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Executives

Abbe Goldstein – Sr. VP IR

David Kennedy – President & CEO

Alan Ennis – Executive VP & CFO

Analysts

Bill Chappell – SunTrust Robinson Humphrey

Carla Casella – JP Morgan

Lance Vitanza – Knighthead Capital Group

Patrick Chuccio – BMO Capital Markets

Joe Galfrano – Babson Capital

Mark Kaufman – MLK Investment Management

Jeff Gates – Gates Capital Management

Revlon, Inc. (REV) Q2 2008 Earnings Call July 31, 2008 9:30 AM ET

Operator

Good morning ladies and gentlemen and welcome to Revlon’s second quarter 2008 earnings conference call. (Operator Instructions) I would now like to turn the call over to Ms. Abbe Goldstein, Revlon’s Senior Vice President, Investor Relations and Corporate Communications. You may begin.

Abbe Goldstein

Good morning everyone and thank you for joining our call. Earlier this morning we released our results for the second quarter 2008. If you have not already received a copy of the earnings release you can obtain one at our website at www.revloninc.com. Here with me today are David Kennedy, President and Chief Executive Officer and Alan Ennis, Executive Vice President and Chief Financial Officer.

On today’s call David will briefly highlight the second quarter results and provide a strategic update on the business. Alan will then review our financial results for the quarter in detail.

Before we get started I would like to remind everyone that our discussion this morning might include forward-looking statements which are subject to the Safe Harbor Provisions of the Private Securities Litigation Act Reform of 1995. Information on factors that could affect the company’s results from time to time and cause them to differ materially from such forward-looking statements is set forth in the company’s filings with the SEC including our 2007 Form 10-K and our second quarter 2008 10-Q which we expect to file today.

Our remarks today will include a discussion of adjusted EBIDTA which is a non-GAAP measure that is defined in the footnotes to the release we issued this morning and is reconciled to net income, the most directly comparable GAAP measure in the accompanying financial tables. In relation to US share results unless otherwise noted our discussion this morning of mass retail share and consumption data is that of US mass retail dollar volume according to ACNielsen which excludes Wal-Mart as well as regional mass volume retailers, prestige department stores, Internet, door-to-door, television shopping, perfumeries and specialty stores all of which are outlets for cosmetic sales. The ACNielsen data is an aggregate of the drug channel, Target, Kmart and food and combo stores and represents approximately two thirds of the company's US mass retail dollar volume.

Finally as a reminder our discussion this morning should not be copied or recorded. With that I would now like to hand it over to David.

David Kennedy

Thank you Abbe and good morning everyone. First I’d like to briefly review our financial results for the second quarter of 2008 compared to last year. Net sales increased 7.8% to $376.4 million compared to $349.2 million in the prior period. Operating income increased to $59.4 million from $16.9 million.

Net income improved to $19.9 million or $0.04 per fully diluted share compared to a net loss of $11.3 million or $0.02 per share. And adjusted EBITDA was $81.7 million compared to $42.0 million last year. Later in the call, Alan will review the financial results for the second quarter in detail.

Let me now make a few comments on the implementation of our strategy. As we have stated our foremost priority is building and leveraging our strong brands particularly the Revlon brand. We continue to be intensely focused on what we believe to be the key drivers to further build our brands.

These are innovative, high quality consumer preferred new products, affective integrated brand communication, competitive levels of advertising and promotion and superb execution with our retail partners.

During the first half of 2008 we began seeing positive results from accelerated new product development. Our Revlon and Almay brand product launches are being well received by consumers. In fact in June we saw improved mass retail share results for the Revlon brand in the US.

As we have said we have a more extensive lineup of new color cosmetic products in the second half of 2088 compared to the second half of 2007; specifically under the Revlon brand we will be introducing about twice the number of color cosmetic SKUs the second half of 2008, as we did in the second half of last year.

It is important to note as we have done with our new product launches to date this year, we intend to support this extensive lineup with competitive levels of brand support throughout the second half of this year.

Further we continue to make excellent progress on our three year rolling new product portfolio plans for all of our brands. We are in various stages of development for new products to be launched over the next few years with the 2009 lineup complete, substantial progress made on expected new product introductions in 2010 and 2011.

