Revlon Reports Second Quarter and Six Months 2005 Results; Company Also Announces Strategic Growth Initiatives and Provides Outlook for 2005 and Beyond

Revlon, Inc. (NYSE: REV) today announced results for thesecond quarter and six months ended June 30, 2005. For the quarter,net sales advanced approximately 1% versus year-ago to $318 million,and Adjusted EBITDA(1) advanced approximately 2% to $24 million. Netloss in the quarter narrowed slightly to $36 million, or $0.10 perdiluted share, compared with a net loss of $39 million, or $0.11 perdiluted share, in the second quarter of 2004. The Company alsoannounced today two strategic growth initiatives, designed tosignificantly accelerate top-line growth and further build theCompany's position in the mass-market color cosmetics category.

Commenting on the results of the quarter, Revlon President andChief Executive Officer Jack Stahl stated, "We are very pleased withour results in the second quarter and the progress we continue to maketo strengthen our brands, our relationships with our retail partners,and our organization."

The Company indicated that one of the initiatives, focused on theAlmay brand, is designed to capitalize on unmet consumer needs forsimplicity and healthy beauty and builds on the inherent strengths ofthe Almay brand and the dramatic success achieved this year with theAlmay Intense i-Color Collection. "We have listened to our consumersand have developed a completely new experience for the Almay consumerthat addresses her busy lifestyle, need for simplicity, and desire forpersonalization," stated Stephanie Peponis, Executive Vice Presidentand Chief Marketing Officer at Revlon. The second initiative isfocused on the more mature cosmetics consumer segment, which is alarge and growing demographic group currently underserved by existingcosmetics offerings. "We have developed a full range of productsspecifically for this important group of women, who have told us thattheir current products no longer work for them. To address this, weare introducing the ideal cosmetics system, products and shades forher changing skin," continued Ms. Peponis.

Mr. Stahl continued, "I am delighted with the strong indicationsof support we are receiving on these initiatives from our retailpartners, and I believe the announcements today underscore our focuson growth. At the same time, we are also very focused on reducing ourcosts and executing against our previously-disclosed operating marginobjective. We believe that our strong top-line outlook, coupled withour operating margin potential, positions us well to achieve ourobjective of long-term profitable growth and value creation."

Commenting specifically on the Company's outlook for 2005 andbeyond, Mr. Stahl stated, "For 2005, we expect that these initiativeswill have a very positive impact on our revenues, while not having ameaningful positive or negative impact on Adjusted EBITDA. As itrelates to 2006, we expect strong top-line performance and relatedsignificant investment spending behind the new initiatives, resultingin our expecting solid Adjusted EBITDA growth for the year. Based onthe progress we have made over the past several years and our plansgoing forward, we expect our earnings momentum to accelerate beyond2006, fueled by both our growing top line and our operating marginimprovement opportunities."

Revlon will host a conference call with members of the investmentcommunity on August 4, 2005 at 10:00 AM EDT to discuss theannouncements made today. Access to the call is available to thepublic at www.revloninc.com, in the Investor Relations section, underEvents Calendar. A copy of the press release and additionalinformation related to the call will be available in the InvestorRelations section of the Company's website, under Press Releases andFinancial Reports, respectively.

Second Quarter Results

Net sales in the second quarter of 2005 advanced approximately 1%to $318.3 million, compared with net sales of $316.1 million in thesecond quarter of 2004. Excluding the impact of favorable foreigncurrency translation, net sales in the quarter were down approximately1%.

In North America(2), net sales declined 4% to $198.3 million,versus $206.8 million in the second quarter of 2004. This performanceprimarily reflected lower licensing revenues stemming from a $5million prepayment of minimum royalties from a licensee that benefitedthe second quarter of 2004. Also impacting the comparison were lowershipments of base products, partially offset by strength of newproducts and a reduction in returns and allowances.

In International, net sales grew 10% to $120.0 million, versus$109.3 million in the second quarter of 2004. This performancereflected growth in each of the Company's international regions, aswell as the benefit of favorable foreign currency translation.Excluding the favorable impact of foreign currency translation,International net sales advanced approximately 5% versus year-ago.

