  |   |   |    |  |   |   |    |  | $      | 800.0  | (b)  |  |   | 800.0   | (b)  |  |   | 800.0   |   |
| Average interest rate(a)                        |  |                                                              |   |                               |  |   |                            |   |  |   |   |       |  |   |   |    |  |   |   |    |  |   | 10.7   | %    |  |   |    |      |  |   |    |   |
| Totaldebt                                       |  | $                                                                 | 33.7   |                               |  | $      |     — |   |  | $      | 191.6  |       |  | $      | 18.5   |    |  | $      | 327.0  |    |  | $      | 800.0  |      |  | $      | 1,370.8 |      |  | $      | 1,337.8 |   |
|                                                 |

|                                                |  |                            |        |                                                  |  |                                                  |        |                                                  |  |                                                  |        |                                |  |                          |        |                       |  |        |        |        |  |        |      |        |  |        |      |        |  |        |         |         |  |  |
|------------------------------------------------|--|----------------------------|--------|--------------------------------------------------|--|--------------------------------------------------|--------|--------------------------------------------------|--|--------------------------------------------------|--------|--------------------------------|--|--------------------------|--------|-----------------------|--|--------|--------|--------|--|--------|------|--------|--|--------|------|--------|--|--------|---------|---------|--|--|
| ForwardContracts                               |  | AverageContractualRate$/FC |        |          |  |          |        |          |  |          |        | OriginalUSDollarNotionalAmount |  | ContractValueJune30,2004 |        | Fair ValueJune30,2004 |
| Sell Hong Kong Dollars/Buy USD                 |  |                       | 0.1283 |                                             |  |                                             |   |                                             |  |                                             |   |                           |  |                     |   |                  |  |   |   |   |  | $      | 0.2  |   |  | $      | 0.2  |   |  | $      | — |    |
| Buy Euros/Sell USD                             |  |                       | 1.2003 |                                             |  |                                             |   |                                             |  |                                             |   |                           |  |                     |   |                  |  |   |   |   |  |   | 4.6  |   |  |   | 4.7  |   |  |   | 0.1     |    |
| Sell British Pounds/Buy USD                    |  |                       | 1.7884 |                                             |  |                                             |   |                                             |  |                                             |   |                           |  |                     |   |                  |  |   |   |   |  |   | 6.9  |   |  |   | 6.9  |   |  |   | — |    |
| Sell Australian Dollars/Buy USD                |  |                       | 0.7283 |                                             |  |                                             |   |                                             |  |                                             |   |                           |  |                     |   |                  |  |   |   |   |  |   | 13.1 |   |  |   | 13.9 |   |  |   | 0.8     |    |
| Sell Canadian Dollars/Buy USD                  |  |                       | 0.7506 |                                             |  |                                             |   |                                             |  |                                             |   |                           |  |                     |   |                  |  |   |   |   |  |   | 14.6 |   |  |   | 14.7 |   |  |   | 0.1     |    |
| Sell South African Rand/BuyUSD                 |  |                       | 0.1423 |                                             |  |                                             |   |                                             |  |                                             |   |                           |  |                     |   |                  |  |   |   |   |  |   | 6.9  |   |  |   | 6.2  |   |  |   | (0.7    | )  |
| Buy Australian Dollars/Sell New ZealandDollars |  |                       | 1.1220 |                                             |  |                                             |   |                                             |  |                                             |   |                           |  |                     |   |                  |  |   |   |   |  |   | 3.7  |   |  |   | 3.6  |   |  |   | (0.1    | )  |
| Buy British Pounds/Sell Euros                  |  |                       | 0.6758 |                                             |  |                                             |   |                                             |  |                                             |   |                           |  |                     |   |                  |  |   |   |   |  |   | 4.1  |   |  |   | 4.1  |   |  |   | — |    |
| Totalforward contracts                         |  |                       |   |                                             |  |                                             |   |                                             |  |                                             |   |                           |  |                     |   |                  |  |   |   |   |  | $      | 54.1 |   |  | $      | 54.3 |   |  | $      | 0.2     |    |
|                                                |

|  |
|--|
|  |  |
|  |

|     |                                                                                                           |
|-----|-----------------------------------------------------------------------------------------------------------|
| (a) | Weightedaverage variable rates are based upon implied forward rates from theyield curves at June 30,2004. |

|     |                                                                                                                                                                                                       |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | Represents borrowings underthe Term Loan Facility under the New Credit Agreement that was enteredinto on July 9, 2004. **(See Note 10 to the Unaudited ConsolidatedCondensed Financial Statements).** |