We continue to make solid improvement in developing effective integrated brand communication including more affective advertising. We believe our ads are highly relevant and consistent and the use of our brand ambassadors helps achieve break through messaging and imagery.

We have continued to strengthen our brand ambassador lineup with the recent signing of Jennifer Connelly to represent the Revlon brand and Leslie Bibb to represent the Almay brand. Jennifer joins Halle Berry, Elle Macpherson, Jessica Alba, and Beau Garrett representing the Revlon brand globally and Leslie joins Elaine Irwin-Mellencamp, and Maria Theiss representing the Almay brand globally.

We continue to maintain positive relationships and open dialogue with all of our customers and with them are focused on implementing plans that will grow the categories in which we participate. In addition along with our retail customers we are focused on providing a positive in-store experience for our consumers with competitive promotions and clear, consistent and affective messages.

Our international business is sound and continues to grow profitably as we leverage our worldwide capabilities and implement our global brand strategies and plans. Our international operating profits and operating margins in each region continue to improve in the second quarter compared to the same period last year.

Finally we remain focused on controlling our costs and driving efficiencies throughout our organization and these actions continue to positively impact our margins and cash flows. We demonstrated continued progress in the first half of the year and are realizing the benefits of executing our strategy.

We believe that our focus on implementing this strategy is generating and we believe will continue to generate sustainable profitable sales growth and positive free cash flow. So with that let me hand it over to Alan to take you through the financial results for the second quarter in details.

Alan Ennis

Thank you David and thank you Abbe and good morning everyone. As we normally do I would like to build upon David’s introductory financial comments and take you through a more detailed review of the financial results.

So starting with the P&L for the second quarter of 2008, net sales of $376.4 million increased 7.8% compared to $349.2 million in the second quarter of last year. Excluding the favorable impact of foreign currency fluctuations net sales increased by 5.5% versus a year ago.

In the United States net sales increased by 6% to $216.4 million compared to $204.2 million in the second quarter of 2007. Importantly the primary driver of the second quarter net sales growth was higher shipments of Revlon color cosmetics largely due to 2008 new product launches including initial shipments from our more extensive second half 2008 new product lineup.

In our international operations net sales increased by 10.3% to $160 million compared to $145 million in the year ago quarter. Excluding the favorable impact of foreign currency fluctuations international net sales increased by 4.8% compared to the same period last year reflecting again primarily higher shipments of Revlon color cosmetics products launched in 2008.

Each of the company’s international regions namely Asia Pacific, Europe and Latin America, experienced net sales growth and margin expansion in the second quarter of 2008 compared to the year ago quarter.

In our Asia Pacific region which is comprise of Asia Pacific and Africa, net sales increased 8.8% to $66.6 million compared to $61.2 million in the second quarter last year. Excluding the favorable impact of foreign currency fluctuations net sales in Asia Pacific grew 5.2% primarily due to higher shipments of Revlon color cosmetics in China and Australia and in our duty free businesses as well as higher shipments of beauty care products in South Africa.

In our Europe region which is comprised of Europe, Canada and The Middle East, net sales increased 12.4% to $57.2 million compared to $50.9 million in the second quarter last year. Excluding the favorable impact of foreign currency fluctuations net sales in Europe grew 4.7% primarily due to higher shipments of Revlon color cosmetics in Canada.

In our Latin America region which is comprised of Mexico, Central America, and South America net sales grew by 10% to $36.2 million compared to $32.9 million in the second quarter last year. Excluding the favorable impact of foreign currency fluctuations net sales in Latin America grew 4% primarily driven by higher shipments of both Revlon color cosmetics and beauty care products in Argentina and Venezuela partially offset by lower shipments in certain distributor markets compared to the same period last year.

Moving down the rest of the P&L for Revlon Inc. in terms of gross margin in the second quarter of 2008 our gross margin improved by 210 basis points to 65.5% from 63.4% in the second quarter of last year primarily driven by favorable changes in sales mix and lower returns and allowances.

SG&A expenses of $192.4 million improved by $10 million or 4.9% from $202.4 million last year. The second quarter of 2007 included significant brand support expenses related to the launch of Revlon Colorist Hair Color which was the primary driver of the improvement in SG&A year-over-year.

