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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-Q

(Mark One)

|    |  |                                                                                        
|--- |  | ---------------------------------------------------------------------------------------
|[X] |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2001

OR

|      |  |                                                                                         
|----- |  | ----------------------------------------------------------------------------------------
|[   ] |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to ________

Commission File Number 333-62989

CDRJ INVESTMENTS (LUX) S.A.(Exact name of Registrant as specified in its charter)

|                                |  |                       
|------------------------------- |  | ----------------------
|Luxembourg                      |  | 98-0185444            
|(State or other jurisdiction of |  | (I.R.S. Employer      
|incorporation or organization)  |  | Identification Number)

4 Boulevard Royal
L-2449 Luxembourg
Luxembourg
(Address, including zip code, of registrants principal executive offices)

(352) 226027
(Registrants telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 3 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.     YES [X]    NO [   ]

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuers classes
of common stock, as of the latest practicable date.

Common stock, par value $2.00 per share, outstanding at November 13, 2001
831,888 shares



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TABLE OF CONTENTS



|                              |                                                                                                  |                                            |  |  |  |  |  | 
|----------------------------- | ------------------------------------------------------------------------------------------------ | ------------------------------------------ |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION
|                              | ITEM 1. FINANCIAL STATEMENTS                                                                    
|                              | Consolidated Financial Statements  CDRJ Investments (Lux) S.A. and Subsidiaries                
|                              |                                                                                                  | CONSOLIDATED BALANCE SHEETS               
|                              |                                                                                                  | CONSOLIDATED STATEMENTS OF OPERATIONS     
|                              |                                                                                                  | CONSOLIDATED STATEMENTS OF CASH FLOWS     
|                              |                                                                                                  | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                              | Consolidated Financial Statements  Jafra Cosmetics International, Inc. and Subsidiaries        
|                              |                                                                                                  | CONSOLIDATED BALANCE SHEETS               
|                              |                                                                                                  | CONSOLIDATED STATEMENTS OF OPERATIONS     
|                              |                                                                                                  | CONSOLIDATED STATEMENTS OF CASH FLOWS     
|                              |                                                                                                  | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                              | Consolidated Financial Statements  Jafra Cosmetics International, S.A. de C.V. and Subsidiaries
|                              |                                                                                                  | CONSOLIDATED BALANCE SHEETS               
|                              |                                                                                                  | CONSOLIDATED STATEMENTS OF OPERATIONS     
|                              |                                                                                                  | CONSOLIDATED STATEMENTS OF CASH FLOWS     
|                              |                                                                                                  | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                              | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS   
|                              | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                              
|PART II. OTHER INFORMATION   
|                              | Item 1. Legal Proceedings                                                                       
|                              | Item 2. Changes in Securities and Use of Proceeds                                               
|                              | Item 3. Defaults Upon Senior Securities                                                         
|                              | Item 4. Submission of Matters to a Vote of Security Holders                                     
|                              | Item 5. Other Information                                                                       
|                              | Item 6. Exhibits and Reports on Form 8-K                                                        
|SIGNATURE                    



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CDRJ INVESTMENTS (LUX) S.A. AND SUBSIDIARIES

Index to Financial Statements and Exhibits

Filed with the Quarterly Report of the Company on Form 10-Q

For the Three and Nine Months Ended September 30, 2001

|                               |  |                                                                                                  |  |         
|------------------------------ |  | ------------------------------------------------------------------------------------------------ |  | --------
|                               |  |                                                                                                  |  | Page No.
|                               |  |                                                                                                  |  |         
|PART I  FINANCIAL INFORMATION
|Item 1.                        |  | Financial Statements (Unaudited):                                                                |  |         
|                              
|                               |  | Consolidated Financial Statements  CDRJ Investments (Lux) S.A. and Subsidiaries                 |  |         
|                               |  | Consolidated Balance Sheets                                                                      |  | 3       
|                               |  | Consolidated Statements of Operations                                                            |  | 4       
|                               |  | Consolidated Statements of Cash Flows                                                            |  | 5       
|                               |  | Notes to Consolidated Financial Statements                                                       |  | 6       
|                              
|                               |  | Consolidated Financial Statements  Jafra Cosmetics International, Inc. and Subsidiaries         |  |         
|                               |  | Consolidated Balance Sheets                                                                      |  | 12      
|                               |  | Consolidated Statements of Operations                                                            |  | 13      
|                               |  | Consolidated Statements of Cash Flows                                                            |  | 14      
|                               |  | Notes to Consolidated Financial Statements                                                       |  | 15      
|                              
|                               |  | Consolidated Financial Statements  Jafra Cosmetics International, S.A. de C.V.
and Subsidiaries |  |         
|                               |  | Consolidated Balance Sheets                                                                      |  | 19      
|                               |  | Consolidated Statements of Operations                                                            |  | 20      
|                               |  | Consolidated Statements of Cash Flows                                                            |  | 21      
|                               |  | Notes to Consolidated Financial Statements                                                       |  | 22      
|                              
|Item 2.                        |  | Managements Discussion and Analysis of Financial Condition and Results of Operations            |  | 27      
|                              
|Item 3.                        |  | Quantitative and Qualitative Disclosures about Market Risk                                       |  | 37      
|                              
|PART II  OTHER INFORMATION    |  |                                                                                                 
|                              
|Item 1.                        |  | Legal Proceedings                                                                                |  | 39      
|                              
|Item 2.                        |  | Changes in Securities and Use of Proceeds                                                        |  | 39      
|                              
|Item 3.                        |  | Defaults Upon Senior Securities                                                                  |  | 39      
|                              
|Item 4.                        |  | Submission of Matters to a Vote of Security Holders                                              |  | 39      
|                              
|Item 5.                        |  | Other Information                                                                                |  | 39      
|                              
|Item 6.                        |  | Exhibits and Reports on Form 8-K                                                                 |  | 39      
|                              
|                               |  | Signature                                                                                        |  | 40      

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PART I. FINANCIAL INFORMATION




ITEM 1. FINANCIAL STATEMENTS




CDRJ INVESTMENTS (LUX) S.A. AND SUBSIDIARIES




CONSOLIDATED BALANCE SHEETS(In thousands, except share amounts)
(Unaudited)


|                                     |                                                                                                                                                                         |                            |         |               |         |              |         |        |         | 
|------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------- | ------------- | ------- | ------------ | ------- | ------ | ------- | 
|                                     |                                                                                                                                                                         |                            |         | September 30, |         | December 31,
|                                     |                                                                                                                                                                         |                            |         | 2001          |         | 2000        
|                                     |                                                                                                                                                                         |                            |         |               |         |             
|ASSETS                               |                                                                                                                                                                         |                            |         |               |         |              |         |       
|Current assets:                      |                                                                                                                                                                         |                            |         |               |         |              |         |       
|                                     | Cash and cash equivalents                                                                                                                                               |                            | $       | 6,485         |         |              | $       | 5,838  |        
|                                     | Receivables, less allowances for doubtful accounts of
$4,430 in 2001 and $3,553 in 2000                                                                                 |                            |         | 47,606        |         |              |         | 35,919 |        
|                                     | Inventories                                                                                                                                                             |                            |         | 39,115        |         |              |         | 38,146 |        
|                                     | Prepaid income taxes                                                                                                                                                    |                            |         |              |         |              |         | 1,869  |        
|                                     | Prepaid expenses and other current assets (including value-added tax
receivables of $1,466 in 2001 and $5,329 in 2000)                                                  |                            |         | 6,303         |         |              |         | 10,296 |        
|                                     |                                                                                                                                                                         |                            |         |               |         |              |         |       
|                                     |                                                                                                                                                                         | Total current assets       |         |               | 99,509  |              |         |        | 92,068  | 
|Property and equipment, net          |                                                                                                                                                                         |                            | 54,685  |               |         |              | 51,448  |       
|Other assets:                        |                                                                                                                                                                         |                            |         |               |         |              |         |       
|                                     | Goodwill, net of accumulated amortization of $6,508 in 2001
and $5,114 in 2000                                                                                          |                            |         | 70,867        |         |              |         | 72,260 |        
|                                     | Trademarks, net of accumulated amortization of $4,877 in 2001
and $3,724 in 2000                                                                                        |                            |         | 48,975        |         |              |         | 49,375 |        
|                                     | Deferred financing fees and other, net of accumulated
amortization of $5,137 in 2001 and $3,998 in 2000                                                                 |                            |         | 9,795         |         |              |         | 11,793 |        
|                                     |                                                                                                                                                                         |                            |         |               |         |              |         |       
|                                     |                                                                                                                                                                         | Total                      |         | $             | 283,831 |              |         | $      | 276,944 | 
|                                     |                                                                                                                                                                         |                            |         |               |         |              |         |       
|LIABILITIES AND STOCKHOLDERS EQUITY |                                                                                                                                                                         |                            |         |               |         |              |         |       
|Current liabilities:                 |                                                                                                                                                                         |                            |         |               |         |              |         |       
|                                     | Short-term debt, including current portion of long-term debt                                                                                                            |                            | $       | 5,873         |         |              | $       | 4,846  |        
|                                     | Accounts payable                                                                                                                                                        |                            |         | 20,483        |         |              |         | 27,988 |        
|                                     | Accrued liabilities                                                                                                                                                     |                            |         | 37,476        |         |              |         | 34,223 |        
|                                     | Income taxes payable                                                                                                                                                    |                            |         | 4,377         |         |              |         | 426    |        
|                                     | Deferred income taxes                                                                                                                                                   |                            |         | 5,434         |         |              |         | 5,391  |        
|                                     |                                                                                                                                                                         |                            |         |               |         |              |         |       
|                                     |                                                                                                                                                                         | Total current liabilities  |         |               | 73,643  |              |         |        | 72,874  | 
|Long-term debt                       |                                                                                                                                                                         |                            | 101,345 |               |         |              | 104,180 |       
|Deferred income taxes                |                                                                                                                                                                         |                            | 16,587  |               |         |              | 16,357  |       
|Other long-term liabilities          |                                                                                                                                                                         |                            | 2,992   |               |         |              | 2,366   |       
|                                     |                                                                                                                                                                         |                            |         |               |         |              |         |       
|                                     |                                                                                                                                                                         | Total liabilities          |         |               | 194,567 |              |         |        | 195,777 | 
|                                     |                                                                                                                                                                         |                            |         |               |         |              |         |       
|Commitments and contingencies        |                                                                                                                                                                         |                            |        |               |         |              |        |       
|Stockholders equity:                |                                                                                                                                                                         |                            |         |               |         |              |         |       
|                                     | Common stock,
par value $2.00; authorized, 1,020,000 shares; issued, 834,767 shares and 834,609 shares; outstanding,
831,888 and 834,293 in 2001 and 2000, respectively |                            |         | 1,669         |         |              |         | 1,669  |        
|                                     | Additional paid-in capital                                                                                                                                              |                            |         | 82,227        |         |              |         | 82,194 |        
|                                     | Retained earnings                                                                                                                                                       |                            |         | 12,878        |         |              |         | 2,942  |        
|                                     | Accumulated other comprehensive loss                                                                                                                                    |                            |         | (6,790        | )       |              |         | (5,572 | )      
|                                     | Less treasury stock, at cost, 2,879 shares in 2001
and 316 shares in 2000                                                                                               |                            |         | (720          | )       |              |         | (66    | )      
|                                     |                                                                                                                                                                         |                            |         |               |         |              |         |       
|                                     |                                                                                                                                                                         | Total stockholders equity |         |               | 89,264  |              |         |        | 81,167  | 
|                                     |                                                                                                                                                                         |                            |         |               |         |              |         |       
|                                     |                                                                                                                                                                         | Total                      |         | $             | 283,831 |              |         | $      | 276,944 | 
|                                     |                                                                                                                                                                         |                            |         |               |         |              |         |       

See accompanying notes to consolidated financial statements

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CDRJ INVESTMENTS (LUX) S.A. AND SUBSIDIARIES




CONSOLIDATED STATEMENTS OF OPERATIONS


(In thousands)
(Unaudited)


|                                                                                          |                        |   |                    |        |                   |   |        |        |      |   |         |         |   |   |         |         |  
|----------------------------------------------------------------------------------------- | ---------------------- | - | ------------------ | ------ | ----------------- | - | ------ | ------ | ---- | - | ------- | ------- | - | - | ------- | ------- | -
|                                                                                          |                        |   | Three Months Ended |        | Nine Months Ended
|                                                                                          |                        |   | September 30,      |        | September 30,    
|                                                                                          |                        |   |                    |        |                  
|                                                                                          |                        |   | 2001               |        | 2000              |   | 2001   |        | 2000
|                                                                                          |                        |   |                    |        |                   |   |        |        |     
|Net sales                                                                                 |                        | $ | 93,141             |        |                   | $ | 79,082 |        |      | $ | 276,717 |         |   | $ | 232,548 |        
|Cost of sales                                                                             |                        |   | 20,194             |        |                   |   | 17,741 |        |      |   | 62,824  |         |   |   | 51,954  |        
|                                                                                          |                        |   |                    |        |                   |   |        |        |      |   |         |         |   |   |         |        
|                                                                                          | Gross profit           |   |                    | 72,947 |                   |   |        | 61,341 |      |   |         | 213,893 |   |   |         | 180,594 |  
|Selling, general and administrative expenses                                              |                        |   | 58,589             |        |                   |   | 49,790 |        |      |   | 175,267 |         |   |   | 150,149 |        
|Restructuring and impairment charges                                                      |                        |   |                   |        |                   |   | 2,009  |        |      |   |        |         |   |   | 3,117   |        
|                                                                                          |                        |   |                    |        |                   |   |        |        |      |   |         |         |   |   |         |        
|                                                                                          | Income from operations |   |                    | 14,358 |                   |   |        | 9,542  |      |   |         | 38,626  |   |   |         | 27,328  |  
|Other income (expense):                                                                   |                        |   |                    |        |                   |   |        |        |      |   |         |         |   |   |         |        
|                                                                                          | Exchange loss, net     |   |                    | (1,261 | )                 |   |        | (4,364 | )    |   |         | (7,963  | ) |   |         | (9,713  | )
|                                                                                          | Interest, net          |   |                    | (3,160 | )                 |   |        | (3,870 | )    |   |         | (10,006 | ) |   |         | (11,890 | )
|                                                                                          | Other, net             |   |                    | 32     |                   |   |        | 148    |      |   |         | (198    | ) |   |         | 1,379   |  
|                                                                                          |                        |   |                    |        |                   |   |        |        |      |   |         |         |   |   |         |        
|Income before income taxes, extraordinary item and
cumulative effect of accounting change |                        |   | 9,969              |        |                   |   | 1,456  |        |      |   | 20,459  |         |   |   | 7,104   |        
|Income tax expense                                                                        |                        |   | 4,582              |        |                   |   | 1,301  |        |      |   | 10,649  |         |   |   | 6,664   |        
|                                                                                          |                        |   |                    |        |                   |   |        |        |      |   |         |         |   |   |         |        
|Income before extraordinary item and cumulative
effect of accounting change               |                        |   | 5,387              |        |                   |   | 155    |        |      |   | 9,810   |         |   |   | 440     |        
|Extraordinary loss on early extinguishment of debt,
net of income tax benefit of $195     |                        |   |                   |        |                   |   |       |        |      |   |        |         |   |   | 315     |        
|                                                                                          |                        |   |                    |        |                   |   |        |        |      |   |         |         |   |   |         |        
|Income before cumulative effect of accounting
change                                      |                        |   | 5,387              |        |                   |   | 155    |        |      |   | 9,810   |         |   |   | 125     |        
|Cumulative effect of accounting change, net of income
tax expense of $82                  |                        |   |                   |        |                   |   |       |        |      |   | 126     |         |   |   |        |        
|                                                                                          |                        |   |                    |        |                   |   |        |        |      |   |         |         |   |   |         |        
|Net income                                                                                |                        | $ | 5,387              |        |                   | $ | 155    |        |      | $ | 9,936   |         |   | $ | 125     |        
|                                                                                          |                        |   |                    |        |                   |   |        |        |      |   |         |         |   |   |         |        

See accompanying notes to consolidated financial statements

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CDRJ INVESTMENTS (LUX) S.A. AND SUBSIDIARIES




CONSOLIDATED STATEMENTS OF CASH FLOWS


(In thousands)
(Unaudited)


|                                                     |                                                                                                                                                    |                                                                  |                                           |                                           |       |                   |        |         |       |         |        |  
|---------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------- | ----------------------------------------- | ----------------------------------------- | ----- | ----------------- | ------ | ------- | ----- | ------- | ------ | -
|                                                     |                                                                                                                                                    |                                                                  |                                           |                                           |       | Nine Months Ended
|                                                     |                                                                                                                                                    |                                                                  |                                           |                                           |       | September 30,    
|                                                     |                                                                                                                                                    |                                                                  |                                           |                                           |       |                  
|                                                     |                                                                                                                                                    |                                                                  |                                           |                                           |       | 2001              |        | 2000   
|                                                     |                                                                                                                                                    |                                                                  |                                           |                                           |       |                   |        |        
|Cash flows from operating activities:                |                                                                                                                                                    |                                                                  |                                           |                                           |       |                   |        |        
|                                                     | Net income                                                                                                                                         |                                                                  | $                                         | 9,936                                     |       |                   | $      | 125     |      
|                                                     |                                                                                                                                                    | Extraordinary loss on early extinguishment of debt, net of taxes |                                           |                                           |      |                   |        |         | 315   |        
|                                                     |                                                                                                                                                    | Cumulative effect of accounting change, net of taxes             |                                           |                                           | (126  | )                 |        |         |      |        
|                                                     |                                                                                                                                                    |                                                                  |                                           |                                           |       |                   |        |        
|                                                     | Income before extraordinary item and cumulative effect of
accounting change                                                                        |                                                                  |                                           | 9,810                                     |       |                   |        | 440     |      
|                                                     | Adjustments to reconcile income before extraordinary item and cumulative
effect of accounting change to net cash provided by operating activities: |                                                                  |                                           |                                           |       |                   |        |         |      
|                                                     |                                                                                                                                                    | Depreciation and amortization                                    |                                           |                                           | 5,983 |                   |        |         | 5,665 |        
|                                                     |                                                                                                                                                    | Amortization of deferred financing fees                          |                                           |                                           | 1,073 |                   |        |         | 1,076 |        
|                                                     |                                                                                                                                                    | Asset impairment charge                                          |                                           |                                           |      |                   |        |         | 1,019 |        
|                                                     |                                                                                                                                                    | Unrealized foreign exchange and derivative losses                |                                           |                                           | 1,320 |                   |        |         | 5,430 |        
|                                                     |                                                                                                                                                    | Deferred realized foreign exchange losses                        |                                           |                                           | (721  | )                 |        |         |      |        
|                                                     |                                                                                                                                                    | Changes in operating assets and liabilities:                     |                                           |                                           |       |                   |        |         |       |        
|                                                     |                                                                                                                                                    |                                                                  | Receivables, net                          |                                           |       | (11,442           | )      |         |       | (1,397  | )     
|                                                     |                                                                                                                                                    |                                                                  | Inventories                               |                                           |       | (594              | )      |         |       | (14,099 | )     
|                                                     |                                                                                                                                                    |                                                                  | Prepaid expenses and other current assets |                                           |       | 4,158             |        |         |       | (996    | )     
|                                                     |                                                                                                                                                    |                                                                  | Other assets                              |                                           |       | 1,067             |        |         |       | (1,444  | )     
|                                                     |                                                                                                                                                    |                                                                  | Accounts payable and accrued liabilities  |                                           |       | (6,748            | )      |         |       | 1,344   |       
|                                                     |                                                                                                                                                    |                                                                  | Income taxes payable/prepaid              |                                           |       | 6,428             |        |         |       | 15,745  |       
|                                                     |                                                                                                                                                    |                                                                  | Other long-term liabilities               |                                           |       | 626               |        |         |       | 470     |       
|                                                     |                                                                                                                                                    |                                                                  |                                           |                                           |       |                   |        |        
|                                                     |                                                                                                                                                    |                                                                  |                                           | Net cash provided by operating activities |       |                   | 10,960 |         |       |         | 13,253 |  
|                                                     |                                                                                                                                                    |                                                                  |                                           |                                           |       |                   |        |        
|Cash flows from investing activities:                |                                                                                                                                                    |                                                                  |                                           |                                           |       |                   |        |        
|                                                     | Purchases of property and equipment                                                                                                                |                                                                  |                                           | (6,463                                    | )     |                   |        | (4,742  | )    
|                                                     | Other                                                                                                                                              |                                                                  |                                           | (160                                      | )     |                   |        | (120    | )    
|                                                     |                                                                                                                                                    |                                                                  |                                           |                                           |       |                   |        |        
|                                                     |                                                                                                                                                    |                                                                  |                                           | Net cash used in investing activities     |       |                   | (6,623 | )       |       |         | (4,862 | )
|                                                     |                                                                                                                                                    |                                                                  |                                           |                                           |       |                   |        |        
|Cash flows from financing activities:                |                                                                                                                                                    |                                                                  |                                           |                                           |       |                   |        |        
|                                                     | Repurchase of subordinated notes                                                                                                                   |                                                                  |                                           |                                          |       |                   |        | (10,597 | )    
|                                                     | Repayments under term loan facility                                                                                                                |                                                                  |                                           | (3,375                                    | )     |                   |        | (2,625  | )    
|                                                     | Net borrowings (repayments) under revolving credit facility                                                                                        |                                                                  |                                           | 200                                       |       |                   |        | (1,500  | )    
|                                                     | Net proceeds from bank debt                                                                                                                        |                                                                  |                                           | 1,367                                     |       |                   |        | 5,319   |      
|                                                     | Issuance of common stock                                                                                                                           |                                                                  |                                           | 33                                        |       |                   |        | 821     |      
|                                                     | Net repurchase of common stock                                                                                                                     |                                                                  |                                           | (654                                      | )     |                   |        |        |      
|                                                     |                                                                                                                                                    |                                                                  |                                           |                                           |       |                   |        |        
|                                                     |                                                                                                                                                    |                                                                  |                                           | Net cash used in financing activities     |       |                   | (2,429 | )       |       |         | (8,582 | )
|                                                     |                                                                                                                                                    |                                                                  |                                           |                                           |       |                   |        |        
|Effect of exchange rate changes on cash              |                                                                                                                                                    |                                                                  | (1,261                                    | )                                         |       |                   | (7     | )      
|                                                     |                                                                                                                                                    |                                                                  |                                           |                                           |       |                   |        |        
|Net
increase (decrease) in cash and cash equivalents |                                                                                                                                                    |                                                                  | 647                                       |                                           |       |                   | (198   | )      
|Cash and cash equivalents at beginning of period     |                                                                                                                                                    |                                                                  | 5,838                                     |                                           |       |                   | 4,906  |        
|                                                     |                                                                                                                                                    |                                                                  |                                           |                                           |       |                   |        |        
|Cash and cash equivalents at end of period           |                                                                                                                                                    | $                                                                | 6,485                                     |                                           |       | $                 | 4,708  |        
|                                                     |                                                                                                                                                    |                                                                  |                                           |                                           |       |                   |        |        

See accompanying notes to consolidated financial statements

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CDRJ INVESTMENTS (LUX) S.A. AND SUBSIDIARIES




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)


(1) Basis of Presentation

The unaudited interim consolidated financial statements of CDRJ
Investments (Lux) S.A. (the Parent) and subsidiaries (the Company) as of
September 30, 2001 and for the three and nine months ended September 30, 2001 and 2000 have been
prepared in accordance with Article 10 of the Securities and Exchange
Commissions Regulation S-X. In the opinion of management, the accompanying
unaudited interim financial statements contain all adjustments, consisting of
normal recurring adjustments, necessary to present fairly the Companys
consolidated financial statements as of September 30, 2001 and for the
interim periods presented. All significant intercompany accounts and
transactions have been eliminated in consolidation.

