Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Overview

Overview of the Business

The Company is providing this overview in accordance with the SEC's December 2003 interpretive guidance regarding Management's Discussion and Analysis of Financial Condition and Results of Operations.

Revlon, Inc. (together with its subsidiaries, the "Company") conducts its business exclusively through its direct wholly-owned operating subsidiary, Revlon Consumer Products Corporation ("Products Corporation") and its subsidiaries. Revlon, Inc. is a direct and indirect majority-owned subsidiary of MacAndrews & Forbes Holdings Inc. ("MacAndrews & Forbes Holdings" and together with certain of its affiliates other than the Company, "MacAndrews & Forbes"), a corporation wholly-owned by Ronald O. Perelman.

The Company's vision is to provide glamour, excitement and innovation to consumers through high-quality products at affordable prices. The Company operates in a single segment and manufactures, markets and sells an extensive array of cosmetics, women's hair color, beauty tools, anti-perspirants/deodorants, fragrances, skincare and other beauty care products. The Company is one of the world's leading cosmetics companies in the mass retail channel (as hereinafter defined). The Company believes that its global brand name recognition, product quality and marketing experience have enabled it to create one of the strongest consumer brand franchises in the world.

The Company's products are sold worldwide and marketed under such brand names as Revlon, including the Revlon ColorStay, Revlon Super Lustrous and Revlon Age Defying franchises, as well as the Almay brand, including the Almay Intense i-Color and Almay Smart Shade franchises, in cosmetics; Revlon ColorSilk women's hair color; Revlon beauty tools; Mitchum anti-perspirants/deodorants; Charlie and Jean Natι fragrances; and Ultima II and Gatineau skincare.

The Company's principal customers include large mass volume retailers, chain drug stores and food stores (collectively, the "mass retail channel") in the U.S., as well as certain department stores and other specialty stores, such as perfumeries outside the U.S. The Company also sells beauty products to U.S. military exchanges and commissaries and has a licensing business pursuant to which the Company licenses certain of its key brand names to third parties for the manufacture and sale of complementary beauty-related products and accessories in exchange for royalties.

The Company was founded by Charles Revson, who revolutionized the cosmetics industry by introducing nail enamels matched to lipsticks in fashion colors over 75 years ago. Today, the Company has leading positions in a number of its principal product categories in the U.S. mass retail channel, including color cosmetics (face, lip, eye and nail categories), women's hair color, beauty tools and anti-perspirants/deodorants. The Company also has leading positions in several product categories in certain foreign countries, including Australia, Canada and South Africa.

Overview of the Company's Strategy

The Company continues to focus on its strategy: (i) building and leveraging its strong brands; (ii) improving the execution of its strategies and plans, and providing for continued improvement in its organizational capability through enabling and developing its employees; (iii) continuing to strengthen its international business; (iv) improving its operating profit margins and cash flow; and (v) improving its capital structure.

Overview of Net Sales and Earnings Results

Consolidated net sales in the third quarter of 2009 decreased $8.2 million, or 2.5%, to $326.2 million, as compared with $334.4 million in the third quarter of 2008. Consolidated net sales for the nine-month period ended September 30, 2009 decreased $61.3 million, or 6.1%, to $951.3 million, as compared with $1,012.6 million for the nine-month period ended September 30, 2008. Excluding the unfavorable impact of foreign currency fluctuations of $5.8 million and $42.8 million, consolidated net sales decreased by 0.7% and 1.8% in the third quarter of 2009 and in the nine-month period ended September 30, 2009, respectively.

In the United States, net sales in the third quarter of 2009 were $183.7 million, a decrease of $5.7 million, or 3.0%, compared to $189.4 million in the third quarter of 2008, primarily driven by lower net sales of Revlon color cosmetics, as well as lower net sales of Revlon beauty tools, partially offset by higher net sales of Revlon ColorSilk hair color. Net sales in the third quarter of 2008 were negatively impacted by higher returns and allowances related to certain beauty care products. In the nine-month period ended September 30, 2009, U.S. net sales were $560.9 million, a decrease of $22.1 million, or 3.8%, compared to $583.0 million in the nine-month period ended September 30, 2008, primarily driven by lower net sales of Revlon and Almay color cosmetics, Mitchum anti-perspirant/deodorant and Revlon beauty tools, partially offset by higher net sales of Revlon ColorSilk hair color.