The Company narrowed its operating loss in the quarter to $0.3million, versus an operating loss of $1.8 million in the secondquarter of 2004. This improvement largely reflected the growth in netsales and lower brand support, partially offset by the impact of theaforementioned licensing benefit in the year-ago period and highergeneral and administrative expenses, including upfront developmentcosts associated with the initiatives.

Adjusted EBITDA in the second quarter advanced 2% to $24.2million, compared with Adjusted EBITDA of $23.7 million in the secondquarter of 2004. This performance was driven by largely the samefactors as those that impacted the operating income comparison.Adjusted EBITDA is a non-GAAP measure that is defined in the footnotesof this release and which is reconciled to net income/(loss), the mostdirectly comparable GAAP measure, in the accompanying financialtables.

Net loss in the second quarter was $35.8 million, or $0.10 perdiluted share, compared with a net loss of $38.9 million, or $0.11 perdiluted share, in the second quarter of 2004. Cash flow used foroperating activities in the second quarter of 2005 was $39.2 million,compared with cash flow used for operating activities of $64.5 millionin the second quarter of 2004.

In terms of U.S. marketplace performance, according toACNielsen(3), the color cosmetics category for the quarter advanced2.8% versus the same period last year. For the first six months of2005, the category advanced 2.2% versus year-ago. Combined share forthe Revlon and Almay brands advanced 0.5 share points versus year-agoto 22.3% in the second quarter. The Revlon brand registered a share of15.7% for the quarter, compared with 16.0% in the second quarter of2004, while the Almay brand advanced to 6.6% for the quarter, comparedwith 5.7% in the year-ago period. For the first six months, combinedmarket share advanced 0.2 share points versus year-ago to 22.2%.Revlon brand share for the six months was 15.7%, versus 16.1% in thefirst six months of 2004, while Almay share was 6.5%, versus 5.8% inthe year-ago period.

In other categories, the Company gained market share in thequarter and six months in hair color and beauty tools, while marketshare was essentially even for anti-perspirants/deodorants.

Six-Month Results

For the first six months of 2005, net sales declined approximately1% to $619.2 million, compared with net sales of $624.5 million in thesame period last year.

In North America, net sales of $392.5 million for the first sixmonths were down approximately 5% versus net sales of $412.7 millionin the same period last year. In International, net sales of $226.7million advanced 7% in the first six months of 2005, versus net salesof $211.8 million in the year-ago period. Excluding the favorableimpact of foreign currency translation, International net sales forthe six-month period grew 3% versus year-ago.

For the first six months of 2005, the Company generated anoperating loss of $2.4 million, versus operating income of $18.3million in the first six months of 2004. Adjusted EBITDA in the firstsix months of 2005 was $45.9 million, compared with Adjusted EBITDA of$68.2 million in the first six months of 2004.

Net loss was $82.6 million, or $0.22 per diluted share, in thefirst six months of 2005, compared with a net loss of $97.1 million,or $0.42 per diluted share, in the first six months of 2004. Cash flowused for operating activities in the first six months of 2005 was$46.8 million, compared with cash flow used for operating activitiesof $100.1 million in the first six months of 2004.

More Detailed Outlook

The Company indicated that the positive net sales impactanticipated from the initiatives in 2005 is approximately $50 million,which includes an estimated $40 million to $50 million of incrementalreturns provisions associated with the launch. The Company expectsthat the combined incremental net sales potential of the twoinitiatives for the full year of 2006 could be well in excess ofdouble the benefit that it expects to realize in 2005.

For 2005, the positive net sales impact of the initiatives isexpected to be essentially offset by accelerated amortization,currently estimated to be approximately $10 million to $15 million,associated with certain retail display fixtures, as well as variousupfront expenses related to the launch, including development andmarketing-related expenses. As previously indicated, the Companyexpects that the initiatives will not have a meaningful positive ornegative impact to Adjusted EBITDA for the year.