Operating income for the second quarter of 2008 was $59.4 million representing and OI margin of 15.8% compared to $16.9 million and an OI margin of 4.8% in the same quarter last year. Operating income adjusted EBITDA and net income in the second quarter of 2008 include a net gain of $5.9 million, $6 million and $4.9 million respectively related to the sale of a facility in Mexico.

The expected full year impact of the sale of the facility in Mexico on operating income adjusted EBITDA and net income will be a net gain of $4.3 million, $4.9 million and $3.5 million respectively after recording restructuring and other related charges in the second half of this year.

Interest expense for the quarter was $30.8 million an improvement from $33.6 million last year due primarily to lower average borrowing rates on comparable average debt levels. Net income was $19.9 million or $0.04 per fully diluted share compared to a net loss of $11.3 million or a loss of $0.02 per share in the second quarter of last year.

Adjusted EBITDA was $81.7 million compared to adjusted EBITDA of $42 million in the same period last year.

Moving on to mass retail share in the US according to ACNielsen the color cosmetics category grew 4.4% in the second quarter of 2008 compared to the same period last year. The Revlon brand continued to maintain and approximate 13% dollar share in the second quarter of 2008 in line with its quarterly performance since the fourth quarter of 2006.

Importantly Revlon brand mass retail share for the month of June was 14%, up 0.5 compared to June, 2007 and up 1.5 points compared to May, 2008 reflecting new product performance, effective brand communication and competitive levels of brand support.

As of June, 2008 products launched in the first half of 2008 are substantially in full distribution. Two products from this launch, Revlon Custom Creations foundation and Revlon ColorStay Mineral foundation continue to be ranked in the ACNielsen top 10 new products by retail dollar sales through June, 2008.

In the second quarter of 2008, Almay continued to maintain and approximate six percent dollar share in line with its quarterly performance since the fourth quarter of 2006. Almay’s positive performance in the face category was driven primarily by Almay TLC Foundation and Almay Smart Shade Blush and Bronzer which were launched in the first half of 2008 and the second half of 2007 respectively.

The women’s hair color category declined by four-tenths of a point in the second quarter of 2008 compared to the same period last year. Revlon ColorSilk recorded a 7.9% dollar share in the second quarter up two-tenths of a point compared to the year ago period with dollar volume up 2.8% versus a year ago.

In anti-perspirants and deodorants the category increased by 2.5% in the second quarter of 2008 compared to the same period last year. In the quarter Mitchum continued to maintain and approximate 5% dollar share in line with its quarterly performance since the third quarter of 2007.

The beauty tools category expanded over 36% in the second quarter of 2008 which is significantly higher than the historical growth rate for the category. This unusual category growth was driven by a single pedicure product introduction from a non-traditional beauty tools category participant. Dollar volume of Revlon beauty tools as measured by ACNielsen grew approximately 2% in the second quarter of 2008 and was the only brand of beauty tools participant to grow consumption during the quarter.

Excluding this non-traditional single pedicure product Revlon dollar share in the second quarter would have increased by eight-tenths of a point to 24.7%.

In the second quarter we continued to support our brands worldwide with comparable dollar spending versus the same quarter last year, excluding the brand support in the second quarter of 2007 related to the launch of Revlon Colorist hair color.

Moving on to cash flows, cash flow provided by operating activities in the first six months of 2008 was $22.9 million compared to cash used by operating activities of $33 million in the same period last year resulting in an improvement of $55.9 million.

As I indicated in our call with you in May while we are not providing specific guidance for adjusted EBITDA for 2008, we did give you information to assist you in understanding the factors that will impact our expected full year 2008 cash flows. I would like to reiterate that information which is unchanged from the information provided to you during our May call, excluding the impact of the net proceeds from the Brazil transaction which I will discuss in a moment.

Capital expenditures are expected to be approximately $25 million for the full year, permanent display expenditures are expected to be approximately $50 million. With respect to interest, in 2007 interest paid was $137.6 million. Our total debt remains at approximately $1.4 million, approximately 60% of which is currently at fixed interest rates and approximately 40% of which is at floating interest rates mostly at LIBOR plus 400 basis points.