39

----

REVHOLDINGS LLC AND SUBSIDIARIESMANAGEMENT'S DISCUSSION ANDANALYSIS OF FINANCIALCONDITION AND RESULTS OFOPERATIONS**—(Continued)**(dollars in millions, except per sharedata)

Item 4.    Controls and Procedures

(a) Disclosure Controls and Procedures. The Company'smanagement, with the participation of the Company's ChiefExecutive Officer and Chief Financial Officer, has evaluated theeffectiveness of the Company's disclosure controls and procedures(as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) asof the end of the fiscal period covered by this Quarterly Report onForm 10-Q. Based upon such evaluation, the Chief Executive Officer andChief Financial Officer have concluded that, as of the end of suchperiod, the Company's disclosure controls and procedures areeffective in recording, processing, summarizing and reportinginformation required to be disclosed by the Company in the reports itfiles or submits under the Exchange Act within the time periodsspecified in the Commission's rules and forms.

(b)Internal Control Over Financial Reporting. There have not been anychanges in the Company's internal control over financialreporting (as such term is defined in Rules 13a-15(f) and 15d-15(f)under the Exchange Act) during the fiscal period covered by thisQuarterly Report on Form 10-Q that have materially affected, or arereasonably likely to materially affect, the Company's internalcontrol over financial reporting.

Forward-LookingStatements

This Quarterly Report on Form 10-Q for the quarterended June 30, 2004, as well as other public documents and statementsof the Company, contain forward-looking statements that involve risksand uncertainties. The Company's actual results may differmaterially from those discussed in such forward-looking statements.Such statements include, without limitation, the Company'sexpectations and estimates (whether qualitative or quantitative) asto:

|           |                                                                                                                                                                                                                                                                                                                                                                                                                           |
|-----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (i)  | the Company's plans to update itsretail presence and improve the marketing effectiveness of its retailwall displays by installing newly-reconfigured wall displays andreconfiguring existing wall displays at its retail customers (and itsestimates of the costs of such wall displays, the effects of such planson the accelerated amortization of existing wall displays and theestimated amount of suchamortization); |

|            |                                                                                                                    |
|------------|--------------------------------------------------------------------------------------------------------------------|
| (ii)  | the Company's plansto increase its advertising and media spending and improve theeffectiveness of its advertising; |

|             |                                                                                                                           |
|-------------|---------------------------------------------------------------------------------------------------------------------------|
| (iii)  | theCompany's plans to introduce new products and further strengthenits new product development and implementationprocess; |

|            |                                                                                                                                                                        |
|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (iv)  | the Company's plans tostreamline its product assortment and reconfigure product placement onits wall displays and selectively adjust prices on certain of itsproducts; |

|           |                                                                                                                                                        |
|-----------|--------------------------------------------------------------------------------------------------------------------------------------------------------|
| (v)  | the Company's plans toimplement comprehensive programs to develop and train its employees andto continue to strengthen its organizationalcapabilities; |

|            |                                                                                                                                                                                                                                                                                               |
|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (vi)  | the Company's futurefinancial performance, including the Company's belief that itsplan is proving effective and that it has strengthened itsorganizational capability (and its expectation to do so in 2004) andthat it has strengthened its relationships with its key retailers inthe U.S.; |

|             |                                                                                                                                                                                                                                               |
|-------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (vii)  | the effect on sales ofpolitical and/or economic conditions, political uncertainties, militaryactions, terrorist activities, adverse currency fluctuations,competitive activities, category weakness and changes in consumerpurchasing habits; |

|              |                                                                                                                                                                                                                                                                                                                                  |
|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (viii)  | the charges and thecash costs resulting from implementing and refining the Company'splan and the timing of such costs, as well as the Company'sexpectations as to improved revenues and achieving profitability overthe long term as a result of such phase of its plan and theCompany's plans to continue to fund brandsupport; |

40

----

REVHOLDINGS LLC AND SUBSIDIARIESMANAGEMENT'S DISCUSSION ANDANALYSIS OF FINANCIALCONDITION AND RESULTS OFOPERATIONS**—(Continued)**(dollars in millions, except per sharedata)

|            |                                                                                                                                                                  |
|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (ix)  | the Company'splans regarding the continued growth momentum and accelerated growthphase of its plan, with the objective of improving its operating profitmargins; |

|           |                                                                                                      |
|-----------|------------------------------------------------------------------------------------------------------|
| (x)  | theCompany's plans to continue to increase the effectiveness andreduce the cost of its displaywalls; |