The Parent, a Luxembourg société anonyme, Jafra Cosmetics International,
Inc., a Delaware corporation (JCI), Jafra Cosmetics International, S.A. de
C.V., a sociedad anonima de capital variableorganized under the laws of the
United Mexican States (Jafra S.A.) and certain other subsidiaries of the
Parent were organized by Clayton, Dubilier & Rice Fund V Limited Partnership, a
Cayman Islands exempted limited partnership managed by Clayton, Dubilier &
Rice, Inc. (CD&R) to acquire (the Acquisition) the worldwide Jafra
Cosmetics business (the Jafra Business) of The Gillette Company
(Gillette). JCI and Jafra S.A. are indirect, wholly owned subsidiaries of
the Parent. The Parent is a holding company that conducts all its operations
through its subsidiaries. The Parent and its subsidiaries are collectively
referred to as the Company.

In the fourth quarter of 2000, the Company adopted the provisions of
Emerging Issues Task Force Issue No. 00-10, Accounting for Shipping and
Handling Fees and Costs, which requires that amounts billed to customers for
shipping and handling fees be classified as revenues. Reclassifications have
been made to year 2000 amounts to reflect shipping and handling fees,
previously reported as reductions to selling, general, and administrative
expenses, in net sales in the accompanying consolidated statements of
operations. The total amounts that have been reclassified as net sales are
$2,513,000 and $7,400,000 for the three and nine months ended September 30,
2000, respectively. Shipping and handling costs are included in selling,
general and administrative expenses.

Effective January 1, 2001, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 133, Accounting for Derivative Instruments
and Hedging Activities. SFAS 133, as amended and interpreted, establishes
accounting and reporting standards for derivative instruments and hedging
activities. In connection with the adoption of SFAS 133, at January 1, 2001,
the Company recorded a net gain of $126,000 (net of a tax effect of $82,000) as
a cumulative transition adjustment to earnings. This adjustment relates to
derivatives not designated as hedges prior to adoption of SFAS 133, and
represents the difference between the carrying value and the fair value of such
instruments at January 1, 2001 (See Note 9).

In July 2001, the
Financial Accounting Standards Board (FASB) approved two new statements: SFAS No. 141, Business
Combinations and SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No.
141 requires business combinations entered into after June 30, 2001 to be
accounted for using the purchase method of accounting. SFAS No. 142 requires that goodwill
not be amortized, but be tested for impairment at least annually. SFAS No. 142
is effective for fiscal years beginning after December 15, 2001 to all goodwill
and other intangible assets recognized in an entitys statement of financial
position at that date, regardless of when those assets were initially
recognized. The Company is evaluating the impact of the adoption of these
standards and has not yet determined the effect of adoption on its financial
position and results of operations. During the nine months ended
September 30, 2001, the Company recorded goodwill amortization
expense of $1,449,000.

In August 2001, the FASB issued SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets. SFAS 144 supersedes
SFAS 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of. SFAS 144 retained substantially all of the requirements of
SFAS 121 while resolving certain implementation issues and addresses
the accounting for a segment of a business accounted for as a
discontinued operation. SFAS 144 is effective
for fiscal years beginning after December 15, 2001, with early application
encouraged. The Company is evaluating the impact of the adoption of this
standard and has not yet determined the effect of adoption on its financial
position and results of operations. The Company does not plan to adopt the
standard prior to December 15, 2001.

6



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CDRJ INVESTMENTS (LUX) S.A. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

(2) Inventories

Inventories consist of the following (in thousands):

|                           |  |               |        |              |  |   |        | 
|-------------------------- |  | ------------- | ------ | ------------ |  | - | ------ | 
|                           |  | September 30, |        | December 31,
|                           |  | 2001          |        | 2000        
|                           |  |               |        |             
|Raw materials and supplies |  | $             | 6,420  |              |  | $ | 6,751  | 
|Finished goods             |  |               | 32,695 |              |  |   | 31,395 | 
|                           |  |               |        |              |  |   |        | 
|Total inventories          |  | $             | 39,115 |              |  | $ | 38,146 | 
|                           |  |               |        |              |  |   |        | 

(3) Property and Equipment

Property and equipment consist of the following (in thousands):

|                              |  |               |        |              |  |   |        | 
|----------------------------- |  | ------------- | ------ | ------------ |  | - | ------ | 
|                              |  | September 30, |        | December 31,
|                              |  | 2001          |        | 2000        
|                              |  |               |        |             
|Land                          |  | $             | 17,388 |              |  | $ | 17,224 | 
|Buildings                     |  |               | 17,965 |              |  |   | 17,089 | 
|Machinery and equipment       |  |               | 30,319 |              |  |   | 25,438 | 
|                              |  |               |        |              |  |   |        | 
|                              |  |               | 65,672 |              |  |   | 59,751 | 
|Less accumulated depreciation |  |               | 10,987 |              |  |   | 8,303  | 
|                              |  |               |        |              |  |   |        | 
|Property and equipment, net   |  | $             | 54,685 |              |  | $ | 51,448 | 
|                              |  |               |        |              |  |   |        | 

(4) Debt

During the nine months ended September 30, 2000, the Company repurchased
and retired a portion of the 11.75% Subordinated Notes due 2008 (the Notes)
of JCI and Jafra S.A., with a par value of $6,500,000 and $4,300,000,
respectively. In connection with the repurchase of the Notes, the related
portion of the unamortized deferred financing costs of $733,000 was written off
and included in the determination of the extraordinary loss on early
extinguishment of debt. The repurchase of the Notes resulted in an
extraordinary loss of $315,000, which is net of an income tax benefit of
$195,000.

During the nine months ended September 30, 2001, Jafra S. A. entered into
an unsecured bank loan agreement, borrowing the peso equivalent of $1,765,000 at a weighted
average annual interest rate of 18.66%. Principal and interest payments are
due monthly through September 26, 2004. As of September 30, 2001, $623,000 of
this loan is classified as short-term debt and $1,090,000 of this loan is
classified as long-term debt in the accompanying consolidated
balance sheet.

(5) Income Taxes

The actual income tax rate differs from the expected income tax rate
(computed by applying the U.S. federal corporate rate of 35% to income before
income taxes) for the three and nine months ended September 30, 2001
principally as a result of a (i) higher effective tax rate in the Mexico
entity, Jafra S.A., due to certain inflation-related income tax adjustments,
(ii) valuation allowances provided against certain operating losses in
South America and Europe and (iii) state income taxes in the United States.

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CDRJ INVESTMENTS (LUX) S.A. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

(6) Comprehensive Income (Loss)

Comprehensive income (loss) is summarized as follows (in thousands):

|                                                                                |  |                    |        |                   |  |      |       |      |  |   |        |   |  |   |      |  
|------------------------------------------------------------------------------- |  | ------------------ | ------ | ----------------- |  | ---- | ----- | ---- |  | - | ------ | - |  | - | ---- | -
|                                                                                |  | Three Months Ended |        | Nine Months Ended
|                                                                                |  | September 30,      |        | September 30,    
|                                                                                |  |                    |        |                  
|                                                                                |  | 2001               |        | 2000              |  | 2001 |       | 2000
|                                                                                |  |                    |        |                   |  |      |       |     
|Net income                                                                      |  | $                  | 5,387  |                   |  | $    | 155   |      |  | $ | 9,936  |   |  | $ | 125  |  
|Unrealized and deferred realized gains (losses)
on derivatives                  |  |                    | 1,842  |                   |  |      |      |      |  |   | (1,877 | ) |  |   |     |  
|Tax (expense) benefit on unrealized and deferred
realized losses on derivatives |  |                    | (721   | )                 |  |      |      |      |  |   | 721    |   |  |   |     |  
|Foreign currency translation adjustment                                         |  |                    | (2,819 | )                 |  |      | 1,726 |      |  |   | (62    | ) |  |   | (677 | )
|                                                                                |  |                    |        |                   |  |      |       |      |  |   |        |   |  |   |      |  
|Comprehensive income (loss)                                                     |  | $                  | 3,689  |                   |  | $    | 1,881 |      |  | $ | 8,718  |   |  | $ | (552 | )
|                                                                                |  |                    |        |                   |  |      |       |      |  |   |        |   |  |   |      |  

(7) Financial Reporting for Business Segments

The Companys business is comprised of one industry segment, direct
selling, with worldwide operations. The Company is organized into geographical
business units that each sell the full line of Jafra cosmetics, skin care, body
care, fragrances, and other products. Jafra has three reportable business
segments: Mexico, the United States, and Europe. Business results for
subsidiaries in South America, the Dominican Republic, and Thailand are
combined and included in the following table under the caption All Others.

The accounting policies used to prepare the information reviewed by the
Companys chief operating decision makers are the same as those described in
the summary of significant accounting policies included in the Companys
audited consolidated financial statements as of and for the year ended December
31, 2000 included in the Companys Annual Report on Form 10-K. The Company
evaluates performance based on segment operating income, excluding
restructuring and impairment charges, unusual gains and losses, and
amortization of goodwill and intangibles. Consistent with the information
reviewed by the Companys chief operating decision makers, corporate costs,
foreign exchange gains and losses, interest expense, other nonoperating income
or expense, and income taxes are not allocated to operating segments for
purposes of this presentation. The effects of intersegment sales (net sales
and related gross profit) are excluded from the related captions below and from
the computation of segment operating income.

8



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CDRJ INVESTMENTS (LUX) S.A. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

|                                                       |  |                |        |        |  |        |         |        |  |          |        |           |  |       |        |             |  |              |         |  |  |            |         |   |  |   |         | 
|------------------------------------------------------ |  | -------------- | ------ | ------ |  | ------ | ------- | ------ |  | -------- | ------ | --------- |  | ----- | ------ | ----------- |  | ------------ | ------- |  |  | ---------- | ------- | - |  | - | ------- | 
|                                                       |  |                |        |        |  |        |         |        |  |          |        |           |  |       |        |             |  |              |         |  |  | Corporate, |         |   |  |  
|                                                       |  | United         |        |        |  |        |         |        |  |          |        | All       |  | Total |        | Unallocated |  | Consolidated
|                                                       |  | States         |        | Mexico |  | Europe |         | Others |  | Segments |        | and Other |  | Total
|                                                       |  |                |        |        |  |        |         |        |  |          |        |           |  |      
|                                                       |  | (in thousands)
|For the Three Months ended
September 30, 2001          |  |                |        |        |  |        |         |        |  |          |        |           |  |       |        |             |  |              |         |  |  |            |         |   |  |   |         | 
|Net sales                                              |  | $              | 18,915 |        |  | $      | 62,669  |        |  | $        | 5,736  |           |  | $     | 5,821  |             |  | $            | 93,141  |  |  | $          |        |   |  | $ | 93,141  | 
|Operating profit (loss)                                |  |                | 2,852  |        |  |        | 17,924  |        |  |          | (60    | )         |  |       | (1,420 | )           |  |              | 19,296  |  |  |            | (4,938  | ) |  |   | 14,358  | 
|Depreciation and amortization                          |  |                | 759    |        |  |        | 1,127   |        |  |          | 25     |           |  |       | 128    |             |  |              | 2,039   |  |  |            | 11      |   |  |   | 2,050   | 
|                                                      
|                                                      
|                                                      
|                                                      
|For the Three Months ended
September 30, 2000          |  |                |        |        |  |        |         |        |  |          |        |           |  |       |        |             |  |              |         |  |  |            |         |   |  |   |         | 
|Net sales                                              |  | $              | 17,259 |        |  | $      | 50,190  |        |  | $        | 6,056  |           |  | $     | 5,577  |             |  | $            | 79,082  |  |  | $          |        |   |  | $ | 79,082  | 
|Operating profit (loss)                                |  |                | 2,989  |        |  |        | 15,945  |        |  |          | (570   | )         |  |       | (1,453 | )           |  |              | 16,911  |  |  |            | (7,369  | ) |  |   | 9,542   | 
|Depreciation and amortization                          |  |                | 509    |        |  |        | 1,077   |        |  |          | 343    |           |  |       | 83     |             |  |              | 2,012   |  |  |            | 7       |   |  |   | 2,019   | 
|                                                      
|                                                      
|                                                      
|                                                      
|As of and for the Nine
Months ended September 30,
2001 |  |                |        |        |  |        |         |        |  |          |        |           |  |       |        |             |  |              |         |  |  |            |         |   |  |   |         | 
|Net sales                                              |  | $              | 58,035 |        |  | $      | 182,937 |        |  | $        | 18,537 |           |  | $     | 17,208 |             |  | $            | 276,717 |  |  | $          |        |   |  | $ | 276,717 | 
|Operating profit (loss)                                |  |                | 6,829  |        |  |        | 52,977  |        |  |          | 389    |           |  |       | (4,608 | )           |  |              | 55,587  |  |  |            | (16,961 | ) |  |   | 38,626  | 
|Depreciation and amortization                          |  |                | 1,931  |        |  |        | 3,354   |        |  |          | 308    |           |  |       | 276    |             |  |              | 5,869   |  |  |            | 114     |   |  |   | 5,983   | 
|Capital expenditures                                   |  |                | 4,060  |        |  |        | 2,039   |        |  |          | 200    |           |  |       | 164    |             |  |              | 6,463   |  |  |            |        |   |  |   | 6,463   | 
|Segment assets                                         |  |                | 70,490 |        |  |        | 181,885 |        |  |          | 18,118 |           |  |       | 14,312 |             |  |              | 284,805 |  |  |            | (974    | ) |  |   | 283,831 | 
|                                                      
|                                                      
|                                                      
|                                                      
|As of and for the Nine
Months ended September 30,
2000 |  |                |        |        |  |        |         |        |  |          |        |           |  |       |        |             |  |              |         |  |  |            |         |   |  |   |         | 
|Net sales                                              |  | $              | 54,292 |        |  | $      | 143,736 |        |  | $        | 19,594 |           |  | $     | 14,926 |             |  | $            | 232,548 |  |  | $          |        |   |  | $ | 232,548 | 
|Operating profit (loss)                                |  |                | 5,642  |        |  |        | 45,266  |        |  |          | (1,339 | )         |  |       | (3,665 | )           |  |              | 45,904  |  |  |            | (18,576 | ) |  |   | 27,328  | 
|Depreciation and amortization                          |  |                | 1,516  |        |  |        | 3,167   |        |  |          | 748    |           |  |       | 223    |             |  |              | 5,654   |  |  |            | 11      |   |  |   | 5,665   | 
|Capital expenditures                                   |  |                | 2,903  |        |  |        | 819     |        |  |          | 56     |           |  |       | 964    |             |  |              | 4,742   |  |  |            |        |   |  |   | 4,742   | 
|Segment assets                                         |  |                | 68,941 |        |  |        | 183,938 |        |  |          | 16,221 |           |  |       | 13,159 |             |  |              | 282,259 |  |  |            | (481    | ) |  |   | 281,778 | 

(8) Restructuring Charges and Related Accruals

At December 31, 2000, restructuring liabilities of approximately $700,000
were reflected on the Companys consolidated balance sheet. During the three
months ended September 30, 2001, nominal payments have been charged against
this accrual and during the nine months ended September 30, 2001, payments of
approximately $300,000 related to severance and $200,000 related to
other restructuring items have been charged against this accrual. As of September
30, 2001, the remaining restructuring liability is approximately $200,000.

(9) Foreign Currency Forward Contracts

The Company is exposed to currency risk relating to its forecasted U.S.
dollar denominated expenditures at Jafra S.A. As part of its overall strategy
to reduce the risk of adverse exchange rate fluctuations in Mexico, the Company
enters into foreign currency exchange contracts (forward contracts). The
Company places forward contracts based on its forecasted U.S. dollar cash
outflows from Jafra S.A. over a rolling 12 month period and does not hedge
transactions that are not included in the 12 month forecast on the date the
forward contract is initiated. As a matter of policy, the Company does not
hold or issue forward contracts for trading or speculative purposes nor does it
enter into contracts or agreements containing embedded derivative features.

The forward contracts utilized by the Company did not qualify for hedge
accounting under the applicable accounting standards prior to adoption of SFAS
133, and accordingly such instruments were marked-to-market with gains and
losses included as a component of exchange loss in the statements of operations
for the three and nine months ended September 30, 2000. Under SFAS 133, such
mark-to-market accounting treatment continues to be applied to certain of the
Companys forward contracts. However, under SFAS 133, the Companys use of
forward contracts to hedge certain forecasted transactions qualifies for hedge
accounting. Gains and losses from such derivative instruments arising
subsequent to January 1, 2001 are deferred as a separate component of other
comprehensive income, and are recognized in income at the same time that the
underlying hedged exposure is recognized in income. This accounting treatment
results in the matching of gains and losses from such forward contracts with
the corresponding gains and losses generated by the underlying hedged
transactions.

9



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CDRJ INVESTMENTS (LUX) S.A. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The Company currently designates certain of its forward contracts as cash
flow hedges of forecasted U.S. dollar denominated inventory purchases,
forecasted U.S. dollar denominated intercompany charges from JCI to Jafra S.A.,
forecasted management fee charges from JCI to Jafra S.A., and U.S. dollar
denominated interest payments. On the date the Company enters into a
derivative contract, management designates the derivative as a hedge of the
identified exposure. The Company formally documents all relationships between
hedging instruments and hedged items, as well as its risk-management objective
and strategy for undertaking various hedge transactions. In this
documentation, the Company specifically identifies the forecasted transaction
that has been designated as a hedged item and states how the hedging instrument
is expected to hedge the risks related to the hedged item. The Company
formally measures effectiveness of its hedging relationships both at the hedge
inception and on an ongoing basis in accordance with its risk management
policy. For all qualifying and highly effective cash flow hedges, the changes
in the fair value of the derivative are deferred as a component of other
comprehensive income. Such amounts will be reclassified from other
comprehensive income into net income when the underlying hedged exposure is
recognized in income. For U.S. dollar denominated inventory purchases, this
will occur upon sale to an outside party of the related inventory. For
intercompany charges and interest, this will occur at the date such charges are
recorded by Jafra S.A.

