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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, 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, 2003

OR

|  |  |                                                                                         
|- |  | ----------------------------------------------------------------------------------------
|o |  | 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 333-106666

JAFRA WORLDWIDE HOLDINGS (Lux) S.àR.L.




(Exact name of Registrant as specified in its charter)


|                                |  |                       
|------------------------------- |  | ----------------------
|Luxembourg                      |  | 98-0399297            
|(State or other jurisdiction of |  | (I.R.S. Employer      
|incorporation or organization)  |  | Identification Number)

174 Route de Longwy
L-1940 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 o NO x

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). YES o NO x

The registrant does not have a class of equity securities registered
pursuant to Section 12 of the Securities Exchange Act of 1934 and there is no
public market for voting stock of the registrant.

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 $100 per share, outstanding at November 12, 2003
151 shares.



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TABLE OF CONTENTS



|                              |                                                                                               |                                                              |                                            |  |  |  |  | 
|----------------------------- | --------------------------------------------------------------------------------------------- | ------------------------------------------------------------ | ------------------------------------------ |  |  |  |  | 
|PART I. FINANCIAL INFORMATION
|                              | ITEM 1. FINANCIAL STATEMENTS                                                                 
|                              |                                                                                               | JAFRA WORLDWIDE HOLDINGS (LUX) S.ar.L. AND SUBSIDIARIES     
|                              |                                                                                               |                                                              | CONSOLIDATED BALANCE SHEETS               
|                              |                                                                                               |                                                              | CONSOLIDATED STATEMENTS OF OPERATIONS     
|                              |                                                                                               |                                                              | CONSOLIDATED STATEMENTS OF CASH FLOWS     
|                              |                                                                                               |                                                              | NOTES TO 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
|                              |                                                                                               | DISTRIBUIDORA COMERCIAL JAFRA, S.A. DE C.V.                 
|                              |                                                                                               |                                                              | BALANCE SHEETS                            
|                              |                                                                                               |                                                              | STATEMENTS OF OPERATIONS                  
|                              |                                                                                               |                                                              | STATEMENTS OF CASH FLOWS                  
|                              |                                                                                               |                                                              | NOTES TO 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                           
|                              | ITEM 4. CONTROLS AND PROCEDURES                                                              
|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                    
|Exhibit 10.1                 
|EXHIBIT 31.1                 
|EXHIBIT 31.2                 
|EXHIBIT 32.1                 
|EXHIBIT 32.1                 



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JAFRA WORLDWIDE HOLDING (Lux), S.àR.L. 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, 2003

|        |     |  |  |                                                                                                  |  |         
|------- | --- |  |  | ------------------------------------------------------------------------------------------------ |  | --------
|        |     |  |  |                                                                                                  |  | Page No.
|        |     |  |  |                                                                                                  |  |         
|        |     |  |  | PART I - FINANCIAL INFORMATION                                                                   |  |         
|Item 1. | (*) |  |  | Financial Statements (Unaudited):                                                                |  |         
|        |     |  |  | Consolidated Financial Statements - Jafra Worldwide Holdings (Lux), S.àR.L                       |  |         
|        |     |  |  | Consolidated Balance Sheets                                                                      |  | 4       
|        |     |  |  | Consolidated Statements of Operations                                                            |  | 5       
|        |     |  |  | Consolidated Statements of Cash Flows                                                            |  | 6       
|        |     |  |  | Notes to Consolidated Financial Statements                                                       |  | 7       
|        |     |  |  | Consolidated Financial Statements - Jafra Cosmetics International, Inc. and Subsidiaries         |  |         
|        |     |  |  | Consolidated Balance Sheets                                                                      |  | 15      
|        |     |  |  | Consolidated Statements of Operations                                                            |  | 16      
|        |     |  |  | Consolidated Statements of Cash Flows                                                            |  | 17      
|        |     |  |  | Notes to Consolidated Financial Statements                                                       |  | 18      
|        |     |  |  | Financial Statements - Distribuidora Comercial Jafra, S.A. de C.V.                               |  |         
|        |     |  |  | Balance Sheets                                                                                   |  | 24      
|        |     |  |  | Statements of Operations                                                                         |  | 25      
|        |     |  |  | Statements of Cash Flows                                                                         |  | 26      
|        |     |  |  | Notes to Financial Statements                                                                    |  | 27      
|        |     |  |  | Consolidated Financial Statements - Jafra Cosmetics International, S.A. de C.V. and Subsidiaries |  |         
|        |     |  |  | Consolidated Balance Sheets                                                                      |  | 31      
|        |     |  |  | Consolidated Statements of Operations                                                            |  | 32      
|        |     |  |  | Consolidated Statements of Cash Flows                                                            |  | 33      
|        |     |  |  | Notes to Consolidated Financial Statements                                                       |  | 34      
|Item 2. |     |  |  | Managements Discussion and Analysis of Financial
Condition and Results of Operations            |  | 39      
|Item 3. |     |  |  | Quantitative and Qualitative Disclosures about Market Risk                                       |  | 50      
|Item 4. |     |  |  | Controls and Procedures                                                                          |  | 52      
|        |     |  |  | PART II - OTHER INFORMATION                                                                      |  |         
|Item 1. |     |  |  | Legal Proceedings                                                                                |  | 53      
|Item 2. |     |  |  | Changes in Securities and Use of Proceeds                                                        |  | 53      
|Item 3. |     |  |  | Defaults Upon Senior Securities                                                                  |  | 53      
|Item 4. |     |  |  | Submission of Matters to a Vote of Security Holders                                              |  | 53      
|Item 5. |     |  |  | Other Information                                                                                |  | 53      
|Item 6. |     |  |  | Exhibits and Reports on Form 8-K                                                                 |  | 53      
|        |     |  |  | Signature                                                                                        |  | 54      
|        |     |  |  | Certifications                                                                                   |  | 55      

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|* |  | Distribuidora Comercial Jafra S.A. de C.V. (Jafra Distribution) and Jafra
Cosmetics International, Inc. (JCI) have fully and unconditionally guaranteed
the obligations of the other under the $200 million aggregate principal amount
of 10 3⁄4% Subordinated Notes due 2011 (the Notes) on a senior
subordinated basis, subject to a 30-day standstill period prior to enforcement
of such guarantees. Jafra Cosmetics International S.A. de C.V. and its
subsidiaries (Jafra S.A.) have fully and unconditionally guaranteed the
obligations of Jafra Distribution under the Notes. As such, Jafra Worldwide
Holdings (Lux) S.àR.L., the parent company of each of JCI, Jafra Distribution
and Jafra S.A., is filing separate financial statements of JCI, Jafra
Distribution and Jafra S.A. in its Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 2003.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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PART I. FINANCIAL INFORMATION




ITEM 1. FINANCIAL STATEMENTS







JAFRA WORLDWIDE HOLDINGS (LUX) S.àR.L. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)

|                                |                                                                                                                                                                                     |                                                |                                      |         |   |               |        |              |   |         |  | 
|------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------- | ------------------------------------ | ------- | - | ------------- | ------ | ------------ | - | ------- |  | 
|                                |                                                                                                                                                                                     |                                                |                                      |         |   | September 30, |        | December 31,
|                                |                                                                                                                                                                                     |                                                |                                      |         |   | 2003          |        | 2002        
|                                |                                                                                                                                                                                     |                                                |                                      |         |   |               |        |             
|                                |                                                                                                                                                                                     |                                                |                                      |         |   | (Unaudited)   |        |              |   |        
|                                |                                                                                                                                                                                     |                                                |                                      | ASSETS  |   |               |        |              |   |         |  | 
|Current assets:                 |                                                                                                                                                                                     |                                                |                                      |         |   |               |        |             
|                                | Cash and cash equivalents                                                                                                                                                           |                                                | $                                    | 8,925   |   |               | $      | 26,821       |  
|                                | Receivables, net                                                                                                                                                                    |                                                |                                      | 31,753  |   |               |        | 40,205       |  
|                                | Inventories                                                                                                                                                                         |                                                |                                      | 43,567  |   |               |        | 33,573       |  
|                                | Prepaid income taxes                                                                                                                                                                |                                                |                                      | 4,044   |   |               |        | 258          |  
|                                | Prepaid expenses and other current assets                                                                                                                                           |                                                |                                      | 8,783   |   |               |        | 4,846        |  
|                                | Current assets from discontinued operations                                                                                                                                         |                                                |                                      | 366     |   |               |        | 3,150        |  
|                                |                                                                                                                                                                                     |                                                |                                      |         |   |               |        |             
|                                |                                                                                                                                                                                     |                                                | Total current assets                 |         |   | 97,438        |        |              |   | 108,853 | 
|Property and equipment, net     |                                                                                                                                                                                     |                                                | 58,916                               |         |   |               | 60,395 |             
|Other assets:                   |                                                                                                                                                                                     |                                                |                                      |         |   |               |        |             
|                                | Goodwill                                                                                                                                                                            |                                                |                                      | 63,967  |   |               |        | 66,173       |  
|                                | Trademarks                                                                                                                                                                          |                                                |                                      | 42,015  |   |               |        | 44,570       |  
|                                | Deferred financing fees and other, net                                                                                                                                              |                                                |                                      | 18,695  |   |               |        | 7,796        |  
|                                | Noncurrent assets from discontinued operations                                                                                                                                      |                                                |                                      |        |   |               |        | 503          |  
|                                |                                                                                                                                                                                     |                                                |                                      |         |   |               |        |             
|                                |                                                                                                                                                                                     |                                                | Total                                |         | $ | 281,031       |        |              | $ | 288,290 | 
|                                |                                                                                                                                                                                     |                                                |                                      |         |   |               |        |             
|                                |                                                                                                                                                                                     | LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT) |                                      |         |   |               |        |              |   |        
|Current liabilities:            |                                                                                                                                                                                     |                                                |                                      |         |   |               |        |             
|                                | Current portion of long-term debt                                                                                                                                                   |                                                | $                                    | 6,875   |   |               | $      | 6,489        |  
|                                | Accounts payable                                                                                                                                                                    |                                                |                                      | 17,513  |   |               |        | 18,215       |  
|                                | Accrued liabilities                                                                                                                                                                 |                                                |                                      | 45,679  |   |               |        | 44,415       |  
|                                | Income taxes payable                                                                                                                                                                |                                                |                                      |        |   |               |        | 4,911        |  
|                                | Deferred income taxes                                                                                                                                                               |                                                |                                      | 2,071   |   |               |        | 2,073        |  
|                                | Current liabilities from discontinued operations                                                                                                                                    |                                                |                                      | 157     |   |               |        | 858          |  
|                                |                                                                                                                                                                                     |                                                |                                      |         |   |               |        |             
|                                |                                                                                                                                                                                     |                                                | Total current liabilities            |         |   | 72,295        |        |              |   | 76,961  | 
|Long-term debt                  |                                                                                                                                                                                     |                                                | 241,875                              |         |   |               | 77,894 |             
|Deferred income taxes           |                                                                                                                                                                                     |                                                | 20,254                               |         |   |               | 21,186 |             
|Other long-term liabilities     |                                                                                                                                                                                     |                                                | 4,407                                |         |   |               | 3,787  |             
|                                |                                                                                                                                                                                     |                                                |                                      |         |   |               |        |             
|                                |                                                                                                                                                                                     |                                                | Total liabilities                    |         |   | 338,831       |        |              |   | 179,828 | 
|                                |                                                                                                                                                                                     |                                                |                                      |         |   |               |        |             
|Commitments and contingencies   |                                                                                                                                                                                     |                                                |                                     |         |   |               |       |             
|Stockholders equity (deficit): |                                                                                                                                                                                     |                                                |                                      |         |   |               |        |             
|                                | Common stock, par value $100: 151 shares authorized, issued
and outstanding in 2003; par value $2.00: 1,020,000
shares authorized and 831,888 shares issued and outstanding in 2002 |                                                |                                      | 15      |   |               |        | 1,664        |  
|                                | Additional paid-in capital                                                                                                                                                          |                                                |                                      |        |   |               |        | 81,921       |  
|                                | Retained earnings (deficit)                                                                                                                                                         |                                                |                                      | (46,433 | ) |               |        | 37,145       |  
|                                | Accumulated other comprehensive loss                                                                                                                                                |                                                |                                      | (11,382 | ) |               |        | (12,268      | )
|                                |                                                                                                                                                                                     |                                                |                                      |         |   |               |        |             
|                                |                                                                                                                                                                                     |                                                | Total stockholders equity (deficit) |         |   | (57,800       | )      |              |   | 108,462 | 
|                                |                                                                                                                                                                                     |                                                |                                      |         |   |               |        |             
|                                |                                                                                                                                                                                     |                                                | Total                                |         | $ | 281,031       |        |              | $ | 288,290 | 
|                                |                                                                                                                                                                                     |                                                |                                      |         |   |               |        |             