In the Company's international operations, net sales in the third quarter of 2009 decreased by $2.5 million, or 1.7%, to $142.5 million, compared to $145.0 million in the third quarter of 2008 (while net sales increased 2.3%, excluding the unfavorable impact of foreign currency fluctuations). The growth in net sales, excluding the impact of foreign currency fluctuations, was primarily due to higher net sales of Revlon ColorSilk hair color, partially offset by lower net sales of Revlon color cosmetics. Excluding the impact of foreign currency fluctuations, higher net sales in the Company's Latin America and Asia Pacific regions in the third quarter of 2009, compared to the third quarter of 2008, were partially offset by lower net sales in the Company's Europe region. In the nine-month period ended September 30, 2009, international net sales decreased $39.2 million, or 9.1%, to $390.4 million, compared to $429.6 million in the nine-month period ended September 30, 2008 (while net sales increased 0.8% excluding the unfavorable impact of foreign currency fluctuations). The growth in net sales, excluding the impact of foreign currency fluctuations, was primarily due to higher net sales of Revlon ColorSilk hair color and Revlon color cosmetics, partially offset by lower net sales of certain beauty care products and Almay color cosmetics. Excluding the impact of foreign currency fluctuations, higher net sales in the Company's Latin America and Asia Pacific regions in the nine-month period ended September 30, 2009, compared to the nine-month period ended September 30, 2008, were partially offset by lower net sales in the Company's Europe region.

Consolidated net income for the third quarter of 2009 was $23.1 million, compared to $29.2 million in the third quarter of 2008. In the nine-month period ended September 30, 2009, consolidated net income was $36.0 million, compared to $46.6 million in the nine-month period ended September 30, 2008. Consolidated net income for the third quarter of 2009 and nine-month period ended September 30, 2009 included income from discontinued operations of nil and $0.3 million, respectively. The third quarter of 2008 benefited from income from discontinued operations of $44.4 million, which included a one-time gain of $45.2 million from the Company's disposition of the non-core Bozzano business and certain other non-core brands, including Juvena and Aquamarine, which were sold only in the Brazilian market (the "Bozzano Sale Transaction").

Income from continuing operations in the third quarter of 2009 was $23.1 million, compared to a loss from continuing operations of $15.2 million in the third quarter of 2008. The improvement in income from continuing operations in the third quarter of 2009, compared to the third quarter of 2008, was primarily due to:

• $32.1 million of lower selling, general and administrative expenses ("SG&A"), primarily due to lower advertising expenses as a result of lower advertising rates in the third quarter of 2009 while

increasing the level of media support, as well as lower production costs; lower compensation expenses as a result of the May 2009 Program (as hereinafter defined); and lower permanent display amortization expenses;

• lower interest expense of $6.1 million due to the impact of lower weighted average borrowing rates and lower debt levels; and

• $1.4 million of lower foreign currency losses related primarily to the revaluation of certain U.S. dollar denominated intercompany payables from the Company's foreign subsidiaries and the Company's outstanding foreign currency forward exchange contracts ("FX Contracts");

with the foregoing partially offset by

• lower consolidated net sales of $8.2 million, primarily driven by lower net sales of Revlon and Almay color cosmetics, partially offset by higher net sales of Revlon ColorSilk hair color;

• $4.8 million of higher pension expense, including $2.3 million and $2.5 million of higher pension expenses in SG&A (as hereinafter defined) and cost of goods, respectively, driven primarily by the amortization of losses as a result of the significant decline in pension asset values in 2008; and

• $2.3 million of higher restructuring costs and other, net, primarily due to $2.6 million of restructuring expense related to the worldwide organizational restructuring announced in May 2009 (the "May 2009 Program" and, together with the restructuring actions in the U.K., Mexico and Argentina announced in the first quarter of 2009, the "2009 Programs").

