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UNITEDSTATES SECURITIES AND EXCHANGECOMMISSION

Washington, D.C.20549

FORM 10-K

(MarkOne)

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|--|--------|----------------------------------------------------------------------------------------|
|  |   | **ANNUAL REPORTPURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF1934** |

For the fiscal year ended December31,2005

OR

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

For the transition period from                 to                

Commission file number33-59650

REVLON CONSUMER PRODUCTSCORPORATION

(Exact name of registrant asspecified in itscharter)

|                                                                          |  |                                                   |  |  |  |  |
|--------------------------------------------------------------------------|--|---------------------------------------------------|--|--|--|--|
| **DELAWARE**(Stateor other jurisdiction of incorporation ororganization) |  | **13-3662953**(I.R.S. EmployerIdentification No.) |
| **237Park Avenue, New York, NewYork**                                    |  | **10017**                                         |
| (Address of principalexecutiveoffices)                                   |  | (ZipCode)                                         |
|                                                                          |

Registrant's telephone number,including area code: (212) 527-4000

Securitiesregistered pursuant to Section 12(b) or 12(g) of the Act:None

Indicate by checkmark if the registrant is a well-known seasoned issuer, as defined inRule 405 of the Securities Act.Yes      No   

Indicate bycheck mark if the registrant is not required to file reports pursuantto Section 13 or Section 15(d) of the Act.   Yes   No   

Indicate by check mark whether theregistrant (1) has filed all reports required to be filed by Section 13or 15(d) of the Securities Exchange Act of 1934 during the preceding 12months (or for such shorter period that the registrant was required tofile such reports), and (2) has been subject to such filingrequirements for the past 90 days. Yes      No   

Indicate bycheck mark if disclosure of delinquent filers pursuant to Item 405 ofRegulation S-K (§ 229.405 of this chapter) is not containedherein, and will not be contained, to the best of registrant’sknowledge, in definitive proxy or information statements incorporatedby reference in Part III of this Form 10-K or any amendment to thisForm 10-K. 

Indicate by check mark whetherthe registrant is a large accelerated filer, an accelerated filer, or anon-accelerated filer. See definition of ‘‘acceleratedfiler’’ and ‘‘large acceleratedfiler’’ in Rule 12b-2 of the Exchange Act. (Checkone):

|                        |  |                   |  |                                        |  |  |  |  |  |  |
|------------------------|--|-------------------|--|----------------------------------------|--|--|--|--|--|--|
| Largeaccelerated filer |  | Accelerated filer |  | Non-acceleratedfiler    |
|                        |

Indicate by check markwhether the registrant is a shell company (as defined in Rule 12b-2 oftheAct).Yes      No   

Theaggregate market value of the voting stock held by non-affiliates ofthe registrant is not applicable as there is no public market therefor.All shares of common stock are held by one affiliate. As ofDecember  31,  2005, the registrant had 5,260 outstandingshares of common stock.

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Revlon Consumer ProductsCorporation and Subsidiaries

Form 10-K

For theYear Ended December  31,  2005

Table ofContents

|             |  |                                                                                                           |  |        |  |        |  |  |  |  |  |  |  |  |
|-------------|--|-----------------------------------------------------------------------------------------------------------|--|--------|--|--------|--|--|--|--|--|--|--|--|
|        |  |                                                                                                      |  | Page   |  |   |
| **PARTI**   |  |                                                                                                      |
| Item1.      |  | Business                                                                                                  |  | 2      |  |   |
| Item1A.     |  | Risk Factors                                                                                              |  | 11     |  |   |
| Item1B.     |  | Unresolved StaffComments                                                                                  |  | 22     |  |   |
| Item2.      |  | Properties                                                                                                |  | 22     |  |   |
| Item3.      |  | Legal Proceedings                                                                                         |  | 23     |  |   |
| Item4.      |  | Submission of Matters to a Vote of SecurityHolders                                                        |  | 23     |  |   |
| **PARTII**  |  |                                                                                                      |
| Item 5.     |  | Market forRegistrant's Common Equity, Related Stockholder Matters andIssuer Purchases of EquitySecurities |  | 24     |  |   |
| Item 6.     |  | SelectedFinancial Data                                                                                    |  | 24     |  |   |
| Item7.      |  | Management's Discussion and Analysis of FinancialCondition and Results of Operations                      |  | 25     |  |   |
| Item7A.     |  | Quantitative and Qualitative Disclosures About MarketRisk                                                 |  | 44     |  |   |
| Item 8.     |  | Financial Statementsand Supplementary Data                                                                |  | 45     |  |   |
| Item9.      |  | Changes in and Disagreements with Accountants on Accountingand Financial Disclosure                       |  | 45     |  |   |
| Item9A.     |  | Controls and Procedures                                                                                   |  | 45     |  |   |
| Item9B.     |  | OtherInformation                                                                                          |  | 46     |  |   |
| **PARTIII** |  |                                                                                                      |
| Item 10.    |  | Directors andExecutive Officers of the Registrant                                                         |  | 51     |  |   |
| Item11.     |  | Executive Compensation                                                                                    |  | 53     |  |   |
| Item12.     |  | Security Ownership of Certain Beneficial Owners andManagement and Related StockholderMatters              |  | 62     |  |   |
| Item 13.    |  | CertainRelationships and RelatedTransactions                                                              |  | 63     |  |   |
| Item 14.    |  | PrincipalAccounting Fees andServices                                                                      |  | 66     |  |   |
| **PARTIV**  |  |                                                                                                      |
| Item 15.    |  | Exhibits andFinancial StatementSchedules                                                                  |  | 68     |  |   |
|        |  | Indexto Consolidated Financial Statements andSchedules                                                    |  | F-1    |  |   |
|        |  | Reportof Independent Registered Public AccountingFirm                                                     |  | F-2    |  |   |
|        |  | FinancialStatements                                                                                       |  | F-3    |  |   |
|        |  | FinancialStatementSchedule                                                                                |  | F-43   |  |   |
|        |  | Signatures                                                                                                |  |   |  |   |
|        |  | Certifications                                                                                            |  |   |  |   |
|        |  | Exhibits                                                                                                  |  |   |  |   |
|             |

1

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PART I

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|--------------|----------|
| Item1.  | Business |

Background

RevlonConsumer Products Corporation (‘‘ProductsCorporation’’ and together with its subsidiaries, the‘‘Company’’) is a direct wholly ownedoperating subsidiary of Revlon, Inc. that manufactures, markets andsells an extensive array of cosmetics, skincare, fragrances andpersonal care products. **Revlon** is one of the world'sleading mass-market cosmetics brands. **Revlon** believes that itsglobal brand name recognition, product quality and marketing experiencehave enabled it to create one of the strongest consumer brandfranchises in the world. The Company's products are soldworldwide and marketed under such brand names as **Revlon, ColorStay,Fabulash, Super Lustrous**and**Revlon Age Defying**makeupwith**Botafirm**, as well as the newly relaunched **Almay**brand, including the Company’s new **Almay Intense i-Color**collection, and the Company’s latest brand, **VitalRadiance,** in cosmetics; a new **Almay**skincare line, as wellas **Ultima II** and **Gatineau** in skincare; **Charlie**and**Jean Naté** in fragrances; **Revlon**and**Expert Effects** in beauty tools; and **Mitchum, Flex, Colorsilk**and **Bozzano** in personal care products. In addition, theCompany has a licensing group pursuant to which the Company licensescertain of its key brand names to third parties for complimentarybeauty-related products and accessories.

The Company was foundedby Charles Revson, who revolutionized the cosmetics industry byintroducing nail enamels matched to lipsticks in fashion colors over 70years ago. Today, the Company has leading market positions in a numberof its principal product categories in the U.S. mass-marketdistribution channel, including the lip, eye, face makeup and nailenamel categories. The Company also has leading market positions inseveral product categories in certain retail markets outside of theU.S., including Australia, Canada, Mexico and South Africa. TheCompany’s products are sold in more than 100 countries acrosssix continents. The Company’s net sales in 2005 in the U.S. andCanada accounted for approximately 64% of its consolidated netsales, most of which were made in the mass-market channel.

AllU.S. market share and market position data herein for theCompany’s brands are based upon retail dollar sales, which arederived from ACNielsen data. ACNielsen measures retail sales volume ofproducts sold in the U.S. mass-market distribution channel. Such datarepresent ACNielsen’s estimates based upon data gathered byACNielsen from market samples and are therefore subject to some degreeof 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. Wal-Mart, Inc.represented approximately 24.0% of the Company’s 2005worldwide net sales. From time to time, ACNielsen adjusts itsmethodology for data collection and reporting, which may result inadjustments to the categories and market shares tracked by ACNielsenfor both current and prior periods. The category and market share datacontained herein has been updated to reflect ACNielsen’sJuly  2005 adjustments.

The Company'sPlan

The Company's plan was comprised of three maincomponents: (1) the Cost Rationalization Phase; (2) the Stabilizationand Growth Phase; and (3) the Accelerated Growth Phase. The Company hascompleted the first two phases of its plan and it is currently in phasethree of its plan.

The overall objectives of this three-phaseplan are to a) create and develop the most consumer-preferred brands,b) become the most valuable partner to the Company's retailersand c) become a top company where people choose towork.

Accelerated Growth Phase

The Company intendsto capitalize on the actions taken during the Cost RationalizationPhase and Stabilization and Growth Phase of its plan, with theobjective of increasing revenues and achieving profitability over thelong term. The Company currently anticipates that this phase of theplan will include various actions that represent refinements of andadditions to the actions taken during the Stabilization and GrowthPhase of its plan, with the objective of balancing top-line growth withan improved operating profit margin and developing and implementingproductivity initiatives. These current ongoing initiatives include,among other things, actions to:

2

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|  |              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|--|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | Further improvethe new product development and introduction process with even deeperinsights into the Company’s consumers and the categories inwhich it competes. This process has yielded insights leading to theCompany’s launch of a completely new line of cosmetics under thenew **Vital Radiance** brand, which focuses on women over 50 yearsof age, as well as the relaunch of **Almay**, targeting women whoare looking for a simpler approach to the cosmeticscategory. |

|  |              |                                                                                                   |
|--|--------------|---------------------------------------------------------------------------------------------------|
|  | •  | Continue toincrease the effectiveness of the Company's display walls acrosscategories and brands. |

|  |              |                                                                                                                                                                                   |
|--|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | Driveefficiencies across the Company's overall supply chain. TheCompany plans to reduce manufacturing costs by continuing torationalize components and by sourcing strategically. |

|  |              |                                                                                  |
|--|--------------|----------------------------------------------------------------------------------|
|  | •  | Optimize the effectiveness ofthe Company's advertising, marketing andpromotions. |

|  |              |                                                                                                                                                                                                                                                                               |
|--|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | Continue thetraining and development of its organization. The Company will continuethe training and development of its employees so that the Company maycontinue to improve its capability to execute the Company’sstrategies while providing enhanced jobsatisfaction. |

|  |              |                                                                                                                                               |
|--|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | Continue tostrengthen the Company's balance sheet and capital structure. TheCompany has continued to strengthen its balance sheet since 2004: |

|  |           |                                                                                                                                                                                                                                                                                                                                          |
|--|-----------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (i)  | In March  2004, Revlon, Inc.exchanged approximately $804  million of ProductsCorporation's debt, $54.6  million of Revlon, Inc.'spreferred stock and $9.9  million of accrued interest for299,969,493 shares of Revlon, Inc. Class A common stock, with a parvalue of $0.01 per share (‘‘Class A CommonStock’’); |

|  |            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|--|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (ii)  | InJuly  2004, Products Corporation entered into a new 2004 CreditAgreement (as hereinafter defined), consisting of an $800.0million term loan facility (which was partially prepaid in 2005, asfurther discussed below) and a $160.0  million asset-basedmulti-currency revolving credit facility, and used the proceeds torefinance its 2001 Credit Agreement (as hereinafter defined) and toredeem all $363.0  million aggregate principal amount outstandingof Products Corporation’s 12% Senior Secured Notes due in2005 (the ‘‘12% Senior SecuredNotes’’); |

|  |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|--|-------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (iii)  | InMarch  2005, Products Corporation issued $310.0  millionaggregate principal amount of 91⁄2% SeniorNotes (as hereinafter defined) and used such proceeds to redeem all$116.2  million aggregate principal amount outstanding of its8 1/8% Senior Notes (as hereinafter defined) andall $75.5  million aggregate principal amount outstanding of its9% Senior Notes (as hereinafter defined) and to prepay$100.0  million of indebtedness outstanding under the term loanfacility of the 2004 Credit Agreement, together with accrued interestand the associated $5.0  million prepayment fee, and to pay$7.0  million in certain fees and expenses associated with theissuance of such notes; |

|  |            |                                                                                                                                                                                                                                                                                          |
|--|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (iv)  | InAugust  2005, Products Corporation issued $80.0  millionaggregate principal amount of additional 91⁄2%Senior Notes, which priced at 951⁄4% of par,which funds were available to the Company for general corporatepurposes, including to help fund its brand initiatives; and |

|  |           |                                                                                                                                                                                                                                                                                                                                     |
|--|-----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (v)  | In August  2005, Revlon, Inc.also announced its plans to conduct an equity issuance in the amount ofapproximately $185  million in 2006 and that it planned to usethe proceeds from approximately $110  million of such equityissuance to reduce Products Corporation's debt. (See‘‘Recent Developments’’). |

Continuingto implement and refine the Company's plan could include takingadvantage of additional opportunities to reposition, repackage orreformulate one or more of the Company's brands or product lines,launching new brands or product lines or further refining theCompany’s approach to retail merchandising. Any of theseactions, whose intended purpose would be to create value throughprofitable growth, could result in the Company making investments orrecognizing charges related to executing against suchopportunities.

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Recent Developments

InFebruary  2006, Revlon, Inc. announced that it had launched andplans to complete in March  2006, a $110  million rightsoffering that would allow stockholders to purchase additional shares ofClass A Common Stock. Pursuant to the rights offering, Revlon, Inc.distributed, at no charge, one transferable subscription right for eachshare of Class A Common Stock and Class B Common Stock (as hereinafterdefined) held by each stockholder of record as of 5:00 p.m. EasternStandard Time on February  13,  2006, the record date forthe rights offering. Each subscription right entitles the holder ofsuch right to purchase 0.1057 shares of Class A Common Stock. As therewill be no fractional shares issued, a rights holder will need to holdat least ten subscription rights to acquire one share of Class A CommonStock in the rights offering. The subscription price for each share ofClass A Common Stock is $2.80 per share, which subscription price wasrecommended by a committee of Revlon, Inc.'s Board of Directorscomposed solely of independent directors within the meaning of Section303A.02 of the NYSE Listed Company Manual and the Board'sGuidelines for Assessing Director Independence and ratified andconfirmed by the Board of Directors (with Messrs. Perelman, Gittis andDrapkin recusing themselves as they are officers of MacAndrews &Forbes (as hereinafter defined)).

Under an over-subscriptionprivilege, each rights holder that exercises its basic subscriptionprivilege in full may also subscribe in the rights offering foradditional shares of Class A Common Stock at the same subscriptionprice of $2.80 per share, to the extent that other rights holders donot exercise their subscription rights in full. If a sufficient numberof shares are not available to fully satisfy the over-subscriptionprivilege requests, the available shares will be sold pro-rata amongsubscription rights holders who exercised their over-subscriptionprivilege, based on the number of shares each subscription rightsholder subscribed for under the basic subscriptionprivilege.

MacAndrews & Forbes has agreed not to exercise itsbasic subscription privilege. Instead, pursuant to a Stock PurchaseAgreement between MacAndrews & Forbes and Revlon, Inc., MacAndrews& Forbes has agreed to purchase at the same $2.80 subscriptionprice, in a private placement directly from Revlon, Inc., the shares ofClass A Common Stock that it would otherwise have been entitled tosubscribe for pursuant to its basic subscription privilege in therights offering (equal to approximately 60% of the sharesavailable for purchase in the rights offering, or approximately$66  million). MacAndrews & Forbes also agreed not toexercise its over-subscription privilege in the rights offering, whichwill maximize the shares available for purchase by other stockholderspursuant to their over-subscription privileges.

If any shares inthe rights offering remain following the exercise of the basicsubscription privilege and the over-subscription privilege by rightsholders other than MacAndrews & Forbes, MacAndrews & Forbeswill back-stop the rights offering by purchasing at the same $2.80subscription price, also in a private placement directly from Revlon,Inc., the remaining shares of Class A Common Stock offered but notpurchased by other rights holders. As a result, Revlon, Inc. is assuredof raising $110  million in gross proceeds through a combinationof the rights offering and the sale of shares, in a private placementand, if necessary, the back-stop, to MacAndrews &Forbes.

Revlon, Inc. expects to transfer the proceeds from therights offering to Products Corporation which it would use, togetherwith available cash, to redeem approximately $110  millionaggregate principal amount of Products Corporation's8 5/8% Senior Subordinated Notes due 2008, insatisfaction of the applicable requirements under ProductsCorporation's 2004 Credit Agreement (as hereinafterdefined).

Revlon, Inc. also announced in February  2006that it intends to conduct a further $75  million equity issuancethrough an underwritten public offering by June  30,  2006.In connection with such further equity issuance, Revlon, Inc. alsoannounced in February  2006 that it had entered into an amendmentto its 2004 Investment Agreement (as hereinafter defined) withMacAndrews & Forbes, which extends MacAndrews & Forbes’back-stop of Revlon, Inc.’s planned $75  million equityissuance from March  31,  2006 until June  30,2006 to, among other things, provide Revlon, Inc. with sufficient timeto complete, following the rights offering, an underwritten publicoffering of its Class A Common Stock, the proceeds of which would betransferred by Revlon, Inc. to Products Corporation to be available forgeneral corporate purposes. Revlon, Inc. also announced that ProductsCorporation had entered into an amendment to its 2004 ConsolidatedMacAndrews & Forbes Line of Credit (as hereinafter defined)extending the term of such agreement until the consummation of Revlon,Inc.’s planned $75  million equity issuance.

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Also in February  2006, Revlon, Inc.separately announced an organizational realignment largely involvingthe consolidation of certain functions within its sales, marketing andcreative groups, as well as certain headquarters functions, whichchanges are designed to streamline internal processes, enabling theCompany to continue to be more effective and efficient in meeting theneeds of its consumers and retail customers. The Company indicated thatit expects to take a charge in 2006 of approximately $10  millionto cover severance and other expenses associated with theorganizational realignment, with the vast majority of the charge toimpact results in the first quarter of 2006. The Company estimated thatongoing annualized savings associated with the organizationalrealignment will be approximately $15  million.

Revlon,Inc. also announced in February  2006 that Products Corporationhad entered into an amendment to its 2004 Credit Agreement whichenables Products Corporation to exclude, from various financialcovenants, certain charges in connection with the aforementionedorganizational realignment, as well as some start-up investment chargesincurred by the Company in 2005 related to the launch of its new VitalRadiance brand and the re-launch of Almay. Specifically, such amendmentprovides for the add-back to the definition of‘‘EBITDA’’ the lesser of (i) $50million; or (ii) the cumulative one-time charges associated with (a)the aforementioned organizational realignment; and (b) thenon-recurring costs in the third and fourth quarters of 2005 associatedwith the launch of the Company's new Vital Radiance brand and there-launch of Almay. Under the 2004 Credit Agreement, such definition isused in the determination of Products Corporation's seniorsecured leverage ratio (the ratio of Products Corporation’sSenior Secured Debt to EBITDA, as each such term is defined in the 2004Credit Agreement) and the consolidated fixed charge coverage ratio (theratio of Products Corporation’s EBITDA minus CapitalExpenditures to Cash Interest Expense for such period, as each suchterm is defined in the 2004 CreditAgreement).

Products

The Company manufactures and marketsa variety of products worldwide. The following table sets forth theCompany's principal brands and certain selectedproducts.

|                |  |                 |  |                |  |                 |  |                             |  |          |  |  |  |  |  |  |  |  |  |  |  |  |
|----------------|--|-----------------|--|----------------|--|-----------------|--|-----------------------------|--|----------|--|--|--|--|--|--|--|--|--|--|--|--|
| COSMETICS      |  | HAIR            |  | BEAUTYTOOLS    |  | FRAGRANCE       |  | ANTI-PERSPIRANTS/DEODORANTS |  | SKINCARE |
| Revlon         |  | Colorsilk       |  | Revlon         |  | Charlie         |  | Mitchum                     |  | Gatineau |
| Almay          |  | HighDimension   |  | Expert Effects |  | JeanNaté |  | Almay                       |  | Almay    |
| VitalRadiance* |  | Frost &Glow |  |           |  |            |  |                        |  | UltimaII |
|           |  | Flex            |  |           |  |            |  |                        |  |     |
|           |  | Bozzano         |  |           |  |            |  |                        |  |     |
|                |

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|--|
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*New brand for 2006.

Cosmetics — Revlon: The Companysells a broad range of cosmetics and skincare products under itsflagship **Revlon** brand designed to fulfillspecifically-identified consumer needs, principally priced in the upperrange of the mass-market distribution channel, including lip makeup,nail color and nail care products, eye and face makeup and skincareproducts such as lotions, cleansers, creams, toners and moisturizers.Many of the Company's products incorporate patented,patent-pending or proprietary technology. (See ‘‘NewProduct Development and Research andDevelopment’’).

The Company markets severaldifferent lines of **Revlon** lip makeup (which address differentsegments of the lip makeup category). The Company's**ColorStay** lipcolor uses patented transfer-resistant technologythat provides long wear; while **ColorStay Overtime**Lipcolor and**Colorstay Overtime Sheers**’ patented lip technology offerslong-wearing benefits while enhancing comfort and shine. **SuperLustrous** lipstick is the Company's flagship wax-basedlipcolor, which was further improved in 2005 with the addition of**LiquiSilk** technology designed to boost moisturization using silkdispersed in emollients.

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The Company sells face makeup, includingfoundation, powder, blush and concealers, under several **Revlon**brand names. **Revlon Age Defying,**which is targeted for women inthe over-35 age bracket, was further improved in 2005 with theincorporation of **Botafirm**, to help reduce the appearance oflines and wrinkles. The Company also markets a complete range of**ColorStay** long wearing face makeup with patented **SoftFlex**Technology for enhanced comfort.

The Company's eye makeupproducts include mascaras, eyeliners and eye shadows. In mascaras, keyfranchises include **Fabulash,**which uses a patented lashperfecting brush for 100% fuller lashes, as well as the newlylaunched **Luxurious Lengths** mascara which makes lashes appear asmuch as 50% longer. The eyeshadow franchises include**Colorstay 12-Hour Eyeshadow** which enables color to look freshfor 12  hours, and **Illuminance**, an eye shadow that givessheer luminous color, as well as **Eyeglide Shimmer Shadow**, acream shadow in a twist-up package.

The Company's nailcolor and nail care lines include enamels, cuticle preparations andenamel removers. The Company's flagship **Revlon** nail enameluses a patented formula that provides consumers with improved wear,application, shine and gloss in a toluene-free, formaldehyde-free andphthalate-free formula. In 2005, the Company launched **Color BeamSheer** nail enamel, which comes in a unique array of shades and hasmultiple patents on its longwearing formula. The Company alsomarkets**ColorStay**nail enamel, which offers superior color andshine for 10 days with an exclusive **ColorLock** system. TheCompany also markets**ColorStay Always On** nail enamel, whichoffers 10-day superior color and wear in an exclusive 2-step system. Inaddition, the Company sells **Cutex** nail polish remover and nailcare products in certain countries outside the U.S.

Cosmetics— Almay: The Company's **Almay** brand consists ofa line of hypo-allergenic, dermatologist-tested, fragrance-freecosmetics and skincare products. **Almay** products include lipmakeup, eye and face makeup, and skincare products. In 2006, the**Almay** brand has been relaunched to focus on consumers’needs for simplicity, personalization and healthy beauty. Therelaunched line includes 18 new product launches, 4 product restagesand new packaging and formulas affecting over 200 stock keeping units(‘‘SKUs’’). Many of the products areorganized into expertly coordinated collections that retail customerscan easily find by answering 3 simple questions about skin type, eyecolor and favorite lipshade. The relaunched **Almay** line isintended to provide today’s increasingly busy women with asimple solution to healthy beauty.

With **Almay**’srenewed commitment to skin, the **Almay**brand now offers acomplete 3-step skincare line with natural ingredients customized byskin type, as well as a line of anti-aging products with Moringa seed,and a line of body firming and sunless tanning products for a completelook. Within the face category, the **Almay** consumer can alsoeasily find products for the consumer’s skin type. In eyemakeup, the Company has further expanded upon the breakthrough **AlmayIntense i-Color** collection with the ‘‘PlayUp’’ collection — providing a new look ofcolor-coordinated shades of shadow, liner and mascara for each eyecolor. **Ideal Lip**is a new product collection that provides acomplete lip look — lipstick, liner and gloss — where theconsumer can choose by favorite lip shade. The **Almay** brandflagship **One Coat**franchise has been strengthened with theintroduction of the patented Triple Effect mascara for a more dramaticlook.

Cosmetics — Vital Radiance: TheCompany's **Vital Radiance** brand focuses on women over 50years of age and involves the launch of a complete line of cosmeticsthat is designed to serve this affluent and growing consumerdemographic currently underserved in the marketplace. The Companybelieves that **Vital Radiance** is the first major color cosmeticsbrand created with women's changing skin in mind. The Companyintroduced **Vital Radiance** with a unique‘‘**Prepare • Color •Finish**’’ beauty system to help more mature womenachieve the look that is right for them. Using the Company'sexclusive hydrating formulas and carefully-developed age-appropriatecolor palette, with the launch of **Vital Radiance** the Companycombined an understanding of the more mature women's skin'sneeds with a desire to make the most of their beauty experience. The**Vital Radiance** ‘‘Prepare • Color •Finish’’ system is designed to fulfill the beauty needsof the changing skin of more-mature women. **Vital Radiance**‘‘Prepare’’ products have moisture-richformulas that help to prepare the skin for makeup application byevening out the skin's surface, filling in the lines andconcealing imperfections.**Vital Radiance**‘‘Color’’ products feature selected

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shade palettes for face, eyes and lips thathelp bring back color and definition while revitalizing overallappearance.**Vital Radiance**‘‘Finish’’ products add a final, definingtouch for a beautiful, polished, more vibrant look.

Hair:The Company sells both haircare and haircolor products throughout theworld. In the U.S., the **Colorsilk** brand was the fastest growinghaircolor brand in the mass-market distribution channel in 2005. TheCompany also markets **High Dimension** haircolor, the first andonly permanent haircolor that works in 10 minutes, as well as its**Frost & Glow** highlighting brand. In haircare, the Companysells the **Flex** and **Aquamarine** lines in many countries andthe **Bozzano** and **Juvena** brands in Brazil.

BeautyTools: The Company sells **Revlon** Beauty Tools, which includenail and eye grooming tools, such as clippers, scissors, files,tweezers and eye lash curlers. **Revlon** Beauty Tools are soldindividually and in sets under the **Revlon** brand name and are thenumber one brand of beauty tools in the U.S. mass-market distributionchannel. In 2005, Revlon introduced 14 new Beauty Tool products,including a new line called **Expert Effects** which have beendesigned ergonomically to enable proper technique for expert-likeresults.

Fragrances: The Company sells a selection ofmoderately-priced and premium-priced fragrances, including perfumes,eau de toilettes, colognes and body sprays. The Company'sportfolio includes fragrances such as**Charlie**and **Ciara**as well as**Jean Naté.**In 2006, the Company intends tore-enter the prestige fragrance market in theU.S.

Anti-perspirants/deodorants: In the area ofanti-perspirants and deodorants, the Company markets **Mitchum**,**Aquamarine** and **Hi** **& Dri** antiperspirantbrands in many countries. The Company also markets hypo-allergenicpersonal care products, including antiperspirants, under the**Almay** brand.

Skincare: The Company's skincareproducts, including moisturizers, are predominantly sold under the**Almay** brand name, as mentioned above. Other brand names include**Eterna 27**, **Vitamin C Absolutes** and **Ultima II**. Inaddition, the Company sells skincare products in international marketsunder internationally-recognized brand names and under various regionalbrands, including the Company's premium-priced **Gatineau**brand, as well as **Ultima II**.

Marketing

TheCompany markets extensive consumer product lines principally priced inthe upper range of the mass-market distribution channels and certainother channels outside of the U.S.

The Company uses print andtelevision advertising and point-of-sale merchandising, includingdisplays and samples. The Company's marketing emphasizes auniform global image and product for its portfolio of core brands,including **Revlon, ColorStay, Revlon Age Defying, Almay, VitalRadiance (**currently available only in U.S. retailers),**Charlie** and **Mitchum**. The Company coordinates advertisingcampaigns with in-store promotional and other marketing activities. TheCompany develops jointly with retailers carefully tailored advertising,point-of-purchase and other focused marketing programs. The Companyuses network and spot television advertising, national cableadvertising and print advertising in major general interest,women's fashion and women's service magazines, as well ascoupons and other trial incentives. In 2005, the Company expanded itsmedia reach utilizing ‘‘non-traditional’’vehicles such as outdoor advertising, newspapers and movie theaters tosupplement its media mix.

The Company also uses cooperativeadvertising programs, supported by Company-paid or Company-subsidizeddemonstrators, and coordinated in-store promotions and displays. Othermarketing materials designed to introduce the Company's newestproducts to consumers and encourage trial and purchase in-store includetrial-size products and couponing. Additionally, the Company maintainsseparate websites, www.revlon.com, www.almay.com, www.vitalradiance.comand www.mitchumman.com devoted to the **Revlon**, **Almay, VitalRadiance**and**Mitchum** brands, respectively. Each of thesewebsites feature current product and promotional information for thebrands, respectively, and are updated regularly to stay current withthe Company's new product launches and other advertising andpromotional campaigns. In addition, the Almay and Vital Radiancewebsites offer coupons and/or sampling incentives to their consumersand offer unique, personalized beauty guides.

TheCompany’s launch of its **Vital Radiance** brand wasaccompanied by the introduction of its **Vital Radiance** BeautyCenter staffed with trained beauty specialists who are available sevendays a week, via 

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an 800 telephone number or through the**Vital Radiance** website, www.vitalradiance.com, to provideconsumers with customized service by helping them to answer all oftheir beauty questions and to help ensure that they achieve theirperfect look. The **Vital Radiance** beauty specialists are trainedextensively in skin assessment, makeup application, color matching,product selection and consultation. Using their thorough knowledge ofthe **Vital Radiance** product line, they are trained to matchconsumers with the products that will best satisfy their beauty needs.The **Vital Radiance** beauty specialists are available live toanswer consumers' questions by calling 1-800-RADIANT or consumersmay send their questions online at www.vitalradiance.com.

NewProduct Development and Research and Development

The Companybelieves that it is an industry leader in the development of innovativeand technologically-advanced consumer products. The Company'smarketing and research and development groups identify consumer needsand shifts in consumer preferences in order to develop new products,tailor line extensions and promotions and redesign or reformulateexisting products to satisfy such needs or preferences. TheCompany's research and development group comprises departmentsspecialized in the technologies critical to the Company's variousproduct categories, as well as an advanced technology department thatpromotes inter-departmental, cross-functional research on a wide rangeof technologies to develop new and innovative products. In connectionwith the implementation of the Stabilization and Growth Phase of theCompany's plan, the Company has developed and implemented a newcross-functional product development process intended to optimize theCompany's ability to bring to market its new product offeringsand to ensure that the Company has products in key trendcategories.

The Company operates an extensive cosmetics researchand development facility in Edison, New Jersey. The scientistsat the Edison facility are responsible for all of the Company’snew product research worldwide, performing research for new products,ideas, concepts and packaging. The research and developmentgroup at the Edison facility also performs extensive safety and qualitytesting on the Company’s products, including toxicology,microbiology and package testing. Additionally, quality controltesting is performed at each manufacturing facility.

As ofDecember  31,  2005, the Company employed approximately 180people in its research and development activities, includingspecialists in pharmacology, toxicology, chemistry, microbiology,engineering, biology, dermatology and quality control. In 2005, 2004and 2003, the Company spent $26.1  million, $24.0  millionand $25.4  million, respectively, on research and developmentactivities.

Manufacturing and Related Operations and RawMaterials

During 2005, the Company’s cosmetics and/orpersonal care products were produced at the Company’s facilitiesin Oxford, North Carolina; Irvington, New Jersey; Venezuela; France;South Africa; China; and Mexico and at third-party owned facilitiesaround the world. The Company has also substantially completed itstransfer of the production of products for its European markets fromCreative Outsourcing Solutions International Limited in Maesteg, Walesto the Company’s Oxford, North Carolina facility. In the secondhalf of 2005, the Company undertook significant increases inmanufacturing and distribution activities, primarily at its Oxford,North Carolina facility, in connection with the launch of its two majorbrand initiatives, the **Almay**relaunch and the launch of **VitalRadiance**.

The Company continually reviews its manufacturingneeds against its manufacturing capacities to identify opportunities toreduce costs and operate more efficiently. The Company purchases rawmaterials and components throughout the world, and continuously pursuesreductions in cost of goods through the global sourcing of rawmaterials and components from qualified vendors, utilizing itspurchasing capacity designed to maximize cost savings. TheCompany’s global sourcing strategy for materials and componentsfrom accredited vendors is also designed to ensure the quality of theraw materials and components and assists in protecting the Companyagainst shortages of, or difficulties in obtaining, such materials. TheCompany believes that alternate sources of raw materials and componentsexist and does not anticipate any significant shortages of, ordifficulty in obtaining, such materials.

Distribution

TheCompany's products are sold in more than 100 countries across sixcontinents. The Company's worldwide sales force had approximately420 people as of December  31,  2005, including a dedicatedsales 

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force for cosmetics, skincare, fragrance andpersonal care products in the U.S. mass-market distribution channel. Inaddition, the Company utilizes sales representatives and independentdistributors to serve certain markets and related distributionchannels.

United States and Canada. Net sales inthe U.S. and Canada accounted for approximately 64% of theCompany's 2005 net sales, a majority of which were made in themass-market distribution channel. The Company also sells a broad rangeof consumer products to U.S. Government military exchanges andcommissaries. The Company licenses its trademarks to selectmanufacturers for complimentary beauty-related products and accessoriesthat the Company believes have the potential to extend theCompany's brand names and image. As of December  31,2005, nine (9) licenses were in effect relating to fifteen (15) productcategories, which are marketed principally in the mass-marketdistribution channel. Pursuant to such licenses, the Company retainsstrict control over product design and development, product quality,advertising and the use of its trademarks. These licensing arrangementsoffer opportunities for the Company to generate revenues and cash flowthrough royalties and renewal fees, some of which have beenprepaid.

As part of the Company’s strategy to increase theretail consumption of its products, the Company’s retailmerchandisers stock and maintain the Company's point-of-sale walldisplays intended to ensure that high-selling SKUs are in stock and toensure the optimal presentation of the Company's products inretail outlets.

International. Net sales outsidethe U.S. and Canada accounted for approximately 36% of theCompany's 2005 net sales. The ten largest countries in terms ofthese sales include South Africa, Australia, U.K., China, Brazil,Japan, France, Mexico, Italy and Venezuela, which together accountedfor approximately 28% of the Company's 2005 net sales. TheCompany distributes its products through drug stores/chemists,hypermarkets/mass volume retailers, variety stores, department storesand specialty stores such as perfumeries. At December  31,2005, the Company actively sold its products through wholly-ownedsubsidiaries established in 16 countries outside of the U.S. andthrough a large number of distributors and licensees elsewhere aroundthe world.

Customers

The Company's principalcustomers include large mass volume retailers and chain drug stores,including such well-known retailers as Wal-Mart, Target, Kmart,Walgreens, Rite Aid, CVS, Eckerd, Albertsons Drugs and Longs in theU.S., Shoppers DrugMart in Canada, Boots in the United Kingdom, A.S.Watson & Co. retail chains in Asia Pacific and Europe. Wal-Mart andits affiliates worldwide accounted for approximately 24.0% ofthe Company's 2005 net sales. As is customary in the consumerproducts industry, none of the Company’s customers is under anobligation to continue purchasing products from the Company in thefuture. The Company expects that Wal-Mart and a small number of othercustomers will, in the aggregate, continue to account for a largeportion of the Company's net sales. Although the loss of Wal-Martor one or more of the Company's other customers that may accountfor a significant portion of the Company's sales, or anysignificant decrease in sales to these customers or any significantdecrease in retail display space in any of these customers'stores, could have a material adverse effect on the Company'sbusiness, financial condition or results of operations, the Company hasno reason to believe that any such loss of customers or decrease insales will occur.

Competition

The consumer productsbusiness is highly competitive. The Company competes primarily on thebasis of: developing quality products with innovative performancefeatures, shades, finishes and packaging; educating consumers on theCompany’s product benefits; anticipating and responding tochanging consumer demands in a timely manner, including the timing ofnew product introductions and line extensions; offering attractivelypriced products relative to the product benefits provided; maintainingfavorable brand recognition; generating competitive margins andinventory turns for its retail customers by providing market-rightproducts and executing effective pricing, incentive and promotionprograms; ensuring product availability through effective planning andreplenishment collaboration with retailers; providing strong andeffective advertising, marketing, promotion and merchandising support;maintaining 

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an effective sales force; and obtainingsufficient retail floor space, optimal in-store positioning andeffective presentation of its products at retail. For 2005, the Revlonand Almay brands combined held U.S. mass-market share of 21.6%,compared with 21.4% for 2004 and 22.2% for 2003. TheCompany competes in selected product categories against a number ofmultinational manufacturers, some of which are larger and havesubstantially greater resources than the Company, and which maytherefore have the ability to spend more aggressively on advertisingand marketing and have more flexibility than the Company to respond tochanging business and economic conditions. In addition to products soldin the mass-market and demonstrator-assisted channels, theCompany's products also compete with similar products sold inprestige department store channels, door-to-door or through mail-orderor telemarketing by representatives of direct sales companies. TheCompany's principal competitors include L'OréalS.A., The Procter & Gamble Company and The Estée LauderCompanies Inc.

Patents, Trademarks and ProprietaryTechnology

The Company's major trademarks are registeredin the U.S. and in well over 100 other countries, and considerstrademark protection to be very important to its business.Significant trademarks include **Revlon**, **ColorStay, RevlonAge Defying** makeup with **Botafirm, High Dimension, Frost &Glow, Illuminance, Cutex**(outside the U.S.), **Mitchum, Eterna 27,Almay, Almay Intense i-Color, Almay Kinetin**, **Vital Radiance**,**Ultima II, Flex, Charlie, Jean Naté, Moon Drops, SuperLustrous**, **Colorsilk, Gatineau**and**Bozzano**. TheCompany regularly renews its important trademark registrations in theordinary course of business if the applicable trademark remains inuse.

The Company utilizes certain proprietary, patent pending orpatented technologies in the formulation or manufacture of a number ofthe Company’s products, including **ColorStay** cosmetics,classic **Revlon** nail enamel, **Skinlights** skin brightener,**High Dimension** hair color, **Super Top Speed** nail enamel,**Revlon Age Defying** foundation and cosmetics**, NewComplexion** makeup**, Time-Off** makeup, **Amazing Lasting**cosmetics and **Almay One Coat** cosmetics. The Company alsoprotects certain of its packaging and component concepts through designpatents. The Company considers its proprietary technology and patentprotection to be important to its business.

The Company filespatents on a continuing basis in the ordinary course of business oncertain of the Company’s new technologies. Patents in the U.S.are effective for up to 20 years and international patents aregenerally effective for up to 20 years. The patents that the Companycurrently has in place expire at various times between 2008 and 2025and the Company expects to continue to file patent applications oncertain of its technologies in the ordinary course of business in thefuture.

Government Regulation

The Company is subject toregulation by the Federal Trade Commission (the‘‘FTC’’) and the Food and DrugAdministration (the ‘‘FDA’’) in the U.S.,as well as various other federal, state, local and foreign regulatoryauthorities, including the European Commission in the European Union(‘‘EU’’). The Oxford, North Carolinamanufacturing facility is registered with the FDA as a drugmanufacturing establishment, permitting the manufacture of cosmeticsthat contain over-the-counter drug ingredients, such as sunscreens andantiperspirants. Compliance with federal, state, local and foreign lawsand regulations pertaining to discharge of materials into theenvironment, or otherwise relating to the protection of theenvironment, has not had, and is not anticipated to have, a materialeffect upon the Company's capital expenditures, earnings orcompetitive position. State and local regulations in the U.S. andregulations in the EU that are designed to protect consumers or theenvironment have an increasing influence on the Company's productclaims, ingredients and packaging.

Industry Segments, Foreignand Domestic Operations

The Company operates in a singlesegment. Certain geographic, financial and other information of theCompany is set forth in the Consolidated Statements of Operations andNote 19 of the Notes to Consolidated Financial Statements of theCompany.

Employees

As of December  31,  2005,the Company employed approximately 6,800 people. AsofDecember  31,  2005, approximately 150 of suchemployees in the U.S. were covered by collective 

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bargaining agreements. The Company believesthat its employee relations are satisfactory. Although the Company hasexperienced minor work stoppages of limited duration in the past in theordinary course of business, such work stoppages have not had amaterial effect on the Company's results of operations orfinancial condition.

Item 1A.  Risk Factors

Inaddition to the other information in this report, investors shouldconsider carefully the following risk factors when evaluating theCompany’s business.

**Revlon, Inc. is a holdingcompany with no business operations of its own and is dependent on itssubsidiaries to pay certain expenses and dividends. In addition, sharesof the capital stock of Products Corporation, Revlon, Inc.'swholly-owned subsidiary, are pledged by Revlon, Inc. to secureobligations under the 2004 Credit Agreement.**

Revlon, Inc. isa holding company with no business operations of its own. Revlon,Inc.’s only material asset is all of the outstanding capitalstock of Products Corporation, Revlon, Inc.’s wholly-ownedsubsidiary, through which the Company conducts its business operations.As such, Revlon, Inc.’s net (loss) income has historicallyconsisted predominantly of its equity in the net (loss) income ofProducts Corporation, which for 2005, 2004 and 2003 was approximately$(77.8) million, $(142.8) million and $(154.0) million, respectively,which excluded approximately $7.6  million, $1.2  millionand $1.2  million, respectively, in expenses primarily related tobeing a public holding company. Revlon, Inc. is dependent on theearnings and cash flow of, and dividends and distributions from,Products Corporation to pay Revlon, Inc.’s expenses incidentalto being a public holding company. Products Corporation may notgenerate sufficient cash flow to pay dividends or distribute funds toRevlon, Inc. because, for example, Products Corporation may notgenerate sufficient cash or net income; state laws may restrict orprohibit Products Corporation from issuing dividends or makingdistributions unless Products Corporation has sufficient surplus or netprofits, which Products Corporation may not have; or becausecontractual restrictions, including negative covenants contained inProducts Corporation’s various debt instruments, may prohibit orlimit such dividends or distributions.

The terms of the 2004Credit Agreement, the 2004 Consolidated MacAndrews & Forbes Line ofCredit (each as hereinafter defined) and the indentures governingProducts Corporation’s outstanding 91⁄2%Senior Notes and 8 5/8% Senior SubordinatedNotes (each as hereinafter defined) generally restrict ProductsCorporation from paying dividends or making distributions, except thatProducts Corporation is permitted to pay dividends and makedistributions to Revlon, Inc., among other things, to enable Revlon,Inc. to make certain payments and pay expenses incidental to being apublic holding company.

Shares of the capital stock of ProductsCorporation held by Revlon, Inc. are pledged to secure Revlon,Inc.’s guarantee of Products Corporation's obligationsunder the 2004 Credit Agreement. A foreclosure upon the shares ofProducts Corporation's common stock would result in Revlon, Inc.no longer holding its only material asset and would have a materialadverse effect on the holders of Revlon, Inc.’s common stock andwould be a change of control under other debt instruments of ProductsCorporation.

**Products Corporation’s substantialindebtedness could adversely affect the Company’s operations andflexibility and Products Corporation’s ability to service itsdebt.**

Products Corporation has a substantial amount ofoutstanding indebtedness. As of December  31,  2005, theCompany’s total indebtedness was $1,422.4  million,primarily including $327.0  million aggregate principal amountoutstanding of Products Corporation's8 5/8% Senior Subordinated Notes, $386.4million aggregate principal amount outstanding of ProductsCorporation's 91⁄2% Senior Notes and$700.0  million aggregate principal amount outstanding under the2004 Credit Agreement. Additionally, the Company has a history of netlosses and if it is unable to achieve sustained profitability in futureperiods, it could adversely affect the Company's operations andProducts Corporation's ability to service its debt.

InJuly  2004, Products Corporation entered into the 2004 CreditAgreement with a syndicate of lenders and Citicorp USA, Inc., as agent.The 2004 Credit Agreement currently consists of a $700.0  millionTerm Loan Facility (as hereinafter defined) and a $160.0  millionasset-based Multi-Currency Facility (as hereinafter defined). TheCredit Facilities (as hereinafter defined) under the 2004 

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Credit Agreement are subject to terminationon October  30,  2007 if the 8 5/8%Senior Subordinated Notes, with an aggregate principal amountoutstanding of $327.0  million as of December  31,2005, are not redeemed, repurchased, defeased or repaid such that notmore than $25.0  million of such notes remain outstanding on orbefore such date. In addition, it will be an event of default under the2004 Credit Agreement and the 2004 Credit Agreement could terminate ifRevlon, Inc. does not issue approximately $110  million of equityand transfer the proceeds of such issuance to Products Corporation byMarch  31,  2006 to promptly reduce outstandingindebtedness. (See ‘‘Recent Developments’’,as to Revlon, Inc.’s plan to, among other things, conduct arights offering by March  31,  2006 and redeemapproximately $110  million of the 8 5/8%Senior Subordinated Notes).

The Company is subject to the risksnormally associated with substantial indebtedness, including the riskthat the Company’s operating revenues and the operating revenuesof its subsidiaries will be insufficient to meet required payments ofprincipal and interest, and the risk that Products Corporation will beunable to refinance existing indebtedness when it becomes due or thatthe terms of any such refinancing will be less favorable than thecurrent terms of such indebtedness. Products Corporation’ssubstantial indebtedness couldalso:

|  |              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|--|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | limit theCompany’s ability to fund (including by obtaining additionalfinancing) the costs and expenses of the continued implementation of,and refinement to, the Company’s business plan, including inconnection with the Company’s previously-announced brandinitiatives (consisting of the complete relaunch of **Almay** andthe introduction of **Vital Radiance**), future working capital,capital expenditures, advertising or promotional expenses, new productdevelopment costs, purchases and reconfiguration of wall displays,acquisitions, investments, restructuring programs and other generalcorporaterequirements; |

|  |              |                                                                                                                                                                                                                                                                                                                                                                                                            |
|--|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | require theCompany to dedicate a substantial portion of its cash flow fromoperations to payments on Products Corporation’s indebtedness,thereby reducing the availability of the Company’s cash flow forthe continued implementation of, and refinement to, theCompany’s business plan, including funding the Company’sbrand initiatives, and for other general corporatepurposes; |

|  |              |                                                                                                |
|--|--------------|------------------------------------------------------------------------------------------------|
|  | •  | place the Companyat a competitive disadvantage compared to its competitors that haveless debt; |

|  |              |                                                                                                                        |
|--|--------------|------------------------------------------------------------------------------------------------------------------------|
|  | •  | limit theCompany’s flexibility in responding to changes in its businessand the industry in which it operates;and |

|  |              |                                                                                                           |
|--|--------------|-----------------------------------------------------------------------------------------------------------|
|  | •  | make the Company morevulnerable in the event of adverse economic conditions or a downturn inits business. |

Although agreements governing ProductsCorporation’s indebtedness, including the indentures governingProducts Corporation’s outstanding 91⁄2%Senior Notes and 8 5/8% Senior SubordinatedNotes, the agreement governing the 2004 Consolidated MacAndrews &Forbes Line of Credit and the 2004 Credit Agreement, limit ProductsCorporation’s ability to borrow additional money, under certaincircumstances Products Corporation is allowed to borrow a significantamount of additional money, some of which, in certain circumstances andsubject to certain limitations, could be securedindebtedness.

Products Corporation’s ability to pay theprincipal of its indebtedness depends on many factors.

ProductsCorporation currently anticipates that, in order to pay the principalamount of its outstanding indebtedness upon the occurrence of any eventof default, to repurchase its 91⁄2% SeniorNotes and 8 5/8% Senior Subordinated Notes if achange of control occurs or in the event that ProductsCorporation’s cash flows from operations are insufficient toallow it to pay the principal amount of its indebtedness at maturity,the Company may be required to refinance Products Corporation’sindebtedness, seek to sell assets or operations, seek to selladditional Revlon, Inc. securities, or seek additional capitalcontributions or loans from MacAndrews & Forbes or from theCompany’s other affiliates or third parties. Revlon, Inc. is apublic holding company and has no business operations of its own, andRevlon, Inc.’s only material asset is the capital stock ofProducts Corporation. None of the Company’s affiliates arerequired to make any capital contributions, loans or other payments toProducts Corporation regarding its 

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obligations on its indebtedness. ProductsCorporation may not be able to pay the principal amount of itsindebtedness if the Company took any of the above actions because,under certain circumstances, the indentures governing ProductsCorporation’s outstanding 91⁄2% SeniorNotes and 8 5/8% Senior Subordinated Notes orany of its other debt instruments (including the 2004 Credit Agreementand the 2004 Consolidated MacAndrews & Forbes Line of Credit) orthe debt instruments of Products Corporation’s subsidiaries thenin effect may not permit the Company to take such actions. (See‘‘Restrictions and covenants in ProductsCorporation’s debt agreements limit its ability to take certainactions and impose consequences in the event of failure tocomply.’’).

Restrictions and covenants in ProductsCorporation’s debt agreements limit its ability to take certainactions and impose consequences in the event of failure tocomply.

Agreements governing Products Corporation’sindebtedness, including the 2004 Credit Agreement, the agreementgoverning the 2004 Consolidated MacAndrews & Forbes Line of Creditand the indentures governing Products Corporation’s outstanding91⁄2% Senior Notes and8 5/8% Senior Subordinated Notes, contain anumber of significant restrictions and covenants that limit ProductsCorporation’s ability and its subsidiaries' ability, amongother things (subject in each case to limited exceptions),to:

|  |              |              |
|--|--------------|--------------|
|  | •  | borrowmoney; |

|  |              |                                                           |
|--|--------------|-----------------------------------------------------------|
|  | •  | use assets assecurity in other borrowings ortransactions; |

|  |              |                                         |
|--|--------------|-----------------------------------------|
|  | •  | pay dividendson stock or purchasestock; |

|  |              |             |
|--|--------------|-------------|
|  | •  | sellassets; |

|  |              |                                                    |
|--|--------------|----------------------------------------------------|
|  | •  | enter into certaintransactions with affiliates;and |

|  |              |                          |
|--|--------------|--------------------------|
|  | •  | make certaininvestments. |

In addition, the 2004 Credit Agreement containsfinancial covenants limiting Products Corporation’s secureddebt-to-EBITDA ratio and, under certain circumstances, requiringProducts Corporation to maintain a minimum consolidated fixed chargecoverage ratio. (See ‘‘RecentDevelopments’’ regarding Products Corporation’srecent amendment to its 2004 Credit Agreement). The 2004 CreditAgreement also includes provisions that would cause the acceleration ofthe maturities of the Credit Facilities if the8 5/8% Senior Subordinated Notes are notrefinanced prior to October  30,  2007 such that not morethan $25.0  million of such notes remain outstanding. Inaddition, it will be an event of default if Revlon, Inc. fails to issueapproximately $110  million of equity and transfer the proceedsof such issuance to Products Corporation by March  31,2006 to promptly reduce outstanding indebtedness. (See‘‘Recent Developments’’ as to Revlon,Inc.’s intention to, among other things, conduct a $110million rights offering by March  31,  2006 and use theproceeds to reduce Products Corporation’s debt). These covenantsaffect Products Corporation’s operating flexibility by, amongother things, restricting its ability to incur expenses andindebtedness that could be used to fund the costs of implementing andrefining the Company’s business plan and to grow theCompany’s business, including with respect to theCompany’s brand initiatives, as well as to fund generalcorporate purposes. The breach of certain covenants contained in the2004 Credit Agreement would permit Products Corporation’slenders to accelerate amounts outstanding under the 2004 CreditAgreement, which would in turn constitute an event of default under the2004 Consolidated MacAndrews & Forbes Line of Credit and theindentures governing Products Corporation’s outstanding91⁄2% Senior Notes and8 5/8% Senior Subordinated Notes, if the amountaccelerated exceeds $25.0  million and such default remainsuncured for 10 days following notice from MacAndrews & Forbes withrespect to the 2004 Consolidated MacAndrews & Forbes Line of Creditor the trustee or holders of the applicable percentage under theapplicable indenture. In addition, holders of ProductsCorporation’s outstanding 91⁄2% SeniorNotes and 8 5/8% Senior Subordinated Notes mayrequire Products Corporation to repurchase their respective notes inthe event of a change of control under the applicable indenture. (See‘‘Products Corporation’s ability to pay theprincipal of its indebtedness depends on manyfactors.’’). Products Corporation may not have sufficientfunds at the time of any such breach of any such covenant or change ofcontrol to repay in full the borrowings under the 2004 CreditAgreement, or to repurchase or redeem its outstanding91⁄2% Senior Notes and/or8 5/8% Senior Subordinated Notes.

Eventsbeyond the Company’s control, such as decreased consumerspending in response to weak economic conditions, weakness in themass-market cosmetics category, retailer inventory management,

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adverse changes in currency, increasedcompetition from the Company’s competitors, changes in consumerpurchasing habits, including with respect to shopping channels, lowerthan anticipated success of the Company’s advertising andmarketing plans, lower than expected customer or consumer acceptance ofthe Company’s brand initiatives, decreased sales of theCompany’s existing products as a result of the Company’sbrand initiatives and changes in the competitive environment, couldimpair the Company’s operating performance, which could affectProducts Corporation’s ability and that of its subsidiaries tocomply with the terms of Products Corporation’s debtinstruments. Products Corporation and its subsidiaries may be unable tocomply with the provisions of Products Corporation’s debtinstruments, including the financial covenants in the 2004 CreditAgreement. If Products Corporation is unable to satisfy such covenantsor other provisions at any future time, Products Corporation would needto seek an amendment or waiver of such financial covenants or otherprovisions. The lenders under the 2004 Credit Agreement may not consentto any amendment or waiver requests that Products Corporation may makein the future, and, if they do consent, they may not do so on termswhich are favorable to it and Revlon, Inc. In the event that ProductsCorporation was unable to obtain such a waiver or amendment and it wasnot able to refinance or repay its debt instruments, including the 2004Credit Agreement, Products Corporation’s inability to meet thefinancial covenants or other provisions would constitute an event ofdefault under its debt instruments, including the 2004 CreditAgreement, which would permit the bank lenders to accelerate the 2004Credit Agreement, which in turn would constitute an event of defaultunder the 2004 Consolidated MacAndrews & Forbes Line of Credit andthe indentures governing Products Corporation’s outstanding91⁄2% Senior Notes and8 5/8% Senior Subordinated Notes, if the amountaccelerated exceeds $25.0  million and such default remainsuncured for 10 days following notice from MacAndrews & Forbes withrespect to the 2004 Consolidated MacAndrews & Forbes Line of Creditor the trustee under the applicable indenture.

ProductsCorporation’s assets and/or cash flow and/or that of ProductsCorporation’s subsidiaries may not be sufficient to repay fullyborrowings under the outstanding debt instruments, either upon maturityor if accelerated upon an event of default, and if Products Corporationwas required to repurchase its outstanding91⁄2% Senior Notes and/or8 5/8% Senior Subordinated Notes upon a changeof control, Products Corporation may be unable to refinance orrestructure the payments on such debt. Further, if Products Corporationwas unable to repay, refinance or restructure its indebtedness underthe 2004 Credit Agreement, the lenders could proceed against thecollateral securing that indebtedness.

**Limits onProducts Corporation’s borrowing capacity under theMulti-Currency Facility may affect the Company’s ability tofinance its operations.**

While the Multi-Currency Facilitycurrently provides for up to $160.0  million of commitments,Products Corporation’s ability to borrow funds under thisfacility is limited by a borrowing base determined relative to thevalue, from time to time, of eligible accounts receivable and eligibleinventory in the U.S. and the U.K. and eligible real property andequipment in the U.S. If the value of these eligible assets is notsufficient to support the full $160.0  million borrowing base,Products Corporation will not have full access to the Multi-CurrencyFacility but rather could have access to a lesser amount determined bythe borrowing base. Further, if Products Corporation borrows fundsunder this facility, subsequent changes in the value or eligibility ofthe assets could cause Products Corporation to be required to pay downthe amounts outstanding so that there is no amount outstanding inexcess of the then-existing borrowing base. ProductsCorporation’s ability to make borrowings under theMulti-Currency Facility is also conditioned upon its compliance withother covenants in the 2004 Credit Agreement, including a fixed chargecoverage ratio that applies when the excess borrowing base is less than$30.0  million. Because of these limitations, ProductsCorporation may not always be able to meet its cash requirements withfunds borrowed under the Multi-Currency Facility, which could have amaterial adverse effect on the Company’s business, results ofoperations or financial condition. On February  1,  2006,the Term Loan Facility was fully drawn, and availability under theMulti-Currency Facility, based upon the calculated borrowing base lessapproximately $16  million of outstanding letters of credit, wasapproximately $144  million, as the Multi-Currency Facility wasundrawn at such date.

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A substantial portion of ProductsCorporation’s indebtedness is subject to floating interestrates.

A substantial portion of Products Corporation’sindebtedness, principally under the 2004 Credit Agreement, is subjectto floating interest rates, which makes the Company more vulnerable inthe event of adverse economic conditions, increases in prevailinginterest rates or a downturn in the Company’s business. As ofDecember  31,  2005, $709.0  million of ProductsCorporation’s total indebtedness was subject to floatinginterest rates. The Term Loan Facility and the Multi-Currency Facilityunder the 2004 Credit Agreement bear interest, at ProductsCorporation’s option, at either the Eurodollar Rate (as definedin the 2004 Credit Agreement), which is based on LIBOR, or theAlternate Base Rate (as defined in the 2004 Credit Agreement), which isbased on the greater of Citibank, N.A.'s announced base rate andthe U.S. federal fund rate plus 0.5%, or the equivalent forloans denominated in currencies other than U.S. dollars. If any ofLIBOR, the base rate, the U.S. federal funds rate or such equivalentlocal currency rate increases, the Company’s debt service costswill increase to the extent that Products Corporation has elected suchrates for its outstanding loans. Based on the amounts outstanding underthe 2004 Credit Agreement and other short-term borrowings (which, inthe aggregate, is Products Corporation’s only debt currentlysubject to floating interest rates) as of December  31,2005, an increase in LIBOR of 1% would increase theCompany’s annual interest expense by $7.1  million.Increased debt service costs would adversely affect theCompany’s cash flow. While Products Corporation may enter intovarious interest hedging contracts, it may not be able to do so on acost-effective basis, any hedging transactions it might enter into maynot achieve their intended purpose and shifts in interest rates mayhave a material adverse effect on the Company.

**TheCompany depends on its Oxford, North Carolina facility for productionof a substantial portion of its products. Disruptions to this facilitycould affect the Company’s sales and financialcondition.**

A substantial portion of the Company’sproducts are produced at its Oxford, North Carolina facility.Significant unscheduled downtime at this facility due to equipmentbreakdowns, power failures, natural disasters, weather conditionshampering delivery schedules or other disruptions, including thosecaused by transitioning manufacturing from other facilities primarilyto the Company’s Oxford, North Carolina facility, or any othercause could adversely affect the Company’s ability to provideproducts to its customers, which would affect the Company’ssales and financial condition. Additionally, if product sales exceedforecasts, the Company could, from time to time, not have an adequatesupply of products to meet customer demands, which could cause theCompany to lose sales.

The Company’s brand initiativesmay not be as successful as the Company anticipates in furthering itsgrowth objectives.

As described under‘‘Management’s Discussion and Analysis ofFinancial Condition and Results of Operations — Overview— Overview of Brand Initiatives,’’ the Companyrecently announced two brand initiatives, one of which involves acomplete relaunch of the Almay brand and builds on Almay’shealthy beauty heritage and the desire among consumers for simplicityand personalization and the other of which is focused on the moremature consumer and involves the launch of a complete line of cosmeticsunder a new brand name, **Vital Radiance**, that is designed toserve this affluent and growing consumer demographic currentlyunderserved in the marketplace.