|            |                                                                                                                                                                    |
|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (xi)  | theCompany's plans to drive efficiencies across its overall supplychain, including reducing manufactory costs by streamlining componentsand sourcingstrategically; |

|             |                                                                                                           |
|-------------|-----------------------------------------------------------------------------------------------------------|
| (xii)  | theCompany's plans to optimize the effectiveness of its marketingand promotions and merchandisercoverage; |

|              |                                                                                                                                              |
|--------------|----------------------------------------------------------------------------------------------------------------------------------------------|
| (xiii)  | restructuringactivities, restructuring costs, the timing of restructuring paymentsand annual savings and other benefits from suchactivities; |

|             |                                                                                                                                                                                                                                                                                          |
|-------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (xiv)  | operatingrevenues, cash on hand and availability of borrowings under theConsolidated Mafco line of credit, Products Corporation's NewCredit Agreement, other permitted lines of credit and the New KeepwellAgreement being sufficient to satisfy the Company's cashrequirements in 2004; |

|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (xv)  | the availability of fundsfrom Products Corporation's New Credit Agreement, theConsolidated Mafco line of credit, other permitted lines of credit andadvances under the New Keepwell Agreement, restructuring indebtedness,selling assets or operations, capital contributions and/or loans fromMacAndrews & Forbes, the Company's other affiliates and/orthird parties and/or the sale of additional equity or debt securitiesof Revlon, Inc.; |

|             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|-------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (xvi)  | theavailability of advances under the New Keepwell Agreement beingsufficient to satisfy REV Holdings' cash requirements, GSBInvestments Corp.'s plan to obtain capital contributions or loansfrom its affiliates to make advances under the New Keepwell Agreementif it does not have sufficient cash flow from dividends on itsinvestments and the sale of equity securities of REV Holdings to paythe principal amount at maturity of the New REV HoldingsNotes; |

|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (xvii)  | theCompany's uses of funds, including amounts required for thepayment of operating expenses, including expenses in connection withthe continued implementation of, and refinement to, the Company'splan, payments in connection with the Company's purchases ofpermanent wall displays, capital expenditures, restructuring programsand debt service payments, and its estimates of operating expenses,working capital expenses, wall display costs, capital expenditures,restructuring costs, cash contributions to the Company's pensionplans, debt service payments (including payments required underProducts Corporation's debt instruments and interest paymentsunder the New REV Holdings Notes) and charges in connection with theCompany's growthplan; |

|               |                                                                   |
|---------------|-------------------------------------------------------------------|
| (xviii)  | matters concerning theCompany's market-risk sensitiveinstruments; |

|             |                                                                       |
|-------------|-----------------------------------------------------------------------|
| (xix)  | the effects of theCompany's adoption of certain accountingprinciples; |

|            |                                                                                                                                           |
|------------|-------------------------------------------------------------------------------------------------------------------------------------------|
| (xx)  | the Company'sestimates of the amount of U.S. federal net operating losses and thealternative minimum tax losses available to Revlon,Inc.; |

|             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|-------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (xxi)  | the Company's planto refinance certain of Products Corporation's debt, includingits plans to refinance Products Corporation's8 1/8% Senior Notes, 9% Senior Notes and8 5/8% Senior Subordinated Notes prior to theirrespective maturities, and the amounts and timing of such transactionsand the estimated impact of such transactions on the Company'sfinancial performance, as well as Products Corporation's plans toredeem the balance of the remaining $64.5 of its 12% SeniorSecured Notes on August 23, 2004 and its plans to consummate theremaining Debt Reduction Transactions;and |

|              |                                                                                                                                                                                                                                                                                                                                                                        |
|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (xxii)  | the Company's plan toefficiently manage its cash and working capital, including, among otherthings, by carefully managing and reducing inventory levels,centralizing purchasing to secure discounts and efficiencies inprocurement, and providing additional discounts to U.S. customers formore timely payment of receivables and carefully managing accountspayable. |

Statements that are not historical facts,including statements about the Company's beliefs andexpectations, are forward-looking statements. Forward-lookingstatements can be identified by, among 