Income from continuing operations in the nine-month period ended September 30, 2009 was $35.7 million, compared to $1.9 million in the nine-month period ended September 30, 2008. The improvement in income from continuing operations in the nine-month period ended September 30, 2009 compared to the nine-month period ended September 30, 2008 was primarily due to:

• $76.6 million of lower SG&A, primarily due to lower compensation expenses as a result of the May 2009 Program and a decrease in the accrual for incentive compensation, lower advertising expenses as a result of lower advertising rates in the first nine months of 2009 while increasing the level of media support and lower permanent display amortization expenses;

• a $16.5 million decrease in income taxes attributable to the favorable resolution of tax contingencies and matters in the U.S. and certain foreign jurisdictions during 2009, as well as lower pre-tax income for taxable subsidiaries in certain foreign jurisdictions;

• lower interest expense of $20.8 million due to the impact of lower weighted average borrowing rates and lower debt levels; and

• a $7.8 million aggregate gain in connection with Products Corporation's repurchases in the first nine months of 2009 of an aggregate principal amount of $39.5 million of its 91/2% Senior Notes (as hereinafter defined), which gain is net of the write-off of the ratable portion of the unamortized debt discounts and deferred financing fees on such notes;

with the foregoing partially offset by

• lower consolidated net sales of $61.3 million, primarily driven by lower net sales of Revlon and Almay color cosmetics and certain beauty care products, partially offset by higher net sales of Revlon ColorSilk hair color;

• $32.7 million of higher restructuring costs and other, net, primarily due to $20.8 million of restructuring expense related to the May 2009 Program. During the nine-month period ended

September 30, 2008, the Company recorded income of $11.3 million of restructuring costs and other, net, primarily due to the gain of $6.8 million related to the sale of a facility in Mexico and a net gain of $5.9 million related to the sale of a non-core trademark;

• $12.6 million of higher pension expense, including $7.0 million and $5.6 million of higher pension expenses in SG&A and cost of goods, respectively, driven primarily by the amortization of losses as a result of the significant decline in pension asset values in 2008, partially offset by the favorable impact of the re-measurements of pension liabilities in the nine-month period ended September 30, 2009 related to the pension plan amendments announced in May 2009 and the May 2009 Program; and

• $8.6 million of higher foreign currency losses related to the Company's outstanding FX Contracts and the revaluation of certain U.S. dollar denominated intercompany payables from the Company's foreign subsidiaries.

Overview of ACNielsen-measured U.S. Mass Retail Dollar Share

According to ACNielsen, the U.S. mass retail color cosmetics category dollar volume grew by 0.7% in the third quarter of 2009, although the rate of growth has slowed from 1.3% in the second quarter of 2009. U.S. mass retail dollar share results, according to ACNielsen, for Revlon and Almay color cosmetics, Revlon ColorSilk hair color, Mitchum anti-perspirant/deodorant, and Revlon beauty tools for the third quarter and nine-month period ended September 30, 2009 are summarized in the table below:

                                                            Share % based on Dollar Volume
                                        Three Months Ended                      Nine Months Ended
                                           September 30,           Point          September 30,           Point
                                        2009           2008       Change        2009           2008      Change

Revlon Color Cosmetics                     12.6 %        13.3 %      (0.7 )        12.8 %       12.9 %      (0.1 )
Almay                                       5.2           5.6        (0.4 )         5.4          5.8        (0.4 )
Revlon ColorSilk Hair Color                10.0           8.1         1.9           9.3          8.1         1.2
Mitchum Anti-perspirants/Deodorants         4.6           5.1        (0.5 )         4.6          5.1        (0.5 )
Revlon Beauty Tools                        21.3          18.7         2.6          20.9         19.0         1.9

All share and dollar volume data herein for the Company's brands is based upon U.S. mass-retail dollar volume, which is derived from ACNielsen data (an independent research entity). ACNielsen data is an aggregate of the drug channel, Kmart, Target and Food and Combo stores. ACNielsen's data does not reflect sales volume from Wal-Mart, Inc., which is the Company's largest customer, representing approximately 23% of the Company's full year 2008 worldwide net sales, or sales volume from regional mass volume retailers, as well as prestige stores, department stores, door-to-door, Internet, television shopping, specialty stores, perfumeries or other distribution outlets, all of which are channels for cosmetics sales. Such data represents ACNielsen's estimates based upon mass retail sample data gathered by ACNielsen and is therefore subject to some degree of variance and may contain slight rounding differences. From time to time, ACNielsen adjusts its methodology for data collection and reporting, which may result in adjustments to the categories and share data tracked by ACNielsen for both current and prior periods.

Recent Developments

See Note 12, "Subsequent Events", regarding the consummation of the Exchange Offer on October 8, 2009 and the October 2009 Note Repurchases.