The Company may not besuccessful in achieving its growth objectives. Each of the elements ofthe brand initiatives carries significant risks, as well as thepossibility of unexpected consequences,including:

|  |              |                                                                                                                             |
|--|--------------|-----------------------------------------------------------------------------------------------------------------------------|
|  | •  | the acceptance ofthe brand initiatives by the Company’s retail customers may notbe as high as the Companyanticipates; |

|  |              |                                                                                                               |
|--|--------------|---------------------------------------------------------------------------------------------------------------|
|  | •  | sales of thenew products to the Company’s retail customers may not be ashigh as the Companyanticipates; |

|  |              |                                                                                                                                                                                                                                                                                                             |
|--|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | theCompany’s marketing strategies for the brand initiatives may beless effective than planned and may fail to effectively reach thetargeted consumer base or engender the desired consumption and the rateof purchases by the Company’s consumers may not be as high asthe Company anticipates; |

|  |              |                                                                                                          |
|--|--------------|----------------------------------------------------------------------------------------------------------|
|  | •  | theCompany’s wall displays to showcase the new products may fail toachieve their intended effects; |

15

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|  |              |                                                                                                          |
|--|--------------|----------------------------------------------------------------------------------------------------------|
|  | •  | theCompany may experience product returns exceeding its expectations as aresult of the brandinitiatives; |

|  |              |                                                                                                                                                                                                                                                                                                                                                                  |
|--|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | the Company mayincur costs exceeding its expectations as a result of the continueddevelopment and launch of the brand initiatives, including, forexample, costs in connection with the purchase and installation of newwall displays and advertising and promotional expenses or other costs,including trade support, related to launching the brandinitiatives; |

|  |              |                                                                                                                                                               |
|--|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | the Company mayexperience a decrease in sales of certain of the Company’sexisting products as a result of the products related to the brandinitiatives; |

|  |              |                                                                                                                                                                                                                      |
|--|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | theCompany’s product pricing strategies for the brand initiativesmay not be accepted by its retail customers and/or its consumers, whichmay result in the Company’s sales being less than itanticipates; |

|  |              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|--|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | any delays orother difficulties impacting the Company’s ability, or theability of the Company’s third party manufacturers andsuppliers, to timely manufacture, distribute and ship products inconnection with launching the brand initiatives, such as inclementweather conditions or those delays or difficulties discussed under‘‘—The Company depends on its Oxford, NorthCarolina facility for production of a substantial portion of itsproducts. Disruptions to this facility could affect theCompany’s sales and financial condition,’’ couldaffect the Company’s ability to ship and deliver products tomeet its retail customers’ resetdeadlines; |

|  |              |                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|--|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | the brandinitiatives will require that the Company cause to be manufactured,shipped and installed new display walls at the Company’s retailcustomers’ stores in time for such customers’ resetschedules. Any delays or other difficulties impacting the manufacture,distribution and installation of these display walls could affect theCompany’s ability to meet its retail customers’ resetdeadlines; and |

|  |              |                                                                                                                                                                                                                                                                    |
|--|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | attempting toaccomplish all of the elements of the brand initiatives simultaneouslymay prove to be a financial and operational burden on the Company andthe Company may be unable to successfully accomplish all of theelements of the initiatives simultaneously. |

Each of the risksreferred to above could delay or impede the Company’s ability toachieve its growth objectives, which could have a material adverseeffect on the Company’s business, results of operations andfinancial condition.

**The Company’s ability toservice its debt and meet its cash requirements depends on manyfactors, including achieving anticipated levels of revenue growth andexpenses. If such levels prove to be other than as anticipated, theCompany may be unable to meet its cash requirements or ProductsCorporation may be unable to meet the requirements of the financialcovenants under the 2004 Credit Agreement, which could have a materialadverse effect on the Company’s business.**

The Companycurrently expects that operating revenues, cash on hand, net cashproceeds from the planned $75  million equity issuance describedin ‘‘Recent Developments’’ and fundsavailable for borrowing under the 2004 Credit Agreement, the 2004Consolidated MacAndrews & Forbes Line of Credit and other permittedlines of credit will be sufficient to enable the Company to cover itsoperating expenses for 2006, including cash requirements in connectionwith the Company’s operations, the continued implementation of,and refinement to, the Company’s plan, including with respect tothe Company’s brand initiatives, the Company’s debtservice requirements for 2006, the organizational realignment describedin ‘‘Recent Developments’’ and regularlyscheduled pension and post-retirement benefit plancontributions.

If the Company’s anticipated level ofrevenue growth is not achieved, however, because of, for example,decreased consumer spending in response to weak economic conditions orweakness in the mass-market cosmetics category, retailer inventorymanagement, adverse changes in currency, increased competition from theCompany’s competitors, changes in consumer purchasing habits,including with respect to shopping channels, or because theCompany’s advertising and marketing plans or the brandinitiatives are not as successful as anticipated, or if theCompany’s expenses associated with continued 

16

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implementation of, and refinement to, theCompany’s plan, including expenses related to theCompany’s brand initiatives, exceed the anticipated level ofexpenses, the Company’s current sources of funds may beinsufficient to meet its cash requirements. In addition, suchdevelopments, if significant, could reduce the Company’srevenues and could adversely affect Products Corporation’sability to comply with certain financial covenants under the 2004Credit Agreement. If operating revenues, cash on hand, net cashproceeds from the planned $75  million equity issuance describedin ‘‘Recent Developments’’ and fundsavailable for borrowing are insufficient to cover the Company’sexpenses or are insufficient to enable Products Corporation to complywith the financial covenants under the 2004 Credit Agreement, theCompany could be required to adopt one or more alternatives listedbelow. For example, the Company could be requiredto:

|  |              |                                                                                                                                                                                                 |
|--|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | delay the implementationof or revise certain aspects of the Company’s plan, includingpotentially delaying, suspending or revising certain aspects of theCompany’s brandinitiatives; |

|  |              |                                                                                                                                                                                                               |
|--|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | reduce or delaypurchases of wall displays or advertising or promotional expenses,including spending on new wall displays anticipated to be undertaken inconnection with the Company’s brandinitiatives; |

|  |              |                                                                                                    |
|--|--------------|----------------------------------------------------------------------------------------------------|
|  | •  | reduce or delaycapital spending, including in connection with the Company’sbrandinitiatives; |

|  |              |                                                      |
|--|--------------|------------------------------------------------------|
|  | •  | restructureProducts Corporation’sindebtedness; |

|  |              |                           |
|--|--------------|---------------------------|
|  | •  | sell assets oroperations; |

|  |              |                                                                                                                                           |
|--|--------------|-------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | delay, reduce orrevise the Company’s restructuring plans (including as describedin ‘‘RecentDevelopments’’); |

|  |              |                                                                                                                                                    |
|--|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | seekadditional capital contributions or loans from MacAndrews & Forbes,Revlon, Inc., the Company’s other affiliates and/or thirdparties; |

|  |              |                                                           |
|--|--------------|-----------------------------------------------------------|
|  | •  | sell additionaldebt securities of Products Corporation;or |

|  |              |                                     |
|--|--------------|-------------------------------------|
|  | •  | reduce otherdiscretionary spending. |

If the Company is required to take any ofthese actions, it could have a material adverse effect on its business,financial condition and results of operations. In addition, the Companymay be unable to take any of these actions, because of a variety ofcommercial or market factors or constraints in ProductsCorporation’s debt instruments, including, for example, marketconditions being unfavorable for an equity or debt issuance, additionalcapital contributions or loans not being available from affiliatesand/or third parties, or that the transactions may not be permittedunder the terms of the various debt instruments then in effect, becauseof restrictions on the incurrence of debt, incurrence of liens, assetdispositions and/or related party transactions. Such actions, if evertaken, may not enable the Company to satisfy its cash requirements orenable Products Corporation to comply with the financial covenantsunder the 2004 Credit Agreement if the actions do not result in savingsor generate a sufficient amount of additional capital, as the case maybe.

The Company depends on a limited number of customers for alarge portion of its net sales and the loss of one or more of thesecustomers could reduce the Company’s net sales.

For 2005,2004 and 2003, Wal-Mart, Inc. and its affiliates accounted forapproximately 24.0%, 21.0%, and 20.6%,respectively, of the Company’s worldwide net sales. The Companyexpects that for 2006 and future periods, Wal-Mart and a small numberof other customers will, in the aggregate, continue to account for alarge portion of the Company’s net sales. As is customary in theconsumer products industry, none of the Company’s customers isunder an obligation to continue purchasing products from the Company inthe future. The loss of Wal-Mart or one or more of the Company’sother customers that may account for a significant portion of theCompany’s net sales, or any significant decrease in sales tothese customers or any significant decrease in the Company’sretail display space in any of these customers' stores, couldreduce the Company’s net sales and therefore could have amaterial adverse effect on the Company’s business, financialcondition and results of operations.

17

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The Company may be unable to increaseits sales through the Company’s primary distributionchannels.

Although the U.S. mass-market for color cosmeticsadvanced 3.2% for the year endedDecember  31,2005, as compared with 2004, the U.S. mass-market color cosmeticscategory declined by approximately 0.6% in 2004 from 2003 anddeclined by approximately 1.1% in 2003 from 2002. In the U.S.,mass volume retailers and chain drug and food stores currently are theprimary distribution channels for the Company’s products.Additionally, other channels, including department stores, door-to-doorand the internet, combined account for a significant amount of sales ofcosmetics and beauty care products. A decrease in consumer demand inthe U.S. mass-market for color cosmetics, retailer inventory managementand/or a change in consumers’ purchasing habits, such as bybuying more cosmetics and beauty care products in channels in which theCompany does not currently compete, could cause the Company to beunable to increase sales of its products through these distributionchannels, which could reduce the Company’s net sales andtherefore have a material adverse effect on the Company’sbusiness, financial condition and results of operations.

TheCompany has a limited operating history under its business plan, and itmay not be successful or enable the Company to achieve or maintainprofitable operations.

The Company has a limited operatinghistory under its three-phase business plan. If the Company fails tosuccessfully execute its plan, including if the Company fails tosuccessfully execute its brand initiatives, the Company may not achievethe expected increases in its net sales or improvements in itsoperating profit margin, which could adversely affect theCompany’s profitability and liquidity. Additionally, it ispossible that implementation of the plan may have unanticipatedconsequences that could be adverse to the Company’sbusiness.

Each of the components of the Company’s plancarries significant risks, as well as the possibility of unexpectedconsequences. Potential risksinclude:

|  |              |                                                                                                                        |
|--|--------------|------------------------------------------------------------------------------------------------------------------------|
|  | •  | theCompany’s attempts to make its advertising and media moreeffective may fail to achieve their intendedeffects; |

|  |              |                                                                                        |
|--|--------------|----------------------------------------------------------------------------------------|
|  | •  | changes to theCompany’s wall displays may fail to achieve their intendedeffects; |

|  |              |                                                                                                                                                                                                                                                                                                                                                                                                                |
|--|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | the Company mayexperience product returns and/or other costs exceeding theCompany’s expectations as a result of new product introductionsor brand launches, including as a result of the brand initiatives, oradditional repositioning, repackaging and reformulating one or more ofthe Company’s product lines or brands, or further refining theCompany’s approach to retailmerchandising; |

|  |              |                                                                                                                                                                                                                                                                                                                                                                                               |
|--|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | the Companymay incur costs exceeding its expectations as a result of the roll outof wall displays, including costs in connection with rolling out newwall displays in connection with the Company’s brandinitiatives, or making further refinements to the Company’s walldisplays, or the wall displays or refinements to such displays may failto achieve their intendedeffects; |

|  |              |                                                                                                                                                                                                                                                                                  |
|--|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | theCompany’s new product development process may not be assuccessful as contemplated, or consumers may not accept theCompany’s new product offerings to the degree envisioned,including products to be sold in connection with the Company’sbrand initiatives; |

|  |              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|--|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | theCompany’s competitors, some of which have greater resources thanthe Company, could increase their spending on advertising and media,increase their new product development spending or take other steps inresponse to the Company’s plan, including in response to itsbrand initiatives, which could impact the effectiveness of theCompany’s plan, including the effectiveness of its brandinitiatives, and the Company’s ability to achieve its objectiveof increased revenues and profitability over the longterm; |

|  |              |                                                                                                                                                                                                                                                                                                          |
|--|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | the Company mayexperience difficulties, delays or higher than expected costs inimplementing its comprehensive program to develop and train theCompany’s employees with the objective of improving itsorganizational capabilities or in attracting and retaining talented andexperienced personnel; |

18

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|  |              |                                                                                                                                                                                                                                                                                                                                                                                                                     |
|--|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | theCompany may be unable to achieve its growth objectives in connectionwith its brand initiatives or the Company may experience difficulties,delays or higher than expected costs in implementing its brandinitiatives, including as discussed in ‘‘—TheCompany’s brand initiatives may not be as successful as theCompany anticipates in furthering its growthobjectives;’’and |

|  |              |                                                                                                                                                                                                                      |
|--|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | attempts to accomplishall of the elements of the Company’s plan simultaneously mayprove to be financially or operationally burdensome and may causedisruption or difficulties in the Company’s business. |

(See‘‘—The Company’s ability to service itsdebt and meet its cash requirements depends on many factors, includingachieving anticipated levels of revenue growth and expenses. If suchlevels prove to be other than as anticipated, the Company may be unableto meet its cash requirements or Products Corporation may be unable tomeet the requirements of the financial covenants under the 2004 CreditAgreement, which could have a material adverse effect on theCompany’s business’’ and‘‘—The Company’s brand initiatives may notbe as successful as the Company anticipates in furthering its growthobjectives.’’).

**Unanticipatedcircumstances may adversely affect the Company’s assumptions andexpectations regarding the Company’s ‘‘DestinationModel’’.**

The Company’s‘‘Destination Model’’ is based upon itsexpectation that the Company will achieve an improvement in itsoperating profit margin as a result of improvements in various aspectsof the Company’s business, including, without limitation, in itsinternational supply chain, in its promotion redesign, in its cost ofgoods (due to various initiatives including value analyses, packaginginitiatives, strategic sourcing and make versus buy analyses), in itsproduct life cycle management, in its in-store merchandising and byleveraging the Company’s fixed cost structure and otherinitiatives, for an aggregate targeted operating profit margin ofapproximately 12% (measured as a percentage of gross sales) bythe end of 2008. Although the Company believes that these expectationsare reasonable and achievable, the Company may achieve less thanexpected savings from one or more of these initiatives, theCompany’s progress may not be spread ratably and the margintransformation initiatives may not be implemented successfully and/orother events and circumstances, such as difficulties, delays orunexpected costs in achieving those results, may occur which couldresult in the Company’s not achieving its‘‘Destination Model’’, achieving only aportion of it, or achieving it later than the Company expects.Additionally, if product sales exceed forecasts, the Company’sfocus on closely managing inventory levels could result, from time totime, in the Company’s not having an adequate supply of productsto meet consumer demand, which would cause the Company to lose sales.In addition, if the Company experiences lower than expected sales, theCompany may experience difficulties or delays in achieving its targetedoperating profit margin.

Competition in the consumer productsbusiness could materially adversely affect the Company’s netsales and its market share.

The consumer products business ishighly competitive. The Company competes primarily on the basisof:

|  |              |                                                                                                 |
|--|--------------|-------------------------------------------------------------------------------------------------|
|  | •  | developing qualityproducts with innovative performance features, shades, finishes andpackaging; |

|  |              |                                                            |
|--|--------------|------------------------------------------------------------|
|  | •  | educatingconsumers on the Company’s productbenefits; |

|  |              |                                                                                                                                                  |
|--|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | anticipating andresponding to changing consumer demands in a timely manner, includingthe timing of new product introductions and lineextensions; |

|  |              |                                                                                 |
|--|--------------|---------------------------------------------------------------------------------|
|  | •  | offeringattractively priced products, relative to the product benefitsprovided; |

|  |              |                                        |
|--|--------------|----------------------------------------|
|  | •  | maintainingfavorable brandrecognition; |

|  |              |                                                                                                                                                                                                |
|--|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | generatingcompetitive margins and inventory turns for the Company’s retailcustomers by providing market-right products and executing effectivepricing, incentive and promotion programs; |

19

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|  |              |                                                                                                       |
|--|--------------|-------------------------------------------------------------------------------------------------------|
|  | •  | ensuringproduct availability through effective planning and replenishmentcollaboration withretailers; |

|  |              |                                                                                           |
|--|--------------|-------------------------------------------------------------------------------------------|
|  | •  | providing strongand effective advertising, marketing, promotion and merchandisingsupport; |

|  |              |                                         |
|--|--------------|-----------------------------------------|
|  | •  | maintaining aneffective sales force;and |

|  |              |                                                                                                                                           |
|--|--------------|-------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | obtaining sufficientretail floor space, optimal in-store positioning and effectivepresentation of the Company’s products at retail. |

Anincrease in the amount of competition that the Company faces could havea material adverse effect on its market share and revenues. The Companyexperienced declines in its market share in the U.S. mass-market incolor cosmetics from the end of the first half of 1998 through thefirst half of 2002, including a decline in the Company’scombined color cosmetics market share from approximately 32% inthe second quarter of 1998 to approximately 22% in the secondquarter of 2002. From the second half of 2002 through 2005, theCompany’s U.S. mass-market share in color cosmetics stabilized,and the Company achieved a combined U.S. mass-market share of21.6% for 2005. The Revlon brand registered a U.S. mass-marketshare of 15.4% for 2005, while the Almay brand advanced to6.2% for 2005. It is possible that declines in theCompany’s market share could occur in the future.

Inaddition, the Company competes in selected product categories against anumber of multinational manufacturers, some of which are larger andhave substantially greater resources than the Company, and which maytherefore have the ability to spend more aggressively on advertisingand marketing and more flexibility to respond to changing business andeconomic conditions than the Company. In addition to products sold inthe mass-market, the Company’s products also compete withsimilar products sold in prestige department store channels,door-to-door, on the internet and through mail-order or telemarketingby representatives of direct sales companies.

**TheCompany’s foreign operations are subject to a variety of social,political and economic risks and may be affected by foreign currencyfluctuation, which could adversely affect the results of theCompany’s operations and the value of its foreignassets.**

As of December  31,  2005, the Companyhad operations based in 16 foreign countries and its products were soldin over 100 countries. The Company is exposed to the risk of changes insocial, political and economic conditions inherent in operating inforeign countries, including those in Asia, Eastern Europe and LatinAmerica, which could adversely affect the Company’s business,results of operations and financial condition. Such changes includechanges in the laws and policies that govern foreign investment incountries where the Company has operations, changes in consumerpurchasing habits including as to shopping channels, as well as, to alesser extent, changes in U.S. laws and regulations relating to foreigntrade and investment. In addition, fluctuations in foreign currencyexchange rates may affect the results of the Company’soperations and the value of its foreign assets, which in turn mayadversely affect the Company’s reported earnings and,accordingly, the comparability of period-to-period results ofoperations. Changes in currency exchange rates may affect the relativeprices at which the Company and its foreign competitors sell productsin the same markets. The Company’s net sales outside of the U.S.and Canada for the years ended December  31,  2005, 2004,and 2003 were approximately 36%, 34% and 31% ofthe Company’s total consolidated net sales, respectively. Inaddition, changes in the value of relevant currencies may affect thecost of certain items and materials required in the Company’soperations. Products Corporation enters into forward foreign exchangecontracts to hedge certain cash flows denominated in foreign currency.At December  31,  2005, the notional amount of ProductsCorporation’s foreign currency forward exchange contracts was$31.9  million. The hedges Products Corporation enters into maynot protect against currency fluctuations.

**Terroristattacks, acts of war or military actions may adversely affect themarkets in which the Company operates and the Company’soperations and profitability.**

On September  11,2001, the U.S. was the target of terrorist attacks of unprecedentedscope. These attacks contributed to major instability in the U.S. andother financial markets and reduced consumer confidence. Theseterrorist attacks, as well as terrorist attacks such as those that haveoccurred in Madrid, 

20

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Spain and London, England, militaryresponses to terrorist attacks and future developments, or othermilitary actions, such as the military actions in Iraq, may adverselyaffect prevailing economic conditions, resulting in reduced consumerspending and reduced demand for the Company’s products. Thesedevelopments subject the Company’s worldwide operations toincreased risks and, depending on their magnitude, could reduce netsales and therefore could have a material adverse effect on theCompany’s business, results of operations and financialcondition.

**The Company’s products are subject tofederal, state and international regulations that could adverselyaffect the Company’s financial results.**

The Company issubject to regulation by the FTC and the FDA, in the U.S., as well asvarious other federal, state, local and foreign regulatory authorities,including the EU in Europe. The Company’s Oxford, North Carolinamanufacturing facility is registered with the FDA as a drugmanufacturing establishment, permitting the manufacture of cosmeticsthat contain over-the-counter drug ingredients, such as sunscreens andantiperspirants. State and local regulations in the U.S. andregulations in the EU that are designed to protect consumers or theenvironment have an increasing influence on the Company’sproduct claims, ingredients and packaging. To the extent regulatorychanges occur in the future, they could require the Company toreformulate or discontinue certain of its products or revise itsproduct packaging or labeling, either of which could result in, amongother things, increased costs to the Company, delays in productlaunches or result in product returns.

**Shares ofRevlon, Inc. Class A Common Stock and Products Corporation’scapital stock are pledged to secure various of Revlon, Inc.’sand/or other of the Company’s affiliates’ obligations andforeclosure upon these shares or dispositions of shares could result inthe acceleration of debt under the 2004 Credit Agreement and could haveother consequences.**

Products Corporation’s shares ofcommon stock are pledged to secure Revlon, Inc.’s guaranteeunder the 2004 Credit Agreement. As of December  31,  2005,there were 2,325,291 shares of Revlon, Inc.’s Class A CommonStock pledged by REV Holdings LLC, a Delaware limited liability company(‘‘REV Holdings’’), to secure $18.5million principal amount of REV Holdings’ 13% SeniorSecured Notes due 2007. MacAndrews & Forbes has advised the Companythat it has pledged additional shares of Revlon, Inc.’s Class ACommon Stock to secure other obligations. Additional shares of Revlon,Inc. and shares of common stock of intermediate holding companiesbetween Revlon, Inc. and MacAndrews & Forbes may from time to timebe pledged to secure obligations of MacAndrews & Forbes. A defaultunder any of these obligations that are secured by the pledged sharescould cause a foreclosure with respect to such shares of Revlon,Inc.’s Class A Common Stock, Products Corporation’scommon stock or stock of intermediate holding companies. A foreclosureupon any such shares of common stock or dispositions of shares ofRevlon, Inc.’s Class A Common Stock, ProductsCorporation's common stock or stock of intermediate holdingcompanies beneficially owned by MacAndrews & Forbes could, in asufficient amount, constitute a ‘‘change ofcontrol’’ under the 2004 Credit Agreement, the 2004Consolidated MacAndrews & Forbes Line of Credit and the indenturesgoverning the 91⁄2% Senior Notes and the8 5/8% Senior Subordinated Notes. A change ofcontrol constitutes an event of default under the 2004 CreditAgreement, which would permit Products Corporation’s lenders toaccelerate amounts outstanding under the 2004 Credit Agreement. Inaddition, holders of the 91⁄2% Senior Notes andthe 8 5/8% Senior Subordinated Notes may requireProducts Corporation to repurchase their respective notes under thosecircumstances. Products Corporation may not have sufficient funds atthe time of any such change of control to repay in full the borrowingsunder the 2004 Credit Agreement or to repurchase or redeem the91⁄2% Senior Notes and/or the8 5/8% Senior Subordinated Notes. (See‘‘The Company’s ability to service its debt andmeet its cash requirements depends on many factors, including achievinganticipated levels of revenue growth and expenses. If such levels proveto be other than as anticipated, the Company may be unable to meet itscash requirements or Products Corporation may be unable to meet therequirements of the financial covenants under the 2004 CreditAgreement, which could have a material adverse effect on theCompany’s business.’’).

MacAndrews &Forbes has the power to direct and control the Company’sbusiness.

MacAndrews & Forbes is wholly owned by Ronald O.Perelman. Mr.  Perelman, directly and through MacAndrews &Forbes, beneficially owns approximately 60% of Revlon,Inc.’s outstanding common 

21

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stock. Mr.  Perelman, directly andthrough MacAndrews & Forbes, controls approximately 77% ofthe combined voting power of Revlon, Inc.’s common stock. As aresult, MacAndrews & Forbes is able to control the election of theentire Board of Directors of Revlon, Inc. and of Products Corporationand controls the vote on all matters submitted to a vote of Revlon,Inc.’s and Products Corporation’s stockholders, includingthe approval of mergers, consolidations, sales of some, all orsubstantially all of Revlon, Inc.’s or ProductsCorporation’s assets, issuances of capital stock and similartransactions.

**New accounting requirements will causethe Company to record compensation expense for employee stock optiongrants, which will affect the Company’s reportedearnings.**

In December  2004, the FASB issued SFAS No.123 (revised 2004), ‘‘Share-BasedPayment,’’ an amendment to FASB Statements Nos. 123 and95 (‘‘SFAS No. 123(R)’’), which replacesSFAS No. 123, and supercedes APB Opinion No. 25,‘‘Accounting for Stock Issued toEmployees.’’ SFAS No. 123(R) requires all share-basedpayments to employees, including grants of employee stock options, tobe recognized in the financial statements based on their fair values.In April  2005, the U.S. Securities and Exchange Commission (the‘‘SEC’’ or the‘‘Commission’’) adopted a rule allowingcompanies to implement SFAS No. 123(R) at the beginning of their nextfiscal year that begins after June  15,  2005, which forthe Company will be effective beginning January  1,  2006.The Company will use the modified prospective transition method,utilizing the Black-Scholes option pricing model for the calculation ofthe fair value of its employee stock options. Under the modifiedprospective method, stock option awards that are granted, modified orsettled after January  1,  2006 will be measured andaccounted for in accordance with SFAS No. 123(R). Compensation cost forstock option awards granted prior to, but not vested, as ofJanuary  1,  2006 would be based on the grant dateattributes originally used to value those awards for pro forma purposesunder SFAS No. 123. The Company expects the adoption of SFAS No. 123(R)will result in approximately $10  million in additional expensesfor fiscal year 2006. This estimate is based on the number of unvestedoptions outstanding as of January 1, 2006 and the estimated number ofoptions to be granted in 2006. This estimate could change based on anumber of factors, including differences in the estimate of the numberof options granted before 2006 which are forfeited during 2006 and thenumber of options actually granted in 2006 and the fair value of theseoptions at their grant date.

Item 1B.  Unresolved StaffComments

None.

Item 2.  Properties

Thefollowing table sets forth as of December  31,  2005 theCompany's major manufacturing, research andwarehouse/distribution facilities, all of which are owned except whereotherwisenoted.

|                           |  |                                                    |                                                    |                                |         |        |           |        |  |  |
|---------------------------|--|----------------------------------------------------|----------------------------------------------------|--------------------------------|---------|--------|-----------|--------|--|--|
| Location                  |  | Use                                                |                                                    | ApproximateFloor Space Sq. Ft. |
| Oxford, North Carolina    |  |                                               | Manufacturing,warehousing, distribution and office | (a)                       |         |   | 1,012,000 |   |
| Edison, New Jersey        |  | Research and office(leased)                        |                                                    |                           | 123,000 |   |
| Irvington, NewJersey.     |  |                                               | Manufacturing, warehousing and office              | (a)                       |         |   | 96,000    |   |
| Mexico City,Mexico        |  | Manufacturing, distribution andoffice              |                                                    |                           | 150,000 |   |
| Caracas,Venezuela         |  | Manufacturing, distribution andoffice              |                                                    |                           | 145,000 |   |
| Kempton Park, SouthAfrica |  | Warehousing, distribution and office(leased)       |                                                    |                           | 120,000 |   |
| Canberra,Australia        |  | Warehousing, distribution and office(leased)       |                                                    |                           | 125,000 |   |
| Rietfontein, SouthAfrica  |  | Manufacturing, warehousing, distribution andoffice |                                                    |                           | 94,000  |   |
|                           |

|  |
|--|
|  |  |
|  |

|     |                                                             |
|-----|-------------------------------------------------------------|
| (a) | Propertiessubject to liens under the 2004 Credit Agreement. |

Inaddition to the facilities described above, the Company owns and leasesadditional facilities in various areas throughout the world, includingthe lease for the Company's executive offices in New York, NewYork (approximately 176,800 square feet). Management considers theCompany's facilities to be 

22

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well-maintained and satisfactory for theCompany's operations, and believes that the Company'sfacilities and third party contractual supplier arrangements providesufficient capacity for its current and expected productionrequirements.

Item 3. Legal Proceedings

TheCompany is involved in various routine legal proceedings incident tothe ordinary course of its business. The Company believes that theoutcome of all pending legal proceedings in the aggregate is unlikelyto have a material adverse effect on the business or consolidatedfinancial condition of the Company.

Item 4. Submissionof Matters to a Vote of Security Holders

No matter was submittedto a vote of security holders during the fourth quarter of the fiscalyear covered by this report.

23

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PART II

|              |                                                                                                            |
|--------------|------------------------------------------------------------------------------------------------------------|
| Item5.  | Market for Registrant's Common Equity,Related Stockholder Matters and Issuer Purchases of EquitySecurities |

Revlon, Inc. beneficially owns all of the 5,260outstanding shares of Products Corporation’s common stock, parvalue $1.00 per share. MacAndrews & Forbes, which is wholly ownedby Ronald O. Perelman, beneficially owns (i) 190,160,641 shares ofRevlon, Inc.’s Class A Common Stock (20,819,333 of which areowned by REV Holdings and 169,341,308 of which are beneficially ownedby MacAndrews & Forbes) and (ii) all of the outstanding 31,250,000shares of Class B Common Stock of Revlon, Inc., with a par value of$0.01 per share (the ‘‘Class B CommonStock’’, and together with the Class A Common Stock, the‘‘Common Stock’’). Based on the sharesreferenced in clauses (i) and (ii) above, and including Mr.Perelman's vested stock options discussed in Part III, Item 12.of this Form 10-K (‘‘Security Ownership of CertainBeneficial Owners and Management’’), Mr.  Perelman,directly and indirectly, through MacAndrews & Forbes, atDecember  31,  2005, beneficially owned approximately60% of Revlon, Inc.'s outstanding shares of Common Stockand had approximately 77% of the combined voting power of theoutstanding shares of Revlon, Inc.'s Common Stock currentlyentitled to vote at its 2006 Annual Meeting of Stockholders. Theremaining 150,265,777 shares of Class A Common Stock outstanding atDecember  31,  2005 were owned by the public. Revlon,Inc.'s Class A Common Stock is listed and traded on the New YorkStock Exchange (the ‘‘NYSE’’). There is noestablished market for Products Corporation’s common stock. Nodividends were declared or paid during 2005 or 2004 by ProductsCorporation to Revlon, Inc. or by Revlon, Inc. on Revlon, Inc.’sCommon Stock. The terms of the 2004 Credit Agreement, the 2004Consolidated MacAndrews & Forbes Line of Credit, the8 5/8% Senior Subordinated Notes and the91⁄2% Senior Notes currently restrict theability of Products Corporation to pay dividends or make distributionsto Revlon, Inc., except in limited circumstances. (See Part III, Item12. of this Form 10-K, ‘‘Security Ownership of CertainBeneficial Owners and Management’’, and theCompany’s Consolidated Financial Statements and the Notesthereto).

|               |                        |
|---------------|------------------------|
| Item 6.  | Selected FinancialData |

The Consolidated Statements of Operations Data for each ofthe years in the five-year period ended December  31,  2005and the Balance Sheet Data as of December  31,  2005, 2004,2003, 2002 and 2001 are derived from the Company’s ConsolidatedFinancial Statements, which have been audited by KPMG LLP, anindependent registered public accounting firm. The SelectedConsolidated Financial Data should be read in conjunction with theCompany's Consolidated Financial Statements and the Notes to theConsolidated Financial Statements and‘‘Management's Discussion and Analysis of FinancialCondition and Results ofOperations.’’

|                                            |  |                                                              |         |           |  |         |         |           |  |         |         |         |  |        |         |         |  |        |         |         |  |  |
|--------------------------------------------|--|--------------------------------------------------------------|---------|-----------|--|---------|---------|-----------|--|---------|---------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|                                       |  | YearEnded December 31,(in millions, except per shareamounts) |
|                                       |  | 2005(a)                                                      |         | 2004      |  | 2003(b) |         | 2002(b)   |  | 2001(c) |
| **Statementof OperationsData:**            |  |                                                         |    |      |  |    |    |      |  |    |    |    |  |   |    |    |  |   |    |    |
| Netsales                                   |  | $                                                            | 1,332.3 |      |  | $       | 1,297.2 |      |  | $       | 1,299.3 |    |  | $      | 1,119.4 |    |  | $      | 1,277.6 |    |
| Grossprofit(d)                             |  |                                                         | 824.2   |      |  |    | 811.9   |      |  |    | 798.2   |    |  |   | 615.7   |    |  |   | 733.4   |    |
| Selling,general and administrativeexpenses |  |                                                         | 750.2   |      |  |    | 716.4   |      |  |    | 769.7   |    |  |   | 711.1   |    |  |   | 676.6   |    |
| Restructuringcosts and other, net(e)       |  |                                                         | 1.5     |      |  |    | 5.8     |      |  |    | 6.0     |    |  |   | 13.6    |    |  |   | 38.1    |    |
| Operatingincome(loss)                      |  |                                                         | 72.5    |      |  |    | 89.7    |      |  |    | 22.5    |    |  |   | (109.0  | )  |  |   | 18.7    |    |
| InterestExpense                            |  |                                                         | 130.0   |      |  |    | 130.8   |      |  |    | 174.5   |    |  |   | 159.0   |    |  |   | 140.5   |    |
| Losson early extinguishment ofdebt         |  |                                                         | 9.0     | (f)  |  |    | 90.7    | (g)  |  |    | — |    |  |   | — |    |  |   | 3.6     |    |
| Lossfrom continuingoperations              |  |                                                         | (77.8   | )    |  |    | (142.8  | )    |  |    | (154.0  | )  |  |   | (281.8  | )  |  |   | (152.2  | )  |
|                                            |

24

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|                                    |  |                                    |          |         |  |         |          |         |  |         |          |         |  |        |          |         |  |        |          |         |  |  |
|------------------------------------|--|------------------------------------|----------|---------|--|---------|----------|---------|--|---------|----------|---------|--|--------|----------|---------|--|--------|----------|---------|--|--|
|                               |  | YearEnded December 31,(inmillions) |
|                               |  | 2005(a)                            |          | 2004    |  | 2003(b) |          | 2002(b) |  | 2001(c) |
| **Balance SheetData:**             |  |                               |     |    |  |    |     |    |  |    |     |    |  |   |     |    |  |   |     |    |
| Totalassets                        |  | $                                  | 1,048.4  |    |  | $       | 998.6    |    |  | $       | 890.7    |    |  | $      | 932.0    |    |  | $      | 991.4    |    |
| Totalindebtedness                  |  |                               | 1,422.4  |    |  |    | 1,355.3  |    |  |    | 1,897.5  |    |  |   | 1,775.1  |    |  |   | 1,661.1  |    |
| Totalstockholder’sdeficiency |  |                               | (1,091.2 | )  |  |    | (1,021.8 | )  |  |    | (1,727.2 | )  |  |   | (1,639.9 | )  |  |   | (1,288.2 | )  |
|                                    |

|  |
|--|
|  |  |
|  |

|     |                                                                                                                                                                                                                                               |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (a) | Resultsfor 2005 include expenses of approximately $44  million inincremental returns and allowances and approximately $7  millionin accelerated amortization cost of certain permanent displays relatedto the launch of the brandinitiatives. |

|     |                                                                                                                                                                                                                                 |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | Results for2003 and 2002 include expenses of approximately $31.0  million in2003 and approximately $104.0  million in 2002 related to theaccelerated implementation of the Stabilization and Growth Phase of theCompany's plan. |

|     |                                                                                                                                                                                                                                   |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (c) | InJuly  2001, the Company completed the disposition of the Coloramabrand and facility in Brazil. Accordingly, the selected financial dataincludes the results of operations of the Colorama brand through thedate of disposition. |

|     |                                                                                                                                                                                                                                                                                                                                                                                               |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (d) | Inconnection with the Company's restructuring activities describedin note (e) below, through 2002 the Company incurred additional costsassociated with the consolidation of its Phoenix and Canada facilitiesand its worldwide operations. The Company recorded $1.5  millionand $38.2  million of such costs for the years endedDecember  31,  2002 and 2001, respectively, in cost ofsales. |

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (e) | In 2000, theCompany initiated a new restructuring program (the ‘‘2000restructuring program’’), to improve profitability byreducing personnel and consolidating manufacturing facilities. The 2000restructuring program focused on closing manufacturing operations inPhoenix, Arizona and Mississauga, Canada and consolidating productioninto the Company's plant in Oxford, North Carolina. The 2000restructuring program also included the remaining obligation for excessleased real estate at the Company's headquarters, consolidationcosts associated with closing the Company's facility in NewZealand and the elimination of several domestic and internationalexecutive and operational positions, each of which was effected toreduce and streamline corporate overhead costs. Restructuring expensesincurred through 2005 were with respect to the 2000 restructuringprogram, the continued consolidation of the Company's worldwideoperations or one-time restructuring events including employeeseverance costs. |

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (f) | The losson early extinguishment of debt for 2005 includes: (i) a $5.0million prepayment fee related to the prepayment in March  2005of $100.0  million of indebtedness outstanding under the TermLoan Facility of the 2004 Credit Agreement with a portion of theproceeds from the issuance of Products Corporation’s Original91⁄2% Senior Notes and (ii) the aggregate$1.5  million loss on the redemption of ProductsCorporation’s 8 1/8% Senior Notes and9% Senior Notes in April  2005, as well as the write-offof the portion of deferred financing costs related to such prepaidamount. |

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (g) | Represents theloss on the exchange of equity for certain indebtedness in the RevlonExchange Transactions (as hereinafter defined) and fees, expenses,premiums and the write-off of deferred financing costs related to theRevlon Exchange Transactions, the tender for and redemption of the12% Senior Secured Notes (including the applicable premium) andthe repayment of the 2001 Credit Agreement. (See Note 9 to theConsolidated Financial Statements). |

|              |                                                                                     |
|--------------|-------------------------------------------------------------------------------------|
| Item7.  | Management's Discussion and Analysis ofFinancial Condition and Results ofOperations |

Overview

Overview of theBusiness

The Company is providing this overview in accordancewith the SEC's December  2003 interpretive guidanceregarding Management's Discussion and Analysis of FinancialCondition and Results of Operations.

Revlon Consumer ProductsCorporation (‘‘Products Corporation’’ andtogether with its subsidiaries, the‘‘Company’’) operates in a single segmentand manufactures, markets and sells an extensive array of cosmetics,skincare, fragrances and personal care products. **Revlon** is oneof the world's leading mass-market cosmetics brands.**Revlon** believes that its global brand name recognition, productquality and marketing experience have enabled it to create one of thestrongest consumer brand franchises in the world. The Company'sproducts are sold worldwide and marketed under such brand names as**Revlon, ColorStay, Fabulash, Super Lustrous**and**Revlon AgeDefying**makeup with**Botafirm**, as well as the newlyrelaunched **Almay** brand, including the Company’s new**Almay Intense i-Color** collection, and the Company’slatest brand, **Vital Radiance,** in cosmetics; a new **Almay**skincare line, as well as **Ultima II** and **Gatineau** inskincare; **Charlie**and**Jean Naté** in fragrances;**Revlon**and **Expert Effects** in beauty tools; and**Mitchum, Flex, Colorsilk**and **Bozzano** in personal careproducts. In addition, the Company has a licensing group pursuant towhich the Company licenses certain of its key brand names to thirdparties for complimentary beauty-related products andaccessories.

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Products Corporation is a directwholly-owned subsidiary of Revlon, Inc., which is an indirectmajority-owned subsidiary of MacAndrews & Forbes Holdings Inc.(‘‘MacAndrews & Forbes Holdings’’ and,together with its affiliates, ‘‘MacAndrews &Forbes’’), a corporation wholly-owned by Ronald O.Perelman.

Overview of the Company’s Plan

TheCompany is in the third phase of its plan, the Accelerated GrowthPhase.

The Company intends to capitalize on the actions takenduring the earlier phases of the plan, with the objective of increasingrevenues and achieving profitability over the long term. TheAccelerated Growth Phase of the plan includes various actions thatrepresent refinements of and additions to the actions taken during theearlier phases of the plan, with the objective of balancing top-linegrowth with an improved operating profit margin. These ongoinginitiatives include, among other things, actions to: (i) furtherimprove the new product development and introduction process with evendeeper insights into the Company’s consumers and the categoriesin which it competes; (ii) continue to increase the effectiveness andreduce the cost of the Company's display walls across categoriesand brands; (iii) drive efficiencies across the Company's overallsupply chain, including reducing manufacturing costs by continuing torationalize components and by sourcing strategically; (iv) optimize theeffectiveness of the Company’s advertising, marketing andpromotions; (v) continue the training and development of theorganization so that the Company may continue to improve itscapabilities to execute its strategies while providing enhanced jobsatisfaction for the Company’s employees; and (vi) continue tostrengthen the Company’s balance sheet and capital structure,much of which has been accomplished during 2004, with additionalfinancing transactions completed during 2005 and planned for 2006. (See‘‘Recent Developments’’ regarding Revlon,Inc.'s planned $110  million rights offering and planned$75  million equity issuance).

The Company believes thatit has strengthened its organizational capabilities and it intends tocontinue doing so. The Company also believes that it has strengthenedits relationships with its key retailers in theU.S.

Overview of Brand Initiatives

In August2005, the Company announced two major brand initiatives. One initiativeinvolves a complete relaunch of the Almay brand and builds onAlmay’s healthy beauty heritage and the desire among consumersfor simplicity and personalization. The second initiative is focused onthe more mature consumer and involves the launch of a complete line ofcosmetics under a new brand name, **Vital Radiance**, that isdesigned to serve this affluent and growing consumer demographiccurrently underserved in the marketplace.

The brand initiativeshad a positive effect on net sales of approximately $33  millionin 2005, after giving effect to approximately $44  million ofprovisions for incremental returns and allowances associated with thelaunch of these initiatives. As a result of these brand initiatives,the Company had accelerated amortization associated with certainexisting retail display fixtures of approximately $7  millionthat impacted selling, general and administrative expenses(‘‘SG&A’’) in 2005. The total upfrontlaunch and related costs of the brand initiatives in 2005 wasapproximately $62  million, principally including provisions forthe aforementioned incremental returns and allowances of approximately$44  million and the aforementioned $7  million ofaccelerated amortization. The Company also currently expects that thefirst quarter of 2006 would benefit from the incremental initialshipments associated with the launch of these brand initiatives.

The Company continues to make certain investments in connection withthese brand initiatives, most notably in the area of permanent displaysand inventory. In terms of the cash flow impact of these brandinitiatives, the Company’s investment in permanent displays,including displays for its existing businesses and these brandinitiatives, was approximately $70  million for 2005 and theCompany expects that its continued investment in permanent displayswill be in the range of $85  million to $95  million for2006, returning to more normalized levels thereafter. The net increasein 2005 inventory levels of approximately $66  million and theincrease in 2005 net trade receivables of approximately $82million, as compared with that of 2004, is primarily due to the brandinitiatives. The Company’s working capital is expected to returnto more normalized levels in relation to sales during the second halfof 2006.

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Overview of Sales and EarningsResults

Net sales in 2005 increased $35.1  million to$1,332.3  million, as compared with $1,297.2  million in2004, driven by higher shipments and favorable foreign currencytranslation, partially offset by higher total returns, allowances anddiscounts and lower licensing revenue primarily as a result of theprepayment of certain minimum royalties and renewal fees by licenseesin 2004.

In the United States and Canada, 2005 net salesincreased $1.4  million to $857.1  million from$855.7  million in 2004. Excluding the impact of Canadiancurrency fluctuations, net sales were down $3.2  million. Thisdecrease was primarily due to a decline in net sales of certain of theCompany’s base business products and a decrease in licensingrevenue from 2004 levels which included the prepayments of certainminimum royalties and renewal fees by licensees, partially offset by anincrease in new product net sales due in part to the brand initiatives.In International, 2005 net sales increased $33.7  million to$475.2  million from $441.5  million in 2004. The increasein 2005 was due primarily to higher shipments and favorable foreigncurrency translation.

Net loss in 2005 decreased $65.0million to $77.8  million, as compared with $142.8  millionin 2004. The improvement in net loss for 2005, as compared with 2004,reflected a decrease of approximately $82  million in expensesrelating to the early extinguishment of debt, higher product shipments,due principally to the brand initiatives, and favorable foreigncurrency impact. These improvements were partially offset by thedecrease in the aforementioned licensing revenues and the additionalcosts incurred relating to the launch of the brand initiatives,including a charge for incremental returns and allowances, plusadditional costs incurred for advertising, which includes expensesincurred for promotional displays and accelerated depreciation oncertain existing permanent displays.

Overview of MarketShare Data

In terms of U.S. marketplace performance, the U.S.color cosmetics category for 2005 increased approximately 3.2%versus 2004. Combined U.S. mass-market share for the Revlon and Almaybrands totaled 21.6% for 2005, compared with 21.4%for 2004, with the Revlon brand registering a share of15.4% for 2005, compared with 15.7% for 2004, and theAlmay brand registering a share of 6.2% for 2005, compared with5.7% for 2004. The share increase for the Almay brand wasdriven primarily by the successful launch of new products, includingthe Almay Intense i-Color collection. In women’s hair color andbeauty tools, the Company gained market share in 2005, compared with2004, increasing, respectively, from a 8.0% market share for2004 to 8.5% for 2005, and 24.1% market share for 2004 to25.0% for 2005. Market share performance was essentially even at6.2% for anti-perspirants/deodorants in 2004 and2005.

Overview of Financing Activities

TheAccelerated Growth Phase of the Company’s plan include actionsintended to, among other things, strengthen the Company's balancesheet and capital structure, much of which actions were accomplishedduring 2005 and 2004. (See ‘‘Financial Condition,Liquidity and Capital Resources — 2004 RefinancingTransactions’’ for a discussion of the 2004 financingtransactions).

In March  2005, Products Corporation issuedin a private placement $310.0  million aggregate principal amountof 91⁄2% Senior Notes due 2011 (the‘‘Original 91⁄2% SeniorNotes’’) and used the proceeds to prepay and permanentlyreduce $100.0  million of indebtedness under the Term LoanFacility of Products Corporation’s 2004 Credit Agreement, toredeem its 8 1/8% Senior Notes and 9%Senior Notes and to pay the applicable redemption premiums, fees,expenses and accrued interest related to these transactions. Thisissuance and the related transactions extended the maturities ofProducts Corporation's debt that would have otherwise been due in2006. In June  2005, all of the Original91⁄2% Senior Notes were exchanged for new91⁄2% Senior Notes (the ‘‘March2005 91⁄2% Senior Notes’’), whichhave substantially identical terms to the Original91⁄2% Senior Notes, except that they areregistered with the SEC under the Securities Act of 1933, as amended(the ‘‘Securities Act’’), and the transferrestrictions and registration rights applicable to the Original91⁄2% Senior Notes do not apply to theMarch  2005  91⁄2% Senior Notes.(See further discussion in ‘‘2005 RefinancingTransactions’’ within this section and in Note 9,‘‘Long-Term Debt’’, to the ConsolidatedFinancial Statements).

In August  2005, ProductsCorporation issued in a private placement $80.0  millionaggregate principal amount of additional 91⁄2%Senior Notes due 2011 (the ‘‘Additional91⁄2% Senior Notes’’). TheCompany 

27

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used the proceeds of such issuance to helpfund investments in its brand initiatives and for general corporatepurposes, as well as to pay fees and expenses in connection with theissuance of the Additional 91⁄2% Senior Notes.In December  2005, all of the Additional91⁄2% Senior Notes were exchanged for new91⁄2% Senior Notes (the ‘‘August2005 91⁄2% Senior Notes’’ andtogether with the March  200591⁄2% Senior Notes, the‘‘91⁄2% SeniorNotes’’), which have substantially identical terms to theAdditional 91⁄2% Senior Notes, except that theyare registered with the SEC under the Securities Act, and the transferrestrictions and registration rights applicable to the Additional91⁄2% Senior Notes do not apply to theAugust  2005  91⁄2% Senior Notes.(See further discussion in ‘‘2005 RefinancingTransactions’’ within this section and in Note 9‘‘Long-Term Debt’’ to the ConsolidatedFinancial Statements).

Also in August  2005, Revlon, Inc.announced its plan to issue $185.0  million of equity with theproceeds from approximately $110  million of this issuance to becontributed to Products Corporation to reduce its debt and the balanceof the proceeds to be available to Products Corporation for generalcorporate purposes. (See ‘‘RecentDevelopments’’ and ‘‘2005 RefinancingTransactions’’ within this section for furtherdiscussion).

In December  2005, the SEC declared effectiveRevlon, Inc.’s ‘‘shelf’’registration statement on Form S-3 registering up to $250.0million of a variety of equity securities, including (a) Class A CommonStock, (b) preferred stock, (c) warrants to purchase Class A CommonStock or preferred stock, (d) stock purchase contracts (representingcontracts obligating holders to purchase from Revlon, Inc. and Revlon,Inc. to sell to the holders, certain shares of Class A Common Stock orpreferred stock at future dates), (e) stock purchase units (whichconsist of a stock purchase contract and/or warrants that would securethe holder’s obligation to purchase or sell Class A Common Stockor preferred stock), and (f) subscription rights to purchase Class ACommon Stock or preferred stock. (See ‘‘RecentDevelopments’’).

Discussion of CriticalAccounting Policies

In the ordinary course of its business, theCompany has made a number of estimates and assumptions relating to thereporting of results of operations and financial condition in thepreparation of its financial statements in conformity with accountingprinciples generally accepted in the U.S. Actual results could differsignificantly from those estimates and assumptions. The Companybelieves that the following discussion addresses the Company'smost critical accounting policies, which are those that are mostimportant to the portrayal of the Company's financial conditionand results and require management's most difficult, subjectiveand complex judgments, often as a result of the need to make estimatesabout the effect of matters that are inherentlyuncertain.

Sales Returns:

The Company allowscustomers to return their unsold products when they meet certaincompany-established criteria as outlined in the Company’s tradeterms. The Company regularly reviews and revises, when deemednecessary, the Company’s estimates of sales returns basedprimarily upon actual returns, planned product discontinuances, andpromotional sales, which would permit customers to return items basedupon the Company’s trade terms. The Company records estimatedsales returns as a reduction to sales and cost of sales, and anincrease in accrued liabilities and inventories. Returned productswhich are recorded as inventories are valued based upon the amount thatthe Company expects to realize upon their subsequent disposition. Thephysical condition and marketability of the returned products are themajor factors the Company considers in estimating realizable value.Cost of sales includes the cost of refurbishment of returned products.Actual returns, as well as realized values on returned products, maydiffer significantly, either favorably or unfavorably, from theCompany’s estimates if factors such as product discontinuances,customer inventory levels or competitive conditions differ from theCompany’s estimates and expectations and, in the case of actualreturns, if economic conditions differ significantly from theCompany’s estimates and expectations.

Trade SupportCosts:

In order to support the retail trade, the Company hasvarious performance-based arrangements with retailers to reimburse themfor all or a portion of their promotional activities related to theCompany's products. The Company regularly reviews and revises,when deemed necessary, estimates of costs to the 

28

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Company for these promotions based onestimates of what has been incurred by the retailers. Actual costsincurred by the Company may differ significantly if factors such as thelevel and success of the retailers' programs, as well as retailerparticipation levels, differ from the Company's estimates andexpectations.

Inventories:

Inventories are stated atthe lower of cost or market value. Cost is principally determined bythe first-in, first-out method. The Company records adjustments to thevalue of inventory based upon its forecasted plans to sell itsinventories, as well as planned discontinuances. The physical condition(e.g., age and quality) of the inventories is also considered inestablishing its valuation. These adjustments are estimates, whichcould vary significantly, either favorably or unfavorably, from theamounts that the Company may ultimately realize upon the disposition ofinventories if future economic conditions, customer inventory levels,product discontinuances, return levels or competitive conditions differfrom the Company's estimates andexpectations.

Property, Plant and Equipment and OtherAssets:

Property, plant and equipment is recorded at cost and isdepreciated on a straight-line basis over the estimated useful lives ofsuch assets. Changes in circumstances such as technological advances,changes to the Company's business model, changes in the planneduse of fixtures or software or closing of facilities or changes in theCompany's capital strategy can result in the actual useful livesdiffering from the Company's estimates.

Included in otherassets are permanent wall displays, which are recorded at cost andamortized on a straight-line basis over the estimated useful lives ofsuch assets. Intangibles other than goodwill are recorded at cost andamortized on a straight-line basis over the estimated useful lives ofsuch assets.

Long-lived assets, including fixed assets, permanentwall displays and intangibles other than goodwill, are reviewed by theCompany for impairment whenever events or changes in circumstancesindicate that the carrying amount of any such asset may not berecoverable. If the undiscounted cash flows (excluding interest) fromthe use and eventual disposition of the asset is less than the carryingvalue, the Company recognizes an impairment loss, measured as theamount by which the carrying value exceeds the fair value of the asset.The estimate of undiscounted cash flow is based upon, among otherthings, certain assumptions about expected future operatingperformance. The Company's estimates of undiscounted cash flowmay differ from actual cash flow due to, among other things,technological changes, economic conditions, changes to its businessmodel or changes in its operating performance. In those cases where theCompany determines that the useful life of other long-lived assetsshould be shortened, the Company would depreciate the net book value inexcess of the salvage value (after testing for impairment as describedabove), over the revised remaining useful life of such asset therebyincreasing amortization expense. Additionally, goodwill is reviewed forimpairment at least annually. The Company recognizes an impairment lossto the extent that carrying value exceeds the fair value of theasset.

Pension Benefits:

The Company sponsors bothfunded and unfunded pension and other retirement plans in various formscovering employees who meet the applicable eligibility requirements.The Company uses several statistical and other factors in an attempt toestimate future events in calculating the liability and expense relatedto the plans. These factors include assumptions about the discountrate, expected return on plan assets and rate of future compensationincreases as determined annually by the Company, within certainguidelines, which assumptions would be subject to revisions ifsignificant events occur during the year. The Company usesSeptember  30 as its measurement date for plan obligations andassets.

The Company selected a discount rate of 5.5% in2005, a decline from the 5.75% rate selected in 2004 for theCompany’s U.S. pension plans. The average discount rate selectedfor the Company’s international plans also declined from5.5% for 2004 to 5% for 2005. The discount rates are usedto measure the benefit obligations at the measurement date and the netperiodic benefit cost for the subsequent calendar year and are resetannually using data available at the measurement date. The changes inthe discount rates used for 2005 were primarily due to declininglong-term interest rates. At September  30,  2005, thedecrease in the discount rates had the effect of increasing theCompany’s projected pension benefit 

29

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obligation by approximately$19 million. For fiscal 2006, the Company expects that decreasesin the discount rates will have the effect of increasing the netperiodic benefit cost for its U.S. and international plans byapproximately $1.5 million.

The expected rate of returnon the pension plan assets used in 2005 and 2004 remained unchanged at8.5% for the Company’s U.S. pension plans. The averageexpected rate of return used for the Company’s internationalplans declined from 7% in 2004 to 6.7% in 2005, primarilydue to a change in the portfolios’ asset allocations.

Thetable below reflects the Company’s estimates of the possibleeffects of changes in the discount rates and expected rates of returnon its 2006 net periodic benefit costs and its projected benefitobligation at September  30,  2005 for the Company’sprincipalplans:

|                       |  |                         |      |                                   |  |                         |         |                                   |  |        |     |        |  |        |         |        |  |  |
|-----------------------|--|-------------------------|------|-----------------------------------|--|-------------------------|---------|-----------------------------------|--|--------|-----|--------|--|--------|---------|--------|--|--|
|                  |  | 25basis points increase |      | 25 basis pointsdecrease           |
|                  |  | Netperiodicbenefitcosts |      | Projectedpensionbenefitobligation |  | Netperiodicbenefitcosts |         | Projectedpensionbenefitobligation |
| Discountrate          |  | $                       | (1.5 | )                            |  | $                       | (19.4   | )                            |  | $      | 1.7 |   |  | $      | 20.2    |   |
| Expectedrate ofreturn |  |                    | (1.0 | )                            |  |                    | — |                              |  |   | 1.0 |   |  |   | — |   |
|                       |

Therate of future compensation increases is another assumption used by theCompany’s third party actuarial consultants for pensionaccounting. The rate of future compensation increases used in 2005 andin 2004 remained unchanged at 4% for the U.S. pension plans Inaddition, the Company's actuarial consultants also use otherfactors such as withdrawal and mortality rates. The actuarialassumptions used by the Company may differ materially from actualresults due to changing market and economic conditions, higher or lowerwithdrawal rates or longer or shorter life spans of participants, amongother things. Differences from these assumptions could significantlyimpact the actual amount of net periodic benefit cost and liabilityrecorded by the Company.

Results ofOperations

**Year ended December  31,2005 compared with the year ended December  31,  2004**

In the tables, numbers are in millions and amounts inparenthesis ( ) denote unfavorablevariances.

Net sales:

Net sales in2005 increased $35.1  million, or 2.7%, to $1,332.3million, as compared with $1,297.2  million in 2004, driven byhigher shipments and favorable foreign currency translation, partiallyoffset by higher total returns, allowances and discounts. Excluding theimpact of foreign currency fluctuations, consolidated 2005 net salesincreased 1.8%. The 2004 year benefited from the prepayment ofcertain minimum royalties and renewal fees bylicensees.

|                         |  |                       |         |        |  |        |         |        |  |        |      |        |  |        |     |                                   |  |  |
|-------------------------|--|-----------------------|---------|--------|--|--------|---------|--------|--|--------|------|--------|--|--------|-----|-----------------------------------|--|--|
|                    |  | YearEnded December31, |         | Change |
|                    |  | 2005                  |         | 2004   |  | $      |         | %      |
| UnitedStates andCanada. |  | $                     | 857.1   |   |  | $      | 855.7   |   |  | $      | 1.4  |   |  |   | 0.2 | %(1)                         |
| International.          |  |                  | 475.2   |   |  |   | 441.5   |   |  |   | 33.7 |   |  |   | 7.6 |     (2)  |
|                    |  | $                     | 1,332.3 |   |  | $      | 1,297.2 |   |  | $      | 35.1 |   |  |   | 2.7 | %(3)                         |
|                         |

|  |
|--|
|  |  |
|  |

|     |                                                                                               |
|-----|-----------------------------------------------------------------------------------------------|
| (1) | Excludingthe impact of foreign currency fluctuations, U.S. and Canada net salesdecreased0.4%. |

|     |                                                                                             |
|-----|---------------------------------------------------------------------------------------------|
| (2) | Excludingthe impact of foreign currency fluctuations, International net salesincreased6.0%. |

|     |                                                                                             |
|-----|---------------------------------------------------------------------------------------------|
| (3) | Excludingthe impact of foreign currency fluctuations, consolidated net salesincreased 1.8%. |

**United States andCanada.**

In the United States and Canada, net sales increased$1.4  million, or 0.2%, to $857.1  million in 2005from $855.7  million in 2004. Excluding the impact of Canadiancurrency fluctuations, 2005 net sales were down $3.2  million, or0.4%, compared with 2004. This decrease was primarily due to adecline in shipments 

30

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of certain base business products and adecrease of approximately $12  million in licensing revenue from2004 levels, which included the prepayments of certain minimumroyalties and renewal fees by licensees, partially offset by anincrease in shipments of new products and the brand initiatives, net ofa provision for incremental returns and allowances of approximately$44  million associated with the launch of the brandinitiatives.

**International.**

Net sales inthe Company's international operations increased $33.7million, or 7.6%, to $475.2  million in 2005 from$441.5  million in 2004. Excluding the impact of foreign currencyfluctuations, international net sales increased by $26.4million, or 6.0%, in 2005, as compared with 2004.

In AsiaPacific and Africa, net sales increased by $16.4  million, or7.3%, to $242.6  million in 2005, as compared with$226.2  million in 2004. Excluding the impact of foreign currencyfluctuations, net sales in Asia Pacific and Africa increased$13.5  million, or 6.0%, in 2005, as compared with 2004.This increase in 2005 net sales, excluding the impact of foreigncurrency fluctuations, was driven by higher net sales in each of theCompany’s major markets in the region. Excluding the impact offoreign currency fluctuations, the Company estimates that South Africa,Australia, Japan and certain distributor markets contributedapproximately 4.8% of the increase in net sales for the regionin 2005, as compared with 2004.

In Europe, which is comprised ofEurope and the Middle East, net sales increased by $4.4  million,or 3.6%, to $125.0  million in 2005, as compared with$120.6  million in 2004. Excluding the impact of foreign currencyfluctuations, net sales in Europe increased by $5.2  million, or4.3%, in 2005, as compared with 2004. The increase in net sales,excluding the impact of foreign currency fluctuations, was due tohigher net sales in the U.K. and certain distributor markets (which theCompany estimates contributed to an approximate 5.0% increase innet sales for the region in 2005, as compared with 2004), and waspartially offset by a decrease in net sales primarily in Italy (whichthe Company estimates contributed to an approximate 0.6%reduction in net sales for the region in 2005, as compared with2004).