Taxes are expected to be approximately $20 million and finally all other cash flows including changes in working capital are anticipated to result in cash usage of approximately $15 million. Therefore you can reach your own conclusion about the expected full year 2008 cash flow based on these factors collectively in conjunction with your own expectations for adjusted EBITDA.

In terms of borrowing capacity our unutilized borrowing capacity and cash as of June 30, 2008 was $161.3 million comprising $138.8 million available under the revolving multi currency facility and $22.5 million of cash and cash equivalents.

As previously announced we intend to effect the 1-for-10 reverse stock split of our Class A and Class B common stock some time in the third quarter of 2008. In accordance with the NYSE standards we have six months from April 11, 2008 to bring the share price of our Class A common stock and its 30-day trading average closing price to at least $1.00.

Earlier this week we completed the sale of our non-core Bozzano brand, a leading men’s hair care and shaving line of products and certain other non-core brands which are sold only in the Brazilian market. The transaction was effected through the sale of our Brazilian subsidiary to Hypermarcas, a Brazilian diversified consumer products corporation.

The purchase price was approximately $104 million in cash plus about $3 million cash on the Brazilian subsidiary’s balance sheet. We expect net proceeds after the payment of taxes and transaction costs to be approximately $94 million. We are currently evaluating the most appropriate use of the net proceeds from this transaction.

In the results for the third quarter of 2008 we expect to record a one-time gain from this transaction of approximately $50 million. We expect that the Brazilian subsidiary’s net sales, operating income and adjusted EBITDA would not be material to the ongoing financial results of Revlon, Inc.

Importantly Revlon brands color cosmetics will continue to be marketed in Brazil through our current third party distributor. As we said in our press release about this transaction our business strategy is to build and leverage our strong brands worldwide particularly the Revlon brand and we remain committed to continuing to grow our business internationally.

This transaction presented Revlon with an opportunity to monetize a non-core, non-strategic brand and a very attractive multiple while enabling us to remain focused on building our core brands around the world.

With that we would now like to open the call for your questions.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from the line of Bill Chappell – SunTrust Robinson Humphrey

Bill Chappell – SunTrust Robinson Humphrey

Looking at the back half of the year can you give us a little more detail of how that kind of compares in terms of product launches versus the first half, is it kind of a 60/40, 50/50 and then more just in terms of looking to 2009, is there expected to be another big in terms of product return accruals to get ready for a fourth quarter sell-in or will carry over—carry between fourth quarter and first quarter of next year?

David Kennedy

The back half of 2008 as we’ve indicated we’re going to have a more extensive product lineup, product launches and introductions then we had in the back half of 2007. As is usually the case, we’ll have a more extensive introduction in the first half of the year in the US, certainly different around the world in terms of the timing of the introductions and launches then we would have in the back half of the year.

As far as the out years are concerned what we would say about that is we will continue to focus on having a competitive introductions or level of introductions of the products as I indicated in my remarks, we are very focused on having a rolling three year new product plan and being out in front at all times in terms of trends, fashion, etc. So we feel good about where we are in terms of that three year product plan for the present time.

Bill Chappell – SunTrust Robinson Humphrey

Do you see any difference in terms of accruals in the third and fourth quarter then versus last year?

David Kennedy

We’re not going to call out any accruals, we can just say that we [inaudible] a gap, we accrue for returns based on our estimates which—and a driver of those estimates are the products that we plan to replace or discontinue.

Alan Ennis

As David mentioned in the second half of this year we do have a much more extensive new product introduction compared to the second half of last year and we intend to support that extensive new product lineup with competitive levels of ground support throughout the balance of this year.

Second point in relation to returns, over the last number of years we’ve gotten a lot better at managing returns. We’ve implemented a number of processes internally to improve our stop-ship dates so that the returns expense and accruals going forward should continue to improve.

Bill Chappell – SunTrust Robinson Humphrey

Looking again longer term, I note a lot of the focus over the past 12, 18 months has been on the core Revlon brand just to stabilize that, but as you look to Almay and also to beauty tools I understand that there’s a competitive product out there on the market affecting beauty tools, but do you see share growth as we move into 2009 and beyond or is it the focus still on Revlon brand and holding the status quo for Almay?