See accompanying notes to consolidated financial statements

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JAFRA WORLDWIDE HOLDINGS (LUX) S.àR.L. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands)
(Unaudited)

|                                                                                                        |                                |   |                    |        |                   |   |        |        |      |   |         |         |   |   |         |         |  
|------------------------------------------------------------------------------------------------------- | ------------------------------ | - | ------------------ | ------ | ----------------- | - | ------ | ------ | ---- | - | ------- | ------- | - | - | ------- | ------- | -
|                                                                                                        |                                |   | Three Months Ended |        | Nine Months Ended
|                                                                                                        |                                |   | September 30,      |        | September 30,    
|                                                                                                        |                                |   |                    |        |                  
|                                                                                                        |                                |   | 2003               |        | 2002              |   | 2003   |        | 2002
|                                                                                                        |                                |   |                    |        |                   |   |        |        |     
|Net sales                                                                                               |                                | $ | 86,594             |        |                   | $ | 93,083 |        |      | $ | 276,742 |         |   | $ | 285,340 |        
|Cost of sales                                                                                           |                                |   | 19,550             |        |                   |   | 21,474 |        |      |   | 63,794  |         |   |   | 66,122  |        
|                                                                                                        |                                |   |                    |        |                   |   |        |        |      |   |         |         |   |   |         |        
|                                                                                                        | Gross profit                   |   |                    | 67,044 |                   |   |        | 71,609 |      |   |         | 212,948 |   |   |         | 219,218 |  
|Selling, general and administrative expenses                                                            |                                |   | 55,520             |        |                   |   | 57,555 |        |      |   | 188,508 |         |   |   | 174,980 |        
|                                                                                                        |                                |   |                    |        |                   |   |        |        |      |   |         |         |   |   |         |        
|                                                                                                        | Income from operations         |   |                    | 11,524 |                   |   |        | 14,054 |      |   |         | 24,440  |   |   |         | 44,238  |  
|Other income (expense):                                                                                 |                                |   |                    |        |                   |   |        |        |      |   |         |         |   |   |         |        
|                                                                                                        | Exchange loss, net             |   |                    | (7,462 | )                 |   |        | (4,904 | )    |   |         | (7,764  | ) |   |         | (9,814  | )
|                                                                                                        | Interest expense, net          |   |                    | (6,886 | )                 |   |        | (2,879 | )    |   |         | (14,097 | ) |   |         | (8,745  | )
|                                                                                                        | Loss on extinguishment of debt |   |                    |       |                   |   |        |       |      |   |         | (6,620  | ) |   |         |        |  
|                                                                                                        | Other, net                     |   |                    | (70    | )                 |   |        | (24    | )    |   |         | (367    | ) |   |         | 215     |  
|                                                                                                        |                                |   |                    |        |                   |   |        |        |      |   |         |         |   |   |         |        
|Income
(loss) from continuing operations before income taxes and cumulative effect of accounting change |                                |   | (2,894             | )      |                   |   | 6,247  |        |      |   | (4,408  | )       |   |   | 25,894  |        
|Income tax expense (benefit)                                                                            |                                |   | (460               | )      |                   |   | 4,956  |        |      |   | 1,159   |         |   |   | 9,713   |        
|                                                                                                        |                                |   |                    |        |                   |   |        |        |      |   |         |         |   |   |         |        
|Income (loss) from continuing operations
before cumulative effect of accounting change                  |                                |   | (2,434             | )      |                   |   | 1,291  |        |      |   | (5,567  | )       |   |   | 16,181  |        
|Loss on discontinued operations (net of 0 tax benefit)                                                  |                                |   | (566               | )      |                   |   | (325   | )      |      |   | (2,567  | )       |   |   | (1,099  | )      
|Cumulative effect of accounting change                                                                  |                                |   |                   |        |                   |   |       |        |      |   |        |         |   |   | (244    | )      
|                                                                                                        |                                |   |                    |        |                   |   |        |        |      |   |         |         |   |   |         |        
|Net (loss) income                                                                                       |                                | $ | (3,000             | )      |                   | $ | 966    |        |      | $ | (8,134  | )       |   | $ | 14,838  |        
|                                                                                                        |                                |   |                    |        |                   |   |        |        |      |   |         |         |   |   |         |        

See accompanying notes to consolidated financial statements

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JAFRA WORLDWIDE HOLDINGS (LUX) S.àR.L. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

|                                                     |                                                                                                                                                                         |                                                       |                                                     |                                                     |       |                   |        |        |        |         |        |  
|---------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------- | --------------------------------------------------- | --------------------------------------------------- | ----- | ----------------- | ------ | ------ | ------ | ------- | ------ | -
|                                                     |                                                                                                                                                                         |                                                       |                                                     |                                                     |       | Nine Months Ended
|                                                     |                                                                                                                                                                         |                                                       |                                                     |                                                     |       | September 30,    
|                                                     |                                                                                                                                                                         |                                                       |                                                     |                                                     |       |                  
|                                                     |                                                                                                                                                                         |                                                       |                                                     |                                                     |       | 2003              |        | 2002  
|                                                     |                                                                                                                                                                         |                                                       |                                                     |                                                     |       |                   |        |       
|Cash flows from operating activities:                |                                                                                                                                                                         |                                                       |                                                     |                                                     |       |                   |        |       
|                                                     | Net
income (loss) from continuing operations                                                                                                                            |                                                       | $                                                   | (5,567                                              | )     |                   | $      | 15,937 |       
|                                                     |                                                                                                                                                                         | Cumulative effect of accounting change                |                                                     |                                                     |      |                   |        |        | 244    |        
|                                                     |                                                                                                                                                                         |                                                       |                                                     |                                                     |       |                   |        |       
|                                                     | Income
(loss) from continuing operations before cumulative effect of accounting change                                                                                  |                                                       |                                                     | (5,567                                              | )     |                   |        | 16,181 |       
|                                                     | Adjustments to reconcile income (loss) from continuing operations before cumulative effect of accounting
change to net cash (used in) provided by operating activities: |                                                       |                                                     |                                                     |       |                   |        |        |       
|                                                     |                                                                                                                                                                         | Gain on sale of property and equipment                |                                                     |                                                     |      |                   |        |        | (88    | )      
|                                                     |                                                                                                                                                                         | Depreciation and amortization                         |                                                     |                                                     | 4,359 |                   |        |        | 3,766  |        
|                                                     |                                                                                                                                                                         | Amortization and write off of deferred financing fees |                                                     |                                                     | 3,234 |                   |        |        | 1,063  |        
|                                                     |                                                                                                                                                                         | Provision for uncollectible accounts receivable       |                                                     |                                                     | 7,038 |                   |        |        | 9,831  |        
|                                                     |                                                                                                                                                                         | Asset impairment charge                               |                                                     |                                                     | 388   |                   |        |        |       |        
|                                                     |                                                                                                                                                                         | Unrealized foreign exchange and derivative loss       |                                                     |                                                     | 8,498 |                   |        |        | 8,483  |        
|                                                     |                                                                                                                                                                         | Deferred realized foreign exchange loss               |                                                     |                                                     | 646   |                   |        |        | 515    |        
|                                                     |                                                                                                                                                                         | Deferred income taxes                                 |                                                     |                                                     |      |                   |        |        | (3,504 | )      
|                                                     |                                                                                                                                                                         | Changes in operating assets and liabilities:          |                                                     |                                                     |       |                   |        |        |        |        
|                                                     |                                                                                                                                                                         |                                                       | Receivables                                         |                                                     |       | (718              | )      |        |        | (15,341 | )     
|                                                     |                                                                                                                                                                         |                                                       | Inventories                                         |                                                     |       | (11,414           | )      |        |        | (1,725  | )     
|                                                     |                                                                                                                                                                         |                                                       | Prepaid expenses and other current assets           |                                                     |       | (3,434            | )      |        |        | 2,960   |       
|                                                     |                                                                                                                                                                         |                                                       | Other assets                                        |                                                     |       | 149               |        |        |        | 1,334   |       
|                                                     |                                                                                                                                                                         |                                                       | Accounts payable and accrued liabilities            |                                                     |       | (1,052            | )      |        |        | (566    | )     
|                                                     |                                                                                                                                                                         |                                                       | Income taxes payable/prepaid                        |                                                     |       | (5,301            | )      |        |        | (448    | )     
|                                                     |                                                                                                                                                                         |                                                       | Other long-term liabilities                         |                                                     |       | 620               |        |        |        | 408     |       
|                                                     |                                                                                                                                                                         |                                                       | Net operating activities of discontinued operations |                                                     |       | 19                |        |        |        | 357     |       
|                                                     |                                                                                                                                                                         |                                                       |                                                     |                                                     |       |                   |        |       
|                                                     |                                                                                                                                                                         |                                                       |                                                     | Net cash (used in) provided by operating activities |       |                   | (2,535 | )      |        |         | 23,226 |  
|                                                     |                                                                                                                                                                         |                                                       |                                                     |                                                     |       |                   |        |       
|Cash flows from investing activities:                |                                                                                                                                                                         |                                                       |                                                     |                                                     |       |                   |        |       
|                                                     | Proceeds from sale of property and equipment                                                                                                                            |                                                       |                                                     |                                                    |       |                   |        | 231    |       
|                                                     | Purchases of property and equipment                                                                                                                                     |                                                       |                                                     | (4,963                                              | )     |                   |        | (7,588 | )     
|                                                     | Other                                                                                                                                                                   |                                                       |                                                     | (643                                                | )     |                   |        | (303   | )     
|                                                     | Net investing activities of discontinued operations                                                                                                                     |                                                       |                                                     |                                                    |       |                   |        | (17    | )     
|                                                     |                                                                                                                                                                         |                                                       |                                                     |                                                     |       |                   |        |       
|                                                     |                                                                                                                                                                         |                                                       |                                                     | Net cash used in investing activities               |       |                   | (5,606 | )      |        |         | (7,677 | )
|                                                     |                                                                                                                                                                         |                                                       |                                                     |                                                     |       |                   |        |       
|Cash flows from financing activities:                |                                                                                                                                                                         |                                                       |                                                     |                                                     |       |                   |        |       
|                                                     | Proceeds from issuance of subordinated debt due 2011                                                                                                                    |                                                       |                                                     | 200,000                                             |       |                   |        |       |       
|                                                     | Proceeds from issuance of term loan                                                                                                                                     |                                                       |                                                     | 50,000                                              |       |                   |        |       |       
|                                                     | Repurchase of subordinated debt due 2008                                                                                                                                |                                                       |                                                     | (75,180                                             | )     |                   |        |       |       
|                                                     | Repayments under term loan facility                                                                                                                                     |                                                       |                                                     | (9,625                                              | )     |                   |        | (5,375 | )     
|                                                     | Net borrowings under revolving credit facility                                                                                                                          |                                                       |                                                     |                                                    |       |                   |        | (1,800 | )     
|                                                     | Distribution of additional paid-in capital to shareholders                                                                                                              |                                                       |                                                     | (83,570                                             | )     |                   |        |       |       
|                                                     | Distribution payment to shareholders from retained earnings                                                                                                             |                                                       |                                                     | (75,444                                             | )     |                   |        |       |       
|                                                     | Deferred financing costs                                                                                                                                                |                                                       |                                                     | (14,449                                             | )     |                   |        |       |       
|                                                     | Net repayments under bank debt                                                                                                                                          |                                                       |                                                     | (828                                                | )     |                   |        | (479   | )     
|                                                     |                                                                                                                                                                         |                                                       |                                                     |                                                     |       |                   |        |       
|                                                     |                                                                                                                                                                         |                                                       |                                                     | Net cash used in financing activities               |       |                   | (9,096 | )      |        |         | (7,654 | )
|                                                     |                                                                                                                                                                         |                                                       |                                                     |                                                     |       |                   |        |       
|Effect of exchange rate changes on cash              |                                                                                                                                                                         |                                                       | (659                                                | )                                                   |       |                   | (3,210 | )     
|                                                     |                                                                                                                                                                         |                                                       |                                                     |                                                     |       |                   |        |       
|Net (decrease) increase in cash and cash equivalents |                                                                                                                                                                         |                                                       | (17,896                                             | )                                                   |       |                   | 4,685  |       
|Cash and cash equivalents at beginning of period     |                                                                                                                                                                         |                                                       | 26,821                                              |                                                     |       |                   | 5,746  |       
|                                                     |                                                                                                                                                                         |                                                       |                                                     |                                                     |       |                   |        |       
|Cash and cash equivalents at end of period           |                                                                                                                                                                         | $                                                     | 8,925                                               |                                                     |       | $                 | 10,431 |       
|                                                     |                                                                                                                                                                         |                                                       |                                                     |                                                     |       |                   |        |       

See accompanying notes to consolidated financial statements

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##### Table of Contents






JAFRA WORLDWIDE HOLDINGS (LUX) S.àR.L. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

(1) Basis of Presentation

Jafra Worldwide Holdings (Lux) S.àr.l, a Luxembourg société à
responsabilité limitée(the Parent) is a wholly-owned subsidiary of CDRJ
North Atlantic (Lux) S.àR.L. CDRJ North Atlantic (Lux) S.àR.L., a Luxembourg
société à responsabilité limitée(North Atlantic), is a wholly-owned
subsidiary of CDRJ Investments (Lux) S.A. a Luxembourg société anonyme
(CDRJ).

On May 20, 2003, the Parent, Jafra Cosmetics International, Inc. (JCI)
and Distribuidora Comercial Jafra S.A. de C.V. (Jafra Distribution and
together with JCI, the Issuers) completed a recapitalization of their
operations by entering into $90 million of new senior secured credit
facilities, consisting of a $50 million senior secured term loan facility and a
$40 million senior secured revolving credit facility and issuing $200 million
of 10 3⁄4% Senior Subordinated Notes due 2011 (collectively, the
Recapitalization). The proceeds from the Recapitalization were used to
redeem the 11 3⁄4% Senior Subordinated Notes due 2008 (the Old Notes) of JCI
and Jafra Cosmetics International, S.A. de C.V. (Jafra S.A.), to repay all
amounts outstanding under the existing credit facilities of JCI and Jafra S.A.
and to make certain payments to CDRJ and employees of JCI and Jafra S.A. The
stockholders of CDRJ then resolved that CDRJ be liquidated and
appointed the Parent
to act as its liquidator. Thereafter, CDRJ made an initial liquidating
distribution of such proceeds to its stockholders. In connection with the
liquidation of CDRJ, North Atlantic transferred all of its assets and
liabilities, including its direct and indirect holdings of JCI, Jafra S.A. and
Jafra Distribution, to the Parent in exchange for additional shares of common
stock of the Parent. Jafra S.A. and Jafra Distribution are collectively
referred to as Jafra Mexico.

Jafra Distribution was organized February 26, 2003 to conduct the
distribution functions of the Parents Mexican operations. The Parent was
organized on February 24, 2003 as a holding company to conduct the worldwide
Jafra cosmetics business through its subsidiaries. CDRJ is a holding company
that, until the Recapitalization, conducted the Jafra cosmetics business
through its subsidiaries. Since the commencement of the liquidation, CDRJ has
conducted no operations other than those incident to winding up its activities.
The liquidation of CDRJ is expected to be completed prior to the end of the
fourth quarter of 2003.

The accompanying unaudited interim consolidated financial statements as of
September 30, 2003 and for the three and nine months ended September 30, 2003
reflect the operations of the Parent and its subsidiaries and include the
operations of CDRJ and its subsidiaries through May 20, 2003. The accompanying
unaudited interim consolidated financial statements for the three and nine
months ended September 30, 2002 and the accompanying audited consolidated
financial statements as of December 31, 2002 reflect the operations of CDRJ and
its subsidiaries through May 20, 2003. The historical consolidated financial statements of CDRJ
are equivalent to the operations of the Parent. CDRJ and its subsidiaries and
the Parent and its subsidiaries are referred to collectively as the Company.

The unaudited interim consolidated financial statements 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, including normal
recurring adjustments, necessary to present fairly the Companys consolidated
financial statements as of September 30, 2003 and for the interim periods
presented. All significant intercompany accounts and transactions have been
eliminated in consolidation.

The functional currency of certain of the Companys foreign subsidiaries
generally 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 loss.