In Latin America, which is comprised of Mexico, CentralAmerica and South America, net sales increased by $12.9  million,or 13.6%, to $107.6  million in 2005, as compared with$94.7  million in 2004. Excluding the impact of foreign currencyfluctuations, net sales in Latin America increased by $8.9million, or 9.5%, in 2005, as compared with 2004. The increasein net sales, excluding the impact of foreign currency fluctuations,was driven primarily by increased shipments in Brazil, Mexico andcertain distributor markets (which the Company estimates contributed toan approximate 9.1% increase in net sales for the region in2005, as compared with 2004), which was partially offset by lower netsales in Argentina and Chile (which the Company estimates contributedto an approximate 0.5% reduction in net sales for the region in2005, as compared with 2004).

Grossprofit:

|              |  |                      |       |        |  |        |       |        |  |   |      |        |  |  |
|--------------|--|----------------------|-------|--------|--|--------|-------|--------|--|---|------|--------|--|--|
|         |  | YearEnded December31 |       |   |
|         |  | 2005                 |       | 2004   |  | Change |
| Grossprofit. |  | $                    | 824.2 |   |  | $      | 811.9 |   |  | $ | 12.3 |   |
|              |

Grossprofit increased by $12.3  million in 2005 from 2004 primarilydue favorable foreign currency translation of $6.4  million andto higher shipments of products, which were partially offset by theaforementioned lower licensing revenues, higher cost of goods due toincreased shipments and higher consolidated returns, allowances anddiscounts, which included approximately $44  million of provisionfor incremental returns and allowances associated with the launch ofthe brand initiatives. Gross profit as a percentage of net salesdecreased to 61.9% in 2005 from 62.6% in 2004 primarilydue to the aforementioned increase in consolidated returns, allowancesand discounts and the aforementioned lower licensingrevenue.

31

----

SG&Aexpenses:

|                  |  |                      |       |        |  |        |       |        |  |   |       |         |  |  |
|------------------|--|----------------------|-------|--------|--|--------|-------|--------|--|---|-------|---------|--|--|
|             |  | YearEnded December31 |       |   |
|             |  | 2005                 |       | 2004   |  | Change |
| SG&Aexpenses |  | $                    | 750.2 |   |  | $      | 716.4 |   |  | $ | (33.8 | )  |
|                  |

Excludingunfavorable foreign currency fluctuations of $5.6  million,SG&A increased $28.2  million, or 4.8%, to$750.2  million for the year ended December  31,2005, primarily due to $17.5  million in expenditures related tothe launch of the Company’s two brand initiatives, inclusive ofthe aforementioned accelerated amortization of permanent displays. Theincrease in SG&A expenses was also due to $4.2  million inhigher distribution costs, higher brand support of $4.0  millionand higher display amortization expenses related to the base businessof $2.7  million, in each case in 2005, as compared with 2004,partially offset by reimbursements from Revlon, Inc. for expensesdirectly related to being a public holding company.

Restructuringcosts:

|                                  |  |                      |     |        |  |        |     |        |  |   |     |        |  |  |
|----------------------------------|--|----------------------|-----|--------|--|--------|-----|--------|--|---|-----|--------|--|--|
|                             |  | YearEnded December31 |     |   |
|                             |  | 2005                 |     | 2004   |  | Change |
| Restructuringcosts and other,net |  | $                    | 1.5 |   |  | $      | 5.8 |   |  | $ | 4.3 |   |
|                                  |

TheCompany recorded $1.5  million and $5.8  million inrestructuring for employee severance and other related personnelbenefits in 2005 and 2004, respectively.

Otherexpenses:

|                  |  |                      |       |        |  |        |       |        |  |   |     |        |  |  |
|------------------|--|----------------------|-------|--------|--|--------|-------|--------|--|---|-----|--------|--|--|
|             |  | YearEnded December31 |       |   |
|             |  | 2005                 |       | 2004   |  | Change |
| Interestexpenses |  | $                    | 130.0 |   |  | $      | 130.8 |   |  | $ | 0.8 |   |
|                  |

Thedecrease in interest expense of $0.8  million for 2005, ascompared with 2004, is primarily due to a slightly lower weightedaverage interest rate during the first three quarters of 2005, offsetin part by higher debt balances during the fourth quarter of 2005attributable primarily to working capital build to help fund theCompany’s brand initiatives, as well as higher weighted averageinterest rates during the fourth quarter of2005.

|                                    |  |                      |     |        |  |        |      |        |  |   |      |        |  |  |
|------------------------------------|--|----------------------|-----|--------|--|--------|------|--------|--|---|------|--------|--|--|
|                               |  | YearEnded December31 |     |   |
|                               |  | 2005                 |     | 2004   |  | Change |
| Losson early extinguishment ofdebt |  | $                    | 9.0 |   |  | $      | 90.7 |   |  | $ | 81.7 |   |
|                                    |

The$9.0  million loss on early extinguishment of debt for 2005includes the $5.0  million prepayment fee related to theprepayment in March  2005 of $100.0  million ofindebtedness outstanding under the Term Loan Facility of the 2004Credit Agreement with a portion of the proceeds from the issuance ofthe Original 91⁄2% Senior Notes, the aggregate$1.5  million loss on the redemption of ProductsCorporation’s 8 1/8% Senior Notes and9% Senior Notes in April  2005, as well as the write-offof the portion of deferred financing costs related to such prepaidamount. The loss on early extinguishment of debt for 2004 representsthe loss on the exchange of equity for certain indebtedness in theRevlon Exchange Transactions and fees, expenses and the write-off ofdeferred financing costs related to the Revlon Exchange Transactions,the tender for and redemption of Products Corporation’s12% Senior Secured Notes (including the applicable premium) andthe repayment of Products Corporation’s credit agreement datedNovember  30,  2001, which was scheduled to mature onMay  30,  2005 (as amended, the ‘‘2001 CreditAgreement’’). (See Note 9 to the Consolidated FinancialStatements).

|                   |  |                      |      |         |  |        |     |        |  |   |     |        |  |  |
|-------------------|--|----------------------|------|---------|--|--------|-----|--------|--|---|-----|--------|--|--|
|              |  | YearEnded December31 |      |    |
|              |  | 2005                 |      | 2004    |  | Change |
| Miscellaneous,net |  | $                    | (0.5 | )  |  | $      | 2.0 |   |  | $ | 2.5 |   |
|                   |

Thedecrease in miscellaneous, net for 2005, as compared with 2004, isprimarily due to fees and expenses associated with the refinancing thatProducts Corporation launched in May  2004 but did notconsummate.

32

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Provision for incometaxes:

|                          |  |                      |     |        |  |        |     |        |  |   |     |        |  |  |
|--------------------------|--|----------------------|-----|--------|--|--------|-----|--------|--|---|-----|--------|--|--|
|                     |  | YearEnded December31 |     |   |
|                     |  | 2005                 |     | 2004   |  | Change |
| Provisionfor incometaxes |  | $                    | 8.3 |   |  | $      | 9.1 |   |  | $ | 0.8 |   |
|                          |

Thedecrease in the provision for income taxes in 2005, as compared with2004, was primarily attributable to the favorable resolution of varioustax matters resulting in a tax benefit of approximately $3.8million in 2005, compared to that of approximately $2.9  millionin 2004. The decrease in the provision for income taxes was partiallyoffset by the tax on cash repatriation dividends from a foreignsubsidiary.

**Year Ended December  31,  2004compared with the year ended December  31,2003**

In the tables, numbers are in millions and amounts inparenthesis ( ) denote unfavorable variances.

Netsales:

Net sales in 2004 declined $2.1  million, or0.2%, to $1,297.2  million, as compared with$1,299.3  million in 2003, driven by higher consolidated returns,allowances and discounts, due in part to higher returns provision forproduct discontinuances identified in 2004 and higher returns frompromotions, partially offset by higher shipments and favorable foreigncurrency translation.

|                        |  |                       |         |        |  |        |         |        |  |        |       |         |  |        |      |                                         |  |  |
|------------------------|--|-----------------------|---------|--------|--|--------|---------|--------|--|--------|-------|---------|--|--------|------|-----------------------------------------|--|--|
|                   |  | YearEnded December31, |         | Change |
|                   |  | 2004                  |         | 2003   |  | $      |         | %      |
| UnitedStates andCanada |  | $                     | 855.7   |   |  | $      | 890.6   |   |  | $      | (34.9 | )  |  |   | (3.9 | )%                                 |
| International          |  |                  | 441.5   |   |  |   | 408.7   |   |  |   | 32.8  |    |  |   | 8.0  |      (1)  |
|                   |  | $                     | 1,297.2 |   |  | $      | 1,299.3 |   |  | $      | (2.1  | )  |  |   | (0.2 | )%(2)                              |
|                        |

|  |
|--|
|  |  |
|  |

|     |                                                                                             |
|-----|---------------------------------------------------------------------------------------------|
| (1) | Excludingthe impact of foreign currency fluctuations, International net salesincreased1.0%. |

|     |                                                                                             |
|-----|---------------------------------------------------------------------------------------------|
| (2) | Excludingthe impact of foreign currency fluctuations, consolidated net salesdecreased 2.7%. |

**United States andCanada.**

Net sales in the U.S. and Canada decreased$34.9  million, or 4%, in 2004, as compared with 2003, dueto higher total returns, allowances and discounts of approximately$51.0  million, partially offset by higher shipments ofapproximately $3.3  million, the favorable impact of foreigncurrency translation of $5.9  million and increased licensingrevenue of $6.9  million, primarily from the prepayments ofminimum royalties and renewal fees by licensees of $11.8  millionin 2004 versus $5.3  million in 2003. The increase in returns,allowances and discounts in 2004 versus 2003 is due in part to higherreturns provision for product discontinuances identified in 2004,higher returns from promotions, and the fact that the 2003 provisionfor returns benefited from a revision of previous estimates for returnsassociated with the Company's Stabilization and Growth Phase ofits plan recorded in 2002.

In terms of U.S. marketplaceperformance, the U.S. color cosmetics category for 2004 declined byapproximately 0.6% versus 2003. For 2004, the Revlon and Almaybrands combined held U.S. mass-market share of 21.4%, comparedwith 22.2% for 2003. Market share performance of existingproducts under the Revlon and Almay brands increased from 2003 to 2004,offset in part by decreased share performance of new products undersuch brands. In women’s hair color and beauty tools, the Companygained market share in 2004, compared with 2003, increasing,respectively, from a 7.3% market share for 2003 to 8.0%for 2004 and a 22.2% market share for 2003 to 24.1% for2004, while market share was down for anti-perspirants/deodorants,decreasing from 6.4% in 2003 to 6.2% in2004.

**International.**

Net sales in theCompany's international operations increased $32.8million, or 8.0%, in 2004, as compared with 2003. Excluding theimpact of foreign currency fluctuations, international net salesincreased by 1.0% in 2004, as compared with2003.

33

----

In Europe, which is comprised of Europeand the Middle East, net sales decreased by $3.7  million, or3.0%, to $120.6  million for 2004, as compared with 2003.Excluding the impact of foreign currency fluctuations, net salesdecreased by $15.1  million, or 12.2%, in 2004, ascompared with 2003. The decline in net sales, excluding the impact offoreign currency fluctuations, was due to lower sales in the U.K., inpart due to reduced customer inventory levels and higher allowancesgranted to customers (which the Company estimates contributed to anapproximate 9.4% reduction in net sales in 2004 for the region,as compared with 2003) and lower sales to distributors in Russia andGermany (which the Company estimates contributed to an approximate4.3% reduction in net sales in 2004 for the region, as comparedwith 2003), partially offset by increased sales in Israel (which theCompany estimates contributed to an approximate 1.3% increase innet sales in 2004 for the region, as compared with 2003).

InSeptember  2004, the Company exercised its contractual rights toterminate its 2002 supply agreement with COSi that became effective onJanuary  31,  2006. The Company has transitioned suchmanufacturing primarily to its Oxford, North Carolina facility anddistribution and warehousing to a local U.K.-based third party. During2004, COSi earned approximately $1.9  million inperformance-based payments. In December  2004, the Company andCOSi entered into a transitional agreement covering the period throughtermination pursuant to which, among other things, COSi received$1.9  million in additional performance-based payments bymaintaining specific production service level objectives. However, suchpayments were fully set off against payments due to the Company fromCOSi in connection with the cessation of such arrangement.

InLatin America, which is comprised of Mexico, Central America and SouthAmerica, net sales increased by $2.5  million, or 2.8%, to$94.7  million for 2004, as compared with 2003. Excluding theimpact of foreign currency fluctuations, net sales increased by$4.8  million, or 5.2%, in 2004, as compared with 2003.The increase in net sales, excluding the impact of foreign currencyfluctuations, was primarily due to increased net sales in Brazil,Venezuela and certain distributor markets due to improved localeconomic and business conditions (which the Company estimatescontributed to an approximate 11.5% increase in net sales forthe region in 2004, as compared with 2003), partially offset by lowersales in Mexico (which the Company estimates contributed to anapproximate 5.2% reduction in net sales in 2004 for the region,as compared with 2003).

In the Asia Pacific and Africa, net salesincreased by $34.0  million, or 17.7%, to $226.2million for 2004, as compared with 2003. Excluding the impact offoreign currency fluctuations, net sales increased $14.4million, or 7.5%, for 2004, as compared with 2003. This increasewas driven by higher sales in South Africa and Japan related tofavorable economic conditions (which the Company estimates contributedto an approximate 6.0% increase in net sales in 2004 for theregion, as compared with 2003).

Grossprofit:

|              |  |                      |       |        |  |        |       |        |  |   |      |        |  |  |
|--------------|--|----------------------|-------|--------|--|--------|-------|--------|--|---|------|--------|--|--|
|         |  | YearEnded December31 |       |   |
|         |  | 2004                 |       | 2003   |  | Change |
| Grossprofit. |  | $                    | 811.9 |   |  | $      | 798.2 |   |  | $ | 13.7 |   |
|              |

Excludingforeign exchange fluctuations, gross profit for 2004 decreased$6.3  million, as compared with 2003, reflecting higher totalreturns, allowances and discounts, partially offset by higher shipmentsof products, the aforementioned increase in licensing revenue and lowercost of goods sold. Gross profit as a percent of sales, excluding theimpact of foreign currency fluctuations, increased to 62.6% in2004 from 61.4% in 2003, primarily due to cost savings and theaforementioned higher licensing revenues, partially offset by highertotal returns, allowances and discounts.

SG&Aexpenses:

|                  |  |                      |       |        |  |        |       |        |  |   |      |        |  |  |
|------------------|--|----------------------|-------|--------|--|--------|-------|--------|--|---|------|--------|--|--|
|             |  | YearEnded December31 |       |   |
|             |  | 2004                 |       | 2003   |  | Change |
| SG&Aexpenses |  | $                    | 716.4 |   |  | $      | 769.7 |   |  | $ | 53.3 |   |
|                  |

SG&Aexpenses decreased $53.3  million, or 6.9%, to$716.4  million for 2004, as compared with 2003, due primarily to$36.7  million of lower marketing spending and the absence offees and expenses related to the Stabilization and Growth Phase of theCompany's plan in 2004 versus $26.1  million ofplan-related expenses in 2003, partially offset by $14.9  millionof unfavorable foreign currency fluctuations.

34

----

Restructuringcosts:

|                                  |  |                      |     |        |  |        |     |        |  |   |     |        |  |  |
|----------------------------------|--|----------------------|-----|--------|--|--------|-----|--------|--|---|-----|--------|--|--|
|                             |  | YearEnded December31 |     |   |
|                             |  | 2004                 |     | 2003   |  | Change |
| Restructuringcosts and other,net |  | $                    | 5.8 |   |  | $      | 6.0 |   |  | $ | 0.2 |   |
|                                  |

TheCompany recorded $5.8  million and $6.0  million foremployee severance and other personnel benefits in 2004 and 2003,respectively.

Otherexpenses:

|                  |  |                      |       |        |  |        |       |        |  |   |      |        |  |  |
|------------------|--|----------------------|-------|--------|--|--------|-------|--------|--|---|------|--------|--|--|
|             |  | YearEnded December31 |       |   |
|             |  | 2004                 |       | 2003   |  | Change |
| Interestexpenses |  | $                    | 130.8 |   |  | $      | 174.5 |   |  | $ | 43.7 |   |
|                  |

Thedecrease in interest expense of $43.7  million for 2004, ascompared with 2003, is primarily due to lower consolidated debt during2004, resulting from the Revlon Exchange Transactions, partially offsetby higher borrowings under the 2004 Credit Agreement to repay the 2001Credit Agreement, the tender for and redemption of the 12%Senior Secured Notes (including the applicable premium and accruedinterest) and to pay related fees and expenses. (See Note 9 to theConsolidated FinancialStatements).

|                                    |  |                      |      |        |  |        |         |        |  |   |       |         |  |  |
|------------------------------------|--|----------------------|------|--------|--|--------|---------|--------|--|---|-------|---------|--|--|
|                               |  | YearEnded December31 |      |   |
|                               |  | 2004                 |      | 2003   |  | Change |
| Losson early extinguishment ofdebt |  | $                    | 90.7 |   |  | $      | — |   |  | $ | (90.7 | )  |
|                                    |

Theloss on early extinguishment of debt in 2004 represents the loss on theexchange of equity for certain indebtedness in the Revlon ExchangeTransactions (such loss was equal to the difference between the fairvalue of the equity securities issued in the Revlon ExchangeTransactions and the book value of the related indebtedness exchangedby third parties other than MacAndrews & Forbes or related parties)and fees, expenses and the write-off of deferred financing costsrelated to the Revlon Exchange Transactions, the tender for andredemption of the 12% Senior Secured Notes (including theapplicable premium) and the repayment of the 2001 Credit Agreement.(See Note 9 to the Consolidated FinancialStatements).

|                   |  |                      |     |        |  |        |     |        |  |   |      |         |  |  |
|-------------------|--|----------------------|-----|--------|--|--------|-----|--------|--|---|------|---------|--|--|
|              |  | YearEnded December31 |     |   |
|              |  | 2004                 |     | 2003   |  | Change |
| Miscellaneous,net |  | $                    | 2.0 |   |  | $      | 0.5 |   |  | $ | (1.5 | )  |
|                   |

Theincrease in miscellaneous, net for 2004, as compared with 2003, isprimarily due to fees and expenses associated with the refinancing thatProducts Corporation launched in May  2004, but did notconsummate.

Provision for incometaxes:

|                          |  |                      |     |        |  |        |     |        |  |   |      |         |  |  |
|--------------------------|--|----------------------|-----|--------|--|--------|-----|--------|--|---|------|---------|--|--|
|                     |  | YearEnded December31 |     |   |
|                     |  | 2004                 |     | 2003   |  | Change |
| Provisionfor incometaxes |  | $                    | 9.1 |   |  | $      | 0.3 |   |  | $ | (8.8 | )  |
|                          |

Theincrease in the provision for income taxes in 2004, as compared with2003, is due to higher taxable income in certain markets outside theU.S. in 2004. Additionally, 2004 and 2003 benefited by approximately$2.9  million and $7.0  million, respectively, from thefavorable resolution of various tax audits.

Financial Condition,Liquidity and Capital Resources

Net cash used for operatingactivities was $139.7  million, $94.2  million and$166.4  million for 2005, 2004 and 2003, respectively. Thisincrease in cash used in 2005 versus 2004 resulted primarily fromincreased purchases of permanent displays and an increase in inventoryand accounts receivables, partially offset by an increase in accountspayable and accrued expenses, in each case due principally to the brandinitiatives. The improvement in net cash used for operating activitiesfor 2004 versus 2003 

35

----

resulted primarily from higher operatingincome, lower purchases of permanent displays, lower accrued expensesand lower cash spending in connection with the Stabilization and GrowthPhase of the Company's plan and lower interest payments. TheCompany received nil, $11.8  million and $5.3  million in2005, 2004 and 2003, respectively, related to prepaid minimum royaltiesand renewal fees under licensing agreements.

Net cash used forinvesting activities was $15.8  million, $18.9  million and$23.3  million for 2005, 2004 and 2003, respectively. Net cashused for investing activities for 2005, 2004 and 2003 primarilyconsisted of capital expenditures, partially offset in 2003 by theproceeds from the sale of the Company's warehouse in Canada.

Net cash provided by financing activities was $67.5  million,$174.5  million and $151.1  million for 2005, 2004 and2003, respectively. Net cash provided by financing activities for 2005included proceeds of $386.2  million from the issuance of the91⁄2% Senior Notes, which was used to (i)prepay $100.0  million of indebtedness under the Term LoanFacility of Products Corporation’s 2004 Credit Agreement, alongwith the $5.0  million prepayment fee plus accrued interest, (ii)redeem $116.2  million aggregate principal amount outstanding ofProducts Corporation’s 8 1/8% SeniorNotes, plus the payment of accrued interest, (iii) redeem $75.5million aggregate principal amount outstanding of ProductsCorporation’s 9% Senior Notes, plus accrued interest andthe applicable premium, and (iv) pay financing costs related to suchtransactions, with the balance being used to help fund theCompany’s brand initiatives. Net cash provided by financingactivities for 2004 included cash drawn under each of the 2001 CreditAgreement, a $125  million term loan from MacAndrews & Forbes(the ‘‘2004 $125  million MacAndrews & ForbesLoan’’) and the Term Loan Facility under the 2004 CreditAgreement, partially offset by a) the repayment of borrowings under the2001 Credit Agreement (in connection with the refinancing thereof), b)the repayment of borrowings under the 2004 $125  millionMacAndrews & Forbes Loan, c) the payment of the redemption price,the applicable premium and interest in connection with the tender forand redemption of Products Corporation’s 12% SeniorSecured Notes and d) the payment of financing costs in connection withcertain amendments to the 2001 Credit Agreement during 2004, the RevlonExchange Transactions, the 2004 Credit Agreement and the tender for andredemption of the 12% Senior Secured Notes. Net cash provided byfinancing activities for 2003 included cash drawn under the 2001 CreditAgreement and under a $65  million line of credit and a$100.0  million term loan from MacAndrews & Forbes and netproceeds from a $50.0  million rights offering conducted byRevlon, Inc. in 2003, partially offset by the repayment of borrowingsunder the 2001 Credit Agreement and payment of financing costs.

At February  1,  2006, Products Corporation had aliquidity position, of approximately $255  million, consisting of(i) cash, cash equivalents and marketable securities (net of anyoutstanding checks), (ii) approximately $144  million ofavailable borrowings from the Multi-Currency Facility under the 2004Credit Agreement and (iii) approximately $87  million ofavailable borrowings under the 2004 Consolidated MacAndrews &Forbes Line of Credit. (See ‘‘RecentDevelopments’’).

2004 CreditAgreement

In July  2004, Products Corporation enteredinto a new credit agreement (the ‘‘2004 CreditAgreement’’) with certain of its subsidiaries as localborrowing subsidiaries, a syndicate of lenders, and Citicorp USA, Inc.,as multi-currency administrative agent, term loan administrative agentand collateral agent.

The 2004 Credit Agreement originallyprovided up to $960.0  million and, before giving effect to the$100.0  million prepayment in March  2005, consisted of aterm loan facility of $800.0  million (prior to being reduced to$700.0  million following the Company’s March  2005prepayment of $100.0  million) (the ‘‘Term LoanFacility’’) and a $160.0  million multi-currencyfacility, the availability under which varies based upon the borrowingbase that is determined based upon the value of eligible accountsreceivable, eligible inventory and eligible real property and equipmentin the U.S. and the U.K. from time to time (the‘‘Multi-Currency Facility’’). ProductsCorporation may request the Multi-Currency Facility to be increasedfrom time to time in an aggregate principal amount not to exceed$50.0  million subject to certain exceptions and subject to thelenders’ agreement. The Multi-Currency Facility is available to:(i) Products Corporation in revolving credit loans denominated in U.S.dollars, (ii) Products Corporation in swing line 

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loans denominated in U.S. dollars up to$25.0  million, (iii) Products Corporation in standby andcommercial letters of credit denominated in U.S. dollars and othercurrencies up to $50.0  million and (iv) Products Corporation andcertain of its international subsidiaries designated from time to timein revolving credit loans and bankers’ acceptances denominatedin U.S. dollars and other currencies, in each case subject to borrowingbase availability. If the value of the eligible assets is notsufficient to support the $160.0  million borrowing base underthe Multi-Currency Facility, Products Corporation will not have fullaccess to the Multi-Currency Facility. Products Corporation’sability to make borrowings under the Multi-Currency Facility is alsoconditioned upon the satisfaction of certain conditions precedent andProducts Corporation’s compliance with other covenants in the2004 Credit Agreement, including a fixed charge coverage ratio thatapplies when the excess borrowing base is less than $30.0million. In March  2005 Products Corporation prepaid$100.0  million of indebtedness outstanding under the Term LoanFacility, together with accrued interest and the $5.0  millionprepayment fee associated with such prepayment, using a portion of theproceeds from the issuance of the Original 200591⁄2% Senior Notes.

The Multi-CurrencyFacility will terminate on July  9,  2009 and the loansunder the Term Loan Facility will mature on July  9,  2010;provided that the 2004 Credit Agreement will terminate onOctober  30,  2007 if the 8 5/8%Senior Subordinated Notes are not redeemed, repurchased, defeased orrepaid on or before such date such that not more than $25.0million in aggregate principal amount of Products Corporation’s8 5/8% Senior Subordinated Notes remainoutstanding. In addition to customary events of default, it would be anevent of default under the 2004 Credit Agreement if Revlon, Inc. failsto complete an approximately $110.0  million equity issuance andtransfer the proceeds of such equity issuance to Products Corporationby March  31,  2006, which Products Corporation mustpromptly use to reduce its outstanding indebtedness. (See‘‘Recent Developments’’).

Borrowingsunder the Multi-Currency Facility (other than loans in foreigncurrencies) bear interest at a rate equal to, at ProductsCorporation's option, either (A) the Alternate Base Rate plus1.50%; or (B) the Eurodollar Rate plus 2.50%. Loans inforeign currencies bear interest in certain limited circumstances or ifmutually acceptable to Products Corporation and the relevant foreignlenders at the Local Rate, and otherwise at the Eurocurrency Rate, ineach case plus 2.50%. The loans under the Term Loan Facilitybear interest at a rate equal to, at Products Corporation'soption, either (A) the Alternate Base Rate plus 5.00%; or (B)the Eurodollar Rate plus 6.00%. At December  31,2005, the weighted average rate for borrowings under the Term LoanFacility was 10.1%.

The 2004 Credit Agreement requiresProducts Corporation to comply with various financial covenants andrestrictions, including covenants and restrictions relating toindebtedness, liens, investments, sales of assets, mergers andacquisitions, dividends and transactions with ProductsCorporation’s affiliates, each of which is subject to limitedexceptions. Additionally, the 2004 Credit Agreement contains financialcovenants limiting Products Corporation’s senior securedleverage ratio (the ratio of Products Corporation’s SeniorSecured Debt to EBITDA, as each such term is defined in the 2004 CreditAgreement) to 5.50 to 1.00 for the four consecutive quarters endingduring the period from December  31,  2004 toSeptember  30,  2005; 5.00 to 1.00 for the four consecutivequarters ending during the period from December  31,  2005to December  31,  2006; and 4.50 to 1.00 for the fourconsecutive quarters ending March  31,  2007 and eachsubsequent quarter until the maturity date of the 2004 CreditAgreement. Additionally, under any circumstances when the excessborrowing base under the Multi-Currency Facility is less than$30.0  million for a period of 30 consecutive days or more,Products Corporation would be required to maintain a consolidated fixedcharge coverage ratio (the ratio of EBITDA minus Capital Expendituresto Cash Interest Expense for such period, as each such term is definedin the 2004 Credit Agreement) of 1.00 to 1.00. Products Corporation wasin compliance with all applicable covenants under the 2004 CreditAgreement as of December  31,  2005.

AtFebruary  1,  2006, the Term Loan Facility was fully drawnand availability under the Multi-Currency Facility, based upon thecalculated borrowing base less approximately $16  million ofoutstanding letters of credit, was approximately $144  million,as the Multi-Currency Facility was undrawn. (See ‘‘RecentDevelopments’’ regarding recent amendments to thefinancial covenants under the 2004 Credit Agreement).

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2004 Consolidated MacAndrews &Forbes Line of Credit

In July  2004, ProductsCorporation and MacAndrews & Forbes Inc. entered into a line ofcredit, with an initial commitment of $152.0  million, whichreduced to $87.0  million in July  2005 (as amended, the‘‘2004 Consolidated MacAndrews & Forbes Line ofCredit’’). (See ‘‘RecentDevelopments’’ regarding an extension of the term of suchline of credit). As of February  1,  2006, the 2004Consolidated MacAndrews & Forbes Line of Credit wasundrawn.

Loans are available under the 2004 ConsolidatedMacAndrews & Forbes Line of Credit if (i) the Multi-CurrencyFacility under the 2004 Credit Agreement has been substantially drawn(after taking into account anticipated needs for Local Loans (asdefined in the 2004 Credit Agreement) and letters of credit), (ii) suchborrowing is necessary to cause the excess borrowing base under theMulti-Currency Facility to remain greater than $30.0  million,(iii) additional revolving loans are not available under theMulti-Currency Facility, (iv) such borrowing is reasonably necessary toprevent or to cure a default or event of default under the 2004 CreditAgreement or (v) Products Corporation requests such loan to assist itin funding investments in the Company’s brandinitiatives.

Loans under the 2004 Consolidated MacAndrews &Forbes Line of Credit bear interest (which is not payable in cash butis capitalized quarterly in arrears) at a rate per annum equal to thelesser of (a) 12.0% and (b) 0.25% less than the ratepayable from time to time on Eurodollar loans under the Term LoanFacility under the 2004 Credit Agreement, which effective interest ratewas 9.35% as of December  31,  2005, provided thatat any time that the Eurodollar Base Rate under the 2004 CreditAgreement is equal to or greater than 3.0%, the applicable rateon loans under the 2004 Consolidated MacAndrews & Forbes Line ofCredit will be equal to the lesser of (x) 12.0% and (y)5.25% over the Eurodollar Base Rate then in effect.

2005 Refinancing Transactions

In March  2005,Products Corporation issued $310.0  million aggregate principalamount of its Original 91⁄2% Senior Notes. Thisissuance and the related transactions extended the maturities ofProducts Corporation's debt that would have otherwise been due in2006.

The proceeds from the Original91⁄2% Senior Notes were used to prepay$100.0  million of indebtedness outstanding under the Term LoanFacility of Products Corporation’s 2004 Credit Agreement,together with accrued interest and the associated $5.0  millionprepayment fee, and to pay $7.0  million in certain fees andexpenses associated with the issuance of the Original91⁄2% Senior Notes. The remaining $197.9million in proceeds was used to redeem all of the $116.2  millionaggregate principal amount outstanding of Products Corporation’s8 1/8% Senior Notes, plus accrued interest, andall of the $75.5  million aggregate principal amount outstandingof Products Corporation’s 9% Senior Notes, plus accruedinterest and applicable premium. The aggregate redemption amounts forthe 8 1/8% Senior Notes and 9% SeniorNotes were $118.1  million and $79.8  million,respectively, which constituted the principal amount and interestpayable on the 8 1/8% Senior Notes and the9% Senior Notes up to, but not including, the redemption date,and, with respect to the 9% Senior Notes, the applicablepremium. In June  2005, all of the Original91⁄2% Senior Notes which were issued byProducts Corporation in March  2005 were exchanged for theMarch  2005  91⁄2% Senior Notes,which have substantially identical terms to the Original91⁄2% Senior Notes, except that theMarch  2005  91⁄2% Senior Notes areregistered with the SEC under the Securities Act, and the transferrestrictions and registration rights applicable to the Original91⁄2% Senior Notes do not apply to theMarch  2005  91⁄2% SeniorNotes.

In August  2005, Products Corporation issued$80.0  million aggregate principal amount of the Additional91⁄2% Senior Notes, which priced at951⁄4% of par. Products Corporation issued theAdditional 91⁄2% Senior Notes as additionalnotes pursuant to the same indenture, dated as of March16,  2005, governing the March  200591⁄2% Senior Notes (the‘‘91⁄2% Senior NotesIndenture’’). The Additional91⁄2% Senior Notes constitute a furtherissuance of, are the same series as, and will vote on any matterssubmitted to note holders with, the March  200591⁄2% Senior Notes. In December  2005,all of the Additional 91⁄2% Senior Notes issuedby Products Corporation were exchanged for new August91⁄2% Senior Notes, which have substantiallyidentical terms to the Additional 91⁄2% SeniorNotes, except that 

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the August  200591⁄2% Senior Notes are registered with the SECunder the Securities Act, and the transfer restrictions andregistration rights applicable to the Additional91⁄2% Senior Notes do not apply to theAugust  2005  91⁄2% SeniorNotes.

Pursuant to the terms of the91⁄2% Senior Notes Indenture, the91⁄2% Senior Notes are senior unsecured debt ofProducts Corporation with right to payment under the91⁄2% Senior Notes equal in right of paymentwith any present and future senior indebtedness of ProductsCorporation. The 91⁄2% Senior Notes bearinterest at an annual rate of 91⁄2%, which ispayable on April  1 and October  1 of each year, whichcommenced on October  1,  2005.

As mentioned in‘‘Overview — Overview of FinancingActivities’’, in August  2005, Revlon, Inc.announced its plan to issue $185.0  million of equity, with theproceeds from approximately $110  million of this issuance to becontributed to Products Corporation to reduce its debt and the balanceof the proceeds to be available to Products Corporation for generalcorporate purposes. Additionally, in connection with Revlon,Inc.’s plan to issue $185.0  million of equity, MacAndrews& Forbes and Revlon, Inc. amended the 2004 Investment Agreement toincrease MacAndrews & Forbes' commitment to purchase suchequity as is necessary to ensure that Revlon, Inc. issues $185.0million in equity. (See ‘‘RecentDevelopments’’).

2004 RefinancingTransactions

In February  2004, Revlon, Inc.'sBoard of Directors approved agreements with Fidelity Management &Research Company (‘‘Fidelity’’) andMacAndrews & Forbes intended to dramatically strengthen theCompany's balance sheet, as well as an Investment Agreement (the‘‘2004 Investment Agreement’’) withMacAndrews & Forbes covering a series of transactions designed toreduce Products Corporation's levels of indebtedness.

InMarch  2004, Revlon, Inc. exchanged approximately $804million of Products Corporation’s debt, $54.6  million ofRevlon, Inc. preferred stock and $9.9  million of accruedinterest for 299,969,493 shares of Class A Common Stock (the‘‘Revlon Exchange Transactions’’). As aresult of the Revlon Exchange Transactions, Revlon, Inc. reducedProducts Corporation's debt by approximately $804  millionon March  25,  2004. In addition to the Revlon ExchangeTransactions, pursuant to the 2004 Investment Agreement, Revlon, Inc.is committed to conduct further rights and equity offerings (suchequity offerings, together with the Revlon Exchange Transactions, arereferred to as the ‘‘Debt ReductionTransactions’’). Under the 2004 Credit Agreement,MacAndrews & Forbes agreed to take, or cause to be taken, allcommercially reasonable actions to facilitate the Debt ReductionTransactions. (See ‘‘Recent Developments’’and ‘‘—Overview — Overview of FinancingActivities’’ for further discussion of such proposedequity issuances).

In another contemporaneous transaction to theRevlon Exchange Transactions, Revlon, Inc. and Fidelity entered into astockholders agreement (the ‘‘StockholdersAgreement’’) pursuant to which, among other things, (i)Revlon, Inc. agreed to continue to maintain a majority of independentdirectors (as defined by NYSE listing standards) on its Board ofDirectors, as it currently does (as of February  1,  2006,eight of Revlon, Inc.’s twelve directors are independent); (ii)Revlon, Inc. would establish and maintain a Nominating and CorporateGovernance Committee of the Board of Directors, which it formed inMarch  2004; and (iii) Revlon, Inc. agreed to certainrestrictions with respect to Revlon, Inc.'s conducting anybusiness or entering into any transactions or series of relatedtransactions with any of its affiliates, any holders of 10% ormore of the outstanding voting stock or any affiliates of such holders(in each case, other than its subsidiaries). The Stockholders Agreementwill terminate at such time as Fidelity ceases to be the beneficialholder of at least 5% of Revlon, Inc.'s outstanding votingstock.

Sources and Uses

The Company'sprincipal sources of funds are expected to be operating revenues, cashon hand, net cash proceeds from the planned $75  million equityissuance described in ‘‘RecentDevelopments’’, and funds available for borrowing underthe 2004 Credit Agreement, the 2004 Consolidated MacAndrews &Forbes Line of Credit and other permitted lines of credit. (See‘‘Recent Developments’’ regarding the

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extension of the term of the 2004Consolidated MacAndrews & Forbes Line of Credit ). The 2004 CreditAgreement, the 2004 Consolidated MacAndrews & Forbes Line of Creditand the indentures governing the 91⁄2% SeniorNotes and the 8 5/8% Senior Subordinated Notescontain certain provisions that by their terms limit ProductsCorporation and its subsidiaries' ability to, among other things,incur additional debt.

The Company's principal uses offunds are expected to be the payment of operating expenses, includingexpenses in connection with the continued implementation of, andrefinement to, the Company’s plan (including theCompany’s brand initiatives referred to in‘‘—Overview — Overview of BrandInitiatives’’), purchases of permanent wall displays,capital expenditure requirements, payments in connection with theCompany’s restructuring programs referred to herein and under‘‘Recent Developments’’, debt servicepayments and costs and regularly scheduled pension and post-retirementbenefit plan contributions. Cash contributions to the Company'spension and post-retirement benefit plans were approximately $27million in 2005 and the Company expects them to be approximately$33  million in 2006. In 2005, the Company’s purchases ofwall displays were approximately $70  million and capitalexpenditures were approximately $26  million.

The Companycontinues to make certain investments in connection with its brandinitiatives, most notably in the area of permanent displays andinventory. In terms of the cash flow impact of these brand initiatives,the Company expects that its investment in permanent displays,including displays for its existing businesses and these brandinitiatives, will be in the range of $85  million to $95million for 2006, returning to more normalized levels thereafter. TheCompany’s working capital increased significantly during thesecond half of 2005, due principally to the brand initiatives, and isexpected to return to more normalized levels in relation to salesduring the second half of 2006. The Company estimates that capitalexpenditures for 2006 will be approximately $35million.

The Company has undertaken a number of programs toefficiently manage its cash and working capital including, among otherthings, programs to carefully manage inventory levels, centralizedpurchasing to secure discounts and efficiencies in procurement, andproviding additional discounts to U.S. customers for more timelypayment of receivables and careful management of accountspayable.

In 2002, the Company estimated that charges related tothe implementation of the Stabilization and Growth Phase of its planwould not exceed $160  million. The Company recorded charges ofapproximately $104  million in 2002, $31  million in 2003and nil after 2003 related to the implementation of the Stabilizationand Growth Phase of its plan. Cash payments related to the foregoingcharges were approximately nil, $20  million and $80million during 2005, 2004 and 2003, respectively.

Continuing toimplement and refine the Company’s plan could include takingadvantage of additional opportunities to reposition, repackage orreformulate one or more brands or product lines, launching additionalnew brands or products and/or further refining the Company’sapproach to retail merchandising. Any of these actions, whose intendedpurpose would be to create value through profitable growth, couldresult in the Company making investments or recognizing charges relatedto executing against such opportunities.

The Company expectsthat operating revenues, cash on hand, net cash proceeds from theplanned $75  million equity issuance described in‘‘Recent Developments’’ and funds availablefor borrowing under the 2004 Credit Agreement, the 2004 ConsolidatedMacAndrews & Forbes Line of Credit and other permitted lines ofcredit will be sufficient to enable the Company to cover its operatingexpenses for 2006, including cash requirements in connection with theCompany’s operations, the continued implementation of, andrefinement to, the Company’s plan (including theCompany’s brand initiatives referred to in‘‘— Overview — Overviewof Brand Initiatives’’), cash requirements inconnection with the Company’s restructuring programs referred toabove, the Company’s debt service requirements and regularlyscheduled pension and post-retirement plan contributions. However,there can be no assurance that such funds will be sufficient to meetthe Company’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 mass-market cosmeticscategory, adverse changes in currency, increased competition from theCompany’s competitors, changes in consumer purchasing habits,including with respect to shopping channels, retailer inventorymanagement or the Company’s advertising and marketing plans orbrand initiatives are not as successful as anticipated, 

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or if the Company’s expensesassociated with the continued implementation of, and refinement to, theCompany’s plan exceed the anticipated level of expenses, theCompany’s current sources of funds may be insufficient to meetthe Company’s cash requirements.

Although the U.S.mass-market for color cosmetics advanced 3.2% for the year endedDecember  31,  2005, as compared with 2004, the U.S.mass-market color cosmetics category declined by approximately0.6% in 2004 from 2003 and declined by approximately 1.1%in 2003 from 2002. In the event of a decrease in demand for theCompany's products, reduced sales, lack of increases in demandand sales, changes in consumer purchasing habits, including withrespect to shopping channels, retailer inventory management and/orincreased returns or expenses associated with the continuedimplementation of, and refinement to, the Company's planexceeding its expectations, any such development, if significant, couldreduce Products Corporation's revenues and could adversely affectProducts Corporation's ability to comply with certain financialcovenants under the 2004 Credit Agreement and in such event the Companycould be required to take measures, including reducing discretionaryspending.

(See Item 1A, ‘‘Risk Factors —The Company’s ability to service its debt and meet its cashrequirements depends on many factors, including achieving anticipatedlevels of revenue growth and expenses. If such levels prove to be otherthan as anticipated, the Company may be unable to meet its cashrequirements or Products Corporation may be unable to meet therequirements of the financial covenants under the 2004 CreditAgreement, which could have a material adverse effect on theCompany’s business’’; ‘‘—TheCompany may be unable to increase its sales through theCompany’s primary distribution channels’’; and‘‘—Restrictions and covenants in ProductsCorporation’s debt agreements limit its ability to take certainactions and impose consequences in the event of failure tocomply’’).

As noted in ‘‘—2005Refinancing Transactions’’, in April  2005, usingthe proceeds from the issuance of the Original91⁄2% Senior Notes in March  2005,Products Corporation prepaid $100.0  million of principal amountoutstanding under the Term Loan Facility of the 2004 CreditAgreement and redeemed all of Products Corporation’s8 1/8% Senior Notes and 9% Senior Notesin April 2005. Products Corporation likewise plans to refinanceits 8 5/8% Senior Subordinated Notes, with anaggregate principal amount outstanding of $327.0  million, priorto their maturity in 2008. Under the 2004 Credit Agreement, ProductsCorporation must refinance its 8 5/8% SeniorSubordinated Notes by October  30,  2007 (such that notmore than $25.0  million aggregate principal amount of such notesremains outstanding). In addition, it would be an event of defaultunder the 2004 Credit Agreement if Revlon, Inc. failed to issueapproximately $110.0  million of equity and transfer the proceedsof such equity issuance to Products Corporation by March31,  2006 to promptly reduce its outstanding indebtedness. (See‘‘Recent Developments’’ and‘‘—Overview — Overview of FinancingActivities’’ regarding the Company’s plannedequity issuances). As of February  1,  2006, the Companyhad $700.0  million of outstanding indebtedness under the TermLoan Facility of the 2004 Credit Agreement and availability ofapproximately $144  million under the Multi-Currency Facility,based upon the calculated borrowing base less approximately $16million of outstanding letters of credit, while the 2004 ConsolidatedMacAndrews & Forbes Line of Credit, with availability of $87million, was undrawn. In addition, in August  2005, ProductsCorporation issued $80.0  million aggregate principal amount ofthe Additional 91⁄2% Senior Notes. (See‘‘2005 RefinancingTransactions’’).

The terms of the 2004 CreditAgreement, the 2004 Consolidated MacAndrews & Forbes Line of Creditand the indentures governing the 91⁄2% SeniorNotes and the 8 5/8% Senior Subordinated Notesgenerally restrict Products Corporation from paying dividends or makingdistributions, except that Products Corporation is permitted to paydividends and make distributions to Revlon, Inc. to enable Revlon,Inc., among other things, to pay expenses incidental to being a publicholding company, including, among other things, professional fees suchas legal and accounting fees, regulatory fees such as SEC filing feesand other miscellaneous expenses related to being a public holdingcompany and, subject to certain limitations, to pay dividends or makedistributions in certain circumstances to finance the purchase byRevlon, Inc. of its Class A Common Stock in connection with thedelivery of such Class A Common Stock to grantees under the Amended andRestated Revlon, Inc. Stock Plan (the ‘‘StockPlan’’).

As a result of the closing of the RevlonExchange Transactions, as of the end of March  25,  2004,Revlon, Inc., Products Corporation and their U.S. subsidiaries were nolonger included in the 

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MacAndrews & Forbes Holdingsconsolidated group (the ‘‘MacAndrews & ForbesGroup’’) for federal income tax purposes. The MacAndrews& Forbes Tax Sharing Agreement (as hereinafter defined) will remainin effect solely for taxable periods beginning on or afterJanuary  1,  1992, through and including March25,  2004. In these taxable periods, Revlon, Inc. and ProductsCorporation were included in the MacAndrews & Forbes Group, andRevlon, Inc.'s and Products Corporation's federal taxableincome and loss were included in such group's consolidated taxreturn filed by MacAndrews & Forbes Holdings. Revlon, Inc. andProducts Corporation were also included in certain state and local taxreturns of MacAndrews & Forbes Holdings or its subsidiaries. InJune  1992, Revlon Holdings (as hereinafter defined), Revlon,Inc., Products Corporation and certain of its subsidiaries, andMacAndrews & Forbes Holdings entered into a tax sharing agreement(as subsequently amended and restated, the ‘‘MacAndrews& Forbes Tax Sharing Agreement’’), pursuant to whichMacAndrews & Forbes Holdings agreed to indemnify Revlon, Inc. andProducts Corporation against federal, state or local income taxliabilities of the MacAndrews & Forbes Group (other than in respectof Revlon, Inc. and Products Corporation) for taxable periods beginningon or after January  1,  1992 during which Revlon, Inc. andProducts Corporation or a subsidiary of Products Corporation was amember of such group. Pursuant to the MacAndrews & Forbes TaxSharing Agreement, for all such taxable periods, Products Corporationwas required to pay to Revlon, Inc., which in turn was required to payto Revlon Holdings, amounts equal to the taxes that ProductsCorporation would otherwise have had to pay if it were to file separatefederal, state or local income tax returns (including any amountsdetermined to be due as a result of a redetermination arising from anaudit or otherwise of the consolidated or combined tax liabilityrelating to any such period which was attributable to ProductsCorporation), except that Products Corporation was not entitled tocarry back any losses to taxable periods ending prior to January1,  1992. No payments were required by Products Corporation orRevlon, Inc. if and to the extent Products Corporation was prohibitedunder the terms of its 2004 Credit Agreement from making tax sharingpayments to Revlon, Inc. The 2004 Credit Agreement prohibits ProductsCorporation from making such tax sharing payments under the MacAndrews& Forbes Tax Sharing Agreement other than in respect of state,local and federal taxes. The MacAndrews & Forbes Tax SharingAgreement was amended, effective as of January  1,  2001,to eliminate a contingent payment to Revlon, Inc. under certaincircumstances in return for a $10  million note by MacAndrews& Forbes Holdings, with interest at 12% and with interestand principal payable in December  2005, which was paid in full.As a result of tax net operating losses, there were no federal taxpayments or payments in lieu of taxes by Revlon, Inc. or ProductsCorporation pursuant to the MacAndrews & Forbes Tax SharingAgreement in respect of 2004.

Following the closing of the RevlonExchange Transactions, Revlon, Inc. became the parent of a newconsolidated 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 tax sharing agreement (the‘‘Revlon Tax Sharing Agreement’’) pursuantto which Products Corporation will be required to pay to Revlon, Inc.amounts equal to the taxes that Products Corporation would otherwisehave had to pay if Products Corporation were to file separate federal,state or local income tax returns, limited to the amount, and payableonly at such times, as Revlon, Inc. will be required to make paymentsto the applicable taxing authorities. The 2004 Credit Agreement doesnot prohibit payments from Products Corporation to Revlon, Inc. to theextent required under the Revlon Tax Sharing Agreement. As a result oftax net operating losses, there were no federal tax payments orpayments in lieu of taxes from Products Corporation to Revlon, Inc.pursuant to the Revlon Tax Sharing Agreement in respect of 2004. TheCompany expects that there will be federal alternative minimum taxpayments of $0.1  million from Products Corporation to Revlon,Inc. pursuant to the Revlon Tax Sharing Agreement in respect of2005.

As a result of dealing with suppliers and vendors ina number of foreign countries, Products Corporation enters into foreigncurrency forward exchange contracts and option contracts from time totime to hedge certain cash flows denominated in foreign currencies.There were foreign currency forward exchange contracts with a notionalamount of $31.9  million outstanding at December31,  2005. The fair value of foreign currency forward exchangecontracts outstanding at December  31,  2005 was$(0.2)  million.

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Disclosures about ContractualObligations and Commercial Commitments

The following tableaggregates all contractual commitments and commercial obligations thataffect the Company's financial condition and liquidity positionas of December  31,  2005:

|                                          |  |                                           |         |                |  |           |         |           |  |             |         |        |  |        |         |        |  |        |         |        |  |  |
|------------------------------------------|--|-------------------------------------------|---------|----------------|--|-----------|---------|-----------|--|-------------|---------|--------|--|--------|---------|--------|--|--------|---------|--------|--|--|
|                                     |  | PaymentsDue in Period(dollars inmillions) |
| ContractualObligations                   |  | Total                                     |         | Less than1year |  | 1-3 years |         | 3-5 years |  | After5years |
| Long-term Debt, including CurrentPortion |  | $                                         | 1,417.0 |           |  | $         | — |      |  | $           | 327.0   |   |  | $      | 700.0   |   |  | $      | 390.0   |   |
| Intereston Long-term Debt(a)             |  |                                      | 571.6   |           |  |      | 136.0   |      |  |        | 246.1   |   |  |   | 180.2   |   |  |   | 9.3     |   |
| CapitalLeaseObligations                  |  |                                      | 5.2     |           |  |      | 2.2     |      |  |        | 2.7     |   |  |   | 0.3     |   |  |   | — |   |
| OperatingLeases                          |  |                                      | 131.2   |           |  |      | 15.7    |      |  |        | 31.9    |   |  |   | 29.4    |   |  |   | 54.2    |   |
| PurchaseObligations(b)                   |  |                                      | 46.1    |           |  |      | 46.1    |      |  |        | — |   |  |   | — |   |  |   | — |   |
| OtherLong-term Obligations(c)            |  |                                      | 32.7    |           |  |      | 16.8    |      |  |        | 15.4    |   |  |   | 0.5     |   |  |   | — |   |
| TotalContractual CashObligations         |  | $                                         | 2,203.8 |           |  | $         | 216.8   |      |  | $           | 623.1   |   |  | $      | 910.4   |   |  | $      | 453.5   |   |
|                                          |

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|  |  |
|  |

|     |                                                                                                                                                                                                                                                                                                                                            |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (a) | Consistsof interest primarily on the 91⁄2% Senior Notesand the 8 5/8% Senior Subordinated Notes and the$700  million Term Loan Facility under the 2004 Credit Agreementthrough the respective maturity dates based upon assumptions regardingthe amount of debt outstanding under the 2004 Credit Agreement andassumed interestrates. |

|     |                                                                                                                                                                                                                                                                                                                                        |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | Consists ofpurchase commitments for finished goods, raw materials, components andservices pursuant to enforceable and legally binding obligations whichinclude all significant terms, including fixed or minimum quantities tobe purchased; fixed, minimum or variable price provisions; and theapproximate timing of thetransactions. |

|     |                                                                                                                                                                                                                                                                                                   |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (c) | Consistsprimarily of obligations related to advertising, insurance, employmentcontracts and other personnel service contracts. Such amounts excludeseverance and other contractual commitments related to restructuring,which are discussed under ‘‘RestructuringCosts’’. |

Off-Balance SheetTransactions

The Company does not maintain any off-balance sheettransactions, arrangements, obligations or other relationships withunconsolidated entities or others that are reasonably likely to have amaterial current or future effect on the Company's financialcondition, changes in financial condition, revenues or expenses,results of operations, liquidity, capital expenditures or capitalresources.

Recent Accounting Pronouncements

In May2005, the FASB issued SFAS No. 154, ‘‘Accounting Changesand Error Corrections.’’ SFAS No. 154 requiresretroactive application of a voluntary change in accounting principleto prior period financial statements unless it is impracticable. SFASNo. 154 also requires that a change in method of depreciation,amortization or depletion for long-lived, non-financial assets beaccounted for as a change in accounting estimate that is affected by achange in accounting principle. SFAS No. 154 replaces APB Opinion No.20, ‘‘Accounting Changes’’ and SFAS No. 3,‘‘Reporting Accounting Changes in Interim FinancialStatements’’. SFAS No. 154 is effective for fiscal yearsbeginning after December  15,  2005. The Company will adoptthe provisions of SFAS No. 154 as of January  1,  2006 anddoes not expect that its adoption will have a material impact on itsresults of operations or financial condition.

In December2004, the FASB issued SFAS No. 123 (revised 2004),‘‘Share-Based Payment,’’ an amendment toFASB Statements Nos. 123 and 95 (‘‘SFAS No.123(R)’’), which replaces SFAS No. 123, and supercedesAPB Opinion No. 25, ‘‘Accounting for Stock Issued toEmployees.’’ SFAS No. 123(R) requires all share-basedpayments to employees, including grants of employee stock options, tobe recognized in the financial statements based on their fair values.In April  2005, the SEC adopted a rule allowing companies toimplement SFAS No. 123(R) at the beginning of their next fiscal yearthat begins after June  15,  2005, which for the Companywill be effective beginning January  1,  2006. The Companywill use the modified prospective transition method, utilizing theBlack-Scholes option pricing model for the calculation of the fairvalue of its employee stock options. Under the modified prospectivemethod, stock option awards that are granted, modified or settled afterJanuary  1,  2006 will be measured and accounted for inaccordance with SFAS No. 123(R). Compensation cost for stock optionawards granted prior to, but not vested, as of January  1,2006 would be based on the grant date attributes originally used tovalue those 

43

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awards for pro forma purposes under SFAS No. 123. The Company expectsthe adoption of SFAS No. 123(R) will result in approximately $10million in additional expenses for fiscal year 2006. This estimate isbased on the number of unvested options outstanding as of January 1,2006 and the estimated number of options to be granted in 2006. Thisestimate could change based on a number of factors, includingdifferences in the estimate of the number of options granted before2006 which are forfeited during 2006 and the number of options actuallygranted in 2006 and the fair value of these options at their grantdate.

In November  2004, the FASB issued SFAS No. 151,‘‘Inventory Costs — An Amendment of ARB No. 43,Chapter 4.’’ SFAS No. 151 amends the guidance in ARB No.43, Chapter 4, ‘‘Inventory Pricing,’’ toclarify the accounting for abnormal amounts of idle facility expense,freight, handling costs and wasted materials (spoilage). Among otherprovisions, the new rule requires that the aforementioned items berecognized as current-period charges. Additionally, SFAS No. 151requires that the allocation of fixed production overheads to the costsof conversion be based on the normal capacity of the productionfacilities. SFAS No. 151 is effective for fiscal years beginning afterJune  15,  2005 and is required to be adopted by theCompany beginning on January  1,  2006. During the thirdquarter of 2005, the Company early adopted the provisions of SFAS No.151, which adoption did not have a material impact on theCompany’s consolidated results of operations and financialposition.

Inflation

In general, the Company's costsare affected by inflation and the effects of inflation may beexperienced by the Company in future periods. Management believes,however, that such effects have not been material to the Company duringthe past three years in the U.S. and in foreign non-hyperinflationarycountries. The Company operates in certain countries around the world,such as Argentina, Brazil, Venezuela and Mexico, which have in the pastexperienced hyperinflation. In hyperinflationary foreign countries, theCompany attempts to mitigate the effects of inflation by increasingprices in line with inflation, where possible, and efficiently managingits working capital levels.

Subsequent Events

See‘‘Part I, Item 1 — RecentDevelopments.’’

Item 7A. Quantitative andQualitative Disclosures About Market Risk

Interest RateSensitivity

The Company has exposure to changing interestrates primarily under the Term Loan Facility and Multi-CurrencyFacility of the 2004 Credit Agreement. The Company manages interestrate risk through the use of a combination of fixed and floating ratedebt. The Company from time to time makes use of derivative financialinstruments to adjust its fixed and floating rate ratio. There were nosuch derivative financial instruments outstanding at December31,  2005. The table below provides information about theCompany's indebtedness that is sensitive to changes in interestrates. The table presents cash flows with respect to principal onindebtedness and related weighted average interest rates by expectedmaturity dates. Weighted average variable rates are based on impliedforward rates in the yield curve at December  31,  2005.The information is presented in U.S. dollar equivalents, which is theCompany's reporting currency.

Exchange RateSensitivity

The Company manufactures and sells its productsin a number of countries throughout the world and, as a result, isexposed to movements in foreign currency exchange rates. In addition, aportion of the Company's borrowings are denominated in foreigncurrencies, which are also subject to market risk associated withexchange rate movement. The Company from time to time hedges majorforeign currency cash exposures generally through foreign exchangeforward and option contracts. Products Corporation enters into thesecontracts with major financial institutions to minimize counterpartyrisk. These contracts generally have a duration of less than twelvemonths and are primarily against the U.S. dollar. In addition,

44

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Products Corporation enters into foreigncurrency swaps to hedge intercompany financing transactions. TheCompany does not hold or issue financial instruments for tradingpurposes.

|                                                 |  |                                                                                                         |         |         |  |        |         |        |  |        |         |            |  |        |         |                          |  |        |         |         |  |        |         |         |  |        |         |        |  |        |         |        |  |  |
|-------------------------------------------------|--|---------------------------------------------------------------------------------------------------------|---------|---------|--|--------|---------|--------|--|--------|---------|------------|--|--------|---------|--------------------------|--|--------|---------|---------|--|--------|---------|---------|--|--------|---------|--------|--|--------|---------|--------|--|--|
|                                            |  | Expectedmaturity date for the year ended December 31, (dollars inmillions, except for rate information) |         |    |
|                                            |  | 2006                                                                                                    |         | 2007    |  | 2008   |         | 2009   |  | 2010   |         | Thereafter |  | Total  |         | FairValueDecember31,2005 |
| **Debt**                                        |  |                                                                                                    |    |    |  |   |    |   |  |   |    |       |  |   |    |                     |  |   |    |    |  |   |    |    |  |   |    |   |  |   |    |   |
| Short-termvariable rate (variouscurrencies)     |  | $                                                                                                       | 9.0     |    |  | $      | — |   |  | $      | — |       |  | $      | — |                     |  | $      | — |    |  | $      | — |    |  | $      | 9.0     |   |  | $      | 9.0     |   |
| Averageinterest rate(a)                         |  |                                                                                                    | 14.2    | %  |  |   | — |   |  |   | — |       |  |   | — |                     |  |   | — |    |  |   | — |    |  |   | — |   |  |   | — |   |
| Long-termfixed rate — third party($US)    |  |                                                                                                    | — |    |  |   | — |   |  |   | 327.0   | *     |  |   | — |                     |  |   | — |    |  |   | 390.0   |    |  |   | 717.0   |   |  |   | 673.4   |   |
| Averageinterestrate                             |  |                                                                                                    | — |    |  |   | — |   |  |   | 8.6     | %     |  |   | — |                     |  |   | — |    |  |   | 9.5     | %  |  |   | — |   |  |   | — |   |
| Long-termvariable rate — third party($US) |  |                                                                                                    | — |    |  |   | — |   |  |   | — |       |  |   | — |                     |  |   | 700.0   |    |  |   | — |    |  |   | 700.0   |   |  |   | 700.0   |   |
| Averageinterest rate(a)                         |  |                                                                                                    | — |    |  |   | — |   |  |   | — |       |  |   | — |                     |  |   | 11.3    | %  |  |   | — |    |  |   | — |   |  |   | — |   |
| Totaldebt                                       |  | $                                                                                                       | 9.0     |    |  | $      | — |   |  | $      | 327.0   |       |  | $      | — |                     |  | $      | 700.0   |    |  | $      | 390.0   |    |  | $      | 1,426.0 |   |  | $      | 1,382.4 |   |
|                                                 |

|                                               |  |                            |        |                                |  |                              |      |                           |  |        |      |        |  |        |         |         |  |  |
|-----------------------------------------------|--|----------------------------|--------|--------------------------------|--|------------------------------|------|---------------------------|--|--------|------|--------|--|--------|---------|---------|--|--|
| ForwardContracts                              |  | AverageContractualRate$/FC |        | OriginalUSDollarNotionalAmount |  | ContractValueDecember31,2005 |      | Fair ValueDecember31,2005 |
| Buy Euros/SellUSD                             |  |                       | 1.2484 |                           |  | $                            | 0.4  |                      |  | $      | 0.4  |   |  | $      | — |    |
| BuyMexican Pesos/SellUSD                      |  |                       | 0.0927 |                           |  |                         | 0.3  |                      |  |   | 0.3  |   |  |   | — |    |
| SellBritish Pounds/BuyUSD                     |  |                       | 1.7835 |                           |  |                         | 4.9  |                      |  |   | 5.0  |   |  |   | 0.1     |    |
| SellAustralian Dollars/BuyUSD                 |  |                       | 0.7470 |                           |  |                         | 7.2  |                      |  |   | 7.4  |   |  |   | 0.2     |    |
| SellCanadian Dollars/BuyUSD                   |  |                       | 0.8374 |                           |  |                         | 9.1  |                      |  |   | 8.8  |   |  |   | (0.3    | )  |
| SellSouth African Rand/BuyUSD                 |  |                       | 0.1484 |                           |  |                         | 3.8  |                      |  |   | 3.6  |   |  |   | (0.2    | )  |
| SellJapanese Yen/BuyUSD                       |  |                       | 0.0085 |                           |  |                         | 1.0  |                      |  |   | 1.0  |   |  |   | — |    |
| SellHong Kong Dollars/BuyUSD                  |  |                       | 0.1290 |                           |  |                         | 0.3  |                      |  |   | 0.3  |   |  |   | — |    |
| BuyAustralian Dollars/Sell New ZealandDollars |  |                       | 1.0959 |                           |  |                         | 4.0  |                      |  |   | 4.0  |   |  |   | — |    |
| BuyNew Zealand Dollars/SellUSD                |  |                       | 0.7050 |                           |  |                         | 0.9  |                      |  |   | 0.9  |   |  |   | — |    |
| Totalforwardcontracts                         |  |                       |   |                           |  | $                            | 31.9 |                      |  | $      | 31.7 |   |  | $      | (0.2    | )  |
|                                               |

|  |
|--|
|  |  |
|  |

|     |                                                                                                                |
|-----|----------------------------------------------------------------------------------------------------------------|
| (a) | Weightedaverage variable rates are based upon implied forward rates from theyield curves at December  31,2005. |

|   |                                                                                                                                                                                                                                               |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| * | While the8 5/8% Senior Subordinated Notes are due inMarch  2008, under the 2004 Credit Agreement, ProductsCorporation must refinance these notes by October  30,2007, such that not more than $25.0  million of such notes remainoutstanding. |

Item 8. Financial Statements andSupplementary Data

Reference is made to the Index on page F-1 ofthe Company’s Consolidated Financial Statements and the Notesthereto contained herein.