During the three and nine months ended September 30, 2000, the Company
recognized losses on forward contracts of approximately $7,203,000 and
$9,313,000, respectively, as a component of exchange loss in the accompanying
consolidated statement of operations. During the three months ended September
30, 2001, the Company recognized approximately $1,544,000 of gains, and during
the nine months ended September 30, 2001, the Company recognized approximately
$8,070,000 of losses as a component of exchange loss on forward contracts that
did not qualify for hedge accounting under SFAS 133. Additionally, during the
nine months ended September 30, 2001, the Company deferred $2,598,000 of
unrealized losses on forward contracts that qualify for hedge accounting under
SFAS 133. Of this amount, approximately $721,000 was reclassified to earnings
upon recognition of the underlying hedged exposure prior to September 30, 2001.
The Company expects that substantially all of the remaining unrealized loss of
$1,877,000 deferred as a component of other comprehensive income at September
30, 2001 will be reclassified into net income within the next twelve months.

During the three and nine months ended September 30, 2001, the
ineffectiveness generated by the Companys forward contracts designated as
hedges was insignificant. Certain hedged forecasted transactions do not appear
probable of occurring due to timing differences between the original and
current forecasts, and accordingly during the three months ended September 30,
2001, $75,000 of gains and during the nine months ended September 30, 2001,
$382,000 of losses were reclassified into earnings.

The outstanding foreign currency forward contracts at September 30, 2001
had a notional value of $87,036,000 and mature at various dates extending to
August 2002. Notional amounts do not quantify market or credit exposure or
represent assets or liabilities of the Company, but are used in the calculation
of cash settlements under the contracts. The table below describes the forward
contracts that were outstanding at September 30, 2001 (in thousands):

10



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CDRJ INVESTMENTS (LUX) S.A. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

|                                |  |               |        |          |  |          |          |          |  |          |       |  |  |   |        | 
|------------------------------- |  | ------------- | ------ | -------- |  | -------- | -------- | -------- |  | -------- | ----- |  |  | - | ------ | 
|                                |  |               |        |          |  |          |          |          |  | Weighted |       |  |  |  
|                                |  | Forward       |        |          |  |          |          | Average  |  |          |       | 
|                                |  | Position in   |        | Maturity |  | Contract |          | Fair    
|Foreign Currency                |  | US Dollars(1) |        | Date     |  | Rate     |          | Value(1)
|                                |  |               |        |          |  |          |          |         
|Buy US Dollar/sell Mexican Peso |  | $             | 2,336  |          |  |          | 10/30/01 |          |  |          | 10.70 |  |  | $ | 2,064  | 
|Buy US Dollar/sell Mexican Peso |  |               | 10,275 |          |  |          | 10/31/01 |          |  |          | 10.71 |  |  |   | 9,074  | 
|Buy US Dollar/sell Mexican Peso |  |               | 6,806  |          |  |          | 11/30/01 |          |  |          | 10.24 |  |  |   | 6,394  | 
|Buy US Dollar/sell Mexican Peso |  |               | 4,110  |          |  |          | 12/27/01 |          |  |          | 10.71 |  |  |   | 3,709  | 
|Buy US Dollar/sell Mexican Peso |  |               | 3,761  |          |  |          | 12/31/01 |          |  |          | 10.90 |  |  |   | 3,321  | 
|Buy US Dollar/sell Mexican Peso |  |               | 10,673 |          |  |          | 1/31/02  |          |  |          | 10.19 |  |  |   | 10,286 | 
|Buy US Dollar/sell Mexican Peso |  |               | 6,995  |          |  |          | 2/28/02  |          |  |          | 10.26 |  |  |   | 6,748  | 
|Buy US Dollar/sell Mexican Peso |  |               | 9,023  |          |  |          | 3/27/02  |          |  |          | 10.46 |  |  |   | 8,612  | 
|Buy US Dollar/sell Mexican Peso |  |               | 8,310  |          |  |          | 4/30/02  |          |  |          | 10.23 |  |  |   | 8,189  | 
|Buy US Dollar/sell Mexican Peso |  |               | 8,013  |          |  |          | 5/31/02  |          |  |          | 10.11 |  |  |   | 8,053  | 
|Buy US Dollar/sell Mexican Peso |  |               | 8,037  |          |  |          | 6/28/02  |          |  |          | 9.95  |  |  |   | 8,259  | 
|Buy US Dollar/sell Mexican Peso |  |               | 4,766  |          |  |          | 7/31/02  |          |  |          | 10.07 |  |  |   | 4,881  | 
|Buy US Dollar/sell Mexican Peso |  |               | 3,931  |          |  |          | 8/30/02  |          |  |          | 10.17 |  |  |   | 4,019  | 
|                                |  |               |        |          |  |          |          |          |  |          |       |  |  |   |        | 
|                                |  | $             | 87,036 |          |  |          |          |          |  |          |       |  |  | $ | 83,609 | 
|                                |  |               |        |          |  |          |          |          |  |          |       |  |  |   |        | 



---

|(1) |  | The Forward Position in US dollars and the Fair Value presented above
represent notional amounts. The net of these two amounts, an unrealized
loss of $3,427,000 at September 30, 2001, represents the fair value of the
forward contracts, and has been recorded in accrued liabilities in the
accompanying consolidated balance sheet as of September 30, 2001.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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##### Table of Contents






JAFRA COSMETICS INTERNATIONAL, INC. AND SUBSIDIARIES




CONSOLIDATED BALANCE SHEETS


(In thousands, except share amounts)
(Unaudited)


|                                     |                                                                                                 |  |                            |        |   |               |         |              |   |        |         | 
|------------------------------------ | ----------------------------------------------------------------------------------------------- |  | -------------------------- | ------ | - | ------------- | ------- | ------------ | - | ------ | ------- | 
|                                     |                                                                                                 |  |                            |        |   | September 30, |         | December 31,
|                                     |                                                                                                 |  |                            |        |   | 2001          |         | 2000        
|                                     |                                                                                                 |  |                            |        |   |               |         |             
|ASSETS                               |                                                                                                 |  |                            |        |   |               |         |             
|Current assets:                      |                                                                                                 |  |                            |        |   |               |         |             
|                                     | Cash and cash equivalents                                                                       |  | $                          | 2,819  |   |               | $       | 3,382        |  
|                                     | Receivables, less allowances for doubtful accounts of
$513 in 2001 and $536 in 2000             |  |                            | 7,816  |   |               |         | 6,730        |  
|                                     | Inventories                                                                                     |  |                            | 10,669 |   |               |         | 9,455        |  
|                                     | Receivables from affiliates                                                                     |  |                            | 21,458 |   |               |         | 5,078        |  
|                                     | Prepaids and other current assets                                                               |  |                            | 1,698  |   |               |         | 2,398        |  
|                                     |                                                                                                 |  |                            |        |   |               |         |             
|                                     |                                                                                                 |  | Total current assets       |        |   | 44,460        |         |              |   | 27,043 |        
|Property and equipment, net          |                                                                                                 |  | 22,872                     |        |   |               | 20,144  |             
|Other assets:                        |                                                                                                 |  |                            |        |   |               |         |             
|                                     | Goodwill, net of accumulated amortization of $3,580 in 2001
and $2,868 in 2000                  |  |                            | 38,600 |   |               |         | 39,542       |  
|                                     | Notes receivable from affiliates                                                                |  |                            | 10,194 |   |               |         | 27,182       |  
|                                     | Deferred financing fees, net of accumulated
amortization of $2,342 in 2001 and $1,871 in 2000   |  |                            | 3,161  |   |               |         | 3,632        |  
|                                     | Other                                                                                           |  |                            | 3,558  |   |               |         | 3,599        |  
|                                     |                                                                                                 |  |                            |        |   |               |         |             
|                                     |                                                                                                 |  |                            | Total  |   | $             | 122,845 |              |   | $      | 121,142 | 
|                                     |                                                                                                 |  |                            |        |   |               |         |             
|LIABILITIES AND STOCKHOLDERS EQUITY |                                                                                                 |  |                            |        |   |               |         |             
|Current liabilities:                 |                                                                                                 |  |                            |        |   |               |         |             
|                                     | Current portion of long-term debt                                                               |  | $                          | 2,875  |   |               | $       | 2,500        |  
|                                     | Accounts payable                                                                                |  |                            | 5,477  |   |               |         | 6,552        |  
|                                     | Accrued liabilities                                                                             |  |                            | 14,988 |   |               |         | 11,988       |  
|                                     | Income taxes payable                                                                            |  |                            | 1,432  |   |               |         | 393          |  
|                                     | Deferred income taxes                                                                           |  |                            | 343    |   |               |         | 343          |  
|                                     | Payables to affiliates                                                                          |  |                            | 2,929  |   |               |         | 2,305        |  
|                                     |                                                                                                 |  |                            |        |   |               |         |             
|                                     |                                                                                                 |  | Total current liabilities  |        |   | 28,044        |         |              |   | 24,081 |        
|Long-term debt                       |                                                                                                 |  | 62,558                     |        |   |               | 68,608  |             
|Deferred income taxes                |                                                                                                 |  | 548                        |        |   |               | 548     |             
|Other long-term liabilities          |                                                                                                 |  | 2,993                      |        |   |               | 2,367   |             
|                                     |                                                                                                 |  |                            |        |   |               |         |             
|                                     |                                                                                                 |  | Total liabilities          |        |   | 94,143        |         |              |   | 95,604 |        
|                                     |                                                                                                 |  |                            |        |   |               |         |             
|Commitments and contingencies        |                                                                                                 |  |                           |        |   |               |        |             
|Stockholders equity:                |                                                                                                 |  |                            |        |   |               |         |             
|                                     | Common stock, par value $.01; authorized, issued
and outstanding, 1,000 shares in 2001 and 2000 |  |                            |       |   |               |         |             |  
|                                     | Additional paid-in capital                                                                      |  |                            | 39,649 |   |               |         | 39,649       |  
|                                     | Retained deficit                                                                                |  |                            | (8,191 | ) |               |         | (11,888      | )
|                                     | Accumulated other comprehensive loss                                                            |  |                            | (2,756 | ) |               |         | (2,223       | )
|                                     |                                                                                                 |  |                            |        |   |               |         |             
|                                     |                                                                                                 |  | Total stockholders equity |        |   | 28,702        |         |              |   | 25,538 |        
|                                     |                                                                                                 |  |                            |        |   |               |         |             
|                                     |                                                                                                 |  |                            | Total  |   | $             | 122,845 |              |   | $      | 121,142 | 
|                                     |                                                                                                 |  |                            |        |   |               |         |             

See accompanying notes to consolidated financial statements

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JAFRA COSMETICS INTERNATIONAL, INC. AND SUBSIDIARIES




CONSOLIDATED STATEMENTS OF OPERATIONS


(In thousands)
(Unaudited)


|                                                                                      |                                     |   |                    |        |                   |   |        |        |      |   |        |        |   |   |        |        |  
|------------------------------------------------------------------------------------- | ----------------------------------- | - | ------------------ | ------ | ----------------- | - | ------ | ------ | ---- | - | ------ | ------ | - | - | ------ | ------ | -
|                                                                                      |                                     |   | Three Months Ended |        | Nine Months Ended
|                                                                                      |                                     |   | September 30,      |        | September 30,    
|                                                                                      |                                     |   |                    |        |                  
|                                                                                      |                                     |   | 2001               |        | 2000              |   | 2001   |        | 2000
|                                                                                      |                                     |   |                    |        |                   |   |        |        |     
|Net sales                                                                             |                                     | $ | 29,877             |        |                   | $ | 28,200 |        |      | $ | 89,740 |        |   | $ | 85,659 |       
|Cost of sales                                                                         |                                     |   | 9,441              |        |                   |   | 9,256  |        |      |   | 26,800 |        |   |   | 26,532 |       
|                                                                                      |                                     |   |                    |        |                   |   |        |        |      |   |        |        |   |   |        |       
|                                                                                      | Gross profit                        |   |                    | 20,436 |                   |   |        | 18,944 |      |   |        | 62,940 |   |   |        | 59,127 |  
|Selling, general and administrative expenses                                          |                                     |   | 22,842             |        |                   |   | 20,599 |        |      |   | 72,634 |        |   |   | 68,233 |       
|Management fee income from affiliates                                                 |                                     |   | (2,119             | )      |                   |   | (1,670 | )      |      |   | (6,555 | )      |   |   | (5,042 | )     
|Restructuring and impairment charges                                                  |                                     |   |                   |        |                   |   | 1,719  |        |      |   |       |        |   |   | 2,827  |       
|                                                                                      |                                     |   |                    |        |                   |   |        |        |      |   |        |        |   |   |        |       
|                                                                                      | Loss from operations                |   |                    | (287   | )                 |   |        | (1,704 | )    |   |        | (3,139 | ) |   |        | (6,891 | )
|Other income (expense):                                                               |                                     |   |                    |        |                   |   |        |        |      |   |        |        |   |   |        |       
|                                                                                      | Royalty income from affiliates, net |   |                    | 5,230  |                   |   |        | 3,652  |      |   |        | 15,203 |   |   |        | 10,384 |  
|                                                                                      | Exchange gain (loss), net           |   |                    | 140    |                   |   |        | (290   | )    |   |        | 137    |   |   |        | (386   | )
|                                                                                      | Interest, net                       |   |                    | (1,660 | )                 |   |        | (1,982 | )    |   |        | (5,110 | ) |   |        | (5,661 | )
|                                                                                      | Other, net                          |   |                    | 190    |                   |   |        | (39    | )    |   |        | (224   | ) |   |        | (71    | )
|                                                                                      |                                     |   |                    |        |                   |   |        |        |      |   |        |        |   |   |        |       
|Income (loss) before income taxes and extraordinary item                              |                                     |   | 3,613              |        |                   |   | (363   | )      |      |   | 6,867  |        |   |   | (2,625 | )     
|Income tax expense                                                                    |                                     |   | 1,277              |        |                   |   | 467    |        |      |   | 3,170  |        |   |   | 1,387  |       
|                                                                                      |                                     |   |                    |        |                   |   |        |        |      |   |        |        |   |   |        |       
|Income (loss) before extraordinary item                                               |                                     |   | 2,336              |        |                   |   | (830   | )      |      |   | 3,697  |        |   |   | (4,012 | )     
|Extraordinary loss on early extinguishment of debt,
net of income tax benefit of $120 |                                     |   |                   |        |                   |   |       |        |      |   |       |        |   |   | 205    |       
|                                                                                      |                                     |   |                    |        |                   |   |        |        |      |   |        |        |   |   |        |       
|Net income (loss)                                                                     |                                     | $ | 2,336              |        |                   | $ | (830   | )      |      | $ | 3,697  |        |   | $ | (4,217 | )     
|                                                                                      |                                     |   |                    |        |                   |   |        |        |      |   |        |        |   |   |        |       

See accompanying notes to consolidated financial statements

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JAFRA COSMETICS INTERNATIONAL, INC. AND SUBSIDIARIES




CONSOLIDATED STATEMENTS OF CASH FLOWS


(In thousands)
(Unaudited)


|                                                 |                                                                                                            |                                              |                                           |                                           |       |                   |        |        |       |        |        |  
|------------------------------------------------ | ---------------------------------------------------------------------------------------------------------- | -------------------------------------------- | ----------------------------------------- | ----------------------------------------- | ----- | ----------------- | ------ | ------ | ----- | ------ | ------ | -
|                                                 |                                                                                                            |                                              |                                           |                                           |       | Nine Months Ended
|                                                 |                                                                                                            |                                              |                                           |                                           |       | September 30,    
|                                                 |                                                                                                            |                                              |                                           |                                           |       |                  
|                                                 |                                                                                                            |                                              |                                           |                                           |       | 2001              |        | 2000  
|                                                 |                                                                                                            |                                              |                                           |                                           |       |                   |        |       
|Cash flows from operating activities:            |                                                                                                            |                                              |                                           |                                           |       |                   |        |       
|                                                 | Net income (loss)                                                                                          |                                              | $                                         | 3,697                                     |       |                   | $      | (4,217 | )    
|                                                 | Extraordinary loss on early extinguishment of debt, net of taxes                                           |                                              |                                           |                                          |       |                   |        | 205    |      
|                                                 |                                                                                                            |                                              |                                           |                                           |       |                   |        |       
|                                                 | Income (loss) before extraordinary item                                                                    |                                              |                                           | 3,697                                     |       |                   |        | (4,012 | )    
|                                                 | Adjustments to reconcile income (loss) before extraordinary item
to net cash used in operating activities: |                                              |                                           |                                           |       |                   |        |        |      
|                                                 |                                                                                                            | Depreciation and amortization                |                                           |                                           | 2,265 |                   |        |        | 2,260 |       
|                                                 |                                                                                                            | Amortization of deferred financing fees      |                                           |                                           | 471   |                   |        |        | 476   |       
|                                                 |                                                                                                            | Asset impairment charge                      |                                           |                                           |      |                   |        |        | 969   |       
|                                                 |                                                                                                            | Unrealized foreign exchange loss             |                                           |                                           | 20    |                   |        |        | 400   |       
|                                                 |                                                                                                            | Changes in operating assets and liabilities: |                                           |                                           |       |                   |        |        |       |       
|                                                 |                                                                                                            |                                              | Receivables, net                          |                                           |       | (1,086            | )      |        |       | 3,056  |       
|                                                 |                                                                                                            |                                              | Inventories                               |                                           |       | (1,214            | )      |        |       | (1,746 | )     
|                                                 |                                                                                                            |                                              | Prepaid expenses and other current assets |                                           |       | 700               |        |        |       | (969   | )     
|                                                 |                                                                                                            |                                              | Intercompany receivables and payables     |                                           |       | (15,756           | )      |        |       | (8,892 | )     
|                                                 |                                                                                                            |                                              | Other assets                              |                                           |       | 168               |        |        |       | (264   | )     
|                                                 |                                                                                                            |                                              | Accounts payable and accrued liabilities  |                                           |       | 1,925             |        |        |       | (900   | )     
|                                                 |                                                                                                            |                                              | Income taxes payable                      |                                           |       | 1,039             |        |        |       | 1,067  |       
|                                                 |                                                                                                            |                                              | Other long-term liabilities               |                                           |       | 626               |        |        |       | (136   | )     
|                                                 |                                                                                                            |                                              |                                           |                                           |       |                   |        |       
|                                                 |                                                                                                            |                                              |                                           | Net cash used in operating activities     |       |                   | (7,145 | )      |       |        | (8,691 | )
|                                                 |                                                                                                            |                                              |                                           |                                           |       |                   |        |       
|Cash flows from investing activities:            |                                                                                                            |                                              |                                           |                                           |       |                   |        |       
|                                                 | Purchases of property and equipment                                                                        |                                              |                                           | (4,270                                    | )     |                   |        | (3,571 | )    
|                                                 | Other                                                                                                      |                                              |                                           | (160                                      | )     |                   |        | (136   | )    
|                                                 |                                                                                                            |                                              |                                           |                                           |       |                   |        |       
|                                                 |                                                                                                            |                                              |                                           | Net cash used in investing activities     |       |                   | (4,430 | )      |       |        | (3,707 | )
|                                                 |                                                                                                            |                                              |                                           |                                           |       |                   |        |       
|Cash flows from financing activities:            |                                                                                                            |                                              |                                           |                                           |       |                   |        |       
|                                                 | Repurchase of subordinated notes                                                                           |                                              |                                           |                                          |       |                   |        | (6,358 | )    
|                                                 | Repayments under term loan facility                                                                        |                                              |                                           | (1,875                                    | )     |                   |        | (1,500 | )    
|                                                 | Net repayments under revolving credit facility                                                             |                                              |                                           | (3,800                                    | )     |                   |        | (1,000 | )    
|                                                 | Net
transactions with affiliates                                                                           |                                              |                                           | 16,988                                    |       |                   |        | 19,832 |      
|                                                 |                                                                                                            |                                              |                                           |                                           |       |                   |        |       
|                                                 |                                                                                                            |                                              |                                           | Net cash provided by financing activities |       |                   | 11,313 |        |       |        | 10,974 |  
|                                                 |                                                                                                            |                                              |                                           |                                           |       |                   |        |       
|Effect of exchange rate changes on cash          |                                                                                                            |                                              | (301                                      | )                                         |       |                   | 1,243  |       
|                                                 |                                                                                                            |                                              |                                           |                                           |       |                   |        |       
|Net decrease in cash and cash equivalents        |                                                                                                            |                                              | (563                                      | )                                         |       |                   | (181   | )     
|Cash and cash equivalents at beginning of period |                                                                                                            |                                              | 3,382                                     |                                           |       |                   | 3,026  |       
|                                                 |                                                                                                            |                                              |                                           |                                           |       |                   |        |       
|Cash and cash equivalents at end of period       |                                                                                                            | $                                            | 2,819                                     |                                           |       | $                 | 2,845  |       
|                                                 |                                                                                                            |                                              |                                           |                                           |       |                   |        |       

See accompanying notes to consolidated financial statements

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JAFRA COSMETICS INTERNATIONAL, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)


(1) Basis of Presentation

Jafra Cosmetics International, Inc., a Delaware corporation (JCI) is an
indirect wholly owned subsidiary of CDRJ Investments (Lux) S.A., a Luxembourg
société anonyme(the Parent). JCI, its subsidiaries, and certain other
subsidiaries of the Parent were organized by Clayton, Dubilier & Rice Fund V
Limited Partnership, a Cayman Islands exempted limited partnership managed by
Clayton, Dubilier & Rice, Inc. (CD&R) to
acquire (the Acquisition) the
worldwide Jafra Cosmetics business (the Jafra Business) of The Gillette
Company (Gillette). JCI and its subsidiaries (collectively, the Company)
have operations in the United States, Austria, Germany, Italy, the Netherlands,
Switzerland, the Dominican Republic and Thailand.