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JAFRA WORLDWIDE HOLDINGS (LUX) S.àR.L. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)

Management Incentive Arrangements. The Company applies Accounting
principles Board Opinion (APB) No. 25, Accounting for Stock issued to
Employees and related Interpretations in accounting for the issuance of stock
options under the Companys Stock Incentive Plan. No options were granted
during the nine months ended September 30, 2003. Had the Company recorded
compensation cost based on the fair value of options granted at the grant date,
as prescribed by Statement of Financial Accounting Standards (SFAS) No. 123,
Accounting for Stock Based Compensation, the compensation expense for the
three and nine months ended September 30, 2003 and 2002 would be immaterial to
the consolidated statements of operations.

New Accounting Pronouncements.The Company adopted SFAS No. 145,
Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement
No. 13, and Technical Corrections on January 1, 2003. This statement rescinds
or modifies existing authoritative pronouncements including SFAS No. 4
Reporting Gains and Losses from Extinguishment of Debt. As a result of the
issuance of SFAS No. 145, gains and losses from extinguishment of debt are
classified as extraordinary items only if they meet the criteria in APB Opinion
30, Reporting the Results of Operations-Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions. Applying the provisions of APB Opinion 30
distinguishes transactions that are part of an entitys recurring operations
from those that are unusual or infrequent or that meet the criteria for
classification as an extraordinary item. Based on the adoption of this
principle, the Company has reclassified any gain or loss on extinguishment of
debt that was classified as an extraordinary item in prior periods and has
classified its current loss on extinguishment of debt within other income
(expense).

The Company adopted SFAS No. 146, Accounting for Costs Associated with
Exit or Disposal Activities on January 1, 2003 which did not result in any
material impact to the Companys consolidated statements of operations. This
statement addresses financial accounting and reporting for costs associated
with exit or disposal activities and nullifies EITF Issue No. 94-3, Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit
an Activity.

(2) Inventories

Inventories consist of the following (in thousands):

|                           |  |               |        |              |  |   |        | 
|-------------------------- |  | ------------- | ------ | ------------ |  | - | ------ | 
|                           |  | September 30, |        | December 31,
|                           |  | 2003          |        | 2002        
|                           |  |               |        |             
|Raw materials and supplies |  | $             | 5,293  |              |  | $ | 5,101  | 
|Finished goods             |  |               | 38,274 |              |  |   | 28,472 | 
|                           |  |               |        |              |  |   |        | 
|Total inventories          |  | $             | 43,567 |              |  | $ | 33,573 | 
|                           |  |               |        |              |  |   |        | 

(3) Property and Equipment

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

|                               |  |               |        |              |  |   |        | 
|------------------------------ |  | ------------- | ------ | ------------ |  | - | ------ | 
|                               |  | September 30, |        | December 31,
|                               |  | 2003          |        | 2002        
|                               |  |               |        |             
|Land                           |  | $             | 15,869 |              |  | $ | 16,448 | 
|Buildings                      |  |               | 16,849 |              |  |   | 17,452 | 
|Machinery, equipment and other |  |               | 44,881 |              |  |   | 41,539 | 
|                               |  |               |        |              |  |   |        | 
|                               |  |               | 77,599 |              |  |   | 75,439 | 
|Less accumulated depreciation  |  |               | 18,683 |              |  |   | 15,044 | 
|                               |  |               |        |              |  |   |        | 
|Property and equipment, net    |  | $             | 58,916 |              |  | $ | 60,395 | 
|                               |  |               |        |              |  |   |        | 

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JAFRA WORLDWIDE HOLDINGS (LUX) S.àR.L. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)

(4) Goodwill and Other Intangible Assets.

The Companys intangible assets consist of trademarks and goodwill. The
Company has determined trademarks to have an indefinite life. The carrying
value of trademarks was $42,015,000 as of September 30, 2003. The changes in
the carrying amount of goodwill for the nine months ended September 30, 2003
are as follows (in thousands):

|                                 |  |        |        |        |  |        |        |        |  |       |       |     |  |              |      |   |  |   |        |  
|-------------------------------- |  | ------ | ------ | ------ |  | ------ | ------ | ------ |  | ----- | ----- | --- |  | ------------ | ---- | - |  | - | ------ | -
|                                 |  | United |        |        |  |        |        |        |  |       |       | All |  | Consolidated
|Goodwill                         |  | States |        | Mexico |  | Europe |        | Others |  | Total
|                                 |  |        |        |        |  |        |        |        |  |      
|Balance as of December 31, 2002  |  | $      | 32,188 |        |  | $      | 28,548 |        |  | $     | 5,300 |     |  | $            | 137  |   |  | $ | 66,173 |  
|Impairment losses                |  |        |       |        |  |        |       |        |  |       |      |     |  |              | (137 | ) |  |   | (137   | )
|Translation effect               |  |        |       |        |  |        | (1,610 | )      |  |       | (459  | )   |  |              |     |   |  |   | (2,069 | )
|                                 |  |        |        |        |  |        |        |        |  |       |       |     |  |              |      |   |  |   |        |  
|Balance as of September 30, 2003 |  | $      | 32,188 |        |  | $      | 26,938 |        |  | $     | 4,841 |     |  | $            |     |   |  | $ | 63,967 |  
|                                 |  |        |        |        |  |        |        |        |  |       |       |     |  |              |      |   |  |   |        |  

In connection with the implementation of SFAS No. 142, Goodwill and Other
Intangible Assets, the Company identified all reporting units and allocated
all goodwill accordingly. During the nine months ended September 30, 2003, the
Company identified impairment indicators regarding the Venezuelan operations given the
Companys decision to exit this market. The
Company recorded an impairment loss of $137,000, for  goodwill
originally allocated to the Venezuelan reporting unit.

(5) Income Taxes

The actual income tax rate of the Company differs from the expected tax
rate, computed by applying the U.S. federal corporate rate of 35% to
income (loss) from continuing operations before income taxes and
cumulative effect of accounting change for the three and nine months ended September 30,
2003. During the three months ended September 30, 2003 Jafra Mexico reported
pretax loss and an income tax benefit. This was partially offset by pretax
income and income tax expense in the United States. During the nine months
ended September 30, 2003, Jafra Mexico reported pretax income and income tax
expense. The income tax expense was partially offset by an income tax benefit
in the United States based on pretax net loss. Additionally, during the three
and nine months ended September, 30, 2003, the Company recorded valuation
allowances against certain pretax losses in other subsidiaries. The actual
income tax rate of the Company differed from the expected rate for the nine
months ended September 30, 2002, principally as a result of (i) a lower
effective tax rate at Jafra Mexico, as the result of the enactment of changes
in Mexicos future corporate statutory tax rates and the related impact on
Jafra Mexicos net deferred income tax liabilities of $1,167,000 and (ii) the
release of valuation allowances of $2,337,000 against certain foreign tax
credits in the United States. These were offset by state income taxes in the
United States and valuation allowances provided against certain operating
losses in South America and Europe. The new tax legislation in Mexico reduces
Mexicos corporate income tax rate annually in one-percent increments from 35%
to 32% beginning January 1, 2003 through 2005.

(6) Debt and Distribution to Shareholders

On May 20, 2003, the Issuers issued $200 million aggregate principal
amount of 10 3⁄4% Subordinated Notes due 2011 (the New Notes) pursuant to
an Indenture dated May 20, 2003 (the Indenture) and entered into a $90
million senior credit agreement (the Senior Credit Agreement). The New
Notes represent the several obligations of JCI and Jafra Distribution in the
amount of $80 million and $120 million, respectively. The New Notes mature in
2011 and bear a fixed interest rate of 10 3⁄4% payable semi-annually.

JCI is a direct wholly-owned subsidiary of the Parent and Jafra
Distribution is an indirect wholly-owned subsidiary of the Parent. The Parent
has fully and unconditionally guaranteed the obligations under the New Notes on
a senior subordinated basis on the terms provided in the Indenture governing
the New Notes. Each Issuer has fully and unconditionally guaranteed the
obligations of the other under the New Notes on a senior subordinated basis,
subject to a 30-day standstill period prior to enforcement of such guarantees.
Each existing and subsequently acquired or organized U.S. subsidiary of JCI is required to fully and
unconditionally guarantee the U.S. portion of New Notes jointly and severally,
on a senior subordinated basis. Each acquired or organized Mexican subsidiary
of

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JAFRA WORLDWIDE HOLDINGS (LUX) S.àR.L. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)

Jafra Distribution is also required to fully and unconditionally guarantee
the Mexican portion of the New Notes jointly and severally, on a senior
subordinated basis. Jafra S.A. has also fully and unconditionally guaranteed the obligations of
Jafra Distribution under the New Notes. Each existing and subsequently
acquired or organized subsidiary of Jafra S.A. is also required to fully and
unconditionally guarantee the Mexican portion of the New Notes jointly and
severally, on a senior subordinated basis.

The New Notes are unsecured and are generally not redeemable for four
years from their issue date. Thereafter, the New Notes will be redeemable on a pro
rata basis at premiums declining to par in the sixth year. Prior to May 16,
2006, the Issuers at their option may concurrently redeem the New Notes in an
aggregate principal amount equal to up to 35% of the original aggregate
principal amount of the New Notes, with funds in an aggregate amount not
exceeding the aggregate cash proceeds of one or more equity offerings, at a
redemption price of 110.75% plus accrued interest. On September 15,
2003, the Issuers consummated a registered exchange of the New Notes
under the Securities Act of 1933.

In addition, the Issuers entered into the Senior Credit Agreement, which
provides for senior secured credit facilities in an aggregate principal amount
of $90 million, consisting of a $50 million senior secured term loan facility
maturing in 2008 and a $40 million senior secured revolving credit facility,
also maturing in 2008, of which $20 million is available as letters of credit.
The Senior Credit Agreement is allocated 40% to JCI and 60% to Jafra
Distribution. On May 20, 2003, JCI borrowed $20 million and Jafra Distribution
borrowed $30 million of the loans under the term facility. At September 30,
2003, $48,750,000 was outstanding under the term loan and no amounts were
outstanding under the revolving credit facility. Borrowings under the term
loan facility are payable in quarterly installments of principal and interest
over five years through May 20, 2008. Borrowings under the revolving credit
facility mature on May 20, 2008. Borrowings under the Senior Credit Agreement
bear interest at an annual rate of LIBOR plus a margin not to exceed 4.00% or
an alternate base rate plus an applicable margin not to exceed 3.00%. The
interest rate in effect at September 30, 2003 was 5.2% for LIBOR borrowings and
7.0% for Prime based borrowings. Borrowings under the Senior Credit Agreement
are secured by substantially all of the assets of JCI and Jafra Distribution.

Both the Indenture 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. These debt agreements 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. As of September 30, 2003, the Company was in compliance with all
covenants.

On May 23, 2003, with proceeds from the issuance of the New Notes and
borrowings under the Senior Credit Agreement, JCI and Jafra S.A. redeemed the
Old Notes in the aggregate outstanding principal amount of $75,180,000 at a
premium of approximately $4,417,000. Additionally, JCI and Jafra S.A. repaid
$7,375,000 under its existing credit agreement (the Old Credit Agreement) and
terminated the Old Credit Agreement. In connection with the redemption of the
Old Notes and the termination of the Old Credit Agreement, the Company wrote
off approximately $2,203,000 of capitalized deferred financing fees. Total
costs related to the redemption of the Old Notes and the repayment of amounts
outstanding under the Old Credit Agreement were $6,620,000 and were recorded as
a component of net (loss) income on the accompanying consolidated statements of
operations.

After the redemption of the Old Notes and repayment of all outstanding
amounts under the Old Credit Agreement, the shareholders of CDRJ resolved to
liquidate CDRJ. As a result, CDRJ made an initial liquidating distribution of
$157,609,000 to its shareholders of record at May 20, 2003. Additionally, CDRJ
reserved $1,405,000 to pay subsequent distributions or expenses associated with
its liquidation. JCI also made a special payment to the holders of Company
options and certain members of management and non-employee directors. (See
footnote 9).

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JAFRA WORLDWIDE HOLDINGS (LUX) S.àR.L. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)

The Company capitalized $14,449,000 of costs related to the issuance of
the New Notes and the Senior Credit Agreement as deferred financing fees.
These deferred financing fees are reported as a noncurrent asset on the
accompanying consolidated balance sheets and are being amortized on a basis
that approximates the interest method over the term of the New Notes and the
Senior Credit Agreement. As of September 30, 2003, approximately $740,000 of
the deferred financing fees were amortized.

(7) Management Incentive Plan

In connection with the Recapitalization, the Board of Directors approved
an amendment to the Companys stock incentive plan (the Stock Incentive Plan) to
reflect the equity instruments as rights to shares in North Atlantic rather
than shares in CDRJ, which is being liquidated. In addition the Board approved
a reduction in the exercise price of all existing stock options due to the
Recapitalization. In order to affect this re-pricing, the exercise price per
share of all existing options was reduced such that the awards ratio of
exercise price per share to the market value per share was not reduced and the
awards aggregate intrinsic value immediately after the
Recapitalization was not greater than the aggregate intrinsic value immediately before
Recapitalization. The amendments became effective as of the
initiation of the liquidation of CDRJ.

(8) Comprehensive Income (Loss)

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

|                                                                                     |  |                    |        |                   |  |      |       |      |  |   |        |   |  |   |        |  
|------------------------------------------------------------------------------------ |  | ------------------ | ------ | ----------------- |  | ---- | ----- | ---- |  | - | ------ | - |  | - | ------ | -
|                                                                                     |  | Three Months Ended |        | Nine Months Ended
|                                                                                     |  | September 30,      |        | September 30,    
|                                                                                     |  |                    |        |                  
|                                                                                     |  | 2003               |        | 2002              |  | 2003 |       | 2002
|                                                                                     |  |                    |        |                   |  |      |       |     
|Net (loss) income                                                                    |  | $                  | (3,000 | )                 |  | $    | 966   |      |  | $ | (8,134 | ) |  | $ | 14,838 |  
|Unrealized and deferred realized (loss) gain on derivatives                          |  |                    | 146    |                   |  |      | (137  | )    |  |   | 303    |   |  |   | 203    |  
|Reclassification of deferred realized (loss) gain to
exchange (loss) gain            |  |                    | 1      |                   |  |      | 539   |      |  |   | (549   | ) |  |   | 882    |  
|Reclassification of deferred realized loss to cost of sales                          |  |                    |       |                   |  |      | 522   |      |  |   | 654    |   |  |   | 2,421  |  
|Tax (benefit) expense on unrealized and deferred realized
(loss) gain on derivatives |  |                    | (49    | )                 |  |      | (323  | )    |  |   | (49    | ) |  |   | (1,227 | )
|Foreign currency translation adjustments                                             |  |                    | 1,461  |                   |  |      | (254  | )    |  |   | 527    |   |  |   | (7,600 | )
|                                                                                     |  |                    |        |                   |  |      |       |      |  |   |        |   |  |   |        |  
|Comprehensive income (loss)                                                          |  | $                  | (1,441 | )                 |  | $    | 1,313 |      |  | $ | (7,248 | ) |  | $ | 9,517  |  
|                                                                                     |  |                    |        |                   |  |      |       |      |  |   |        |   |  |   |        |  

(9) Related Party Transaction

In connection with the Recapitalization, the Board of Directors authorized
CDRJ to reprice all outstanding Company stock options. (See footnote 7) In
order to compensate option holders for any diminished value of the outstanding
options, the Board of Directors further authorized $10,391,000 in bonus
payments to current option holders during the nine months ended September 30,
2003. Additionally, the Company authorized a special bonus of $2,715,000
(excluding employer taxes) to certain members of management and non-employee
directors for contributions in completing the Recapitalization of CDRJ. Bonus
payments were recorded as compensation expense as a component of
income from operations within the consolidated statements of operations.