Item 9. Changes in andDisagreements with Accountants on Accounting and FinancialDisclosures

None.

Item 9A. Controls andProcedures

**(a)    Disclosure Controls andProcedures.** The Company maintains disclosure controls andprocedures that are designed to ensure that information required to bedisclosed in the Company's reports under the Securities ExchangeAct of 1934, as amended (the ‘‘ExchangeAct’’), is recorded, processed, summarized and reportedwithin the time periods specified in the SEC's rules and forms,and that such information is accumulated and communicated tomanagement, including the Company's Chief Executive Officer andChief Financial Officer, as appropriate, to allow timely decisionsregarding required disclosure. The Company's management, with theparticipation of the Company's Chief Executive Officer and ChiefFinancial Officer, has evaluated the effectiveness of theCompany's disclosure controls and 

45

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procedures as of the end of the fiscal yearcovered by this Annual Report on Form 10-K. The Company's ChiefExecutive Officer and Chief Financial Officer have concluded that, asof the end of the period covered by this Annual Report on Form 10-K,the Company's disclosure controls and procedures wereeffective.

Products Corporation is not an‘‘accelerated filer’’ as defined in Rule12b-2 of the Exchange Act. Accordingly, Products Corporation’smanagement is not required to perform an assessment of its internalcontrol over financial reporting for, and its management report on itsinternal control over financial reporting is not required to beincluded in, Products Corporation's Annual Report on Form 10-Kfor the fiscal year ended December  31,  2005. Revlon,Inc., the owner of 100% of the outstanding shares of ProductsCorporation's capital stock, which is Revlon, Inc.’s onlymaterial asset or holding, is an ‘‘acceleratedfiler.’’ The Sarbanes-Oxley Act of 2002 and theSEC's related rules and regulations require Revlon, Inc. toinclude management's report on Revlon, Inc.'s internalcontrol over financial reporting in Revlon, Inc.'s Annual Reportson Form 10-K and include a report from its independent registeredpublic accounting firm attesting to such management report. Revlon,Inc. has included this report and attestation in Revlon, Inc.'sAnnual Report on Form 10-K for the fiscal year ended December31,  2005. Revlon, Inc.'s management determined that as ofDecember 31, 2005, its internal control over financial reporting waseffective.

KPMG LLP, the independent registered publicaccounting firm that audited Revlon, Inc.’s financial statementsincluded in its Annual Report on Form 10-K for the period endedDecember  31,  2005 (as well as ProductsCorporation’s financial statements included in this AnnualReport on Form 10-K for the period ended December  31,2005), has issued an audit report on Revlon, Inc.’smanagement's assessment of internal control over financialreporting, which report expressed an unqualified opinion onmanagement's assessment of, and on the effective operation ofinternal control over financial reporting, which appears on page F-3 ofRevlon, Inc.’s Form 10-K for the fiscal year endedDecember  31,  2005 filed with the SEC on March 2,2006.

**(b)    Changes in Internal Control Over FinancialReporting.**    There have not been any changes in theCompany's internal control over financial reporting during thefiscal quarter ended December  31,  2005 that havematerially affected, or are reasonably likely to materially affect, theCompany's internal control over financial reporting.

Item9B. Other Information

As previously announced by theCompany on January  18,  2006, Thomas E. McGuire, theCompany's Executive Vice President and Chief Financial Officer,and David L. Kennedy, the Company's Executive Vice President andPresident of the Company's international operations, will rotatetheir positions and responsibilities, effective in early March2006, after the Company files this Annual Report on Form 10-K for theyear ended December  31,  2005. In connection with thesechanges, effective March 2, 2006, Products Corporation entered intoamendments to the employment agreements of each of Messrs. McGuire andKennedy to reflect their new responsibilities and to provide for a termthat would expire effective two years after written notice ofnon-extension of the agreement. A copy of such employment agreementamendments are attached to this Form 10-K as Exhibits 10.7 and 10.9 andthe terms of such amendments are incorporated herein byreference.

Forward Looking Statements

This Annual Reporton Form 10-K for the year ended December  31,  2005, aswell as other public documents and statements of the Company, containforward-looking statements that involve risks and uncertainties, whichare based on the beliefs, expectations, estimates, projections,forecasts, plans, anticipations, targets, outlooks, initiatives,destinations, visions, objectives, strategies, opportunities, driversand intents of the Company’s management. The Company'sactual results may differ materially from those discussed in suchforward-looking statements. Such statements include, withoutlimitation, the Company's expectations and estimates (whetherqualitative or quantitative) asto:

|  |           |                                                                                                                                                                                                                                                               |
|--|-----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (i)  | the Company's futurefinancial performance, including the Company's belief that it hasstrengthened its organizational capabilities (and its expectation tocontinue to do so) and that it has strengthened its relationships withits key retailers in the U.S.; |

46

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|  |            |                                                                                                                                                                                                                                                                                                             |
|--|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (ii)  | theeffect on sales of weak economic conditions, political uncertainties,military actions, terrorist activities, adverse currency fluctuations,category weakness, competitive activities, retailer inventorymanagement and changes in consumer purchasing habits, including withrespect to shoppingchannels; |

|  |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|--|-------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (iii)  | theCompany's belief that the continued implementation and refinementto its plan could include taking advantage of additional opportunitiesto reposition, repackage and/or reformulate one or more of its brandsor product lines and/or launching new brands or product lines and/orfurther refining its approach to retail merchandising, including,without limitation, the Company’s plans to re-enter the U.S.prestige fragrance market in 2006, any of which, whose intended purposewould be to create value through profitable growth, could result in theCompany making investments and/or recognizing charges related toexecuting against suchopportunities; |

|  |            |                                                                                                                                                                                                                                                                                                                                                                                                                            |
|--|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (iv)  | theCompany's plans regarding the Accelerated Growth Phase of itsplan, including the Company's plans to capitalize on the actionstaken during the previous phases of its plan, and the Company'sexpectation that such actions would help it achieve the objective ofbalancing top-line growth with an improved operating profit margin(including a targeted operating profit margin of approximately12% by the end of2008); |

|  |           |                                                                                           |
|--|-----------|-------------------------------------------------------------------------------------------|
|  | (v)  | theCompany's plans to further improve its new product developmentand introductionprocess; |

|  |            |                                                                                                               |
|--|------------|---------------------------------------------------------------------------------------------------------------|
|  | (vi)  | theCompany's plans to continue to increase the effectiveness of itsdisplay walls across categories andbrands; |

|  |             |                                                                                                                                                                                      |
|--|-------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (vii)  | theCompany's plans to drive efficiencies across its overall supplychain, including reducing manufacturing costs by continuing torationalize components and by sourcingstrategically; |

|  |              |                                                                                              |
|--|--------------|----------------------------------------------------------------------------------------------|
|  | (viii)  | theCompany's plans to optimize the effectiveness of its advertising,marketing andpromotions; |

|  |            |                                                                                                                                                                                                                               |
|--|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (ix)  | theCompany's plans to continue training and development of itsorganization so that it may continue to improve its capabilities toexecute the Company's strategies, while providing enhanced jobsatisfaction for itsemployees; |

|  |           |                                                                                  |
|--|-----------|----------------------------------------------------------------------------------|
|  | (x)  | theCompany's current expectation and beliefs regarding its two brandinitiatives; |

|  |            |                                                                                                                                                      |
|--|------------|------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (xi)  | theCompany's belief that the Almay initiative will build on itshealthy beauty heritage and desire among consumers for simplicity andpersonalization; |

|  |             |                                                                                                                                                                                                       |
|--|-------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (xii)  | theCompany's belief that its Vital Radiance initiative, focused onthe more mature cosmetics consumer, will serve an affluent and growingconsumer demographic currently underserved in themarketplace; |

|  |              |                                                                                                                                                                 |
|--|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (xiii)  | theCompany's expectation that the first quarter of 2006 will benefitfrom incremental initial shipments associated with the launch of thesetwo brandinitiatives; |

|  |             |                                                                                                                                                                                                                                                                                                               |
|--|-------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (xiv)  | theCompany's expectation that the cash flow impact of the brandinitiatives from its investment in permanent displays, includingdisplays for its existing businesses and the brand initiatives, will bein the range of $85  million to $95  million during 2006,returning to more normalized levelsthereafter; |

|  |            |                                                                                                                                                                     |
|--|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (xv)  | theCompany's expectation that due to the brand initiatives, workingcapital will return to more normalized levels in relation to salesduring the second half of2006; |

|  |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|--|-------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (xvi)  | theCompany’s plans to continue to strengthen its balance sheet andcapital structure, including Revlon, Inc.’s plans to conduct a$110  million rights offering and contribute the proceeds fromsuch equity issuance to Products Corporation by March  31,2006 to promptly reduce its debt by redeeming approximately $110million of its 8 5/8% Senior Subordinated Notes,as well as its plans to refinance the balance of ProductsCorporation’s 8 5/8% Senior SubordinatedNotes by October  30,  2007 prior to their maturity andRevlon, Inc.’s plans to conduct an additional equity issuance of$75  million by June  30,  2006; |

|  |              |                                                                                                                                                                                                                         |
|--|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (xvii)  | restructuring activities,restructuring costs, the timing of restructuring payments and annualsavings and other benefits from such activities (including as describedin ‘‘RecentDevelopments’’); |

47

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|  |               |                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|--|---------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (xviii)  | operatingrevenues, cash on hand, net cash proceeds of Revlon, Inc.’splanned $75  million equity issuance, and availability ofborrowings under Products Corporation's 2004 Credit Agreement,the 2004 Consolidated MacAndrews & Forbes Line of Credit and otherpermitted lines of credit being sufficient to satisfy theCompany's operating expenses in 2006, including cash requirementsreferred to in item (xx)below; |

|  |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|--|-------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (xix)  | the availabilityof funds from Products Corporation's 2004 Credit Agreement, the2004 Consolidated MacAndrews & Forbes Line of Credit and otherpermitted lines of credit, restructuring indebtedness, selling assetsor operations, capital contributions and/or loans from MacAndrews &Forbes, Revlon, Inc.’s other affiliates and/or third partiesand/or the sale of additional debt securities of Products Corporationand the net cash proceeds of Revlon, Inc.’s planned $75million equity issuance described in ‘‘RecentDevelopments’’; |

|  |            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|--|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (xx)  | 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 (including in connection with its brand initiatives), payments inconnection with the Company's purchases of permanent walldisplays, capital expenditure requirements, restructuring programs(including as described in ‘‘RecentDevelopments’’), debt service payments and costs andregularly scheduled pension and post-retirement plan contributions, andits estimates of operating expenses, working capital expenses, walldisplay costs, capital expenditures, cash contributions to theCompany's pension plans and post-retirement benefit plans, debtservice payments (including payments required under ProductsCorporation's debt instruments) and charges in connection withthe Company's growthplan; |

|  |             |                                                                   |
|--|-------------|-------------------------------------------------------------------|
|  | (xxi)  | mattersconcerning the Company's market-risk sensitiveinstruments; |

|  |              |                                                                           |
|--|--------------|---------------------------------------------------------------------------|
|  | (xxii)  | theeffects of the Company's adoption of certain accountingprinciples; and |

|  |               |                                                                                                                                                                                                                                                                                                                                                           |
|--|---------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (xxiii)  | theCompany's plan to efficiently manage its cash and workingcapital, including, among other things, by carefully managing inventorylevels, 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 other things, the use offorward-looking language such as‘‘estimates,’’‘‘objectives,’’‘‘visions,’’‘‘projects,’’‘‘forecasts,’’‘‘plans,’’‘‘targets,’’‘‘strategies,’’‘‘opportunities,’’‘‘drivers,’’‘‘believes,’’‘‘intends,’’‘‘destinations,’’‘‘outlooks,’’‘‘initiatives,’’‘‘expects,’’ ‘‘scheduledto,’’ ‘‘anticipates,’’‘‘seeks,’’‘‘may,’’‘‘will,’’ or‘‘should’’ or the negative of those terms,or other variations of those terms or comparable language, or bydiscussions of strategy, targets, models or intentions. Forward-lookingstatements speak only as of the date they are made, and except for theCompany's ongoing obligations under the U.S. federal securitieslaws, the Company undertakes no obligation to publicly update anyforward-looking statements, whether as a result of new information,future events or otherwise. Investors are advised, however, to consultany additional disclosures the Company made in its Quarterly Reports onForm 10-Q and Current Reports on Form 8-K, in each case filed with theSEC in 2005 and 2006 (which, among other places, can be found on theSEC's website at http://www.sec.gov). The information availablefrom time to time on such website shall not be deemed incorporated byreference into this Annual Report on Form 10-K. Additionally, thebusiness and financial materials and any other statement or disclosureon, or made available through, the Company's websites shall notbe considered a ‘‘free writing prospectus’’under the SEC's Rule 405 of the Securities Act of 1933, asamended, unless specifically identified as such. A number of importantfactors could cause actual results to differ materially from thosecontained in any forward-looking statement. In addition to factors thatmay be described in the Company's filings with the SEC, includingthis filing, the following factors, among others, could cause theCompany's actual results to differ materially from thoseexpressed in any forward-looking statements made by theCompany:

|  |           |                                                                                                                                                                                                                                                                                                                                                          |
|--|-----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (i)  | 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, changes in consumerpurchasing |

48

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|  |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|--|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  |   | habits, including with respect to shoppingchannels, lower than expected retail customer acceptance or consumeracceptance of the Company’s brand initiatives, decreased salesof the Company’s existing products as a result of theCompany’s brand initiatives and changes in the competitiveenvironment, actions by the Company’s customers, such asretailer inventory management, and actions by the Company'scompetitors, including business combinations, technologicalbreakthroughs, new products offerings, promotional spending andmarketing and promotional successes, including increases in marketshare; |

|  |            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|--|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (ii)  | the effects ofand changes in economic conditions (such as inflation, monetaryconditions and foreign currency fluctuations, as well as in trade,monetary, fiscal and tax policies in international markets); politicalconditions (such as military actions and terrorist activities); as wellas the effects of and changes in category weakness, in competitiveactivities, in retailer inventory management and in consumer purchasinghabits, including with respect to shoppingchannels; |

|  |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|--|-------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (iii)  | 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 such plan, includinglower than expected sales, or higher than expected costs, including asmay arise from any additional repositioning, repackaging and/orreformulating of one or more of the Company's brands or productlines and/or launching of new brands or product lines and/or furtherrefining its approach to retail merchandising, including, withoutlimitation, difficulties, delays or increased costs in connection withthe Company’s plans to re-enter the prestige fragrance market in2006; |

|  |            |                                                                                                                                                                                                                                                                                                                                                                                                                          |
|--|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (iv)  | difficulties,delays or unanticipated costs in implementing the Company's plansregarding the Accelerated Growth Phase of its plan, includingdifficulties, delays or unanticipated costs in taking actions tocapitalize on the actions taken during the previous phases of its plan,which could affect the Company's ability to achieve its objectiveof balancing top-line growth with an improved operating profitmargin; |

|  |           |                                                                                                                                                                                                                                                                                                                                                                                             |
|--|-----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (v)  | difficulties,delays or unanticipated costs in connection with the Company'splans to further improve its new product development and introductionprocess, which could affect the Company's ability to effectivelylaunch new and restaged products and/or reposition, repackage and/orreformulate one or more of the Company's brands or product linesand generate revenues from suchsources; |

|  |            |                                                                                                                                              |
|--|------------|----------------------------------------------------------------------------------------------------------------------------------------------|
|  | (vi)  | difficulties,delays or unanticipated costs in implementing the Company's plansto continue to increase the effectiveness of its displaywalls; |

|  |             |                                                                                                                                                                                                                                     |
|--|-------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (vii)  | difficulties,delays or unanticipated costs in implementing the Company's plansto drive efficiencies across its overall supply chain, includingreducing manufacturing costs by rationalizing components and bysourcingstrategically; |

|  |              |                                                                                                                                                          |
|--|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (viii)  | difficulties,delays or unanticipated costs in implementing the Company's plansto optimize the effectiveness of its advertising, marketing andpromotions; |

|  |            |                                                                                                                                                                                                                                                              |
|--|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (ix)  | difficulties,delays or unanticipated costs in the Company continuing to train anddevelop its organization so that it may continue to improve itscapabilities to execute the Company's strategies, while providingenhanced job satisfaction for itsemployees; |

|  |           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|--|-----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (x)  | difficulties,delays or unanticipated circumstances or costs associated with theCompany’s brand initiatives, including the Company'sinability to timely implement its brand initiatives, higher thanexpected returns in connection with the brand initiatives, weaker thanexpected retail customer acceptance and/or consumer demand for theproducts launched pursuant to the brand initiatives, the possibilitythat the Company's product pricing strategies for the brandinitiatives will not be accepted by the Company's retailcustomers and/or consumers or that the Company may experience decreasedsales of its existing products as a result of the products launched andsold under these initiatives and the possibility that theCompany's current expectations and beliefs regarding the brandinitiatives may turn out to be incorrect, or as applicable,overestimates or underestimates; |

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|  |            |                                                                                                                                                |
|--|------------|------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (xi)  | theAlmay initiative does not achieve its anticipated marketing effects andless than anticipated consumer or retail customer acceptancethereof; |

|  |             |                                                                                                                                                                                                   |
|--|-------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (xii)  | the VitalRadiance brand initiative targeted to the more mature consumer does notachieve its anticipated marketing effects and less than anticipatedconsumer or retail customer acceptancethereof; |

|  |              |                                                                                                                                                                                                                                                                                                                                                                                           |
|--|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (xiii)  | theCompany's inability to achieve the anticipated benefits fromthese brand initiatives in the first quarter of 2006, such as due toless than expected shipments during the first quarter of 2006 as aresult of less than anticipated acceptance of these initiatives fromthe Company's retail customers and/or consumers or otherdifficulties, delays or unexpected costs relatedthereto; |

|  |             |                                                                                                                       |
|--|-------------|-----------------------------------------------------------------------------------------------------------------------|
|  | (xiv)  | higher thananticipated costs for permanent displays or unforeseen circumstancesaffecting the timing or levelsthereof; |

|  |            |                                                                                                          |
|--|------------|----------------------------------------------------------------------------------------------------------|
|  | (xv)  | higher thananticipated working capital or unforeseen circumstances affecting thetiming or levelsthereof; |

|  |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|--|-------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (xvi)  | difficulties,delays or unanticipated costs in, or the Company's inability toconsummate, transactions to strengthen its balance sheet and capitalstructure, including difficulties, delays or increased costs associatedwith, or Revlon, Inc.'s inability to consummate, in whole or inpart, the $110  million rights offering by March31,  2006, to use the proceeds from such rights offering topromptly reduce Products Corporation’s debt, including to redeemapproximately $110  million of its 8 5/8%Senior Subordinated Notes, or other difficulties, delays or unexpectedcosts related thereto, or difficulties, delays or increased costsassociated with, or the inability to consummate, in whole or in part,the refinancing of the balance of Products Corporation’s8 5/8% Senior Subordinated Notes byOctober  30,  2007 prior to their maturity, ordifficulties, delays or increased costs associated with conducting, orRevlon, Inc.’s inability to consummate, in whole or in part, theadditional planned $75  million equity issuance by June30,2006; |

|  |              |                                                                                                                                                                                                                             |
|--|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (xvii)  | difficulties,delays or unanticipated costs or less than expected savings and otherbenefits resulting from the Company's restructuring activities(including as described in ‘‘RecentDevelopments’’); |

|  |               |                                                                                                                                                                                |
|--|---------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (xviii)  | lowerthan expected operating revenues, the inability to secure capitalcontributions or loans from MacAndrews & Forbes, Revlon,Inc.'s other affiliates and/or thirdparties; |

|  |             |                                                                                                                                                                                                                                                                                                                                                                                                            |
|--|-------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (xix)  | theunavailability of funds under Products Corporation's 2004 CreditAgreement, the 2004 Consolidated MacAndrews & Forbes Line of Creditor other permitted lines of credit, restructuring indebtedness, sellingassets or operations, the sale of additional debt securities or fromRevlon, Inc.’s planned $75  million equity issuancedescribed in ‘‘RecentDevelopments’’; |

|  |            |                                                                                                                                                                                                                                                                                                                           |
|--|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (xx)  | higherthan expected operating expenses (including in connection with thebrand initiatives), sales returns, working capital expenses, walldisplay costs, capital expenditures, restructuring costs, regularlyscheduled cash pension plan contributions, post-retirement benefit plancontributions or debt servicepayments; |

|  |             |                                                                                                                        |
|--|-------------|------------------------------------------------------------------------------------------------------------------------|
|  | (xxi)  | interest rateor foreign exchange rate changes affecting the Company and itsmarket-risk sensitive financialinstruments; |

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

|  |               |                                                                                                        |
|--|---------------|--------------------------------------------------------------------------------------------------------|
|  | (xxiii)  | difficulties,delays or the inability of the Company to efficiently manage its cashand working capital. |

Factors other than those listed above couldalso cause the Company's results to differ materially fromexpected results. This discussion is provided as permitted by thePrivate Securities Litigation Reform Act of1995.

50

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Part III

(Dollars in Part III are actual dollars, not millions)

Item10. Directors and Executive Officers of theRegistrant

The following table sets forth certain informationconcerning the Directors of Products Corporation as of December31,  2005. Each Director holds office until his or her successoris duly elected and qualified or until his or her resignation orremoval, ifearlier.

|                  |  |                                                |          |        |  |  |
|------------------|--|------------------------------------------------|----------|--------|--|--|
| **Name**         |  |                                           | Position |   |
| RonaldO.Perelman |  | Chairmanof the Board and Director              |
| Jack L.Stahl     |  | President, Chief Executive Officer andDirector |
| Alan S.Bernikow  |  | Director                                       |
| Donald G.Drapkin |  | Director                                       |
| Edward J.Landau  |  | Director                                       |
| BarrySchwartz    |  | Director                                       |
|                  |

The name, age (as ofDecember  31,  2005), principal occupation for the lastfive years, selected biographical information and period of service asa Director of Products Corporation for each of the Directors are setforth below:

**Mr.  Perelman (62)** has been Chairman ofthe Board of Directors of Revlon, Inc. and of Products Corporationsince June  1998 and a Director of Revlon, Inc. and of ProductsCorporation since their respective formations in 1992. Mr.Perelman has been Chairman of the Board of Managers, Manager and ChiefExecutive Officer of REV Holdings, which files reports pursuant to theExchange Act, since December  2002. He was Chief ExecutiveOfficer of REV Holdings Inc. (the predecessor of REV Holdings) from1997 through December  2002 and Chairman of its Board ofDirectors from 1993 through December  2002. Mr.  Perelmanhas been Chairman of the Board and Chief Executive Officer ofMacAndrews & Forbes Holdings and various of its affiliates since1980. Mr.  Perelman served as Chairman of the Board of Directorsof Panavision Inc. (‘‘Panavision’’) untilSeptember  2003 and thereafter began service as Co-Chairman.Mr.  Perelman is also a Director (or member of the Board ofManagers, as applicable) of the following companies which are requiredto file reports pursuant to the Exchange Act: Allied Security HoldingsLLC (‘‘Allied Security’’), M&FWorldwide Corp., Panavision and Scientific Games Corporation(‘‘Scientific Games’’).

**Mr.  Stahl (52)** has been President and Chief ExecutiveOfficer of Revlon, Inc. and of Products Corporation sinceFebruary  2002 and a Director of Revlon, Inc. and of ProductsCorporation since March  2002. Mr.  Stahl served asPresident and Chief Operating Officer of The Coca-Cola Company(‘‘Coca-Cola’’) from February  2000to March  2001. Prior to that, Mr.  Stahl held varioussenior executive positions at Coca-Cola, where he began his career in1979. Mr.  Stahl is also a Director of the Cosmetic, Toiletry,and Fragrance Association, Vice Chairman of the Board of the UnitedNegro College Fund and is a member of the Board of Governors of theBoys & Girls Clubs of America.

**Mr.  Bernikow(65)** has been a Director of Revlon, Inc. and of ProductsCorporation since September  2003. From 1998 until his retirementin May  2003, Mr.  Bernikow served as the Deputy ChiefExecutive Officer of Deloitte & Touche LLP(‘‘D&T’’). Prior to that, Mr.Bernikow held various senior executive positions at D&T and variousof its predecessor companies, which he joined in 1966. Mr.Bernikow also serves as a Director and as a member of the AuditCommittee of Casual Male Retail Group, Inc. and as a Director andChairman of the Audit Committee of Mack-Cali Realty Corporation, eachof which are required to file reports pursuant to the Exchange Act.Mr.  Bernikow is also a director or trustee and serves asChairman of the audit committees of certain funds for which UBS GlobalAsset Management (US) Inc., a wholly-owned subsidiary of UBS AG, or oneof its affiliates serves as investment advisor, sub-advisor ormanager.

**Mr.  Drapkin (57)** has been a Director ofRevlon, Inc. and of Products Corporation since their respectiveformations in 1992. He has been Vice Chairman of the Board ofMacAndrews & Forbes 

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Holdings and various of its affiliates since1987. Mr.  Drapkin was a partner in the law firm of Skadden,Arps, Slate, Meagher & Flom LLP for more than five years prior to1987. Mr.  Drapkin is also a Director (or member of the Board ofManagers, as applicable) of the following companies which are requiredto file reports pursuant to the Exchange Act: Allied Security,Anthracite Capital, Inc., Nephros Inc., Playboy Enterprises, Inc. andSIGA Technologies, Inc.

**Mr.  Landau (75**) has been aDirector of Revlon, Inc. since June  1996 and of ProductsCorporation since June 1992. From February  1998 until hisretirement in February  2003, Mr.  Landau was Of Counsel atthe law firm of Wolf, Block, Schorr and Solis-Cohen LLP, and was aSenior Partner of Lowenthal, Landau, Fischer & Bring, P.C., apredecessor to such firm, for more than five years prior toFebruary  1998.

**Mr.  Schwartz (55**) has been aDirector of Products Corporation since March  2004. Mr.Schwartz has been Executive Vice President and General Counsel of REVHoldings since December  2002 and a Manager since March2004 and was Executive Vice President and General Counsel of REVHoldings Inc. from March  1997 through December  2002. Hehas been Executive Vice President and General Counsel of MacAndrews& Forbes and various of its affiliates since 1993. Mr.Schwartz was Senior Vice President of MacAndrews & Forbes andvarious of its affiliates from 1989 to 1993. Mr.  Schwartz isalso a director of Scientific Games, which is required to file reportspursuant to the Exchange Act.

Executive Officers

Thefollowing table sets forth each of the executive officers of Revlon,Inc. and Products Corporation as of December  31,  2005,except for Mr.  Kennedy who became an executive officer effectivein early March2006:

|                   |  |                                                        |  |  |  |  |
|-------------------|--|--------------------------------------------------------|--|--|--|--|
| **Name**          |  | **Position**                                           |
| Jack L. Stahl     |  | President and Chief ExecutiveOfficer                   |
| Thomas E. McGuire |  | Executive VicePresident and Chief Financial Officer    |
| David L.Kennedy   |  | Executive Vice President                               |
| Robert K.Kretzman |  | Executive Vice President, General Counsel andSecretary |
|                   |

The following sets forth the ages,positions held with Revlon, Inc. and Products Corporation and selectedbiographical information for the executive officers of Revlon, Inc. andProducts Corporation, in each case as of December  31,2005, except for Mr.  Stahl, whose biographical information isincluded above with the other Directors of ProductsCorporation:

**Mr.  McGuire (51**) served as ExecutiveVice President and Chief Financial Officer of Revlon, Inc. and ofProducts Corporation from August  2003 through early March2006. In early March  2006, Mr.  McGuire rotated positionswith Mr.  Kennedy and became Executive Vice President andPresident of Revlon, Inc.'s and Products Corporation'sinternational operations. Mr.  McGuire was the Founder and ChiefExecutive Officer of Human Capital Formation, LLC from August2001 until August  2003. Mr.  McGuire was the ChiefOperating Officer of Zyman Marketing Group from July  2000 untilMay  2001. From March  1982 until June  2000,Mr.  McGuire held various professional staff and senior financialexecutive positions at Coca-Cola, including positions in itsinternational businesses.

**Mr.  Kennedy (59**) servedas Executive Vice President and President of Revlon, Inc.'s andProducts Corporation's international operations from June2002 until early March  2006. In early March  2006,Mr.  Kennedy rotated positions with Mr.  McGuire and becameExecutive Vice President and Chief Financial Officer of Revlon, Inc.and of Products Corporation. From November  2001 untilJanuary  2002, Mr.  Kennedy served as a financialconsultant. From 1998 until 2001, Mr.  Kennedy was ManagingDirector of Coca-Cola Amatil Limited, a publicly-traded companyheadquartered in Sydney, Australia and listed on the Sydney StockExchange. Prior to 1998, Mr.  Kennedy held several seniormanagement and senior financial positions with Coca-Cola and itsdivisions and affiliated companies, which he joined in 1980, includingvarious senior financial positions responsible for financial reporting,internal audit, budgeting and forecasting, as well as serving asGeneral Manager of the Coca-Cola USA Fountain Division from 1992 to1997.

**Mr.  Kretzman (54**) has been Executive VicePresident, Chief Legal Officer, General Counsel and Secretary ofRevlon, Inc. and of Products Corporation since December  2003.Mr.  Kretzman served as 

52

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Senior Vice President, General Counsel andSecretary of Revlon, Inc. and of Products Corporation fromJanuary  2000 until December  2003. Prior to becomingGeneral Counsel, Mr.  Kretzman served as Senior Vice President,Deputy General Counsel and Secretary from March  1998 toJanuary  2000, as Vice President, Deputy General Counsel andSecretary from January  1997 to March  1998, and as VicePresident and Secretary from September  1992 to January1997. Mr.  Kretzman joined the Company in 1988 as Senior Counselresponsible for mergers and acquisitions. Mr.  Kretzman has alsoserved as the Company's Chief Compliance Officer sinceJanuary  2000.

Compensation of Directors

Directorswho currently are not receiving compensation as officers or employeesof the Company or any of its affiliates are paid an annual retainer feeof $25,000, payable in quarterly installments, and a fee of $1,000 foreach meeting of the Board of Directors or any committee thereof thatthey attended.

Audit Committee and Audit Committee FinancialExpert

The Board of Directors of Revlon, Inc., which owns100% of Products Corporation’s common stock, maintains anAudit Committee in accordance with the applicable SEC rules and theNYSE’s listing standards. Revlon, Inc.’s Board ofDirectors has determined that Revlon, Inc.'s Audit Committee,consisting of Alan S. Bernikow, Paul J. Bohan, Meyer Feldberg andEdward J. Landau, has at least one ‘‘audit committeefinancial expert.’’ Revlon, Inc.’s Boarddetermined that Alan S. Bernikow, who is also a member of ProductsCorporation's Board of Directors, based upon his experience,training and education, qualifies as an audit committee financialexpert in that he has (a) an understanding of generally acceptedaccounting principles (‘‘GAAP’’) andfinancial statements; (b) the ability to assess the general applicationof GAAP in connection with accounting for estimates, accruals andreserves; (c) experience preparing, auditing, analyzing or evaluatingfinancial statements that present a breadth and level of complexity ofaccounting issues that are generally comparable to the breadth andcomplexity of issues that can reasonably be expected to be raised bythe Company's financial statements, as well as experienceactively supervising one or more persons engaged in such activities;(d) an understanding of internal controls and procedures for financialreporting; and (e) an understanding of audit committee functions. Forcertain biographical data concerning Mr.  Bernikow, see‘‘—Directors and Executive Officers of theRegistrant.’’ Revlon, Inc.’s Board furtherdetermined that Mr.  Bernikow and the other members of Revlon,Inc.’s Audit Committee are independent of management pursuant toapplicable SEC rules and NYSE listing standards regarding theindependence of board and audit committee members, including theindependence principles set forth in the Revlon, Inc. Board Guidelinesfor Assessing Director Independence, which are posted on Revlon,Inc.'s website at www.revloninc.com.

Senior FinancialOfficer Code of Ethics

The Company has a written Code ofBusiness Conduct (the ‘‘Code of BusinessConduct’’) that includes a code of ethics (the‘‘Senior Financial Officer Code ofEthics’’) that applies to the Company's ChiefExecutive Officer and senior financial officers (including theCompany's Chief Financial Officer, Controller and personsperforming similar functions) (collectively, the ‘‘SeniorFinancial Officers’’). In addition to printable copies ofthe Code of Business Conduct and the Senior Financial Officer Code ofEthics being available on Revlon, Inc.'s website,www.revloninc.com, the Company will provide a copy of the SeniorFinancial Officer Code of Ethics, without charge, upon written requestto Robert K. Kretzman, Executive Vice President and Chief LegalOfficer, Revlon Consumer Products Corporation, 237 Park Avenue, NewYork NY, 10017. If the Company changes the Senior Financial OfficerCode of Ethics in any material respect or waives any provision ofthe Senior Financial Officer Code of Ethics for any of its SeniorFinancial Officers, the Company expects to provide the public withnotice of any such change or waiver by publishing an appropriatedescription of such event on Revlon, Inc.’s website,www.revloninc.com, or by other appropriate means as required orpermitted under applicable rules of the Commission. The Company doesnot currently expect to make any such waivers.

Item 11.Executive Compensation

The following table sets forthinformation for the years indicated concerning the compensation awardedto, earned by or paid to the persons who served as Chief ExecutiveOfficer of the Company 

53

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during 2005 and the four most highly paidexecutive officers (see footnote (a) below), other than the ChiefExecutive Officer, who served as executive officers of the Companyduring 2005 (collectively, the ‘‘Named ExecutiveOfficers’’), for services rendered in all capacities tothe Company and its subsidiaries during such periods.

SummaryCompensationTable

|                                                                                                                                                                             |  |        |        |                       |  |                             |           |                            |  |                             |         |                              |  |                         |         |        |  |        |           |        |  |        |           |        |  |        |         |        |  |  |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--------|--------|-----------------------|--|-----------------------------|-----------|----------------------------|--|-----------------------------|---------|------------------------------|--|-------------------------|---------|--------|--|--------|-----------|--------|--|--------|-----------|--------|--|--------|---------|--------|--|--|
|                                                                                                                                                                        |  |   |        | AnnualCompensation(a) |  | Long-TermCompensationAwards |           |                       |
| NameAnd PrincipalPosition                                                                                                                                                   |  | Year   |        | Salary($)             |  | Bonus($)                    |           | OtherAnnualCompensation($) |  | RestrictedStockAwards($)(b) |         | Securities UnderlyingOptions |  | AllOtherCompensation($) |
| Jack L.Stahl                                                                                                                                                                |  |   | 2005   |                  |  |                        | 1,300,000 |                       |  |                        | — |                         |  |                    | 80,634  |   |  |   | —   |   |  |   | —   |   |  |   | 158,505 |   |
| President and ChiefExecutive                                                                                                                                                |  |   | 2004   |                  |  |                        | 1,300,000 |                       |  |                        | 455,000 |                         |  |                    | 95,677  |   |  |   | 8,181,000 |   |  |   | 5,520,000 |   |  |   | 173,631 |   |
| Officer(c)                                                                                                                                                                  |  |   | 2003   |                  |  |                        | 1,300,000 |                       |  |                        | — |                         |  |                    | 103,244 |   |  |   | —   |   |  |   | 100,000   |   |  |   | 173,277 |   |
| ThomasE.McGuire                                                                                                                                                             |  |   | 2005   |                  |  |                        | 524,231   |                       |  |                        | 41,635  |                         |  |                    | 57,722  |   |  |   | —   |   |  |   | 130,000   |   |  |   | 97,116  |   |
| Executive Vice Presidentand                                                                                                                                                 |  |   | 2004   |                  |  |                        | 500,000   |                       |  |                        | 735,000 |                         |  |                    | 88,973  |   |  |   | 590,850   |   |  |   | 995,000   |   |  |   | 128,631 |   |
| Chief Financial Officer(d)                                                                                                                                                  |  |   | 2003   |                  |  |                        | 182,692   |                       |  |                        | — |                         |  |                    | 18,678  |   |  |   | 150,500   |   |  |   | 100,000   |   |  |   | 25,224  |   |
| RobertK.Kretzman                                                                                                                                                       |  |   | 2005   |                  |  |                        | 521,880   |                       |  |                        | 113,985 |                         |  |                    | 12,573  |   |  |   | —   |   |  |   | 120,000   |   |  |   | 11,902  |   |
|     ExecutiveVice    President, Chief Legal    Officer, GeneralCounsel and     Secretary(e) |  |   |   |                  |  |                        |      |                       |  |                        |    |                         |  |                    |    |   |  |   |      |   |  |   |      |   |  |   |    |   |
|                                                                                                                                                                             |

|  |
|--|
|  |  |
|  |

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (a) | Theamounts shown in Annual Compensation for 2005, 2004 and 2003 reflectsalary, bonus and other annual compensation (including, as required tobe disclosed in accordance with Item 402 of Regulation S-K promulgatedunder the Exchange Act, perquisites and other personal benefits valuedin excess of $50,000) and amounts reimbursed for payment of taxesawarded to, earned by or paid to the persons listed for servicesrendered to the Company and its subsidiaries. For the periods reported,the Company had an executive bonus plan in which executivesparticipated (including Messrs. Stahl, McGuire and Kretzman) (see‘‘—Employment Agreements’’). Theexecutive bonus plan provided for payment of cash compensation upon theachievement of predetermined business and personal performanceobjectives during the calendar year that are established by Revlon,Inc.’s Compensation and Stock Plan Committee (the‘‘Compensation Committee’’), except that inrespect of 2003, as a result of the non-attainment of bonus objectivesfor that year, the Compensation Committee determined that no bonuseswould be payable under the executive bonus plan or any other incentivecompensation plan of the Company for that year. In addition, no salaryincreases were provided in 2004 and the Company's bonus plantargets for 2004 and 2005 were set at 50% and 75%,respectively, of the regular bonus targets. For 2005, the Company isreporting the compensation of Messrs. Stahl, McGuire and Kretzman, itsonly executive officers during 2005. |

|     |                                                                                                                                                                                                                                                                                                                                                                        |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | Seefootnotes (c), (d) and (e) below for information concerning the number,value and vesting schedules on restricted stock awards to the NamedExecutive Officers under the Stock Plan. The options granted to NamedExecutive Officers during 2005 pursuant to the Stock Plan are discussedbelow under ‘‘Option Grants in the Last FiscalYear.’’ |

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (c) | Mr.  Stahlbecame President and Chief Executive Officer of the Company duringFebruary  2002. In March  2006, Mr.  Stahl wasentitled to receive a bonus of $373,190, which he had earned in respectof 2005 pursuant to the terms of the executive bonus plan, and basedupon the achievement of certain predetermined, objectiveperformance-based bonus criteria that had been established in early2005 by the Compensation Committee. Mr.  Stahl waived receipt ofsuch bonus to help fund, in part, discretionary bonuses to participantsin the executive bonus plan in recognition of the Company’ssignificant achievements during 2005, including the launch of theCompany’s new Vital Radiance brand and the restage of Almay;securing an approximately 23% increase in shelf spacecommitments at U.S. retail customers; growth in the U.S. market sharefor color cosmetics, hair color and beauty tools; the successfulrefinancing of the Company’s debt which was scheduled to maturein 2006 and extending its term through 2011; and the development of anew fragrance for the Company’s re-entry into the prestigedistribution channel. The amount shown for Mr.  Stahl under OtherAnnual Compensation for 2005 includes $80,634 in respect of gross upsfor taxes on imputed income arising out of (x) personal use of aCompany-provided automobile, (y) premiums paid or reimbursed by theCompany in respect of life insurance and (z) reimbursements formortgage principal and interest payments pursuant to Mr.Stahl's employment agreement, as amended. In addition, althoughnot required to be disclosed in the Summary Compensation Table abovepursuant to Item 402 of Regulation S-K, Mr.  Stahl'scompensation for 2005 also included (i) $5,652 in respect of use of aCompany-provided automobile, (ii) $12,782 in reimbursements under theCompany's Executive Medical Plan, (iii) $39,014 in premiums paidby the Company in respect of supplemental long-term disabilityinsurance and (iv) $8,500 for tax preparation expenses in 2005. Theamount shown under All Other Compensation for 2005 reflects (i) $16,237in respect of life insurance premiums, (ii) $135,968 of additionalcompensation in respect of interest and principal payments on amortgage loan which Products Corporation made to Mr.  Stahl onMay  20,  2002 (prior to the passage of the Sarbanes-OxleyAct of 2002 and its prohibitions on loans to executive officers) topurchase a principal residence in the New York metropolitan areapursuant to his employment agreement (see‘‘—Employment Agreements ‘‘) and(iii) $6,300 in respect of matching contributions under the 401(k)Plan. |

|  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|--|--|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  |  | In March  2005, Mr.  Stahlreceived a bonus of $455,000 in respect of 2004 pursuant to the termsof the executive bonus plan, and based upon the achievement of certainpredetermined, objective performance-based bonus criteria that had beenestablished in early 2004 by the Compensation Committee. The amountshown for Mr.  Stahl under Other Annual Compensation for 2004includes $95,677 in respect of gross ups for taxes on imputed incomearising out of (x) personal use of a Company-provided automobile, (y)premiums paid or reimbursed by the Company in respect of life insuranceand (z) |

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|--|--|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  |  | reimbursements for mortgage principal andinterest payments pursuant to Mr.  Stahl's employmentagreement, as amended. In addition, although not required to bedisclosed in the Summary Compensation Table above pursuant to Item 402of Regulation S-K, Mr.  Stahl's compensation for 2004 alsoincluded (i) $21,188 in respect of use of a Company-providedautomobile, (ii) $11,886 in reimbursements under the Company'sExecutive Medical Plan, (iii) $28,028 in premiums paid by the Companyin respect of supplemental long-term disability insurance and (iv)$8,500 for tax preparation expenses in 2004. The amount shown under AllOther Compensation for 2004 reflects (i) $16,513 in respect of lifeinsurance premiums, (ii) $135,968 of additional compensation in respectof interest and principal payments on a mortgage loan which ProductsCorporation made to Mr.  Stahl on May  20,  2002(prior to the passage of the Sarbanes-Oxley Act of 2002 and itsprohibitions on loans to executive officers) to purchase a principalresidence in the New York metropolitan area pursuant to his employmentagreement (see ‘‘—Employment Agreements‘‘), (iii) $6,150 in respect of matching contributionsunder the 401(k) Plan and (iv) $15,000 in respect of matchingcontributions under the Revlon Excess Savings Plan for Key Employees.On April  14,  2004, Mr.  Stahl was awarded a grantof 2,700,000 shares of restricted stock under the Stock Plan. One thirdof Mr.  Stahl's 2004 restricted stock Award vested onApril  14,  2005 and, provided Mr.  Stahl remainscontinuously employed by the Company, or if he is terminated by theCompany without ‘‘cause’’ or if heterminates his employment for ‘‘goodreason’’ (as each such term is described in Mr.Stahl's employment agreement, as amended), his 2004 restrictedstock Award will vest as to an additional one-third on each subsequentanniversary of the grant date. No dividends will be paid on unvestedrestricted stock granted to Mr.  Stahl in 2004. The value of therestricted stock Awards granted to Mr.  Stahl on April14,  2004 as reflected in the table is based on the $3.03 pershare closing market price of Revlon, Inc.'s Class A Common Stockon the NYSE on the grant date, provided, however, only one-third ofMr.  Stahl's restricted stock Award had vested as ofDecember  31,  2005 and those vested shares were valued at$2,727,000 on the same basis. The value of these restricted stockAwards as of December  31,  2005 was $8,370,000, based on aper share price of $3.10, the per share closing market price of Revlon,Inc.'s Class A Common Stock on the NYSE on December31,  2005, provided, however, because only one-third ofMr.  Stahl's restricted stock Award had vested as ofDecember  31,  2005 those vested shares were valued at$2,790,000 on the same basis. |

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|  |  | The amount shownfor Mr.  Stahl under Other Annual Compensation for 2003 includes$103,244 in respect of gross ups for taxes on imputed income arisingout of (i) personal use of a Company-provided automobile, (ii) premiumspaid or reimbursed by the Company in respect of life insurance and(iii) reimbursements for mortgage principal and interest paymentspursuant to Mr.  Stahl's employment agreement, as amended.The amount shown under All Other Compensation for 2003 reflects (i)$16,309 in respect of life insurance premiums, (ii) $135,968 ofadditional compensation in respect of interest and principal paymentson a mortgage loan which Products Corporation made to Mr.  Stahlon May  20,  2002 to purchase a principal residence in theNew York metropolitan area pursuant to his employment agreement (see‘‘—Employment Agreements’’), (iii)$6,000 in respect of matching contributions under the 401(k) Plan and(iv) $15,000 in respect of matching contributions under the RevlonExcess Savings Plan for Key Employees. |

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|  |  | Mr.Stahl's employment agreement was amended on December17,  2004 to extend the term for three years and to provide thatin the event that Mr.  Stahl is terminated without‘‘cause’’ or if he terminates hisemployment for ‘‘good reason,’’ the stockoption awards granted to Mr.  Stahl on February  17,2002, May  19,  2003 and April  14,  2004, andthe restricted stock awards granted to Mr.  Stahl onFebruary  17,  2002 and April  14,  2004, shallcontinue to vest in accordance with their terms as if Mr.Stahl's employment had not been terminated and he had remainedemployed by the Company, and those stock option awards shall remainexercisable until the later of (i) one year after such existing optionaward becomes 100% fully vested and exercisable or (ii) 18months following Mr.  Stahl's termination of employment,but in no event beyond the original option term of each suchaward. |

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| (d) | Mr.  McGuire served asExecutive Vice President and Chief Financial Officer of the Companyfrom August  2003 until early March  2006. In earlyMarch  2006, Mr.  McGuire became Executive Vice Presidentand President of the Company's international operations. InMarch  2006, Mr.  McGuire will receive a bonus of $41,635in respect of 2005 pursuant to the terms of the executive bonus plan,and based upon the achievement of certain predetermined, objectiveperformance-based bonus criteria that had been established in early2005 by the Compensation Committee. The amount shown for Mr.McGuire under Other Annual Compensation for 2005 includes $57,722 inrespect of gross ups for taxes on imputed income arising out ofrelocation expenses paid or reimbursed by the Company in 2005. Inaddition, although not required to be disclosed in the SummaryCompensation Table above pursuant to Item 402 of Regulation S-K,Mr.  McGuire's compensation for 2005 also included $15,000in respect of a cash car allowance. The amount shown under All OtherCompensation for 2005 reflects (i) $88,078 in Company-paid expenses fortemporary corporate housing and travel to and from Atlanta pending hisrelocation to the New York metropolitan area, (ii) $6,300 in respect ofmatching contributions under the 401(k) Plan and (iii) $2,739 inrespect of life insurance premiums. |

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|  |  | InMarch  2005, Mr.  McGuire received a bonus of $135,000 inrespect of 2004 pursuant to the terms of the executive bonus plan,$70,875 of which was based upon the achievement of certainpredetermined, objective performance-based bonus criteria that had beenestablished in early 2004 by the Compensation Committee and $64,125 ofwhich was a discretionary bonus approved by the Compensation Committeein recognition of, among other things, Mr.  McGuire'ssignificant contributions to the Company's refinancing activitiesduring 2004. In addition, pursuant to the terms of his employmentagreement, in January  2005 Mr.  McGuire received a$600,000 retention incentive in respect of 2004, intended to assist himtowards funding the purchase of a home in the New York metropolitanarea (see ‘‘—EmploymentAgreements’’). The amount shown for Mr.  McGuireunder Other Annual Compensation for 2004 includes $88,973 in respect ofgross ups for taxes on imputed income arising out of relocationexpenses paid or reimbursed by the Company in 2004. In addition,although not required to be disclosed in the Summary Compensation Tableabove pursuant to Item 402 of Regulation S-K, Mr.McGuire's compensation for 2004 also included $15,000 in respectof a cash car allowance. The amount shown under All Other Compensationfor 2004 reflects (i) $119,835 in Company-paid expenses for temporarycorporate housing and travel to and from Atlanta pending his relocationto the New York metropolitan area and (ii) $2,546 in respect of lifeinsurance premiums. On April  14,  2004, Mr.  McGuirewas awarded a grant of 195,000 shares of restricted stock under theStock Plan. One-third of Mr.  McGuire's restricted stockAward vested on April  14,  2005 and, provided Mr.McGuire remains continuously employed by the Company, his 2004restricted stock Award will vest as to an additional one-third on eachsubsequent anniversary of the grant date. No dividends will be paid onthe unvested restricted stock granted to Mr.  McGuire in 2004.The value of the restricted stock Awards granted to Mr.  McGuireon April  14,  2004 as reflected in the table is based onthe $3.03 per share closing market price of Revlon, Inc.'s ClassA Common Stock on the NYSE on that date, provided, however, onlyone-third of Mr.  McGuire's restricted stock Award hadvested as of December  31,  2005 and those vested shareswere valued at $196,950 on the same basis. The value of theserestricted stock Awards as of December  31,  2005 was$604,500, based on a per share price of $3.10, the per share closingmarket price of Revlon, Inc.'s Class A Common Stock on the NYSEon December  31,  2005, provided, however, only one-thirdof Mr.  McGuire's restricted stock Award had vested as ofDecember  31,  2005 and those vested shares were valued at$201,500 on the same basis. |

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|  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
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|  |  | The amount shown forMr.  McGuire under Other Annual Compensation for 2003 includes$18,678 in respect of gross ups for taxes on imputed income arising outof relocation expenses paid or reimbursed by the Company in 2003. Theamount shown under All Other Compensation for 2003 reflects (i) $24,732in Company-paid relocation expenses and (ii) $492 in respect ofpremiums under the Company’s basic life insurance program. OnAugust  18,  2003 (the ‘‘2003 McGuire GrantDate’’), Mr.  McGuire was awarded 50,000 shares ofrestricted stock under the Stock Plan. Provided Mr.  McGuireremains continuously employed by the Company, his 2003 restricted stockAward will vest as to one-third of the restricted shares on the dayafter which the 20-day average of the closing price of Class A CommonStock on the NYSE equals or exceeds $20.00 per share, an additionalone-third of such restricted shares will vest on the day after whichsuch 20-day average closing price equals or exceeds $25.00 per shareand the balance will vest on the day after which such 20-day averageclosing price equals or exceeds $30.00 per share, provided (i) subjectto clause (ii) below, no portion of Mr.  McGuire's 2003restricted stock Award was to vest until the second anniversary of the2003 McGuire Grant Date, (ii) all of the shares of restricted stockawarded to Mr.  McGuire in 2003 will vest immediately in theevent of a ‘‘change in control’’ (asdefined in Mr.  McGuire's restricted stock agreement) and(iii) all of the shares of restricted stock granted to Mr.McGuire in 2003 that have not previously vested will fully vest on thethird anniversary of the 2003 McGuire Grant Date. No dividends will bepaid on the unvested restricted stock granted to Mr.  McGuire in2003. The value of the restricted stock Awards granted to Mr.McGuire on the 2003 McGuire Grant Date (none of the Award had vested asof December  31,  2005) as reflected in the table is basedon the $3.01 per share closing market price of Revlon, Inc.'sClass A Common Stock on the NYSE on the 2003 McGuire Grant Date. Thevalue of these restricted stock Awards as of December  31,2005 was $155,000, based on a per share price of $3.10, the per shareclosing market price of Revlon, Inc.'s Class A Common Stock onthe NYSE on December  31,  2005. |

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| (e) | Mr. Kretzman, Executive Vice President,Chief Legal Officer, General Counsel and Secretary of Revlon, Inc. andof Products Corporation, became an executive officer effective inMarch  2005. In March  2006, Mr.  Kretzman willreceive a bonus of $113,985 in respect of 2005 pursuant to the terms ofthe executive bonus plan, and based upon the achievement of certainpredetermined, objective performance-based bonus criteria that had beenestablished in early 2005 by the Compensation Committee. The amountshown for Mr.  Kretzman under Other Annual Compensation for 2005includes $12,573 in respect of gross ups for taxes on imputed incomearising out of personal use of a Company-provided automobile. Inaddition, although not required to be disclosed in the SummaryCompensation Table above pursuant to Item 402 of Regulation S-K,Mr.  Kretzman's compensation for 2005 also included (i)$17,007 in respect of use of a Company-provided automobile, (ii)$12,782 in reimbursements under the Company's Executive MedicalPlan and (iii) $1,000 for tax preparation expenses in 2005. The amountshown under All Other Compensation for 2005 reflects (i) $5,602 inrespect of life insurance premiums and (ii) $6,300 in respect ofmatching contributions under the 401(k) Plan. |

OPTION GRANTSIN THE LAST FISCAL YEAR

During 2005, the following grants ofstock options were made pursuant to the Stock Plan to the NamedExecutive Officers:

|                  |  |                                                 |         |                                                         |  |                            |         |                |      |                           |         |          |  |        |         |        |  |        |         |        |  |  |
|------------------|--|-------------------------------------------------|---------|---------------------------------------------------------|--|----------------------------|---------|----------------|------|---------------------------|---------|----------|--|--------|---------|--------|--|--------|---------|--------|--|--|
|             |  | IndividualGrants                                |         | Grant DateValue(a)                                      |
| Name             |  | Number ofSecuritiesUnderlying OptionsGranted(#) |         | Percent ofTotalOptions Granted toEmployees InFiscalYear |  | Exercise orBasePrice($/Sh) |         | ExpirationDate |      | GrantDatePresent Value($) |
| Jack L.Stahl     |  |                                            | — |                                                    |  |                       | — |           |      |                      | — |     |  |   | — |   |  |   | — |   |
| ThomasE.McGuire  |  |                                            | 130,000 |                                                    |  | 2.50%                      |         | $              | 2.55 |                      |         | 3/7/2012 |  |   | 177,359 |   |
| RobertK.Kretzman |  |                                            | 120,000 |                                                    |  | 2.31%                      |         | $              | 2.55 |                      |         | 3/7/2012 |  |   | 163,716 |   |
|                  |

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| (a) | GrantDate Present Values were calculated using the Black-Scholes optionpricing model. The model used March  7,  2005 as a grantdate with respect to options granted to Messrs. McGuire and Kretzman onsuch date. Stock option models require a prediction about the futuremovement of stock price. The following assumptions were made forpurposes of calculating Grant Date Present Values: (i) a risk-freeinterest rate of return of 3.96%; (ii) expected stock pricevolatility of approximately 61%, based upon the volatility ofthe stock price of Class A Common Stock; (iii) a constant dividend rateof zero percent; and (iv) an estimated life of 4.75 years from thegrant date. No adjustments to the theoretical value were made toreflect the waiting period, if any, prior to vesting of the stockoptions or the transferability (or restrictions related thereto) of thestock options. The real value of the options in the table depends uponthe actual performance of Revlon, Inc.'s Class A Common Stock onthe NYSE during the applicable period and upon exercise. |

Theoptions granted to Messrs. McGuire and Kretzman in 2005 under the StockPlan were awarded on March  7,  2005 and consist ofnon-qualified options having a term of seven years, vesting 25%on March  7,  2006 and continuing to vest in additional25% increments on each March  7th thereafter, becoming100% vested on March  7,  2009. These options havean exercise price equal to $2.55, the per share closing market price onthe NYSE of Revlon, Inc.'s Class A Common Stock on such grantdate, as indicated in the table above.

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AGGREGATED OPTION EXERCISES INLASTFISCAL YEAR AND FISCAL YEAR-END OPTION VALUES

Thefollowing chart shows the number of stock options exercised during 2005and the 2005 year-end value of the stock options held by the NamedExecutive Officers:

|                  |  |                                     |         |                          |  |                                                                                                                     |         |                                                                                                    |  |                     |  |                            |  |  |  |  |  |  |
|------------------|--|-------------------------------------|---------|--------------------------|--|---------------------------------------------------------------------------------------------------------------------|---------|----------------------------------------------------------------------------------------------------|--|---------------------|--|----------------------------|--|--|--|--|--|--|
| Name             |  | SharesAcquiredonExerciseDuring 2005 |         | Value RealizedDuring2005 |  | Number of SecuritiesUnderlying UnexercisedOptionsat Fiscal Year-EndExercisable/UnexercisableatDecember 31, 2005 (#) |         | Value of In-The-MoneyOptionsat Fiscal Year-EndExercisable/UnexercisableatDecember 31, 2005 (a) ($) |
| Jack L.Stahl     |  |                                | — |                     |  |                                                                                                                | — |                                                                                               |  | 2,810,000/3,210,000 |  | 193,700/193,700            |
| ThomasE.McGuire  |  |                                | — |                     |  |                                                                                                                | — |                                                                                               |  | 547,500/677,500     |  |   39,325/110,825 |
| RobertK.Kretzman |  |                                | — |                     |  |                                                                                                                | — |                                                                                               |  | 595,000/597,500     |  | 33,425/99,425              |
|                  |

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| (a) | Amountsshown as value of in-the-money options represent the difference betweenthe exercise price of the options (exercisable or unexercisable, as thecase may be) and the market value of the underlying shares of Class ACommon Stock at year end, calculated using $3.10, the December31,  2005 closing market price on the NYSE of Revlon,Inc.'s Class A Common Stock. The actual value, if any, anexecutive may realize upon exercise of a stock option depends upon theamount by which the market price of shares of Class A Common Stockexceeds the exercise price per share when the stock options areexercised. |

Employment Agreements

Each of Messrs.Stahl, McGuire and Kretzman has an executive employment agreement withProducts Corporation.

Mr.  Stahl's employmentagreement, as amended and extended (his ‘‘employmentagreement’’), provides that he will serve as Presidentand Chief Executive Officer at a base salary of not less than$1,300,000 per annum, and that he receive a bonus of not less than$1,300,000 in respect of 2002 (which bonus was paid in February2003) and grants of 1,000,000 shares of restricted stock and 400,000options upon joining the Company in 2002 (which grants were made onFebruary  17,  2002 (the ‘‘2002 Stahl GrantDate’’)). The term of Mr.  Stahl's employmentagreement ends on February  16,  2008, provided, however,that at any time on or after February  17,  2005, ProductsCorporation may terminate Mr.  Stahl's employment by 36months' prior written notice of non-renewal of theagreement.

Mr.  Stahl's employment agreement providesfor participation in the executive bonus plan and other executivebenefit plans on a basis equivalent to other senior executives of theCompany generally. Mr.  Stahl's employment agreementprovides for Company-paid supplemental disability insurance andsupplemental term life insurance coverage with a death benefit of$10,000,000 during employment. The employment agreement for Mr.Stahl also provides for protection of Company confidential informationand includes a non-compete obligation.