The Company expects its performance in the third quarter of 2005to include the impact of much of the anticipated incremental provisionfor returns, while performance in the fourth quarter would benefitfrom the incremental shipments associated with the launch. Given themagnitude of the initiatives, the Company also expects the firstquarter of 2006 to benefit from incremental initial shipmentsassociated with the launch.

From a cash flow perspective and assuming the initiatives beginshipping in the fourth quarter of 2005 as planned, working capital isexpected to increase during the second half of the year and return tomore normalized levels in relation to sales during the second quarterof 2006. In addition, the Company expects to increase its investmentin permanent displays in 2005 and 2006, in order to execute theinitiatives.

In connection with the initiatives, the Company indicated that itintends to increase to $185 million its previously announcedcommitment to issue $110 million of equity by March 31, 2006. TheCompany reiterated its commitment to use the proceeds of $110 millionof the equity offering to reduce debt, with the balance available forgeneral corporate purposes. The Company also announced that it intendsto conduct a proposed debt financing to raise approximately $75million in the third quarter of 2005, to help fund investments in theinitiatives.

To the extent that the equity issuance is less than $185 million,MacAndrews & Forbes, the Company's principal shareholder, has agreedto back-stop the issuance by purchasing such additional equity asnecessary to ensure that the Company raises the full $185 million.MacAndrews & Forbes has also agreed to extend the term of theCompany's existing line of credit, which has current availability of$87 million, through the planned equity issuance to be consummated byMarch 31, 2006.

About Revlon

Revlon is a worldwide cosmetics, skin care, fragrance, andpersonal care products company. The Company's vision is to deliver thepromise of beauty through creating and developing the most consumerpreferred brands. Websites featuring current product and promotionalinformation can be reached at www.revlon.com and www.almay.com.Corporate and investor relations information can be accessed atwww.revloninc.com. The Company's brands, which are sold worldwide,include Revlon(R), Almay(R), Ultima(R), Charlie(R), Flex(R), andMitchum(R).

Footnotes to Press Release

(1)Adjusted EBITDA is defined as net earnings before interest,taxes, depreciation, amortization, gains/losses on foreign currencytransactions, gains/losses on the sale of assets, gains/losses on theearly extinguishment of debt, and miscellaneous expenses. AdjustedEBITDA is a non-GAAP financial measure that is reconciled to netincome/(loss), its most directly comparable GAAP measure, in theaccompanying financial tables. The Company believes that AdjustedEBITDA is a financial metric that can assist the Company and investorsin assessing its financial operating performance and underlyingstrength of its business, excluding the effects of certain factors,including gains/losses on foreign currency transactions, gains/losseson the sale of assets, gains/losses on the early extinguishment ofdebt, and miscellaneous expenses. Finally, EBITDA is defineddifferently for our credit agreement.

(2)North America includes the United States and Canada.

(3)All market share and consumption data is U.S. mass-marketdollar volume according to ACNielsen (an independent research entity).ACNielsen data is an aggregate of the drug channel, Kmart, Target andFood and Combo stores, and excludes Wal-Mart and regional mass volumeretailers. This data represents approximately two-thirds of theCompany's U.S. mass-market Dollar volume.