(10) 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.

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JAFRA WORLDWIDE HOLDINGS (LUX) S.àR.L. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)

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, 2002 included in the CDRJ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.

|                                                       |  |                |         |        |  |        |        |        |  |          |        |           |  |       |        |             |  |              |         |  |  |            |         |   |  |   |         | 
|------------------------------------------------------ |  | -------------- | ------- | ------ |  | ------ | ------ | ------ |  | -------- | ------ | --------- |  | ----- | ------ | ----------- |  | ------------ | ------- |  |  | ---------- | ------- | - |  | - | ------- | 
|                                                       |  |                |         |        |  |        |        |        |  |          |        |           |  |       |        |             |  |              |         |  |  | Corporate, |         |   |  |  
|                                                       |  |                |         |        |  | United |        |        |  |          |        | All       |  | Total |        | Unallocated |  | Consolidated
|                                                       |  | Mexico         |         | States |  | Europe |        | Others |  | Segments |        | And Other |  | Total
|                                                       |  |                |         |        |  |        |        |        |  |          |        |           |  |      
|                                                       |  | (in thousands)
|For the Three Months Ended
September 30, 2003          |  |                |         |        |  |        |        |        |  |          |        |           |  |       |        |             |  |              |         |  |  |            |         |   |  |   |         | 
|Net sales                                              |  | $              | 51,843  |        |  | $      | 25,330 |        |  | $        | 6,602  |           |  | $     | 2,819  |             |  | $            | 86,594  |  |  | $          |        |   |  | $ | 86,594  | 
|Operating income (loss)                                |  |                | 12,294  |        |  |        | 4,589  |        |  |          | (34    | )         |  |       | (1,297 | )           |  |              | 15,552  |  |  |            | (4,028  | ) |  |   | 11,524  | 
|Depreciation and amortization                          |  |                | 590     |        |  |        | 643    |        |  |          | 85     |           |  |       | 91     |             |  |              | 1,409   |  |  |            |        |   |  |   | 1,409   | 
|For the Three Months Ended
September 30, 2002          |  |                |         |        |  |        |        |        |  |          |        |           |  |       |        |             |  |              |         |  |  |            |         |   |  |   |         | 
|Net sales                                              |  | $              | 62,622  |        |  | $      | 22,098 |        |  | $        | 5,544  |           |  | $     | 2,819  |             |  | $            | 93,083  |  |  | $          |        |   |  | $ | 93,083  | 
|Operating income (loss)                                |  |                | 15,731  |        |  |        | 3,797  |        |  |          | (137   | )         |  |       | (1,014 | )           |  |              | 18,377  |  |  |            | (4,323  | ) |  |   | 14,054  | 
|Depreciation and amortization                          |  |                | 599     |        |  |        | 589    |        |  |          | 123    |           |  |       | 85     |             |  |              | 1,396   |  |  |            |        |   |  |   | 1,396   | 
|As of and for the Nine Months
Ended September 30, 2003 |  |                |         |        |  |        |        |        |  |          |        |           |  |       |        |             |  |              |         |  |  |            |         |   |  |   |         | 
|Net sales                                              |  | $              | 172,057 |        |  | $      | 74,483 |        |  | $        | 22,670 |           |  | $     | 7,532  |             |  | $            | 276,742 |  |  | $          |        |   |  | $ | 276,742 | 
|Operating income (loss)                                |  |                | 44,845  |        |  |        | 11,646 |        |  |          | 473    |           |  |       | (3,868 | )           |  |              | 53,096  |  |  |            | (28,656 | ) |  |   | 24,440  | 
|Depreciation and amortization                          |  |                | 1,688   |        |  |        | 2,067  |        |  |          | 317    |           |  |       | 287    |             |  |              | 4,359   |  |  |            |        |   |  |   | 4,359   | 
|Capital expenditures                                   |  |                | 1,814   |        |  |        | 2,565  |        |  |          | 305    |           |  |       | 279    |             |  |              | 4,963   |  |  |            |        |   |  |   | 4,963   | 
|Segment assets                                         |  |                | 172,466 |        |  |        | 84,386 |        |  |          | 18,744 |           |  |       | 6,098  |             |  |              | 281,694 |  |  |            | (1,029  | ) |  |   | 280,665 | 
|Discontinued operations assets                         |  |                |        |        |  |        |       |        |  |          |       |           |  |       | 366    |             |  |              | 366     |  |  |            |        |   |  |   | 366     | 
|Goodwill                                               |  |                | 26,938  |        |  |        | 32,188 |        |  |          | 4,841  |           |  |       |       |             |  |              | 63,967  |  |  |            |        |   |  |   | 63,967  | 
|As of and for the Nine Months
Ended September 30, 2002 |  |                |         |        |  |        |        |        |  |          |        |           |  |       |        |             |  |              |         |  |  |            |         |   |  |   |         | 
|Net sales                                              |  | $              | 190,502 |        |  | $      | 66,882 |        |  | $        | 18,599 |           |  | $     | 9,357  |             |  | $            | 285,340 |  |  | $          |        |   |  | $ | 285,340 | 
|Operating income (loss)                                |  |                | 49,953  |        |  |        | 10,865 |        |  |          | 185    |           |  |       | (3,728 | )           |  |              | 57,275  |  |  |            | (13,037 | ) |  |   | 44,238  | 
|Depreciation and amortization                          |  |                | 1,511   |        |  |        | 1,719  |        |  |          | 289    |           |  |       | 247    |             |  |              | 3,766   |  |  |            |        |   |  |   | 3,766   | 
|Capital expenditures                                   |  |                | 2,026   |        |  |        | 5,197  |        |  |          | 78     |           |  |       | 287    |             |  |              | 7,588   |  |  |            |        |   |  |   | 7,588   | 
|Segment assets                                         |  |                | 176,641 |        |  |        | 79,712 |        |  |          | 18,332 |           |  |       | 2,126  |             |  |              | 276,811 |  |  |            | (1,648  | ) |  |   | 275,163 | 
|Discontinued operations assets                         |  |                |        |        |  |        |       |        |  |          |       |           |  |       | 4,113  |             |  |              | 4,113   |  |  |            |        |   |  |   | 4,113   | 
|Goodwill                                               |  |                | 28,983  |        |  |        | 32,188 |        |  |          | 5,548  |           |  |       | 137    |             |  |              | 66,856  |  |  |            |        |   |  |   | 66,856  | 

(11) Foreign Currency Forward and Option Contracts

The Company is exposed to currency risk relating to its forecasted U.S.
dollar-denominated expenditures at Jafra Mexico. As part of its overall
strategy to reduce the risk of potential adverse exchange rate fluctuations in
Mexico, the Company entered into foreign currency exchange contracts (forward
contracts) during the first four months of 2002, and entered into foreign
currency option contracts (option contracts or options) during 2002 and
2003. The Company places forward contracts or option contracts based on its
rolling forecasted cash outflows from Jafra Mexico and hedges transactions
included in the forecast on the date the forward contract or option contract is
initiated. As a matter of policy, the Company does not hold or issue forward
contracts or option contracts for trading or speculative purposes nor does it
enter into contracts or agreements containing embedded derivative features.

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JAFRA WORLDWIDE HOLDINGS (LUX) S.àR.L. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)

The Company currently designates certain of its forward contracts and
option contracts as cash flow hedges of forecasted U.S. dollar-denominated
inventory purchases, forecasted U.S. dollar-denominated intercompany charges
from JCI to Jafra Mexico, forecasted management fee charges from JCI to Jafra
Mexico, and U.S. dollar-denominated interest payments. 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 loss. Such
amounts will be reclassified from other comprehensive loss into net (loss)
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 paid by Jafra Mexico.

During the nine months ended September 30, 2003, the Company recognized
gains of approximately $627,000 on option contracts. The Company recognized
losses on forward contracts of approximately $83,000 and $949,000 during the
three and nine months ended September 30, 2002, respectively. The Company
recognized gains on option contracts of approximately $22,000 and $755,000
during the three and nine months ended September 30, 2002, respectively, in the
accompanying consolidated statements of operations.

As of December 31, 2001, the Company had deferred as a component of other
comprehensive loss $3,746,000 of losses on forward contracts. During the nine
months ended September 30, 2002, the Company deferred as a component of other
comprehensive loss an additional $1,779,000 of losses on forward contracts and
$1,982,000 of gains on option contracts qualifying for hedge accounting under
SFAS No. 133. During the nine months ended September 30, 2002, approximately
$882,000 was reclassified as exchange loss and $2,421,000 was
reclassified as cost of sales upon recognition of the underlying hedged
exposure.

As of December 31, 2002, the Company had deferred as a component of other
comprehensive loss $739,000 of losses on forward contracts and $475,000
of gains on option contracts. During the nine months ended September 30, 2003,
the Company deferred as a component of other comprehensive loss an additional
$303,000 of gains on option contracts qualifying for hedge accounting under
SFAS No. 133. During the nine months ended September 30, 2003, approximately
$549,000 of gains were reclassified as exchange loss and approximately
$654,000 of losses were reclassified as cost of sales upon the recognition of
the underlying hedged exposure. The Company expects that substantially all of
the remaining gain of $144,000 deferred as a component of other comprehensive
loss at September 30, 2003 will be recognized into net income
(loss) within the next
twelve months.

The fair value of the option contracts was $144,000 at September 30, 2003
and has been recorded in other receivables in the consolidated balance sheets.
The fair value of the option contracts was $402,000 at December 31, 2002, and
was recorded in other receivables in the consolidated balance sheets.

During the three and nine months ended September 30, 2003 and 2002, the
ineffectiveness generated by the Companys forward and option 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 nine months ended
September 30, 2003 and 2002, $230,000 and $162,000, respectively, of gains,
were reclassified into earnings.

The outstanding foreign currency option contracts had a notional value
denominated in Mexican pesos of 743,000,000 in put and call positions at
September 30, 2003 and mature at various dates through December 31, 2004. The
outstanding foreign currency option contracts had a notional value denominated
in Mexican pesos of 523,000,000 in put and call positions at December 31, 2002
and mature at various dates through December 31, 2003. 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.

(12) Discontinued operations/Markets to be Exited

As of September 30, 2003, the Company discontinued its operations in
Venezuela, Colombia, Chile and Peru. The Company has terminated sales in these
markets and has liquidated a majority of the assets during the
quarter ended September 30, 2003.
Final liquidation of the assets in Venezuela, Colombia, Chile and
Peru is expected to be complete during the fourth quarter of 2003
or early 2004. As such, the results of

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JAFRA WORLDWIDE HOLDINGS (LUX) S.àR.L. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)

the operations of these markets has
been classified as discontinued operations in all period disclosed on the
statements of operations. The assets and liabilities from the discontinued
operations has been segregated on the accompanying balance sheets.

Net sales and loss from discontinued operations is as follows:

|                                              |  |                |       |          |  |       |        |      |  |       |      |   |  |   |      |   |  |   |        |  
|--------------------------------------------- |  | -------------- | ----- | -------- |  | ----- | ------ | ---- |  | ----- | ---- | - |  | - | ---- | - |  | - | ------ | -
|                                              |  | Venezuela      |       | Colombia |  | Chile |        | Peru |  | Total
|                                              |  |                |       |          |  |       |        |      |  |      
|                                              |  | (in thousands)
|For the Three Months Ended September 30,
2003 |  |                |       |          |  |       |        |      |  |       |      |   |  |   |      |   |  |   |        |  
|Net sales                                     |  | $              | 25    |          |  | $     |       |      |  | $     |     |   |  | $ |     |   |  | $ | 25     |  
|Loss from discontinued operations             |  |                | (163  | )        |  |       | (292   | )    |  |       | (33  | ) |  |   | (78  | ) |  |   | (566   | )
|For the Three Months Ended September 30,
2002 |  |                |       |          |  |       |        |      |  |       |      |   |  |   |      |   |  |   |        |  
|Net sales                                     |  | $              | 921   |          |  | $     | 755    |      |  | $     | 70   |   |  | $ | 97   |   |  | $ | 1,843  |  
|Income (Loss) from discontinued operations    |  |                | 32    |          |  |       | (79    | )    |  |       | (173 | ) |  |   | (105 | ) |  |   | (325   | )
|For the Nine Months Ended September 30,
2003  |  |                |       |          |  |       |        |      |  |       |      |   |  |   |      |   |  |   |        |  
|Net sales                                     |  | $              | 1,255 |          |  | $     | 1,004  |      |  | $     | 97   |   |  | $ | 127  |   |  | $ | 2,483  |  
|Loss from discontinued operations             |  |                | (995  | )        |  |       | (1,129 | )    |  |       | (191 | ) |  |   | (252 | ) |  |   | (2,567 | )
|For the Nine Months Ended September 30,
2002  |  |                |       |          |  |       |        |      |  |       |      |   |  |   |      |   |  |   |        |  
|Net sales                                     |  | $              | 3,632 |          |  | $     | 2,628  |      |  | $     | 212  |   |  | $ | 311  |   |  | $ | 6,783  |  
|Income (Loss) from discontinued operations    |  |                | (543  | )        |  |       | 38     |      |  |       | (369 | ) |  |   | (225 | ) |  |   | (1,099 | )