Mr.  Stahl'semployment agreement provides that in the event of termination of theterm by Mr.  Stahl for ‘‘goodreason’’ (as defined in Mr.  Stahl'semployment agreement), or by the Company (otherwise than for‘‘cause’’ or‘‘disability’’ as each such term is definedor described in Mr.  Stahl's employment agreement),Mr.  Stahl would be entitled, at his election, to severancepursuant to Products Corporation's Executive Severance Policy(see ‘‘—Executive SeverancePolicy’’) (other than the six-month limit on lump sumpayments provided for in such policy, which six-month limit provisionwould not apply to Mr.  Stahl); or continued payments of basesalary, continued participation in the Company's life insuranceplan (which life insurance coverage is subject to a limit of two years)and medical plans subject to the terms of such plans, and continuedCompany-paid supplemental term life insurance, in each case through thedate occurring 36 months after the date of notice of non-renewal, or inthe case of medical plan participation only, until such earlier date onwhich Mr.  Stahl were to become covered by like plans of anothercompany. In addition, Mr.  Stahl's employment agreementprovides that if he remains employed by Products Corporation or itsaffiliates until age 60, then upon any subsequent retirement he will beentitled to a supplemental pension benefit in a sufficient amount sothat his annual pension benefit from all qualified and non-qualifiedpension plans of Products Corporation and its affiliates, as well asany such plans of Mr.  Stahl's past employers or theiraffiliates (expressed as a straight life annuity), equals $500,000. IfMr.  Stahl's employment were to terminate on or afterFebruary  28,  2006 and prior to February  28,2007, 

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then he would have received 33.32% ofthe supplemental pension benefit otherwise payable pursuant to hisemployment agreement and thereafter an additional 8.33% willaccrue as of each February  28th on which Mr.  Stahl isstill employed (but in no event more than would have been payable toMr.  Stahl under the foregoing provision had he retired at age60). Mr.  Stahl would not receive any supplemental pensionbenefit and any amounts then being paid for supplemental pensionbenefits would immediately cease if he were to materially breach hisemployment agreement or be terminated by the Company for‘‘cause’’ (as defined in Mr.Stahl's employment agreement). Mr.  Stahl'semployment agreement provides for continuation of group life insuranceand executive medical insurance coverage in the event of permanentdisability.

Mr.  Stahl's employment agreementprovides that he was entitled to a loan in March  2002 fromProducts Corporation to satisfy state, local and federal income taxes(including any withholding taxes) incurred by him as a result of hishaving made an election under Section 83(b) of the Internal RevenueCode of 1986 (as amended, the ‘‘Code’’) inconnection with the 1,000,000 shares of restricted stock that weregranted to him by the Company on the 2002 Stahl Grant Date. Mr.Stahl received such loan from Products Corporation in the amount of$1,800,000 in March  2002, prior to the passage of theSarbanes-Oxley Act of 2002 and its prohibition on loans to executiveofficers. Interest on such loan is payable at the applicable federalrate. The full principal amount of such loan and all accrued interestis due and payable on February  17,  2007 (the fifthanniversary of the 2002 Stahl Grant Date), provided that if Mr.Stahl terminates his employment for ‘‘goodreason’’ or the Company terminates him other than for‘‘disability’’ or‘‘cause’’ (as each such term is defined ordescribed in Mr.  Stahl's employment agreement), theoutstanding balance of such loan and all accrued interest would beforgiven. Such loan is secured by a pledge of the 1,000,000 shares ofrestricted stock which were granted to Mr.  Stahl on the 2002Stahl Grant Date and such loan and pledge are evidenced by a PromissoryNote and a Pledge Agreement, each dated March  13,  2002.Mr.  Stahl's employment agreement also provides that he wasentitled to a mortgage loan to cover the purchase of a principalresidence in the New York metropolitan area and/or a Manhattanapartment, in the principal amount of $2,000,000, which loan wasadvanced by Products Corporation to Mr.  Stahl on May20,  2002, prior to the passage of the Sarbanes-Oxley Act of2002. The principal of the mortgage loan is repayable on a monthlybasis during the period from June  1,  2002 through andincluding May  1,  2032, with interest at the applicablefederal rate, with the unpaid principal and accrued and unpaid interestdue in full 90 days after Mr.  Stahl's employment with theCompany terminates, whichever occurs earlier. Pursuant to hisemployment agreement, Mr.  Stahl is entitled to receiveadditional compensation payable on a monthly basis equal to the amountrepaid by him in respect of interest and principal on the mortgageloan, plus a gross up for any taxes resulting from such additionalcompensation. If during the term of his employment agreement Mr.Stahl terminates his employment for ‘‘goodreason,’’ or the Company terminates his employment otherthan for ‘‘disability’’ or‘‘cause’’ (as each such term is defined ordescribed in Mr.  Stahl's employment agreement), themortgage loan from the Company would be forgiven in itsentirety.

Mr.  Stahl's employment agreement wasamended on December  17,  2004 to extend the term of hisagreement to February  16,  2008 and to provide forcontinued vesting of equity awards previously granted to Mr.Stahl in the event that he is terminated by the Company without‘‘cause’’ or if Mr.  Stahl terminateshis employment for ‘‘good reason’’ (as eachsuch term is defined or described in Mr.  Stahl'semployment agreement). Specifically, in the event that Mr.  Stahlis terminated without ‘‘cause’’ or if heterminated his employment for ‘‘goodreason,’’ the stock option awards granted to Mr.Stahl on February  17,  2002, May  19,  2003and April  14,  2004, and the restricted stock awardsgranted to Mr.  Stahl on February  17,  2002 andApril  14,  2004, would continue to vest in accordance withtheir terms as if Mr.  Stahl's employment had not beenterminated and he had remained employed by the Company, and those stockoption awards shall remain exercisable until the later of (i) one yearafter such existing option award becomes 100% fully vested andexercisable or (ii) 18 months following Mr.  Stahl'stermination of employment, but in no event beyond the original optionterm of each such award; provided, however, that as consideration forcontinued vesting of any option awards or restricted stock awards, asdescribed above, the non-solicitation and non-competition covenants inMr.  Stahl's employment agreement shall remain in effect atleast until the date that all existing equity awards are fullyvested.

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Mr.  McGuire's employmentagreement with Products Corporation, as amended (as so amended, his‘‘employment agreement’’), provides that hewill serve as Executive Vice President and Chief Financial Officerthrough early March  2006 and then as Executive Vice Presidentand President of the Company's international operations, or suchother duties and responsibilities as may be assigned to him from timeto time, at a base salary of not less than $500,000 per annum and thathe receive a (i) retention incentive of $600,000 (which was paid onJanuary  13,  2005) to assist him in purchasing a home inthe New York metropolitan area, and (ii) grant of (A) 50,000 shares ofrestricted stock in 2003 (which grant was made on the 2003 McGuireGrant Date), (B) 100,000 options in 2003 (which grant was made on the2003 McGuire Grant Date), (C) 25,000 options in 2004 (which grant wasmade on April  14,  2004) and (D) 25,000 options in 2005(which grant was made on March  7,  2005). ProductsCorporation may terminate Mr.  McGuire's employmentagreement effective two years after written notice of non-extension ofthe agreement. During any period that his employment continues aftertermination or expiration of the term of his employment agreement,Mr.  McGuire would be deemed an employee at will and would beeligible for severance under Products Corporation's ExecutiveSeverance Policy (see ‘‘—Executive SeverancePolicy’’), provided that the Severance Period forMr.  McGuire shall not be less than 24 months.

Mr.McGuire's employment agreement provides for participation in theexecutive bonus plan with specific bonus targets. The employmentagreement for Mr.  McGuire also provides for protection ofCompany confidential information and includes a non-competeobligation.

Mr.  McGuire's employment agreementprovides that in the event of termination of the term by Mr.McGuire for material breach by the Company of a material provision ofsuch agreement or failure of the Compensation Committee to adopt andimplement the recommendations of management with respect to stockoption or restricted stock grants to be provided under his employmentagreement, or by the Company (otherwise than for‘‘cause’’ as defined in Mr.McGuire's employment agreement or disability), Mr.  McGuirewould be entitled, at his election, to severance, includingparticipation in the Company's medical plans, pursuant to theExecutive Severance Policy (see ‘‘—ExecutiveSeverance Policy’’) (provided that the Severance Periodfor Mr.  McGuire shall not be less than 24 months) or continuedpayments of base salary throughout the term and continued participationin the Company's life insurance plan, which life insurancecoverage is subject to a limit of two years, and medical plans, subjectto the terms of such plans throughout the term or until Mr.McGuire were covered by like plans of another company.

Mr.  McGuire's original employment agreementprovided that Mr.  McGuire was eligible for certain relocationand retention benefits with the expectation that he would sell his homein Atlanta by August  18,  2004 and complete his relocationto New York by October  18,  2004. Due to the significanttime that Mr.  McGuire spent on the Company's refinancingand debt reduction activities during 2004, which did not permitMr.  McGuire to pursue his relocation, the employment agreementwas amended in December  2004 to allow Mr.  McGuire untilAugust  18,  2005 to sell his home in Atlanta, untilOctober  18,  2005 to complete his relocation to the NewYork metropolitan area and to extend the period that ProductsCorporation's would provide him with reasonable corporate housinguntil December  31,  2004.

Mr.Kretzman's employment agreement (his ‘‘employmentagreement’’) provides that he will serve as ExecutiveVice President, Chief Legal Officer and General Counsel at a basesalary of not less than his current base salary, which for 2005 was$529,000. Products Corporation may terminate Mr.Kretzman's employment agreement effective two years after writtennotice of non-extension of the agreement. During any period that hisemployment continues after the termination or expiration of the term ofhis employment agreement, Mr.  Kretzman would be deemed anemployee at will and would be eligible for severance under ProductsCorporation's Executive Severance Policy (see‘‘—Executive Severance Policy’’),provided that the severance period for Mr.  Kretzman shall not beless than 24 months.

Mr.  Kretzman's employmentagreement provides for participation in the executive bonus plan andother executive benefit plans on a basis equivalent to other seniorexecutives of the Company generally. Mr.  Kretzman'semployment agreement provides for Company-paid supplemental term lifeinsurance coverage of two times Mr.  Kretzman's basesalary. In addition, Mr.  Kretzman's employment agreementprovides that he is entitled to receive a retirement benefit at age 62,calculated under the Retirement Plan and Pension Equalization Plan(each as defined below), as if Mr.  Kretzman had electedretirement at age 

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65. The employment agreement for Mr.Kretzman also provides for protection of Company confidentialinformation and includes a non-compete obligation.

Mr.Kretzman's agreement provides that in the event of termination ofthe term of the employment agreement by Mr.  Kretzman for breachby the Company of a material provision of his employment agreement,failure of the Compensation Committee to adopt and implement therecommendations of management with respect to stock option orrestricted stock grants to be provided under his employment agreementor for ‘‘good reason’’ (as defined inMr.  Kretzman's employment agreement), or by the Company(otherwise than for ‘‘cause’’ as defined inthe employment agreement or for disability), Mr.  Kretzman wouldbe entitled, at his election, to severance and benefits continuationpursuant to the Executive Severance Policy (see‘‘—Executive Severance Policy’’)(provided that the Severance Period for Mr.  Kretzman shall notbe less than 24 months) or continued payments of base salary throughoutthe term and continued participation in the Company's lifeinsurance plan, subject to a limit of two years, and medical plans,subject to the terms of such plans, throughout the term or untilMr.  Kretzman were covered by like plans of another company.Mr.  Kretzman's agreement provides for continued vesting ofeach of the stock option and restricted stock awards granted toMr.  Kretzman prior to November  1,  2002 in theevent that he is terminated by the Company without‘‘cause’’ or if Mr.  Kretzmanterminates his employment agreement in accordance with its terms. Suchawards would continue to vest in accordance with their terms and remainexercisable until one year following the later of: (i) Mr.Kretzman's termination of employment or (ii) the date all suchawards became 100% fully vested andexercisable.

Executive Severance Policy

ProductsCorporation's Executive Severance Policy as in effect onDecember  31,  2005 provides that upon termination ofemployment of eligible executive employees, including Messrs. Stahl,McGuire and Kretzman, other than voluntary resignation by the executiveor termination by Products Corporation for ‘‘goodreason,’’ in consideration for the executive'sexecution of a release and confidentiality agreement and theCompany's standard employee non-competition agreement, theeligible executive may be eligible to receive, in lieu of severanceunder any employment agreement then in effect or under ProductsCorporation's basic severance plan, a number of months ofseverance pay in bi-weekly installments based upon suchexecutive's grade level and years of service, reduced by theamount of any compensation from subsequent employment, unemploymentcompensation or statutory termination payments received by suchexecutive during the severance period and, in certain circumstances, bythe actuarial value of enhanced pension benefits received by theexecutive, as well as continued participation in medical and certainother benefit plans for the severance period (or in lieu thereof, uponcommencement of subsequent employment, a lump sum payment equal to thethen present value of 50% of the amount of base salary thenremaining payable through the balance of the severance period,generally capped at six months pay and subject to any restrictionsunder the Code). Pursuant to the Executive Severance Policy, uponmeeting the conditions set forth in such policy, as of December31,  2005, Messrs. Stahl, McGuire and Kretzman could be entitledto severance pay of up to 22, 20 and 24 months of base salary,respectively, at the base salary rate in effect on the date ofemployment termination, plus continued participation in the medical anddental plans for the same respective periods on the same terms asactive employees, provided that under each of Messrs. McGuire'sand Kretzman's employment agreements the severance period is atleast 24 months and under Mr.  Stahl's agreement he isentitled to 36 months' severance. Any compensation and benefitsto which Messrs. Stahl, McGuire or Kretzman would be eligible toreceive upon termination pursuant to the terms of their employmentagreements or the Executive Severance Policy would be subject toapplicable restrictions of the Code, if any, including, withoutlimitation, Internal Revenue Code Section 409A and relatedregulations.

Defined Benefit Plans

In accordance with theterms of the Revlon Employees' Retirement Plan (the‘‘Retirement Plan’’), the following tableshows the estimated annual retirement benefits payable (as ofDecember  31,  2005) under the non-cash balance program ofthe Retirement Plan (the ‘‘Non-Cash BalanceProgram’’) at normal retirement age (65) to a personretiring with the indicated average compensation and years of creditedservice, on a straight life annuity basis, after Social Securityoffset, including amounts attributable 

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to the Revlon Pension Equalization Plan, asamended (the ‘‘Pension EqualizationPlan’’), as described below.

|                                                                            |  |                                                                                                             |         |        |  |        |         |        |  |        |         |        |  |        |         |        |  |        |         |        |  |  |
|----------------------------------------------------------------------------|--|-------------------------------------------------------------------------------------------------------------|---------|--------|--|--------|---------|--------|--|--------|---------|--------|--|--------|---------|--------|--|--------|---------|--------|--|--|
| HighestConsecutive Five-Year Average Compensation During Final 10 Years($) |  | Estimated Annual Straight Life Annuity Benefits AtRetirement With IndicatedYears Of Credited Service ($)(a) |
| 15                                                                         |  | 20                                                                                                          |         | 25     |  | 30     |         | 35     |
| 600,000                                                                    |  |                                                                                                        | 150,183 |   |  |   | 200,244 |   |  |   | 250,305 |   |  |   | 300,366 |   |  |   | 300,366 |   |
| 700,000                                                                    |  |                                                                                                        | 176,183 |   |  |   | 234,911 |   |  |   | 293,638 |   |  |   | 352,366 |   |  |   | 352,366 |   |
| 800,000                                                                    |  |                                                                                                        | 202,183 |   |  |   | 269,577 |   |  |   | 336,972 |   |  |   | 404,366 |   |  |   | 404,366 |   |
| 900,000                                                                    |  |                                                                                                        | 228,183 |   |  |   | 304,244 |   |  |   | 380,305 |   |  |   | 456,366 |   |  |   | 456,366 |   |
| 1,000,000                                                                  |  |                                                                                                        | 254,183 |   |  |   | 338,911 |   |  |   | 423,638 |   |  |   | 500,000 |   |  |   | 500,000 |   |
| 1,100,000                                                                  |  |                                                                                                        | 280,183 |   |  |   | 373,577 |   |  |   | 466,972 |   |  |   | 500,000 |   |  |   | 500,000 |   |
| 1,200,000                                                                  |  |                                                                                                        | 306,183 |   |  |   | 408,244 |   |  |   | 500,000 |   |  |   | 500,000 |   |  |   | 500,000 |   |
| 1,300,000                                                                  |  |                                                                                                        | 332,183 |   |  |   | 442,911 |   |  |   | 500,000 |   |  |   | 500,000 |   |  |   | 500,000 |   |
| 1,400,000                                                                  |  |                                                                                                        | 358,183 |   |  |   | 477,577 |   |  |   | 500,000 |   |  |   | 500,000 |   |  |   | 500,000 |   |
| 1,500,000                                                                  |  |                                                                                                        | 384,183 |   |  |   | 500,000 |   |  |   | 500,000 |   |  |   | 500,000 |   |  |   | 500,000 |   |
| 2,000,000                                                                  |  |                                                                                                        | 500,000 |   |  |   | 500,000 |   |  |   | 500,000 |   |  |   | 500,000 |   |  |   | 500,000 |   |
| 2,500,000                                                                  |  |                                                                                                        | 500,000 |   |  |   | 500,000 |   |  |   | 500,000 |   |  |   | 500,000 |   |  |   | 500,000 |   |
|                                                                            |

|  |
|--|
|  |  |
|  |

|     |                                                                                                                |
|-----|----------------------------------------------------------------------------------------------------------------|
| (a) | Thenormal form of benefit for the Retirement Plan and the PensionEqualization Plan is a straight life annuity. |

The RetirementPlan is intended to be a tax qualified defined benefit plan. Non-CashBalance Program benefits are a function of service and final averagecompensation. The Non-Cash Balance Program is designed to provide anemployee having 30 years of credited service with an annuity generallyequal to 52% of final average compensation, less 50% ofestimated individual Social Security benefits. Final averagecompensation is defined as average annual base salary and bonus (butnot any part of bonuses in excess of 50% of base salary) duringthe five consecutive calendar years in which base salary and bonus (butnot any part of bonuses in excess of 50% of base salary) werehighest out of the last 10 years prior to retirement or earliertermination. Except as otherwise indicated, credited service includesall periods of employment with the Company or a subsidiary prior toretirement or earlier termination. Messrs. Stahl and McGuire do notparticipate in the Non-Cash Balance Program. The estimated annualbenefit payable under the Non-Cash Balance Program as a single lifeannuity (assuming such plan participant remains employed by the Companyuntil age 65 at his current level of compensation) is $303,700 forMr.  Kretzman.

Effective January  1,  2001,Products Corporation amended the Retirement Plan to provide for a cashbalance program under the Retirement Plan (the ‘‘CashBalance Program’’). Under the Cash Balance Program,eligible employees will receive quarterly credits to an individual cashbalance bookkeeping account equal to 5% of their compensationfor the previous quarter. Interest credits, which commenced June30,  2001, are allocated quarterly (based on the yield of the30-year Treasury bond for November of the preceding calendar year).Employees who as of January  1,  2001 were at least age 45,had 10 or more years of service with the Company and whose age andyears of service totaled at least 60, including Mr.  Kretzman,were ‘‘grandfathered’’ and continue toparticipate in the Non-Cash Balance Program under the same retirementformula described in the preceding paragraph. All other eligibleemployees had their benefits earned (if any) under the Non-Cash BalanceProgram ‘‘frozen’’ on December31,  2000 and began to participate in the Cash Balance Program onJanuary  1,  2001. The‘‘frozen’’ benefits will be payable atnormal retirement age and will be reduced if the employee elects earlyretirement. Any employee who, as of January  1,  2001 wasat least age 40 but not part of the‘‘grandfathered’’ group will, in additionto the ‘‘basic’’ 5% quarterly paycredits, receive quarterly ‘‘transition’’pay credits of 3% of compensation each year for up to 10 yearsor until he/she leaves employment with the Company, whichever isearlier. Messrs. Stahl and McGuire participate in the Cash BalanceProgram. As they were not employed by the Company on January1,  2001 (the date on which a‘‘transition’’ employee was determined),Messrs. Stahl and McGuire are eligible to receive only basic paycredits. The estimated annual benefits payable under the Cash BalanceProgram as a single life annuity (assuming Messrs. Stahl and McGuireremain employed by the Company until age 65 at their current level ofcompensation) is 

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$137,800 for Mr.  Stahl and $57,500for Mr.  McGuire. Mr.  Stahl's total retirementbenefits will be determined in accordance with his employmentagreement, which provides for a guaranteed retirement benefit providedthat certain conditions are met.

The Employee Retirement IncomeSecurity Act of 1974, as amended, places certain maximum limitationsupon the annual benefit payable under all qualified plans of anemployer to any one individual. In addition, the Code limits the annualamount of compensation that can be considered in determining the levelof benefits under qualified plans. The Pension Equalization Plan, asamended, is a non-qualified benefit arrangement designed to provide forthe payment by the Company of the difference, if any, between theamount of such maximum limitations and the annual benefit that would bepayable under the Retirement Plan (including the Non-Cash BalanceProgram and the Cash Balance Program) but for such limitations, up to acombined maximum annual straight life annuity benefit at age 65 underthe Retirement Plan and the Pension Equalization Plan of $500,000.Benefits provided under the Pension Equalization Plan are conditionedon the participant's compliance with his or her non-competitionagreement and on the participant not competing with ProductsCorporation for one year after termination of employment.

Thenumber of full years of service under the Retirement Plan and thePension Equalization Plan as of January  1,  2006 forMr.  Stahl was three years, for Mr.  McGuire was two yearsand for Mr.  Kretzman was 17 years.

Item12. Security Ownership of Certain Beneficial Owners andManagement

Revlon, Inc. beneficially owns all of ProductCorporation’s 5,260 outstanding shares of common stock, parvalue $1.00 per share. As of December  31,  2005,MacAndrews & Forbes, which is wholly owned by Ronald O. Perelman,who is Chairman of the Board of Directors of Revlon, Inc. and ProductsCorporation, beneficially owned (i) 191,685,641 shares of Revlon, Inc.Class A Common Stock (including 32,599,374 shares of Class A CommonStock beneficially owned by a family member, with respect to whichshares MacAndrews & Forbes holds a voting proxy, 170,000 sharesthat represent restricted shares which have vested and 1,525,000 sharesthat Mr.  Perelman may acquire under vested options) and (ii) allof the outstanding 31,250,000 shares of Revlon, Inc. Class B CommonStock. Based on the shares referenced in clauses (i) and (ii) above,Mr.  Perelman through MacAndrews & Forbes, at December31,  2005, beneficially owned approximately 60% of Revlon,Inc.'s outstanding shares of Revlon, Inc. Common Stock and hadapproximately 77% of the combined voting power of such shares.As a result, MacAndrews & Forbes is able to control the election ofthe entire Board of Directors of Revlon, Inc. and Products Corporationand control the vote on all matters submitted to a vote of Revlon,Inc.'s and Products Corporation's stockholders. No otherdirector, executive officer or other person beneficially owns anyshares of Products Corporation's common stock.

In additionto Mr.  Perelman, certain of Products Corporation'sdirectors and executive officers beneficially own shares of Revlon,Inc. Class A Common Stock. The following table sets forth, as ofJanuary  1,  2006, the number of shares of Revlon, Inc.Common Stock beneficially owned, and the percent so owned, by (i) eachdirector of Products Corporation, (ii) the Chief Executive Officerduring 2005 and each of the other Named Executive Officers during 2005and (iii) all directors and Named Executive Officers of ProductsCorporation as a group. The number of shares owned are thosebeneficially owned, as determined under the applicable rules of the SECfor the purposes of this Annual Report on Form 10-K, and suchinformation is not necessarily indicative of beneficial ownership forany other purpose. Under such rules, beneficial ownership includes anyshares of Revlon, Inc. Common Stock as to which a person has sole orshared voting power or investment power and any shares of Common Stockwhich the person has the right to acquire within 60 days through theexercise of any option, warrant or right, through conversion of anysecurity or pursuant to the automatic termination of a power ofattorney or revocation of a trust, discretionary account or similararrangement. Certain of the shares listed as beneficially owned arepursuant to stock options, which may be out of themoney.

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|                                                                  |  |                                             |  |                                                                        |  |  |  |  |  |  |
|------------------------------------------------------------------|--|---------------------------------------------|--|------------------------------------------------------------------------|--|--|--|--|--|--|
| Nameand Address of Beneficial Owner                              |  | Amount and Nature ofBeneficial Ownership    |  | Percentage ofClass                                                     |
| Ronald O.Perelman 35 E. 62nd St. New York, NY10021          |  | 191,685,641(Class A) 31,250,000 (ClassB)(1) |  | 59.74%(Class A and Class B combined) 56.06% (Class A)100.00% (Class B) |
| Alan S.Bernikow                                                  |  | 14,780 (ClassA)(2)                          |  | *                                                                      |
| DonaldG.Drapkin                                                  |  | —                                     |  | *                                                                      |
| RobertK.Kretzman                                                 |  | 708,420(ClassA)(3)                          |  | *                                                                      |
| EdwardJ. Landau                                                  |  | 31,789 (ClassA)(4)                          |  | *                                                                      |
| ThomasE. McGuire                                                 |  | 586,857 (ClassA)(5)                         |  | *                                                                      |
| BarryF. Schwartz                                                 |  | 9,380 (ClassA)                              |  | *                                                                      |
| JackL. Stahl                                                     |  | 4,424,416 (ClassA)(6)                       |  | 1.18%(Class A and Class B combined) 1.29% (ClassA)                     |
| All Directors and Named Executive Officers as aGroup (8 Persons) |  | 197,461,283 (Class A) 31,250,000 (ClassB)   |  | 60.63% (Class A and Class B combined)57.08% (Class A) 100.00% (ClassB) |
|                                                                  |

|  |
|--|
|  |  |
|  |

* Less than onepercent.

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1) | As described above,Mr.  Perelman beneficially owns, directly and indirectly, throughMacAndrews & Forbes, 191,685,641 shares of Revlon, Inc. Class ACommon Stock (including 32,599,374 shares of Class A Common Stockbeneficially owned by a family member, with respect to which sharesMacAndrews & Forbes holds a voting proxy, 170,000 shares thatrepresent restricted shares which have vested and 1,525,000 shares thatMr.  Perelman may acquire under vested options). Mr.Perelman, through MacAndrews & Forbes, also beneficially owns allof the outstanding 31,250,000 shares of Revlon, Inc. Class B CommonStock, each of which is convertible into one share of Class A CommonStock, which, together with the Class A Common Stock referenced above,represent approximately 60% of the outstanding shares of Revlon,Inc. Common Stock and approximately 77% of the combined votingpower of such shares. Shares of Class A Common Stock and shares ofintermediate holding companies between Revlon, Inc. and MacAndrews& Forbes are, and may from time to time be, pledged to secureobligations of MacAndrews & Forbes. In addition, ProductsCorporation’s shares of common stock are pledged to secureRevlon, Inc.’s guarantee under the 2004 CreditAgreement. |

|     |                                                                           |
|-----|---------------------------------------------------------------------------|
| (2) | Includes 14,780shares that Mr.  Bernikow may acquire under vestedoptions. |

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (3) | Includes 35,000 sharesthat represent restricted shares that vested during 2004, 78,420 sharesthat represent restricted shares that vested during 2005 and 595,000shares that Mr.  Kretzman may acquire under vested options (asset forth above in Item. 11, ‘‘Executive Compensation— Aggregated Option Exercises in Last Fiscal Year and FiscalYear-End Option Values,’’ the value of Mr.Kretzman's exercisable in-the-money options at December31,  2005 was$33,425). |

|     |                                                                                                                   |
|-----|-------------------------------------------------------------------------------------------------------------------|
| (4) | Includes 134 sharesheld directly by Mr.  Landau and 31,655 shares that Mr.Landau may acquire under vestedoptions. |

|     |                                                                                                                                                                                                                                                                                                                                                                                                                              |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (5) | Includes 39,357 sharesthat represent restricted shares that vested during 2005 and 547,500shares that Mr.  McGuire may acquire under vested options (as setforth above in Item. 11, ‘‘Executive Compensation— Aggregated Option Exercises in Last Fiscal Year and FiscalYear-End Option Values,’’ the value of Mr.McGuire's exercisable in-the-money options at December31,  2005 was$39,325). |

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (6) | Includes 1,601,015shares held directly by Mr.  Stahl (including 250,000 shares thatrepresent restricted shares that vested during 2004, 900,000 sharesthat represent restricted shares that vested during 2005 and 250,000restricted shares that vested on February  17,  2006),13,401 shares held by Mr.  Stahl's wife, as to which hedisclaims beneficial ownership, and 2,810,000 shares that Mr.Stahl may acquire under vested options (as set forth above in Item. 11,‘‘Executive Compensation — Aggregated OptionExercises in Last Fiscal Year and Fiscal Year-End OptionValues,’’ the value of Mr.  Stahl'sexercisable in-the-money options at December  31,  2005 was$193,700). |

Item 13. Certain Relationships And RelatedTransactions

Revlon, Inc. beneficially owns all of ProductsCorporation’s 5,260 outstanding shares of common stock. As ofDecember  31,  2005, MacAndrews & Forbes beneficiallyowned shares of Revlon, Inc.'s Common Stock having approximately77% of the combined voting power of such outstanding shares. Asa result, MacAndrews & Forbes is able to control the election ofthe entire Board of Directors of Revlon, Inc. and Products Corporationand control the vote on all matters submitted to a vote of Revlon,Inc.'s and Products Corporation’s stockholders. MacAndrews& Forbes is wholly owned by Ronald O. Perelman, who is Chairman ofthe Board of Directors of Revlon, Inc. and ProductsCorporation.

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Transfer Agreements

InJune  1992, Revlon, Inc. and Products Corporation entered into anasset transfer agreement with Revlon Holdings LLC (a Delaware limitedliability company and formerly a Delaware corporation known as RevlonHoldings Inc. (‘‘Revlon Holdings’’) andwhich is an affiliate and an indirect wholly-owned subsidiary ofMacAndrews & Forbes Holdings) and certain of RevlonHoldings’ wholly-owned subsidiaries. Revlon, Inc. and ProductsCorporation also entered into a real property asset transfer agreementwith Revlon Holdings. Pursuant to such agreements, on June24,  1992 Revlon Holdings transferred assets to ProductsCorporation and Products Corporation assumed all of the liabilities ofRevlon Holdings, other than certain specifically excluded assets andliabilities (the liabilities excluded are referred to as the‘‘Excluded Liabilities’’). Certain consumerproducts lines sold in demonstrator-assisted distribution channelsconsidered not integral to Revlon, Inc.'s business, and thathistorically had not been profitable, and certain other assets andliabilities were retained by Revlon Holdings. Revlon Holdings agreed toindemnify Revlon, Inc. and Products Corporation against losses arisingfrom the Excluded Liabilities, and Revlon, Inc. and ProductsCorporation agreed to indemnify Revlon Holdings against losses arisingfrom the liabilities assumed by Products Corporation. The amountreimbursed by Revlon Holdings to Products Corporation for the ExcludedLiabilities for 2005 was $0.2  million.

ReimbursementAgreements

Revlon, Inc., Products Corporation and MacAndrews& Forbes Inc. (a wholly-owned subsidiary of MacAndrews & ForbesHoldings) have entered into reimbursement agreements (the‘‘Reimbursement Agreements’’) pursuant towhich (i) MacAndrews & Forbes Inc. is obligated to provide(directly or through affiliates) certain professional andadministrative services, including employees, to Revlon, Inc. and itssubsidiaries, including Products Corporation, and purchase servicesfrom third party providers, such as insurance, legal and accountingservices and air transportation services, on behalf of Revlon, Inc. andits subsidiaries, including Products Corporation, to the extentrequested by Products Corporation, and (ii) Products Corporation isobligated to provide certain professional and administrative services,including employees, to MacAndrews & Forbes and purchase servicesfrom third party providers, such as insurance and legal and accountingservices, on behalf of MacAndrews & Forbes to the extent requestedby MacAndrews & Forbes Inc., provided that in each case theperformance of such services does not cause an unreasonable burden toMacAndrews & Forbes or Products Corporation, as the case may be.Products Corporation reimburses MacAndrews & Forbes for theallocable costs of the services purchased for or provided to ProductsCorporation and its subsidiaries and for reasonable out-of-pocketexpenses incurred in connection with the provision of such services.MacAndrews & Forbes Inc. (or such affiliates) reimburses ProductsCorporation for the allocable costs of the services purchased for orprovided to MacAndrews & Forbes and for the reasonableout-of-pocket expenses incurred in connection with the purchase orprovision of such services. Each of Revlon, Inc. and ProductsCorporation, on the one hand, and MacAndrews & Forbes Inc., on theother, has agreed to indemnify the other party for losses arising outof the provision of services by it under the Reimbursement Agreementsother than losses resulting from its willful misconduct or grossnegligence. The Reimbursement Agreements may be terminated by eitherparty on 90 days' notice. Products Corporation does not intend torequest services under the Reimbursement Agreements unless their costswould be at least as favorable to Products Corporation as could beobtained from unaffiliated third parties. Revlon, Inc. and ProductsCorporation participate in MacAndrews & Forbes' directors andofficers liability insurance program, which covers Revlon, Inc. andProducts Corporation as well as MacAndrews & Forbes. The limits ofcoverage are available on an aggregate basis for losses to any or allof the participating companies and their respective directors andofficers. Revlon, Inc. and Products Corporation reimburse MacAndrews& Forbes from time to time for their allocable portion of thepremiums for such coverage, which the Company believes is morefavorable than the premiums Products Corporation would pay were it tosecure stand-alone coverage. The amounts paid by Revlon, Inc. andProducts Corporation to MacAndrews & Forbes for premiums isincluded in the amounts paid under the Reimbursement Agreements. Thenet amount payable to MacAndrews & Forbes Inc. for the servicesprovided under the Reimbursement Agreements for 2005 was $3.7million.

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Tax Sharing Agreements

As aresult of the closing of the Revlon Exchange Transactions, as of theend of March  25,  2004, Revlon, Inc., Products Corporationand their U.S. subsidiaries were no longer included in the MacAndrews& Forbes Group for federal income tax purposes. See Item 7.,‘‘Management's Discussion and Analysis of FinancialCondition and Results of Operations — Financial Condition,Liquidity and Capital Resources — Sources andUses’’ for further discussion on these agreements andrelated transactions in 2005.

2004 Consolidated MacAndrews &Forbes Line of Credit

For a description of transactions in 2005with MacAndrews & Forbes in connection with the 2004 loanagreements, see Item 7., ‘‘Management's Discussionand Analysis of Financial Condition and Results of Operations —Financial Condition, Liquidity and Capital Resources — 2004Consolidated MacAndrews & Forbes Line ofCredit.’’

2005 Refinancing Transactions

Fora description of transactions in 2005 with MacAndrews & Forbes inconnection with the Debt Reduction Transactions, the Revlon ExchangeTransactions and the 2004 Investment Agreement, see Item 7.,‘‘Management's Discussion and Analysis of FinancialCondition and Results of Operations — Financial Condition,Liquidity and Capital Resources — 2005 Refinancing Transactions,and — 2004 RefinancingTransactions.’’

Other

Pursuant to a leasedated April  2,  1993 (the ‘‘EdisonLease’’), Revlon Holdings leased to Products Corporationthe Edison research and development facility for a term of up to 10years with an annual rent of $1.4  million and certain sharedoperating expenses payable by Products Corporation which, together withthe annual rent, were not to exceed $2.0  million per year. InAugust  1998, Revlon Holdings sold the Edison facility to anunrelated third party, which assumed substantially all liability forenvironmental claims and compliance costs relating to the Edisonfacility, and in connection with the sale Products Corporationterminated the Edison Lease and entered into a new lease with the newowner. Revlon Holdings agreed to indemnify Products Corporation throughSeptember  1,  2013 (the term of the new lease) to theextent that rent under the new lease exceeds rent that would have beenpayable under the terminated Edison Lease had it not been terminated.The net amount reimbursed by Revlon Holdings to Products Corporationwith respect to the Edison facility for 2005 was $0.3million.

During 2005, Products Corporation leased a small amountof space at certain facilities to MacAndrews & Forbes or itsaffiliates pursuant to occupancy agreements and leases, including spaceat Products Corporation's New York headquarters. The rent paid byMacAndrews & Forbes or its affiliates to Products Corporation for2005 was $0.2  million.

The 2004 Credit Agreement issupported by, among other things, guaranties from Revlon, Inc. and,subject to certain limited exceptions, all of the domestic subsidiariesof Products Corporation. The obligations under such guaranties aresecured by, among other things, the capital stock of ProductsCorporation and, subject to certain limited exceptions, the capitalstock of all of Products Corporation's domestic subsidiaries and66% of the capital stock of Products Corporation's and itsdomestic subsidiaries' first-tier foreign subsidiaries. Inconnection with the Revlon Exchange Transactions, on February11,  2004, Revlon, Inc. entered into supplemental indenturespursuant to which it agreed to guarantee the obligations of ProductsCorporation under the indentures governing Products Corporation's8 5/8% Senior Subordinated Notes and, prior totheir redemption in April  2005, Products Corporation's8 1/8% Senior Notes and 9% SeniorNotes.

In March  2002, prior to the passage of theSarbanes-Oxley Act of 2002, Products Corporation made an advance of$1.8  million to Mr.  Stahl pursuant to his employmentagreement, which was entered into in February  2002, for taxassistance related to a grant of restricted stock provided toMr.  Stahl pursuant to such agreement, which loan bears interestat the applicable federal rate. In May  2002, prior to the

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passage of the Sarbanes-Oxley Act of 2002,Products Corporation made an advance of $2.0  million toMr.  Stahl pursuant to his employment agreement in connectionwith the purchase of his principal residence in the New York Citymetropolitan area, which loan bears interest at the applicable federalrate. Mr.  Stahl repaid $147,299 of such loan during 2005.Pursuant to his employment agreement, Mr.  Stahl receives fromProducts Corporation additional compensation payable on a monthly basisequal to the amount actually paid by him in respect of interest andprincipal on such $2.0  million advance, which for 2005 was$135,968. Products Corporation also pays Mr.  Stahl a gross upfor any taxes payable by Mr.  Stahl as a result of suchadditional compensation, which tax gross up amount was $68,999 in2005.

During 2005, Products Corporation made payments of$0.6  million to Ms.  Ellen  Barkin under a writtenagreement pursuant to which she provides voiceover services for certainof the Company's advertisements, which payments were competitivewith industry rates for similarly situated talent.

During 2005,Products Corporation paid $1.0  million to anationally-recognized security services company, in which MacAndrews& Forbes has a controlling interest, for security officer services.Products Corporation's decision to engage such firm was basedupon its expertise in the field of security services, and the rateswere competitive with industry rates for similarly situated securityfirms.

Item 14. Principal Accounting Fees andServices

AUDIT FEES

The Board of Directors ofRevlon, Inc., which owns 100% of Products Corporation'scommon stock, maintains an Audit Committee in accordance withapplicable SEC rules and the NYSE's listing standards. Inaccordance with the charter of Revlon, Inc.'s Audit Committee,which is available at www.revloninc.com, Revlon, Inc.'s AuditCommittee is directly responsible for the appointment, compensation,retention and oversight of the work of Revlon, Inc.'s andProducts Corporation’s independent auditors for the purpose ofpreparing and issuing its audit report or performing other audit,review or attest services for Revlon, Inc. and Products Corporation.The independent auditors report directly to Revlon, Inc.'s AuditCommittee and Revlon, Inc.'s Audit Committee is directlyresponsible for, among other things, reviewing in advance, and grantingany appropriate pre-approvals of, (a) all auditing services to beprovided by the independent auditor and (b) all non-audit services tobe provided by the independent auditor (as permitted by the ExchangeAct), and in connection therewith to approve all fees and other termsof engagement, as required by the applicable rules of the Exchange Actand subject to the exemptions provided for in such rules. Revlon,Inc.’s Audit Committee has an Audit Committee Pre-ApprovalPolicy for pre-approving all permissible audit and non-audit servicesperformed by KPMG. In 2004, the Audit Committee approved the AuditCommittee Pre-Approval Policy for 2005, and in October  2005, theAudit Committee approved the Audit Committee Pre-Approval Policy for2006.

The aggregate fees billed for professional services byKPMG in 2005 and 2004 for these various services were (inmillions):

|                   |  |        |                                 |        |  |        |                                 |        |  |  |
|-------------------|--|--------|---------------------------------|--------|--|--------|---------------------------------|--------|--|--|
| TypesofFees       |  |   |   2005      |   |  |   |   2004      |   |
| AuditFees         |  | $      | 4.6                             |   |  | $      | 5.6                             |   |
| Audit-RelatedFees |  | $      | 0.5                             |   |  | $      | 0.3                             |   |
| TaxFees           |  | $      | 0.3                             |   |  | $      | 0.5                             |   |
| All OtherFees     |  |   |   —   |   |  |   |   —   |   |
| **TotalFees**     |  | $      | 5.4                             |   |  | $      | 6.4                             |   |
|                   |

Inthe above table, in accordance with the SEC definitions and rules,‘‘audit fees’’ are fees the Company paidKPMG for professional services rendered for the audits of (i) Revlon,Inc.’s and Products Corporation’s annual financialstatements, (ii) management's assessment of the effectiveness ofRevlon, Inc.’s internal control over financial reporting, (iii)the effectiveness of Revlon, Inc.’s internal control overfinancial reporting and (iv) the review of financial statementsincluded in Revlon, Inc.’s and Products Corporation'sQuarterly Reports on Form 10-Q, and for services that are normallyprovided by the auditor in connection with statutory and regulatoryfilings or engagements; ‘‘audit-relatedfees’’ are fees 

66

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billed by KPMG for assurance and relatedservices that are traditionally performed by the auditor, includingservices performed by KPMG related to employee benefit plan audits, theissuance by Products Corporation of its 91⁄2%Senior Notes in March and August  2005, the universal shelfregistration statement filed by Revlon, Inc. with the SEC in 2005 andcertain equity issuances undertaken pursuant to such shelfregistration, the Revlon Exchange Transactions consummated in 2004 andattest services not required by statute or regulation;‘‘tax fees’’ are fees for permissible taxcompliance, tax advice and tax planning; and ‘‘all otherfees’’ are fees billed by KPMG to the Company for anypermissible services not included in the first threecategories.

During 2005, the Audit Committee specificallypre-approved the services performed by KPMG in connection with (i)Revlon, Inc.'s and Products Corporation's 2005 audits, (ii)the issuance by Products Corporation of its91⁄2% Senior Notes in March and August2005 and (iii) the universal shelf registration statement filed byRevlon, Inc. with the SEC in 2005 and Revlon, Inc.’s planned$110  million rights offering being undertaken pursuant to suchshelf registration. During 2004, the Audit Committee specificallypre-approved the services performed by KPMG in connection with (i)Revlon, Inc.’s and Products Corporation's 2004 audit and(ii) the Debt Reduction Transactions consummated in 2004. All of theother services performed by KPMG for the Company during 2005 and 2004were either expressly pre-approved by the Audit Committee or werepre-approved in accordance with the Audit Committee'sPre-Approval Policy and the Audit Committee was provided with regularupdates as to the nature of such services and fees paid for suchservices.

Website Availability of Reports and Other CorporateGovernance Information

Revlon, Inc., which owns 100% ofProducts Corporation common stock, maintains a comprehensive corporategovernance program, including Corporate Governance Guidelines forRevlon, Inc.’s Board of Directors, Revlon, Inc.’s BoardGuidelines for Assessing Director Independence and charters for Revlon,Inc.’s Audit Committee, Nominating and Corporate GovernanceCommittee and Compensation and Stock Plan Committee. Revlon, Inc.maintains a corporate investor relations website, www.revloninc.com,where stockholders and other interested persons may review, withoutcharge, among other things, Revlon, Inc.'s corporate governancematerials and certain SEC filings (such as Revlon, Inc.'s annualreports on Form 10-K, quarterly reports on Form 10-Q, current reportson Form 8-K, proxy statements, annual reports, Section 16 reportsreflecting certain changes in the stock ownership of Revlon,Inc.’s directors and Section 16 executive officers, and certainother documents filed with the Commission), each of which are generallyavailable on the same business day as the filing date with the SEC onthe SEC’s website http://www.sec.gov, as well as on Revlon,Inc.’s website http://www.revloninc.com. In addition, under thesection of the website entitled, ‘‘CorporateGovernance,’’ Revlon, Inc. posts printable copies of thelatest versions of its Corporate Governance Guidelines, BoardGuidelines for Assessing Director Independence, charters for Revlon,Inc.'s Audit Committee, Nominating and Corporate GovernanceCommittee and Compensation and Stock Plan Committee, as well as Revlon,Inc.'s and the Company’s Code of Business Conduct, whichincludes Revlon, Inc.'s and the Company’s Code of Ethicsfor Senior Financial Officers and the Audit Committee Pre-approvalPolicy, each of which the Company will provide in print, withoutcharge, upon written request to Robert K. Kretzman, Executive VicePresident and Chief Legal Officer, Revlon Consumer ProductsCorporation, 237 Park Avenue, New York, NY 10017. The business andfinancial materials and any other statement or disclosure on, or madeavailable through, Revlon, Inc.'s websites shall not beconsidered a ‘‘free writing prospectus’’under the SEC's Rule 405 of the Securities Act of 1933, asamended, unless specifically identified assuch.

67

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PART IV

Item15.  Exhibits, Financial StatementSchedules

|  |           |                                               |
|--|-----------|-----------------------------------------------|
|  | (a)  | List of documentsfiled as part of thisReport: |

|  |           |                                                                                                          |
|--|-----------|----------------------------------------------------------------------------------------------------------|
|  | (1)  | Consolidated FinancialStatements and Independent Auditors' Report included herein: SeeIndex on page F-1. |

|  |           |                                                     |
|--|-----------|-----------------------------------------------------|
|  | (2)  | FinancialStatement Schedule: See Index on page F-1. |

All otherschedules are omitted as they are inapplicable or the requiredinformation is furnished in the Consolidated Financial Statements ofthe Company or the Notesthereto.

|  |           |                  |
|--|-----------|------------------|
|  | (3)  | List ofExhibits: |

|  |          |                                         |
|--|----------|-----------------------------------------|
|  | 3.  | Certificate ofIncorporation andBy-laws. |

|  |           |                                                                                                                                                                                                                                                                         |
|--|-----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | 3.1  | RestatedCertificate of Incorporation of Products Corporation, dated May13,  2004 (incorporated by reference to Exhibit 3.1 to theQuarterly Report on Form 10-Q of Products Corporation for the quarterended March  31,  2004 filed with the Commission onMay  17,2004). |

|  |           |                                                                                                                                                                                                                                                                     |
|--|-----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | 3.2  | Amended and RestatedBy-Laws of Products Corporation dated as of June  5,  2002(incorporated by reference to Exhibit 3.3 to the Products CorporationQuarterly Report on Form 10-Q for the quarter endedJune  30,  2002 filed with the Commission on August 14,2002). |

|  |          |                                                                          |
|--|----------|--------------------------------------------------------------------------|
|  | 4.  | InstrumentsDefining the Rights of Security Holders, IncludingIndentures. |

|  |           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|--|-----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | 4.1  | CreditAgreement, dated as of July  9,  2004, among ProductsCorporation and certain local borrowing subsidiaries, as borrowers, thelenders and issuing lenders party thereto, Citicorp USA, Inc., as termloan administrative agent, Citicorp USA, Inc. as multi-currencyadministrative agent, Citicorp USA, Inc., as collateral agent, UBSSecurities LLC, as syndication agent, and Citigroup Global MarketsInc., as sole lead arranger and sole bookrunner (the‘‘2004 Credit Agreement’’) (incorporated byreference to Exhibit 4.34 to the Current Report on Form 8-K of ProductsCorporation filed with the Commission on July  13,  2004(the ‘‘Products Corporation July  13,  2004Form 8-K’’)). |

|  |           |                                                                                                                                                                                                                                                                                                         |
|--|-----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | 4.2  | FirstAmendment dated February  15,  2006 to the 2004 CreditAgreement (incorporated by reference to Exhibit 10.2 to the CurrentReport on Form 8-K of Products Corporation filed with the Commission onFebruary  17,  2006 (the ‘‘ProductsCorporation February  2006 Form8-K’’)). |

|  |           |                                                                                                                                                                                                                                                                                                                        |
|--|-----------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | 4.3  | Pledge andSecurity Agreement, dated as of July  9,  2004, amongRevlon, Inc., Products Corporation and the additional grantors partythereto, in favor of Citicorp USA, Inc., as collateral agent for thesecured parties (incorporated by reference to Exhibit 4.35 to theProducts Corporation July  13,  2004 Form8-K). |

|  |           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|--|-----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | 4.4  | Intercreditor andCollateral Agency Agreement, dated as of July  9,  2004,among Citicorp USA, Inc., as administrative agent for themulti-currency lenders and issuing lenders, Citicorp USA, Inc., asadministrative agent for the term loan lenders, Citicorp USA, Inc., ascollateral agent for the secured parties, Revlon, Inc., ProductsCorporation and each other loan party (incorporated by reference toExhibit 4.36 to the Products Corporation July  13,  2004Form 8-K). |

|  |           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|--|-----------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | 4.5  | Indenture, dated as ofFebruary  1,  1998, between Revlon Escrow and U.S. BankTrust National Association, as trustee, relating to the 8 5/8% Senior Subordinated Notes due 2008 (asamended, the ‘‘8  5/8% SeniorSubordinated Notes Indenture’’) (incorporated byreference to Exhibit 4.3 to the Registration Statement on Form S-1 ofProducts Corporation filed with the Commission on March12,  1998, File No. 333-47875 (the ‘‘ProductsCorporation March  1998 FormS-1’’)). |

|  |           |                                                                                                                                                                                                                                                                                                       |
|--|-----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | 4.6  | FirstSupplemental Indenture, dated March  4,  1998, amongProducts Corporation, Revlon Escrow, and U.S. Bank Trust NationalAssociation, as trustee, amending the 8  5/8%Senior Subordinated Notes Indenture (incorporated by reference toExhibit 4.4 to the Products Corporation March  1998 FormS-1). |

68

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|  |           |                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|--|-----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | 4.7  | SecondSupplemental Indenture, dated as of February  11,  2004,among Products Corporation, U.S. Bank Trust National Association, astrustee, and Revlon, Inc. as guarantor, amending the 8 5/8% Senior Subordinated Notes Indenture(incorporated by reference to Exhibit 4.31 of the Current Report onForm 8-K of Revlon, Inc. filed with the Commission on February12,  2004 (the ‘‘Revlon, Inc. February12,  2004 Form8-K’’)). |

|  |           |                                                                                                                                                                                                                                                                                                                                                                                                       |
|--|-----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | 4.8  | Indenture,dated as of March  16,  2005, between Products Corporationand U.S. Bank National Association, as trustee, relating to ProductsCorporation's 91⁄2% Senior Notes due 2011(incorporated by reference to Exhibit 4.12 to the Annual Report on Form10-K/A for the year ended December  31,  2004 of ProductsCorporation (the ‘‘2004 Products Corporation10-K/A’’)). |

|  |           |                                                                                                                                                                                                                                                                                                                                 |
|--|-----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | 4.9  | StockPurchase Agreement, dated February  17,  2006, betweenRevlon, Inc. and MacAndrews & Forbes Holdings (incorporated byreference to Exhibit 10.1 to the Current Report on Form 8-K of Revlon,Inc. filed with the Commission on February  17,  2006 (the‘‘Revlon, Inc. February  2006 Form8-K’’)). |

|  |           |                    |
|--|-----------|--------------------|
|  | 10.  | MaterialContracts. |

|  |            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|--|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | 10.1  | Tax SharingAgreement, dated as of June  24,  1992, among MacAndrews& Forbes Holdings, Revlon, Inc., Products Corporation and certainsubsidiaries of Products Corporation, as amended and restated as ofJanuary  1,  2001 (incorporated by reference to Exhibit10.2 to the Annual Report on Form 10-K of Products Corporation for thefiscal year ended December  31,  2001 filed with theCommission on February  25,  2002 (the‘‘Products Corporation 2001 Form10-K’’)). |

|  |            |                                                                                                                                                                                                                                                                                                                                             |
|--|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | 10.2  | TaxSharing Agreement, dated as of March  26,  2004, by andamong Revlon, Inc., Products Corporation and certain subsidiaries ofProducts Corporation (incorporated by reference to Exhibit 10.25 to theQuarterly Report on Form 10-Q of Products Corporation for the quarterended March  31,  2004 filed with the Commission onMay  17,2004). |

|  |            |                                                                                                                                                                                                                                                                                                                                                  |
|--|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | 10.3  | Employment Agreement,dated as of February  17,  2002, between ProductsCorporation and Jack L. Stahl (the ‘‘Stahl EmploymentAgreement’’) (incorporated by reference to Exhibit 10.17to the Quarterly Report on Form 10-Q of Revlon, Inc. for the quarterended March  31,  2002 filed with the Commission onMay  15,2002). |

|  |            |                                                                                                                                                                                                                                                                                                              |
|--|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | 10.4  | First Amendment to theStahl Employment Agreement, effective as of December  17,2004 (incorporated by reference to Exhibit 10.35 to the Current Reporton Form 8-K of Revlon, Inc. filed with the Commission onDecember  22,  2004 (the ‘‘Revlon, Inc.December  22,  2004 Form8-K’’)). |

|  |            |                                                                                                                                                                                                                                                                                                                                                              |
|--|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | 10.5  | EmploymentAgreement, dated as of August  18,  2003, between ProductsCorporation and Thomas E. McGuire (the ‘‘McGuireEmployment Agreement’’) (incorporated by reference toExhibit 10.5 to the Quarterly Report on Form 10-Q of Revlon, Inc. forthe quarter ended September  30,  2003 filed with theCommission on November  14,2003). |

|  |            |                                                                                                                                                                       |
|--|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | 10.6  | Amendment to McGuireEmployment Agreement, dated as of December  17,  2004(incorporated by reference to Exhibit 10.36 to the Revlon, Inc.December  22,  2004 Form8-K). |

|  |            |                                                                                                                                                                                                                                                           |
|--|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | 10.7  | Second Amendment toMcGuire Employment Agreement, effective as of March 2, 2006(incorporated by reference to Exhibit 10.7 to the Annual Report on Form10-K of Revlon, Inc. for the year ended December 31, 2005 filed withthe Commission on March 2,2006). |

|  |            |                                                                                                                                                                                                                                                                                                             |
|--|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | 10.8  | Employment Agreement,dated as of June  10,  2002, between Products Corporationand David L. Kennedy (the ‘‘Kennedy EmploymentAgreement’’) (incorporated by reference to Exhibit 99.1to the Current Report on Form 8-K of Revlon, Inc. filed with theCommission on January  18,2006). |

|  |            |                                                                                                                                                                                                                                                     |
|--|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | 10.9  | First Amendment toKennedy Employment Agreement, effective March 2, 2006 (incorporated byreference to Exhibit 10.9 to the Annual Report on Form 10-K of Revlon,Inc. for the year ended December 31, 2005 filed with the Commission onMarch 2, 2006). |

69

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|  |             |                                                                                                                                                                                                                                                                                                                                                              |
|--|-------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | 10.10  | EmploymentAgreement, dated as of November  1,  2002, between ProductsCorporation and Robert K. Kretzman (incorporated by reference toExhibit 10.10 to the Annual Report on Form 10-K of Revlon, Inc. for thefiscal year ended December  31,  2004 filed with theCommission on March  10,  2005 (the ‘‘Revlon,Inc. 2004 Form10-K’’)). |

|  |             |                                                                                                                                                                                                                                                                        |
|--|-------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | 10.11  | Amendedand Restated Revlon, Inc. Stock Plan (as amended the‘‘Stock Plan’’) (incorporated by referenceto Exhibit 4.1 to the Registration Statement on Form S-8 of Revlon,Inc. filed with the Commission on June  4,  2004, File No.333-116160). |

|  |             |                                                                                                                                                        |
|--|-------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | 10.12  | Current form ofNonqualified Stock Option Agreement under the Stock Plan (incorporatedby reference to Exhibit 10.12 to the Revlon, Inc. 2004 Form10-K). |

|  |             |                                                                                                                                               |
|--|-------------|-----------------------------------------------------------------------------------------------------------------------------------------------|
|  | 10.13  | Current form ofRestricted Stock Agreement under the Stock Plan (incorporated byreference to Exhibit 10.13 to the Revlon, Inc. 2004 Form10-K). |

|  |             |                                                                                                                                                                                                              |
|--|-------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | 10.14  | Revlon, Inc. 2002Supplemental Stock Plan (incorporated by reference to Exhibit 4.1 tothe Registration Statement on Form S-8 of Revlon, Inc. filed with theCommission on June  24,  2002, File No.333-91040). |

|  |             |                                                                                                                                                                                                                                                                                                          |
|--|-------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | 10.15  | Revlon ExecutiveBonus Plan (incorporated by reference to Exhibit 10.15 to the QuarterlyReport on Form 10-Q of Products Corporation for the quarter endedJune  30,  2005 filed with the Commission on August9,  2005 (the ‘‘Products Corporation 2005 SecondQuarter Form10-Q’’)). |

|  |             |                                                                                                                                                                                                                                                                                |
|--|-------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | 10.16  | Amendedand Restated Revlon Pension Equalization Plan, amended and restated asof December  14,  1998 (incorporated by reference toExhibit 10.15 to the Annual Report on Form 10-K of Revlon, Inc. foryear ended December  31,  1998 filed with the Commission onMarch  3,1999). |

|  |             |                                                                                                                                                                                                                                                                                                                    |
|--|-------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | 10.17  | Executive SupplementalMedical Expense Plan Summary, dated July  2000 (incorporated byreference to Exhibit 10.10 to the Annual Report on Form 10-K of Revlon,Inc. for the year ended December  31,  2002 filed with theCommission on March  21,  2003 (the ‘‘Revlon,Inc. 2002 Form10-K’’)). |

|  |             |                                                                                                                                                                                                                                                                                                                           |
|--|-------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | 10.18  | BenefitPlans Assumption Agreement, dated as of July  1,  1992, byand among Revlon Holdings, Revlon, Inc. and Products Corporation(incorporated by reference to Exhibit 10.25 to the Annual Report onForm 10-K for the year ended December  31,  1992 ofProducts Corporation filed with the Commission on March12,  1993). |

|  |             |                                                                                                                                            |
|--|-------------|--------------------------------------------------------------------------------------------------------------------------------------------|
|  | 10.19  | RevlonExecutive Severance Policy, as amended July  1,  2002(incorporated by reference to Exhibit 10.13 to the Revlon, Inc. 2002Form 10-K). |

|  |             |                                                                                                                                                                                                                                                                                                                                                                                                                |
|--|-------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | 10.20  | 2004 SeniorUnsecured Line of Credit Agreement, dated as of July  9,2004, between Products Corporation and MacAndrews & Forbes (the‘‘2004 Consolidated MacAndrews & Forbes Line ofCredit’’) (incorporated by reference to Exhibit 10.34 tothe Quarterly Report on Form 10-Q of Revlon, Inc. for the quarter endedJune  30,  2004 filed with the Commission on August16,  2004). |

|  |             |                                                                                                                                                                                                                    |
|--|-------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | 10.21  | FirstAmendment, dated as of August  4,  2005, to the 2004Consolidated MacAndrews & Forbes Line of Credit (incorporated byreference to Exhibit 10.33 to the Products Corporation 2005 SecondQuarter Form 10-Q). |

|  |             |                                                                                                                                                                                                               |
|--|-------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | 10.22  | SecondAmendment, dated as of February  17,  2006, to the 2004Consolidated MacAndrews & Forbes Line of Credit (incorporated byreference to Exhibit 10.4 to the Products Corporation February2006 Form8-K). |

|  |             |                                                                                                                                                                                                                                                                                                                          |
|--|-------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | 10.23  | StockholdersAgreement, dated as of February  20,  2004, by and betweenRevlon, Inc. and Fidelity (incorporated by reference to Exhibit 10.29to the Current Report on Form 8-K of Revlon, Inc. filed with theCommission on February  23,  2004 (the‘‘Revlon, Inc. February  23,  2004 Form8-K’’)). |

70

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|  |                         |                                                                                                                                                                                                                                                                                    |
|--|-------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  |   10.24  | InvestmentAgreement, dated as of February  5,  2003, among Revlon,Inc., Products Corporation and MacAndrews & Forbes Holdings(incorporated by reference to Exhibit 2.1 to the Current Report on Form8-K of Products Corporation filed with the Commission onFebruary  5,2003). |

|  |                         |                                                                                                                                                                                                                                                                                          |
|--|-------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  |   10.25  | InvestmentAgreement, dated as of February  20,  2004, by and betweenRevlon, Inc. and MacAndrews & Forbes Holdings (as amended, the‘‘2004 Investment Agreement’’)(incorporated by reference to Exhibit 10.30 of the Revlon, Inc.February  23,  2004 Form8-K). |

|  |                         |                                                                                                                                                                                                                   |
|--|-------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  |   10.26  | Amendment,dated as of March  24,  2004, to the 2004 InvestmentAgreement (incorporated by reference to Exhibit 10.33 to the CurrentReport on Form 8-K of Revlon, Inc. filed with the Commission onMarch  26,2004). |

|  |                         |                                                                                                                                                              |
|--|-------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  |   10.27  | SecondAmendment, dated as of March  7,  2005, to the 2004Investment Agreement (incorporated by reference to Exhibit 10.31 to theRevlon, Inc. 2004 Form10-K). |

|  |                         |                                                                                                                                                                                                                                                                  |
|--|-------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  |   10.28  | ThirdAmendment, dated as of August  4,  2005, to the 2004Investment Agreement (incorporated by reference to Exhibit 10.34 to theQuarterly Report on Form 10-Q of Revlon, Inc. for the quarter endedJune  30,  2005 filed with the Commission on August9,  2005). |

|  |                         |                                                                                                                                                                          |
|--|-------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  |   10.29  | FourthAmendment, dated as of February  17,  2006, to the 2004Investment Agreement (incorporated by reference to Exhibit 10.3 to theRevlon, Inc. February  2006 Form8-K). |

|  |                       |               |
|--|-----------------------|---------------|
|  |   21.  | Subsidiaries. |

|  |             |                                                     |
|--|-------------|-----------------------------------------------------|
|  | *21.1  | Subsidiariesof Revlon Consumer ProductsCorporation. |

|  |                       |                    |
|--|-----------------------|--------------------|
|  |   24.  | Powersof Attorney. |

|  |             |                                                 |
|--|-------------|-------------------------------------------------|
|  | *24.1  | Power ofAttorney executed by Ronald O.Perelman. |

|  |             |                                               |
|--|-------------|-----------------------------------------------|
|  | *24.2  | Power of Attorneyexecuted by Alan S.Bernikow. |

|  |             |                                                |
|--|-------------|------------------------------------------------|
|  | *24.3  | Power of Attorneyexecuted by Donald G.Drapkin. |

|  |             |                                               |
|--|-------------|-----------------------------------------------|
|  | *24.4  | Power of Attorneyexecuted by Edward J.Landau. |

|  |             |                                                |
|--|-------------|------------------------------------------------|
|  | *24.5  | Power of Attorneyexecuted by Barry F.Schwartz. |

|  |             |                                                                                                                                      |
|--|-------------|--------------------------------------------------------------------------------------------------------------------------------------|
|  | *31.1  | Certification of JackL. Stahl, Chief Executive Officer, dated March 2, 2006, pursuant toRule 13a-14(a)/15d-14(a) of the ExchangeAct. |

|  |             |                                                                                                                                          |
|--|-------------|------------------------------------------------------------------------------------------------------------------------------------------|
|  | *31.2  | Certification of Thomas E.McGuire, Chief Financial Officer, dated March 2, 2006, pursuant to Rule13a-14(a)/15d-14(a) of the ExchangeAct. |

|  |                                                 |                                                                                                                                                                                     |
|--|-------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  |   32.1(furnished herewith)  | Certification ofJack L. Stahl, Chief Executive Officer, dated March 2, 2006, pursuantto 18 U.S.C. Section 1350, as adopted pursuant to Section906 of the Sarbanes-Oxley Act of2002. |

|  |                                                       |                                                                                                                                                                                         |
|--|-------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  |   32.2 (furnished herewith)  | Certification ofThomas E. McGuire, Chief Financial Officer, dated March 2, 2006,pursuant to 18 U.S.C. Section 1350, as adopted pursuantto Section 906 of the Sarbanes-Oxley Act of2002. |

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

|  |  |                      |
|--|--|----------------------|
|  |  | * Filedherewith |

71

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REVLONCONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES INDEX TOCONSOLIDATED FINANCIAL STATEMENTS ANDSCHEDULE

|                                                                                                                                                 |  |        |  |  |  |  |
|-------------------------------------------------------------------------------------------------------------------------------------------------|--|--------|--|--|--|--|
|                                                                                                                                            |  | Page   |
| Reportof Independent Registered Public Accounting Firm                                                                                          |  | F-2    |
| **AuditedFinancialStatements:**                                                                                                                 |  |   |
| Consolidated BalanceSheets as of December  31,  2005 and2004                                                                                    |  | F-3    |
| Consolidated Statements ofOperations for each of the years in the three-year period endedDecember  31,2005                                      |  | F-4    |
| Consolidated Statements ofStockholder's Deficiency and Comprehensive Loss for each of theyears in the three-year period ended December  31,2005 |  | F-5    |
| Consolidated Statements ofCash Flows for each of the years in the three-year period endedDecember  31,2005                                      |  | F-6    |
| Notes to ConsolidatedFinancialStatements                                                                                                        |  | F-8    |
| **FinancialStatement Schedule:**                                                                                                                |  |   |
| Schedule II— Valuation and QualifyingAccounts                                                                                             |  | F-43   |
|                                                                                                                                                 |

F-1

----

REPORT OF INDEPENDENT REGISTERED PUBLICACCOUNTING FIRM

The Board of Directors andStockholderRevlon Consumer Products Corporation:

Wehave audited the accompanying consolidated balance sheets of RevlonConsumer Products Corporation and subsidiaries as of December31,  2005 and 2004, and the related consolidated statements ofoperations, stockholder’s deficiency and comprehensive loss, andcash flows for each of the years in the three-year period endedDecember  31,  2005. In connection with our audits of theconsolidated financial statements, we also have audited the financialstatement schedule as listed on the index on page F-1. Theseconsolidated financial statements and the financial statement scheduleare the responsibility of the Company’s management. Ourresponsibility is to express an opinion on these consolidated financialstatements and the financial statement schedule based on ouraudits.