The accompanying unaudited interim consolidated financial statements as of
September 30, 2001 and for the three and nine months ended September 30, 2001 and 2000 reflect the
operations of the Company and have been prepared in accordance with Article 10
of the Securities and Exchange Commissions Regulation S-X. In the opinion of
management, the accompanying unaudited interim financial statements contain all
adjustments, consisting of normal recurring adjustments, necessary to present
fairly JCIs consolidated financial statements as of September 30, 2001 and for
the interim periods presented. All significant intercompany accounts and
transactions between entities comprising the Company have been eliminated in
consolidation.

In connection with the Acquisition, JCI and an affiliated company, Jafra
S.A. (the indirect, wholly owned Mexican subsidiary of the Parent) issued $100
million aggregate principal amount of 11.75% Subordinated Notes due 2008 (the
Notes). The Notes represent several obligations of JCI and Jafra S.A., with
each participating on a pro rata basis upon redemption. JCI and Jafra S.A.
have fully and unconditionally guaranteed the obligations of the other under
the Notes on a senior subordinated basis, subject to a 30-day standstill period
prior to enforcement of such guarantees. As the cross-guarantee of JCI and
Jafra S.A. is subject to a 30-day standstill period, the Parent is filing these
separate financial statements of JCI in its Quarterly Report on Form 10-Q for
the quarterly period ended September 30, 2001.

The functional currency of certain of the Companys subsidiaries consists
of currencies other than the U.S. dollar. For presentation purposes, assets
and liabilities are translated into U.S. dollars at current exchange rates, and
related revenues and expenses are translated at average exchange rates in
effect during the period. Resulting translation adjustments are recorded as a
component of other comprehensive income (loss).

In the fourth quarter of 2000, the Company adopted the provisions of
Emerging Issues Task Force Issue No. 00-10, Accounting for Shipping and
Handling Fees and Costs, which requires that amounts billed to customers for
shipping and handling fees be classified as revenues. Reclassifications have
been made to year 2000 amounts to reflect shipping and handling fees,
previously reported as reductions to selling, general, and administrative
expenses, in net sales in the accompanying consolidated statements of
operations. The total amount that has been reclassified as net sales is
$1,168,000 and $3,514,000 for the three and nine months ended September 30,
2000, respectively. Shipping and handling costs are included in selling, general and
administrative expenses.

Effective January 1, 2001, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 133, Accounting for Derivative Instruments
and Hedging Activities. SFAS 133, as amended and interpreted, establishes
accounting and reporting standards for derivative instruments and hedging
activities. The adoption of SFAS 133 did not have a material impact on the
Companys consolidated financial statements.

In July 2001, the
Financial Accounting Standards Board (FASB) issued two new statements: SFAS No. 141, Business
Combinations and SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No.
141 requires business combinations entered into after June 30, 2001 to be
accounted for using the purchase method of accounting. SFAS No. 142 requires that goodwill
not be amortized, but be tested for impairment at least annually. SFAS No. 142
is effective for fiscal years beginning after December 15, 2001 to all goodwill
and other intangible assets recognized in an entitys statement of financial
position at that date, regardless of when those assets were initially
recognized. The Company is evaluating the impact of the adoption of these
standards and has not yet determined the effect of adoption on its financial
position and results of operations. During the nine months ended September 30, 2001,
the Company recorded goodwill amortization expense of $631,000.

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JAFRA COSMETICS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

In August 2001, the FASB issued SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets. SFAS 144 supersedes SFAS 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of. SFAS 144 retained substantially all of the requirements of
SFAS 121 while resolving certain implementation issues and addresses the accounting for a segment of a business
accounted for as a discontinued operation. SFAS 144 is effective
for fiscal years beginning after December 15, 2001, with early application
encouraged. The Company is evaluating the impact of the adoption of this
standard and has not yet determined the effect of adoption on its financial
position and results of operations. The Company does not plan to adopt the
standard prior to December 15, 2001.

(2) Inventories

Inventories consist of the following (in thousands):

|                           |  |               |        |              |  |   |       | 
|-------------------------- |  | ------------- | ------ | ------------ |  | - | ----- | 
|                           |  | September 30, |        | December 31,
|                           |  | 2001          |        | 2000        
|                           |  |               |        |             
|Raw materials and supplies |  | $             |       |              |  | $ | 44    | 
|Finished goods             |  |               | 10,669 |              |  |   | 9,411 | 
|                           |  |               |        |              |  |   |       | 
|Total inventories          |  | $             | 10,669 |              |  | $ | 9,455 | 
|                           |  |               |        |              |  |   |       | 

(3) Property and Equipment

Property and equipment consist of the following (in thousands):

|                              |  |               |        |              |  |   |        | 
|----------------------------- |  | ------------- | ------ | ------------ |  | - | ------ | 
|                              |  | September 30, |        | December 31,
|                              |  | 2001          |        | 2000        
|                              |  |               |        |             
|Land                          |  | $             | 6,188  |              |  | $ | 6,188  | 
|Buildings                     |  |               | 6,709  |              |  |   | 5,998  | 
|Machinery and equipment       |  |               | 15,703 |              |  |   | 11,997 | 
|                              |  |               |        |              |  |   |        | 
|                              |  |               | 28,600 |              |  |   | 24,183 | 
|Less accumulated depreciation |  |               | 5,728  |              |  |   | 4,039  | 
|                              |  |               |        |              |  |   |        | 
|Property and equipment, net   |  | $             | 22,872 |              |  | $ | 20,144 | 
|                              |  |               |        |              |  |   |        | 

(4) Debt

During the nine months ended September 30, 2000, JCI repurchased and
retired a portion of the 11.75% Subordinated Notes due 2008 (the Notes) with
a par value of $6,500,000. In connection with the repurchase of the Notes, the
related portion of the unamortized deferred financing costs of $459,000 was
written off and included in the determination of the extraordinary loss on
early extinguishment of debt. The repurchase of the Notes resulted in an
extraordinary loss of $205,000, which is net of an income tax benefit of
$120,000.

(5) Income Taxes

The actual income tax rate differs from the expected income tax rate
(computed by applying the U.S. federal corporate rate of 35% to income before
income taxes) for the three and nine months ended September 30, 2001
principally as a result of valuation allowances provided against certain
operating losses in Europe and state income taxes in the United States.

(6) Comprehensive Income (Loss)

Comprehensive income (loss) is summarized as follows (in thousands):

|                                        |  |                    |       |                   |  |      |        |      |  |   |       |   |  |   |        |  
|--------------------------------------- |  | ------------------ | ----- | ----------------- |  | ---- | ------ | ---- |  | - | ----- | - |  | - | ------ | -
|                                        |  | Three Months Ended |       | Nine Months Ended
|                                        |  | September 30,      |       | September 30,    
|                                        |  |                    |       |                  
|                                        |  | 2001               |       | 2000              |  | 2001 |        | 2000
|                                        |  |                    |       |                   |  |      |        |     
|Net income (loss)                       |  | $                  | 2,336 |                   |  | $    | (830   | )    |  | $ | 3,697 |   |  | $ | (4,217 | )
|Foreign currency translation adjustment |  |                    | 812   |                   |  |      | (529   | )    |  |   | (533  | ) |  |   | (493   | )
|                                        |  |                    |       |                   |  |      |        |      |  |   |       |   |  |   |        |  
|Comprehensive income (loss)             |  | $                  | 3,148 |                   |  | $    | (1,359 | )    |  | $ | 3,164 |   |  | $ | (4,710 | )
|                                        |  |                    |       |                   |  |      |        |      |  |   |       |   |  |   |        |  

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JAFRA COSMETICS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

(7) Related Party Transactions

The Company distributes skin and body products to other affiliates of the
Parent (Affiliates). Sales to Affiliates, primarily in Mexico and South
America, were $4,097,000 and $10,278,000 for the three and nine months ended
September 30, 2001, respectively, and $4,399,000 and $11,162,000 for the three
and nine months ended September 30, 2000, respectively. These sales were made
at cost plus a markup ranging from 0 to 11%.

In addition, the Company provides certain management services, such as
legal, accounting and treasury, management oversight, and other administrative
functions to Affiliates. The cost of these services is included in selling,
general and administrative expenses in the accompanying consolidated statements
of operations. The Company charges out a portion of these management expenses
to its Affiliates based upon charges identified to specific Affiliates and a
formula using the percentage of revenues of each Affiliate to the total
consolidated revenues of the Parent. The Company believes the amounts and
methods of allocation are reasonable and approximate the cost of the actual
services provided. The management fee income, which consists of amounts billed
to Affiliates in Mexico and South America, was $2,119,000 and $6,555,000 for
the three and nine months ended September 30, 2001, respectively, and
$1,670,000 and $5,042,000 for the three and nine months ended September 30,
2000, respectively.

The Company is charged a royalty by Jafra S.A.
for the right to use the Jafra trademark in the United States and Europe. The
total royalty expense charged by Jafra S.A. to the Company was $410,000 and
$1,261,000 for the three and nine months ended September 30, 2001, respectively
and $261,000 and $820,000 for the three and nine months ended September 30,
2000, respectively, and is offset against royalty income from Affiliates in the
accompanying consolidated statements of operations.

The Company owns the worldwide rights to its multi-level sales know-how
(referred to as the Jafra Way). The Jafra Way was initially developed in the
United States for lineage, training, and compensation of consultants. The
royalty fees charged by the Company to Jafra S.A. were $5,640,000 and
$16,464,000 for the three and nine months ended September 30, 2001,
respectively, and $3,913,000 and $11,204,000 for the three and nine months
ended September 30, 2000, respectively, and are based upon a percentage of
Jafra S.A.s sales.

The Company has granted loans to certain Affiliates at annual interest
rates ranging from 6% to 9%. Such loans are due to be repaid five years from
the date of grant, with no prepayment penalty. Notes receivable from
Affiliates at December 31, 2000 consists primarily of amounts
receivable from Jafra
S.A. as a result of Jafra S.A.s purchase of U.S. and German trademarks from
the Company in December 1999, and amounts billed to Jafra S.A. in connection
with the Jafra Way royalty. At September 30, 2001, notes receivable from
Affiliates consists primarily of loans the Company has made to indirect
subsidiaries of the Parent to fund certain of the their operations in South
America. Net interest income from Affiliates, primarily Jafra S.A., was
$140,000 and $605,000 for the three and nine months ended September 30, 2001,
respectively, and $482,000 and $1,761,000 for the three and nine months ended
September 30, 2000, respectively.

(8) Financial Reporting for Business Segments

The Companys business is comprised of one industry segment, direct
selling, with worldwide operations, principally in the United States and
Europe. The Company is organized into geographical business units that each
sell the full line of Jafra cosmetics, skin care, body care, fragrances, and
other products. The Company has two reportable business segments: the United
States and Europe. Business results for subsidiaries in the Dominican Republic
and Thailand are combined and included in the following table under the caption
All Others.

The accounting policies used to prepare the information reviewed by the
Companys chief operating decision makers are the same as those described in
the summary of significant accounting policies included in the
Companys audited consolidated financial statements as of and for the year
ended December 31, 2000 included in the Parents Annual Report on Form 10-K.
The Company evaluates performance based on segment operating income, excluding
restructuring and impairment charges, unusual gains and losses, and
amortization of goodwill and intangibles. Consistent with the information
reviewed by the Companys chief operating decision makers, corporate costs,
foreign exchange gains and losses, interest expense, other nonoperating income
or expense, and income taxes are not allocated to operating segments for
purposes of this presentation. The effects of intersegment

17



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JAFRA COSMETICS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

sales (net sales and related gross profit) are excluded from the computation of segment
operating income. Sales and gross profit related to Affiliates (primarily in
Mexico and South America) is included in the following table under the caption
Corporate, Unallocated and Other. Segment assets exclude notes and accounts
receivable from Affiliates.

|                                                       |  |                |        |           |  |        |        |          |  |           |       |             |  |              |        |  |  |            |         |   |  |   |         |  
|------------------------------------------------------ |  | -------------- | ------ | --------- |  | ------ | ------ | -------- |  | --------- | ----- | ----------- |  | ------------ | ------ |  |  | ---------- | ------- | - |  | - | ------- | -
|                                                       |  |                |        |           |  |        |        |          |  |           |       |             |  |              |        |  |  | Corporate, |         |   |  |  
|                                                       |  | United         |        |           |  |        |        | All      |  | Total     |       | Unallocated |  | Consolidated
|                                                       |  | States         |        | Europe(1) |  | Others |        | Segments |  | And Other |       | Total      
|                                                       |  |                |        |           |  |        |        |          |  |           |       |            
|                                                       |  | (in thousands)
|For the Three Months ended
September 30, 2001          |  |                |        |           |  |        |        |          |  |           |       |             |  |              |        |  |  |            |         |   |  |   |         |  
|Net sales                                              |  | $              | 18,915 |           |  | $      | 5,736  |          |  | $         | 1,129 |             |  | $            | 25,780 |  |  | $          | 4,097   |   |  | $ | 29,877  |  
|Operating profit (loss)                                |  |                | 2,852  |           |  |        | (60    | )        |  |           | (54   | )           |  |              | 2,738  |  |  |            | (3,025  | ) |  |   | (287    | )
|Depreciation and amortization                          |  |                | 759    |           |  |        | 22     |          |  |           | 56    |             |  |              | 837    |  |  |            |        |   |  |   | 837     |  
|                                                      
|                                                      
|                                                      
|                                                      
|For the Three Months ended
September 30, 2000          |  |                |        |           |  |        |        |          |  |           |       |             |  |              |        |  |  |            |         |   |  |   |         |  
|Net sales                                              |  | $              | 17,259 |           |  | $      | 6,021  |          |  |           | 521   |             |  | $            | 23,801 |  |  | $          | 4,399   |   |  | $ | 28,200  |  
|Operating profit (loss)                                |  |                | 2,989  |           |  |        | (436   | )        |  |           | 18    |             |  |              | 2,571  |  |  |            | (4,275  | ) |  |   | (1,704  | )
|Depreciation and amortization                          |  |                | 509    |           |  |        | 342    |          |  |           | 9     |             |  |              | 860    |  |  |            |        |   |  |   | 860     |  
|                                                      
|                                                      
|                                                      
|                                                      
|As of and for the Nine
Months ended September 30, 2001 |  |                |        |           |  |        |        |          |  |           |       |             |  |              |        |  |  |            |         |   |  |   |         |  
|Net sales                                              |  | $              | 58,035 |           |  | $      | 18,503 |          |  | $         | 2,925 |             |  | $            | 79,463 |  |  | $          | 10,277  |   |  | $ | 89,740  |  
|Operating profit (loss)                                |  |                | 6,829  |           |  |        | 479    |          |  |           | (848  | )           |  |              | 6,460  |  |  |            | (9,599  | ) |  |   | (3,139  | )
|Depreciation and amortization                          |  |                | 1,931  |           |  |        | 300    |          |  |           | 34    |             |  |              | 2,265  |  |  |            |        |   |  |   | 2,265   |  
|Capital expenditures                                   |  |                | 4,060  |           |  |        | 200    |          |  |           | 10    |             |  |              | 4,270  |  |  |            |        |   |  |   | 4,270   |  
|Segment assets                                         |  |                | 70,490 |           |  |        | 17,830 |          |  |           | 2,873 |             |  |              | 91,193 |  |  |            | 31,652  |   |  |   | 122,845 |  
|                                                      
|                                                      
|                                                      
|                                                      
|As of and for the Nine
Months ended September 30, 2000 |  |                |        |           |  |        |        |          |  |           |       |             |  |              |        |  |  |            |         |   |  |   |         |  
|Net sales                                              |  | $              | 54,292 |           |  | $      | 19,458 |          |  | $         | 747   |             |  | $            | 74,497 |  |  | $          | 11,162  |   |  | $ | 85,659  |  
|Operating profit (loss)                                |  |                | 5,642  |           |  |        | (841   | )        |  |           | (283  | )           |  |              | 4,518  |  |  |            | (11,409 | ) |  |   | (6,891  | )
|Depreciation and amortization                          |  |                | 1,516  |           |  |        | 735    |          |  |           | 9     |             |  |              | 2,260  |  |  |            |        |   |  |   | 2,260   |  
|Capital expenditures                                   |  |                | 2,903  |           |  |        | 39     |          |  |           | 629   |             |  |              | 3,571  |  |  |            |        |   |  |   | 3,571   |  
|Segment assets                                         |  |                | 68,941 |           |  |        | 15,844 |          |  |           | 1,751 |             |  |              | 86,536 |  |  |            | 37,454  |   |  |   | 123,990 |  

(1) excludes Poland, an indirect
wholly owned subsidiary of the Parent, an affiliate of JCI.

(9) Restructuring Charges and Related Accruals

At December 31, 2000, restructuring liabilities of approximately $500,000
were reflected on the Companys consolidated balance sheet. During the three
months ended September 30, 2001, nominal payments have been charged against
this accrual and during the nine months ended September 30, 2001, payments of
approximately $300,000, primarily related to severance, have been charged against this accrual. As of September
30, 2001, the remaining restructuring liability is approximately $200,000.

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JAFRA COSMETICS INTERNATIONAL, S.A. DE C.V.




CONSOLIDATED BALANCE SHEETS


(In thousands, except share amounts)
(Unaudited)


|                                     |                                                                                                      |  |                            |        |   |               |        |              |   |         |  | 
|------------------------------------ | ---------------------------------------------------------------------------------------------------- |  | -------------------------- | ------ | - | ------------- | ------ | ------------ | - | ------- |  | 
|                                     |                                                                                                      |  |                            |        |   | September 30, |        | December 31,
|                                     |                                                                                                      |  |                            |        |   | 2001          |        | 2000        
|                                     |                                                                                                      |  |                            |        |   |               |        |             
|ASSETS                               |                                                                                                      |  |                            |        |   |               |        |             
|Current assets:                      |                                                                                                      |  |                            |        |   |               |        |             
|                                     | Cash and cash equivalents                                                                            |  | $                          | 1,979  |   |               | $      | 561          |  
|                                     | Receivables, less allowances for doubtful accounts of
$2,481 in 2001 and $2,117 in 2000              |  |                            | 36,714 |   |               |        | 26,712       |  
|                                     | Inventories                                                                                          |  |                            | 25,422 |   |               |        | 25,149       |  
|                                     | Receivables from affiliates                                                                          |  |                            | 5,316  |   |               |        | 4,679        |  
|                                     | Prepaid income taxes                                                                                 |  |                            |       |   |               |        | 1,846        |  
|                                     | Prepaid expenses                                                                                     |  |                            | 2,018  |   |               |        | 1,948        |  
|                                     | Value-added tax receivables                                                                          |  |                            | 1,352  |   |               |        | 5,146        |  
|                                     |                                                                                                      |  |                            |        |   |               |        |             
|                                     |                                                                                                      |  | Total current assets       |        |   | 72,801        |        |              |   | 66,041  | 
|Property and equipment, net          |                                                                                                      |  | 31,064                     |        |   |               | 30,402 |             
|Other assets:                        |                                                                                                      |  |                            |        |   |               |        |             
|                                     | Goodwill, net of accumulated amortization of $2,828 in 2001
and $2,154 in 2000                       |  |                            | 31,376 |   |               |        | 31,550       |  
|                                     | Trademarks, net of accumulated amortization of $3,512 in 2001
and $2,475 in 2000                     |  |                            | 48,810 |   |               |        | 49,082       |  
|                                     | Deferred financing fees, net of accumulated
amortization of $2,795 in 2001 and $2,127 in 2000        |  |                            | 1,419  |   |               |        | 1,983        |  
|                                     | Other                                                                                                |  |                            | 1,744  |   |               |        | 2,707        |  
|                                     |                                                                                                      |  |                            |        |   |               |        |             
|                                     |                                                                                                      |  | Total                      |        | $ | 187,214       |        |              | $ | 181,765 | 
|                                     |                                                                                                      |  |                            |        |   |               |        |             
|LIABILITIES AND STOCKHOLDERS EQUITY |                                                                                                      |  |                            |        |   |               |        |             
|Current liabilities:                 |                                                                                                      |  |                            |        |   |               |        |             
|                                     | Short-term debt, including current portion of long-term debt                                         |  | $                          | 2,998  |   |               | $      | 2,346        |  
|                                     | Accounts payable                                                                                     |  |                            | 14,098 |   |               |        | 20,266       |  
|                                     | Accrued liabilities                                                                                  |  |                            | 21,393 |   |               |        | 20,735       |  
|                                     | Income taxes payable                                                                                 |  |                            | 2,901  |   |               |        |             |  
|                                     | Payables to affiliates                                                                               |  |                            | 17,768 |   |               |        | 2,140        |  
|                                     | Deferred income taxes                                                                                |  |                            | 5,091  |   |               |        | 5,048        |  
|                                     |                                                                                                      |  |                            |        |   |               |        |             
|                                     |                                                                                                      |  | Total current liabilities  |        |   | 64,249        |        |              |   | 50,535  | 
|Long-term debt                       |                                                                                                      |  | 38,787                     |        |   |               | 35,572 |             
|Deferred income taxes                |                                                                                                      |  | 16,039                     |        |   |               | 15,809 |             
|Notes payable to affiliates          |                                                                                                      |  |                           |        |   |               | 20,093 |             
|                                     |                                                                                                      |  |                            |        |   |               |        |             
|                                     |                                                                                                      |  | Total liabilities          |        |   | 119,075       |        |              |   | 122,009 | 
|                                     |                                                                                                      |  |                            |        |   |               |        |             
|Commitments and contingencies        |                                                                                                      |  |                           |        |   |               |       |             
|Stockholders equity:                |                                                                                                      |  |                            |        |   |               |        |             
|                                     | Series B common stock, no par value; authorized, issued
and outstanding, 151 shares in 2001 and 2000 |  |                            |       |   |               |        |             |  
|                                     | Additional paid-in capital                                                                           |  |                            | 34,184 |   |               |        | 34,184       |  
|                                     | Retained earnings                                                                                    |  |                            | 36,114 |   |               |        | 27,030       |  
|                                     | Accumulated other comprehensive loss                                                                 |  |                            | (2,159 | ) |               |        | (1,458       | )
|                                     |                                                                                                      |  |                            |        |   |               |        |             
|                                     |                                                                                                      |  | Total stockholders equity |        |   | 68,139        |        |              |   | 59,756  | 
|                                     |                                                                                                      |  |                            |        |   |               |        |             
|                                     |                                                                                                      |  | Total                      |        | $ | 187,214       |        |              | $ | 181,765 | 
|                                     |                                                                                                      |  |                            |        |   |               |        |             

See accompanying notes to consolidated financial statements

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JAFRA COSMETICS INTERNATIONAL, S.A. DE C.V.