The components of assets and liabilities of the discontinued operations is
as follows:

|                         |                                  |   |                |     |          |   |       |     |      |   |       |    |  |   |     |    |  |   |       |       | 
|------------------------ | -------------------------------- | - | -------------- | --- | -------- | - | ----- | --- | ---- | - | ----- | -- |  | - | --- | -- |  | - | ----- | ----- | 
|                         |                                  |   | Venezuela      |     | Colombia |   | Chile |     | Peru |   | Total
|                         |                                  |   |                |     |          |   |       |     |      |   |      
|                         |                                  |   | (in thousands)
|As of September 30, 2003 |                                  |   |                |     |          |   |       |     |      |   |       |    |  |   |     |    |  |   |       |      
|Current assets:          |                                  |   |                |     |          |   |       |     |      |   |       |    |  |   |     |    |  |   |       |      
|                         | Cash                             |   | $              | 12  |          |   | $     | 43  |      |   | $     | 36 |  |   | $   | 18 |  |   | $     | 109   | 
|                         | Receivables, net                 |   |                | 1   |          |   |       | 40  |      |   |       |   |  |   |     |   |  |   |       | 41    | 
|                         | Inventory                        |   |                | 174 |          |   |       |    |      |   |       | 17 |  |   |     |   |  |   |       | 191   | 
|                         | Prepaid and other current assets |   |                | 3   |          |   |       |    |      |   |       | 3  |  |   |     | 19 |  |   |       | 25    | 
|                         |                                  |   |                |     |          |   |       |     |      |   |       |    |  |   |     |    |  |   |       |       | 
|Total assets             |                                  | $ | 190            |     |          | $ | 83    |     |      | $ | 56    |    |  | $ | 37  |    |  | $ | 366   |      
|                         |                                  |   |                |     |          |   |       |     |      |   |       |    |  |   |     |    |  |   |       |       | 
|Current liabilities:     |                                  |   |                |     |          |   |       |     |      |   |       |    |  |   |     |    |  |   |       |      
|                         | Accounts payable                 |   | $              |    |          |   | $     | 11  |      |   | $     | 2  |  |   | $   | 23 |  |   | $     | 36    | 
|                         | Accrued liabilities              |   |                | 19  |          |   |       | 84  |      |   |       |   |  |   |     |   |  |   |       | 103   | 
|                         | Other current liabilities        |   |                |    |          |   |       | 18  |      |   |       |   |  |   |     |   |  |   |       | 18    | 
|                         |                                  |   |                |     |          |   |       |     |      |   |       |    |  |   |     |    |  |   |       |       | 
|Total liabilities        |                                  | $ | 19             |     |          | $ | 113   |     |      | $ | 2     |    |  | $ | 23  |    |  | $ | 157   |      
|                         |                                  |   |                |     |          |   |       |     |      |   |       |    |  |   |     |    |  |   |       |       | 
|As of December 31, 2002  |                                  |   |                |     |          |   |       |     |      |   |       |    |  |   |     |    |  |   |       |      
|Current assets:          |                                  |   |                |     |          |   |       |     |      |   |       |    |  |   |     |    |  |   |       |      
|                         | Cash                             |   | $              | 125 |          |   | $     | 195 |      |   | $     | 9  |  |   | $   | 56 |  |   | $     | 385   | 
|                         | Receivables, net                 |   |                | 439 |          |   |       | 408 |      |   |       | 34 |  |   |     | 40 |  |   |       | 921   | 
|                         | Inventory                        |   |                | 904 |          |   |       | 663 |      |   |       | 85 |  |   |     | 61 |  |   |       | 1,713 | 
|                         | Prepaid and other current assets |   |                | 27  |          |   |       | 70  |      |   |       | 21 |  |   |     | 13 |  |   |       | 131   | 
|                         |                                  |   |                |     |          |   |       |     |      |   |       |    |  |   |     |    |  |   |       |       | 
|Total current assets     |                                  |   | 1,495          |     |          |   | 1,336 |     |      | $ | 149   |    |  | $ | 170 |    |  | $ | 3,150 |      
|                         | Non current assets               |   |                | 345 |          |   |       | 83  |      |   |       | 31 |  |   |     | 44 |  |   |       | 503   | 
|                         |                                  |   |                |     |          |   |       |     |      |   |       |    |  |   |     |    |  |   |       |       | 
|Total assets             |                                  | $ | 1,840          |     |          | $ | 1,419 |     |      | $ | 180   |    |  | $ | 214 |    |  | $ | 3,653 |      
|                         |                                  |   |                |     |          |   |       |     |      |   |       |    |  |   |     |    |  |   |       |       | 
|Current liabilities:     |                                  |   |                |     |          |   |       |     |      |   |       |    |  |   |     |    |  |   |       |      
|                         | Accounts payable                 |   | $              | 141 |          |   | $     | 222 |      |   | $     | 32 |  |   | $   | 26 |  |   | $     | 421   | 
|                         | Accrued liabilities              |   |                | 220 |          |   |       | 189 |      |   |       |   |  |   |     |   |  |   |       | 409   | 
|                         | Other current liabilities        |   |                |    |          |   |       | 28  |      |   |       |   |  |   |     |   |  |   |       | 28    | 
|                         |                                  |   |                |     |          |   |       |     |      |   |       |    |  |   |     |    |  |   |       |       | 
|Total liabilities        |                                  | $ | 361            |     |          | $ | 439   |     |      | $ | 32    |    |  | $ | 26  |    |  | $ | 858   |      
|                         |                                  |   |                |     |          |   |       |     |      |   |       |    |  |   |     |    |  |   |       |       | 

In addition to the markets discontinued, the Company is currently evaluating
its operations in Argentina and Brazil for potential restructuring or
discontinuation. The Company has begun implementation of plans to discontinue
its operations in Thailand and expect to exit the market by the end of the
fourth quarter of 2003.

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JAFRA COSMETICS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)

|                                |                                                                                                |  |                                      |                                                |   |               |         |              |   |        |         | 
|------------------------------- | ---------------------------------------------------------------------------------------------- |  | ------------------------------------ | ---------------------------------------------- | - | ------------- | ------- | ------------ | - | ------ | ------- | 
|                                |                                                                                                |  |                                      |                                                |   | September 30, |         | December 31,
|                                |                                                                                                |  |                                      |                                                |   | 2003          |         | 2002        
|                                |                                                                                                |  |                                      |                                                |   |               |         |             
|                                |                                                                                                |  |                                      |                                                |   | (Unaudited)   |         |              |   |       
|
|                                |                                                                                                |  |                                      | ASSETS                                         |   |               |         |              |   |        |         | 
|Current assets:                 |                                                                                                |  |                                      |                                                |   |               |         |             
|                                | Cash and cash equivalents                                                                      |  | $                                    | 5,728                                          |   |               | $       | 13,088       |  
|                                | Receivables, net                                                                               |  |                                      | 4,308                                          |   |               |         | 5,713        |  
|                                | Inventories                                                                                    |  |                                      | 14,614                                         |   |               |         | 11,974       |  
|                                | Receivables from affiliates                                                                    |  |                                      | 16,544                                         |   |               |         | 25,608       |  
|                                | Prepaid expenses and other current assets                                                      |  |                                      | 6,036                                          |   |               |         | 2,554        |  
|                                |                                                                                                |  |                                      |                                                |   |               |         |              |  
|                                |                                                                                                |  | Total current assets                 |                                                |   | 47,230        |         |              |   | 58,937 |        
|Property and equipment, net     |                                                                                                |  | 26,561                               |                                                |   |               | 26,357  |             
|Other assets:                   |                                                                                                |  |                                      |                                                |   |               |         |             
|                                | Goodwill                                                                                       |  |                                      | 37,029                                         |   |               |         | 37,488       |  
|                                | Notes receivable from affiliates                                                               |  |                                      | 16,009                                         |   |               |         | 10,694       |  
|                                | Deferred financing fees, net                                                                   |  |                                      | 5,528                                          |   |               |         | 2,375        |  
|                                | Other                                                                                          |  |                                      | 4,518                                          |   |               |         | 3,938        |  
|                                |                                                                                                |  |                                      |                                                |   |               |         |              |  
|                                |                                                                                                |  |                                      | Total                                          |   | $             | 136,875 |              |   | $      | 139,789 | 
|                                |                                                                                                |  |                                      |                                                |   |               |         |              |  
|
|                                |                                                                                                |  |                                      | LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT) |   |               |         |              |   |        |         | 
|Current liabilities:            |                                                                                                |  |                                      |                                                |   |               |         |             
|                                | Current portion of long-term debt                                                              |  | $                                    | 2,750                                          |   |               | $       | 4,000        |  
|                                | Accounts payable                                                                               |  |                                      | 4,553                                          |   |               |         | 5,944        |  
|                                | Accrued liabilities                                                                            |  |                                      | 16,834                                         |   |               |         | 12,230       |  
|                                | Income taxes payable                                                                           |  |                                      | 39                                             |   |               |         | 815          |  
|                                | Deferred income taxes                                                                          |  |                                      | 643                                            |   |               |         | 643          |  
|                                | Payables to affiliates                                                                         |  |                                      | 16,075                                         |   |               |         | 20,435       |  
|                                |                                                                                                |  |                                      |                                                |   |               |         |              |  
|                                |                                                                                                |  | Total current liabilities            |                                                |   | 40,894        |         |              |   | 44,067 |        
|Long-term debt                  |                                                                                                |  | 96,750                               |                                                |   |               | 47,108  |             
|Deferred income taxes           |                                                                                                |  | 4,671                                |                                                |   |               | 4,671   |             
|Other long-term liabilities     |                                                                                                |  | 4,407                                |                                                |   |               | 3,787   |             
|                                |                                                                                                |  |                                      |                                                |   |               |         |              |  
|                                |                                                                                                |  | Total liabilities                    |                                                |   | 146,722       |         |              |   | 99,633 |        
|                                |                                                                                                |  |                                      |                                                |   |               |         |              |  
|Commitments and contingencies   |                                                                                                |  |                                     |                                                |   |               |        |             
|Stockholders equity (deficit): |                                                                                                |  |                                      |                                                |   |               |         |             
|                                | Common stock, par value $.01: 1,000 shares authorized, issued
and outstanding in 2003 and 2002 |  |                                      |                                               |   |               |         |             |  
|                                | Additional paid-in capital                                                                     |  |                                      |                                               |   |               |         | 39,649       |  
|                                | Retained earnings (deficit)                                                                    |  |                                      | (6,971                                         | ) |               |         | 3,249        |  
|                                | Accumulated other comprehensive loss                                                           |  |                                      | (2,876                                         | ) |               |         | (2,742       | )
|                                |                                                                                                |  |                                      |                                                |   |               |         |              |  
|                                |                                                                                                |  | Total stockholders equity (deficit) |                                                |   | (9,847        | )       |              |   | 40,156 |        
|                                |                                                                                                |  |                                      |                                                |   |               |         |              |  
|                                |                                                                                                |  |                                      | Total                                          |   | $             | 136,875 |              |   | $      | 139,789 | 
|                                |                                                                                                |  |                                      |                                                |   |               |         |              |  

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,    
|                                             |                                |   |                    |        |                  
|                                             |                                |   | 2003               |        | 2002              |   | 2003   |        | 2002
|                                             |                                |   |                    |        |                   |   |        |        |     
|Net sales to third parties                   |                                | $ | 32,578             |        |                   | $ | 28,877 |        |      | $ | 99,634  |        |   | $ | 90,296  |       
|Sales to affiliates                          |                                |   | 3,074              |        |                   |   | 4,679  |        |      |   | 11,207  |        |   |   | 12,587  |       
|                                             |                                |   |                    |        |                   |   |        |        |      |   |         |        |   |   |         |       
|Net sales                                    |                                |   | 35,652             |        |                   |   | 33,556 |        |      |   | 110,841 |        |   |   | 102,883 |       
|Cost of sales                                |                                |   | 10,205             |        |                   |   | 10,838 |        |      |   | 32,633  |        |   |   | 31,644  |       
|                                             |                                |   |                    |        |                   |   |        |        |      |   |         |        |   |   |         |       
|                                             | Gross profit                   |   |                    | 25,447 |                   |   |        | 22,718 |      |   |         | 78,208 |   |   |         | 71,239 |  
|Selling, general and administrative expenses |                                |   | 25,700             |        |                   |   | 23,509 |        |      |   | 94,635  |        |   |   | 74,035  |       
|Management fee income from affiliates        |                                |   | (1,895             | )      |                   |   | (1,814 | )      |      |   | (7,911  | )      |   |   | (6,180  | )     
|Royalty income from affiliates, net          |                                |   | (3,720             | )      |                   |   | (4,895 | )      |      |   | (12,638 | )      |   |   | (14,923 | )     
|                                             |                                |   |                    |        |                   |   |        |        |      |   |         |        |   |   |         |       
|                                             | Income from operations         |   |                    | 5,362  |                   |   |        | 5,918  |      |   |         | 4,122  |   |   |         | 18,307 |  
|Other income (expense):                      |                                |   |                    |        |                   |   |        |        |      |   |         |        |   |   |         |       
|                                             | Exchange gain (loss), net      |   |                    | 216    |                   |   |        | (78    | )    |   |         | (235   | ) |   |         | 466    |  
|                                             | Interest expense, net          |   |                    | (2,503 | )                 |   |        | (1,540 | )    |   |         | (5,828 | ) |   |         | (4,657 | )
|                                             | Loss on extinquishment of debt |   |                    |       |                   |   |        |       |      |   |         | (4,778 | ) |   |         |       |  
|                                             | Other, net                     |   |                    | (190   | )                 |   |        | 1      |      |   |         | (243   | ) |   |         | 295    |  
|                                             |                                |   |                    |        |                   |   |        |        |      |   |         |        |   |   |         |       
|Income (Loss) before income taxes            |                                |   | 2,885              |        |                   |   | 4,301  |        |      |   | (6,962  | )      |   |   | 14,411  |       
|Income tax expense (benefit)                 |                                |   | 1,444              |        |                   |   | 2,311  |        |      |   | (1,404  | )      |   |   | 3,228   |       
|                                             |                                |   |                    |        |                   |   |        |        |      |   |         |        |   |   |         |       
|Net income (loss)                            |                                | $ | 1,441              |        |                   | $ | 1,990  |        |      | $ | (5,558  | )      |   | $ | 11,183  |       
|                                             |                                |   |                    |        |                   |   |        |        |      |   |         |        |   |   |         |       