Results of Operations

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

Net sales:

Third quarter results

Consolidated net sales in the third quarter of 2009 were $326.2 million, a decrease of $8.2 million, or 2.5%, compared to $334.4 million in the third quarter of 2008. Excluding the unfavorable impact of foreign currency fluctuations of $5.8 million, consolidated net sales decreased by 0.7% in the third quarter of 2009. The decline in consolidated net sales was driven by lower net sales of Revlon and Almay color cosmetics, partially offset by higher net sales of Revlon ColorSilk hair color.

Year-to-date results

Consolidated net sales for the nine-month period ended September 30, 2009 were $951.3 million, a decrease of $61.3 million, or 6.1%, compared to $1,012.6 million for the nine-month period ended September 30, 2008. Excluding the unfavorable impact of foreign currency fluctuations of $42.8 million, consolidated net sales decreased by 1.8% in the nine-month period ended September 30, 2009. The decline in consolidated net sales was driven by lower net sales of Revlon and Almay color cosmetics and certain beauty care products, partially offset by higher net sales of Revlon ColorSilk hair color.

                            Three Months Ended
                               September 30,                Change              XFX Change(1)
                             2009          2008         $           %            $          %

    United States         $    183.7      $ 189.4     $ (5.7 )      (3.0 )%   $  (5.7 )     (3.0 )%
    Asia Pacific                70.3         70.4       (0.1 )      (0.1 )        0.5        0.7
    Europe                      43.2         49.8       (6.6 )     (13.3 )       (3.0 )     (6.0 )
    Latin America               29.0         24.8        4.2        16.9          5.8       23.4

    Total International   $    142.5      $ 145.0     $ (2.5 )      (1.7 )%   $   3.3        2.3 %

    Total Company         $    326.2      $ 334.4     $ (8.2 )      (2.5 )%   $  (2.4 )     (0.7 )%

                            Nine Months Ended
                              September 30,                Change               XFX Change(1)
                            2009         2008           $           %            $          %

    United States         $  560.9     $   583.0     $ (22.1 )      (3.8 )%   $ (22.1 )     (3.8 )%
    Asia Pacific             190.1         201.1       (11.0 )      (5.5 )        6.0        3.0
    Europe                   124.6         156.1       (31.5 )     (20.2 )      (10.4 )     (6.7 )
    Latin America             75.7          72.4         3.3         4.6          8.0       11.0

    Total International   $  390.4     $   429.6     $ (39.2 )      (9.1 )%   $   3.6        0.8 %

    Total Company         $  951.3     $ 1,012.6     $ (61.3 )      (6.1 )%   $ (18.5 )     (1.8 )%

(1) XFX excludes the impact of foreign currency fluctuations.

United States

Third quarter results

In the United States, net sales in the third quarter of 2009 were $183.7 million, a decrease of $5.7 million, or 3.0%, compared to $189.4 million in the third quarter of 2008, primarily driven by lower net sales of Revlon color cosmetics, as well as lower net sales of Revlon beauty tools, partially offset by higher net sales of Revlon ColorSilk hair color. Lower net sales of Revlon color cosmetics were primarily driven by lower shipments resulting from the cycling of the third quarter 2008 launch of the Revlon Beyond Natural collection. Net sales of Almay color cosmetics were essentially flat, primarily impacted by lower shipments resulting from the cycling of certain products launched in the third quarter of 2008, which were almost entirely offset by lower returns of discontinued products in the third quarter of 2009, compared to the third quarter of 2008. In addition, net sales in the third quarter of 2008 were negatively impacted by higher returns and allowances related to certain beauty care products.

Year-to-date results

In the United States, net sales in the nine-month period ended September 30, 2009 were $560.9 million, a decrease of $22.1 million, or 3.8%, compared to $583.0 million in the nine-month period ended September 30, 2008, primarily driven by lower net sales of Revlon and Almay color cosmetics, Mitchum anti-perspirant deodorant and Revlon beauty tools, partially offset by higher net sales of Revlon ColorSilk hair color.