CONSOLIDATED STATEMENTS OF OPERATIONS


(In thousands)
(Unaudited)


|                                                                                          |                                    |   |                    |        |                   |   |        |        |      |   |         |         |   |   |         |         |  
|----------------------------------------------------------------------------------------- | ---------------------------------- | - | ------------------ | ------ | ----------------- | - | ------ | ------ | ---- | - | ------- | ------- | - | - | ------- | ------- | -
|                                                                                          |                                    |   | Three Months Ended |        | Nine Months Ended
|                                                                                          |                                    |   | September 30,      |        | September 30,     |  
|                                                                                          |                                    |   |                    |        |                  
|                                                                                          |                                    |   | 2001               |        | 2000              |   | 2001   |        | 2000
|                                                                                          |                                    |   |                    |        |                   |   |        |        |     
|Net sales                                                                                 |                                    | $ | 65,684             |        |                   | $ | 54,064 |        |      | $ | 191,973 |         |   | $ | 152,016 |        
|Cost of sales                                                                             |                                    |   | 16,443             |        |                   |   | 15,188 |        |      |   | 50,685  |         |   |   | 40,213  |        
|                                                                                          |                                    |   |                    |        |                   |   |        |        |      |   |         |         |   |   |         |        
|                                                                                          | Gross profit                       |   |                    | 49,241 |                   |   |        | 38,876 |      |   |         | 141,288 |   |   |         | 111,803 |  
|Selling, general and administrative expenses                                              |                                    |   | 31,361             |        |                   |   | 24,195 |        |      |   | 88,876  |         |   |   | 68,313  |        
|Management fee expense to affiliates                                                      |                                    |   | 2,118              |        |                   |   | 1,666  |        |      |   | 6,555   |         |   |   | 5,014   |        
|                                                                                          |                                    |   |                    |        |                   |   |        |        |      |   |         |         |   |   |         |        
|                                                                                          | Income from operations             |   |                    | 15,762 |                   |   |        | 13,015 |      |   |         | 45,857  |   |   |         | 38,476  |  
|Other income (expense):                                                                   |                                    |   |                    |        |                   |   |        |        |      |   |         |         |   |   |         |        
|                                                                                          | Royalty expense to affiliates, net |   |                    | (5,230 | )                 |   |        | (3,652 | )    |   |         | (15,203 | ) |   |         | (10,384 | )
|                                                                                          | Exchange loss, net                 |   |                    | (620   | )                 |   |        | (4,044 | )    |   |         | (6,862  | ) |   |         | (9,313  | )
|                                                                                          | Interest, net                      |   |                    | (1,389 | )                 |   |        | (1,828 | )    |   |         | (4,613  | ) |   |         | (6,061  | )
|                                                                                          | Other, net                         |   |                    | 47     |                   |   |        | 216    |      |   |         | (41     | ) |   |         | 1,462   |  
|                                                                                          |                                    |   |                    |        |                   |   |        |        |      |   |         |         |   |   |         |        
|Income before income taxes, extraordinary item
and cumulative effect of accounting change |                                    |   | 8,570              |        |                   |   | 3,707  |        |      |   | 19,138  |         |   |   | 14,180  |        
|Income tax expense                                                                        |                                    |   | 3,282              |        |                   |   | 825    |        |      |   | 7,380   |         |   |   | 5,323   |        
|                                                                                          |                                    |   |                    |        |                   |   |        |        |      |   |         |         |   |   |         |        
|Income before extraordinary item and cumulative
effect of accounting change               |                                    |   | 5,288              |        |                   |   | 2,882  |        |      |   | 11,758  |         |   |   | 8,857   |        
|Extraordinary loss on early extinguishment of debt,
net of income tax benefit of $75      |                                    |   |                   |        |                   |   |       |        |      |   |        |         |   |   | 110     |        
|                                                                                          |                                    |   |                    |        |                   |   |        |        |      |   |         |         |   |   |         |        
|Income before cumulative effect of
accounting change                                      |                                    |   | 5,288              |        |                   |   | 2,882  |        |      |   | 11,758  |         |   |   | 8,747   |        
|Cumulative effect of accounting change,
net of income tax expense of $82                  |                                    |   |                   |        |                   |   |       |        |      |   | 126     |         |   |   |        |        
|                                                                                          |                                    |   |                    |        |                   |   |        |        |      |   |         |         |   |   |         |        
|Net income                                                                                |                                    | $ | 5,288              |        |                   | $ | 2,882  |        |      | $ | 11,884  |         |   | $ | 8,747   |        
|                                                                                          |                                    |   |                    |        |                   |   |        |        |      |   |         |         |   |   |         |        

See accompanying notes to consolidated financial statements

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JAFRA COSMETICS INTERNATIONAL, S.A. DE C.V.




CONSOLIDATED STATEMENTS OF CASH FLOWS


(In thousands)
(Unaudited)


|                                                 |                                                                                                                                                    |                                                   |                                           |                                           |       |                   |         |         |       |         |         |  
|------------------------------------------------ | -------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------- | ----------------------------------------- | ----------------------------------------- | ----- | ----------------- | ------- | ------- | ----- | ------- | ------- | -
|                                                 |                                                                                                                                                    |                                                   |                                           |                                           |       | Nine Months Ended
|                                                 |                                                                                                                                                    |                                                   |                                           |                                           |       | September 30,    
|                                                 |                                                                                                                                                    |                                                   |                                           |                                           |       |                  
|                                                 |                                                                                                                                                    |                                                   |                                           |                                           |       | 2001              |         | 2000   
|                                                 |                                                                                                                                                    |                                                   |                                           |                                           |       |                   |         |        
|Cash flows from operating activities:            |                                                                                                                                                    |                                                   |                                           |                                           |       |                   |         |        
|                                                 | Net income                                                                                                                                         |                                                   | $                                         | 11,884                                    |       |                   | $       | 8,747   |      
|                                                 | Extraordinary loss on early extinguishment of debt, net of taxes                                                                                   |                                                   |                                           |                                          |       |                   |         | 110     |      
|                                                 | Cumulative effect of accounting change, net of taxes                                                                                               |                                                   |                                           | (126                                      | )     |                   |         |        |      
|                                                 |                                                                                                                                                    |                                                   |                                           |                                           |       |                   |         |        
|                                                 | Income before extraordinary item and cumulative effect of accounting change                                                                        |                                                   |                                           | 11,758                                    |       |                   |         | 8,857   |      
|                                                 | Adjustments to reconcile income before extraordinary item and
cumulative effect of accounting change to net cash provided by
operating activities: |                                                   |                                           |                                           |       |                   |         |         |       |        
|                                                 |                                                                                                                                                    | Depreciation and amortization                     |                                           |                                           | 3,354 |                   |         |         | 3,167 |        
|                                                 |                                                                                                                                                    | Amortization of deferred financing fees           |                                           |                                           | 602   |                   |         |         | 600   |        
|                                                 |                                                                                                                                                    | Unrealized foreign exchange and derivative losses |                                           |                                           | 175   |                   |         |         | 5,030 |        
|                                                 |                                                                                                                                                    | Deferred realized derivative losses               |                                           |                                           | (721  | )                 |         |         |      |        
|                                                 |                                                                                                                                                    | Changes in operating assets and liabilities:      |                                           |                                           |       |                   |         |         |       |        
|                                                 |                                                                                                                                                    |                                                   | Receivables, net                          |                                           |       | (9,758            | )       |         |       | (3,870  | )      
|                                                 |                                                                                                                                                    |                                                   | Inventories                               |                                           |       | 102               |         |         |       | (11,648 | )      
|                                                 |                                                                                                                                                    |                                                   | Prepaid expenses and other current assets |                                           |       | (41               | )       |         |       | 5,589   |        
|                                                 |                                                                                                                                                    |                                                   | Value-added tax receivables               |                                           |       | 3,931             |         |         |       | (5,218  | )      
|                                                 |                                                                                                                                                    |                                                   | Intercompany receivables and payables     |                                           |       | 15,362            |         |         |       | 8,712   |        
|                                                 |                                                                                                                                                    |                                                   | Other assets                              |                                           |       | 1,019             |         |         |       | (1,086  | )      
|                                                 |                                                                                                                                                    |                                                   | Accounts payable and accrued liabilities  |                                           |       | (7,925            | )       |         |       | 1,442   |        
|                                                 |                                                                                                                                                    |                                                   | Income taxes payable/prepaid              |                                           |       | 5,489             |         |         |       | 15,007  |        
|                                                 |                                                                                                                                                    |                                                   |                                           |                                           |       |                   |         |        
|                                                 |                                                                                                                                                    |                                                   |                                           | Net cash provided by operating activities |       |                   | 23,347  |         |       |         | 26,582  |  
|                                                 |                                                                                                                                                    |                                                   |                                           |                                           |       |                   |         |        
|Cash flows from investing activities:            |                                                                                                                                                    |                                                   |                                           |                                           |       |                   |         |        
|                                                 | Purchases of property and equipment                                                                                                                |                                                   |                                           | (2,039                                    | )     |                   |         | (819    | )    
|                                                 |                                                                                                                                                    |                                                   |                                           |                                           |       |                   |         |        
|                                                 |                                                                                                                                                    |                                                   |                                           | Net cash used in investing activities     |       |                   | (2,039  | )       |       |         | (819    | )
|                                                 |                                                                                                                                                    |                                                   |                                           |                                           |       |                   |         |        
|Cash flows from financing activities:            |                                                                                                                                                    |                                                   |                                           |                                           |       |                   |         |        
|                                                 | Repurchase of subordinated notes                                                                                                                   |                                                   |                                           |                                          |       |                   |         | (4,239  | )    
|                                                 | Repayments under term loan facility                                                                                                                |                                                   |                                           | (1,500                                    | )     |                   |         | (1,125  | )    
|                                                 | Net borrowings (repayments) under revolving credit facility                                                                                        |                                                   |                                           | 4,000                                     |       |                   |         | (500    | )    
|                                                 | Net proceeds from bank debt                                                                                                                        |                                                   |                                           | 1,367                                     |       |                   |         | 5,319   |      
|                                                 | Net
transactions with affiliates                                                                                                                   |                                                   |                                           | (20,712                                   | )     |                   |         | (24,391 | )    
|                                                 | Payment of dividends                                                                                                                               |                                                   |                                           | (2,800                                    | )     |                   |         |        |      
|                                                 |                                                                                                                                                    |                                                   |                                           |                                           |       |                   |         |        
|                                                 |                                                                                                                                                    |                                                   |                                           | Net cash used in financing activities     |       |                   | (19,645 | )       |       |         | (24,936 | )
|                                                 |                                                                                                                                                    |                                                   |                                           |                                           |       |                   |         |        
|Effect of exchange rate changes on cash          |                                                                                                                                                    |                                                   | (245                                      | )                                         |       |                   | (588    | )      
|Net increase in cash and cash equivalents        |                                                                                                                                                    |                                                   | 1,418                                     |                                           |       |                   | 239     |        
|Cash and cash equivalents at beginning of period |                                                                                                                                                    |                                                   | 561                                       |                                           |       |                   | 3       |        
|                                                 |                                                                                                                                                    |                                                   |                                           |                                           |       |                   |         |        
|Cash and cash equivalents at end of period       |                                                                                                                                                    | $                                                 | 1,979                                     |                                           |       | $                 | 242     |        
|                                                 |                                                                                                                                                    |                                                   |                                           |                                           |       |                   |         |        

See accompanying notes to consolidated financial statements

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JAFRA COSMETICS INTERNATIONAL, S.A. DE C.V. AND SUBSIDIARIES




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)


(1) Basis of Presentation

Jafra Cosmetics International, S.A. de C.V., a sociedad anomina de capital
variableorganized under the laws of the United Mexican States (Jafra S.A.)
is an indirect wholly owned subsidiary of CDRJ Investments (Lux) S.A., a
Luxembourg société anonyme(the Parent). Jafra S.A., its subsidiaries, and
certain other subsidiaries of the Parent were organized by Clayton, Dubilier &
Rice Fund V Limited Partnership, a Cayman Islands exempted limited partnership
managed by Clayton, Dubilier & Rice, Inc. (CD&R) to acquire (the
Acquisition) the worldwide Jafra Cosmetics business (the
Jafra
Business) of The Gillette Company (Gillette).

The accompanying unaudited interim consolidated financial statements as of
September 30, 2001 and for the three and nine months ended September 30, 2001 and 2000 reflect the
operations of Jafra S.A. and its subsidiaries (collectively, the Company) and
have been prepared in accordance with Article 10 of the Securities and Exchange
Commissions Regulation S-X. In the opinion of management, the accompanying
unaudited interim financial statements contain all adjustments, consisting of
normal recurring adjustments, necessary to present fairly Jafra S.A.s
consolidated financial statements as of September 30, 2001 and for the
interim periods presented. All significant intercompany accounts and
transactions between entities comprising the Company have been eliminated in
consolidation.

In connection with the Acquisition, Jafra S.A. and an affiliated company,
JCI (the indirect, wholly owned United States subsidiary of the Parent) issued
$100 million aggregate principal amount of 11.75% Subordinated Notes due 2008
(the Notes). The Notes represent several obligations of
Jafra S.A. and JCI,
with each participating on a pro rata basis upon redemption. Jafra S.A. and JCI
have fully and unconditionally guaranteed the obligations of the other under
the Notes on a senior subordinated basis, subject to a 30-day standstill period
prior to enforcement of such guarantees. As the cross-guarantee of Jafra S.A.
and JCI is subject to a 30-day standstill period, the Parent is filing these
separate financial statements of Jafra S.A. in its Quarterly Report on Form
10-Q for the quarterly period ended September 30, 2001.

The functional currency for the Company is the Mexican peso. For
presentation purposes, assets and liabilities are translated into U.S. dollars
at current exchange rates, and related revenues and expenses are translated at
average exchange rates in effect during the period. Resulting translation
adjustments are recorded as a component of other comprehensive income.

In the fourth quarter of 2000, the Company adopted the provisions of
Emerging Issues Task Force Issue No. 00-10, Accounting for Shipping and
Handling Fees and Costs, which requires that amounts billed to customers for
shipping and handling fees be classified as revenues. Reclassifications have
been made to year 2000 amounts to reflect shipping and handling fees,
previously reported as reductions to selling, general, and administrative
expenses, in net sales in the accompanying consolidated statements of
operations. The total amounts that have been reclassified as net sales are
$1,274,000 and $3,682,000 for the three and nine months ended September 30,
2000, respectively. Shipping and handling costs are included in selling,
general and administrative expenses.

Effective January 1, 2001, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 133, Accounting for Derivative Instruments
and Hedging Activities. SFAS 133, as amended and interpreted, establishes
accounting and reporting standards for derivative instruments and hedging
activities. In connection with the adoption of SFAS 133, at January 1, 2001,
the Company recorded a net gain of $126,000 (net of a tax effect of $82,000) as
a cumulative transition adjustment to earnings. This adjustment relates to
derivatives not designated as hedges prior to adoption of SFAS 133, and
represents the difference between the carrying value and the fair value of such
instruments at January 1, 2001 (See Note 8).

In July 2001, the
Financial Accounting Standards Board (FASB) approved two new statements: SFAS No. 141, Business
Combinations and SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No.
141 requires business combinations entered into after June 30, 2001 to be
accounted for using the purchase method of accounting. SFAS No. 142 requires that goodwill
not be amortized, but be tested for impairment at least annually. SFAS No. 142
is effective for fiscal years beginning after December 15, 2001 to all goodwill
and other intangible assets recognized in an entitys statement of financial
position at that date, regardless of when those assets were initially
recognized. The Company
is evaluating the impact of the adoption of these standards and has not yet
determined the effect of adoption on its financial position and results of
operations. During the nine months ended September 30, 2001, the
Company recorded goodwill amortization expense of $651,000.

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JAFRA COSMETICS INTERNATIONAL, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

In August 2001, the FASB issued SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets. SFAS 144 supersedes SFAS 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of. SFAS 144 retained substantially all of the requirements of
SFAS 121 while resolving certain implementation issues and addresses
the accounting for a segment of a business accounted for as a
discontinued operation. SFAS 144 is effective
for fiscal years beginning after December 15, 2001, with early application
encouraged. The Company is evaluating the impact of the adoption of this
standard and has not yet determined the effect of adoption on its financial
position and results of operations. The Company does not plan to adopt the
standard prior to December 15, 2001.

(2) Inventories

Inventories consist of the following (in thousands):

|                           |  |               |        |              |  |   |        | 
|-------------------------- |  | ------------- | ------ | ------------ |  | - | ------ | 
|                           |  | September 30, |        | December 31,
|                           |  | 2001          |        | 2000        
|                           |  |               |        |             
|Raw materials and supplies |  | $             | 6,194  |              |  | $ | 6,443  | 
|Finished goods             |  |               | 19,228 |              |  |   | 18,706 | 
|                           |  |               |        |              |  |   |        | 
|Total inventories          |  | $             | 25,422 |              |  | $ | 25,149 | 
|                           |  |               |        |              |  |   |        | 

(3) Property and Equipment

Property and equipment consist of the following (in thousands):

|                              |  |               |        |              |  |   |        | 
|----------------------------- |  | ------------- | ------ | ------------ |  | - | ------ | 
|                              |  | September 30, |        | December 31,
|                              |  | 2001          |        | 2000        
|                              |  |               |        |             
|Land                          |  | $             | 11,200 |              |  | $ | 11,036 | 
|Buildings                     |  |               | 11,256 |              |  |   | 11,091 | 
|Machinery and equipment       |  |               | 13,341 |              |  |   | 12,146 | 
|                              |  |               |        |              |  |   |        | 
|                              |  |               | 35,797 |              |  |   | 34,273 | 
|Less accumulated depreciation |  |               | 4,733  |              |  |   | 3,871  | 
|                              |  |               |        |              |  |   |        | 
|Property and equipment, net   |  | $             | 31,064 |              |  | $ | 30,402 | 
|                              |  |               |        |              |  |   |        | 

(4) Debt

During the nine months ended September 30, 2000, Jafra S.A. repurchased
and retired a portion of the 11.75% Subordinated Notes due 2008 (the Notes)
with a par value of $4,300,000. In connection with the repurchase of the
Notes, the related portion of the unamortized deferred financing costs of
$274,000 was written off and included in the determination of the extraordinary
loss on early extinguishment of debt. The repurchase of the Notes resulted in
an extraordinary loss of $110,000, which is net of an income tax benefit of
$75,000.

During the nine months ended September 30, 2001, Jafra S.A. entered into
an unsecured bank loan agreement, borrowing the peso equivalent of
$1,765,000 at a
weighted average annual interest rate of 18.66%. Principal and interest
payments are due monthly through September 26, 2004. As of September 30, 2001,
$623,000 of this loan is classified as short-term debt and $1,090,000
of this loan is classified as long-term debt in the accompanying
consolidated balance sheet.

(5) Income Taxes

The actual income tax rate differs from the expected income tax rate
(computed by applying the Mexican federal corporate rate of 35% to income
before income taxes) for the three and nine months ended September 30, 2001
principally as a result of certain inflation-related income tax adjustments.