David Kennedy

Our focus is on all of our key strong brands including Almay including our participation in our business in beauty tools, so we are focused on all those brands. Bozzano, we were focused on the Bozzano brand because we thought it was a strong local brand and it was and we were able in effect to monetize the value of that brand in the business. I think we’re pretty clear about the categories that we’re participating in and the brands that we’re focusing on.

Bill Chappell – SunTrust Robinson Humphrey

Do you see any stepped-up marketing support behind Almay going into next year?

David Kennedy

I wouldn’t want to call that, we said that we’re going to have a competitive lineup of new products and we’re going to support all of our brands with the appropriate level of competitive brand support.

Alan Ennis

David referred to the portfolio plan, the three year rolling portfolio plan, they relate to all of our key brands. We’re putting together extensive portfolio plans across our entire brand portfolio not just the Revlon brand.

Operator

Your next question comes from the line of Carla Casella – JP Morgan

Carla Casella – JP Morgan

Can you talk to the share gains in June do you think you’re seeing that continue in July?

David Kennedy

Well we haven’t seen the month of July yet. We haven’t seen those numbers. I think what’s important about the June share gains in the US ACNielsen channels is that our new product launches for the first half of 2008 really gained 100% of distribution in the US so we really started to see the results from those new products as well as our very effective brand support including our advertising.

Carla Casella – JP Morgan

The second half launches, the timing, will we see that sell-in all in the third quarter or does some of that trail into the fourth quarter?

Alan Ennis

In terms of the sell-in, we started to ship second half 2008 in May and you’ll see shipments in May, June, July and probably trickle into August again depending on the retailers. So as is the case the shipment starts earlier obviously before the consumption so for example, first half 2009 shipments will start to ship in the November, December timeframe.

Carla Casella – JP Morgan

How would you say the brand support for these compares to like the Colorist Coloresse campaign from last year, is this much larger because it’s a lot more products or can you be more efficient with the advertising dollars?

David Kennedy

We believe that we’ve got a competitive level of brand support behind all these new product launches.

Carla Casella – JP Morgan

But you’re not going to say how it compares to last year’s launch.

David Kennedy

No and you really can’t compare it because they’re in different categories and it really depends on the position of the brand and the category they’re in and the nature of the product so they’re really not comparable.

Carla Casella – JP Morgan

On the debt are you permitted to repay any of the [Masco] term loan or the bonds with proceeds from the asset sale?

Alan Ennis

As I mentioned in my remarks, we’re currently evaluating the most appropriate use of proceeds. The ability to pay down debt as you know is governed by the covenants in our credit facility and in our senior notes and our debt instruments which are in the public domain obviously include all that information which we would be happy to point you to the relevant sections in a separate call offline.

Having said that the sale of the Bozzano brand was not a net proceeds event and therefore we’re not required to pay down debt.

Operator

Your next question comes from the line of Lance Vitanza – Knighthead Capital Group

Lance Vitanza – Knighthead Capital Group

The sales improvement was such a welcomed surprise given the environment, it sounds like new products drove it so the new products started shipping May, June you did say though you expect those to continue to ship in July, August, is it fair to assume that its going to be fewer new shipments then in July and August then occurred in May and June and therefore all else equal we shouldn’t expect to see the same type of year-over-year sales gain in Q3 that we saw in Q2?

David Kennedy

I think the shipments patterns really occur in the US and again I call out it can be different around the world which I think is an important point. But in the US the shipping patterns are generally pipeline shipments for new products a few months in advance of when they actually show up in the marketplace. So as Alan indicated shipments for the first half, most of the shipments, pipeline shipments as we refer to them, occur in November, December but they can also be some in the first quarter of the year.

So the same thing generally in terms of the pattern will follow for the back half. So you’ll see shipments for the pipeline in the second quarter but then some shipments after that depending upon exactly when the retailers reset their shelves. Beyond that I really wouldn’t want to comment.

Lance Vitanza – Knighthead Capital Group

The gain from the sale of the Mexican facility, is that in that restructuring line that you have or is that some sort of offset to cost of sales?

Alan Ennis

First of all the transaction for the Bozzano brand closed in the 28th of July and so it’s a third quarter event.