International

In the Company's international operations, net sales in the third quarter of 2009 decreased by $2.5 million, or 1.7%, to $142.5 million, compared to $145.0 million in the third quarter of 2008 (while net sales increased 2.3% excluding the unfavorable impact of foreign currency fluctuations). The growth in net sales, excluding the impact of foreign currency fluctuations, was primarily due to higher net sales of Revlon ColorSilk hair color, partially offset by lower net sales of Revlon color cosmetics. Excluding the impact of foreign currency fluctuations, higher net sales in the Company's Latin America and Asia Pacific regions in the third quarter of 2009, compared to the third quarter of 2008, were partially offset by lower net sales in the Company's Europe region. In the nine-month period ended September 30, 2009, international net sales decreased $39.2 million, or 9.1%, to $390.4 million, compared to $429.6 million in the nine-month period ended September 30, 2008 (while net sales increased 0.8% excluding the unfavorable impact of foreign currency fluctuations). The growth in net sales, excluding the impact of foreign currency fluctuations, was primarily due to higher net sales of Revlon ColorSilk hair color and Revlon color cosmetics, partially offset by lower net sales of certain beauty care products and Almay color cosmetics. Excluding the impact of foreign currency fluctuations, higher net sales in the Company's Latin America and Asia Pacific regions in the nine-month period ended September 30, 2009, compared to the nine-month period ended September 30, 2008, were partially offset by lower net sales in the Company's Europe region.

Third quarter results by region

In Asia Pacific, which is comprised of Asia Pacific and Africa, net sales in the third quarter of 2009 decreased 0.1% to $70.3 million, compared to $70.4 million in the third quarter of 2008 (while increasing 0.7% excluding the unfavorable impact of foreign currency fluctuations). The growth in net sales, excluding the unfavorable impact of foreign currency fluctuations, was due primarily to higher shipments of Revlon color cosmetics in Australia and China (which contributed approximately 4.1 percentage points to the increase in the region's net sales in the third quarter of 2009, compared with the third quarter of 2008),

partially offset by lower shipments of Revlon color cosmetics in Japan and higher returns in South Africa (which offset by approximately 3.2 percentage points the region's net sales in the third quarter of 2009, compared to the third quarter of 2008).

In Europe, which is comprised of Europe, Canada and the Middle East, net sales in the third quarter of 2009 decreased 13.3%, or 6.0% excluding the impact of foreign currency fluctuations, to $43.2 million, compared to $49.8 million in the third quarter of 2008. This decline in net sales, excluding the impact of foreign currency fluctuations, was primarily due to lower shipments of Revlon color cosmetics in the U.K. and Canada (which together contributed approximately 6.1 percentage points to the decrease in the region's net sales in the third quarter of 2009, compared with the third quarter of 2008), partially offset by higher shipments of Revlon skincare in certain distributor markets (which offset by approximately 1.0 percentage points the region's net sales in the third quarter of 2009, compared to the third quarter of 2008).

In Latin America, which is comprised of Mexico, Central America and South America, net sales in the third quarter of 2009 increased 16.9%, or 23.4% excluding the impact of foreign currency fluctuations, to $29.0 million, compared to $24.8 million in the third quarter of 2008. The growth in net sales, excluding the unfavorable impact of foreign currency fluctuations, was driven primarily by higher net sales in Venezuela and Argentina and higher shipments of beauty care products in certain distributor markets (which together contributed approximately 26.0 percentage points to the increase in the region's net sales in the third quarter of 2009, compared to the third quarter of 2008).

Year-to-date results by region

In Asia Pacific, net sales in the nine-month period ended September 30, 2009 decreased 5.5% to $190.1 million, compared to $201.1 million in the nine-month period ended September 30, 2008 (while increasing 3.0% excluding the unfavorable impact of foreign currency fluctuations). The growth in net sales, excluding the unfavorable impact of foreign currency fluctuations, was due primarily to higher shipments of Revlon color cosmetics in Australia and China, and higher shipments of certain beauty care products in South Africa and Australia (which together contributed approximately 4.3 percentage points to the increase in the region's net sales in the nine-month period ended September 30, 2009, compared with the nine-month period ended September 30, 2008), partially offset by lower shipments of Revlon color cosmetics in Japan (which offset by approximately 1.4 percentage points the region's net sales in the nine-month period ended September 30, 2009, compared to the nine-month period ended September 30, 2008).

In Europe, net sales in the nine-month period ended September 30, 2009 decreased 20.2%, or 6.7% excluding the impact of foreign currency fluctuations, to $124.6 million, compared to $156.1 million in the nine-month period ended September 30, 2008. This decline in net sales, excluding the unfavorable impact . . .