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JAFRA COSMETICS INTERNATIONAL, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

(6) Comprehensive Income

Comprehensive income is summarized as follows (in thousands):

|                                                                                |  |                    |        |                   |  |      |       |      |  |   |        |   |  |   |       | 
|------------------------------------------------------------------------------- |  | ------------------ | ------ | ----------------- |  | ---- | ----- | ---- |  | - | ------ | - |  | - | ----- | 
|                                                                                |  | Three Months Ended |        | Nine Months Ended
|                                                                                |  | September 30,      |        | September 30,    
|                                                                                |  |                    |        |                  
|                                                                                |  | 2001               |        | 2000              |  | 2001 |       | 2000
|                                                                                |  |                    |        |                   |  |      |       |     
|Net income                                                                      |  |                    |        |                   |  |      |       |      |  |   |        |   |  |   |       | 
|                                                                                |  | $                  | 5,288  |                   |  | $    | 2,882 |      |  | $ | 11,884 |   |  | $ | 8,747 | 
|Unrealized and
deferred realized
gains (losses) on
derivatives                  |  |                    | 1,842  |                   |  |      |      |      |  |   | (1,877 | ) |  |   |      | 
|Tax (expense)
benefit on
unrealized and
deferred realized
losses on
derivatives |  |                    | (721   | )                 |  |      |      |      |  |   | 721    |   |  |   |      | 
|Foreign currency
translation
adjustment                                         |  |                    | (3,797 | )                 |  |      | 2,319 |      |  |   | 455    |   |  |   | 183   | 
|                                                                                |  |                    |        |                   |  |      |       |      |  |   |        |   |  |   |       | 
|Comprehensive
income                                                            |  | $                  | 2,612  |                   |  | $    | 5,201 |      |  | $ | 11,183 |   |  | $ | 8,930 | 
|                                                                                |  |                    |        |                   |  |      |       |      |  |   |        |   |  |   |       | 

(7) Related Party Transactions

The Company manufactures and distributes color cosmetics and fragrance
products to other affiliates of the Parent (Affiliates). Sales to
Affiliates, primarily in the United States and Germany, were $3,015,000 and
$9,036,000 for the three and nine months ended September 30, 2001,
respectively, and $3,874,000 and $8,280,000 for the three and nine months ended
September 30, 2000, respectively. These sales were made at cost plus a markup
ranging from 0 to 11%.

In addition, the Company is provided with certain management services,
such as legal, accounting and treasury, management oversight, and other
administrative functions from JCI. The cost of these services is included in
management fee expense from Affiliate in the accompanying consolidated
statements of operations. JCI charges out a portion of these management
expenses to its Affiliates based upon charges identified to specific Affiliates
and a formula using the percentage of revenues of each Affiliate to the total
consolidated revenues of the Parent. JCI believes the amounts and methods of
allocation are reasonable and approximate the cost of the actual services
provided. The management fee expense charged by JCI to the Company was
$2,118,000 and $6,555,000 for the three and nine months ended September 30,
2001, respectively, and $1,666,000 and $5,014,000 for the three and nine months
ended September 30, 2000, respectively.

Jafra S.A. charges JCI a royalty for the right to use
the Jafra trademark in the United States and Europe. The total royalty income
earned by Jafra S.A. from JCI and Jafra Germany was $410,000 and $1,261,000 for
the three and nine months ended September 30, 2001, respectively, and $261,000
and $820,000 for the three and nine months ended September 30, 2000,
respectively, and is offset against royalty expense to Affiliates in the
accompanying consolidated statements of operations.

JCI owns the worldwide rights to its multi-level sales know-how (referred
to as the Jafra Way). The Jafra Way was initially developed in the United
States for lineage, training, and compensation of consultants. The royalty fees
charged by JCI to Jafra S.A. for the use of the Jafra Way were $5,640,000 and
$16,464,000 for the three and nine months ended September 30, 2001,
respectively, and $3,913,000 and $11,204,000 for the three and nine months
ended September 30, 2000, respectively, and are based upon a percentage of
Jafra S.A.s sales.

The Company has obtained loans from certain Affiliates at annual interest
rates ranging from 6% to 9%. Such loans are due to be repaid five years from
the date of grant, with no prepayment penalty. Notes payable to Affiliates at
December 31, 2000 consist primarily of amounts owed by Jafra S.A. as a result
of Jafra S.A.s purchase of the U.S. and German trademarks from JCI in December
1999, and amounts billed to Jafra S.A. in connection with the Jafra Way
royalty. Net interest expense to Affiliates, primarily JCI, was $257,000 for
the nine months ended September 30, 2001 and $409,000 and $1,562,000 for the
three and nine months ended September 30, 2000, respectively.

During the nine months ended September 30, 2001, the Company made a
dividend payment of $2,800,000 to an indirect wholly owned subsidiary of the
Parent.

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JAFRA COSMETICS INTERNATIONAL, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

(8) Foreign Currency Forward Contracts

The Company is exposed to currency risk relating to its forecasted U.S.
dollar denominated expenditures. As part of the Parents overall strategy to
reduce the risk of adverse exchange rate fluctuations in Mexico, the Company
enters into foreign currency exchange contracts (forward contracts). The
Company places forward contracts based on its forecasted U.S. dollar cash
outflows over a rolling 12 month period and does not hedge transactions not
included in the 12 month forecast on date the forward contract is initiated.
As a matter of policy, the Company does not hold or issue forward contracts for
trading or speculative purposes nor does it enter into contracts or agreements
containing embedded derivative features.

The forward contracts utilized by the Company did not qualify for hedge
accounting under the applicable accounting standards prior to adoption of SFAS
133, and accordingly such instruments were marked-to-market with gains and
losses included as a component of exchange loss in the statements of operations
for the three and nine months ended September 30, 2000. Under SFAS 133, such
mark-to-market accounting treatment continues to be applied to certain of the
Companys forward contracts. However, under SFAS 133, the Companys use of
forward contracts to hedge certain forecasted transactions qualifies for hedge
accounting. Gains and losses from such derivative instruments arising
subsequent to January 1, 2001 are deferred as a separate component of other
comprehensive income, and are recognized in income at the same time that the
underlying hedged exposure is recognized in income. This accounting treatment
results in the matching of gains and losses from such forward contracts with
the corresponding gains and losses generated by the underlying hedged
transactions.

The Company currently designates certain of its forward contracts as cash
flow hedges of forecasted U.S. dollar denominated inventory purchases,
forecasted U.S. dollar denominated intercompany charges from JCI, forecasted
management fee charges from JCI and U.S. dollar denominated interest payments.
On the date the Company enters into a derivative contract, management
designates the derivative as a hedge of the identified exposure. The Company
formally documents all relationships between hedging instruments and hedged
items, as well as its risk-management objective and strategy for undertaking
various hedge transactions. In this documentation, the Company specifically
identifies the forecasted transaction that has been designated as a hedged item
and states how the hedging instrument is expected to hedge the risks related to
the hedged item. The Company formally measures effectiveness of its hedging
relationships both at the hedge inception and on an ongoing basis in accordance
with its risk management policy. For all qualifying and highly effective cash
flow hedges, the changes in the fair value of the derivative are deferred as a
component of other comprehensive income. Such amounts will be reclassified
from other comprehensive income into net income when the underlying hedged
exposure is recognized in income. For U.S. dollar denominated inventory
purchases, this will occur upon sale to an outside party of the related
inventory. For intercompany charges and interest, this will occur at the date
such charges are recorded by the Company.

During the three and nine months ended September 30, 2000, the Company
recognized losses on forward contracts of approximately $7,203,000 and
$9,313,000, respectively, as a component of exchange loss in the accompanying
consolidated statement of operations. During the three months ended September
30, 2001, the Company recognized approximately $1,544,000 of gains, and during
the nine months ended September 30, 2001, the Company recognized approximately
$8,070,000 of losses as a component of exchange loss on forward contracts that
did not qualify for hedge accounting under SFAS 133. Additionally, during the
nine months ended September 30, 2001, the Company deferred $2,598,000 of
unrealized losses on forward contracts that qualify for hedge accounting under
SFAS 133. Of this amount, $721,000 was reclassified to earnings upon
recognition of the underlying hedged exposure prior to September 30, 2001. The
Company expects that substantially all of the remaining unrealized loss of
$1,877,000 deferred as a component of other comprehensive income at September
30, 2001 will be reclassified into net income within the next twelve months.

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JAFRA COSMETICS INTERNATIONAL, S.A. DE C.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

During the three and nine months ended September 30, 2001, the
ineffectiveness generated by the Companys forward contracts designated as
hedges was insignificant. Certain hedged forecasted transactions do not appear
probable of occurring due to timing differences between the original and current
forecasts, and accordingly during the three months ended September 30, 2001,
$75,000 of gains and during the nine months ended September 30, 2001, $382,000
of losses were reclassified into earnings.

The outstanding foreign currency forward contracts at September 30, 2001
had a notional value of $87,036,000 and mature at various dates extending to
August 2002. Notional amounts do not quantify market or credit exposure or
represent assets or liabilities of the Company, but are used in the calculation
of cash settlements under the contracts. The table below describes the forward
contracts that were outstanding at September 30, 2001 (in thousands):

|                                |  |               |        |          |  |          |          |          |  |          |       |  |  |   |        | 
|------------------------------- |  | ------------- | ------ | -------- |  | -------- | -------- | -------- |  | -------- | ----- |  |  | - | ------ | 
|                                |  |               |        |          |  |          |          |          |  | Weighted |       |  |  |  
|                                |  | Forward       |        |          |  |          |          | Average  |  |          |       | 
|                                |  | Position in   |        | Maturity |  | Contract |          | Fair    
|Foreign Currency                |  | US Dollars(1) |        | Date     |  | Rate     |          | Value(1)
|                                |  |               |        |          |  |          |          |         
|Buy US Dollar/sell Mexican Peso |  | $             | 2,336  |          |  |          | 10/30/01 |          |  |          | 10.70 |  |  | $ | 2,064  | 
|Buy US Dollar/sell Mexican Peso |  |               | 10,275 |          |  |          | 10/31/01 |          |  |          | 10.71 |  |  |   | 9,074  | 
|Buy US Dollar/sell Mexican Peso |  |               | 6,806  |          |  |          | 11/30/01 |          |  |          | 10.24 |  |  |   | 6,394  | 
|Buy US Dollar/sell Mexican Peso |  |               | 4,110  |          |  |          | 12/27/01 |          |  |          | 10.71 |  |  |   | 3,709  | 
|Buy US Dollar/sell Mexican Peso |  |               | 3,761  |          |  |          | 12/31/01 |          |  |          | 10.90 |  |  |   | 3,321  | 
|Buy US Dollar/sell Mexican Peso |  |               | 10,673 |          |  |          | 1/31/02  |          |  |          | 10.19 |  |  |   | 10,286 | 
|Buy US Dollar/sell Mexican Peso |  |               | 6,995  |          |  |          | 2/28/02  |          |  |          | 10.26 |  |  |   | 6,748  | 
|Buy US Dollar/sell Mexican Peso |  |               | 9,023  |          |  |          | 3/27/02  |          |  |          | 10.46 |  |  |   | 8,612  | 
|Buy US Dollar/sell Mexican Peso |  |               | 8,310  |          |  |          | 4/30/02  |          |  |          | 10.23 |  |  |   | 8,189  | 
|Buy US Dollar/sell Mexican Peso |  |               | 8,013  |          |  |          | 5/31/02  |          |  |          | 10.11 |  |  |   | 8,053  | 
|Buy US Dollar/sell Mexican Peso |  |               | 8,037  |          |  |          | 6/28/02  |          |  |          | 9.95  |  |  |   | 8,259  | 
|Buy US Dollar/sell Mexican Peso |  |               | 4,766  |          |  |          | 7/31/02  |          |  |          | 10.07 |  |  |   | 4,881  | 
|Buy US Dollar/sell Mexican Peso |  |               | 3,931  |          |  |          | 8/30/02  |          |  |          | 10.17 |  |  |   | 4,019  | 
|                                |  |               |        |          |  |          |          |          |  |          |       |  |  |   |        | 
|Buy US Dollar/sell Mexican Peso |  | $             | 87,036 |          |  |          |          |          |  |          |       |  |  | $ | 83,609 | 
|                                |  |               |        |          |  |          |          |          |  |          |       |  |  |   |        | 



---

|(1) |  | The Forward Position in US dollars and the Fair Value presented above
represent notional amounts. The net of these two amounts, an unrealized
loss of $3,427,000 at September 30, 2001, represents the fair value of the
forward contracts, and has been recorded in accrued liabilities in the
accompanying consolidated balance sheet as of September 30, 2001.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

The following discussion of the results of operations, financial condition
and liquidity of the Company should be read in conjunction with the
accompanying unaudited interim consolidated financial statements and notes
thereto and with the Companys audited consolidated financial statements as of
and for the year ended December 31, 2000, included in the Companys Annual
Report on Form 10-K. The results of operations for the three and nine months
ended September 30, 2001 are not necessarily indicative of results that may be
expected for future periods.

Results of Operations

The following table represents selected components of the Companys
results of operations, in millions of dollars and as percentages of net sales.
The table reflects the operations of the Company for the three and nine months
ended September 30, 2001 and 2000.

|                                                                                          |  |                                  |      |                                 |  |      |       |          |  |   |      |   |  |  |       |   |  |   |       |   |  |  |       |   |  |   |       |   |  |  |       |  
|----------------------------------------------------------------------------------------- |  | -------------------------------- | ---- | ------------------------------- |  | ---- | ----- | -------- |  | - | ---- | - |  |  | ----- | - |  | - | ----- | - |  |  | ----- | - |  | - | ----- | - |  |  | ----- | -
|                                                                                          |  | Three Months Ended September 30, |      | Nine Months Ended September 30,
|                                                                                          |  |                                  |      |                                
|                                                                                          |  | 2001                             |      | 2000 (1)                        |  | 2001 |       | 2000 (1)
|                                                                                          |  |                                  |      |                                 |  |      |       |         
|Net sales                                                                                 |  | $                                | 93.1 |                                 |  |      | 100.0 | %        |  | $ | 79.1 |   |  |  | 100.0 | % |  | $ | 276.7 |   |  |  | 100.0 | % |  | $ | 232.5 |   |  |  | 100.0 | %
|Cost of sales                                                                             |  |                                  | 20.2 |                                 |  |      | 21.7  |          |  |   | 17.7 |   |  |  | 22.4  |   |  |   | 62.8  |   |  |  | 22.7  |   |  |   | 52.0  |   |  |  | 22.4  |  
|                                                                                          |  |                                  |      |                                 |  |      |       |          |  |   |      |   |  |  |       |   |  |   |       |   |  |  |       |   |  |   |       |   |  |  |       |  
|Gross profit                                                                              |  |                                  | 72.9 |                                 |  |      | 78.3  |          |  |   | 61.4 |   |  |  | 77.6  |   |  |   | 213.9 |   |  |  | 77.3  |   |  |   | 180.5 |   |  |  | 77.6  |  
|Selling, general and administrative expenses                                              |  |                                  | 58.6 |                                 |  |      | 62.9  |          |  |   | 49.8 |   |  |  | 63.0  |   |  |   | 175.3 |   |  |  | 63.4  |   |  |   | 150.1 |   |  |  | 64.6  |  
|Restructuring charges                                                                     |  |                                  |     |                                 |  |      |      |          |  |   | 2.0  |   |  |  | 2.5   |   |  |   |      |   |  |  |      |   |  |   | 3.1   |   |  |  | 1.3   |  
|                                                                                          |  |                                  |      |                                 |  |      |       |          |  |   |      |   |  |  |       |   |  |   |       |   |  |  |       |   |  |   |       |   |  |  |       |  
|Income from operations                                                                    |  |                                  | 14.3 |                                 |  |      | 15.4  |          |  |   | 9.6  |   |  |  | 12.1  |   |  |   | 38.6  |   |  |  | 13.9  |   |  |   | 27.3  |   |  |  | 11.7  |  
|Exchange loss                                                                             |  |                                  | (1.3 | )                               |  |      | (1.4  | )        |  |   | (4.4 | ) |  |  | (5.6  | ) |  |   | (8.0  | ) |  |  | (2.9  | ) |  |   | (9.7  | ) |  |  | (4.2  | )
|Interest, net                                                                             |  |                                  | (3.1 | )                               |  |      | (3.3  | )        |  |   | (3.9 | ) |  |  | (4.9  | ) |  |   | (10.0 | ) |  |  | (3.6  | ) |  |   | (11.9 | ) |  |  | (5.1  | )
|Other (expense) income, net                                                               |  |                                  | 0.0  |                                 |  |      |      |          |  |   | 0.2  |   |  |  | 0.3   |   |  |   | (0.2  | ) |  |  | (0.1  | ) |  |   | 1.4   |   |  |  | 0.6   |  
|                                                                                          |  |                                  |      |                                 |  |      |       |          |  |   |      |   |  |  |       |   |  |   |       |   |  |  |       |   |  |   |       |   |  |  |       |  
|Income before income taxes, extraordinary
item and cumulative effect of accounting
change |  |                                  | 9.9  |                                 |  |      | 10.7  |          |  |   | 1.5  |   |  |  | 1.9   |   |  |   | 20.4  |   |  |  | 7.3   |   |  |   | 7.1   |   |  |  | 3.0   |  
|Income tax expense                                                                        |  |                                  | 4.5  |                                 |  |      | 4.8   |          |  |   | 1.3  |   |  |  | 1.6   |   |  |   | 10.6  |   |  |  | 3.8   |   |  |   | 6.7   |   |  |  | 2.9   |  
|                                                                                          |  |                                  |      |                                 |  |      |       |          |  |   |      |   |  |  |       |   |  |   |       |   |  |  |       |   |  |   |       |   |  |  |       |  
|Income before extraordinary item and
cumulative effect of accounting change               |  |                                  | 5.4  |                                 |  |      | 5.9   |          |  |   | 0.2  |   |  |  | 0.3   |   |  |   | 9.8   |   |  |  | 3.5   |   |  |   | 0.4   |   |  |  | 0.1   |  
|Extraordinary loss on early extinguishment
of debt, net of income tax benefit of $0.2     |  |                                  |     |                                 |  |      |      |          |  |   |     |   |  |  |      |   |  |   |      |   |  |  |      |   |  |   | 0.3   |   |  |  | 0.1   |  
|                                                                                          |  |                                  |      |                                 |  |      |       |          |  |   |      |   |  |  |       |   |  |   |       |   |  |  |       |   |  |   |       |   |  |  |       |  
|Income before cumulative effect of
accounting change                                      |  |                                  | 5.4  |                                 |  |      | 5.9   |          |  |   | 0.2  |   |  |  | 0.3   |   |  |   | 9.8   |   |  |  | 3.5   |   |  |   | 0.1   |   |  |  | 0.0   |  
|Cumulative effect of accounting change, net
of income tax expense of $0.1                 |  |                                  |     |                                 |  |      |      |          |  |   |     |   |  |  |      |   |  |   | 0.1   |   |  |  |      |   |  |   |      |   |  |  |      |  
|                                                                                          |  |                                  |      |                                 |  |      |       |          |  |   |      |   |  |  |       |   |  |   |       |   |  |  |       |   |  |   |       |   |  |  |       |  
|Net income                                                                                |  | $                                | 5.4  |                                 |  |      | 5.9   | %        |  | $ | 0.2  |   |  |  | 0.3   | % |  | $ | 9.9   |   |  |  | 3.5   | % |  | $ | 0.1   |   |  |  | 0.0   | %
|                                                                                          |  |                                  |      |                                 |  |      |       |          |  |   |      |   |  |  |       |   |  |   |       |   |  |  |       |   |  |   |       |   |  |  |       |  



---

|(1) |  | In the fourth quarter of 2000, the Company adopted the provisions of
Emerging Issues Task Force Issue No. 00-10, Accounting for Shipping and
Handling Fees and Costs, which requires that amounts billed to customers
for shipping and handling fees be classified as revenues.
Reclassifications have been made to year 2000 amounts to reflect shipping
and handling fees, previously reported as reductions to selling, general
and administrative expenses, in net sales to conform to the current period
presentation. Total amounts that have been reclassified are approximately
$2.5 million and $7.4 million for the three and nine months ended
September 30, 2000. Shipping and handling costs are included in selling,
general and administrative expenses.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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Three months ended September 30, 2001 compared to the three months ended September 30, 2000

Net sales. Net sales in the third quarter of 2001 increased to $93.1
million from $79.1 million in the third quarter of 2000, an increase of $14.0
million, or 17.7%. Net sales in local currencies in the third quarter of 2001
increased by 17.2% over the comparable prior year period. The sales increase
in U.S. dollars was higher than the increase measured in local currencies,
primarily as a result of strengthening of average exchange rates of local
currencies in Mexico during the third quarter of 2001 as compared to the third
quarter of 2000. The Companys average number of consultants (who perform the
duties of sales representatives) worldwide for the third quarter increased to
approximately 371,000 or 18.0% over the 2000 average, while the number of
active consultants placing orders increased by 19.3% over the same period of
2000. In general, consultants are considered to be active if they place at
least one order within four months. During the quarter, 49.7% of all
consultants were considered active compared to 49.2% during the third quarter
of 2000.