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,    
|                                                     |                                                                                          |                                                       |                                           |                                           |       |                  
|                                                     |                                                                                          |                                                       |                                           |                                           |       | 2003              |        | 2002  
|                                                     |                                                                                          |                                                       |                                           |                                           |       |                   |        |       
|Cash flows from operating activities:                |                                                                                          |                                                       |                                           |                                           |       |                   |        |       
|                                                     | Net (loss) income                                                                        |                                                       | $                                         | (5,558                                    | )     |                   | $      | 11,183 |       
|                                                     | Adjustments to reconcile net (loss) income to net cash provided by
operating activities: |                                                       |                                           |                                           |       |                   |        |        |       
|                                                     |                                                                                          | Depreciation and amortization                         |                                           |                                           | 2,552 |                   |        |        | 2,139  |       
|                                                     |                                                                                          | Provision for uncollectible accounts receivable       |                                           |                                           | 407   |                   |        |        | 535    |       
|                                                     |                                                                                          | Write off and amortization of deferred financing fees |                                           |                                           | 2,668 |                   |        |        | 471    |       
|                                                     |                                                                                          | Asset impairment charges                              |                                           |                                           | 251   |                   |        |        |       |       
|                                                     |                                                                                          | Unrealized foreign exchange loss                      |                                           |                                           | 586   |                   |        |        | (269   | )     
|                                                     |                                                                                          | Deferred income taxes                                 |                                           |                                           |      |                   |        |        | (2,337 | )     
|                                                     |                                                                                          | Changes in operating assets and liabilities:          |                                           |                                           |       |                   |        |        |        |       
|                                                     |                                                                                          |                                                       | Receivables                               |                                           |       | 998               |        |        |        | (78    | )     
|                                                     |                                                                                          |                                                       | Inventories                               |                                           |       | (2,640            | )      |        |        | (5,386 | )     
|                                                     |                                                                                          |                                                       | Prepaid expenses and other current assets |                                           |       | (3,482            | )      |        |        | (694   | )     
|                                                     |                                                                                          |                                                       | Intercompany receivables and payables     |                                           |       | 4,118             |        |        |        | 7,159  |       
|                                                     |                                                                                          |                                                       | Other assets                              |                                           |       | 63                |        |        |        | 435    |       
|                                                     |                                                                                          |                                                       | Accounts payable and accrued liabilities  |                                           |       | 3,213             |        |        |        | 820    |       
|                                                     |                                                                                          |                                                       | Income taxes payable/prepaid              |                                           |       | (776              | )      |        |        | 2,373  |       
|                                                     |                                                                                          |                                                       | Other long-term liabilities               |                                           |       | 620               |        |        |        | 408    |       
|                                                     |                                                                                          |                                                       |                                           |                                           |       |                   |        |        |       
|                                                     |                                                                                          |                                                       |                                           | Net cash provided by operating activities |       |                   | 3,020  |        |        |        | 16,759 |  
|                                                     |                                                                                          |                                                       |                                           |                                           |       |                   |        |        |       
|Cash flows from investing activities:                |                                                                                          |                                                       |                                           |                                           |       |                   |        |       
|                                                     | Purchases of property and equipment                                                      |                                                       |                                           | (3,069                                    | )     |                   |        | (5,505 | )     
|                                                     | Other                                                                                    |                                                       |                                           | (643                                      | )     |                   |        | (303   | )     
|                                                     |                                                                                          |                                                       |                                           |                                           |       |                   |        |        |       
|                                                     |                                                                                          |                                                       |                                           | Net cash used in investing activities     |       |                   | (3,712 | )      |        |        | (5,808 | )
|                                                     |                                                                                          |                                                       |                                           |                                           |       |                   |        |        |       
|Cash flows from financing activities:                |                                                                                          |                                                       |                                           |                                           |       |                   |        |       
|                                                     | Proceeds from issuance of subordinated debt due 2011                                     |                                                       |                                           | 80,000                                    |       |                   |        |       |       
|                                                     | Proceeds from issuance of term loan                                                      |                                                       |                                           | 20,000                                    |       |                   |        |       |       
|                                                     | Repurchase of subordinated debt due 2008                                                 |                                                       |                                           | (45,108                                   | )     |                   |        |       |       
|                                                     | Repayments under term loan facility                                                      |                                                       |                                           | (6,500                                    | )     |                   |        | (2,250 | )     
|                                                     | Net repayments under revolving credit facility                                           |                                                       |                                           |                                          |       |                   |        | (1,800 | )     
|                                                     | Lending of note receivable to affiliate                                                  |                                                       |                                           | (5,315                                    | )     |                   |        | (5,125 | )     
|                                                     | Distribution of additional paid-in capital to shareholder                                |                                                       |                                           | (39,649                                   | )     |                   |        |       |       
|                                                     | Distribution payment to shareholder from retained earnings                               |                                                       |                                           | (4,662                                    | )     |                   |        |       |       
|                                                     | Deferred financing costs                                                                 |                                                       |                                           | (5,821                                    | )     |                   |        |       |       
|                                                     |                                                                                          |                                                       |                                           |                                           |       |                   |        |        |       
|                                                     |                                                                                          |                                                       |                                           | Net cash used in financing activities     |       |                   | (7,055 | )      |        |        | (9,175 | )
|                                                     |                                                                                          |                                                       |                                           |                                           |       |                   |        |        |       
|Effect of exchange rate changes on cash              |                                                                                          |                                                       | 387                                       |                                           |       |                   | (51    | )     
|                                                     |                                                                                          |                                                       |                                           |                                           |       |                   |        |        |       
|Net (decrease) increase in cash and cash equivalents |                                                                                          |                                                       | (7,360                                    | )                                         |       |                   | 1,725  |       
|Cash and cash equivalents at beginning of period     |                                                                                          |                                                       | 13,088                                    |                                           |       |                   | 4,081  |       
|                                                     |                                                                                          |                                                       |                                           |                                           |       |                   |        |        |       
|Cash and cash equivalents at end of period           |                                                                                          | $                                                     | 5,728                                     |                                           |       | $                 | 5,806  |       
|                                                     |                                                                                          |                                                       |                                           |                                           |       |                   |        |        |       

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 a direct wholly-owned subsidiary of Jafra Worldwide Holdings (Lux) S.àR.L., a
Luxembourg société à responsabilité limitée(the Parent), which is a
wholly-owned direct subsidiary of CDRJ North Atlantic (Lux) S.àR.L., a
Luxembourg société à responsabilité limitée(North Atlantic).North Atlantic
is a wholly-owned subsidiary of CDRJ Investments (Lux) S.A., a Luxembourg
société anonyme(CDRJ).

The accompanying unaudited interim consolidated financial statements as of
September 30, 2003 and for the three and nine months ended September 30, 2003
and 2002 reflect the operations of JCI, 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, 2003 and for the interim periods presented. All significant
intercompany accounts and transactions between entities comprising JCI have
been eliminated in consolidation.

On May 20, 2003, the Parent, JCI and Distribuidora Comercial Jafra S.A. de
C.V. (Jafra Distribution and together with JCI, the Issuers) completed a
recapitalization of their operations by entering into $90 million of new senior
secured credit facilities, consisting of a $50 million senior secured term loan
facility and a $40 million senior secured revolving credit facility and issuing
$200 million of 10 3⁄4% Senior Subordinated Notes due 2011 (the New Notes
and such transactions, collectively, the Recapitalization). The proceeds
from the Recapitalization were used to redeem the 11 3⁄4% Senior Subordinated
Notes due 2008 (the Old Notes) of JCI and Jafra Cosmetics International, S.A.
de C.V. (Jafra S.A.), to repay all amounts outstanding under the existing
credit facilities of JCI and Jafra S.A. and to make certain payments to CDRJ
and employees of JCI and Jafra S.A. The stockholders of CDRJ then resolved
that CDRJ be liquidated and appointed the Parent to act as its liquidator.
Thereafter, CDRJ made an initial liquidating distribution of such proceeds to
its stockholders. In connection with the liquidation of CDRJ, North Atlantic
transferred all of its assets and liabilities, including its direct and
indirect holdings of JCI, Jafra S.A. and Jafra Distribution, to the Parent in
exchange for additional shares of common stock of the Parent. Jafra S.A. and
Jafra Distribution are collectively referred to as Jafra Mexico.

The New Notes represent several obligations of JCI and Jafra Distribution.
JCI and Jafra Distribution have fully and unconditionally guaranteed the
obligations of the other under the New 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 Distribution and JCI is subject to a 30-day
standstill period, the Parent is filing these separate financial statements of
JCI on its Report on Form 10-Q.

The functional currency of certain of JCI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 loss.

Management Incentive Arrangements. JCI applies Accounting principles
Board Opinion (APB) No. 25, Accounting for Stock issued to Employees and
related Interpretations in accounting for the issuance of stock options under
the Parents Stock Incentive Plan. No options were granted during the three or
nine months ended September 30, 2003. Had JCI recorded compensation cost based
on the fair value of options granted at the grant date, as prescribed by
Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for
Stock Based Compensation, the compensation expense for the three and nine
months ended September 30, 2003 and 2002 would be immaterial to the
consolidated statements of operations.

New Accounting Pronouncements.JCI adopted SFAS No. 145, Rescission of
FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and
Technical Corrections on January 1, 2003. This Statement
rescinds or modifies existing authoritative pronouncements including SFAS No. 4
Reporting Gains and Losses from Extinguishment of Debt. As a result of the
issuance of SFAS No. 145, gains and losses from extinguishment of debt are
classified as extraordinary items only if they meet the criteria in APB Opinion
30, Reporting the Results of Operations-Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions. Applying the provisions of APB Opinion 30
distinguishes

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

transactions that are part of an entitys recurring operations
from those that are unusual or infrequent or that meet the criteria for
classification as an extraordinary item. Based on the adoption of this
principle, JCI has reclassified any gain or loss on extinguishment of debt that
was classified as an extraordinary item in prior periods and has classified its
current loss on extinguishment of debt within other income (expense).

JCI adopted SFAS No. 146, Accounting for Costs Associated with Exit or
Disposal Activities on January 1, 2003 which did not result in any material
impact to JCIs consolidated statements of operations. This statement
addresses financial accounting and reporting for costs associated with exit or
disposal activities and nullifies EITF Issue No. 94-3, Liability Recognition
for Certain Employee Termination Benefits and Other Costs to Exit an Activity.
JCI applied the provisions of SFAS No. 146 to costs associated with disposal
activities.

(2) Property and Equipment

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

|                               |  |               |        |              |  |   |        | 
|------------------------------ |  | ------------- | ------ | ------------ |  | - | ------ | 
|                               |  | September 30, |        | December 31,
|                               |  | 2003          |        | 2002        
|                               |  |               |        |             
|Land                           |  | $             | 6,188  |              |  | $ | 6,188  | 
|Buildings                      |  |               | 7,068  |              |  |   | 7,099  | 
|Machinery, equipment and other |  |               | 24,969 |              |  |   | 22,460 | 
|                               |  |               |        |              |  |   |        | 
|                               |  |               | 38,225 |              |  |   | 35,747 | 
|Less accumulated depreciation  |  |               | 11,664 |              |  |   | 9,390  | 
|                               |  |               |        |              |  |   |        | 
|Property and equipment, net    |  | $             | 26,561 |              |  | $ | 26,357 | 
|                               |  |               |        |              |  |   |        | 

(3) Goodwill and Other Intangible Assets

JCIs intangible assets consist of trademarks and goodwill. JCI has
determined trademarks to have an indefinite life. The carrying value of
trademarks was $258,000 as of September 30, 2003. The changes in the carrying
amount of goodwill for the nine months ended September 30, 2003 are as follows
(in thousands):

|                                 |  |        |        |        |  |       |       |              |  |   |        |  
|-------------------------------- |  | ------ | ------ | ------ |  | ----- | ----- | ------------ |  | - | ------ | -
|                                 |  | United |        |        |  |       |       | Consolidated
|Goodwill                         |  | States |        | Europe |  | Total
|                                 |  |        |        |        |  |      
|Balance as of December 31, 2002  |  | $      | 32,188 |        |  | $     | 5,300 |              |  | $ | 37,488 |  
|Translation effect               |  |        |       |        |  |       | (459  | )            |  |   | (459   | )
|                                 |  |        |        |        |  |       |       |              |  |   |        |  
|Balance as of September 30, 2003 |  | $      | 32,188 |        |  | $     | 4,841 |              |  | $ | 37,029 |  
|                                 |  |        |        |        |  |       |       |              |  |   |        |  

(4) Income Taxes

The actual income tax rate of JCI differs from the expected tax rate,
computed by applying the U.S. federal corporate rate of 35% to (loss) income
before income taxes, for the three and nine months ended September 30, 2003
principally as the result of (i) state income tax, and (ii) valuation
allowances against certain operating losses in Europe and the Dominican Republic.

The actual income tax rate of JCI differs from the expected tax rate for
the three and nine months ended September 30, 2002, principally as a result of
state income taxes in the United States and valuation allowances provided
against certain operating losses in Europe. During the nine months ended
September 30, 2002, these were offset by the release of valuation allowances of
$2,337,000 against certain foreign tax credits in the United States.

(5) Debt and Distribution to Shareholder

On May 20, 2003, the Issuers issued $200 million aggregate principal
amount of 10 3⁄4% Subordinated Notes due 2011, the New Notes, pursuant to an
Indenture dated May 20, 2003 (the Indenture) and entered into a $90 million
senior credit agreement (the Senior Credit Agreement). The New Notes
represent the several obligations of JCI and Jafra Distribution in the amount
of $80 million and $120 million, respectively. The New Notes mature in 2011 and
bear a fixed interest rate of 10 3⁄4% payable semi-annually.

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

JCI is a direct wholly-owned subsidiary of the Parent and Jafra
Distribution is an indirect wholly-owned subsidiary of the Parent. The Parent
has fully and unconditionally guaranteed the obligations under the New Notes on
a senior subordinated basis on the terms provided in the Indenture governing
the New Notes. The Issuers have fully and unconditionally guaranteed the
obligations of the other under the New Notes on a senior subordinated basis,
subject to a 30-day standstill period prior to enforcement of such guarantees.
Each existing and subsequently acquired or organized U.S. subsidiary of JCI is
also required to fully and unconditionally guarantee the New Notes jointly and
severally, on a senior subordinated basis.

The New Notes are unsecured and are generally not redeemable for four
years from their date of issue. Thereafter, the Notes will be redeemable on a
pro rata basis at premiums declining to par in the sixth year. Prior to May
16, 2006, the Issuers at their option may concurrently redeem the New Notes in
an aggregate principal amount equal to up to 35% of the original aggregate
principal amount of the New Notes, with funds in an aggregate amount not
exceeding the aggregate cash proceeds of one or more equity offerings, at a
redemption price of 110.75% plus accrued interest. On September 15, 2003, the Issuers consummated a registered exchange of the New Notes
under the Securities Act of 1933.