We conducted our audits in accordance with thestandards of the Public Company Accounting Oversight Board (UnitedStates). Those standards require that we plan and perform the audit toobtain reasonable assurance about whether the financial statements arefree of material misstatement. An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures in the financialstatements. An audit also includes assessing the accounting principlesused and significant estimates made by management, as well asevaluating the overall financial statement presentation. We believethat our audits provide a reasonable basis for ouropinion.

In our opinion, the consolidated financialstatements referred to above present fairly, in all material respects,the financial position of Revlon Consumer Products Corporation andsubsidiaries as of December  31,  2005 and 2004, and theresults of their operations and their cash flows for each of the yearsin the three-year period ended December  31,  2005, inconformity with U.S. generally accepted accounting principles. Also inour opinion, the related financial statement schedule, when consideredin relation to the basic consolidated financial statements taken as awhole, presents fairly, in all material respects, the information setforth therein.

/s/ KPMG LLP

New York, NewYorkMarch 1, 2006

F-2

----

REVLON CONSUMER PRODUCTS CORPORATION ANDSUBSIDIARIES

CONSOLIDATED BALANCE SHEETS(dollars inmillions, except per shareamounts)

|                                                                                                                                                        |  |                 |          |                 |  |        |          |         |  |  |
|--------------------------------------------------------------------------------------------------------------------------------------------------------|--|-----------------|----------|-----------------|--|--------|----------|---------|--|--|
|                                                                                                                                                   |  | December31,2005 |          | December31,2004 |
| ASSETS                                                                                                                                                 |  |            |          |            |
| Currentassets:                                                                                                                                         |  |            |     |            |  |   |     |    |
| Cash and cashequivalents                                                                                                                               |  | $               | 32.4     |            |  | $      | 120.8    |    |
| Tradereceivables, less allowances of $18.9 and $19.0 as ofDecember  31,  2005 and 2004,respectively                                                    |  |            | 282.2    |            |  |   | 200.6    |    |
| Inventories                                                                                                                                            |  |            | 220.6    |            |  |   | 154.7    |    |
| Prepaidexpenses andother                                                                                                                               |  |            | 61.5     |            |  |   | 67.8     |    |
| Totalcurrentassets                                                                                                                                     |  |            | 596.7    |            |  |   | 543.9    |    |
| Property,plant and equipment,net                                                                                                                       |  |            | 119.7    |            |  |   | 118.7    |    |
| Otherassets                                                                                                                                            |  |            | 146.0    |            |  |   | 149.9    |    |
| Goodwill,net                                                                                                                                           |  |            | 186.0    |            |  |   | 186.1    |    |
| Totalassets                                                                                                                                            |  | $               | 1,048.4  |            |  | $      | 998.6    |    |
| **LIABILITIESAND STOCKHOLDER’SDEFICIENCY**                                                                                                       |  |            |     |            |  |   |     |    |
| Currentliabilities:                                                                                                                                    |  |            |     |            |  |   |     |    |
| Short-termborrowings — thirdparties                                                                                                              |  | $               | 9.0      |            |  | $      | 36.6     |    |
| Currentportion of long-term debt — thirdparties                                                                                                  |  |            | —  |            |  |   | 10.5     |    |
| Accountspayable and outstandingchecks                                                                                                                  |  |            | 133.1    |            |  |   | 95.2     |    |
| Accruedexpenses andother                                                                                                                               |  |            | 328.4    |            |  |   | 283.2    |    |
| Totalcurrentliabilities                                                                                                                                |  |            | 470.5    |            |  |   | 425.5    |    |
| Long-termdebt — thirdparties                                                                                                                     |  |            | 1,413.4  |            |  |   | 1,308.2  |    |
| Otherlong-termliabilities                                                                                                                              |  |            | 255.7    |            |  |   | 286.7    |    |
| Stockholder’sdeficiency:                                                                                                                         |  |            |     |            |  |   |     |    |
| Preferredstock, par value $1.00 per share; 1,000 shares authorized, 546 sharesof Series A Preferred Stock issued andoutstanding                        |  |            | 54.6     |            |  |   | 54.6     |    |
| Commonstock, par value $1.00 per share; 10,000 shares authorized and 5,260shares issued and outstanding as of December  31, 2005 and 2004,respectively |  |            | —  |            |  |   | —  |    |
| Additionalpaid-in capital                                                                                                                              |  |            | 706.3    |            |  |   | 706.5    |    |
| Accumulateddeficit                                                                                                                                     |  |            | (1,723.9 | )          |  |   | (1,646.1 | )  |
| Deferredcompensation                                                                                                                                   |  |            | (6.5     | )          |  |   | (12.5    | )  |
| Accumulatedother comprehensiveloss                                                                                                                     |  |            | (121.7   | )          |  |   | (124.3   | )  |
| Totalstockholder’sdeficiency                                                                                                                     |  |            | (1,091.2 | )          |  |   | (1,021.8 | )  |
| Totalliabilities and stockholder’sdeficiency                                                                                                     |  | $               | 1,048.4  |            |  | $      | 998.6    |    |
|                                                                                                                                                        |

SeeAccompanying Notes to Consolidated Financial Statements

F-3

----

REVLON CONSUMER PRODUCTS CORPORATION ANDSUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS(dollars inmillions, except per shareamounts)

|                                            |  |                       |         |         |  |        |         |         |  |        |         |         |  |  |
|--------------------------------------------|--|-----------------------|---------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|                                       |  | YearEnded December31, |
|                                       |  | 2005                  |         | 2004    |  | 2003   |
| Netsales                                   |  | $                     | 1,332.3 |    |  | $      | 1,297.2 |    |  | $      | 1,299.3 |    |
| Costofsales                                |  |                  | 508.1   |    |  |   | 485.3   |    |  |   | 501.1   |    |
| Grossprofit                                |  |                  | 824.2   |    |  |   | 811.9   |    |  |   | 798.2   |    |
| Selling,general and administrativeexpenses |  |                  | 750.2   |    |  |   | 716.4   |    |  |   | 769.7   |    |
| Restructuringcosts and other,net           |  |                  | 1.5     |    |  |   | 5.8     |    |  |   | 6.0     |    |
| Operatingincome                            |  |                  | 72.5    |    |  |   | 89.7    |    |  |   | 22.5    |    |
| Otherexpenses(income):                     |  |                  |    |    |  |   |    |    |  |   |    |    |
| Interestexpense                            |  |                  | 130.0   |    |  |   | 130.8   |    |  |   | 174.5   |    |
| Interestincome                             |  |                  | (3.9    | )  |  |   | (3.1    | )  |  |   | (2.7    | )  |
| Amortizationof debt issuancecosts          |  |                  | 6.9     |    |  |   | 8.2     |    |  |   | 8.9     |    |
| Foreigncurrency (gains) losses,net         |  |                  | 0.5     |    |  |   | (5.2    | )  |  |   | (5.0    | )  |
| Losson early extinguishment ofdebt         |  |                  | 9.0     |    |  |   | 90.7    |    |  |   | — |    |
| Miscellaneous,net                          |  |                  | (0.5    | )  |  |   | 2.0     |    |  |   | 0.5     |    |
| Otherexpenses,net                          |  |                  | 142.0   |    |  |   | 223.4   |    |  |   | 176.2   |    |
| Lossbefore incometaxes                     |  |                  | (69.5   | )  |  |   | (133.7  | )  |  |   | (153.7  | )  |
| Provisionfor incometaxes                   |  |                  | 8.3     |    |  |   | 9.1     |    |  |   | 0.3     |    |
| Netloss                                    |  | $                     | (77.8   | )  |  | $      | (142.8  | )  |  | $      | (154.0  | )  |
|                                            |

SeeAccompanying Notes to Consolidated Financial Statements

F-4

----

REVLON CONSUMER PRODUCTS CORPORATION ANDSUBSIDIARIESCONSOLIDATED STATEMENTS OF STOCKHOLDER’SDEFICIENCYAND COMPREHENSIVE LOSS(dollars inmillions)

|                                                           |  |                |        |                           |  |                    |        |                      |  |                                   |          |                                    |  |        |        |         |  |        |        |         |  |        |          |         |  |  |
|-----------------------------------------------------------|--|----------------|--------|---------------------------|--|--------------------|--------|----------------------|--|-----------------------------------|----------|------------------------------------|--|--------|--------|---------|--|--------|--------|---------|--|--------|----------|---------|--|--|
|                                                      |  | PreferredStock |        | AdditionalPaid-In-Capital |  | AccumulatedDeficit |        | DeferredCompensation |  | AccumulatedOtherComprehensiveLoss |          | TotalStockholder’sDeficiency |
| Balance,January  1,2003                                   |  | $              | 54.6   |                      |  | $                  | (206.1 | )               |  | $                                 | (1,349.3 | )                             |  | $      | (6.4   | )  |  | $      | (132.7 | )  |  | $      | (1,639.9 | )  |
| Netproceeds from 2003 Rights Offering (See Note9)         |  |           |   |                      |  |               | 46.9   |                 |  |                              |     |                               |  |   |   |    |  |   |   |    |  |   | 46.9     |    |
| Reductionof liabilities assumed from indirectparent       |  |           |   |                      |  |               | 6.9    | (a)             |  |                              |     |                               |  |   |   |    |  |   |   |    |  |   | 6.9      |    |
| Amortizationof deferred compensation                 |  |           |   |                      |  |               |   |                 |  |                              |     |                               |  |   | 2.2    |    |  |   |   |    |  |   | 2.2      |    |
| Comprehensiveloss:                                        |  |           |   |                      |  |               |   |                 |  |                              |     |                               |  |   |   |    |  |   |   |    |  |   |     |    |
| Netloss                                                   |  |           |   |                      |  |               |   |                 |  |                              | (154.0   | )                             |  |   |   |    |  |   |   |    |  |   | (154.0   | )  |
| Adjustmentfor minimum pensionliability                    |  |           |   |                      |  |               |   |                 |  |                              |     |                               |  |   |   |    |  |   | 1.5    |    |  |   | 1.5      |    |
| Revaluationof foreign currency forward exchange contracts |  |           |   |                      |  |               |   |                 |  |                              |     |                               |  |   |   |    |  |   | (1.4   | )  |  |   | (1.4     | )  |
| Currencytranslationadjustment                             |  |           |   |                      |  |               |   |                 |  |                              |     |                               |  |   |   |    |  |   | 10.6   |    |  |   | 10.6     |    |
| Totalcomprehensiveloss                                    |  |           |   |                      |  |               |   |                 |  |                              |     |                               |  |   |   |    |  |   |   |    |  |   | (143.3   | )  |
| Balance,December  31,2003                                 |  |           | 54.6   |                      |  |               | (152.3 | )               |  |                              | (1,503.3 | )                             |  |   | (4.2   | )  |  |   | (122.0 | )  |  |   | (1,727.2 | )  |
| RevlonExchange Transaction(b)                             |  |           |   |                      |  |               | 827.7  |                 |  |                              |     |                               |  |   |   |    |  |   |   |    |  |   | 827.7    |    |
| Reductionof liabilities assumed from indirectparent       |  |           |   |                      |  |               | 16.4   | (a)             |  |                              |     |                               |  |   |   |    |  |   |   |    |  |   | 16.4     |    |
| Stock-basedcompensation                                   |  |           |   |                      |  |               | 14.7   |                 |  |                              |     |                               |  |   | (14.7  | )  |  |   |   |    |  |   | —  |    |
| Amortizationof deferred compensation                      |  |           |   |                      |  |               |   |                 |  |                              |     |                               |  |   | 6.4    |    |  |   |   |    |  |   | 6.4      |    |
| Comprehensiveloss:                                        |  |           |   |                      |  |               |   |                 |  |                              |     |                               |  |   |   |    |  |   |   |    |  |   |     |    |
| Netloss(b)                                                |  |           |   |                      |  |               |   |                 |  |                              | (142.8   | )                             |  |   |   |    |  |   |   |    |  |   | (142.8   | )  |
| Adjustmentfor minimum pensionliability                    |  |           |   |                      |  |               |   |                 |  |                              |     |                               |  |   |   |    |  |   | (1.6   | )  |  |   | (1.6     | )  |
| Revaluationof foreign currency forward exchangecontracts  |  |           |   |                      |  |               |   |                 |  |                              |     |                               |  |   |   |    |  |   | (1.3   | )  |  |   | (1.3     | )  |
| Currencytranslationadjustment                             |  |           |   |                      |  |               |   |                 |  |                              |     |                               |  |   |   |    |  |   | 0.6    |    |  |   | 0.6      |    |
| Totalcomprehensiveloss                                    |  |           |   |                      |  |               |   |                 |  |                              |     |                               |  |   |   |    |  |   |   |    |  |   | (145.1   | )  |
| Balance,December  31,2004                                 |  |           | 54.6   |                      |  |               | 706.5  |                 |  |                              | (1,646.1 | )                             |  |   | (12.5  | )  |  |   | (124.3 | )  |  |   | (1,021.8 | )  |
| Stock-basedcompensation                                   |  |           |   |                      |  |               | (0.2   | )               |  |                              |     |                               |  |   | 0.2    |    |  |   |   |    |  |   | —  |    |
| Amortizationof deferred compensation                 |  |           |   |                      |  |               |   |                 |  |                              |     |                               |  |   | 5.8    |    |  |   |   |    |  |   | 5.8      |    |
| Comprehensiveloss:                                        |  |           |   |                      |  |               |   |                 |  |                              |     |                               |  |   |   |    |  |   |   |    |  |   |     |    |
| Netloss                                                   |  |           |   |                      |  |               |   |                 |  |                              | (77.8    | )                             |  |   |   |    |  |   |   |    |  |   | (77.8    | )  |
| Adjustmentfor minimum pensionliability                    |  |           |   |                      |  |               |   |                 |  |                              |     |                               |  |   |   |    |  |   | 6.7    |    |  |   | 6.7      |    |
| Revaluationof foreign currency forward exchangecontracts  |  |           |   |                      |  |               |   |                 |  |                              |     |                               |  |   |   |    |  |   | 2.4    |    |  |   | 2.4      |    |
| Currencytranslationadjustment                             |  |           |   |                      |  |               |   |                 |  |                              |     |                               |  |   |   |    |  |   | (6.5   | )  |  |   | (6.5     | )  |
| Totalcomprehensiveloss                                    |  |           |   |                      |  |               |   |                 |  |                              |     |                               |  |   |   |    |  |   |   |    |  |   | (75.2    | )  |
| Balance,December  31,2005                                 |  | $              | 54.6   |                      |  | $                  | 706.3  |                 |  | $                                 | (1,723.9 | )                             |  | $      | (6.5   | )  |  | $      | (121.7 | )  |  | $      | (1,091.2 | )  |
|                                                           |

|  |
|--|
|  |  |
|  |

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (a) | During2003, the Company resolved various tax audits, which resulted in a taxbenefit of $13.9 of which $6.9 was recorded directly to capitaldeficiency since it relates to liabilities assumed by Revlon ConsumerProducts Corporation in connection with the transfer agreements relatedto Revlon Consumer Products Corporation's formation in 1992.During 2004, the Company resolved various state and federal tax auditsand determined that certain tax liabilities assumed by Revlon ConsumerProducts Corporation in connection with transfer agreements related toRevlon Consumer Products Corporation's formation in 1992 were nolonger probable. As a result, $16.4 was recorded directly to capitaldeficiency. (See Note 15, ‘‘Related PartyTransactions’’). |

|     |                                                                                                                                                                                                                                                                |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | Thechanges in Preferred Stock, Common Stock, Additional Paid-in-Capital(Capital Deficiency) and a portion of Accumulated Deficit are a resultof the consummation of the Revlon Exchange Transactions. (See Note 9,‘‘Long-Term Debt’’). |

SeeAccompanying Notes to Consolidated FinancialStatements

F-5

----

REVLON CONSUMER PRODUCTS CORPORATIONSUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(dollars inmillions)

|                                                                                        |  |             |         |         |  |        |         |         |  |        |         |         |  |  |
|----------------------------------------------------------------------------------------|--|-------------|---------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|                                                                                   |  | December31, |
|                                                                                   |  | 2005        |         | 2004    |  | 2003   |
| **CASHFLOWS FROM OPERATINGACTIVITIES:**                                                |  |        |    |    |  |   |    |    |  |   |    |    |
| Netloss                                                                                |  | $           | (77.8   | )  |  | $      | (142.8  | )  |  | $      | (154.0  | )  |
| Adjustmentsto reconcile net loss to net cash used in operatingactivities:              |  |        |    |    |  |   |    |    |  |   |    |    |
| Depreciationand amortization                                                           |  |        | 102.9   |    |  |   | 106.1   |    |  |   | 107.6   |    |
| Amortizationof debtdiscount                                                            |  |        | 0.2     |    |  |   | 1.8     |    |  |   | 3.1     |    |
| Stockcompensationamortization                                                          |  |        | 5.8     |    |  |   | 6.4     |    |  |   | 2.2     |    |
| Losson early extinguishment ofdebt                                                     |  |        | 9.0     |    |  |   | 77.3    |    |  |   | — |    |
| Changein assets andliabilities:                                                        |  |        |    |    |  |   |    |    |  |   |    |    |
| (Increase)decrease in tradereceivables                                                 |  |        | (86.5   | )  |  |   | (12.1   | )  |  |   | 40.2    |    |
| Increaseininventories                                                                  |  |        | (69.8   | )  |  |   | (7.8    | )  |  |   | (5.7    | )  |
| (Increase)decrease in prepaid expenses and other currentassets                         |  |        | (3.3    | )  |  |   | (7.7    | )  |  |   | 1.1     |    |
| Increase(decrease) in accountspayable                                                  |  |        | 22.0    |    |  |   | (4.4    | )  |  |   | 0.5     |    |
| Increase(decrease) in accrued expenses and other currentliabilities                    |  |        | 12.9    |    |  |   | (31.7   | )  |  |   | (79.6   | )  |
| Purchaseof permanentdisplays                                                           |  |        | (69.6   | )  |  |   | (56.0   | )  |  |   | (72.9   | )  |
| Other,net                                                                              |  |        | 14.5    |    |  |   | (23.3   | )  |  |   | (8.9    | )  |
| Netcash used in operatingactivities                                                    |  |        | (139.7  | )  |  |   | (94.2   | )  |  |   | (166.4  | )  |
| **CASHFLOWS FROM INVESTINGACTIVITIES:**                                                |  |        |    |    |  |   |    |    |  |   |    |    |
| Capitalexpenditures                                                                    |  |        | (25.8   | )  |  |   | (18.9   | )  |  |   | (28.6   | )  |
| Investmentin debt defeasancetrust                                                      |  |        | (197.9  | )  |  |   | — |    |  |   | — |    |
| Liquidationof investment in debt defeasancetrust                                       |  |        | 197.9   |    |  |   | — |    |  |   | — |    |
| Paymentreceived on note fromparent                                                     |  |        | 10.0    |    |  |   | — |    |  |   | — |    |
| Proceedsfrom the sale of brand and certainassets                                       |  |        | — |    |  |   | — |    |  |   | 5.3     |    |
| Netcash used in investingactivities                                                    |  |        | (15.8   | )  |  |   | (18.9   | )  |  |   | (23.3   | )  |
| **CASHFLOWS FROM FINANCINGACTIVITIES:**                                                |  |        |    |    |  |   |    |    |  |   |    |    |
| Netincrease (decrease) in short-term borrowings and overdraft —thirdparties      |  |        | (8.8    | )  |  |   | 6.0     |    |  |   | (1.6    | )  |
| Proceedsfrom the issuance of long-term debt — thirdparties                       |  |        | 386.2   |    |  |   | 1,136.2 |    |  |   | 233.1   |    |
| Repaymentof long-term debt — third parties, including prepayment fee andpremiums |  |        | (297.9  | )  |  |   | (960.2  | )  |  |   | (239.3  | )  |
| Proceedsfrom the issuance of long-term debt —affiliates                          |  |        | — |    |  |   | 42.4    |    |  |   | 178.1   |    |
| Repaymentof long-term debt —affiliates                                           |  |        | — |    |  |   | (19.5   | )  |  |   | (62.6   | )  |
| CapitalContribution from directparent                                                  |  |        | — |    |  |   | — |    |  |   | 46.9    |    |
| Paymentof financingcosts                                                               |  |        | (12.0   | )  |  |   | (30.4   | )  |  |   | (3.5    | )  |
| Netcash provided by financingactivities                                                |  |        | 67.5    |    |  |   | 174.5   |    |  |   | 151.1   |    |
| Effectof exchange rate changes on cash and cashequivalents                             |  |        | (0.4    | )  |  |   | 2.9     |    |  |   | 9.3     |    |
| Net(decrease) increase in cash and cashequivalents                                     |  |        | (88.4   | )  |  |   | 64.3    |    |  |   | (29.3   | )  |
| Cashand cash equivalents at beginning ofperiod                                         |  |        | 120.8   |    |  |   | 56.5    |    |  |   | 85.8    |    |
| Cashand cash equivalents at end ofperiod                                               |  | $           | 32.4    |    |  | $      | 120.8   |    |  | $      | 56.5    |    |
|                                                                                        |

F-6

----

REVLON CONSUMER PRODUCTS CORPORATIONSUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(dollars inmillions)

|                                                                            |  |             |         |        |  |        |        |        |  |        |         |        |  |  |
|----------------------------------------------------------------------------|--|-------------|---------|--------|--|--------|--------|--------|--|--------|---------|--------|--|--|
|                                                                       |  | December31, |
|                                                                       |  | 2005        |         | 2004   |  | 2003   |
| Supplementalschedule of cash flowinformation:                              |  |        |    |   |  |   |   |   |  |   |    |   |
| Cashpaid during the periodfor:                                             |  |        |    |   |  |   |   |   |  |   |    |   |
| Interest                                                                   |  | $           | 123.5   |   |  | $      | 133.9  |   |  | $      | 160.8   |   |
| Incometaxes, net ofrefunds                                                 |  | $           | 17.9    |   |  | $      | 11.1   |   |  | $      | 6.7     |   |
| Supplementalschedule of non-cash investing and financingactivities:        |  |        |    |   |  |   |   |   |  |   |    |   |
| Conversionof long-term debt and accrued interest into Class A Common Stock |  | $           | — |   |  | $      | 813.8  |   |  | $      | — |   |
| Reductionof liabilities assumed from indirect parent                       |  | $           | — |   |  | $      | 16.4   |   |  | $      | 6.9     |   |
|                                                                            |

SeeAccompanying Notes to Consolidated FinancialStatements

F-7

----

REVLONCONSUMER PRODUCTS CORPORATION AND SUBSIDIARIES

NOTESTO CONSOLIDATED FINANCIAL STATEMENTS

(all tabularamounts in millions, except per shareamounts)

|          |                                           |
|----------|-------------------------------------------|
| 1.  | SUMMARYOF SIGNIFICANT ACCOUNTING POLICIES |

Principles ofConsolidation and Basis of Presentation:

Revlon ConsumerProducts Corporation (‘‘ProductsCorporation’’ and together with its subsidiaries, the‘‘Company’’) manufactures and sells anextensive array of cosmetics, skincare, fragrances, beauty tools andpersonal care products. The Company's principal customers includelarge mass volume retailers and chain drug stores, as well as certaindepartment stores and other specialty stores, such as perfumeries. TheCompany also sells consumer products to U.S. military exchanges andcommissaries and has a licensing group, pursuant to which the Companylicenses certain of its key brand names to third parties forcomplimentary beauty-related products and accessories.

ProductsCorporation is a direct wholly-owned subsidiary of Revlon, Inc., whichis an indirect majority-owned subsidiary of MacAndrews & ForbesHoldings Inc. (‘‘MacAndrews & ForbesHoldings’’ and, together with its affiliates,‘‘MacAndrews & Forbes’’), a corporationwholly-owned by Ronald O. Perelman.

The accompanying ConsolidatedFinancial Statements include the accounts of the Company afterelimination of all material intercompany balances and transactions.

The preparation of financial statements in conformity withaccounting principles generally accepted in the U.S. requiresmanagement to make estimates and assumptions that affect amounts ofassets and liabilities and disclosures of contingent assets andliabilities as of the date of the financial statements and reportedamounts of revenues and expenses during the periods presented. Actualresults could differ from these estimates. Estimates and assumptionsare reviewed periodically and the effects of revisions are reflected inthe consolidated financial statements in the period they are determinedto be necessary. Significant estimates made in the accompanyingConsolidated Financial Statements include, but are not limited to,allowances for doubtful accounts, inventory valuation reserves,expected sales returns and allowances, certain assumptions related tothe recoverability of intangible and long-lived assets, reserves forestimated tax liabilities, and certain estimates regarding thecalculation of the net periodic benefit costs and the projected benefitobligation for the Company’s pension and other post-retirementplans.

Cash and Cash Equivalents:

Cash equivalents areprimarily investments in high-quality, short-term money marketinstruments with original maturities of three months or less and arecarried at cost, which approximates fair value. Cash equivalents were$9.7  million and $79.0  million as of December31,  2005 and 2004, respectively. Accounts payable includes$18.2  million and $4.4  million of outstanding checks notyet presented for payment at December  31,  2005 and 2004,respectively.

In accordance with borrowing arrangements withcertain financial institutions, Products Corporation is permitted toborrow against its cash balances. The cash available to ProductsCorporation is the net of the cash position less amounts supportingthese short-term borrowings. The cash balances and related borrowingsare shown gross in the Company's Consolidated Balance Sheets. Asof December  31,  2005 and 2004, the Company had$3.2  million and $36.2  million, respectively, of cashsupporting such short-term borrowings. (See Note 8,‘‘Short-Term Borrowings’’).

AccountsReceivable:

Accounts receivable represent payments due to theCompany for previously recognized net sales, reduced by an allowancefor doubtful accounts for balances, which are estimated to beuncollectible at December  31,  2005 and 2004. The Companygrants credit terms in the normal course of business to its customers.Trade credit is extended based upon periodically updated evaluations ofeach customer's 

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ability to perform its obligations. TheCompany does not normally require collateral or other security tosupport credit sales. The allowance for doubtful accounts is determinedbased on historical experience and ongoing evaluations of theCompany's receivables and evaluations of the risks of payment.Accounts receivable balances are recorded against the allowance fordoubtful accounts when they are deemed uncollectible. Recoveries ofaccounts receivable previously recorded against the allowance arerecorded in the Consolidated Statements of Operations when received. Atboth December  31,  2005 and 2004, the Company'sthree largest customers accounted for an aggregate of approximately43% of outstanding accountsreceivable.

Inventories:

Inventories are stated at thelower of cost or market value. Cost is principally determined by thefirst-in, first-out method.

Property, Plant and Equipment andOther Assets:

Property, plant and equipment is recorded at costand is depreciated on a straight-line basis over the estimated usefullives of such assets as follows: land improvements, 20 to 40 years;buildings and improvements, 5 to 45 years; machinery and equipment, 3to 17 years; and office furniture and fixtures and capitalizedsoftware, 2 to 12 years. Leasehold improvements are amortized overtheir estimated useful lives or the terms of the leases, whichever isshorter. Repairs and maintenance are charged to operations as incurred,and expenditures for additions and improvements arecapitalized.

Long-lived assets, including fixed assets andintangibles other than goodwill, are reviewed for impairment wheneverevents or changes in circumstances indicate that the carrying amount ofan asset may not be recoverable. If events or changes in circumstancesindicate that the carrying amount of an asset may not be recoverable,the Company estimates the undiscounted future cash flows (excludinginterest) resulting from the use of the asset and its ultimatedisposition. If the sum of the undiscounted cash flows (excludinginterest) is less than the carrying value, the Company recognizes animpairment loss, measured as the amount by which the carrying valueexceeds the fair value of the asset.

Included in other assets arenet permanent wall displays amounting to approximately $91.4million and $94.2  million as of December  31,  2005and 2004, respectively, which are generally amortized over 3years in the U.S. and generally over 3 to 5 years outside of the U.S.Amortization expense for permanent wall displays for 2005, 2004 and2003 was $70.4 million, $60.9 million and $62.1 million, respectively.The Company has included in other assets net costs related to theissuance of Products Corporation’s debt instruments amounting toapproximately $33.9  million and $31.6  million as ofDecember  31,  2005 and 2004, respectively, which areamortized over the terms of the related debt instruments. In addition,the Company has included in other assets trademarks, net, of$8.1  million and $7.8  million as of December31,  2005 and 2004, respectively, and patents, net, of$2.3  million and $3.2  million as of December31,  2005 and 2004, respectively. Patents and trademarks arerecorded at cost and amortized ratably over approximately 10 to 17years. Amortization expense for patents and trademarks for 2005, 2004and 2003 was $2.0  million, $1.8  million and $1.8million, respectively.

Intangible Assets Related to BusinessesAcquired:

Intangible assets related to businesses acquiredprincipally represent goodwill, which represents the excess purchaseprice over the fair value of assets acquired. The Company accounts forits goodwill and intangible assets in accordance with SFAS No. 142,‘‘Goodwill and Other Intangible Assets’’,and does not amortize its goodwill. The Company reviews its goodwillfor impairment at least annually, or whenever events or changes incircumstances would indicate possible impairment. The Company performsits annual impairment test of goodwill as of September  30 andperformed the annual test as of September  30,  2005 and2004 and concluded that no impairment existed. The Company operates inone reportable segment, which is also the only reporting unit forpurposes of SFAS No. 142. Since the Company currently only has onereporting unit, all of the goodwill has been assigned to the enterpriseas a whole. The Company compared its estimated fair value as measuredby, among other factors, its market capitalization to its net assetsand since the fair value was substantially greater than the net assets,the 

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Company concluded that as of December31,  2005 there was no impairment of goodwill. The amountoutstanding for goodwill, net, was $186.0  million and$186.1  million at December  31,  2005 and 2004,respectively. Accumulated amortization aggregated $117.2  millionand $117.3  million at December  31,  2005 and 2004,respectively. Amortization of goodwill ceased on January1,  2002 upon adoption of SFAS No. 142.

In accordance withSFAS No. 142, the Company’s intangible assets with finite usefullives are amortized over their respective estimated useful lives totheir estimated residual values, and reviewed for impairment wheneverevents or changes in circumstances would indicate possible impairmentin accordance with Statement 144, ‘‘Accounting for theImpairment or Disposal of Long-Lived Assets’’.

Revenue Recognition:

Sales are recognized when revenue isrealized or realizable and has been earned. The Company's policyis to recognize revenue when risk of loss and title to the producttransfers to the customer. Net sales is comprised of gross revenuesless expected returns, trade discounts and customer allowances, whichinclude costs associated with off-invoice mark-downs and other pricereductions, as well as trade promotions and coupons. These incentivecosts are recognized at the later of the date on which the Companyrecognizes the related revenue or the date on which the Company offersthe incentive. The Company allows customers to return their unsoldproducts if and when they meet certain Company-established criteria asoutlined in the Company's trade terms. The Company regularlyreviews and revises, when deemed necessary, its estimates of salesreturns based primarily upon actual returns, planned productdiscontinuances, new product launches, estimates of customer inventoryand promotional sales, which would permit customers to return itemsbased upon the Company's trade terms. The Company records salesreturns as a reduction to sales and cost of sales, and an increase toaccrued liabilities and to inventories. Returned products which arerecorded as inventories are valued based upon the amount that theCompany expects to realize upon their subsequent disposition. Thephysical condition and marketability of the returned products are themajor factors considered by the Company in estimating realizable value.Actual returns, as well as realized values on returned products, maydiffer significantly, either favorably or unfavorably, from theCompany's estimates if factors such as product discontinuances,customer inventory levels or competitive conditions differ from theCompany's estimates and expectations and, in the case of actualreturns, if economic conditions differ significantly from theCompany's estimates and expectations. Revenues derived fromlicensing arrangements, including any prepayments, are recognized inthe period in which they become due and payable but not before theinitial license term commences.

Cost of sales includes all of thecosts to manufacture the Company's products. For productsmanufactured in the Company's own facilities, such costs includeraw materials and supplies, direct labor and factory overhead. Forproducts manufactured for the Company by third-party contractors, suchcosts represent the amounts invoiced by the contractors. Cost of salesalso includes the cost of refurbishing products returned by customersthat will be offered for resale and the cost of inventory write-downsassociated with adjustments of held inventories to net realizablevalue. These costs are reflected in the statement of operations whenthe product is sold and net sales revenues are recognized or, in thecase of inventory write-downs, when circumstances indicate that thecarrying value of inventories is in excess of its recoverable value.Additionally, cost of sales reflects the costs associated with freeproducts. These incentive costs are recognized on the later of the datethat the Company recognizes the related revenue or the date on whichthe Company offers the incentive.

Selling, general andadministrative expenses (‘‘SG&A’’)include expenses to advertise the Company's products, such astelevision advertising production costs and air-time costs, printadvertising costs, promotional displays and consumer promotions.SG&A also includes the amortization of permanent wall displays andintangible assets, distribution costs (such as freight and handling),non-manufacturing overhead, principally personnel and related expenses,insurance and professional fees.

Income Taxes:

Incometaxes are calculated using the asset and liability method in accordancewith the provisions of SFAS No. 109, ‘‘Accounting forIncome Taxes.’’

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Revlon, Inc. and its U.S. subsidiaries,including Products Corporation, for federal income tax purposes, wereincluded through the period ended March  25,  2004 in theaffiliated group of which MacAndrews & Forbes Holdings was thecommon parent (the ‘‘MacAndrews & ForbesGroup’’), and Revlon, Inc.'s and its U.S.subsidiaries’, including Products Corporation’s, federaltaxable income and loss was through the period ended March25,  2004 included in such group's consolidated tax returnfiled by MacAndrews & Forbes Holdings. As a result of the RevlonExchange Transactions (as hereinafter defined) (see Note 9,‘‘Long-Term Debt’’), as of the end of theday on March  25,  2004, Revlon, Inc. and its U.S.subsidiaries, including Products Corporation, were no longer includedin the MacAndrews & Forbes Group for federal income taxpurposes.

Research and Development:

Research anddevelopment expenditures are expensed as incurred. The amounts chargedagainst earnings in 2005, 2004 and 2003 for research and developmentexpenditures were $26.1  million, $24.0  million and$25.4  million, respectively.

Foreign CurrencyTranslation:

Assets and liabilities of foreign operations aregenerally translated into U.S. dollars at the rates of exchange ineffect at the balance sheet date. Income and expense items aregenerally translated at the weighted average exchange rates prevailingduring each period presented. Gains and losses resulting from foreigncurrency transactions are included in the results of operations. Gainsand losses resulting from translation of financial statements offoreign subsidiaries and branches operating in non-hyperinflationaryeconomies are recorded as a component of accumulated othercomprehensive loss until either sale or upon complete or substantiallycomplete liquidation by the Company of its investment in a foreignentity. Foreign subsidiaries and branches operating inhyperinflationary economies translate non-monetary assets andliabilities at historical rates and include translation adjustments inthe results of operations.

Sale of Subsidiary Stock:

TheCompany recognizes gains and losses on sales of subsidiary stock in itsConsolidated Statements of Operations.

Classes ofStock:

Products Corporation designated 1,000 shares of preferredstock as the ‘‘Series A Preferred Stock’’,of which 546 shares are outstanding and held by Revlon, Inc. The holderof the Series A Preferred Stock is not entitled to receive anydividends. The Series A Preferred Stock is entitled to a liquidationpreference of $100,000 per share before any distribution is made to theholder of Products Corporation's common stock. The holder of theSeries A Preferred Stock does not have any voting rights, except asrequired by law. The Series A Preferred Stock may be redeemed at anytime by Products Corporation, at its option, for $100,000 per share.However, the terms of Products Corporation's various debtagreements currently restrict Products Corporation's ability toeffect such redemption.

Stock-Based Compensation:

SFASNo. 123, ‘‘Accounting for Stock-BasedCompensation,’’ encourages, but does not require,companies to record compensation cost for stock-based employeecompensation plans at fair value for fiscal periods ended on or beforeDecember  31,  2005. For such periods, the Company haschosen to account for stock-based compensation plans using theintrinsic value method as prescribed in Accounting Principles Board(‘‘APB’’) Opinion No. 25,‘‘Accounting for Stock Issued toEmployees,’’ and related interpretations. Accordingly,compensation cost for stock options granted to employees is measured asthe excess, if any, of the quoted market price of Revlon, Inc.’sClass A common stock, with a par value of $0.01  per share (the‘‘Class A Common Stock’’), at the date ofthe grant over the amount an employee must pay to acquire such commonstock.

The following table illustrates the effect on net loss asif the Company had applied the fair value method to its stock-basedcompensation under the disclosure provisions of SFAS No. 123 andamended 

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disclosure provisions of SFAS No. 148,‘‘Accounting for Stock-Based Compensation —Transition and Disclosure, an amendment of FASB Statements No.123’’, which is more fully described in Note 14,‘‘Stock CompensationPlan’’:

|                                                                                                        |  |                         |       |         |  |        |        |         |  |        |        |         |  |  |
|--------------------------------------------------------------------------------------------------------|--|-------------------------|-------|---------|--|--------|--------|---------|--|--------|--------|---------|--|--|
|                                                                                                   |  | YearEnded December  31, |
|                                                                                                   |  | 2005                    |       | 2004    |  | 2003   |
| Netloss asreported                                                                                     |  | $                       | (77.8 | )  |  | $      | (142.8 | )  |  | $      | (154.0 | )  |
| Add-back:Stock-based employee compensation expense included in reported netloss                        |  |                    | 5.8   |    |  |   | 5.2    |    |  |   | 2.2    |    |
| Deduct:Stock-based employee compensation expense determined under fair valuebased method for allawards |  |                    | (22.1 | )  |  |   | (30.3  | )  |  |   | (7.7   | )  |
| Proforma netloss                                                                                       |  | $                       | (94.1 | )  |  | $      | (167.9 | )  |  | $      | (159.5 | )  |
|                                                                                                        |

TheCompany uses the Black-Scholes option valuation model(‘‘Black-Scholes’’), which is the measureof fair value most often utilized under SFAS No. 123. The Companyestimated the fair value of stock-based compensation issued toemployees during each respective period using Black-Scholes with thefollowing weighted averageassumptions:

|                        |  |                         |  |            |  |           |  |  |  |  |  |  |  |  |
|------------------------|--|-------------------------|--|------------|--|-----------|--|--|--|--|--|--|--|--|
|                   |  | YearEnded December  31, |
|                   |  | 2005                    |  | 2004       |  | 2003      |
| Expectedlife ofoption  |  | 4.75years               |  | 7.00 years |  | 7.00years |
| Risk-free interestrate |  | 3.95%                   |  | 3.95%      |  | 3.72%     |
| Expectedvolatility     |  | 61%                     |  | 69%        |  | 70%       |
| Expecteddividendyield  |  | N/A                     |  | N/A        |  | N/A       |
|                        |

DerivativeFinancial Instruments:

The Company accounts for derivativefinancial instruments in accordance with SFAS No. 133, as amended bySFAS No. 149. The standard requires the recognition of all derivativeinstruments on the balance sheet as either assets or liabilitiesmeasured at fair value. Changes in fair value are recognizedimmediately in earnings unless the derivatives qualify as hedges offuture cash flows. For derivatives qualifying as hedges of future cashflows, the effective portion of changes in fair value is recorded as acomponent of other comprehensive income (loss) and recognized inearnings when the hedged transaction is recognized in earnings. Anyineffective portion (representing the extent that the change in fairvalue of the hedges does not completely offset the change in theanticipated net payments being hedged) is recognized in earnings as itoccurs. If a derivative instrument designated as a hedge is terminated,the unrecognized fair value of the hedge previously recorded inaccumulated other comprehensive income (loss) is recognized in earningswhen the hedged transaction is recognized in earnings. If thetransaction being hedged is terminated, the unrecognized fair value ofthe Company's related hedge instrument is recognized in earningsat that time.

The Company formally designates and documents eachfinancial instrument as a hedge of a specific underlying exposure, aswell as the risk management objectives and strategies for entering intothe hedge transaction upon inception. The Company also formallyassesses upon inception and quarterly thereafter whether the financialinstruments used in hedging transactions are effective in offsettingchanges in the fair value or cash flows of the hedged items.

TheCompany uses derivative financial instruments, primarily foreigncurrency forward exchange contracts, to reduce the effects offluctuations in foreign currency exchange rates. These contracts, whichhave been designated as cash flow hedges, were entered into primarilyto hedge anticipated inventory purchases and certain intercompanypayments denominated in foreign currencies, which have maturities ofless than one year. Any unrecognized income (loss) related to thesecontracts are recorded in the Statement of Operations primarily in costof goods sold when the underlying transactions hedged are realized(e.g., when inventory is sold or intercompany transactions aresettled). Products Corporation enters into these contracts withcounterparties that are major financial institutions, and accordinglythe 

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Company believes that the risk ofcounterparty nonperformance is remote. During 2005, 2004 and 2003, netderivative losses of $2.2  million, $1.5  million and$1.5  million, respectively, were reclassified to the Statementof Operations. The notional amount of the foreign currency forwardexchange contracts outstanding at December  31,  2005 and2004 was $31.9  million and $31.5  million, respectively.The fair value of the foreign currency forward exchange contractsoutstanding at December  31,  2005 and 2004 was $(0.2)million and $(2.3) million, respectively, and is recorded in‘‘Accrued expenses and other’’ in theaccompanying Consolidated Balance Sheets. The Company had accumulatednet derivative losses of $(0.3) million in other comprehensive loss asof December  31,  2005 related to cash flow hedges, all ofwhich will be reclassified into earnings within 12 months. The amountof the hedges' ineffectiveness for the years endedDecember  31,  2005 and 2004 recorded in the ConsolidatedStatements of Operations was not significant.

Advertising andPromotion:

Costs associated with advertising and promotion areexpensed when incurred. The costs of promotional displays are expensedin the period in which they are shipped to customers. Televisionadvertising production costs are expensed the first time theadvertising takes place. Advertising and promotion expenses were$230.5  million, $225.2  million and $251.4  millionfor 2005, 2004 and 2003, respectively, and were included in SG&A inthe Company's Consolidated Statements of Operations. The Companyalso has various arrangements with customers pursuant to its tradeterms to reimburse them for a portion of their advertising orpromotional costs, which provide advertising and promotional benefitsto the Company. Additionally, from time to time the Company may payfees to customers in order to expand or maintain shelf space for itsproducts. The costs that the Company incurs for‘‘cooperative’’ advertising programs, endcap placement, shelf placement costs and slotting fees are expensed asincurred and are netted against revenues on the Company'sConsolidated Statements of Operations.

DistributionCosts:

Costs, such as freight and handling costs, associatedwith distribution are expensed within SG&A when incurred.Distribution costs were $68.3  million, $62.0  million and$60.4  million for 2005, 2004 and 2003,respectively.

Recent Accounting Pronouncements:

InMay  2005, the FASB issued SFAS No. 154,‘‘Accounting Changes and ErrorCorrections.’’ SFAS No. 154 requires retroactiveapplication of a voluntary change in accounting principle to priorperiod financial statements unless it is impracticable. SFAS No. 154also requires that a change in method of depreciation, amortization ordepletion for long-lived, non-financial assets be accounted for as achange in accounting estimate that is affected by a change inaccounting principle. SFAS No. 154 replaces APB Opinion No. 20,‘‘Accounting Changes’’ and SFAS No. 3,‘‘Reporting Accounting Changes in Interim FinancialStatements’’. SFAS No. 154 is effective for fiscal yearsbeginning after December  15,  2005. The Company will adoptthe provisions of SFAS No. 154 as of January  1,  2006 anddoes not expect that its adoption will have a material impact on itsresults of operations or financial condition.

In December2004, the FASB issued SFAS No. 123 (revised 2004),‘‘Share-Based Payment’’, an amendment toFASB Statements Nos. 123 and 95 (‘‘SFAS No.123(R)’’), which replaces SFAS No. 123, and supercedesAPB Opinion No. 25, ‘‘Accounting for Stock Issued toEmployees’’. SFAS No. 123(R) requires all share-basedpayments to employees, including grants of employee stock options, tobe recognized in the financial statements based on their fair values.In April  2005, the U.S. Securities and Exchange Commission (the‘‘SEC’’ or the‘‘Commission’’) adopted a rule allowingcompanies to implement SFAS No. 123(R) at the beginning of their nextfiscal year that begins after June  15,  2005, which forthe Company will be effective beginning January  1,  2006.The Company will use the modified prospective transition method,utilizing the Black-Scholes option pricing model for the calculation ofthe fair value of its employee stock options. Under the modifiedprospective method, stock option awards that are granted, modified orsettled after January  1,  2006 will be measured andaccounted for in accordance with SFAS No. 123(R). Compensation cost forawards granted prior to, but not vested, as of 

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January  1,  2006 would be basedon the grant date attributes originally used to value those awards forpro forma purposes under SFAS No. 123. The Company expects the adoptionof SFAS No. 123(R) will have a material impact for 2006.

InNovember  2004, the FASB issued SFAS No. 151,‘‘Inventory Costs — An Amendment of ARB No. 43,Chapter 4’’. SFAS No. 151 amends the guidance in ARB No.43, Chapter 4, ‘‘Inventory Pricing’’, toclarify the accounting for abnormal amounts of idle facility expense,freight, handling costs and wasted materials (spoilage). Among otherprovisions, the new rule requires that the aforementioned items berecognized as current-period charges. Additionally, SFAS No. 151requires that the allocation of fixed production overheads to the costsof conversion be based on the normal capacity of the productionfacilities. SFAS No. 151 is effective for fiscal years beginning afterJune  15,  2005 and is required to be adopted by theCompany beginning on January  1,  2006. The Company hadearly adopted the provisions of SFAS No. 151 during the third quarterof 2005, which adoption did not have a material impact on theCompany’s consolidated results of operations and financialposition.

|          |                                          |
|----------|------------------------------------------|
| 2.  | RESTRUCTURING COSTS ANDOTHER, NET   |

During 2005, the Company recordednet charges of $1.5  million for employee severance and otherrelated personnel benefits. During 2004, the Company recorded netcharges of $5.8  million primarily for employee severance andother related personnel benefits for 42 employees in connection withrealignments within several departmental functions and internationaloperations, as to which 40 employees had been terminated as ofDecember  31,  2005. In 2003, the Company recorded separatecharges of $5.9  million for employee severance and otherpersonnel benefits for 421 employees in certain Internationaloperations, as to which 397 employees had been terminated as ofDecember  31,  2005.

Designed to improveprofitability by reducing personnel and consolidating certainfacilities, the 2000 restructuring program accounted for the obligationof excess leased real estate in the Company's old New York Cityheadquarters, consolidation costs associated with the Company closingcertain facilities and the elimination of several domestic andinternational executive and operational positions. The 2000restructuring program was fully paid-out in 2004.

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Details of the activity described aboveduring 2005, 2004 and 2003 are asfollows:

|                                                |  |                        |         |                  |  |              |         |         |  |        |         |         |  |        |         |         |  |        |         |        |  |  |
|------------------------------------------------|--|------------------------|---------|------------------|--|--------------|---------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--------|---------|--------|--|--|
|                                           |  | BalanceBeginningofYear |         | Expenses,Net     |  | Utilized,Net |         |    |
| Cash                                           |  | Noncash                |         | BalanceEndofYear |
| **2005**                                       |  |                   |    |             |  |         |    |    |  |   |    |    |  |   |    |    |  |   |    |   |
| Employeeseverance and other personnelbenefits: |  |                   |    |             |  |         |    |    |  |   |    |    |  |   |    |    |  |   |    |   |
| 2003programs                                   |  | $                      | 3.1     |             |  | $            | — |    |  | $      | (1.7    | )  |  | $      | (0.2    | )  |  | $      | 1.2     |   |
| 2004programs                                   |  |                   | 5.1     |             |  |         | 1.5     |    |  |   | (3.9    | )  |  |   | (0.3    | )  |  |   | 2.4     |   |
|                                           |  |                   | 8.2     |             |  |         | 1.5     |    |  |   | (5.6    | )  |  |   | (0.5    | )  |  |   | 3.6     |   |
| Leasesand equipmentwrite-offs                  |  |                   | 2.9     |             |  |         | — |    |  |   | (2.0    | )  |  |   | (0.3    | )  |  |   | 0.6     |   |
|                                           |  | $                      | 11.1    |             |  | $            | 1.5     |    |  | $      | (7.6    | )  |  | $      | (0.8    | )  |  | $      | 4.2     |   |
| **2004**                                       |  |                   |    |             |  |         |    |    |  |   |    |    |  |   |    |    |  |   |    |   |
| Employeeseverance and other personnelbenefits: |  |                   |    |             |  |         |    |    |  |   |    |    |  |   |    |    |  |   |    |   |
| 2000program                                    |  | $                      | 1.8     |             |  | $            | — |    |  | $      | (1.8    | )  |  | $      | — |    |  | $      | — |   |
| 2003program                                    |  |                   | 5.0     |             |  |         | 0.1     |    |  |   | (2.4    | )  |  |   | 0.4     |    |  |   | 3.1     |   |
| 2004program                                    |  |                   | — |             |  |         | 5.9     |    |  |   | (0.8    | )  |  |   | — |    |  |   | 5.1     |   |
|                                           |  |                   | 6.8     |             |  |         | 6.0     |    |  |   | (5.0    | )  |  |   | 0.4     |    |  |   | 8.2     |   |
| Leasesand equipmentwrite-offs                  |  |                   | 2.2     |             |  |         | (0.2    | )  |  |   | 0.6     |    |  |   | 0.3     |    |  |   | 2.9     |   |
|                                           |  | $                      | 9.0     |             |  | $            | 5.8     |    |  | $      | (4.4    | )  |  | $      | 0.7     |    |  | $      | 11.1    |   |
| **2003**                                       |  |                   |    |             |  |         |    |    |  |   |    |    |  |   |    |    |  |   |    |   |
| Employeeseverance and other personnelbenefits: |  |                   |    |             |  |         |    |    |  |   |    |    |  |   |    |    |  |   |    |   |
| 2000program                                    |  | $                      | 7.0     |             |  | $            | — |    |  | $      | (5.2    | )  |  | $      | — |    |  | $      | 1.8     |   |
| 2003program                                    |  |                   | — |             |  |         | 5.9     |    |  |   | (0.9    | )  |  |   | — |    |  |   | 5.0     |   |
|                                           |  |                   | 7.0     |             |  |         | 5.9     |    |  |   | (6.1    | )  |  |   | — |    |  |   | 6.8     |   |
| Relocation                                     |  |                   | — |             |  |         | 0.1     |    |  |   | (0.1    | )  |  |   | — |    |  |   | — |   |
| Leasesand equipmentwrite-offs                  |  |                   | 3.9     |             |  |         | — |    |  |   | (1.7    | )  |  |   | — |    |  |   | 2.2     |   |
| Otherobligations                               |  |                   | 0.9     |             |  |         | — |    |  |   | — |    |  |   | (0.9    | )  |  |   | — |   |
|                                           |  | $                      | 11.8    |             |  | $            | 6.0     |    |  | $      | (7.9    | )  |  | $      | (0.9    | )  |  | $      | 9.0     |   |
|                                                |

Asof December  31,  2005, 2004 and 2003, the unpaid balanceof the restructuring costs and other, net for reserves are included in‘‘Accrued expenses and other’’ and‘‘Other long-term liabilities’’ in theCompany's Consolidated Balance Sheets. The remaining balance atDecember  31,  2005 for employee severance and otherpersonnel benefits is $4.2  million, of which $3.8  millionis expected to be paid by the end of 2006 and the remaining obligationsof $0.4  million are expected to be paid by the end of2008.

|          |                    |
|----------|--------------------|
| 3.  | DISPOSITIONS  |

InDecember  2003, the Company sold a facility located in Canada forapproximately $5.2  million and leased it back through the end of2006. In connection with such disposition, the Company would recognizea pre-tax and after-tax net gain of approximately $1.7  millionratably over the remaining 3-year lease term, of which approximately$0.6 million was recognized in each of 2005 and 2004, with theremaining amount to be recognized in 2006. For 2005 and 2004, theCompany had no additional dispositions.