41

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REVHOLDINGS LLC AND SUBSIDIARIESMANAGEMENT'S DISCUSSION ANDANALYSIS OF FINANCIALCONDITION AND RESULTS OFOPERATIONS**—(Continued)**(dollars in millions, except per sharedata)

other things, the use of forward-lookinglanguage, such as "believes,""expects,""estimates,""projects,""forecast," "may,""will," "should,""seeks," "plans,""scheduled to,""anticipates" or"intends" or the negative of those terms, orother variations of those terms or comparable language, or bydiscussions of strategy or intentions. Forward-looking statements speakonly as of the date they are made, and except for the Company'songoing obligations under the U.S. federal securities laws, the Companyundertakes no obligation to publicly update any forward-lookingstatements, whether as a result of new information, future events orotherwise. Investors are advised, however, to consult any additionaldisclosures the Company makes in its Quarterly Reports on Form 10-Qfiled in 2004 and Current Reports on Form 8-K filed with the Commissionin 2004 (which, among other places, can be found on theCommission's website at http://www.sec.gov). The informationavailable from time to time on such website shall not be deemedincorporated by reference into this Quarterly Report on Form 10-Q. Anumber of important factors could cause actual results to differmaterially from those contained in any forward-looking statement. Inaddition to factors that may be described in the Company'sfilings with the Commission, including this filing, the followingfactors, among others, could cause the Company's actual resultsto differ materially from those expressed in any forward-lookingstatements made by theCompany:

|           |                                                                                                                                  |
|-----------|----------------------------------------------------------------------------------------------------------------------------------|
| (i)  | difficulties or delays orunanticipated costs associated with improving the marketingeffectiveness of the Company's walldisplays; |

|            |                                                                                                                                                                                                 |
|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (ii)  | difficulties or delaysin, or unanticipated costs associated with, developing and/orpresenting the Company's increased advertising programs and/orimproving the effectiveness of itsadvertising; |

|             |                                                                                                                                                                                                                                                                               |
|-------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (iii)  | difficulties ordelays in, or unanticipated costs associated with, developing andintroducing new products or failure of the Company's customers toaccept new product offerings and/or in further strengthening theCompany's new product development and implementationprocess; |

|            |                                                                                                                                                                                                                                                      |
|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (iv)  | difficulties or delaysin, or unanticipated costs associated with, implementing theCompany's plans to streamline its product assortment andreconfigure product placement on its wall displays and selectivelyadjust prices on certain of itsproducts; |

|           |                                                                                                                                                                                               |
|-----------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (v)  | difficulties or delaysin, or unanticipated costs associated with, implementing comprehensiveprograms to train the Company's employees and strengthen theCompany's organizationalcapabilities; |

|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (vi)  | unanticipatedcircumstances or results affecting the Company's financialperformance, including decreased consumer spending in response to weakeconomic conditions or weakness in the category, changes in consumerpreferences, such as reduced consumer demand for the Company'scolor cosmetics and other current products, and actions by theCompany's competitors, including business combinations,technological breakthroughs, new products offerings, promotionalspending and marketing and promotional successes, including increasesin market share; |

|             |                                                                                                                                                                                                                                                        |
|-------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (vii)  | the effects of andchanges in political and/or economic conditions, including inflation,monetary conditions, military actions, terrorist activities, consumerpurchasing habits and in trade, monetary, fiscal and tax policies ininternational markets; |

|              |                                                                                                                                                                                                                                                                           |
|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (viii)  | unanticipatedcosts or difficulties or delays in completing projects associated withthe continued implementation of, and refinement to, the Company'splan or lower than expected revenues or inability to achieveprofitability over the long term as a result of suchplan; |

|            |                                                                                                                                                                                               |
|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (ix)  | difficulties, delays orunanticipated costs in implementing the Company's plans regardingthe accelerated growth phase of its plan, with the objective ofimproving its operating profitmargins; |

|           |                                                                                                                                                                  |
|-----------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (x)  | difficulties, delays orunanticipated costs in implementing the Company's plans tocontinue to increase the effectiveness and reduce the cost of itsdisplay walls; |

42

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REVHOLDINGS LLC AND SUBSIDIARIESMANAGEMENT'S DISCUSSION ANDANALYSIS OF FINANCIALCONDITION AND RESULTS OFOPERATIONS**—(Continued)**(dollars in millions, except per sharedata)

|            |                                                                                                                                                                                                                                |
|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (xi)  | difficulties,delays or unanticipated costs in implementing the Company's plansto drive efficiencies across its overall supply chain, includingreducing manufactory costs by streamlining components and sourcingstrategically; |

|             |                                                                                                                                                                      |
|-------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (xii)  | difficulties, delays orunanticipated costs in implementing the Company's plans tooptimize the effectiveness of its marketing and promotions ormerchandiser coverage; |

|              |                                                                                                                                                  |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------|
| (xiii)  | difficulties,delays or unanticipated costs or less than expected savings and otherbenefits resulting from the Company's restructuringactivities; |