In addition, the Issuers entered into the Senior Credit Agreement which
provides for senior secured credit facilities in an aggregate principal amount
of $90 million, consisting of a $50 million senior secured term loan facility
maturing in 2008 and a $40 million senior secured revolving credit facility,
also maturing in 2008, of which $20 million is available as letters of credit.
The Senior Credit Agreement is allocated 40% to JCI and 60% to Jafra
Distribution. On May 20, 2003, JCI borrowed $20 million and Jafra Distribution
borrowed $30 million of the loans under the term facility. No amounts were
outstanding under the revolving credit facility at September 30, 2003.
Borrowings under the term loan facility are payable in quarterly installments
of principal and interest over five years through May 20, 2008. Borrowings
under the revolving credit facility mature on May 20, 2008. Borrowings under
the Senior Credit Agreement bear interest at an annual rate of LIBOR plus a
margin not to exceed 4.00% or an alternate base rate plus an applicable margin
not to exceed 3.00%. The interest rate in effect at September 30, 2003 was
5.2% for LIBOR borrowings and 7.0% for Prime based borrowings. Borrowings
under the Senior Credit Agreement are secured by substantially all of the
assets of JCI and Jafra Distribution.

Both the Indenture and the Senior Credit Agreement contain certain
covenants that limit JCIs ability to incur additional indebtedness, pay cash
dividends and make certain other payments. These debt agreements also require
the Parent to maintain certain financial ratios including a minimum EBITDA to
cash interest expense coverage ratio and a maximum debt to EBITDA Ratio. As of
September 30, 2003, the Parent was in compliance with all covenants.

On May 23, 2003, with proceeds from the issuance of the New Notes and its
borrowings under the Senior Credit Agreement, JCI redeemed its Old Notes in the
aggregate outstanding principal amount of $45,108,000 at a premium of
approximately $2,650,000. Additionally, JCI repaid $5,000,000 under its
existing credit agreement (the Old Credit Agreement) and terminated the Old
Credit Agreement. In connection with the redemption of the Old Notes and the
termination of the Old Credit Agreement, JCI wrote off approximately $2,128,000
of capitalized deferred financing fees. Total costs related to the recall of
the previous debt were $4,778,000 and were recorded as a component of other
income (expense)on the accompanying consolidated statements of operations.

After the redemption of the Old Notes and repayment of all outstanding
amounts under the Old Credit Agreement, JCI distributed a total of $44,311,000
to its sole shareholder, North Atlantic. In addition, JCI made a special
payment to the holder of its options and to certain members of management and
non-employee directors (see footnote 8). Upon completion of the
Recapitalization and the distribution, North Atlantic contributed all of its
assets and liabilities, including its investment in JCI to the Parent.

JCI capitalized approximately $5,821,000 of costs related to the issuance
of the New Notes and the Senior Credit Agreement as deferred financing fees.
These deferred financing fees are reported as a noncurrent asset on the
accompanying consolidated balance sheets and are being amortized on a basis
that approximates the interest method over the term of the New Notes and the
Senior Credit Agreement. As of September 30, 2003, approximately of $298,000
of the deferred financing fees were amortized.

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

(6) Management Incentive Plan

In connection with the Recapitalization, the Board of Directors approved
an amendment to CDRJs stock incentive plan (the Stock Incentive Plan) to
reflect the equity instruments as rights to shares in North Atlantic rather
than shares in CDRJ, which is being liquidated. In addition the Board approved
a reduction in the exercise price of all existing stock options due to the
Recapitalization. In order to affect this re-pricing, the exercise price per
share of all existing options was reduced such that the awards ratio of
exercise price per share to the market value per share was not reduced and the
awards aggregate intrinsic value immediately after the
Recapitalization was
not greater than the aggregate intrinsic value immediately before
the
Recapitalization. The amendments became effective as of the
initiation of the liquidation of CDRJ.

(7) Comprehensive Income (Loss)

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

|                                         |  |                    |        |                   |  |      |       |      |  |   |        |   |  |   |        |  
|---------------------------------------- |  | ------------------ | ------ | ----------------- |  | ---- | ----- | ---- |  | - | ------ | - |  | - | ------ | -
|                                         |  | Three Months Ended |        | Nine Months Ended
|                                         |  | September 30,      |        | September 30 ,   
|                                         |  |                    |        |                  
|                                         |  | 2003               |        | 2002              |  | 2003 |       | 2002
|                                         |  |                    |        |                   |  |      |       |     
|Net income (loss)                        |  | $                  | 1,441  |                   |  | $    | 1,990 |      |  | $ | (5,558 | ) |  | $ | 11,183 |  
|Foreign currency translation adjustments |  |                    | (94    | )                 |  |      | (129  | )    |  |   | (134   | ) |  |   | (288   | )
|                                         |  |                    |        |                   |  |      |       |      |  |   |        |   |  |   |        |  
|Comprehensive income (loss)              |  | $                  | (1,347 | )                 |  | $    | 1,861 |      |  | $ | (5,692 | ) |  | $ | 10,895 |  
|                                         |  |                    |        |                   |  |      |       |      |  |   |        |   |  |   |        |  

(8) Related Party Transactions

JCI distributes skin and body products to other affiliates of the Parent
(affiliates). Sales to affiliates were made at cost plus a markup ranging
from 0 to 11%. JCI purchased color and fragrance products from Jafra Mexico
totaling $3,031,000 and $8,657,000 for the three and nine months ended
September 30, 2003, respectively, and $3,763,000 and $11,406,000 for the three
and nine months ended September 30, 2002, respectively.

In addition, JCI provides certain management services, such as legal,
accounting and treasury, management oversight, and other administrative
functions to affiliates, primarily in Mexico and South America. The cost of
these services is included in selling, general and administrative expenses 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. Management fee income
consists of amounts billed to affiliates in Mexico and South America.

JCI is charged a royalty by Jafra Mexico for the right to use the Jafra
trademark in the United States and Europe. The total royalty expense charged
by Jafra Mexico to JCI was $819,000 and $2,445,000 for the three and nine
months ended September 30, 2003, respectively, and $582,000 and $1,774,000 for
the three and nine
months ended September 30, 2002, respectively, and is offset against
royalty income from 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 Mexico for the use of the Jafra Way were $4,539,000 and
$15,083,000 for the three and nine months ended September 30, 2003,
respectively, and $5,477,000 and $16,697,000 for the three and nine months
ended September 30, 2002, respectively, and are based upon a percentage of
Jafra Mexicos sales.

JCI 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, 2002 and September 30, 2003 consist primarily of loans JCI has
made to indirect subsidiaries of the Parent to fund certain of their operations
in South America. Net interest income from affiliates was $161,000 and
$443,000 for the three and nine months ended September 30, 2003, respectively,
and $96,000 and $231,000 for the

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

three and nine months ended September 30,
2002, respectively, and was included in interest expense, net on the
accompanying consolidated statements of operations.

In connection with the Recapitalization, the Board of Directors authorized
CDRJ to reprice all existing stock options. (See footnote 6). In order to
compensate option holders for any diminished value of the outstanding options,
the Board of Directors further authorized $9,445,000 in bonus payments to
current option holders during the nine months ended September 30, 2003.
Additionally, the Company authorized a special bonus of $2,365,000 to certain
members of management and non-employee directors for contributions in
completing the Recapitalization of CDRJ. Bonus payments were recorded as
compensation expense as a component of income from operations within the consolidated
statements of operations.

(9) Financial Reporting for Business Segments

JCIs business is comprised of one industry segment, direct selling, with
worldwide operations, principally in the United States and Europe. JCI is
organized into geographical business units that each sell the full line of
Jafra cosmetics, skin care, body care, fragrances, and other products. JCI 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 JCIs
chief operating decision makers are the same as those described in the summary
of significant accounting policies included in JCIs audited consolidated
financial statements as of and for the year ended December 31, 2002 included in
CDRJs Annual Report on Form 10-K. JCI 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 JCI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 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. Notes and accounts receivable from
affiliates are excluded from segment assets and are included in the following
table under the caption Corporate, Unallocated and Other.

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

|                                                       |  |                |        |            |  |        |        |          |  |           |       |             |  |              |         |  |  |            |        |   |  |   |         | 
|------------------------------------------------------ |  | -------------- | ------ | ---------- |  | ------ | ------ | -------- |  | --------- | ----- | ----------- |  | ------------ | ------- |  |  | ---------- | ------ | - |  | - | ------- | 
|                                                       |  |                |        |            |  |        |        |          |  |           |       |             |  |              |         |  |  | Corporate, |        |   |  |  
|                                                       |  | United         |        |            |  |        |        | All      |  | Total     |       | Unallocated |  | Consolidated
|                                                       |  | States         |        | Europe (1) |  | Others |        | Segments |  | And Other |       | Total      
|                                                       |  |                |        |            |  |        |        |          |  |           |       |            
|                                                       |  | (in thousands)
|For the Three Months ended
September 30, 2003          |  |                |        |            |  |        |        |          |  |           |       |             |  |              |         |  |  |            |        |   |  |   |         | 
|Net sales                                              |  | $              | 25,330 |            |  | $      | 6,602  |          |  | $         | 646   |             |  | $            | 32,578  |  |  | $          | 3,074  |   |  | $ | 35,652  | 
|Operating income (loss)                                |  |                | 4,589  |            |  |        | (34    | )        |  |           | (178  | )           |  |              | 4,377   |  |  |            | 985    |   |  |   | 5,362   | 
|Depreciation and amortization                          |  |                | 643    |            |  |        | 85     |          |  |           | 79    |             |  |              | 807     |  |  |            |       |   |  |   | 807     | 
|For the Three Months ended
September 30, 2002          |  |                |        |            |  |        |        |          |  |           |       |             |  |              |         |  |  |            |        |   |  |   |         | 
|Net sales                                              |  | $              | 22,098 |            |  | $      | 5,544  |          |  | $         | 1,235 |             |  | $            | 28,877  |  |  | $          | 4,679  |   |  | $ | 33,556  | 
|Operating income (loss)                                |  |                | 3,797  |            |  |        | (99    | )        |  |           | (101  | )           |  |              | 3,597   |  |  |            | 2,321  |   |  |   | 5,918   | 
|Depreciation and amortization                          |  |                | 589    |            |  |        | 100    |          |  |           | 58    |             |  |              | 747     |  |  |            |       |   |  |   | 747     | 
|As of and for the Nine
Months ended September 30,
2003 |  |                |        |            |  |        |        |          |  |           |       |             |  |              |         |  |  |            |        |   |  |   |         | 
|Net sales                                              |  | $              | 74,483 |            |  | $      | 22,670 |          |  | $         | 2,481 |             |  | $            | 99,634  |  |  | $          | 11,207 |   |  | $ | 110,841 | 
|Operating income (loss)                                |  |                | 11,646 |            |  |        | 473    |          |  |           | (460  | )           |  |              | 11,659  |  |  |            | (7,537 | ) |  |   | 4,122   | 
|Depreciation and amortization                          |  |                | 2,067  |            |  |        | 317    |          |  |           | 168   |             |  |              | 2,552   |  |  |            |       |   |  |   | 2,552   | 
|Capital expenditures                                   |  |                | 2,565  |            |  |        | 305    |          |  |           | 199   |             |  |              | 3,069   |  |  |            |       |   |  |   | 3,069   | 
|Segment assets                                         |  |                | 84,386 |            |  |        | 18,473 |          |  |           | 1,463 |             |  |              | 104,322 |  |  |            | 32,553 |   |  |   | 136,875 | 
|Goodwill                                               |  |                | 32,188 |            |  |        | 4,841  |          |  |           |      |             |  |              | 37,029  |  |  |            |       |   |  |   | 37,029  | 
|As of and for the Nine
Months ended September 30,
2002 |  |                |        |            |  |        |        |          |  |           |       |             |  |              |         |  |  |            |        |   |  |   |         | 
|Net sales                                              |  | $              | 66,882 |            |  | $      | 18,598 |          |  | $         | 4,816 |             |  | $            | 90,296  |  |  | $          | 12,587 |   |  | $ | 102,883 | 
|Operating
income (loss)                                |  |                | 10,865 |            |  |        | 269    |          |  |           | (78   | )           |  |              | 11,056  |  |  |            | 7,251  |   |  |   | 18,307  | 
|Depreciation and amortization                          |  |                | 1,719  |            |  |        | 260    |          |  |           | 160   |             |  |              | 2,139   |  |  |            |       |   |  |   | 2,139   | 
|Capital expenditures                                   |  |                | 5,197  |            |  |        | 78     |          |  |           | 230   |             |  |              | 5,505   |  |  |            |       |   |  |   | 5,505   | 
|Segment assets                                         |  |                | 79,712 |            |  |        | 18,093 |          |  |           | 2,918 |             |  |              | 100,723 |  |  |            | 28,668 |   |  |   | 129,391 | 
|Goodwill                                               |  |                | 32,188 |            |  |        | 5,548  |          |  |           |      |             |  |              | 37,736  |  |  |            |       |   |  |   | 37,736  | 

(1)  excludes Jafra Poland
sp.zo.o, an indirect wholly-owned subsidiary of the Parent and an
affiliate of JCI