In Mexico, net sales in the third quarter of 2001 increased to $62.7
million from $50.2 million in the third quarter of 2000, an increase of $12.5
million, or 24.9%. Sales in Mexico in local currency increased by 22.6% over
the comparable 2000 period. The quarter-to-quarter increase was due primarily
to higher sponsoring (activation of new consultants) and increased ordering
activity achieved as a result of certain promotional activities implemented
during the third quarter of 2001. In Mexico, the average number of consultants
for the third quarter of 2001 increased to approximately 239,000, or by
approximately 22.7%, and the number of active, ordering consultants increased
by 25.4% over the respective third quarter 2000 averages. During the third
quarter of 2001, approximately 50.3% of all consultants were considered active,
compared to 49.2% during the third quarter of 2000.

In the U.S., net sales in the third quarter of 2001 increased to $18.9
million from $17.3 million in the third quarter of 2000, an increase of $1.6
million, or 9.2%. The increase was due to a combination of an increase in the
average consultant base achieved by improved retention and increased ordering
activity. The utilization of consultant order placing and order paying via
the Internet continues to expand, which contributes to increased ordering
activity. In the U.S., the average number of consultants for the third quarter
of 2001 increased to approximately 66,000, or by 9.2%, and the number of
active, ordering consultants increased by 14.5% over the respective third
quarter 2000 averages. During the third quarter of 2001, 52.5% of all
consultants were considered active, compared to 50.1% during the third quarter
of 2000.

In Europe, net sales decreased to $5.7 million in the third quarter of
2001 from $6.1 million in the third quarter of 2000, a decrease of $0.4
million, or 6.6%. The decrease is the result of a stronger U.S. dollar when
measured with equivalent exchange rates and reduced consultant activity.
Excluding the exchange rate impact, net sales decreased by $0.2 million or
3.6%. The average number of consultants for the third quarter of 2001
increased by 2.4% to 17,000, however, the number of active consultants
decreased 6.6%.

Gross profit.Consolidated gross profit in the third quarter of 2001
increased to $72.9 million from $61.4 million in the comparable prior year
period, an increase of $11.5 million, or 18.7%. Gross profit as a percentage of
sales (gross margin) increased to 78.3% from 77.6%. The increase in gross
margin in the third quarter of 2001 was due primarily to favorable purchase
price variances in Mexico and a favorable product mix in Europe, partially
offset by a heavier mix of promotional products, as compared to regular
(non-discounted) products in Mexico and the United States.

In Mexico, gross margin in the third quarter of 2001 increased to 77.7%
from 77.6% in the third quarter of 2000, due primarily to favorable purchase
price variances as a result of the strengthening of the Mexican peso. These purchase
price variances were partially offset by a heavier mix of lower margin
promotional products, including discounted products, which were offered to
reduce inventory balances and stimulate sponsoring and consultant activity.

In the United States, gross margin in the third quarter of 2001 decreased
to 78.8% from 79.3% in the third quarter of 2000, due to a heavier mix of
promotional products, including demo packs and discounted products in the third
quarter of 2001.

In Europe, gross margin in the third quarter of 2001 increased to 76.8%
from 75.1% in the third quarter of 2000, due primarily to a more favorable
product mix and less aggressive promotional discounts.

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Selling, general and administrative expenses.SG&A expenses in the third
quarter of 2001 increased to $58.6 million from $49.8 million in the third
quarter of 2000, an increase of $8.8 million, or 17.7%. SG&A expenses, as a
percentage of net sales, decreased slightly in the third quarter of 2001 to
62.9% from 63.0% for the same period in 2000.

In Mexico, SG&A expenses in the third quarter of 2001 increased by $6.9
million, or 28.9%, from the third quarter of 2000. SG&A expenses, as a
percentage of net sales, in Mexico were 49.1% in the third quarter of 2001,
compared to 47.6% in the third quarter of 2000. The increased SG&A expenses in
Mexico related primarily to sales promotion expenses, commission expenses,
freight and certain administration expenses. Sales promotion expenses,
commission expenses and freight tend to increase proportionally with sales.
However during the third quarter of 2001, sales promotion expenses, increased
proportionally more than net sales due to increased promotional activity.
Freight expenses also increased proportionally more than net sales due to the
shipment of promotional items which resulted in higher packaging costs and
shipment of more small orders. Commission expense, as a percentage of net
sales, remained relatively consistent. Administrative expenses increased due
to increased headcount and other general expenses, including bad debt expenses,
to support the growing business.

In the United States, SG&A expenses in the third quarter of 2001 increased
by $1.4 million, or 12.7% from the third quarter of 2000. SG&A expenses, as a
percentage of net sales, in the U.S. were 63.7% in the third quarter of 2001,
compared to 62.0% for the third quarter of 2000. The increased SG&A expenses in
the U.S. were primarily due to increased selling expenses related to the
implementation of the expanded e-commerce platform during the end of the second
quarter of 2001. Administrative expenses decreased $0.3 million due to cost
saving measures.

In Europe, SG&A expenses in the third quarter of 2001 decreased by $0.7
million, or 12.8%, from the third quarter of 2000. The decrease was primarily
the result of decreased selling expenses and administrative expenses due to cost
savings achieved from restructuring activities undertaken during the latter
part of 2000.

SG&A expenses in other selling markets (South America and Thailand) and at
corporate headquarters in the third quarter of 2001 increased by $1.2 million,
or 11.9%, primarily as a result of administrative expenses in the Companys
growing South American markets and reorganization expenses at corporate
headquarters.

Exchange loss.The Companys foreign exchange loss was $1.3 million in the
third quarter of 2001, compared to $4.4 million in the prior year, a decrease
of $3.1 million, or 70.5%. The Companys foreign exchange gains and losses
primarily result from foreign currency exposure to the Mexican peso. During the third quarter of
2001, the Company recognized $1.5 million of exchange gains on forward
contracts, resulting from the weakening of the Mexican peso against the U.S.
dollar compared to the end of the second quarter. These exchange gains were
offset by an unrealized exchange loss of $2.3 million on the remeasurement of
U.S. dollar denominated debt and other transactional losses of $0.5 million.
During the third quarter of 2000, the Company recognized $7.2 million of
exchange losses on forward contracts, resulting from the strengthening of the
Mexican peso against the U.S. dollar during the period. The exchange losses
were offset by $0.5 million of exchange gains on other foreign currency
transactions and an unrealized exchange gain of $2.3 million on the
remeasurement of U.S. dollar denominated debt. See Recent Accounting
Pronouncements and Item 3, Quantitative and Qualitative Disclosures about
Market Risk.

Interest expense.Net interest expense (including amortization of
deferred financing fees) in the third quarter of 2001 decreased to $3.1 million
from $3.9 million in 2000, a decrease of $0.8 million, or 20.5%. The decrease
was due to a combination of lower average balances on the term loan and
revolving credit line, and lower interest rates on those borrowings. The lower
interest rates in the third quarter of 2001 reflected both decreases in general
market interest rates along with a 25 basis point reduction in borrowing costs
for the entire third quarter of 2001 compared to half of the third quarter of
2000, achieved by the Company due to the attainment of specified leverage
ratios as defined by the Companys Senior Credit Agreement.

Income tax expense.Income tax expense increased to $4.5 million in the
third quarter of 2001 from $1.3 million in the comparable 2000 period, an
increase of $3.2 million, or 246.2%. The Companys effective income tax rate
decreased to approximately 45.5%, compared to 86.7% for the comparable period
of 2000. The decrease in the effective tax rate was driven in part by the U.S.
subsidiary, as a result of valuation allowances taken against certain
foreign tax credits of the U.S. subsidiary in 2000 which were not deemed
necessary in the third quarter of 2001. Additionally, valuation allowances
were provided against net operating losses in South America and Europe in 2001
and 2000.

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Net income.Net income was $5.4 million for the third quarter of 2001, a
$5.2 million increase compared to $0.2 million in 2000. The increase was due
to a 17.7% increase in net sales which resulted in a $11.5 million increase in
gross profit, a $0.8 million reduction in interest expense, a $3.1 reduction in
exchange loss, the absence of a $2.0 million restructuring charge incurred in
2000, partially offset by a $8.8 million increase in SG&A expenses, a $3.2
million increase in income tax expense and a $0.2 million negative fluctuation
in other (expense) income.

Nine months ended September 30, 2001 compared to the nine months ended September 30, 2000

Net sales. Net sales for the nine months ended September 30, 2001
increased to $276.7 million from $232.5 million in the comparable prior year
period, an increase of $44.2 million, or 19.0%. The effects of foreign
currency translation had no material impact on sales growth during the first
nine months of 2001 compared to the first nine months of 2000. The Companys
average number of consultants worldwide for the nine months ended September 30,
2001 increased to approximately 358,000 or 17.3% over the 2000 average, while
the number of active consultants placing orders increased by 20.9% over the
same period of 2000.

In Mexico, net sales for the nine months ended September 30, 2001
increased to $182.9 million from $143.7 million in the comparable prior year
period, an increase of $39.2 million, or 27.3%. Sales in Mexico in local
currency increased by 26.1% over the comparable 2000 period. The year-to-year
increase was due primarily to higher sponsoring and increased ordering activity
achieved as a result of certain promotional activities, including promotional
kits, implemented during the first nine months of 2001. In Mexico, the average
number of consultants for the first nine months of 2001 increased to
approximately 226,000, or by 17.2%, and the number of active, ordering
consultants increased by 24.0% over the respective 2000 averages. During the
nine months ended September 30, 2001, 50.8% of consultants were considered
active compared to 48.0% during the comparable 2000 period.

In the U.S., net sales for the nine months ended September 30, 2001
increased to $58.0 million from $54.3 million in the comparable prior year
period, an increase of $3.7 million, or 6.8%. The year-to-year increase was
due to a combination of increased ordering activity and an increase in the
average consultant base achieved by improved retention. Consultant losses
during the nine months ended September 30, 2001 decreased 0.1% compared to the
nine months ended September 30, 2000. The increased ordering activity was due
to successful product launches and special promotions for new consultants. In
the U.S., the average number of consultants for the nine months ended September
30, 2001 increased to approximately 66,000, or 8.5%, and the number of active,
ordering consultants increased by 17.9%, over the respective 2000 averages.
These increases were partially offset by a decrease in consultant productivity
as the commission structure implemented during 2000 resulted in lower average
order sizes.

In Europe, net sales decreased to $18.5 million for the nine months ended
September 30, 2001 from $19.6 million in the comparable prior year period, a
decrease of $1.1 million, or 5.6%. The decrease in sales is primary the result
of a stronger U.S. dollar when measured with equivalent exchange rates.
Excluding the effects of exchange rates, sales decreased $0.2 million or 0.1%. The
average number of consultants for the nine months ended September 30, 2001 was
unchanged from the comparable prior year period at 17,000.

Gross profit.Consolidated gross profit for the nine months ended
September 30, 2001 increased to $213.9 million from $180.5 million in the
comparable prior year period, an increase of $33.4 million, or 18.5%. Gross
profit as a percentage of sales (gross margin) decreased to 77.3% from 77.6%.
The reduction in gross margin was due primarily to a heavier mix of promotional
products, as compared to regular (non-discounted) products.

In Mexico, gross profit for the nine months ended September 30, 2001
increased to $139.9 million from $111.2 million in the comparable period of
2000, an increase of $28.7 million, or 25.8%. Gross margin decreased to 76.5%
for the nine months ended September 30, 2001 from 77.4% during the comparable
prior year period, due primarily to a heavier mix of promotional products,
including lower margin discounted limited life items, and increased sales of
slow moving inventory. This reduction in gross margin was partially offset by
favorable purchase price variances.

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In the United States, gross margin for the nine months ended September 30,
2001 decreased to 78.2% from 79.0% in the comparable period of 2000, due to
product mix, specifically an increase in the sale of discounted promotional
items and a decrease in sales of regular product. In Europe, gross margin for
the nine months ended September 30, 2001, increased to 80.5% from 77.3% in
comparable prior year period, due primarily to a more favorable product mix and
less aggressive discounting.

Selling, general and administrative expenses.SG&A expenses for the nine
months ended September 30, 2001 increased to $175.3 million from $150.1 million
in the comparable prior year period, an increase of $25.2 million, or 16.8%.
SG&A expenses, as a percentage of net sales, for the nine months ended
September 30, 2001 decreased to 63.4% from 64.6% for the same period in 2000,
primarily due to reduced promotional spending in the United States and
administrative cost savings in the United States and Europe.

In Mexico, SG&A expenses for the nine months ended September 30, 2001
increased by $19.7 million, or 29.4%, from the comparable prior year period.
SG&A expenses, as a percentage of net sales, were 47.6% for the nine months
ended September 30, 2001, compared to 46.8% for the nine months ended September
30, 2000. The increased SG&A expenses in Mexico related primarily to sales
promotion expenses, commission expenses, variable freight expenses and
administrative expenses. Sales promotion expenses and commission expenses tend
to increase proportionally with sales, however, sales promotion expenses
increased proportionally more than sales due to additional promotions to
improve consultant productivity. Variable freight expenses increased
proportionally more than sales due to a greater number of smaller shipments of
certain promotional items and consultant kits. Administrative expenses
increased due to collection fees, bad debt expenses and headcount increases to
support the growing business.

In the U.S., SG&A expenses for the nine months ended September 30, 2001
increased by $0.9 million, or 2.3% from the comparable prior year period. SG&A
expenses, as a percentage of net sales, were 66.4% for the first nine months of
2001, compared to 69.4% for the first nine months of 2000. The increased SG&A
expenses in the U.S. were primarily due to increased selling expenses related
to the implementation of consultant order placing and order paying via the
Internet and variable freight expenses. This increase is partially offset by a
decrease in sales promotion expenses due to changes in the scope of certain
sales promotion activities and administrative expense savings. In Europe,
SG&A expenses for the nine months of 2001 decreased by $2.0 million, or 11.9%,
compared to the first nine months of 2000. The decrease was primarily the
result of administrative expense savings achieved from restructuring activities
undertaken during the latter part of 2000.

SG&A expenses in other selling markets (South America and Thailand) and at
corporate headquarters for the nine months ended September 30, 2001 increased
by $6.5 million, or 22.6%, primarily as a result of sales promotion expenses
and commission expenses in the Companys growing South American markets and
increased corporate expenses.

Exchange loss.The Companys foreign exchange loss was $8.0 million for
the nine months ended September 30, 2001, compared to $9.7 million in the
comparable period of the prior year, a decrease of $1.7 million, or 17.5%. The
Companys foreign exchange gains and losses primarily result from its
foreign currency exposure to the Mexican peso. During the first nine months of 2001, the Company
recognized $8.1 million of exchange losses on certain forward contracts,
resulting from the strengthening of the Mexican peso against the U.S. dollar
and exchange losses on other foreign currency transactions of $0.6 million.
These exchange losses were partially offset by an unrealized exchange gain of
$0.7 million on the remeasurement of U.S. dollar denominated debt. For the
nine months ended September 30, 2000, the net loss on forward contracts was
$9.3 million, the remeasurement of U.S. dollar denominated debt resulted in an
unrealized exchange loss of $0.1 million, and net realized losses on other
foreign currency transactions were $0.3 million. See Recent Accounting
Pronouncements and Item 3, Quantitative and Qualitative Disclosure about
Market Risk.

Interest expense.Net interest expense (including amortization of
deferred financing fees) for the nine months ended September 30, 2001 decreased
to $10.0 million from $11.9 million in 2000, a decrease of $1.9 million, or
16.0%. The decrease was due to a combination of lower average balances on the
term loan and revolving credit line, and lower interest rates on those
borrowings. The lower interest rates for the nine months ended September 30,
2001
reflected primarily a decrease in general market interest rates along with a 25 basis point reduction in borrowing costs for nine months of 2001 compared to
six months of 2000, achieved by the Company due to the attainment of specified
leverage ratios as defined by the Companys credit agreement.

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Other income (expense).Other expense for the nine months ended September
30, 2001 was $0.2 million, compared to other income of $1.4 million during the
nine months ended September 30, 2000, a change of $1.6 million. The other
income during the nine months ended September 30, 2000 consisted primarily of
income related to a recovery of the effect of inflation on a prior year tax
receivable.

Income tax expense.Income tax expense increased to $10.6 million for
the nine months ended September 30, 2001 from $6.7 million in the comparable
2000 period, an increase of $3.9 million, or 58.2%. The increase is due to
higher taxable income generated by the Companys Mexican and United States
subsidiaries in 2001 as compared to 2000. After taking into effect the tax
impacts related to the cumulative effect of accounting change in 2001 and the
extraordinary item in 2000, the Companys effective income tax rate decreased
to approximately 51.9%, compared to 98.1% for the comparable period of 2000.
The decrease in the effective tax rate was driven in part by the U.S.
subsidiary and Europe. In the United States, valuation allowances were provided
for certain foreign tax credits in 2000, whereas no additional valuation allowances were
deemed necessary in 2001. In Europe, larger net operating losses were recorded
in 2000 compared to 2001. For the nine months ended September 30, 2001 and
2000, valuation allowances were taken against net operating losses in
Europe and South America.

Net income.Net income was $9.9 million
for the nine months ended
September 30, 2001, a $9.8 million increase compared to the prior year. The
change was due to a 19.0% increase in net sales which resulted in a $33.4
million increase in gross profit, a $1.7 million reduction in exchange loss, a
$1.9 million reduction in interest expense, the absence of
$3.1 million of restructuring charges and a $0.3 million
extraordinary loss (net of income taxes) on early extinguishment of
debt incurred in 2000 and income of $0.1
million (net of income taxes) from the cumulative effect of an accounting
change, partially offset by a $25.2 million increase in SG&A expenses, a $1.6
million negative fluctuation in other (expense) income, and a $3.9 million
increase in income tax expenses.

Liquidity and Capital Resources

The Companys liquidity needs arise primarily from principal and interest
payments under its 11.75% Subordinated Notes due 2008 (Notes), and the Senior
Credit Agreement consisting of the Term Loan Facility and the Revolving Credit
Facility. The Notes represent several obligations of Jafra Cosmetics
International, Inc. (JCI) and Jafra Cosmetics International, S.A. de C.V.
(Jafra S.A.) in the original amount of $60 million and $40 million (currently
at $45.1 million and $30.1 million), respectively, with each participating on a
pro rata basis upon redemption. The Notes mature in 2008 and bear a fixed
interest rate of 11.75% payable semi-annually.

Borrowings under the Senior Credit Agreement are payable in quarterly
installments of principal and interest through April 30, 2004. Scheduled term
loan principal payments under the Term Loan Facility will be approximately $4.5
million, $5.5 million, $6.5 million, and $2.5 million for each of the years
from 2001 through 2004, respectively. Borrowings under the Revolving Credit
Facility ($14.7 million as of September 30, 2001) mature on April 30, 2004.
Borrowings under the Senior Credit Agreement bear interest at an annual rate of
LIBOR plus a margin not to exceed 1.625% or an alternate base rate (the higher
of the prime rate or federal funds rate plus 0.5%, plus an applicable margin
not to exceed 0.625%). The interest rate in effect at September 30, 2001 was
approximately 4.3% for the LIBOR-based borrowings, and approximately 6.8% for
the prime-based borrowings. Borrowings under the Senior Credit Agreement are
secured by substantially all of the assets of JCI and Jafra S.A. During the
nine months ended September 30, 2001, cash paid for interest was approximately
$6.7 million.

Both the indenture (the Indenture), dated as of April 30, 1998, under
which the Notes were issued, and the Senior Credit Agreement contain certain
covenants that limit the Companys ability to incur additional indebtedness,
pay cash dividends and make certain other payments. The Indenture and the
Senior Credit Agreement also require the Company to maintain certain financial
ratios including a minimum EBITDA to cash interest expense coverage ratio and a
maximum debt to EBITDA ratio. The Company has two letters of credit outstanding
as of September 30, 2001 under the Revolving Credit Facility, totaling $1.8
million. Additionally, Jafra S.A. has seven letters of credit outstanding as
of September 30, 2001, totaling $1.3 million.

The Notes are unsecured and are generally non-callable for five years.
Thereafter, the Notes will be callable at premiums declining to par in the
eighth year. The Company may from time to time repurchase the Notes in the
open market. The Company has obtained Consent and Waivers to the Senior Credit
Agreement that allow the Company to repurchase the Notes in the open market,
with the aggregate purchase price for all such Notes repurchased not to exceed
$50.0 million. Aggregate repurchases as of September 30, 2001 were $24.8
million. The repurchased debt was replaced with debt under the Revolving
Credit Facility, which currently has lower effective interest rates.

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During the nine months ended September 30, 2001, Jafra S.A. repaid the
balance remaining under a one-year term loan originally due on August 16, 2001,
and entered into an unsecured bank loan agreement, borrowing the peso
equivalent of $1.8 million, at a weighted average annual interest rate of 18.6%. Principal and
interest payments are due monthly through September 26, 2004. As of September
30, 2001, $0.6 million of this loan is classified as short-term
debt and $1.1 of this loan is classified as long-term debt in the
accompanying consolidated balance sheet.

The Company believes, but no assurance can be given, that its existing
cash, cash flow from operations and availability under the Senior Credit
Agreement will provide sufficient liquidity to meet the Companys cash
requirements and working capital needs over the next twelve months.