|             |                                                                                                                                                                                |
|-------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (xiv)  | lower than expectedoperating revenues, the inability to secure capital contributions orloans from MacAndrews & Forbes, the Company's otheraffiliates and/or third parties; |

|            |                                                                                                                                                                                                                                                                        |
|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (xv)  | theunavailability of funds under Products Corporation's New CreditAgreement, the Consolidated Mafco line of credit, other permitted linesof credit or the New Keepwell Agreement or from selling additionalshares of Revlon, Inc. or equity securities of REVHoldings; |

|             |                                                                                                                                                                                                                                                                                                                               |
|-------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (xvi)  | advances under the NewKeepwell Agreement being insufficient to satisfy REV Holdings'cash requirements or GSB Investments Corp.'s inability to obtaincapital contributions or loans from its affiliates to make advancesunder the New Keepwell Agreement if it has not received sufficientdividend income from itsinvestments; |

|              |                                                                                                                                                                                                                              |
|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (xvii)  | higher than expectedoperating expenses, sales returns, working capital expenses, walldisplay costs, capital expenditures, restructuring costs, cash pensionplan contributions, growth plan charges, or debt servicepayments; |

|               |                                                                                                                    |
|---------------|--------------------------------------------------------------------------------------------------------------------|
| (xviii)  | interest rate or foreignexchange rate changes affecting the Company and its market sensitivefinancial instruments; |

|             |                                                                                    |
|-------------|------------------------------------------------------------------------------------|
| (xix)  | unanticipatedeffects of the Company's adoption of certain new accountingstandards; |

|            |                                                                                                                  |
|------------|------------------------------------------------------------------------------------------------------------------|
| (xx)  | lower than expected U.S.federal net operating losses or alternative minimum tax lossesavailable to Revlon, Inc.; |

|             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|-------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (xxi)  | difficulties,delays or the inability of the Company to refinance certain of ProductsCorporation's debt, including its plans to refinance ProductsCorporation's 8 1/8% Senior Notes,9% Senior Notes and 8 5/8% SeniorSubordinated Notes prior to their respective maturities or to completethe redemption of the remaining $64.5 of the 12% Senior SecuredNotes and the inability to issue equity or debt securities, includingClass A Common Stock, for cash or in exchange for indebtedness ofProducts Corporation and difficulties, delays or the inability of theCompany to consummate the remaining Debt Reduction Transactions;and |

|              |                                                                                                        |
|--------------|--------------------------------------------------------------------------------------------------------|
| (xxii)  | difficulties, delays or theinability of the Company to efficiently manage its cash and workingcapital. |

Factors other than those listed above could also causethe Company's results to differ materially from expected results.This discussion is provided as permitted by the Private SecuritiesLitigation Reform Act of 1995.

43

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REVHOLDINGS LLC AND SUBSIDIARIES

PART II— OTHER INFORMATION

Item 2.    Changes in Securities,Use of Proceeds and Issuer Purchases of Equity Securities –None

Item 4.    Submission of Matters to a Vote ofSecurity Holders – None

Item 6.    Exhibits andReports on Form 8-K.

(a)    Exhibits

|       |  |                                                                                                                                                                                                                                                                           |  |  |  |  |
|-------|--|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|
| 10.34 |  | 2004Senior Unsecured Line of Credit Agreement, dated as of July 9, 2004,between Products Corporation and MacAndrews Holdings (incorporated byreference to Exhibit 10.34 to the Quarterly Report on Form 10-Q ofRevlon, Inc. for the quarterly period ended June 30,2004). |
| 31.1  |  | Section 302 CEO certification.Filed herewith.                                                                                                                                                                                                                             |
| 31.2  |  | Section 302 CFOcertification. Filed herewith.                                                                                                                                                                                                                             |
| 32.1  |  | Section906 CEO certification. Furnishedherewith.                                                                                                                                                                                                                          |
| 32.2  |  | Section 906 CFOcertification. Furnishedherewith.                                                                                                                                                                                                                          |
|       |

(b)    Reports on Form 8-K -None

S I G N A T U R E S

Pursuant to the requirements ofthe Securities Exchange Act of 1934, as amended, the registrant hasduly caused this report to be signed on its behalf by the undersignedthereunto duly authorized.

Dated: August 16, 2004

REV HOLDINGS LLC

|  | Registrant    By: /s/ Todd J.Slotkin |
|--|----------------------------------------------------------|

|  |
|--|
|  |  |  |
|  |

|  | ToddJ. Slotkin. Executive Vice President, Chief FinancialOfficer, Chief Accounting OfficerandManager |
|--|------------------------------------------------------------------------------------------------------|

44

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