Forward-Looking Statements

Statements made in this press release which are not historicalfacts, including statements about the Company's plans, strategies,beliefs and expectations, are forward-looking and subject to the safeharbor provisions of the Private Securities Litigation Reform Act of1995. Forward-looking statements speak only as of the date they aremade, and, except for the Company's ongoing obligations under the U.S.federal securities laws, the Company undertakes no obligation topublicly update any forward-looking statement, whether as a result ofnew information, future events or otherwise. Such forward-lookingstatements include, without limitation, the Company's expectations,plans and/or beliefs: (i) concerning its growth outlook, includingthat the two strategic growth initiatives will significantlyaccelerate the Company's top-line growth and further build theCompany's position in the mass-market color cosmetics category andthat the Company is positioned well to achieve its objective oflong-term profitable growth and value creation; (ii) that it hasstrong support for these initiatives from its retail partners; (iii)that it will reduce its costs and execute against itspreviously-disclosed operating margin objective; (iv) that thepositive net sales impact in 2005 from the two strategic initiativeswill be approximately $50 million, that it will have an estimated $40million to $50 million of incremental returns provisions associatedwith the launch (much of which will impact the third quarter of 2005),that accelerated amortization of existing displays will beapproximately $10 million to $15 million and that these initiativeswill not have a meaningful positive or negative impact to theCompany's Adjusted EBITDA for 2005; (v) that the first quarter of 2006will benefit from incremental initial shipments associated with thelaunch, that the combined incremental net sales potential of the twoinitiatives for the full year 2006 could be well in excess of doublethe benefit that it expects to realize in 2005, that its performancein 2006 will be characterized as one of strong top-line performanceand related significant investment spending behind the newinitiatives, that it will have solid Adjusted EBITDA growth for 2006and that its earnings momentum will accelerate beyond 2006; (vi) thatworking capital will increase during the second half of 2005 andreturn to more normalized levels in relation to sales during thesecond quarter of 2006; (vii) that its overall investments inpermanent displays will increase in 2005 and 2006; (viii) that it willissue $185 million of equity by March 31, 2006 and use proceeds from$110 million of such issuance to reduce debt and the Company'sexpectation that the balance of such proceeds will be available forgeneral corporate purposes; and (ix) that it will conduct a debtfinancing in the third quarter of 2005 to raise approximately $75million and that proceeds from such financing will be available forgeneral corporate purposes, including to help fund the initiatives.Actual results may differ materially from such forward-lookingstatements for a number of reasons, including those set forth in theCompany's filings with the Securities and Exchange Commission,including the Company's Annual Report on Form 10-K/A for the yearended December 31, 2004, and the Company's Quarterly Reports on Form10-Q and Current Reports on Form 8-K that it files with the SEC during2005 (which may be viewed on the SEC's website at http://www.sec.govor on the Company's website at http://www.revloninc.com), as well asthe following reasons: (i) difficulties, delays or higher thanexpected costs to generate the Company's anticipated growth in netsales in 2005 and 2006 or difficulties or delays to generateanticipated growth in earnings and/or Adjusted EBITDA, including in2005 and 2006 or beyond, such as due to less than anticipated netsales, higher than anticipated returns, higher than expected expenses,less than anticipated retail customer or consumer acceptance of theseinitiatives, decreased sales of the Company's existing products as aresult of the sale of products associated with these initiativesand/or competitive activities; (ii) difficulties, delays orunanticipated costs in the Company's efforts to reduce its costs andexecute against its previously-disclosed operating margin objective,such as due to increased costs of raw materials, components, labor orother items or other difficulties or delays in implementinginitiatives intended to improve operating margins; (iii) higher thananticipated returns in the third quarter of 2005, higher thananticipated amortization of existing displays or less than anticipatedshipments associated with the launch; (iv) higher than anticipatedworking capital or unforeseen circumstances affecting the timing orlevels thereof; (v) difficulties, delays or increased costs associatedwith, or the Company's inability to consummate, the issuance of $185million of equity by March 31, 2006 and the unavailability of, or lessthan anticipated, proceeds from such transaction; and (vi)difficulties, delays or increased costs associated with, or theCompany's inability to consummate, the proposed debt financing toraise approximately $75 million and the unavailability of, or lessthan anticipated, proceeds from such transaction.
REVLON, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(dollars in millions, except per share data)