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|          |                   |
|----------|-------------------|
| 4.  | INVENTORIES  |

|                          |  |             |       |        |  |        |       |        |  |  |
|--------------------------|--|-------------|-------|--------|--|--------|-------|--------|--|--|
|                     |  | December31, |
|                     |  | 2005        |       | 2004   |
| Rawmaterials andsupplies |  | $           | 60.7  |   |  | $      | 48.1  |   |
| Work-in-process          |  |        | 17.6  |   |  |   | 12.2  |   |
| Finishedgoods            |  |        | 142.3 |   |  |   | 94.4  |   |
|                     |  | $           | 220.6 |   |  | $      | 154.7 |   |
|                          |

|          |                                |
|----------|--------------------------------|
| 5.  | PREPAIDEXPENSES ANDOTHER  |

|                 |  |             |      |        |  |        |      |        |  |  |
|-----------------|--|-------------|------|--------|--|--------|------|--------|--|--|
|            |  | December31, |
|            |  | 2005        |      | 2004   |
| Prepaidexpenses |  | $           | 37.8 |   |  | $      | 35.4 |   |
| Other           |  |        | 23.7 |   |  |   | 32.4 |   |
|            |  | $           | 61.5 |   |  | $      | 67.8 |   |
|                 |

|              |                                            |
|--------------|--------------------------------------------|
| **6.**  | **PROPERTY,PLANT AND EQUIPMENT,NET**  |

|                                                   |  |             |        |         |  |        |        |         |  |  |
|---------------------------------------------------|--|-------------|--------|---------|--|--------|--------|---------|--|--|
|                                              |  | December31, |
|                                              |  | 2005        |        | 2004    |
| Landand improvements                              |  | $           | 2.2    |    |  | $      | 2.3    |    |
| Buildingandimprovements                           |  |        | 57.6   |    |  |   | 57.3   |    |
| Machinery,equipment and capitalleases             |  |        | 125.7  |    |  |   | 125.1  |    |
| Office furniture,fixtures and capitalizedsoftware |  |        | 110.3  |    |  |   | 110.6  |    |
| Leaseholdimprovements                             |  |        | 18.9   |    |  |   | 17.4   |    |
| Construction-in-progress                          |  |        | 14.9   |    |  |   | 7.8    |    |
|                                              |  |        | 329.6  |    |  |   | 320.5  |    |
| Accumulateddepreciation                           |  |        | (209.9 | )  |  |   | (201.8 | )  |
|                                              |  | $           | 119.7  |    |  | $      | 118.7  |    |
|                                                   |

Depreciationexpense for the years ended December  31,  2005, 2004 and2003 was $22.7  million, $34.0  million and $33.7million, respectively. In 2002, the Company evaluated its managementinformation systems and determined, among other things, to upgrade itssystems. As a result of this decision, certain existing informationsystems were amortized on an accelerated basis. The additionalamortization recorded in 2004 and 2003 was $4.3  million and$4.6  million, respectively, and these information systems werethen fully amortized in 2004.

|          |                                 |
|----------|---------------------------------|
| 7.  | ACCRUED EXPENSES ANDOTHER  |

|                                      |  |             |       |        |  |        |       |        |  |  |
|--------------------------------------|--|-------------|-------|--------|--|--------|-------|--------|--|--|
|                                 |  | December31, |
|                                 |  | 2005        |       | 2004   |
| Salesreturns andallowances           |  | $           | 141.2 |   |  | $      | 103.3 |   |
| Advertisingand promotionalcosts      |  |        | 48.0  |   |  |   | 45.5  |   |
| Compensation andrelatedbenefits      |  |        | 61.5  |   |  |   | 56.9  |   |
| Interest                             |  |        | 28.5  |   |  |   | 20.9  |   |
| Taxes,other than federal incometaxes |  |        | 13.8  |   |  |   | 13.0  |   |
| Restructuringcosts                   |  |        | 3.8   |   |  |   | 7.6   |   |
| Other                                |  |        | 31.6  |   |  |   | 36.0  |   |
|                                 |  | $           | 328.4 |   |  | $      | 283.2 |   |
|                                      |

|          |                            |
|----------|----------------------------|
| 8.  | SHORT-TERMBORROWINGS  |

Products Corporation had outstandingshort-term bank borrowings (excluding borrowings under the 2004 CreditAgreement (as defined in Note 9)) aggregating $9.0  million and$36.6  million at 

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December  31,  2005 and 2004,respectively. The weighted average interest rate on short-termborrowings outstanding at December  31,  2005 and 2004 was13.7% and 4.2%, respectively. The higher weighted averageinterest rate for short-term borrowings in 2005 reflects higher-rateborrowings in certain Latin American countries and the cessation of oneof the Company’s cash-collateralized borrowing arrangements witha financial institution. Under these cash-collateralized borrowingarrangements, the Company was permitted to borrow against its cashbalances. The cash balances and related borrowings are shown gross inthe Company's Consolidated Balance Sheets. As of December31,  2005 and 2004, the Company had $3.2  million and$36.2  million, respectively, of cash supporting such short-termborrowings. Interest rates on these cash balances at December31,  2005 and 2004 ranged from 0.3% to 0.5% and0.5% to 4.5%,respectively.

|          |                     |
|----------|---------------------|
| 9.  | LONG-TERMDEBT  |

|                                                        |  |             |         |        |  |        |         |         |  |  |
|--------------------------------------------------------|--|-------------|---------|--------|--|--------|---------|---------|--|--|
|                                                   |  | December31, |
|                                                   |  | 2005        |         | 2004   |
| 2004Credit Agreement (a):                              |  |        |    |   |  |   |    |    |
| TermLoan Facility due2010                              |  | $           | 700.0   |   |  | $      | 800.0   |    |
| Multi-CurrencyFacility due2009                         |  |        | — |   |  |   | — |    |
| 8 1/8%Senior Notes due 2006(b)                         |  |        | — |   |  |   | 116.2   |    |
| 9% SeniorNotes due 2006(c)                             |  |        | — |   |  |   | 75.5    |    |
| 91⁄2%Senior Notes due 2011, net of discounts(d)   |  |        | 386.4   |   |  |   | — |    |
| 8 5/8%Senior Subordinated Notes due 2008(e)            |  |        | 327.0   |   |  |   | 327.0   |    |
| 2004 ConsolidatedMacAndrews & Forbes Line ofCredit |  |        | — |   |  |   | — |    |
|                                                   |  |        | 1,413.4 |   |  |   | 1,318.7 |    |
| Lesscurrentportion                                     |  |        | — |   |  |   | (10.5   | )  |
|                                                   |  | $           | 1,413.4 |   |  | $      | 1,308.2 |    |
|                                                        |

TheCompany completed two significant financing transactions during 2005:(i) Products Corporation issued $310.0  million aggregateprincipal amount of its 91⁄2% Senior Notes (ashereinafter defined), and using the proceeds of such notes, ProductsCorporation completed the redemption of all $116.2  millionaggregate principal amount outstanding of its8 1/8% Senior Notes (as hereinafter defined) andall $75.5  million aggregate principal amount outstanding of its9% Senior Notes (as hereinafter defined) and prepaid$100.0  million of the Term Loan Facility (as hereinafterdefined) and paid related fees and expenses incurred in connection withsuch transactions and (ii) Products Corporation issued $80.0million aggregate principal amount of additional91⁄2% Senior Notes, which priced at951⁄4% of par, and used the proceeds to fundgeneral corporate purposes, principally to fund its brand initiatives,namely the relaunch of the **Almay** brand and the launch of its new**Vital Radiance** brand.

The Company completed twosignificant financing transactions during 2004: (i) Revlon, Inc.exchanged approximately $804  million of ProductsCorporation's debt, $54.6  million of Revlon, Inc.preferred stock and $9.9  million of accrued interest for299,969,493 shares of Class A Common Stock (the ‘‘RevlonExchange Transactions’’) and (ii) Products Corporationentered into the 2004 Credit Agreement, consisting of an $800.0million term loan facility (before giving effect to the $100.0million prepayment discussed above) and a $160.0  millionasset-based multi-currency revolving credit facility, and used theproceeds to refinance its 2001 Credit Agreement (as hereinafterdefined) and to complete a tender offer and subsequent redemption ofall of its 12% Senior Secured Notes due 2005. See discussionbelow.

|  |           |                       |
|--|-----------|-----------------------|
|  | (a)  | 2004 CreditAgreement: |

In July  2004, Products Corporation enteredinto a new credit agreement (the ‘‘2004 CreditAgreement’’) with certain of its subsidiaries as localborrowing subsidiaries, a syndicate of lenders, and Citicorp USA, Inc.,as multi-currency administrative agent, term loan administrative agentand collateral agent.

The 2004 Credit Agreement originallyprovided up to $960.0  million and, before giving effect to the$100.0  million prepayment in March  2005, consisted of an$800.0  million term loan facility (the ‘‘Term

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Loan Facility’’) and a$160.0  million asset-based multi-currency facility (the‘‘Multi-Currency Facility’’), theavailability under which varies based upon the borrowing base that isbased upon the value of eligible accounts receivable, eligibleinventory and eligible real property and equipment in the U.S. and theU.K. from time to time. Products Corporation may request theMulti-Currency Facility to be increased from time to time in anaggregate principal amount not to exceed $50.0  million subjectto certain exceptions and subject to the lenders’ agreement. TheMulti-Currency Facility is available to: (i) Products Corporation inrevolving credit loans denominated in U.S. dollars, (ii) ProductsCorporation in swing line loans denominated in U.S. dollars up to$25.0  million, (iii) Products Corporation in standby andcommercial letters of credit denominated in U.S. dollars and othercurrencies up to $50.0  million and (iv) Products Corporation andcertain of its international subsidiaries designated from time to timein revolving credit loans and bankers’ acceptances denominatedin U.S. dollars and other currencies, in each case subject to borrowingbase availability. If the value of the eligible assets is notsufficient to support the $160.0  million borrowing base,Products Corporation will not have full access to the Multi-CurrencyFacility. Products Corporation’s ability to make borrowingsunder the Multi-Currency Facility is also conditioned upon thesatisfaction of certain conditions precedent and ProductsCorporation’s compliance with other covenants in the 2004 CreditAgreement, including a fixed charge coverage ratio that applies if andwhen the excess borrowing base is less than $30.0  million. InMarch  2005, Products Corporation prepaid $100.0  millionof indebtedness outstanding under the Term Loan Facility, together withaccrued interest and the $5.0  million prepayment fee associatedwith such prepayment, using proceeds from the issuance of the Original91⁄2% Senior Notes (as hereinafterdefined).

During July and August  2004, ProductsCorporation used the proceeds from borrowings under the Term LoanFacility to repay in full the $290.5  million of outstandingindebtedness (including accrued interest) under ProductsCorporation's credit agreement dated November  30,2001 and which was scheduled to mature on May  30,  2005(as amended, the ‘‘2001 CreditAgreement’’), to purchase and redeem in July andAugust  2004 (the ‘‘Tender Offer’’)all of the $363.0  million aggregate principal amount of ProductsCorporation’s 12% Senior Secured Notes for a purchaseprice of approximately $412.3  million (including the applicablepremium and accrued interest), and to pay fees and expenses incurred inconnection with the 2004 Credit Agreement, the Tender Offer for the12% Senior Secured Notes and the Revlon Exchange Transactions,including the payment of expenses related to a refinancing thatProducts Corporation launched in May  2004 but did notconsummate. The balance of such proceeds was available to ProductsCorporation for general corporate purposes.

The Multi-CurrencyFacility will terminate on July  9,  2009 and the loansunder the Term Loan Facility will mature on July  9,  2010;provided that the 2004 Credit Agreement will terminate onOctober  30,  2007 if the 8 5/8%Senior Subordinated Notes (as hereinafter defined) are not redeemed,repurchased, defeased or repaid on or before such date such that notmore than $25.0  million in aggregate principal amount of suchnotes remain outstanding. In addition to customary events of default,it would be an event of default under the 2004 Credit Agreement ifRevlon, Inc. fails to undertake an approximately $110.0  millionequity issuance and transfer the proceeds of such equity issuance toProducts Corporation by March  31,  2006 to promptly reduceits outstanding indebtedness. See Note 19, ‘‘SubsequentEvents’’.

Borrowings under the Multi-CurrencyFacility (other than loans in foreign currencies) bear interest at arate equal to, at Products Corporation's option, either (A) theAlternate Base Rate plus 1.50%; or (B) the Eurodollar Rate plus2.50%. Loans in foreign currencies bear interest in certainlimited circumstances or if mutually acceptable to Products Corporationand the relevant foreign lenders at the Local Rate, and otherwise atthe Eurocurrency Rate, in each case plus 2.50%. The loans underthe Term Loan Facility bear interest at a rate equal to, at ProductsCorporation's option, either (A) the Alternate Base Rate plus5.00%; or (B) the Eurodollar Rate plus 6.00%. AtDecember  31,  2005, the weighted average rate forborrowings under the Term Loan Facility was 10.1%.

The2004 Credit Agreement requires Products Corporation to comply withvarious financial covenants and restrictions, including covenants andrestrictions relating to indebtedness, liens, investments, sales ofassets, mergers and acquisitions, dividends and transactions withProducts Corporation’s affiliates, each of which is subject tolimited exceptions. Additionally, the 2004 Credit Agreement containsfinancial covenants limiting Products Corporation’s seniorsecured leverage ratio (the ratio of Products Corporation’s

F-18

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Senior Secured Debt to EBITDA, as each suchterm is defined in the 2004 Credit Agreement) to 5.50 to 1.00 for thefour consecutive quarters ending during the period from December31,  2004 to September  30,  2005; 5.00 to 1.00 forthe four consecutive quarters ending during the period fromDecember  31,  2005 to December  31,  2006; and4.50 to 1.00 for the four consecutive quarters ending March31,  2007 and each subsequent quarter until the maturity date ofthe 2004 Credit Agreement. Additionally, under any circumstances whenthe excess borrowing base under the Multi-Currency Facility is lessthan $30.0  million for a period of 30 consecutive days or more,Products Corporation would be required to maintain a consolidated fixedcharge coverage ratio (the ratio of EBITDA minus Capital Expendituresto Cash Interest Expense for such period, as each such term is definedin the 2004 Credit Agreement) of 1.00 to 1.00. Products Corporation wasin compliance with all applicable covenants under the 2004 CreditAgreement as of December  31,  2005. (See Note 19,‘‘Subsequent Events’’, regarding recentamendments to the financial covenants under the 2004 CreditAgreement).

At December  31,  2005, the Term LoanFacility was fully drawn and availability under the Multi-CurrencyFacility, based upon the calculated borrowing base less approximately$16  million of outstanding letters of credit, was approximately$144  million, as the Multi-Currency Facility wasundrawn.

|  |           |                                                                                                    |
|--|-----------|----------------------------------------------------------------------------------------------------|
|  | (b)  | Redemption ofthe 8 1/8% Senior Notes due 2006 (the‘‘8 1/8% SeniorNotes’’): |

The 8 1/8% SeniorNotes, prior to their redemption in April  2005, were seniorunsecured obligations of Products Corporation and ranked equally inright of payment with all existing and future senior debt of ProductsCorporation, including the 91⁄2% Senior Notes,the indebtedness under the 2004 Credit Agreement and the indebtednessunder the 2004 Consolidated MacAndrews & Forbes Line of Credit (ashereinafter defined) and were senior to the8 5/8% Senior Subordinated Notes and to allfuture subordinated indebtedness of Products Corporation. The8 1/8% Senior Notes were effectivelysubordinated to the outstanding indebtedness and other liabilities ofProducts Corporation's subsidiaries. Interest was payable onFebruary  1 and August  1.

The principal amount of$116.2  million outstanding of the 8 1/8%Senior Notes was redeemed in April  2005. The aggregateredemption price of the 8 1/8% Senior Notes was$118.1  million, which constituted the principal amount andinterest payable on the 8 1/8% Senior Notes. Inconnection with the redemption, the Company recognized a loss onextinguishment of debt (see ‘‘(c)’’below).

|  |           |                                                                                             |
|--|-----------|---------------------------------------------------------------------------------------------|
|  | (c)  | Redemption ofthe 9% Senior Notes due 2006 (the ‘‘9%Senior Notes’’): |

The 9% Senior Notes, priorto their redemption in April  2005, were senior unsecuredobligations of Products Corporation and ranked equally in right ofpayment with all existing and future senior debt of ProductsCorporation, including the 91⁄2% Senior Notes,the indebtedness under the 2004 Credit Agreement and the indebtednessunder the 2004 Consolidated MacAndrews & Forbes Line of Credit andwere senior to the 8 5/8% Senior SubordinatedNotes and to all future subordinated indebtedness of ProductsCorporation. The 9% Senior Notes were effectively subordinatedto outstanding indebtedness and other liabilities of ProductsCorporation's subsidiaries. Interest was payable on May  1and November  1.

The principal amount of $75.5million outstanding of the 9% Senior Notes was redeemed inApril  2005. The aggregate redemption price of the 9%Senior Notes was $79.8  million, which constituted the principalamount, interest payable on the 9% Senior Notes and theapplicable premium.

In connection with the redemption of the9% Senior Notes and the redemption of the8 1/8% Senior Notes, the Company recognized aloss on extinguishment of debt of $1.5million.

|  |           |                                  |
|--|-----------|----------------------------------|
|  | (d)  | 91⁄2%Senior Notes due 2011: |

Products Corporation issued $310.0million aggregate principal amount of 91⁄2%Senior Notes due 2011 (the ‘‘Original91⁄2% Senior Notes’’) pursuant toan indenture, dated as of March  16,  2005, by and betweenProducts Corporation and U.S. Bank National Association, as trustee.This issuance and the related transactions extended the maturities ofProducts Corporation's debt that would have otherwise been due in2006.

F-19

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The proceeds from the Original91⁄2% Senior Notes were used to prepay$100.0  million of indebtedness outstanding under the Term LoanFacility of Products Corporation’s 2004 Credit Agreement,together with accrued interest and the associated $5.0  millionprepayment fee and to pay $7.0  million in certain fees andexpenses associated with the issuance of the Original91⁄2% Senior Notes. The remaining $197.9million of proceeds from the Original 91⁄2%Senior Notes was placed in a debt defeasance trust and, in April2005, used to redeem $116.2  million aggregate principal amountoutstanding of Products Corporation’s8 1/8% Senior Notes, plus accrued interest, and$75.5  million aggregate principal amount outstanding of ProductsCorporation’s 9% Senior Notes, plus accrued interest andthe applicable premium. The aggregate redemption amounts for the8 1/8% Senior Notes and 9% Senior Noteswere $118.1  million and $79.8  million, respectively,which constituted the principal amount and interest payable on the8 1/8% Senior Notes and the 9% SeniorNotes up to, but not including, the redemption date, and, with respectto the 9% Senior Notes, the applicable premium. In connectionwith the redemption, the Company recognized a loss on extinguishment ofdebt of $1.5  million. Amounts prepaid under the Term LoanFacility permanently reduced the commitment and are not available forfuture borrowings. In June  2005, all of the Original91⁄2% Senior Notes were exchanged for new91⁄2% Senior Notes (the ‘‘March2005 91⁄2% Senior Notes’’), whichhave substantially identical terms to the Original91⁄2% Senior Notes, except that theMarch  2005  91⁄2% Senior Notes areregistered with the SEC under the Securities Act of 1933, as amended(the ‘‘Securities Act’’), and the transferrestrictions and registration rights applicable to the Original91⁄2% Senior Notes do not apply to theMarch  2005  91⁄2% SeniorNotes.

In August  2005, Products Corporation issued$80.0  million aggregate principal amount of additional91⁄2% Senior Notes due 2011, which priced at951⁄4% of par (the ‘‘Additional91⁄2% Senior Notes’’) in aprivate placement to institutional buyers, as additional notes pursuantto the same indenture governing the Original91⁄2% Senior Notes. The issuance of theAdditional 91⁄2% Senior Notes constituted afurther issuance of, are the same series as, and will vote on anymatters submitted to note holders with, the Original91⁄2% Senior Notes. The Company used theproceeds of this issuance to help fund investments in theCompany’s brand initiatives and for general corporate purposes,as well as to pay fees and expenses in connection with the issuance ofthe Additional 91⁄2% Senior Notes and anyoutstanding fees and expenses in connection with the issuance of andexchange offer for the Original 91⁄2% SeniorNotes.

On December  27,  2005, all of the Additional91⁄2% Senior Notes issued by ProductsCorporation were exchanged for new 91⁄2% SeniorNotes (the ‘‘August 2005 91⁄2%Senior Notes’’), which have substantially identical termsto the Additional 91⁄2% Senior Notes, exceptthat the August  2005  91⁄2% SeniorNotes are registered with the SEC under the Securities Act, and thetransfer restrictions and registration rights applicable to theAdditional 91⁄2% Senior Notes do not apply tothe August  2005  91⁄2% SeniorNotes (which are collectively referred to with the March2005  91⁄2% Senior Notes as the‘‘91⁄2% SeniorNotes’’).

The 91⁄2% SeniorNotes are senior unsecured obligations of Products Corporation rankingequally in right of payment with any of Products Corporation'spresent and future senior indebtedness, including the indebtednessunder the 2004 Credit Agreement and the indebtedness under the 2004MacAndrews & Forbes Line of Credit, and are senior to the8 5/8% Senior Subordinated Notes and to allfuture subordinated indebtedness of Products Corporation. The91⁄2% Senior Notes are effectively subordinatedto the outstanding indebtedness and other liabilities of ProductsCorporation’s subsidiaries. The 91⁄2%Senior Notes bear interest at an annual rate of91⁄2%, which is payable on April  1 andOctober  1 of each year, commencing with October  1,2005. The 91⁄2% Senior Notes indenture providesthat Products Corporation may redeem the 91⁄2%Senior Notes at its option, in whole or in part, at any time on orafter April  1,  2008, at the redemption prices set forthin the 91⁄2% Senior Notes indenture. Inaddition, at any time prior to April  1,  2008 ProductsCorporation is entitled to redeem up to 35% of the aggregateprincipal amount of the 91⁄2% Senior Notes at aredemption price of 109.5% of the principal amount thereof, plusaccrued and unpaid interest, if any, to the date of redemption, with,to the extent actually received, the net cash proceeds of one or morepublic equity offerings, provided that at least 65% of theaggregate principal amount of the 91⁄2% SeniorNotes issued remains outstanding immediately after giving effect tosuch redemption. In addition, the 91⁄2% SeniorNotes indenture provides that Products Corporation is entitled toredeem the 91⁄2% Senior Notes at any time orfrom time to time prior to April  1,  2008 at a redemptionprice per note equal to the sum of (1) the then outstanding principalamount thereof, plus (2) accrued and unpaid interest, if any, to thedate of redemption, plus (3) the greater of (i) 1.0% of the then

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outstanding principal amount of such noteand (ii) the excess of (A) the present value at such redemption date of(1) the redemption price of such note on April  1,  2008(exclusive of any accrued interest) plus (2) all required remainingscheduled interest payments due on such note through April1,  2008, computed using a discount rate equal to the applicabletreasury rate plus 75 basis points, over (B) the then outstandingprincipal amount of such note. Pursuant to the91⁄2% Senior Notes indenture, upon a Change ofControl (as defined in the 91⁄2% Senior Notesindenture), each holder of the 91⁄2% SeniorNotes has the right to require Products Corporation to make an offer torepurchase all or a portion of such holder's91⁄2% Senior Notes at a price equal to101% of the principal amount of such holder's91⁄2% Senior Notes, plus accrued and unpaidinterest, if any, thereon to the date of repurchase.

The91⁄2% Senior Notes indenture contains covenantswhich, subject to certain exceptions, limit the ability of ProductsCorporation and its subsidiaries to, among other things, incuradditional indebtedness, pay dividends on or redeem or repurchasestock, engage in certain asset sales, make certain types of investmentsand other restricted payments, engage in transactions with affiliates,restrict dividends or payments from subsidiaries and create liens ontheir assets. All of these limitations and prohibitions, however, aresubject to a number of important qualifications and exceptions. The91⁄2% Senior Notes indenture contains customaryevents of default (see below item (e) fordetails).

|  |           |                                                                                                                |
|--|-----------|----------------------------------------------------------------------------------------------------------------|
|  | (e)  | The8 5/8% Senior Subordinated Notes due 2008 (the‘‘8 5/8% Senior SubordinatedNotes’’): |

The 8 5/8%Senior Subordinated Notes are general unsecured obligations of ProductsCorporation and (i) are subordinate in right of payment to all existingand future senior debt of Products Corporation, including the91⁄2% Senior Notes, the indebtedness under the2004 Credit Agreement and the indebtedness under the 2004 ConsolidatedMacAndrews & Forbes Line of Credit, (ii) rank equally in right ofpayment with all future senior subordinated debt, if any, of ProductsCorporation and (iii) are senior in right of payment to all futurejunior subordinated debt, if any, of Products Corporation. The8  5/8% Senior Subordinated Notes areeffectively subordinated to the outstanding indebtedness and otherliabilities of Products Corporation's subsidiaries. Interest ispayable on February  1 and August  1.

The8 5/8% Senior Subordinated Notes are dueFebruary  2008 and may be redeemed at the option of ProductsCorporation in whole or from time to time in part at any time on orafter February  1,  2003 at the redemption prices set forthin the 8 5/8% Senior Subordinated Notesindenture, plus accrued and unpaid interest, if any, to the date ofredemption. The 2004 Credit Agreement requires that ProductsCorporation redeem, repurchase or defease on or before October30,  2007 the 8 5/8% Senior SubordinatedNotes such that not more than $25.0  million in aggregateprincipal amount of the 8 5/8% SeniorSubordinated Notes remains outstanding. Otherwise, the 2004 CreditFacilities will terminate and all amounts outstanding under the 2004Credit Facilities will become due on such date. In 2004, approximately$322.9  million principal amount of the8 5/8% Senior Subordinated Notes were exchangedfor Class A Common Stock in the Revlon Exchange Transactions, asdiscussed below. See Note 19, ‘‘SubsequentEvents’’, regarding the Company’s plans to redeem,repurchase or defease approximately $110  million of the8 5/8% Senior Subordinated Notes.

Upon aChange of Control, as defined in the 8 5/8%Senior Subordinated Notes indenture, Products Corporation will have theoption to redeem the 8 5/8% Senior SubordinatedNotes in whole at a redemption price equal to the principal amountthereof, plus accrued and unpaid interest, if any, thereon to the dateof redemption, plus the applicable premium, as defined in the8 5/8% Senior Subordinated Notes indenture, and,subject to certain conditions, each holder of the8 5/8% Senior Subordinated Notes will have theright to require Products Corporation to repurchase all or a portion ofsuch holder's 8 5/8% Senior SubordinatedNotes at a price equal to 101% of the principal amount thereof,plus accrued and unpaid interest, if any, thereon to the date ofrepurchase.

The 8 5/8% Senior SubordinatedNotes indenture contains covenants that, among other things, limit (i)the issuance of additional debt and redeemable stock by ProductsCorporation, (ii) the incurrence of liens, (iii) the issuance of debtand preferred stock by Products Corporation's subsidiaries, (iv)the payment of dividends on capital stock of Products Corporation andits subsidiaries and the redemption of capital stock of ProductsCorporation, (v) the sale of assets and subsidiary stock, (vi)transactions with affiliates, (vii) consolidations, mergers andtransfers of all or substantially all of Products Corporation'sassets and 

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(viii) the issuance of additionalsubordinated debt that is senior in right of payment to the8  5/8% Senior Subordinated Notes. The8 5/8% Senior Subordinated Notes indenture alsoprohibits certain restrictions on distributions from subsidiaries. Allof these limitations and prohibitions, however, are subject to a numberof important qualifications and exceptions.

The indenture foreach of the 91⁄2% Senior Notes and the8 5/8% Senior Subordinated Notes containcustomary events of default for debt instruments of such type andincludes a cross acceleration provision which provides that it shall bean event of default under each such indenture if any debt (as definedin each such indenture) of Products Corporation or any of itssignificant subsidiaries (as defined in each such indenture) is notpaid within any applicable grace period after final maturity or isaccelerated by the holders of such debt because of a default and thetotal principal amount of the portion of such debt that is unpaid oraccelerated exceeds $25.0  million and such default continues for10 days after notice from the trustee under such indenture. If any suchevent of default occurs, the trustee under such indenture or theholders of at least 25% in principal amount of the outstandingnotes under such indenture may declare all such notes to be due andpayable immediately, provided that the holders of a majority inaggregate principal amount of the outstanding notes under suchindenture may, by notice to the trustee, waive any such default orevent of default and its consequences under such indenture. Inconnection with the Revlon Exchange Transactions, in February2004, Revlon, Inc. entered into a supplemental indenture pursuant towhich it agreed to guarantee Products Corporation’s obligationsunder the 8 5/8% Senior Subordinated Notesindenture.

2004 Consolidated MacAndrews & Forbes Line ofCredit

In July  2004, Products Corporation andMacAndrews & Forbes Inc. entered into an agreement, which effectiveas of August  10,  2004 amended, restated and consolidatedthe facilities for the MacAndrews & Forbes $65  million lineof credit (which was undrawn at such time) and the 2004 MacAndrews& Forbes $125  million term loan (as to which after theRevlon Exchange Transactions the total term loan availability was$87.0  million) into a single consolidated line of credit (asamended, the ‘‘2004 Consolidated MacAndrews & ForbesLine of Credit’’). As of December  31,  2005,the 2004 Consolidated MacAndrews & Forbes Line of Credit hadavailability of $87.0  million. The commitment under the 2004Consolidated MacAndrews & Forbes Line of Credit reduced to$87.0  million from $152.0  million as of July1,  2005. In August  2005, the 2004 Consolidated MacAndrews& Forbes Line of Credit was amended to provide that such line ofcredit is available to assist the Company in funding its brandinitiatives. See Note 19, ‘‘SubsequentEvents’’, regarding an extension of the term of the 2004Consolidated MacAndrews & Forbes Line of Credit.

Loans areavailable under the 2004 Consolidated MacAndrews & Forbes Line ofCredit if (i) the Multi-Currency Facility under the 2004 CreditAgreement has been substantially drawn (after taking into accountanticipated needs for Local Loans (as defined in the 2004 CreditAgreement) and letters of credit), (ii) such borrowing is necessary tocause the excess borrowing base under the Multi-Currency Facility toremain greater than $30.0  million, (iii) additional revolvingloans are not available under the Multi-Currency Facility, (iv) suchborrowing is reasonably necessary to prevent or to cure a default orevent of default under the 2004 Credit Agreement or (v) ProductsCorporation requests such loan to assist in funding theCompany’s investments in its brand initiatives.

Loansunder the 2004 Consolidated MacAndrews & Forbes Line of Credit bearinterest (which is not payable in cash but is capitalized quarterly inarrears) at a rate per annum equal to the lesser of (a) 12.0%and (b) 0.25% less than the rate payable from time to time onEurodollar loans under the Term Loan Facility under the 2004 CreditAgreement, which the effective interest rate was 9.35% as ofDecember  31,  2005, provided that at any time that theEurodollar Base Rate under the 2004 Credit Agreement is equal to orgreater than 3.0%, the applicable rate on loans under the 2004Consolidated MacAndrews & Forbes Line of Credit will be equal tothe lesser of (x) 12.0% and (y) 5.25% over the EurodollarBase Rate then in effect. As of December  31,  2005, the2004 Consolidated MacAndrews & Forbes Line of Credit wasundrawn.

During 1992, Revlon Holdings (as hereinafter defined)made an advance of $25.0  million to Products Corporation,evidenced by subordinated noninterest-bearing demand notes. The noteswere subsequently 

F-22

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adjusted by offsets and additional amountsloaned by Revlon Holdings to Products Corporation. In March2004, the balance of $24.1  million was exchanged for Class ACommon Stock in the Revlon Exchange Transactions as discussedbelow.

The aggregate amounts of contractual long-term debtmaturities at December  31,  2005 in the years 2006 through2010 and thereafter are asfollows:

|                        |  |                         |         |           |  |  |
|------------------------|--|-------------------------|---------|-----------|--|--|
| Yearsended December31, |  | Long-termdebtmaturities |
| 2006                   |  | $                       | — |      |
| 2007                   |  |                    | — |      |
| 2008                   |  |                    | 327.0   | (1)  |
| 2009                   |  |                    | — |      |
| 2010                   |  |                    | 700.0   |      |
| Thereafter             |  |                    | 390.0   | (2)  |
| Totallong-termdebt     |  | $                       | 1,417.0 |      |
|                        |

|  |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|--|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (1) | Amountrefers to the aggregate principal balance due on the8 5/8% Senior Subordinated Notes, which is due2008. However, the 2004 Credit Agreement requires that ProductsCorporation redeem, repurchase or defease on or before October30,  2007 the 8 5/8% Senior SubordinatedNotes such that not more than $25.0  million in aggregateprincipal amount of such notes remain outstanding. See Note 19,‘‘SubsequentEvents’’. |

|  |     |                                                                                                                                                                                                                                                              |
|--|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (2) | Amountrefers to the principal balance due on the91⁄2% Senior Notes. The difference between thisamount and the carrying amount is due to the issuance of the$80.0  million Additional 91⁄2% SeniorNotes at a discount, priced at 951⁄4% ofpar. |

Revlon Exchange Transactions

InFebruary  2004, Revlon, Inc. entered into agreements withFidelity Management & Research Co.(‘‘Fidelity’’) and MacAndrews & Forbesconfirming that if Revlon, Inc. were to commence an offer to exchangeor convert certain indebtedness of Products Corporation and Revlon,Inc. preferred stock for Class A Common Stock, Fidelity and MacAndrews& Forbes would tender, or cause to be tendered, certainindebtedness in the exchange. In February  2004, Revlon, Inc.launched debt-for-equity exchange offers to exchange any and all ofProducts Corporation’s outstanding 8 1/8%Senior Notes, 9% Senior Notes, and 8 5/8%Senior Subordinated Notes (collectively, the ‘‘RevlonExchange Notes’’) for shares of Revlon, Inc.'sClass A Common Stock or, under certain conditions, cash.

Fidelityand MacAndrews & Forbes agreed to tender the Revlon Exchange Notesat a ratio of 400 shares of Class A Common Stock for each one thousanddollars principal of 8 1/8% Senior Notes or9% Senior Notes and 300 shares of Class A Common Stock for eachone thousand dollars principal of 8 5/8% SeniorSubordinated Notes tendered for exchange. The agreements allowedFidelity the right to elect to receive cash or additional shares ofClass A Common Stock for accrued interest on the notes tendered whileMacAndrews & Forbes received Class A Common Stock for the accruedinterest. Other holders were offered the opportunity to exchange theirRevlon Exchange Notes for (i) shares of Class A Common Stock at thesame exchange ratios or, under certain conditions, (ii) cash up to amaximum of $150  million aggregate principal of tendered RevlonExchange Notes, subject to proration, at $830 per one thousand dollarsprincipal for the 8 1/8% Senior Notes, $800 perone thousand dollars principal for the 9% Senior Notes and $620per one thousand dollars principal for the8 5/8% Senior Subordinated Notes. Accruedinterest was paid in cash or additional shares of Class A Common Stock,at the holder's option.

An aggregate of approximately$631.2  million in outstanding notes, consisting of approximately$133.8  million of 8 1/8% Senior Notes,approximately $174.5  million of the 9% Senior Notes andapproximately $322.9  million of the8 5/8% Senior Subordinated Notes were exchanged,along with the related accrued interest, for an aggregate ofapproximately 224.1  million shares of Class A Common Stock.These amounts included approximately $1.0  million of 9%Senior Notes and $286.7  million of8  5/8% Senior Subordinated Notes tenderedby MacAndrews & Forbes and related entities and approximately$85.9  million of 9% Senior Notes, approximately$77.8  million of 8 1/8% Senior Notes andapproximately $32.1  million of 8 5/8%Senior Subordinated Notes tendered by funds and accounts managed byFidelity. No cash was paid for any principal amount of notesexchanged.

F-23

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MacAndrews & Forbes also receivedClass A Common Stock for amounts outstanding as of the March25,  2004 closing date under the MacAndrews & Forbes$100  million term loan (approximately $109.7  million,including accrued interest), the 2004 MacAndrews & Forbes$125  million term loan (approximately $38.9  million,including accrued interest) and approximately $24.1  million insubordinated promissory notes. Amounts under the MacAndrews &Forbes $100  million term loan and 2004 MacAndrews & Forbes$125  million term loan, which exchanged at 400 shares perthousand dollars, exchanged for approximately 43.9  millionshares and 15.6  million shares, respectively. Amounts under thesubordinated promissory notes, which exchanged at 300 shares perthousand dollars, exchanged for approximately 7.2  millionshares. Portions of the 2004 MacAndrews & Forbes $125million term loan and the MacAndrews & Forbes $65  millionline of credit not exchanged remained available to ProductsCorporation, subject to a borrowing limitation, which was subsequentlyeliminated. As mentioned above, the 2004 MacAndrews & Forbes$125  million term loan and the MacAndrews & Forbes$65  million line of credit were consolidated into the 2004Consolidated MacAndrews & Forbes Line of Credit in July2004.

REV Holdings LLC (‘‘REVHoldings’’), a wholly owned indirect subsidiary ofMacAndrews & Forbes Holdings, owned all 546 shares of Revlon,Inc.'s outstanding Series A preferred stock with a par value of$0.01 per share and a liquidation preference of $54.6  million(‘‘Revlon, Inc. Series A Preferred Stock’’)and all 4,333 shares of Revlon, Inc.'s outstanding Series Bconvertible preferred stock, with a par value of $0.01 per share(‘‘Revlon, Inc. Series B PreferredStock’’), and which were convertible into 433,333 sharesof Class A Common Stock. As part of the Revlon Exchange Transactions,REV Holdings exchanged each $1,000 of liquidation preference of Revlon,Inc. Series A Preferred Stock for 160 shares of Class A Common Stockfor an aggregate of approximately 8.7  million shares of Class ACommon Stock and converted its shares of Revlon, Inc. Series BPreferred Stock into an aggregate of 433,333 shares of Class A CommonStock.

The consummation of the Revlon Exchange Transactions(other than the exchange or conversion, as the case may be, of theRevlon, Inc. Series A and Revlon, Inc. Series B Preferred Stock) onMarch  25,  2004 resulted in Revlon, Inc. transferring thetendered Revlon Exchange Notes and other exchanged indebtedness toProducts Corporation for cancellation, which (i) reduced indebtednessand accrued and unpaid interest of approximately $804 million (as ofsuch date) and $9.9 million, respectively, and (ii) resulted in adecrease to capital deficiency of $827.7 million, including $49.9million as a result of the exchange of indebtedness by MacAndrews &Forbes, calculated as the difference between the market value onMarch  25,  2004 of Revlon, Inc. Class A Common Stockissued and the principal amount of the indebtedness exchanged, togetherwith accrued interest thereon. Additionally, the Company recognized aloss on early extinguishment of debt of $32.0 million in connectionwith the write-off of unamortized debt issuance costs and debtdiscount, estimated fees and expenses and the difference between themarket value on March  25,  2004 of the shares of Revlon,Inc. Class A Common Stock issued and the principal amount of debtexchanged by third parties (other than by MacAndrews & Forbes),together with accrued interest thereon, of $15.5 million.

InFebruary  2004, Revlon, Inc. and Fidelity also entered into astockholders agreement (the ‘‘StockholdersAgreement’’) pursuant to which, among other things, (i)Revlon, Inc. agreed to continue to maintain a majority of independentdirectors (as defined by New York Stock Exchange listing standards) onits Board of Directors, as it currently does; (ii) Revlon, Inc. wouldestablish and maintain a Nominating and Corporate Governance Committeeof the Board of Directors, which it formed in March  2004; and(iii) Revlon, Inc. agreed to certain restrictions with respect toRevlon, Inc.’s conducting any business or entering into anytransactions or series of related transactions with any of itsaffiliates, any holders of 10% or more of the outstanding votingstock or any affiliates of such holders (in each case, other than itssubsidiaries). This Stockholders Agreement will terminate when Fidelityceases to be the beneficial holder of at least 5% of Revlon,Inc.'s outstanding voting stock.

Also in February2004, Revlon, Inc. and MacAndrews & Forbes also entered into aninvestment agreement (as amended, the ‘‘2004 InvestmentAgreement’’) pursuant to which MacAndrews and Forbescommitted to assisting the Company with its goal of reducing itsindebtedness by an additional $200  million in the aggregate bythe end of 2004 and further by an additional $100  million in theaggregate by March  2006. Pursuant to the 2004 InvestmentAgreement, MacAndrews & Forbes agreed, among other things, (i) tothe extent that a minimum of $150  million aggregate principalamount of notes were 

F-24

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not tendered in the Revlon ExchangeTransaction, to back-stop the exchange offers by subscribing foradditional shares of Revlon, Inc.'s Class A Common Stock at apurchase price of $2.50 per share, to the extent of any shortfall, theproceeds of which would be used to reduce Products Corporation'soutstanding indebtedness; (ii) to back-stop a rights offering in anamount necessary to meet the $200  million aggregate debtreduction target by December  31,  2004, not to exceed$50  million since at least $150  million of debt reductionin the aggregate was ensured as a result of the MacAndrews & Forbesback-stop obligations discussed in (i) above; and (iii) to back-stop anequity or rights offering in an amount necessary to meet the$300  million aggregate debt reduction target by March31,  2006, not to exceed $100  million since at least$200  million of debt reduction in the aggregate is ensured as aresult of the back-stop obligations discussed in (i) and (ii) above(such equity offerings together with the Revlon Exchange Transactionsare the ‘‘Debt Reduction Transactions’’).In connection with the closing of the Revlon Exchange Transactions onMarch  25,  2004, MacAndrews & Forbes Holdings executeda joinder agreement to the Revlon, Inc. registration rights agreementpursuant to which all Class A Common Stock acquired by MacAndrews &Forbes will be deemed to be registrable securities. In August2005, in connection with Revlon, Inc.’s plan to issue$185.0  million of equity, MacAndrews & Forbes and Revlon,Inc. amended the 2004 Investment Agreement to increase MacAndrews &Forbes' commitment to purchase such equity as is necessary toensure that Revlon, Inc. issues $185.0  million of equity. (SeeNote 19, ‘‘Subsequent Events’’).

Inconnection with consummating the Revlon Exchange Transactions, Revlon,Inc. announced that its previously-announced plan to launch a rightsoffering and use the proceeds to reduce debt by a further $50million by year-end 2004 was reduced to $9.7  million, as aresult of $190.3  million of Revlon Exchange Notes having beenexchanged in excess of the Revlon Exchange Notes committed to beexchanged by MacAndrews & Forbes and Fidelity under theirrespective support agreements. This $190.3  million more thansatisfied Revlon, Inc.'s plan to reduce debt through the RevlonExchange Offers (as hereinafter defined) by $150  million inaddition to the Revlon Exchange Notes that were committed to beexchanged in the support agreements with MacAndrews & Forbes andFidelity. The $40.3  million difference satisfied all but$9.7  million of the Company's plan to reduce debt (inaddition to the Revlon Exchange Notes) by a further $50  millionby year-end 2004. Because the costs and expenses, as well as the use oforganizational resources, associated with a $9.7  million rightsoffering would have been unduly disproportionate, Revlon, Inc.'ssupport agreements with MacAndrews & Forbes and Fidelity and the2004 Investment Agreement relating to the Company's debtreduction plan were amended to enable Revlon, Inc. to satisfy theremaining $9.7  million of debt reduction as part of the finalstage of the Company's debt reduction plan. Consistent withagreements between MacAndrews & Forbes and Revlon, Inc. enteredinto contemporaneously with the agreements relating to the RevlonExchange Transactions, MacAndrews & Forbes agreed to back-stop theproposed equity issuance. See Note 19, ‘‘SubsequentEvents’’.

LiquidityConsiderations

The Company expects that operating revenues,cash on hand, the net cash proceeds from Revlon, Inc.’s planned$75  million equity issuance described in Note 19,‘‘Subsequent Events’’ and funds availablefor borrowing under the 2004 Credit Agreement, the 2004 ConsolidatedMacAndrews & Forbes Line of Credit and other permitted lines ofcredit will be sufficient to enable the Company to cover its operatingexpenses for 2006, including cash requirements in connection with theCompany’s operations, the continued implementation of, andrefinement to, the Company’s plan, cash requirements inconnection with the Company’s restructuring programs referred toabove (including as described in Note 19, ‘‘SubsequentEvents’’), the Company’s debt service requirementsand regularly scheduled pension and post-retirement plan contributions.However, there can be no assurance that such funds will be sufficientto meet the Company’s cash requirements on a consolidated basis.If the Company’s anticipated level of revenue growth is notachieved because, for example, of decreased consumer spending inresponse to weak economic conditions or weakness in the mass-marketcosmetics category, adverse changes in currency, increased competitionfrom the Company’s competitors, changes in consumer purchasinghabits, including with respect to shopping channels, retailer inventorymanagement or the Company’s advertising and marketing plans orbrand initiatives are not as successful as anticipated, or if theCompany’s expenses associated with the continued implementationof, and refinement to, the Company’s plan exceed the anticipatedlevel of expenses, the Company’s current sources of funds may beinsufficient to meet the Company’s cashrequirements.

F-25

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In the event of a decrease in demand forthe Company's products, reduced sales, lack of increases indemand and sales, changes in consumer purchasing habits, including withrespect to shopping channels, retailer inventory management and/orincreased returns or expenses associated with the continuedimplementation of, and refinement to, the Company's planexceeding its expectations, any such development, if significant, couldreduce Products Corporation's revenues and could adversely affectits ability to comply with certain financial covenants under the 2004Credit Agreement and in such event the Company could be required totake measures, including reducing discretionary spending.

If theCompany is unable to satisfy its cash requirements from the sourcesidentified above or comply with its debt covenants, the Company couldbe required to adopt one or more alternatives, such as delaying theimplementation of or revising aspects of its plan, including reducingor delaying purchases of wall displays or advertising or promotionalexpenses, reducing or delaying capital spending, delaying, reducing orrevising restructuring programs (including as described in Note 19,‘‘Subsequent Events’’), restructuringindebtedness, selling assets or operations, seeking additional capitalcontributions or loans from MacAndrews & Forbes, theCompany's other affiliates and/or third parties, sellingadditional debt securities of Products Corporation or reducing otherdiscretionary spending. There can be no assurance that the Companywould be able to take any of the actions referred to above because of avariety of commercial or market factors or constraints in ProductsCorporation's debt instruments, including, for example, marketconditions being unfavorable for an equity or debt issuance, additionalcapital contributions or loans not being available from affiliatesand/or third parties, or that the transactions may not be permittedunder the terms of Products Corporation'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 or enable Products Corporationto comply with its debt covenants if the actions do not generate asufficient amount of additional capital.

The terms of the 2004Credit Agreement, the 2004 Consolidated MacAndrews & Forbes Line ofCredit and the indentures governing the 91⁄2%Senior Notes and the 8 5/8% Senior SubordinatedNotes generally restrict Products Corporation from paying dividends ormaking distributions, except that Products Corporation is permitted topay dividends and make distributions to Revlon, Inc. to enable Revlon,Inc., among other things, to pay expenses incidental to being a publicholding company, including, among other things, professional fees suchas legal and accounting fees, regulatory fees such as SEC filing feesand other miscellaneous expenses related to being a public holdingcompany and, subject to certain limitations, to pay dividends or makedistributions in certain circumstances to finance the purchase byRevlon, Inc. of its Class A Common Stock in connection with thedelivery of such Class A Common Stock to grantees under the Amended andRestated Revlon, Inc. Stock Plan (the ‘‘StockPlan’’).

|           |                            |
|-----------|----------------------------|
| 10.  | FINANCIALINSTRUMENTS  |

The fair value of theCompany's long-term debt is based on the quoted market prices forthe same issues or on the current rates offered to the Company for debtof the same remaining maturities. The estimated fair value of long-termdebt at December  31,  2005 and 2004, respectively, wasapproximately $40.0  million and $38.3  million less thanthe carrying values of $1,413.4  million and $1,318.7million, respectively.

Products Corporation also maintainsstandby and trade letters of credit with certain banks for variouscorporate purposes under which Products Corporation is obligated, ofwhich approximately $16.0  million and $17.0  million(including amounts available under credit agreements in effect at thattime) were maintained at December  31,  2005 and 2004,respectively. Included in these amounts is approximately $11.9million and $11.0  million, at December  31,  2005and 2004, respectively, in standby letters of credit, which supportProducts Corporation's self-insurance programs. The estimatedliability under such programs is accrued by ProductsCorporation.

The carrying amounts of cash and cash equivalents,marketable securities, trade receivables, notes receivable, accountspayable and short-term borrowings approximate their fairvalues.

F-26

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|           |                    |
|-----------|--------------------|
| 11.  | INCOMETAXES   |

The Company's loss before incometaxes and the applicable provision (benefit) for income taxes are asfollows:

|                                        |  |                       |        |          |  |        |        |         |  |        |        |         |  |  |
|----------------------------------------|--|-----------------------|--------|----------|--|--------|--------|---------|--|--------|--------|---------|--|--|
|                                   |  | YearEnded December31, |
| Loss beforeincometaxes:                |  | **2005**              |        | **2004** |  | 2003   |
| Domestic                               |  | $                     | (91.5  | )   |  | $      | (166.3 | )  |  | $      | (136.9 | )  |
| Foreign                                |  |                  | 22.0   |     |  |   | 32.6   |    |  |   | (16.8  | )  |
|                                   |  | $                     | (69.5  | )   |  | $      | (133.7 | )  |  | $      | (153.7 | )  |
| Provision(benefit) for incometaxes:    |  |                  |   |     |  |   |   |    |  |   |   |    |
| Federal                                |  | $                     | 0.1    |     |  | $      | (1.7   | )  |  | $      | (4.4   | )  |
| Stateandlocal                          |  |                  | 0.2    |     |  |   | (1.0   | )  |  |   | 0.2    |    |
| Foreign                                |  |                  | 8.0    |     |  |   | 11.8   |    |  |   | 4.5    |    |
|                                   |  | $                     | 8.3    |     |  | $      | 9.1    |    |  | $      | 0.3    |    |
| Current                                |  | $                     | 16.8   |     |  | $      | 12.4   |    |  | $      | 8.1    |    |
| Deferred                               |  |                  | 0.1    |     |  |   | 1.6    |    |  |   | 1.9    |    |
| Benefitsof operating losscarryforwards |  |                  | (4.8   | )   |  |   | (2.0   | )  |  |   | (1.9   | )  |
| Resolutionof taxmatters                |  |                  | (3.8   | )   |  |   | (2.9   | )  |  |   | (7.8   | )  |
|                                   |  | $                     | 8.3    |     |  | $      | 9.1    |    |  | $      | 0.3    |    |
|                                        |

Theeffective tax rate on loss before income taxes is reconciled to theapplicable statutory federal income tax rate asfollows:

|                                                                        |  |                         |         |          |  |        |         |          |  |        |         |          |  |  |
|------------------------------------------------------------------------|--|-------------------------|---------|----------|--|--------|---------|----------|--|--------|---------|----------|--|--|
|                                                                   |  | YearEnded December  31, |
|                                                                   |  | 2005                    |         | 2004     |  | 2003   |
| Statutoryfederal income taxrate                                        |  |                    | (35.0   | )%  |  |   | (35.0   | )%  |  |   | (35.0   | )%  |
| Stateand local taxes, net of federal income taxbenefit                 |  |                    | 0.2     |     |  |   | 0.1     |     |  |   | 0.1     |     |
| Foreignand U.S. tax effects attributable to operations outside theU.S. |  |                    | 15.6    |     |  |   | (4.4    | )   |  |   | 2.1     |     |
| Loss onearly extinguishment ofdebt                                     |  |                    | — |     |  |   | (14.8   | )   |  |   | — |     |
| Changein valuationallowance                                            |  |                    | 36.9    |     |  |   | 61.4    |     |  |   | 38.0    |     |
| Saleofbusinesses                                                       |  |                    | — |     |  |   | — |     |  |   | — |     |
| Resolutionof taxaudits                                                 |  |                    | (5.6    | )   |  |   | (2.2    | )   |  |   | (5.1    | )   |
| Other                                                                  |  |                    | (0.2    | )   |  |   | 1.7     |     |  |   | 0.1     |     |
| Effectiverate                                                          |  |                    | 11.9    | %   |  |   | 6.8     | %   |  |   | 0.2     | %   |
|                                                                        |

Thetax effects of temporary differences that give rise to significantportions of the deferred tax assets and deferred tax liabilities atDecember  31,  2005 and 2004 are presentedbelow:

|                                                               |  |             |        |        |  |        |        |        |  |  |
|---------------------------------------------------------------|--|-------------|--------|--------|--|--------|--------|--------|--|--|
|                                                          |  | December31, |
|                                                          |  | 2005        |        | 2004   |
| Deferredtax assets:                                           |  |        |   |   |  |   |   |   |
| Accounts receivable, principallydue to doubtfulaccounts       |  | $           | 1.3    |   |  | $      | 1.5    |   |
| Inventories                                                   |  |        | 13.6   |   |  |   | 13.0   |   |
| Netoperating loss carryforwards —domestic               |  |        | 180.8  |   |  |   | 176.8  |   |
| Netoperating loss carryforwards —foreign                |  |        | 122.9  |   |  |   | 135.4  |   |
| Accrualsand relatedreserves                                   |  |        | 1.4    |   |  |   | 4.4    |   |
| Employeebenefits                                              |  |        | 63.0   |   |  |   | 67.1   |   |
| State andlocaltaxes                                           |  |        | 7.6    |   |  |   | 7.6    |   |
| Advertising,sales discounts and returns and couponredemptions |  |        | 50.3   |   |  |   | 36.2   |   |
|                                                               |

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|                                                     |  |             |        |         |  |        |        |         |  |  |
|-----------------------------------------------------|--|-------------|--------|---------|--|--------|--------|---------|--|--|
|                                                |  | December31, |
|                                                |  | 2005        |        | 2004    |
| Other                                               |  |        | 34.2   |    |  |   | 29.6   |    |
| Totalgross deferred taxassets.                      |  |        | 475.1  |    |  |   | 471.6  |    |
| Lessvaluationallowance                              |  |        | (445.4 | )  |  |   | (441.6 | )  |
| Totaldeferred tax assets, net of valuationallowance |  |        | 29.7   |    |  |   | 30.0   |    |
| Deferredtax liabilities:                            |  |        |   |    |  |   |   |    |
| Plant,equipment and otherassets                     |  |        | (24.2  | )  |  |   | (23.5  | )  |
| Other                                               |  |        | (1.6   | )  |  |   | (2.1   | )  |
| Totalgross deferred taxliabilities                  |  |        | (25.8  | )  |  |   | (25.6  | )  |
| Netdeferred taxassets                               |  | $           | 3.9    |    |  | $      | 4.4    |    |
|                                                     |

Inassessing the recoverability of its deferred tax assets, managementconsiders whether it is more likely than not that some portion or allof the deferred tax assets will not be realized. The ultimaterealization of deferred tax assets is dependent upon the generation offuture taxable income during the periods in which those temporarydifferences become deductible. Management considers the scheduledreversal of deferred tax liabilities, projected future taxable income,and tax planning strategies in making this assessment. Based upon thelevel of historical taxable income for certain international marketsand projections for future taxable income over the periods in which thedeferred tax assets are deductible, management believes it is morelikely than not that the Company will realize the benefits of certaindeductible differences existing at December  31,  2005. Thevaluation allowance increased by $3.8  million during 2005 anddecreased by $182.7  million during 2004.

During 2005, 2004and 2003, certain of the Company's foreign subsidiaries usedoperating loss carryforwards to credit the current provision for incometaxes by $1.1  million, $2.0  million, and $1.9million, respectively. Certain other foreign operations generatedlosses during 2005, 2004 and 2003 for which the potential tax benefitwas reduced by a valuation allowance. During 2005 the Company useddomestic operating loss carryforwards to credit the current provisionfor income taxes by $3.8  million. At December  31,2005, the Company had tax loss carryforwards of approximately$911.3  million of which $394.6  million are foreign and$516.7  million are domestic. Of the domestic losses,$112.0  million represent tax losses generated by the Companyfrom March  26,  2004 to December  31,  2004,and $404.7  million represent losses of the Company not absorbedby the MacAndrews & Forbes Group in accordance with the InternalRevenue Code of 1986 (as amended, the‘‘Code’’) and the Treasury regulationsissued thereunder, offset by losses used by the Company in 2005. Thelosses expire in future years as follows: 2006-$46.5  million;2007-$119.0  million; 2008-$182.8  million;2009-$88.0  million; 2010 and beyond−$220.3 million; andunlimited−$254.7 million. The Company could receive the benefitof such tax loss carryforwards only to the extent it has taxable incomeduring the carryforward periods in the applicable tax jurisdictions. Asa result of the closing of the Revlon Exchange Transactions, as of theend of the day on March  25,  2004, Revlon Inc., ProductsCorporation and its U.S. subsidiaries were no longer included in theMacAndrews & Forbes Group for federal income tax purposes (seefurther discussion immediately below). The Code and the Treasuryregulations issued thereunder govern both the calculation of the amountand allocation to the members of the MacAndrews & Forbes Group ofany consolidated federal net operating losses(‘‘CNOLs’’) of the group that will beavailable to offset Revlon, Inc.’s taxable income and thetaxable income of its U.S. subsidiaries, including ProductsCorporation, for the taxable years beginning after March25,  2004. Only the amount of any CNOLs that the MacAndrews &Forbes Group did not absorb by December  31,  2004 will beavailable to be allocated to Revlon, Inc. and its U.S. subsidiaries,including Products Corporation, for their taxable years beginning onMarch  26,  2004. MacAndrews & Forbes Holdings hasindicated that, after giving effect to the CNOLs that the MacAndrews& Forbes Group reported as having absorbed on its 2004 consolidatedfederal income tax return, $415.9  million in U.S. federal netoperating losses and $15.2  million of alternative minimum taxlosses were available to Revlon, Inc. and its U.S. subsidiaries,including Products Corporation, after March  25,  2004.These amounts are subject to change if the Internal Revenue Serviceadjusts the results of the MacAndrews & Forbes Group or if theMacAndrews & Forbes Group amends its returns for the tax yearsended on or before December  31,  2004. Any losses thatRevlon, Inc. and its U.S. subsidiaries, 

F-28

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including Products Corporation, generateafter March  25,  2004 will be available to Revlon, Inc.for its use and its U.S. subsidiaries', including ProductsCorporation’s, use and will not be available for the use of theMacAndrews & Forbes Group.

The Company has not provided forU.S. Federal and foreign withholding taxes on $44.9  million offoreign subsidiaries' undistributed earnings as ofDecember  31,  2005, because such earnings are intended tobe indefinitely reinvested overseas. The amount of unrecognizeddeferred tax liabilities for temporary differences related toinvestments in undistributed earnings is not practicable to determineat this time.

As a result of the closing of the Revlon ExchangeTransactions, as of the end of March  25,  2004, Revlon,Inc., Products Corporation and their U.S. subsidiaries were no longerincluded in the MacAndrews & Forbes Group for federal income taxpurposes. The MacAndrews & Forbes Tax Sharing Agreement (ashereinafter defined) will remain in effect solely for taxable periodsbeginning on or after January  1,  1992, through andincluding March  25,  2004. In these taxable periods,Revlon, Inc. and Products Corporation were included in the MacAndrews& Forbes Group, and Revlon, Inc.'s and ProductsCorporation's federal taxable income and loss were included insuch group's consolidated tax return filed by MacAndrews &Forbes Holdings. Revlon, Inc. and Products Corporation were alsoincluded in certain state and local tax returns of MacAndrews &Forbes Holdings or its subsidiaries. In June  1992, RevlonHoldings, Revlon, Inc., Products Corporation and certain of itssubsidiaries, and MacAndrews & Forbes Holdings entered into a taxsharing agreement (as subsequently amended and restated, the‘‘MacAndrews & Forbes Tax SharingAgreement’’), pursuant to which MacAndrews & ForbesHoldings agreed to indemnify Revlon, Inc. and Products Corporationagainst federal, state or local income tax liabilities of theMacAndrews & Forbes Group (other than in respect of Revlon, Inc.and Products Corporation) for taxable periods beginning on or afterJanuary  1,  1992 during which Revlon, Inc. and ProductsCorporation or a subsidiary of Products Corporation was a member ofsuch group. Pursuant to the MacAndrews & Forbes Tax SharingAgreement, for all such taxable periods, Products Corporation wasrequired to pay to Revlon, Inc., which in turn was required to pay toRevlon Holdings, amounts equal to the taxes that Products Corporationwould otherwise have had to pay if it were to file separate federal,state or local income tax returns (including any amounts determined tobe due as a result of a redetermination arising from an audit orotherwise of the consolidated or combined tax liability relating to anysuch period which was attributable to Products Corporation), exceptthat Products Corporation was not entitled to carry back any losses totaxable periods ending prior to January  1,  1992. Nopayments were required by Products Corporation or Revlon, Inc. if andto the extent Products Corporation was prohibited under the terms ofits 2004 Credit Agreement from making tax sharing payments to Revlon,Inc. The 2004 Credit Agreement prohibits Products Corporation frommaking such tax sharing payments under the MacAndrews & Forbes TaxSharing Agreement other than in respect of state, local and federaltaxes. The MacAndrews & Forbes Tax Sharing Agreement was amended,effective as of January  1,  2001, to eliminate acontingent payment to Revlon, Inc. under certain circumstances inreturn for a $10  million note by MacAndrews & ForbesHoldings, with interest at 12% and interest and principalpayable in December  2005, which was paid in full. As a result oftax net operating losses, there were no federal tax payments orpayments in lieu of taxes pursuant to the MacAndrews & Forbes TaxSharing Agreement in respect of 2004.

Following the closing ofthe Revlon Exchange Transactions, Revlon, Inc. became the parent of anew 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 tax sharing agreement (the‘‘Revlon Tax Sharing Agreement’’) pursuantto which Products Corporation will be required to pay to Revlon, Inc.amounts equal to the taxes that Products Corporation would otherwisehave had to pay if Products Corporation were to file separate federal,state or local income tax returns, limited to the amount, and payableonly at such times, as Revlon, Inc. will be required to make paymentsto the applicable taxing authorities. The 2004 Credit Agreement doesnot prohibit payments from Products Corporation to Revlon, Inc. to theextent required under the Revlon Tax Sharing Agreement. As a result oftax net operating losses, there were no federal tax payments orpayments in lieu of taxes from Products Corporation to Revlon, Inc.pursuant to the Revlon Tax Sharing Agreement in respect of 2004. TheCompany expects that there will be federal 

F-29

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alternative minimum tax payments of$0.1  million from Products Corporation to Revlon, Inc. pursuantto the Revlon Tax Sharing Agreement in respect of 2005.

Pursuantto the asset transfer agreement referred to in Note 15, ProductsCorporation assumed all tax liabilities of Revlon Holdings other than(i) certain income tax liabilities arising prior to January1,  1992 to the extent such liabilities exceeded reserves onRevlon Holdings' books as of January  1,  1992 orwere not of the nature reserved for and (ii) other tax liabilities tothe extent such liabilities are related to the business and assetsretained by Revlon Holdings. During the second quarter of 2003, theCompany resolved various tax audits, which resulted in a tax benefit of$13.9  million, of which $6.9  million was recordeddirectly to capital deficiency since it relates to liabilities assumedby Products Corporation in connection with the transfer agreementsrelated to Products Corporation's formation in 1992 (see Note 15,‘‘Related Party Transactions’’). During2004, the Company resolved various state and federal tax audits anddetermined that certain tax liabilities were no longer probable, whichresulted in a tax benefit of $19.3  million, of which$16.4  million was recorded to capital deficiency since itrelates to liabilities assumed by Products Corporation in connectionwith the transfer agreements related to Products Corporation'sformation in 1992 (see Note 15, ‘‘Related PartyTransactions’’). During 2005, the Company resolvedvarious tax matters and determined certain tax liabilities were nolonger probable, which resulted in a tax benefit of $3.8million, none of which was recorded to capital deficiency. In thenormal course of business, the Company is subject to tax examinationsin both domestic and foreign jurisdictions. The Company believes thatadequate provisions have been made for adjustment that may result fromsuch tax examinations.

|           |                                                         |
|-----------|---------------------------------------------------------|
| 12.  | SAVINGSPLAN, PENSION AND POST-RETIREMENT BENEFITS  |

Savings Plan:

The Company offersa qualified defined contribution plan for U.S.-based employees, theRevlon Employees' Savings, Investment and Profit Sharing Plan (asamended, the ‘‘Savings Plan’’), whichallows eligible participants to contribute up to 25% and highlycompensated employees to contribute up to 6% of qualifiedcompensation through payroll deductions. The Company matches employeecontributions at fifty cents for each dollar contributed up to thefirst 6% of eligible compensation. The Company may alsocontribute from time to time profit sharing contributions (if any) fornon-bonus eligible employees. In 2005, 2004 and 2003, the Company madecash matching contributions to the Savings Plan of approximately$2.9  million, $2.7  million and $2.8  million,respectively. There were no additional contributions or profit sharingcontributions made during those years.