Lance Vitanza – Knighthead Capital Group

I’m not talking about the brand; I’m talking about the sale of the Mexican facility.

Alan Ennis

The gain on the sale of Mexico is recorded on the restructuring and other line, obviously it is the other but the line is restructuring.

Lance Vitanza – Knighthead Capital Group

Okay so that didn’t impact your gross margin in any way then?

Alan Ennis

Correct.

Lance Vitanza – Knighthead Capital Group

Could you just tell me how much you have outstanding under the revolver?

Alan Ennis

Our borrowing capacity at the end of June we had $161.3 million in total, of which $138.8 million was available under the ABS.

Lance Vitanza – Knighthead Capital Group

How much was drawn though under the ABS?

Alan Ennis

Well we have about $15 million of LCs so it was drawn as the balance between that and our borrowing base.

Operator

Your next question comes from the line of Patrick Chuccio – BMO Capital Markets

Patrick Chuccio – BMO Capital Markets

What is your biggest market in Latin America? We thought it was Brazil but we’re just wondering I guess after the sale of the Bozzano brand what the biggest market is now in Brazil?

Alan Ennis

Brazil was certainly one of our bigger markets. We do have significant presence through our subsidiaries in Mexico and Venezuela. We do have significant presence in Argentina with our subsidiary there and then the balance of our Latin American business is typically done through third party distributors. So our products are sold throughout Latin America but we do have subsidiaries based in Brazil, Argentina, Mexico and Venezuela, or at least we did have a subsidiary in Brazil.

So Brazil was certainly one of the bigger markets down there for us. And again as I mentioned we will continue to have Revlon Color cosmetics in Brazil through our existing third party relationship there.

Patrick Chuccio – BMO Capital Markets

With the asset sale, what is the priority? Is it debt pay down or is there a possibility for an acquisition?

Alan Ennis

We are currently evaluating the use of proceeds at this time.

Patrick Chuccio – BMO Capital Markets

It looks like you’re going to generate some free cash flow this year and what is your priority, is it debt pay down or are there other strategic alternatives that you would look at?

David Kennedy

We’re still evaluating it.

Patrick Chuccio – BMO Capital Markets

How many other assets are there similar to the Bozzano brand that can be sold without having a financial impact on adjusted EBITDA or net income?

David Kennedy

We wouldn’t have any comment on that.

Patrick Chuccio – BMO Capital Markets

Just on the gross margin line it looked like your gross margin expanded 210 basis points and I’m wondering how much of that is working capital related because it looks like year-over-year your working capital has been improving for the last three quarters.

David Kennedy

I don’t think the working capital changes would have any impact on our gross margin, that’s a cost number.

Alan Ennis

The main driver as I called out in the gross margin really was a change in sales mix. We sold—you’ll see in the 10-Q which we’re going to file later today we had a higher percentage of our sales were in the cosmetics side compared to beauty care which resulted in favorable sales mix and then as we continue to improve our sales returns process we saw some favorability there in the form of lower returns.

Patrick Chuccio – BMO Capital Markets

Fundamentals appear to be improving but we haven’t seen management buy shares and I’m just wondering why that is?

David Kennedy

Well I think that I’ve got a substantial amount of shares. I bought shares some time ago. I can’t speak for others. I don’t really have anything else to say on that.

Operator

Your next question comes from the line of Joe Galfrano – Babson Capital

Joe Galfrano – Babson Capital

You sold the Mexican facility, you sold Bozzano now, some I’m trying to figure out what the strategy is there, you sold one of the largest businesses in that part of the world and yet you’re still going to have products there so that seems good, so why hold onto Argentina, why continue to own things?

David Kennedy

What we sold in Brazil was a brand, we sold a brand which was the primary brand in the business and it was non-core. As we said our strategy is very clear, we’re focused on our key strong brands around the world and that brand happened to be one of our key strong brands however we considered it non-core and we had the opportunity to achieve a very favorable value for that brand. So it really didn’t affect our strategy but we did have the opportunity again to realize the value from a strong local brand, the Brazilian brand.