Three Months Ended Six Months Ended
June 30, June 30,
------------------------ -------------------------
2005 2004 2005 2004
------------ ----------- ------------ ------------
Net sales $ 318.3 $ 316.1 $ 619.2 $ 624.5
Cost of sales 118.9 118.4 233.1 235.5
------------ ----------- ------------ ------------
Gross profit 199.4 197.7 386.1 389.0
Selling, general
and administrative
expenses 199.9 199.4 387.0 371.3
Restructuring
(benefit) costs
and other, net (0.2) 0.1 1.5 (0.6)
------------ ----------- ------------ ------------
Operating income
(loss) (0.3) (1.8) (2.4) 18.3
------------ ----------- ------------ ------------
Other expenses
(income):
Interest expense 31.8 29.0 61.5 73.6
Interest income (1.8) (1.1) (3.4) (2.1)
Amortization of
debt issuance
costs 1.7 2.5 3.3 5.1
Foreign currency
(gains) losses,
net (1.2) 3.0 1.3 1.6
Loss on early
extinguishment of
debt 1.5 - 9.0 32.6
Miscellaneous, net 0.2 2.4 1.6 2.5
------------ ----------- ------------ ------------
Other expenses,
net 32.2 35.8 73.3 113.3
------------ ----------- ------------ ------------

Loss before income
taxes (32.5) (37.6) (75.7) (95.0)

Provision for
income taxes 3.3 1.3 6.9 2.1
------------ ----------- ------------ ------------

Net loss $ (35.8)$ (38.9)$ (82.6)$ (97.1)
============ =========== ============ ============

Basic and diluted
net loss per
common share $ (0.10)$ (0.11)$ (0.22)$ (0.42)
============ =========== ============ ============

Weighted average
number of common
shares outstanding:
Basic and diluted 371,240,301 369,526,515 370,686,698 231,229,771
============ =========== ============ ============

REVLON, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(dollars in millions)

June 30, December 31,
ASSETS 2005 2004
-------------- -------------
(Unaudited)
Current assets:
Cash and cash equivalents $ 66.7 $ 120.8
Trade receivables, net 148.4 200.6
Inventories 190.2 154.7
Prepaid expenses and other 69.5 69.7
-------------- -------------
Total current assets 474.8 545.8
Property, plant and equipment, net 115.9 118.7
Other assets 148.6 149.9
Goodwill, net 186.1 186.1
-------------- -------------
Total assets $ 925.4 $ 1,000.5
============== =============

LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current liabilities:
Short-term borrowings - third parties $ 37.5 $ 36.6
Current portion of long-term debt -
third parties - 10.5
Accounts payable 99.7 95.2
Accrued expenses and other 267.4 283.2
-------------- -------------
Total current liabilities 404.6 425.5
Long-term debt - third parties 1,337.0 1,308.2
Other long-term liabilities 286.2 286.7
Total stockholders' deficiency (1,102.4) (1,019.9)
-------------- -------------
Total liabilities and stockholders'
deficiency $ 925.4 $ 1,000.5
============== =============

REVLON, INC. AND SUBSIDIARIES
UNAUDITED ADJUSTED EBITDA RECONCILIATION
(dollars in millions)

Three Months Ended
June 30,
------------------
2005 2004
-------- --------
Reconciliation to net loss: (Unaudited)
---------------------------------------------------

Net loss $ (35.8) $ (38.9)

Interest expense, net 30.0 27.9
Amortization of debt issuance costs 1.7 2.5
Foreign currency (gains) losses, net (1.2) 3.0
Loss on early extinguishment of debt 1.5 -
Miscellaneous, net 0.2 2.4
Provision for income taxes 3.3 1.3
Depreciation and amortization 24.5 25.5

-------- --------
Adjusted EBITDA $ 24.2 $ 23.7
======== ========


Six Months Ended
June 30,
------------------
2005 2004
-------- --------
Reconciliation to net loss: (Unaudited)
---------------------------------------------------

Net loss $ (82.6) $ (97.1)

Interest expense, net 58.1 71.5
Amortization of debt issuance costs 3.3 5.1
Foreign currency (gains) losses, net 1.3 1.6
Loss on early extinguishment of debt 9.0 32.6
Miscellaneous, net 1.6 2.5
Provision for income taxes 6.9 2.1
Depreciation and amortization 48.3 49.9

-------- --------
Adjusted EBITDA $ 45.9 $ 68.2
======== ========