PensionBenefits:

The Company sponsors a number of qualified definedbenefit pension plans covering a substantial portion of theCompany's employees in the U.S., as well as certain othernon-U.S. employees. The Company also has nonqualified pension planswhich provide benefits in excess of IRS limitations in the U.S. and incertain limited cases contractual benefits for designated officers ofthe Company. These plans are funded from the general assets of theCompany.

Other Post-retirement Benefits:

TheCompany previously sponsored an unfunded retiree benefit plan, whichprovides death benefits payable to beneficiaries of a very limitednumber of former employees. Participation in this plan was limited toparticipants enrolled as of December  31,  1993. TheCompany also administers an unfunded medical insurance plan on behalfof Revlon Holdings, the cost of which has been apportioned to RevlonHoldings under the reimbursement agreements among Revlon, Inc.,Products Corporation and MacAndrews & Forbes. (See Note 15,‘‘Related Party Transactions — ReimbursementAgreements’’).

F-30

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The Company uses September  30 asits measurement date for pension and other post-retirement plansobligations and assets.

Information regarding the Company'ssignificant pension and other post-retirement plans at the datesindicated is asfollows:

|                                                                           |  |              |         |                                    |  |        |         |         |  |        |         |         |  |        |         |         |  |  |
|---------------------------------------------------------------------------|--|--------------|---------|------------------------------------|--|--------|---------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|                                                                      |  | PensionPlans |         | Other Post-retirement BenefitPlans |
|                                                                      |  | 2005         |         | 2004                               |  | 2005   |         | 2004    |
| Changein BenefitObligation:                                               |  |         |    |                               |  |   |    |    |  |   |    |    |  |   |    |    |
| Benefitobligation — September  30 of prioryear                      |  | $            | (557.8  | )                             |  | $      | (518.2  | )  |  | $      | (13.0   | )  |  | $      | (17.1   | )  |
| Servicecost                                                               |  |         | (9.6    | )                             |  |   | (9.9    | )  |  |   | (0.1    | )  |  |   | (0.1    | )  |
| Interestcost                                                              |  |         | (31.0   | )                             |  |   | (30.6   | )  |  |   | (0.9    | )  |  |   | (0.8    | )  |
| Planamendments                                                            |  |         | — |                               |  |   | — |    |  |   | (0.5    | )  |  |   | 4.2     |    |
| Actuarialloss                                                             |  |         | (20.3   | )                             |  |   | (21.8   | )  |  |   | — |    |  |   | (0.1    | )  |
| Benefitspaid                                                              |  |         | 27.5    |                               |  |   | 26.6    |    |  |   | 1.1     |    |  |   | 1.0     |    |
| Foreignexchange                                                           |  |         | 4.9     |                               |  |   | (3.6    | )  |  |   | 0.2     |    |  |   | — |    |
| Planparticipantcontributions                                              |  |         | (0.2    | )                             |  |   | (0.3    | )  |  |   | — |    |  |   | — |    |
| Benefitobligation — September  30 of currentyear                    |  |         | (586.5  | )                             |  |   | (557.8  | )  |  |   | (13.2   | )  |  |   | (12.9   | )  |
| Changein Plan Assets:                                                     |  |         |    |                               |  |   |    |    |  |   |    |    |  |   |    |    |
| Fairvalue of plan assets — September  30 of prioryear               |  |         | 341.5   |                               |  |   | 298.6   |    |  |   | — |    |  |   | — |    |
| Actualreturn (loss) on plan assets.                                       |  |         | 44.0    |                               |  |   | 36.6    |    |  |   | — |    |  |   | — |    |
| Employercontributions                                                     |  |         | 27.5    |                               |  |   | 30.3    |    |  |   | 1.1     |    |  |   | 1.0     |    |
| Planparticipant contributions                                             |  |         | 0.2     |                               |  |   | 0.3     |    |  |   | — |    |  |   | — |    |
| Benefitspaid                                                              |  |         | (27.2   | )                             |  |   | (26.5   | )  |  |   | (1.1    | )  |  |   | (1.0    | )  |
| Foreignexchange                                                           |  |         | (3.0    | )                             |  |   | 2.2     |    |  |   | — |    |  |   | — |    |
| Fairvalue of plan assets — September  30 of current yearSettlements |  |         | 383.0   |                               |  |   | 341.5   |    |  |   | — |    |  |   | — |    |
| Fundedstatus ofplans                                                      |  |         | (203.5  | )                             |  |   | (216.3  | )  |  |   | (13.2   | )  |  |   | (12.9   | )  |
| Amountscontributed to plans during fourthquarter                          |  |         | 2.3     |                               |  |   | 4.3     |    |  |   | 0.2     |    |  |   | 0.2     |    |
| Unrecognizednetloss                                                       |  |         | 130.0   |                               |  |   | 135.1   |    |  |   | 1.6     |    |  |   | 1.5     |    |
| Unrecognizedprior servicecost                                             |  |         | (3.6    | )                             |  |   | (4.1    | )  |  |   | — |    |  |   | — |    |
| Accruednet periodic benefit cost at December31                            |  | $            | (74.8   | )                             |  | $      | (81.0   | )  |  | $      | (11.4   | )  |  | $      | (11.2   | )  |
|                                                                           |

|                                                                 |  |             |        |         |  |        |        |         |  |        |         |         |  |        |         |         |  |  |
|-----------------------------------------------------------------|--|-------------|--------|---------|--|--------|--------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|                                                            |  | December31, |
|                                                            |  | 2005        |        | 2004    |  | 2005   |        | 2004    |
| Amountsrecognized in the Consolidated Balance Sheets consistof: |  |        |   |    |  |   |   |    |  |   |    |    |  |   |    |    |
| Prepaidexpenses                                                 |  | $           | 6.2    |    |  | $      | 6.8    |    |  | $      | — |    |  | $      | — |    |
| Accruedexpenses                                                 |  |        | (31.6  | )  |  |   | (23.3  | )  |  |   | — |    |  |   | — |    |
| Otherlong-term liabilities                                      |  |        | (157.2 | )  |  |   | (179.0 | )  |  |   | (11.4   | )  |  |   | (11.2   | )  |
| Intangibleasset                                                 |  |        | 0.2    |    |  |   | 0.3    |    |  |   | — |    |  |   | — |    |
| Accumulatedother comprehensive loss                             |  |        | 107.0  |    |  |   | 113.7  |    |  |   | — |    |  |   | — |    |
| Otherlong-term assets                                           |  |        | 0.6    |    |  |   | 0.5    |    |  |   | — |    |  |   | — |    |
|                                                            |  | $           | (74.8  | )  |  | $      | (81.0  | )  |  | $      | (11.4   | )  |  | $      | (11.2   | )  |
|                                                                 |

Withrespect to the above accrued net periodic benefit costs, the Companyhas recorded a receivable from affiliates of $1.9  million and$1.3  million at December  31,  2005 and 2004,respectively, relating to Revlon Holdings' participation in theCompany's pension plans and $1.0  million and $1.1million at December  31,  2005 and 2004, respectively, forother post-retirement net periodic benefits costs attributable toRevlon Holdings.

F-31

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Where the accumulated benefit obligationexceeded the related fair value of plan assets, the projected benefitobligation, accumulated benefit obligation, and fair value of planassets for the Company's pension plans are asfollows:

|  | **** |
|--|------|

|                               |  |              |       |        |  |        |       |        |  |        |       |        |  |  |
|-------------------------------|--|--------------|-------|--------|--|--------|-------|--------|--|--------|-------|--------|--|--|
|                          |  | September30, |
|                          |  | 2005         |       | 2004   |  | 2003   |
| Projectedbenefit obligation   |  | $            | 586.5 |   |  | $      | 557.8 |   |  | $      | 518.2 |   |
| Accumulatedbenefit obligation |  |         | 567.6 |   |  |   | 541.0 |   |  |   | 502.4 |   |
| Fairvalue of plan assets      |  |         | 383.0 |   |  |   | 341.5 |   |  |   | 298.6 |   |
|                               |

Thecomponents of net periodic benefit cost for the plans are asfollows:

|                                     |  |                        |         |                                  |  |        |       |         |  |        |       |         |  |        |         |        |  |        |         |        |  |        |         |         |  |  |
|-------------------------------------|--|------------------------|---------|----------------------------------|--|--------|-------|---------|--|--------|-------|---------|--|--------|---------|--------|--|--------|---------|--------|--|--------|---------|---------|--|--|
|                                |  | PensionPlans           |         | OtherPost-retirementBenefitPlans |
|                                |  | YearsEnded December31, |
|                                |  | 2005                   |         | 2004                             |  | 2003   |       | 2005    |  | 2004   |       | 2003    |
| Servicecost                         |  | $                      | 9.6     |                             |  | $      | 9.9   |    |  | $      | 11.8  |    |  | $      | 0.1     |   |  | $      | 0.1     |   |  | $      | 0.3     |    |
| Interestcost                        |  |                   | 31.0    |                             |  |   | 30.6  |    |  |   | 29.2  |    |  |   | 0.9     |   |  |   | 0.8     |   |  |   | 1.0     |    |
| Expectedreturn on planassets        |  |                   | (28.3   | )                           |  |   | (24.7 | )  |  |   | (21.3 | )  |  |   | — |   |  |   | — |   |  |   | — |    |
| Amortizationof prior servicecost    |  |                   | (0.6    | )                           |  |   | (0.6  | )  |  |   | (0.8  | )  |  |   | — |   |  |   | — |   |  |   | — |    |
| Amortizationof net transitionasset  |  |                   | — |                             |  |   | (0.1  | )  |  |   | (0.1  | )  |  |   | — |   |  |   | — |   |  |   | — |    |
| Amortizationof actuarial loss(gain) |  |                   | 7.4     |                             |  |   | 9.6   |    |  |   | 9.5   |    |  |   | 0.1     |   |  |   | — |   |  |   | (0.1    | )  |
|                                |  |                   | 19.1    |                             |  |   | 24.7  |    |  |   | 28.3  |    |  |   | 1.1     |   |  |   | 0.9     |   |  |   | 1.2     |    |
| Portionallocated to RevlonHoldings  |  |                   | (0.1    | )                           |  |   | (0.1  | )  |  |   | (0.3  | )  |  |   | — |   |  |   | — |   |  |   | — |    |
|                                |  | $                      | 19.0    |                             |  | $      | 24.6  |    |  | $      | 28.0  |    |  | $      | 1.1     |   |  | $      | 0.9     |   |  | $      | 1.2     |    |
|                                     |

TheCompany recognized $3.3  million of income in 2004 related to areduction in the liability for an International post-retirement benefitarrangement whose terms were modified.

The followingweighted-average assumptions were used in accounting for both thebenefit obligations and net periodic benefit cost of the pensionplans:

|                                     |  |           |     |                    |  |        |      |         |  |        |     |         |  |        |     |         |  |        |     |         |  |        |     |         |  |  |
|-------------------------------------|--|-----------|-----|--------------------|--|--------|------|---------|--|--------|-----|---------|--|--------|-----|---------|--|--------|-----|---------|--|--------|-----|---------|--|--|
|                                |  | U.S.Plans |     | InternationalPlans |
|                                |  | 2005      |     | 2004               |  | 2003   |      | 2005    |  | 2004   |     | 2003    |
| Discountrate                        |  |      | 5.5 | %             |  |   | 5.75 | %  |  |   | 6.0 | %  |  |   | 5.0 | %  |  |   | 5.5 | %  |  |   | 5.4 | %  |
| Expectedreturn on planassets        |  |      | 8.5 |               |  |   | 8.5  |    |  |   | 8.8 |    |  |   | 6.7 |    |  |   | 7.0 |    |  |   | 7.1 |    |
| Rateof future compensationincreases |  |      | 4.0 |               |  |   | 4.0  |    |  |   | 4.0 |    |  |   | 3.7 |    |  |   | 3.7 |    |  |   | 3.6 |    |
|                                     |

The5.5% discount rate for the U.S. plans was derived by referenceto appropriate benchmark yields on high quality corporate bonds, withterms which approximate the duration of the benefit payments and therelevant benchmark bond indices considering the individualplan’s characteristics, such as Moody’s Aa Corporate BondIndex and the Citigroup Pension Discount Curve, to select a rate atwhich the Company believes the U.S. pension benefits could beeffectively settled. The discount rates for the Company’sprimary international plans were derived from similar local studies, inconjunction with local actuarial consultants and assetmanagers.

The Company considers a number of factors to determineits expected rate of return on plan assets assumption, including,without limitation, recent and historical performance of plan assets,asset allocation and other third-party studies and surveys. The Companyconsidered the plan portfolios' asset allocations over a varietyof time periods and compared them with third-party studies and reviewedperformance of the capital markets in recent years and other factorsand advice from various third parties, such as the pension plans'advisers, investment managers and actuaries. While the Companyconsidered recent performance and the historical performance of planassets over a ten-year period (from 1995 to 2005), the results of whichexceeded the Company’s expected rate of return, theCompany’s assumptions are based primarily on its estimates oflong-term, prospective rates of return. Using the aforementionedmethodologies, the Company selected the 8.5% return on assetsassumption used for the U.S pension 

F-32

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plans. Differences between actual andexpected asset returns are recognized in the net periodic benefit costover the remaining service period of the active participatingemployees.

The rate of future compensation increases is anassumption used by the actuarial consultants for pension accounting andis determined based on the Company’s current expectation forsuch increases.

The following table presents domestic andforeign pension plan assets information at September  30,2005, 2004 and2003:

|                         |  |           |       |                    |  |      |       |        |  |      |       |        |  |   |      |        |  |   |      |        |  |   |      |        |  |  |
|-------------------------|--|-----------|-------|--------------------|--|------|-------|--------|--|------|-------|--------|--|---|------|--------|--|---|------|--------|--|---|------|--------|--|--|
|                    |  | U.S.Plans |       | InternationalPlans |
|                    |  | 2005      |       | 2004               |  | 2003 |       | 2005   |  | 2004 |       | 2003   |
| Fairvalue of planassets |  | $         | 347.5 |               |  | $    | 308.9 |   |  | $    | 272.1 |   |  | $ | 35.5 |   |  | $ | 32.6 |   |  | $ | 26.5 |   |
|                         |

TheInvestment Committee for the Company's pension plans (the‘‘Investment Committee’’) has adopted (andrevises from time to time) an investment policy for the U.S. pensionplans intended to meet or exceed the expected rate of return on planassets assumption. In connection with this objective, the InvestmentCommittee retains professional investment managers that invest planassets in the following asset classes: equity and fixed incomesecurities, real estate, and cash and other investments, which mayinclude hedge funds and private equity and global balanced strategies.The International plans follow a similar methodology in conjunctionwith local actuarial consultants and asset managers.

The U.S.pension plans currently have the following target ranges for theseasset classes, which are reviewed quarterly and considered forreadjustment when an asset class weighting is outside of its targetrange (recognizing that these are flexible target ranges that may varyfrom time to time) with the goal of achieving the required return at areasonable risk level asfollows:

|                           |  |              |        |        |  |  |
|---------------------------|--|--------------|--------|--------|--|--|
|                      |  | TargetRanges |
| AssetCategory:            |  |         |   |   |
| Equitysecurities          |  | 37%- 47%     |
| Fixed incomesecurities    |  | 17% -25%     |
| Real estate               |  | 0% -8%       |
| Cash and otherinvestments |  | 8% -18%      |
| Global balancedstrategies |  | 15% - 25%    |
|                           |

TheU.S. pension plans weighted-average asset allocations atSeptember  30,  2005 and 2004 by asset categories were asfollows:

|                           |  |        |        |         |  |        |        |         |  |  |
|---------------------------|--|--------|--------|---------|--|--------|--------|---------|--|--|
|                      |  | 2005   |        | 2004    |
| AssetCategory:            |  |   |   |    |  |   |   |    |
| Equitysecurities          |  |   | 43.6   | %  |  |   | 45.7   | %  |
| Fixedincome securities    |  |   | 17.9   |    |  |   | 25.5   |    |
| Realestate                |  |   | 4.4    |    |  |   | 4.0    |    |
| Cash and otherinvestments |  |   | 13.7   |    |  |   | 8.2    |    |
| Globalbalancedstrategies  |  |   | 20.4   |    |  |   | 16.6   |    |
|                      |  |   | 100.0  | %  |  |   | 100.0  | %  |
|                           |

Withinthe equity securities asset class, the investment policy provides forinvestments in a broad range of publicly-traded securities ranging fromsmall to large capitalization stocks and U.S. and international stocks.Within the fixed income securities asset class, the investment policyprovides for investments in a broad range of publicly-traded debtsecurities ranging from U.S. Treasury issues, corporate debtsecurities, mortgages and asset-backed issues, as well as internationaldebt securities. Within the real estate asset class, the investmentpolicy provides for investment in a diversified commingled pool of realestate properties across the U.S. In the cash and other investmentsasset class, investments may be in cash and cash equivalents and otherinvestments, which may include hedge funds and private equity notcovered in the classes listed above, provided that such investments areapproved by the Investment Committee prior to their selection. Withinthe global balanced strategies, the investment policy provides forinvestments in a broad range of publicly traded stocks and bonds inboth U.S. and international markets as described in the asset classeslisted above. In addition, the global 

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balanced strategies can include commodities,provided that such investments are approved by the Investment Committeeprior to their selection.

The Investment Committee’sinvestment policy does not allow the use of derivatives for speculativepurposes, but such policy does allow its investment managers to usederivatives to reduce risk exposures or to replicate exposures of aparticular asset class.

Contributions:

TheCompany’s policy is to fund at least the minimum contributionsrequired to meet applicable federal employee benefit and local laws, orto directly pay benefit payments where appropriate. During 2006, theCompany expects to contribute approximately $31.6  million to itspension plans and $1.0  million to other post-retirement benefitplans.

Estimated Future Benefit Payments:

The followingbenefit payments, which reflect expected future service, asappropriate, are expected to bepaid:

|                  |  |                      |       |                     |  |        |     |        |  |  |
|------------------|--|----------------------|-------|---------------------|--|--------|-----|--------|--|--|
|             |  | TotalPensionBenefits |       | Total OtherBenefits |
| 2006             |  | $                    | 28.5  |                |  | $      | 1.1 |   |
| 2007             |  |                 | 29.9  |                |  |   | 1.2 |   |
| 2008             |  |                 | 31.9  |                |  |   | 1.2 |   |
| 2009             |  |                 | 33.3  |                |  |   | 1.2 |   |
| 2010             |  |                 | 35.0  |                |  |   | 1.2 |   |
| Years2011 to2015 |  |                 | 197.3 |                |  |   | 6.0 |   |
|                  |

|           |                               |
|-----------|-------------------------------|
| 13.  | STOCKCOMPENSATION PLAN   |

The Company applies APBOpinion No. 25 and its related interpretations in accounting for theStock Plan, its stock-based compensation plan. Under APB Opinion No.25, because the exercise price of employee stock options under theStock Plan equals the market price of the underlying stock on the dateof grant, no compensation cost has been recognized for the fiscalperiods ended December  31,  2005.

In June2004, the Stock Plan was amended and restated to, among other things,increase the number of shares available for grant and to reduce themaximum term of the option grants to 7 years. Awards may be granted toemployees and directors of Revlon, Inc., and its subsidiaries,including Products Corporation, for up to an aggregate of 40,650,000shares of Class A Common Stock, of which up to 5,935,000 shares may beissued as restricted stock. Non-qualified options granted under theStock Plan are granted at prices that equal or exceed the market valueof Class A Common Stock on the grant date and have a term of 7 years(option grants under the Stock Plan prior to June  4,  2004have a term of 10 years). Option grants vest over service periods thatrange from one to five years. Certain option grants contain provisionsthat allow for accelerated vesting if the Class A Common Stock closingprice equals or exceeds amounts ranging from $30.00 to $40.00 pershare. Additionally, certain employee stock option grants vest upon a‘‘change in control’’ as defined in therespective stock option agreements.

In August  2004,pursuant to a pre-existing contractual commitment, the Compensation andStock Plan Committee (the ‘‘CompensationCommittee’’) of Revlon, Inc.’s Board of Directorsgranted options to a former executive officer of the Company topurchase 825,000 shares of Class A Common Stock at $3.03 per share,vesting 25% on each December  31st thereafterand with a term of 7 years. The transaction was valued using theBlack-Scholes option-pricing model and the Company recognized$1.2  million in stock compensation expense related to thegrant.

Stock options:

At December31,  2005, 2004 and 2003 there were 15,972,389, 10,415,745 and3,792,196 stock options exercisable under the Stock Plan,respectively.

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A summary of the status of the Stock Planas of December  31,  2005, 2004 and 2003 and changes duringthe years then ended is presentedbelow:

|                                 |  |                     |          |                               |  |        |         |        |  |  |
|---------------------------------|--|---------------------|----------|-------------------------------|--|--------|---------|--------|--|--|
|                            |  | Shares(000’s) |          | Weighted AverageExercisePrice |
| Outstanding at January  1,2003  |  |                | 7,886.1  |                          |  | $      | 12.83   |   |
| Granted                         |  |                | 1,091.6  |                          |  |   | 3.00    |   |
| Exercised                       |  |                | —  |                          |  |   | — |   |
| Forfeited                       |  |                | (1,270.1 | )                        |  |   | 17.43   |   |
| Outstandingat December  31,2003 |  |                | 7,707.6  |                          |  |   | 10.66   |   |
| Granted                         |  |                | 24,517.4 |                          |  |   | 3.03    |   |
| Exercised                       |  |                | —  |                          |  |   | — |   |
| Forfeited                       |  |                | (1,443.3 | )                        |  |   | 9.01    |   |
| Outstandingat December  31,2004 |  |                | 30,781.7 |                          |  |   | 4.66    |   |
| Granted                         |  |                | 5,200.4  |                          |  |   | 2.56    |   |
| Exercised                       |  |                | (18.1    | )                        |  |   | 3.03    |   |
| Forfeited                       |  |                | (2,930.9 | )                        |  |   | 5.59    |   |
| Outstandingat December  31,2005 |  |                | 33,033.1 |                          |  |   | 4.25    |   |
|                                 |

Theweighted average grant date fair value of options granted during 2005,2004 and 2003 approximated $1.38, $2.08 and $2.03, respectively, andwere estimated using the Black-Scholes option valuation model with thefollowing weighted-average assumptions:

|                        |  |                         |  |           |  |           |  |  |  |  |  |  |  |  |
|------------------------|--|-------------------------|--|-----------|--|-----------|--|--|--|--|--|--|--|--|
|                   |  | YearEnded December  31, |
|                   |  | 2005                    |  | 2004      |  | 2003      |
| Expectedlife ofoption  |  | 4.75years               |  | 7.00years |  | 7.00years |
| Risk-free interestrate |  | 3.95%                   |  | 3.95%     |  | 3.72%     |
| Expectedvolatility     |  | 61%                     |  | 69%       |  | 70%       |
| Expecteddividendyield  |  | N/A                     |  | N/A       |  | N/A       |
|                        |

Thefollowing table summarizes information about the Stock Plan'soptions outstanding at December  31,2005:

|                                                                                                                                                            |  |                              |          |                               |  |                               |  |                               |  |                               |          |        |  |        |  |  |  |  |  |  |  |  |
|------------------------------------------------------------------------------------------------------------------------------------------------------------|--|------------------------------|----------|-------------------------------|--|-------------------------------|--|-------------------------------|--|-------------------------------|----------|--------|--|--------|--|--|--|--|--|--|--|--|
|                                                                                                                                                       |  | Outstanding                  |          | Exercisable                   |
| RangeofExercise Prices                                                                                                                                     |  | NumberofOptions(000’s) |          | WeightedAverageYearsRemaining |  | WeightedAverageExercise Price |  | Number ofOptions(000’s) |  | WeightedAverageExercise Price |
| $  2.31        to        $  3.78                       |  |                         | 29,536.0 |                          |  | 5.60                          |  | $2.99                         |  |                          | 12,977.5 |   |  | $3.12  |
|     3.82        to            6.88 |  |                         | 1,508.1  |                          |  | 5.87                          |  | 4.87                          |  |                          | 1,005.9  |   |  | 5.31   |
|     7.06        to          15.00            |  |                         | 1,115.5  |                          |  | 3.96                          |  | 10.28                         |  |                          | 1,115.5  |   |  | 10.28  |
|   18.50        to          50.00                       |  |                         | 873.5    |                          |  | 1.89                          |  | 38.14                         |  |                          | 873.5    |   |  | 38.14  |
|     2.31        to          50.00            |  |                         | 33,033.1 |                          |  |                          |  |                          |  |                          | 15,972.4 |   |  |   |
|                                                                                                                                                            |

Restricted stock awards: 

TheStock Plan also allows for awards of restricted stock to employees anddirectors of Revlon, Inc. and its subsidiaries, including ProductsCorporation. The restricted stock awards vest over service periods thatrange from three to five years. In 2005, 2004 and 2003, Revlon, Inc.granted 50,000, 4,495,000 and 200,000 shares, respectively, ofrestricted stock under the Stock Plan with weighted average fairvalues, based on the market price of Class A Common Stock on the datesof grant, of $3.13, $3.03 and $3.01, respectively. At December31,  2005 and 2004, there were 3,412,502 and 5,327,500 shares,respectively, of restricted stock outstanding and unvested under theStock Plan.

In 2002, Revlon, Inc. adopted the Revlon, Inc. 2002Supplemental Stock Plan (the ‘‘Supplemental StockPlan’’), the purpose of which was to provide Mr.Jack  Stahl, the Company's President and Chief

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Executive Officer, the sole eligibleparticipant, with inducement awards to entice him to join the Companyto enhance the Company's long-term performance and profitability.The Supplemental Stock Plan covers 530,000 shares of Class A CommonStock. All of the 530,000 shares were issued in the form of restrictedshares of Class A Common Stock to the Company’s President andChief Executive Officer in February  2002. The terms of theSupplemental Stock Plan and the foregoing grant of restricted shares tothe President and Chief Executive Officer are substantially the same asthe Stock Plan. Pursuant to the terms of the Supplemental Stock Plan,such grant was made conditioned upon his execution of theCompany's standard Employee Agreement as to Confidentiality andNon-Competition.

No dividends will be paid on unvested restrictedstock, provided, however, that in connection with the 2002 grants tothe Company's President and Chief Executive Officer, of 470,000shares of restricted stock under the Stock Plan and 530,000 shares ofrestricted stock under the Supplemental Stock Plan (of which 750,000shares of restricted stock remained unvested at December31,  2005), in the event any cash or in-kind distributions aremade in respect of Revlon, Inc.’s Common Stock (as hereinafterdefined) prior to the lapse of the restrictions on such shares, suchdividends will be held by the Company and paid to Mr.  Stahl whenand if such restrictions lapse.

The Company amortizes amountsrelated to restricted stock awards using the straight-line method overthe vesting period as compensation expense and recorded expense of$5.8  million, $5.2  million and $2.2  million during2005, 2004 and 2003, respectively, and deferred compensation of$6.5  million and $12.5  million at December31,  2005 and 2004, respectively, related to the restricted stockawards.

|           |                         |
|-----------|-------------------------|
| 14.  | COMPREHENSIVELOSS  |

The components of comprehensive loss during2005, 2004 and 2003 are asfollows:

|                               |  |                            |         |                         |  |                       |         |                                   |  |        |         |         |  |        |        |         |  |  |
|-------------------------------|--|----------------------------|---------|-------------------------|--|-----------------------|---------|-----------------------------------|--|--------|---------|---------|--|--------|--------|---------|--|--|
|                          |  | ForeignCurrencyTranslation |         | MinimumPensionLiability |  | Deferred Loss-Hedging |         | AccumulatedOtherComprehensiveLoss |
| Balance,January  1,2003       |  | $                          | (19.1   | )                  |  | $                     | (113.6  | )                            |  | $      | — |    |  | $      | (132.7 | )  |
| Unrealized(losses)            |  |                       | 10.6    |                    |  |                  | 1.5     |                              |  |   | (2.9    | )  |  |   | 9.2    |    |
| Reclassificationsinto netloss |  |                       | — |                    |  |                  | — |                              |  |   | 1.5     |    |  |   | 1.5    |    |
| Balance,December  31,2003     |  |                       | (8.5    | )                  |  |                  | (112.1  | )                            |  |   | (1.4    | )  |  |   | (122.0 | )  |
| Unrealizedgains(losses)       |  |                       | 0.6     |                    |  |                  | (1.6    | )                            |  |   | (2.8    | )  |  |   | (3.8   | )  |
| Reclassificationsinto netloss |  |                       | — |                    |  |                  | — |                              |  |   | 1.5     |    |  |   | 1.5    |    |
| BalanceDecember  31,2004      |  |                       | (7.9    | )                  |  |                  | (113.7  | )                            |  |   | (2.7    | )  |  |   | (124.3 | )  |
| Unrealizedgains(losses)       |  |                       | (6.9    | )                  |  |                  | 6.7     |                              |  |   | 0.2     |    |  |   | 1.5    |    |
| Reclassificationsinto netloss |  |                       | 0.4     |                    |  |                  | — |                              |  |   | 2.2     |    |  |   | 1.1    |    |
| BalanceDecember  31,2005      |  | $                          | (14.4   | )                  |  | $                     | (107.0  | )                            |  | $      | (0.3    | )  |  | $      | (121.7 | )  |
|                               |

|           |                                 |
|-----------|---------------------------------|
| 15.  | RELATEDPARTY TRANSACTIONS  |

As of December31,  2005, MacAndrews & Forbes beneficially owned shares ofRevlon, Inc.'s Common Stock having approximately 77% ofthe combined voting power of such outstanding shares. Revlon, Inc. inturn directly owns all 5,260 outstanding shares. As a result,MacAndrews & Forbes is able to elect the entire Board of Directorsof Revlon, Inc. and Products Corporation and control the vote on allmatters submitted to a vote of Revlon, Inc.'s and ProductsCorporation’s stockholders. MacAndrews & Forbes is whollyowned by Ronald O. Perelman, Chairman of Revlon, Inc.’s andProducts Corporation's Board of Directors.

TransferAgreements

In June  1992, Revlon, Inc. andProducts Corporation entered into an asset transfer agreement withRevlon Holdings LLC, a Delaware limited liability company and formerlya Delaware corporation known as Revlon Holdings Inc.(‘‘Revlon Holdings’’) and which is anaffiliate and an indirect wholly-owned 

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subsidiary of MacAndrews & Forbes andcertain of Revlon Holdings’ wholly-owned subsidiaries. Revlon,Inc. and Products Corporation also entered into a real property assettransfer agreement with Revlon Holdings. Pursuant to such agreements,on June  24,  1992 Revlon Holdings transferred assets toProducts Corporation and Products Corporation assumed all of theliabilities of Revlon Holdings, other than certain specificallyexcluded assets and liabilities (the liabilities excluded are referredto as the ‘‘Excluded Liabilities’’).Certain consumer products lines sold in demonstrator-assisteddistribution channels considered not integral to Revlon, Inc.'sbusiness and that historically had not been profitable and certainother assets and liabilities were retained by Revlon Holdings. RevlonHoldings agreed to indemnify Revlon, Inc. and Products Corporationagainst losses arising from the Excluded Liabilities, and Revlon, Inc.and Products Corporation agreed to indemnify Revlon Holdings againstlosses arising from the liabilities assumed by Products Corporation.The amounts reimbursed by Revlon Holdings to Products Corporation forthe Excluded Liabilities for 2005, 2004 and 2003 were $0.2million, $0.2  million and $0.3  million,respectively.

Reimbursement Agreements

Revlon, Inc.,Products Corporation and MacAndrews & Forbes Inc. (a wholly-ownedsubsidiary of MacAndrews & Forbes Holdings) have entered intoreimbursement agreements (the ‘‘ReimbursementAgreements’’) pursuant to which (i) MacAndrews &Forbes Inc. is obligated to provide (directly or through affiliates)certain professional and administrative services, including employees,to Revlon, Inc. and its subsidiaries, including Products Corporation,and purchase services from third party providers, such as insurance,legal and accounting services and air transportation services, onbehalf of Revlon, Inc. and its subsidiaries, including ProductsCorporation, to the extent requested by Products Corporation, and (ii)Products Corporation is obligated to provide certain professional andadministrative services, including employees, to MacAndrews &Forbes and purchase services from third party providers, such asinsurance and legal and accounting services, on behalf of MacAndrews& Forbes to the extent requested by MacAndrews & Forbes Inc.,provided that in each case the performance of such services does notcause an unreasonable burden to MacAndrews & Forbes or ProductsCorporation, as the case may be. Products Corporation reimbursesMacAndrews & Forbes for the allocable costs of the servicespurchased for or provided to Products Corporation and its subsidiariesand for reasonable out-of-pocket expenses incurred in connection withthe provision of such services. MacAndrews & Forbes Inc. (or suchaffiliates) reimburses Products Corporation for the allocable costs ofthe services purchased for or provided to MacAndrews & Forbes andfor the reasonable out-of-pocket expenses incurred in connection withthe purchase or provision of such services. Each of Revlon, Inc. andProducts Corporation, on the one hand, and MacAndrews & ForbesInc., on the other, has agreed to indemnify the other party for lossesarising out of the provision of services by it under the ReimbursementAgreements other than losses resulting from its willful misconduct orgross negligence. The Reimbursement Agreements may be terminated byeither party on 90 days' notice. Products Corporation does notintend to request services under the Reimbursement Agreements unlesstheir costs would be at least as favorable to Products Corporation ascould be obtained from unaffiliated third parties. Revlon, Inc. andProducts Corporation participate in MacAndrews & Forbes'directors and officers liability insurance program, which coversRevlon, Inc. and Products Corporation as well as MacAndrews &Forbes. The limits of coverage are available on an aggregate basis forlosses to any or all of the participating companies and theirrespective directors and officers. Revlon, Inc. and ProductsCorporation reimburse MacAndrews & Forbes from time to time fortheir allocable portion of the premiums for such coverage, which theCompany believes is more favorable than the premiums it would pay wereit to secure stand-alone coverage. The amounts paid by Revlon, Inc. andProducts Corporation to MacAndrews & Forbes for premiums isincluded in the amounts paid under the Reimbursement Agreements. Thenet amounts reimbursable from (payable to) MacAndrews & Forbes Inc.for the services provided under the Reimbursement Agreements for 2005,2004 and 2003, were $(3.7) million, $1.0  million and $(2.7)million, respectively.

Tax Sharing Agreements

As aresult of the closing of the Revlon Exchange Transactions, as of theend of March  25,  2004, Revlon, Inc., Products Corporationand their U.S. subsidiaries were no longer included in the

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MacAndrews & Forbes Group for federalincome tax purposes. See Note 11, ‘‘IncomeTaxes’’, for further discussion on these agreements andrelated transactions in 2005, 2004 and 2003.

2004 ConsolidatedMacAndrews & Forbes Line of Credit

For a description oftransactions in 2005 and 2004 with MacAndrews & Forbes inconnection with the 2004 loan agreements with MacAndrews & Forbes,see Note 9, ‘‘Long-TermDebt’’.

Refinancing Transactions

For adescription of transactions in 2005 and 2004 with MacAndrews &Forbes in connection with the Debt Reduction Transactions, the RevlonExchange Transactions and the 2004 Investment Agreement, see Note 9,‘‘Long-TermDebt’’.

Other

Pursuant to a lease datedApril  2,  1993 (the ‘‘EdisonLease’’), Revlon Holdings leased to Products Corporationthe Edison research and development facility for a term of up to 10years with an annual rent of $1.4  million and certain sharedoperating expenses payable by Products Corporation which, together withthe annual rent, were not to exceed $2.0  million per year. InAugust  1998, Revlon Holdings sold the Edison facility to anunrelated third party, which assumed substantially all liability forenvironmental claims and compliance costs relating to the Edisonfacility, and in connection with the sale Products Corporationterminated the Edison Lease and entered into a new lease with the newowner. Revlon Holdings agreed to indemnify Products Corporation throughSeptember  1,  2013 (the term of the new lease) to theextent that rent under the new lease exceeds rent that would have beenpayable under the terminated Edison Lease had it not been terminated.The net amounts reimbursed by Revlon Holdings to Products Corporationwith respect to the Edison facility for 2005, 2004 and 2003 were$0.3  million, $0.3  million and $1.1  million,respectively.

During 2005, 2004 and 2003, Products Corporationleased a small amount of space at certain facilities to MacAndrews& Forbes or its affiliates pursuant to occupancy agreements andleases, including space at Products Corporation's New Yorkheadquarters. The rent paid by MacAndrews & Forbes or itsaffiliates to Products Corporation for 2005, 2004 and 2003 was$0.2  million, $0.3  million and $0.3  million,respectively.

The 2004 Credit Agreement is, and prior to theredemption of all Products Corporation's outstanding 12%Senior Secured Notes in July and August  2004, the 12%Senior Secured Notes were, supported by, among other things, guarantiesfrom Revlon, Inc. and, subject to certain limited exceptions, all ofthe domestic subsidiaries of Products Corporation. The obligationsunder such guaranties are and were secured by, among other things, thecapital stock of Products Corporation and, subject to certain limitedexceptions, the capital stock of all of Products Corporation'sdomestic subsidiaries and 66% of the capital stock of ProductsCorporation's and its domestic subsidiaries' first-tierforeign subsidiaries. In connection with the Revlon ExchangeTransactions, on February  11,  2004, Revlon, Inc. enteredinto supplemental indentures pursuant to which it agreed to guaranteethe obligations of Products Corporation under the indentures governingProducts Corporation's 8 5/8% SeniorSubordinated Notes and, prior to their redemption in April  2005,Products Corporation’s 8 1/8% SeniorNotes and 9% Senior Notes.

In March  2002, prior tothe passage of the Sarbanes-Oxley Act of 2002, Products Corporationmade an advance of $1.8  million to Mr.  Stahl pursuant tohis employment agreement, which was entered into in February2002, for tax assistance related to a grant of restricted stockprovided to Mr.  Stahl pursuant to such agreement, which loanbears interest at the applicable federal rate. In May  2002,prior to the passage of the Sarbanes-Oxley Act of 2002, ProductsCorporation made an advance of $2.0  million to Mr.  Stahlpursuant to his employment agreement in connection with the purchase ofhis principal residence in the New York City metropolitan area, whichloan bears interest at the applicable federal rate. Mr.  Stahlrepaid $0.1  million, $0.1  million and $0.1  millionof such loan during 2005, 2004 and 2003, respectively. Pursuant to hisemployment agreement, Mr.  Stahl receives from ProductsCorporation additional compensation payable on a monthly basis equal tothe amount actually paid by him in respect 

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of interest and principal on such$2.0  million advance, which for 2005, 2004 and 2003 was$0.1  million, $0.1  million and $0.1  million,respectively. Products Corporation also pays Mr.  Stahl a grossup for any taxes payable by Mr.  Stahl as a result of suchadditional compensation, which tax gross up amount was $0.1million, $0.1  million and $0.1  million in 2005, 2004 and2003, respectively.

During 2000, prior to the passage of theSarbanes-Oxley Act of 2002, Products Corporation made an advance of$0.8  million to Mr.  Douglas  Greeff, theCompany's former Executive Vice President Strategic Finance,pursuant to his employment agreement, which loan bore interest at theapplicable federal rate and was payable in 5 equal annual installmentson each of May  9,  2001, 2002, 2003, 2004, and May9,  2005. Mr.  Greeff has fully repaid such loan, includinginstallments of $0.2  million, $0.2  million and$0.2  million during 2005, 2004 and 2003, respectively. Pursuantto his employment agreement, Mr.  Greeff was entitled to receivebonuses from Products Corporation, payable on each May  9thcommencing on May  9,  2001 and ending on May9,  2005, in each case equal to the sum of the principal andinterest on the advance repaid in respect of such year by Mr.Greeff, provided that he remained employed by Products Corporation oneach such May  9th, which bonus installments were paidto Mr.  Greeff. Pursuant to the terms of Mr.Greeff's separation agreement, as a result of the fact thatMr.  Greeff ceased employment in February  2005, Mr.Greeff repaid the remaining amount of the loan on or about May9,  2005 and Products Corporation paid the final bonusinstallment to Mr.  Greeff on or about May  12,2005.

During 2005, 2004 and 2003 Products Corporation madepayments of $0.6  million, $0.4  million and $0.3million, respectively, to Ms.  Ellen  Barkin under awritten agreement pursuant to which she provides voiceover services forcertain of the Company's advertisements, which payments werecompetitive with industry rates for similarly situatedtalent.

Products Corporation employed Mr.  Perelman'sdaughter in a marketing position through June  2004, withcompensation paid in each of 2004 and 2003 of less than $0.1million.

Products Corporation employed Mr.  Drapkin'sdaughter in a marketing position through June  2004, withcompensation paid in each of 2004 and 2003 of less than $0.1million.

During 2005 and 2004, Products Corporation paid$1.0  million and $1.0  million, respectively, to anationally-recognized security services company, in which MacAndrews& Forbes has a controlling interest, for security officer services.Products Corporation's decision to engage such firm was basedupon its expertise in the field of security services, and the rateswere competitive with industry rates for similarly situated securityfirms.

|           |                                    |
|-----------|------------------------------------|
| 16.  | COMMITMENTS ANDCONTINGENCIES  |

The Company currently leasesmanufacturing, executive, including research and development, and salesfacilities and various types of equipment under operating and capitallease agreements. Rental expense was $17.3  million, $19.4million and $27.2  million for the years ended December31,  2005, 2004 and 2003, respectively. Minimum rentalcommitments under all noncancelable leases, including those pertainingto idled facilities, with remaining lease terms in excess of one yearfrom December  31,  2005 aggregated $136.4  million.Such commitments for each of the five years and thereafter subsequentto December  31,  2005 are $17.9, $18.1, $16.5, $15.5,$14.2 and $54.2  million, respectively.

The Company andits subsidiaries are defendants in litigation and proceedings involvingvarious matters. In the opinion of the Company's management,based upon advice of its counsel handling such litigation andproceedings, adverse outcomes, if any, will not result in a materialeffect on the Company's consolidated financial condition orresults of operations. The Company is involved in various routine legalproceedings incident to the ordinary course of its business. TheCompany believes that the outcome of all pending legal proceedings inthe aggregate is unlikely to have a material adverse effect on thebusiness or consolidated financial condition of the Company.

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|           |                                                  |
|-----------|--------------------------------------------------|
| 17.  | QUARTERLYRESULTS OF OPERATIONS (UNAUDITED)  |

The followingis a summary of the unaudited quarterly results ofoperations:

|                     |  |                             |       |             |  |            |       |             |  |        |       |         |  |        |       |        |  |  |
|---------------------|--|-----------------------------|-------|-------------|--|------------|-------|-------------|--|--------|-------|---------|--|--------|-------|--------|--|--|
|                |  | YearEnded December  31,2005 |
|                |  | 1stQuarter                  |       | 2nd Quarter |  | 3rdQuarter |       | 4th Quarter |
| Netsales            |  | $                           | 300.9 |        |  | $          | 318.3 |        |  | $      | 275.3 |    |  | $      | 437.8 |   |
| Grossprofit         |  |                        | 186.7 |        |  |       | 199.4 |        |  |   | 158.3 |    |  |   | 279.8 |   |
| Net(loss) income(a) |  |                        | (46.9 | )      |  |       | (36.0 | )      |  |   | (61.6 | )  |  |   | 66.7  |   |
|                |  | YearEnded December  31,2004 |
|                |  | 1stQuarter                  |       | 2nd Quarter |  | 3rdQuarter |       | 4th Quarter |
| Netsales            |  | $                           | 308.4 |        |  | $          | 316.1 |        |  | $      | 294.4 |    |  | $      | 378.3 |   |
| Grossprofit         |  |                        | 191.3 |        |  |       | 197.7 |        |  |   | 176.5 |    |  |   | 246.4 |   |
| Net(loss) income(b) |  |                        | (58.3 | )      |  |       | (38.9 | )      |  |   | (91.8 | )  |  |   | 46.2  |   |
|                     |

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

|  |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|--|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (a) | During2005, primarily in the third and fourth quarters, the Company recordedupfront launch costs of approximately $62  million associatedwith the launch of its brand initiatives. In addition, primarily duringthe first and second quarters of 2005, the Company recorded anaggregate $9.0  million loss on early extinguishment of debt,which includes a $5.0  million prepayment fee related to theprepayment of $100.0  million of indebtedness outstanding underthe Term Loan Facility of the 2004 Credit Agreement with a portion ofthe proceeds from the issuance of the Original91⁄2% Senior Notes, the loss on the redemptionof Products Corporation’s 8 1/8% SeniorNotes and 9% Senior Notes of $1.5  million in theaggregate, as well as the write-off of the portion of deferredfinancing costs related to such prepaidamount. |

|  |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|--|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (b) | During2004, primarily in the first and third quarters, the Company incurred$90.7  million in losses on the early extinguishment of debtconsisting of the loss on exchange for equity of certain indebtednessin the Revlon Exchange Transactions and fees, expenses, premiums andthe write-off of deferred financing costs related to the RevlonExchange Transactions, the tender for and redemption of the 12%Senior Secured Notes and the repayment of the 2001 CreditAgreement. |

|           |                                                  |
|-----------|--------------------------------------------------|
| 18.  | GEOGRAPHIC,FINANCIAL AND OTHER INFORMATION  |

The Companymanages its business on the basis of one reportable operating segment.See Note 1, ‘‘Summary of Significant AccountingPolicies’’, for a brief description of theCompany's business. As of December  31,  2005, theCompany had operations established in 16 countries outside of the U.S.and its products are sold throughout the world. The Company'sresults of operations and the value of its foreign assets andliabilities may be adversely affected by, among other things, weakeconomic conditions, political uncertainties, military actions,terrorist activities, adverse currency fluctuations, competitiveactivities, retailer inventory management and changes in consumerpurchasing habits, including with respect to shopping channels. Netsales by geographic area are presented by attributing revenues fromexternal customers on the basis of where the products are sold. During2005, 2004 and 2003, Wal-Mart and its affiliates worldwide accountedfor approximately 24.0%, 21.0% and 20.6%,respectively, of the Company's net sales. The Company expectsthat Wal-Mart and a small number of other customers will, in theaggregate, continue to account for a large portion of theCompany's net sales. As is customary in the consumer productsindustry, none of the Company’s customers is under an obligationto continue purchasing products from the Company in the future.Although the loss of Wal-Mart or one or more of the Company'sother customers that may account for a significant portion of theCompany's sales, or any significant decrease in sales to thesecustomers or any significant decrease in retail display space in any ofthese customers' stores, could have a material adverse effect onthe Company's business, financial condition or results ofoperations, the Company has no reason to believe that any such loss ofcustomer or decrease in sales will occur.

F-40

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|                                  |  |                       |         |        |  |        |         |        |  |        |         |        |  |  |
|----------------------------------|--|-----------------------|---------|--------|--|--------|---------|--------|--|--------|---------|--------|--|--|
|                             |  | YearEnded December31, |
|                             |  | 2005                  |         | 2004   |  | 2003   |
| **Geographicarea:**              |  |                  |    |   |  |   |    |   |  |   |    |   |
| Netsales:                        |  |                  |    |   |  |   |    |   |  |   |    |   |
| UnitedStates                     |  | $                     | 788.3   |   |  | $      | 792.7   |   |  | $      | 837.0   |   |
| Canada                           |  |                  | 68.8    |   |  |   | 63.0    |   |  |   | 53.6    |   |
| UnitedStates andCanada           |  |                  | 857.1   |   |  |   | 855.7   |   |  |   | 890.6   |   |
| International                    |  |                  | 475.2   |   |  |   | 441.5   |   |  |   | 408.7   |   |
|                             |  | $                     | 1,332.3 |   |  | $      | 1,297.2 |   |  | $      | 1,299.3 |   |
|                             |  | December31,           |
|                             |  | 2005                  |         | 2004   |  | 2003   |
| Long-livedassets —net:     |  |                  |    |   |  |   |    |   |  |   |    |   |
| UnitedStates                     |  | $                     | 366.9   |   |  | $      | 371.3   |   |  | $      | 378.7   |   |
| Canada                           |  |                  | 3.8     |   |  |   | 4.2     |   |  |   | 3.9     |   |
| UnitedStates andCanada           |  |                  | 370.7   |   |  |   | 375.5   |   |  |   | 382.6   |   |
| International                    |  |                  | 81.0    |   |  |   | 79.2    |   |  |   | 79.8    |   |
|                             |  | $                     | 451.7   |   |  | $      | 454.7   |   |  | $      | 462.4   |   |
|                             |  | YearEnded December31, |
|                             |  | 2005                  |         | 2004   |  | 2003   |
| Classesof similarproducts:       |  |                  |    |   |  |   |    |   |  |   |    |   |
| Netsales:                        |  |                  |    |   |  |   |    |   |  |   |    |   |
| Cosmetics,skincare andfragrances |  | $                     | 904.3   |   |  | $      | 874.7   |   |  | $      | 872.4   |   |
| Personalcare                     |  |                  | 428.0   |   |  |   | 422.5   |   |  |   | 426.9   |   |
|                             |  | $                     | 1,332.3 |   |  | $      | 1,297.2 |   |  | $      | 1,299.3 |   |
|                                  |

|           |                         |
|-----------|-------------------------|
| 19.  | SUBSEQUENTEVENTS   |

In February  2006, Revlon, Inc.announced that it had launched and plans to complete in March2006, a $110  million rights offering that would allowstockholders to purchase additional shares of Class A Common Stock.Pursuant to the rights offering, Revlon, Inc. distributed, at nocharge, one transferable subscription right for each share of Class ACommon Stock and Revlon, Inc.’s Class B common stock, with a parvalue of $0.01 per share (together with the Class A Common Stock, the‘‘Common Stock’’) held by each stockholderof record as of 5:00 p.m. Eastern Standard Time on February13,  2006, the record date for the rights offering. Eachsubscription right entitles the holder of such right to purchase 0.1057shares of Class A Common Stock. As there will be no fractional sharesissued, a rights holder will need to hold at least ten subscriptionrights to acquire one share of Class A Common Stock in the rightsoffering. The subscription price for each share of Class A Common Stockis $2.80 per share, which subscription price was recommended by acommittee of Revlon, Inc.'s Board of Directors composed solely ofindependent directors within the meaning of Section 303A.02 of the NYSEListed Company Manual and the Board's Guidelines for AssessingDirector Independence and ratified and confirmed by the Board ofDirectors (with Messrs. Perelman, Gittis and Drapkin recusingthemselves as they are officers of MacAndrews & Forbes).

Under an over-subscription privilege, each rights holder thatexercises its basic subscription privilege in full may also subscribein the rights offering for additional shares of Class A Common Stock atthe same subscription price of $2.80 per share, to the extent thatother rights holders do not exercise their subscription rights in full.If a sufficient number of shares are not available to fully satisfy theover-subscription privilege requests, the available shares will be soldpro-rata among subscription rights holders who exercised theirover-subscription privilege, based on the number of shares eachsubscription rights holder subscribed for under the basic subscriptionprivilege.

F-41

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MacAndrews & Forbes has agreed not toexercise its basic subscription privilege. Instead pursuant to a StockPurchase Agreement between MacAndrews & Forbes and Revlon, Inc.,MacAndrews & Forbes has agreed to purchase at the same $2.80subscription price, in a private placement directly from Revlon, Inc.,the shares of Class A Common Stock that it would otherwise have beenentitled to subscribe for pursuant to its basic subscription privilegein the rights offering (equal to approximately 60% of the sharesavailable for purchase in the rights offering, or approximately$66  million). MacAndrews & Forbes also agreed not toexercise its over-subscription privilege in the rights offering, whichwill maximize the shares available for purchase by other stockholderspursuant to their over-subscription privileges.

If any shares inthe rights offering remain following the exercise of the basicsubscription privilege and the over-subscription privilege by rightsholders other than MacAndrews & Forbes, MacAndrews & Forbeswill back-stop the rights offering by purchasing at the same $2.80subscription price, also in a private placement directly from Revlon,Inc., the remaining shares of Class A Common Stock offered but notpurchased by other rights holders. As a result of this back-stop,Revlon, Inc. is assured of raising $110  million in grossproceeds through a combination of the rights offering and the sale ofshares, in a private placement and, if necessary, the back-stop, toMacAndrews & Forbes.

Revlon, Inc. expects to transfer theproceeds from the rights offering to Products Corporation which itwould use, together with available cash, to redeem approximately$110  million aggregate principal amount of ProductsCorporation's 8 5/8% Senior SubordinatedNotes, in satisfaction of the applicable requirements under ProductsCorporation's 2004 Credit Agreement.

Revlon, Inc. alsoannounced in February  2006 that it intends to conduct a further$75  million equity issuance through an underwritten publicoffering by June  30,  2006. In connection with suchfurther equity issuance, Revlon, Inc. also announced in February2006 that it had entered into an amendment to its 2004 InvestmentAgreement with MacAndrews & Forbes, which extends MacAndrews &Forbes’ back-stop of Revlon, Inc.’s planned $75million equity issuance from March  31,  2006 untilJune  30,  2006 to, among other things, provide Revlon,Inc. with sufficient time to complete, following the rights offering,an underwritten public offering of its Class A Common Stock, theproceeds of which would be transferred by Revlon, Inc. to ProductsCorporation to be available for general corporate purposes. Revlon,Inc. also announced that Products Corporation had entered into anamendment to its 2004 Consolidated MacAndrews & Forbes Line ofCredit extending the term of such agreement until the consummation ofRevlon, Inc.’s planned $75  million equity issuance.

Also in February  2006, Revlon, Inc. separately announced anorganizational realignment largely involving the consolidation ofcertain functions within its sales, marketing and creative groups, aswell as certain headquarters functions, which changes are designed tostreamline internal processes, enabling the Company to continue to bemore effective and efficient in meeting the needs of its consumers andretail customers. The Company indicated that it expects to take acharge in 2006 of approximately $10  million to cover severanceand other expenses associated with the organizational realignment, withthe vast majority of the charge to impact results in the first quarterof 2006. The Company estimates significant ongoing annualized savingsassociated with the organizational realignment.

Revlon, Inc. alsoannounced in February  2006 that Products Corporation had enteredinto an amendment to its 2004 Credit Agreement which enables ProductsCorporation to exclude, from various financial covenants, certaincharges in connection with the aforementioned organizationalrealignment, as well as some start-up investment charges incurred bythe Company in 2005 related to the launch of its new **VitalRadiance** brand and the re-launch of **Almay**. Specifically,such amendment provides for the add-back to the definition of‘‘EBITDA’’ the lesser of (i) $50million; or (ii) the cumulative one-time charges associated with (a)the aforementioned organizational realignment; and (b) thenon-recurring costs in the third and fourth quarters of 2005 associatedwith the launch of the Company's new **Vital Radiance** brandand the re-launch of **Almay**. Under the 2004 Credit Agreement,such definition is used in the determination of ProductsCorporation's senior secured leverage ratio (the ratio ofProducts Corporation’s Senior Secured Debt to EBITDA, as eachsuch term is defined in the 2004 Credit Agreement) and the consolidatedfixed charge coverage ratio (the ratio of Products Corporation’sEBITDA minus Capital Expenditures to Cash Interest Expense for suchperiod, as each such term is defined in the 2004 CreditAgreement).

F-42

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**ScheduleII**

REVLON CONSUMER PRODUCTS CORPORATION ANDSUBSIDIARIESVALUATION AND QUALIFYING ACCOUNTSYears EndedDecember  31,  2005, 2004 and 2003(dollars inmillions)

|                                                |  |                        |        |                           |  |                 |        |                     |  |        |        |           |  |        |        |        |  |  |
|------------------------------------------------|--|------------------------|--------|---------------------------|--|-----------------|--------|---------------------|--|--------|--------|-----------|--|--------|--------|--------|--|--|
|                                           |  | BalanceatBeginningYear |        | Charged toCostandExpenses |  | OtherDeductions |        | Balance atEndofYear |
| **Yearended December 31,2005:**                |  |                   |   |                      |  |            |   |                |  |   |   |      |  |   |   |   |
| Appliedagainst assetaccounts:                  |  |                   |   |                      |  |            |   |                |  |   |   |      |  |   |   |   |
| Allowancefor doubtfulaccounts                  |  | $                      | 5.6    |                      |  | $               | 0.6    |                |  | $      | (1.1)  | (1)  |  | $      | 5.1    |   |
| Allowancefor volume and early paymentdiscounts |  | $                      | 13.4   |                      |  | $               | 49.6   |                |  | $      | (49.2) | (2)  |  | $      | 13.8   |   |
| **Yearended December  31,2004:**               |  |                   |   |                      |  |            |   |                |  |   |   |      |  |   |   |   |
| Appliedagainst assetaccounts:                  |  |                   |   |                      |  |            |   |                |  |   |   |      |  |   |   |   |
| Allowancefor doubtfulaccounts                  |  | $                      | 7.7    |                      |  | $               | (1.6   | )              |  | $      | (0.5)  | (1)  |  | $      | 5.6    |   |
| Allowancefor volume and early paymentdiscounts |  | $                      | 11.7   |                      |  | $               | 47.4   |                |  | $      | (45.7) | (2)  |  | $      | 13.4   |   |
| **Yearended December  31,2003:**               |  |                   |   |                      |  |            |   |                |  |   |   |      |  |   |   |   |
| Appliedagainst assetaccounts:                  |  |                   |   |                      |  |            |   |                |  |   |   |      |  |   |   |   |
| Allowancefor doubtfulaccounts                  |  | $                      | 15.8   |                      |  | $               | 3.2    |                |  | $      | (11.3) | (1)  |  | $      | 7.7    |   |
| Allowancefor volume and early paymentdiscounts |  | $                      | 8.2    |                      |  | $               | 40.4   |                |  | $      | (36.9) | (2)  |  | $      | 11.7   |   |
|                                                |

|  |
|--|
|  |  |
|  |

Notes:

|     |                                                                                                              |
|-----|--------------------------------------------------------------------------------------------------------------|
| (1) | Doubtfulaccounts written off, less recoveries, reclassifications and foreigncurrency translationadjustments. |

|     |                                                                                |
|-----|--------------------------------------------------------------------------------|
| (2) | Discountstaken, reclassifications and foreign currency translationadjustments. |

F-43

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SIGNATURES

Pursuantto the requirements of Section 13 or 15(d) of the Securities ExchangeAct of 1934, the Registrant has duly caused this report to be signed onits behalf by the undersigned, thereunto dulyauthorized.

Revlon Consumer ProductsCorporation(Registrant)

|                                                              |  |                                                                      |  |                                                                   |  |  |  |  |  |  |
|--------------------------------------------------------------|--|----------------------------------------------------------------------|--|-------------------------------------------------------------------|--|--|--|--|--|--|
| By:   /s/Jack L. Stahl                        |  | By:   /s/ Thomas E.McGuire                            |  | By:   /s/ John F. Matsen,Jr.                       |
| Jack L. Stahl President, ChiefExecutive Officer and Director |  | Thomas E. McGuireExecutive Vice President and Chief FinancialOfficer |  | John F. Matsen, Jr. Senior Vice President andCorporate Controller |
|                                                              |

Dated: March 2,2006

Pursuant to the requirements of the SecuritiesExchange Act of 1934, this report has been signed by the followingpersons on behalf of the Registrant on March 2, 2006 and in thecapacitiesindicated.

|                                                        |  |                                                |  |  |  |  |
|--------------------------------------------------------|--|------------------------------------------------|--|--|--|--|
| Signature                                              |  | Title                                          |
| *________________________(RonaldO.Perelman)            |  | Chairmanof the Board andDirector               |
| *________________________(BarryF.Schwartz)             |  | Director                                       |
| *________________________(DonaldG. Drapkin)            |  | Director                                       |
| /s/ Jack L.Stahl________________________(Jack L.Stahl) |  | President, Chief Executive Officer andDirector |
| *________________________(AlanS.Bernikow)              |  | Director                                       |
| *________________________(EdwardJ. Landau)             |  | Director                                       |
|                                                        |

|   |                                                                                                                                                                                                                                                                                      |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| * | RobertK. Kretzman, by signing his name hereto, does hereby sign this reporton behalf of the directors of the registrant above whose typed namesasterisks appear, pursuant to powers of attorney duly executed by suchdirectors and filed with the Securities and ExchangeCommission. |

By: /s/ Robert K.Kretzman

|  |
|--|
|  |  |
|  |

Robert K.Kretzman Attorney-in-fact

----