Alan Ennis

Its important to add to that I think that our strategy is not the sale of brand or sale of facilities, as David said the Bozzano brand was really an opportunistic response to sell a non-core brand. The facility in Mexico was part of our plan to optimize our manufacturing footprint around the world. Again that was part of our strategy in that area so it’s not a strategy of monetizing assets at all.

Operator

Your next question comes from the line of Mark Kaufman – MLK Investment Management

Mark Kaufman – MLK Investment Management

First I’d like to say to one of the other participants on the call just to make mention to him he should note that in March the Chairman of the Board bought personally over 3 million shares of Revlon stock, obviously having some confidence in the results going forward. I’ve noticed shopping patterns in the US change over the past year, specifically people going more to Wal-Mart and given the way the ACNielsen’s constructed; it appears to me it makes it a little less relevant. So have you seen any improvement in your business at Wal-Mart, is that something you can comment on and ultimately have you, I saw another comment from L’Oreal that gave me the impression that their business in North America did not improve as much as yours and so ultimately wondering if the shift in shopping habits actually benefited your firm?

David Kennedy

As you know as we called out the growth in the category is measured by ACNielsen in the US is I’d say significantly greater this year year-to-date then it was last year where it was about flat. I can’t really comment on our results at Wal-Mart. I would say that we have a very good relationship with Wal-Mart. Obviously they are very important to us and we really value that relationship and like doing business with them. We believe that we’ve got a good partnership with them. But I really couldn’t comment on our results there.

Mark Kaufman – MLK Investment Management

About the reverse split, when it was first announced the intention was to get it done in the second quarter and now the intention is to get it done in the third quarter but obviously you’ve made a change in the past, is it possible that you let it slide entirely now that the stock is over $1.00 again?

Alan Ennis

We’re still committed to doing the reverse stock split. As you know we have six months from the April 11, 2008 date to bring the share price and the 30-day trading average above $1.00 but we’re still committed to doing the reverse split.

Operator

Your next question is a follow-up from the line of Carla Casella – JP Morgan

Carla Casella – JP Morgan

Related the Brazil sale, will that be put in discontinued operations next quarter or no?

Alan Ennis

We’re still going through the accounting treatment for that and expect that it probably will be discontinued operations but we’re going through that with our auditors right now. And we also expect to file an 8-K on the transaction by the 12th of August which will include pro forma information.

Operator

Your final question comes from the line of Jeff Gates – Gates Capital Management

Jeff Gates – Gates Capital Management

You say the sales in EBITDA are not material from the asset you sold but can you just tell us what they are?

Alan Ennis

No.

Jeff Gates – Gates Capital Management

You’ll be filing an 8-K on that correct?

Alan Ennis

Yes. We will be filing the 8-K on the 12th of August and that will include pro forma information which should help you understand that business a bit better.

Jeff Gates – Gates Capital Management

When you—you do say one of your stated objectives is to strengthen the balance sheet, correct?

Alan Ennis

Yes, improve our capital structure is one of our strategy statements, correct.

Jeff Gates – Gates Capital Management

Improve your capital structure, and how would you define that statement?

David Kennedy

As we’ve done in the past we’ve taken certain steps, if you recall at the end of 2006 we refinanced our term loan and our revolver so we considered that to be an improvement. We got a much better deal in terms of interest rates and the covenant package as well. That would be a step that we have taken to improve our capital structure.

Alan Ennis

Really a capital structure is, if you look at it’s a function of your performance as a business and so you’d look at your EBITDA to debt ratio so you could grow into a capital structure or you could reduce debt, there’s a number of things that you could do to improve your capital structure.

Operator

This ends the question-and-answer session of today’s call, we will now turn the call over to Mr. Kennedy for some closing remarks.

David Kennedy

It’s been a very good call. Thank you very much for your interest in our company and for all of your questions. We have demonstrated continuous progress in the first half of the year and are realizing the benefits of executing our strategy. We believe that our focus on the key drivers including innovative, high quality, consumer preferred new product, effective integrated brand communication, competitive levels of advertising and promotion, and superb execution with our retail partners will continue to generate sustainable profitable sales growth and positive free cash flow. Thank you.

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Source: Revlon, Inc. F2Q08 (Qtr End 06/30/08) Earnings Call Transcript
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