Cash Flows

Net cash provided by operating activities was $11.0 million for the nine
months ended September 30, 2001, consisting of $17.5 million provided by net
income plus depreciation, amortization, and other non-cash items included in
net income, offset by $6.5 million used by changes in operating assets and
liabilities. The significant elements of net cash used by changes in operating
assets and liabilities during the nine months ended September 30, 2001 were an
increase of $11.4 million in accounts receivable, and a reduction of
$6.7 million in accounts payable and accrued
liabilities, partially offset by an increase in payable/prepaid income taxes of
$6.4 million, and a reduction in prepaid and other assets of $5.2 million.

Net cash used in investing activities was $6.6 million for the nine months
ended September 30, 2001, of which $6.5 million was used for capital
expenditures, consisting primarily of information system upgrades. Capital
expenditures in 2001 are expected to be approximately $10-11 million.

Net cash used in financing activities was $2.4 million for the nine months
ended September 30, 2001, and consisted of repayments of $3.4 million under the
Term Loan Facility and $0.6 used in the net repurchase of common stock,
partially offset by net borrowings under the Revolving Credit Facility of $0.2
million and net proceeds from other bank debt of $1.4 million.

The effect of exchange rate changes on cash was $1.3 million for the nine
months ended September 30, 2001 relating primarily to fluctuations in the
exchange rates in Europe and Mexico.

Recent Accounting Pronouncements

The Company is exposed to currency risk relating to its forecasted U.S.
dollar denominated expenditures at Jafra S.A. As part of its overall strategy
to reduce the risk of adverse exchange rate fluctuations in Mexico, the Company
enters into foreign currency exchange contracts (forward contracts). The
Company places forward contracts based on its forecasted U.S. dollar cash
outflows from Jafra S.A. over a rolling 12 month period and does not hedge
transactions that are not included in the 12 month forecast on the date the
forward contract is initiated. As a matter of policy, the Company does not
hold or issue forward contracts for trading or speculative purposes nor does it
enter into contracts or agreements containing embedded derivative features.

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The forward contracts utilized by the Company did not qualify for hedge
accounting under the applicable accounting standards prior to adoption of SFAS
133, and accordingly such instruments were marked-to-market with gains and
losses included as a component of exchange loss in the statements of operations
for the three and nine months ended September 30, 2000. Under SFAS 133, such
mark-to-market accounting treatment continues to be applied to certain of the
Companys forward contracts. However, under SFAS 133, the Companys use of
forward contracts to hedge certain forecasted transactions qualifies for hedge
accounting. Unrealized gains and losses from such derivative instruments
arising subsequent to January 1, 2001 are deferred as a separate component of
other comprehensive income and are recognized in income at the same time that
the underlying hedged exposure is recognized in income. This accounting
treatment results in the matching of gains and losses from such forward
contracts with the corresponding gains and losses generated by the underlying
hedged transactions.

The Company currently designates certain of its forward contracts as cash
flow hedges of forecasted U.S. dollar denominated inventory purchases, U.S.
dollar denominated intercompany charges from JCI to Jafra S.A., forecasted
management fee charges from JCI to Jafra S.A. and U.S. dollar denominated
interest payments. On the date the Company enters into a derivative contract,
management designates the derivative as a hedge of the identified exposure.
The Company formally documents all relationships between hedging instruments
and hedged items, as well as its risk management objective and strategy for
undertaking various hedge transactions. In this documentation, the Company
specifically identifies the forecasted transaction that has been designated as
a hedged item and states how the hedging instrument is expected to hedge the
risks related to the hedged item. The Company formally measures effectiveness
of its hedging relationships both at the hedge inception and on an ongoing
basis in accordance with its risk management policy. For all qualifying and
highly effective cash flow hedges, the changes in the fair value of the
derivative are deferred as a component of other comprehensive income. Such
amounts will be reclassified from other comprehensive income into net income
when the underlying hedged exposure is recognized in income. For U.S. dollar
denominated inventory purchases, this will occur upon sale to an outside party
of the related inventory. For intercompany charges, this will occur at the
date such charges are recorded by Jafra S.A. For intercompany charges and
interest, this will occur at the date such charges are recorded by the Company.

During the three and nine months ended September 30, 2000, the Company
recognized losses on forward contracts of approximately $7.2 million and $9.3
million, respectively, as a component of exchange loss in the accompanying
consolidated statement of operations. During the three months ended September
30, 2001, the Company recognized approximately $1.5 million of gains, and
during the nine months ended September 30, 2001, the Company recognized
approximately $8.1 million of losses as a component of exchange loss on forward
contracts that did not qualify for hedge accounting under SFAS 133.
Additionally, during the nine months ended September 30, 2001, the Company
deferred $2.6 million of unrealized losses on forward contracts that qualify
for hedge accounting under SFAS 133. Of this amount, $0.7 million was
reclassified to earnings upon recognition of the underlying hedged exposure
prior to September 30, 2001. The Company expects that substantially all of the
remaining unrealized losses of $1.9 million deferred as a component of other
comprehensive income at September 30, 2001 will be reclassified into net income
within the next twelve months.

During the three and nine months ended September 30, 2001, the
ineffectiveness generated by the Companys forward contracts designated as
hedges was insignificant. Certain hedged forecasted transactions do not appear
probable of occurring due to timing differences between the original and
current forecasts, and accordingly during the three months ended September 30,
2001, $0.1 million of gains and during the nine months ended
September 30, 2001, $0.4 million of losses were reclassified into earnings.

In July 2001, the FASB issued two new statements: SFAS No. 141, Business
Combinations and SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No.
141 requires business combinations entered into after June 30, 2001 to be
accounted for using the purchase method of accounting. SFAS No. 142 requires that goodwill
not be amortized, but be tested for impairment at least annually. SFAS No. 142
is effective for fiscal years beginning after December 15, 2001 to all goodwill
and other intangible assets recognized in an entitys statement of financial
position at that date, regardless of when those assets were initially
recognized. The Company is evaluating the impact of the adoption of these
standards and has not yet determined the effect of adoption on its financial
position and results of operations. During the nine months ended
September 30, 2001, the Company recorded a $1.4 million of
goodwill amortization expense.

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In August 2001, the FASB issued SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets. SFAS 144 supersedes
SFAS 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of. SFAS 144 retained substantially all of the requirements of
SFAS 121 while resolving certain implementation issues and
addresses the accounting for a segment of a business accounted for as
a discontinued operation.
SFAS 144 is effective
for fiscal years beginning after December 15, 2001, with early application
encouraged. The Company is evaluating the impact of the adoption of this
standard and has not yet determined the effect of adoption on its financial
position and results of operations. The Company does not plan to adopt the
standard prior to December 15, 2001.

Foreign Operations

Sales outside of the United States aggregated approximately 79.7% and
79.0% of the Companys total net sales for the three and nine months ended
September 30, 2001, respectively, and 78.2%, and 76.7% of the Companys total
net sales for the three and nine months ended September 30, 2000, respectively.
In addition, as of September 30, 2001, international subsidiaries comprised
approximately 75.2% of the Companys consolidated total assets. Accordingly,
the Company has experienced and continues to be exposed to foreign exchange
risk. In 2000 and 2001, the Company entered into foreign currency forward
contracts in Mexican pesos to reduce the effect of potentially adverse exchange
rate fluctuations in Mexico.

The Companys subsidiary in Mexico, Jafra S.A., generated approximately
67.3% and 66.1% of the Companys net sales for the three and nine months ended
September 30, 2001, respectively, and 63.5% and 61.8% of the Companys net
sales for the three and nine months ended September 30, 2000, respectively,
substantially all of which were denominated in Mexican pesos. Jafra S.A. had
$40.1 million of U.S. dollar denominated third party debt. Gains and losses
from remeasuring such debt to the U.S. dollar from the peso are included as a
component of net income. Jafra S.A. recognized an unrealized loss of
$2.3 million and an unrealized gain of $0.7 million on the remeasurement of this
U.S. dollar denominated debt and a net gain of $1.5 and a net loss of $8.1 million
on foreign currency forward contracts for the three and nine months ended
September 30, 2001, respectively.

European Economic and Monetary Union

On January 1, 1999, eleven of the fifteen member countries of the European
Union established fixed conversion rates between their existing sovereign
currencies and the euro. The participating countries adopted the euro as their
common legal currency on that day. The euro will trade on currency exchanges
and be available for non-cash transactions during the transition period between
January 1, 1999 and January 1, 2002. During this transition period, the
existing currencies are scheduled to remain legal tender in the participating
countries as denominations of the euro and public and private parties may pay
for goods and services using either the euro or the participating countries
existing currencies.

During the transition period, the Company will continue to utilize the
respective countrys existing currency as the functional currency. Use of the
euro by the Company or its consultants is not expected to be significant and
will be converted and recorded in the Companys accounting records in the
existing functional currency.

The Company's
European subsidiaries intend to adopt the euro as the functional currency on
January 1, 2002, when the majority of the transactions in the member countries
are conducted in the euro. The Company has identified that its European
commercial system will not support the euro and that modifications are
required in order to adapt the commercial system to support the euro. The
Company started modifying its system in the second quarter of 2001, expects to
complete the necessary modifications by the end of 2001, and does not expect to
incur significant expenses in achieving a euro-compliant system. The Company
does not expect the euro to materially adversely affect its business, financial
condition, or results of operations.

Business Trends and Initiatives

The Company has experienced significant sales growth and an increased
concentration of sales in Mexico over the last three years, due primarily to
increases in the number of consultants. The Companys Mexican subsidiary
generated 66% of the Companys consolidated net sales for nine months ended

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September 30, 2001, compared to 62% for the full year in 2000. The
year-to-year sales growth in Mexico for the nine months ended September 30,
2001 was approximately 27% in U.S. dollars and 26% in local currency. Assuming
a continued stable economic environment, the Company intends to continue to
grow its revenues and consultant base in Mexico, but at rates in the range of
8-10% per year.

The Company is employing a strategy to leverage diversification through
growth in other markets besides Mexico. The U.S. subsidiary has created
distinct business divisions to recognize the distinct elements of its General
and Hispanic customer groups. Net sales in the U.S. for the nine months ended
September 30, 2001 increased 7% compared to the comparable period of the prior
year. The U.S. plans to implement a number of strategies in the remainder of
2001 that, along with the initiation of doing business via e-commerce and an
increased focus on sponsoring new consultants through enhanced training
programs, are intended to stimulate sales growth in the high single digits over
2000 levels.

Net sales in Europe have been on a downward trend for the last two years.
European sales have declined from approximately 16% of the Companys business
in 1998 to 7% of the Companys business in the nine months ended September 30,
2001. In the first nine months of 2001, excluding the impact of exchange
rates, net sales decreased 1% compared to the first nine months of 2000. While
no assurance can be given, the Company expects to achieve approximately the
same level of European sales in year 2001 as was achieved in 2000, but at
higher operating profit as a result of the repositioning and restructuring
activities undertaken during 2000.

During the last two years, the Company has made significant investments in
new markets in South America. Sales in U.S. dollars in the South American
region grew by over 20% in 2000 and were up 1% in the nine months ended
September 30, 2001. In local currency, sales in South America increased 12% in
the nine months ended September 30, 2001. In 2000, net sales generated by
subsidiaries in the South American region were approximately 6% of consolidated
sales. The Company expects the region to contribute approximately 5% of
consolidated sales for 2001.

As a result of these differential growth rates, the Company expects, but
no assurance can be given, that its percentage of net sales in Mexico and South
America will increase slightly, and its percentage of net sales in Europe will
decrease slightly for the near term.

The Company has made plans to develop new business in 2001 through
expansion into new markets, particularly Thailand, which was opened in 2000,
and by utilizing the Internet and electronic commerce to increase its revenue
base in existing markets.

Information Concerning Forward-Looking Statements

Certain of the statements contained in this report (other than the
Companys consolidated financial statements and other statements of historical
fact) are forward-looking statements, including, without limitation, (i) the
statements in Liquidity and Capital Resources concerning the Companys
belief that it will have sufficient liquidity to meet its cash requirements and
working capital needs over the next twelve months; (ii) the
statement in Cash
Flows that total capital expenditures in 2001 are expected to be approximately
$10-11 million; (iii) the statements in European Economic and Monetary
Union concerning the Companys expectations that (a) during the transition
period, use of the euro by the Company or its consultants will not be
significant; (b) it will complete the necessary modifications to achieve a
euro-compliant system by the end of 2001 without incurring significant
expenses, and (c) the introduction of the euro will not materially adversely
affect its business, financial condition or results of operations; (iv) the
statements in Business Trends and Initiatives that (a) assuming a continued
stable economic environment, the Company intends to continue to grow its
revenues and consultant base in Mexico, but at rates in the range of 8-10% per
year; (b) the Companys expectation that U.S. sales growth will be in the high
single digits in 2001; (c) the Companys expectation that the level of sales in
Europe for the year 2001 will be approximately the same as was achieved in
2000, but at higher operating profit; (d) the Companys expectation that the
percentage of net sales in South America will increase to approximately 5% of
consolidated sales for 2001, and (e) the Companys expectation that the
percentage of net sales in Mexico and South America will increase
slightly, and that its percentage of net sales in Europe will decrease slightly
for the near term; and (v) other statements as to managements or the Companys
expectations or beliefs presented in this Managements Discussion and
Analysis of Financial Condition and Results of Operations.

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Forward-looking statements are based upon managements current
expectations and beliefs concerning future developments and their potential
effects upon the Company. There can be no assurance that future developments
will be in accordance with managements expectations or that the effect of
future developments on the Company will be those anticipated by management.
The factors described in the Companys Annual Report on Form 10-K for the year
ended December 31, 2000 (including, without limitation, those discussed in
Business-Strategy, International
Operations, Distribution,
Manufacturing, Management
Information Systems, Environmental
Matters, Properties, Legal Proceedings and Managements Discussion
and Analysis of Financial Condition and Results of Operations  Results of
Operations, Liquidity and Capital
Resources, Foreign Operations,
and European Economic and Monetary Union), or in other Securities and
Exchange Commission filings, could affect (and in some cases have affected) the
Companys actual results and could cause such results to differ materially from
estimates or expectations reflected in such forward-looking statements.

While the Company periodically reassesses material trends and
uncertainties affecting the Companys results of operations and financial
condition in connection with its preparation of managements discussion and
analysis of results of operations and financial condition contained in its
quarterly and annual reports, the Company does not intend to review or revise
any particular forward-looking statement referenced in this report in light of
future events.




ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to certain market risks arising from transactions
in the normal course of its business, and from debt incurred in connection with
the Acquisition. Such risk is principally associated with interest rate and
foreign exchange fluctuations, as well as changes in the Companys credit
standing. See disclosures under Item 7a, Quantitative and Qualitative
Disclosures About Market Risks in the Companys annual report on Form 10-K for
the year ended December 31, 2000. No significant changes have occurred during
the third quarter of 2001 in relation to the interest rate risk or its credit
standing.

Foreign Currency Risk

The Company operates globally, with manufacturing facilities in Mexico and
distribution facilities in various locations around the world. All
intercompany product sales are denominated in U.S. dollars. In addition, 79.0%
of the Companys revenue for first nine months of 2001 was generated in
countries with a functional currency other than the U.S. dollar. As a result,
the Companys earnings and cash flows for the nine months ended September 30,
2001 are exposed to fluctuations in foreign currency exchange rates.

The Company may reduce its primary market exposures to fluctuations in
foreign exchange rates and hedge contractual foreign currency cash flows or
obligations (including third party and intercompany foreign currency
transactions) by creating offsetting positions through the use of forward
exchange contracts. The Company regularly monitors its foreign currency
exposures and ensures that contract amounts do not exceed the amounts of the
underlying exposures. The Company does not use derivative financial
instruments for trading or speculative purposes, nor is the Company a party to
leveraged derivatives.

The outstanding foreign currency forward contracts at September 30, 2001
had a notional value of $87,036,000 and mature at various dates extending to
August 2002. Notional amounts do not quantify market or credit exposure or
represent assets or liabilities of the Company, but are used in the calculation
of cash settlements under the contracts. The table below describes the forward
contracts that were outstanding at September 30, 2001 (in thousands):

|                                |  |               |        |          |  |          |          |          |  |          |       |  |  |   |        | 
|------------------------------- |  | ------------- | ------ | -------- |  | -------- | -------- | -------- |  | -------- | ----- |  |  | - | ------ | 
|                                |  |               |        |          |  |          |          |          |  | Weighted |       |  |  |  
|                                |  | Forward       |        |          |  |          |          | Average  |  |          |       | 
|                                |  | Position in   |        | Maturity |  | Contract |          | Fair    
|Foreign Currency                |  | US Dollars(1) |        | Date     |  | Rate     |          | Value(1)
|                                |  |               |        |          |  |          |          |         
|Buy US Dollar/sell Mexican Peso |  | $             | 2,336  |          |  |          | 10/30/01 |          |  |          | 10.70 |  |  | $ | 2,064  | 
|Buy US Dollar/sell Mexican Peso |  |               | 10,275 |          |  |          | 10/31/01 |          |  |          | 10.71 |  |  |   | 9,074  | 
|Buy US Dollar/sell Mexican Peso |  |               | 6,806  |          |  |          | 11/30/01 |          |  |          | 10.24 |  |  |   | 6,394  | 
|Buy US Dollar/sell Mexican Peso |  |               | 4,110  |          |  |          | 12/27/01 |          |  |          | 10.71 |  |  |   | 3,709  | 
|Buy US Dollar/sell Mexican Peso |  |               | 3,761  |          |  |          | 12/31/01 |          |  |          | 10.90 |  |  |   | 3,321  | 
|Buy US Dollar/sell Mexican Peso |  |               | 10,673 |          |  |          | 1/31/02  |          |  |          | 10.19 |  |  |   | 10,286 | 

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|                                |  |               |        |          |  |          |         |          |  |          |       |  |  |   |        | 
|------------------------------- |  | ------------- | ------ | -------- |  | -------- | ------- | -------- |  | -------- | ----- |  |  | - | ------ | 
|                                |  |               |        |          |  |          |         |          |  | Weighted |       |  |  |  
|                                |  | Forward       |        |          |  |          |         | Average  |  |          |       | 
|                                |  | Position in   |        | Maturity |  | Contract |         | Fair    
|Foreign Currency                |  | US Dollars(1) |        | Date     |  | Rate     |         | Value(1)
|                                |  |               |        |          |  |          |         |         
|Buy US Dollar/sell Mexican Peso |  |               | 6,995  |          |  |          | 2/28/02 |          |  |          | 10.26 |  |  |   | 6,748  | 
|Buy US Dollar/sell Mexican Peso |  |               | 9,023  |          |  |          | 3/27/02 |          |  |          | 10.46 |  |  |   | 8,612  | 
|Buy US Dollar/sell Mexican Peso |  |               | 8,310  |          |  |          | 4/30/02 |          |  |          | 10.23 |  |  |   | 8,189  | 
|Buy US Dollar/sell Mexican Peso |  |               | 8,013  |          |  |          | 5/31/02 |          |  |          | 10.11 |  |  |   | 8,053  | 
|Buy US Dollar/sell Mexican Peso |  |               | 8,037  |          |  |          | 6/28/02 |          |  |          | 9.95  |  |  |   | 8,259  | 
|Buy US Dollar/sell Mexican Peso |  |               | 4,766  |          |  |          | 7/31/02 |          |  |          | 10.07 |  |  |   | 4,881  | 
|Buy US Dollar/sell Mexican Peso |  |               | 3,931  |          |  |          | 8/30/02 |          |  |          | 10.17 |  |  |   | 4,019  | 
|                                |  |               |        |          |  |          |         |          |  |          |       |  |  |   |        | 
|Buy US Dollar/sell Mexican Peso |  | $             | 87,036 |          |  |          |         |          |  |          |       |  |  | $ | 83,609 | 
|                                |  |               |        |          |  |          |         |          |  |          |       |  |  |   |        | 



---

|(1) |  | The Forward Position in US dollars and the Fair Value presented above
represent notional amounts. The net of these two amounts, an unrealized
loss of $3,427,000 at September 30, 2001, represents the fair value of the
forward contracts, and has been recorded in accrued liabilities in the
accompanying consolidated balance sheet as of September 30, 2001.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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PART II. OTHER INFORMATION




Item 1. Legal Proceedings

See discussion under Legal Proceedings in the Companys Annual Report on
Form 10-K for the year ended December 31, 2000.




Item 2. Changes in Securities and Use of Proceeds

None.




Item 3. Defaults Upon Senior Securities

None.




Item 4. Submission of Matters to a Vote of Security Holders

None.




Item 5. Other Information

None.




Item 6. Exhibits and Reports on Form 8-K



|(a) |  | Exhibits           
|--- |  | -------------------
|   
|    |  | None.              
|   
|(b) |  | Reports on Form 8-K

During the quarter ended September 30, 2001, the Company filed no reports
on Form 8-K.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.

|                  |                                                                 
|----------------- | ----------------------------------------------------------------
|                  | CDRJ Investments (Lux) S.A.                                     
|                  |                                                                 
|                  | /s/ MICHAEL A. DIGREGORIO                                       
|                  |                                                                 
|                  | Michael A. DiGregorio                                           
|                  | Senior Vice President and Chief Financial
        Officer of the
|                  | Advisory Committee (Principal Financial
        Officer)        
|November 14, 2001 |                                                                 

40