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DISTRIBUIDORA COMERCIAL JAFRA, S.A. DE C.V.
BALANCE SHEETS
(In thousands, except share amounts)

|                              |                                                                                            |                                                |                            |         |   |               |       |              |   |        |  | 
|----------------------------- | ------------------------------------------------------------------------------------------ | ---------------------------------------------- | -------------------------- | ------- | - | ------------- | ----- | ------------ | - | ------ |  | 
|                              |                                                                                            |                                                |                            |         |   | September 30, |       | December 31,
|                              |                                                                                            |                                                |                            |         |   | 2003          |       | 2002        
|                              |                                                                                            |                                                |                            |         |   |               |       |             
|                              |                                                                                            |                                                |                            |         |   | (Unaudited)   |       |              |   |       
|                              |                                                                                            |                                                |                            | ASSETS  |   |               |       |              |   |        |  | 
|Current assets:               |                                                                                            |                                                |                            |         |   |               |       |             
|                              | Cash and cash equivalents                                                                  |                                                | $                          | 9       |   |               | $     | 38           |  
|                              | Receivables, net                                                                           |                                                |                            | 310     |   |               |       | 174          |  
|                              | Inventories                                                                                |                                                |                            | 28,613  |   |               |       | 21,200       |  
|                              | Receivables from affiliates                                                                |                                                |                            | 29,986  |   |               |       | 28,620       |  
|                              | Prepaid income taxes                                                                       |                                                |                            | 1,439   |   |               |       | 741          |  
|                              | Prepaid expenses and other current assets                                                  |                                                |                            | 8,168   |   |               |       | 3,221        |  
|                              |                                                                                            |                                                |                            |         |   |               |       |              |  
|                              |                                                                                            |                                                | Total current assets       |         |   | 68,525        |       |              |   | 53,994 | 
|Property and equipment, net   |                                                                                            |                                                | 1,652                      |         |   |               | 1,806 |             
|Other assets:                 |                                                                                            |                                                |                            |         |   |               |       |             
|                              | Deferred financing fees, net                                                               |                                                |                            | 7,735   |   |               |       |             |  
|                              | Investment in affiliated Company                                                           |                                                |                            | 128,471 |   |               |       |             |  
|                              | Other                                                                                      |                                                |                            | 3,286   |   |               |       | 31           |  
|                              | Deferred income taxes                                                                      |                                                |                            | 21      |   |               |       | 22           |  
|                              |                                                                                            |                                                |                            |         |   |               |       |              |  
|                              |                                                                                            |                                                | Total                      |         | $ | 209,690       |       |              | $ | 55,853 | 
|                              |                                                                                            |                                                |                            |         |   |               |       |              |  
|                              |                                                                                            | LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT) |                            |         |   |               |       |              |   |       
|Current liabilities:          |                                                                                            |                                                |                            |         |   |               |       |             
|                              | Current portion of long-term debt                                                          |                                                | $                          | 4,125   |   |               | $     |             |  
|                              | Accounts payable                                                                           |                                                |                            | 8,419   |   |               |       | 8,668        |  
|                              | Accrued liabilities                                                                        |                                                |                            | 4,993   |   |               |       | 107          |  
|                              | Payables to affiliates                                                                     |                                                |                            |        |   |               |       | 1,895        |  
|                              | Deferred income taxes                                                                      |                                                |                            | 10,123  |   |               |       | 10,698       |  
|                              |                                                                                            |                                                |                            |         |   |               |       |              |  
|                              |                                                                                            |                                                | Total current liabilities  |         |   | 27,660        |       |              |   | 21,368 | 
|Long-term debt                |                                                                                            |                                                | 145,125                    |         |   |               |      |             
|                              |                                                                                            |                                                |                            |         |   |               |       |              |  
|                              |                                                                                            |                                                | Total liabilities          |         |   | 172,785       |       |              |   | 21,368 | 
|Commitments and contingencies |                                                                                            |                                                |                           |         |   |               |      |             
|Stockholders equity:         |                                                                                            |                                                |                            |         |   |               |       |             
|                              | Series B common stock, no par
value: 151 shares authorized, issued
and outstanding in 2003 |                                                |                            | 5       |   |               |       |             |  
|                              | Retained earnings                                                                          |                                                |                            | 42,273  |   |               |       | 38,031       |  
|                              | Accumulated other comprehensive loss                                                       |                                                |                            | (5,373  | ) |               |       | (3,546       | )
|                              |                                                                                            |                                                |                            |         |   |               |       |              |  
|                              |                                                                                            |                                                | Total stockholders equity |         |   | 36,905        |       |              |   | 34,485 | 
|                              |                                                                                            |                                                |                            |         |   |               |       |              |  
|                              |                                                                                            |                                                | Total                      |         | $ | 209,690       |       |              | $ | 55,853 | 
|                              |                                                                                            |                                                |                            |         |   |               |       |              |  

See accompanying notes to financial statements

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DISTRIBUIDORA COMERCIAL JAFRA, S.A. DE C.V.
STATEMENTS OF OPERATIONS
(In thousands)
(Unaudited)

|                                             |                           |   |                    |        |                   |   |        |        |      |   |        |        |   |   |         |        |  
|-------------------------------------------- | ------------------------- | - | ------------------ | ------ | ----------------- | - | ------ | ------ | ---- | - | ------ | ------ | - | - | ------- | ------ | -
|                                             |                           |   | Three Months Ended |        | Nine Months Ended
|                                             |                           |   | September 30,      |        | September 30,    
|                                             |                           |   |                    |        |                  
|                                             |                           |   | 2003               |        | 2002              |   | 2003   |        | 2002
|                                             |                           |   |                    |        |                   |   |        |        |     
|Sales to affiliates                          |                           | $ | 28,804             |        |                   | $ | 32,745 |        |      | $ | 92,888 |        |   | $ | 101,926 |       
|Cost of sales                                |                           |   | 18,111             |        |                   |   | 20,534 |        |      |   | 59,063 |        |   |   | 61,854  |       
|                                             |                           |   |                    |        |                   |   |        |        |      |   |        |        |   |   |         |       
|                                             | Gross profit              |   |                    | 10,693 |                   |   |        | 12,211 |      |   |        | 33,825 |   |   |         | 40,072 |  
|Selling, general and administrative expenses |                           |   | 547                |        |                   |   | 573    |        |      |   | 2,304  |        |   |   | 1,256   |       
|Management fee expense to affiliates         |                           |   | 412                |        |                   |   | 479    |        |      |   | 2,107  |        |   |   | 1,567   |       
|Service fee expense to affiliate             |                           |   | 3,989              |        |                   |   | 2,413  |        |      |   | 7,694  |        |   |   | 9,743   |       
|                                             |                           |   |                    |        |                   |   |        |        |      |   |        |        |   |   |         |       
|                                             | Income from operations    |   |                    | 5,745  |                   |   |        | 8,746  |      |   |        | 21,720 |   |   |         | 27,506 |  
|Other expense:                               |                           |   |                    |        |                   |   |        |        |      |   |        |        |   |   |         |       
|                                             | Exchange (loss) gain, net |   |                    | (7,175 | )                 |   |        | 86     |      |   |        | (8,661 | ) |   |         | (3,033 | )
|                                             | Interest expense, net     |   |                    | (4,231 | )                 |   |        |       |      |   |        | (5,997 | ) |   |         |       |  
|                                             | Other, net                |   |                    | (29    | )                 |   |        |       |      |   |        | (30    | ) |   |         |       |  
|                                             |                           |   |                    |        |                   |   |        |        |      |   |        |        |   |   |         |       
|Income (loss) before income taxes            |                           |   | (5,690             | )      |                   |   | 8,832  |        |      |   | 7,032  |        |   |   | 24,473  |       
|Income tax (benefit) expense                 |                           |   | (3,571             | )      |                   |   | 2,834  |        |      |   | 2,790  |        |   |   | 8,372   |       
|                                             |                           |   |                    |        |                   |   |        |        |      |   |        |        |   |   |         |       
|Net (loss) income                            |                           | $ | (2,119             | )      |                   | $ | 5,998  |        |      | $ | 4,242  |        |   | $ | 16,101  |       
|                                             |                           |   |                    |        |                   |   |        |        |      |   |        |        |   |   |         |       

See accompanying notes to financial statements

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DISTRIBUIDORA COMERCIAL JAFRA, S.A. DE C.V.
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

|                                                     |                                                                                             |                                                 |                                           |                                                     |       |                   |          |        |     |         |      |  
|---------------------------------------------------- | ------------------------------------------------------------------------------------------- | ----------------------------------------------- | ----------------------------------------- | --------------------------------------------------- | ----- | ----------------- | -------- | ------ | --- | ------- | ---- | -
|                                                     |                                                                                             |                                                 |                                           |                                                     |       | Nine Months Ended
|                                                     |                                                                                             |                                                 |                                           |                                                     |       | September 30,    
|                                                     |                                                                                             |                                                 |                                           |                                                     |       |                  
|                                                     |                                                                                             |                                                 |                                           |                                                     |       | 2003              |          | 2002  
|                                                     |                                                                                             |                                                 |                                           |                                                     |       |                   |          |       
|Cash flows from operating activities:                |                                                                                             |                                                 |                                           |                                                     |       |                   |          |       
|                                                     | Net income                                                                                  |                                                 | $                                         | 4,242                                               |       |                   | $        | 16,101 |    
|                                                     | Adjustments to reconcile net income to net cash
(used in) provided by operating activities: |                                                 |                                           |                                                     |       |                   |          |        |    
|                                                     |                                                                                             | Depreciation and amortization                   |                                           |                                                     | 209   |                   |          |        | 55  |        
|                                                     |                                                                                             | Amortization of guarantee                       |                                           |                                                     | 176   |                   |          |        |    |        
|                                                     |                                                                                             | Amortization of deferred financing fees         |                                           |                                                     | 131   |                   |          |        |    |        
|                                                     |                                                                                             | Unrealized foreign exchange and derivative loss |                                           |                                                     | 9,056 |                   |          |        | 147 |        
|                                                     |                                                                                             | Changes in operating assets and liabilities:    |                                           |                                                     |       |                   |          |        |     |        
|                                                     |                                                                                             |                                                 | Receivables                               |                                                     |       | (149              | )        |        |     | 57      |     
|                                                     |                                                                                             |                                                 | Inventories                               |                                                     |       | (8,834            | )        |        |     | 2,949   |     
|                                                     |                                                                                             |                                                 | Prepaid expenses and other current assets |                                                     |       | 223               |          |        |     | 525     |     
|                                                     |                                                                                             |                                                 | Intercompany receivables and payables     |                                                     |       | (4,723            | )        |        |     | (18,052 | )   
|                                                     |                                                                                             |                                                 | Other assets                              |                                                     |       | 15                |          |        |     | 5       |     
|                                                     |                                                                                             |                                                 | Accounts payable and accrued liabilities  |                                                     |       | 263               |          |        |     | (5,971  | )   
|                                                     |                                                                                             |                                                 | Income taxes payable/prepaid              |                                                     |       | (758              | )        |        |     | 4,562   |     
|                                                     |                                                                                             |                                                 |                                           |                                                     |       |                   |          |       
|                                                     |                                                                                             |                                                 |                                           | Net cash (used in) provided by operating activities |       |                   | (149     | )      |     |         | 378  |  
|                                                     |                                                                                             |                                                 |                                           |                                                     |       |                   |          |       
|Cash flows from investing activities:                |                                                                                             |                                                 |                                           |                                                     |       |                   |          |       
|                                                     | Purchase of preferred shares of affiliate                                                   |                                                 |                                           | (136,420                                            | )     |                   |          |       |    
|                                                     | Purchases of property and equipment                                                         |                                                 |                                           | (66                                                 | )     |                   |          | (365   | )  
|                                                     |                                                                                             |                                                 |                                           |                                                     |       |                   |          |       
|                                                     |                                                                                             |                                                 |                                           | Net cash used in investing activities               |       |                   | (136,486 | )      |     |         | (365 | )
|                                                     |                                                                                             |                                                 |                                           |                                                     |       |                   |          |       
|Cash flows from financing activities:                |                                                                                             |                                                 |                                           |                                                     |       |                   |          |       
|                                                     | Proceeds from issuance of subordinated debt due 2011                                        |                                                 |                                           | 120,000                                             |       |                   |          |       |    
|                                                     | Proceeds from term loan                                                                     |                                                 |                                           | 30,000                                              |       |                   |          |       |    
|                                                     | Repayments under term loan facility                                                         |                                                 |                                           | (750                                                | )     |                   |          |       |    
|                                                     | Payment of debt guarantee fee to affiliate                                                  |                                                 |                                           | (4,000                                              | )     |                   |          |       |    
|                                                     | Deferred financing costs                                                                    |                                                 |                                           | (8,628                                              | )     |                   |          |       |    
|                                                     |                                                                                             |                                                 |                                           |                                                     |       |                   |          |       
|                                                     |                                                                                             |                                                 |                                           | Net cash provided by financing activities           |       |                   | 136,622  |        |     |         |     |  
|                                                     |                                                                                             |                                                 |                                           |                                                     |       |                   |          |       
|Effect of exchange rate changes on cash              |                                                                                             |                                                 | (16                                       | )                                                   |       |                   | (4       | )     
|                                                     |                                                                                             |                                                 |                                           |                                                     |       |                   |          |       
|Net
(decrease) increase in cash and cash equivalents |                                                                                             |                                                 | (29                                       | )                                                   |       |                   | 9        |       
|Cash and cash equivalents at beginning of period     |                                                                                             |                                                 | 38                                        |                                                     |       |                   |         |       
|                                                     |                                                                                             |                                                 |                                           |                                                     |       |                   |          |       
|Cash and cash equivalents at end of period           |                                                                                             | $                                               | 9                                         |                                                     |       | $                 | 9        |       
|                                                     |                                                                                             |                                                 |                                           |                                                     |       |                   |          |        |    

See accompanying notes to financial statements

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DISTRIBUIDORA COMERCIAL JAFRA, S.A. DE C.V.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)

(1) Basis of Presentation

Distribuidora Comercial Jafra, S.A. de C.V., a sociedad anonima de capital
variable(Jafra Distribution),organized under the laws of the United Mexican
States on February 26, 2003, is owned by five indirect wholly-owned
subsidiaries of Jafra Worldwide Holdings (Lux), S.àR.L., a Luxembourg société a
responsabilité limitée(the Parent). The Parent is the wholly-owned
subsidiary of CDRJ North Atlantic (Lux) S.àr.l., a Luxembourg société
responsabilité limitée(North Atlantic), which in turn is a wholly-owned
subsidiary of CDRJ Investments (Lux) S.A., a Luxembourg société anonyme
(CDRJ). Jafra Distribution was organized to conduct the Parents
distribution business in Mexico. The distribution business was previously
conducted by Distribuidora Venus, S.A. de C.V., (Venus), a wholly-owned
subsidiary of Jafra Cosmetics International, S.A. de C.V. (Jafra S.A.).
Jafra S.A. is also owned by five indirect wholly-owned subsidiaries of the
Parent.

The accompanying unaudited interim financial statements as of September
30, 2003 and for the three and nine months ended September 30, 2003 and 2002
reflect the operations of Jafra Distribution or the carved-out distribution
operations of Venus, which are now conducted by Jafra Distribution, 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 Distributions
financial statements as of September 30, 2003 and for the interim periods
presented.

On May 20, 2003, the Parent, Jafra Cosmetics International, Inc. (JCI)
and Jafra Distribution (together with JCI, the Issuers) completed a
recapitalization of their operations by entering into $90 million of new senior
secured credit facilities, consisting of a $50 million senior secured term loan
facility and a $40 million senior secured revolving credit facility and issuing
$200 million of 10 3⁄4% Senior Subordinated Notes due 2011 (collectively, the
Recapitalization). The proceeds from the Recapitalization were used to
redeem the 11 3⁄4% Senior Subordinated Notes due 2008 (the Old Notes), of
JCI and Jafra S.A., to repay all amounts outstanding under the existing credit
facilities of JCI and Jafra S.A. and to make certain payments to CDRJ and
employees of JCI and Jafra S.A. The stockholders of CDRJ then resolved that
CDRJ be liquidated and appointed the Parent to act as its liquidator. Thereafter,
CDRJ made an initial liquidating distribution of such proceeds to its
stockholders. In connection with the liquidation of CDRJ, North Atlantic
transferred all of its assets and liabilities, including its direct and
indirect holdings of JCI, Jafra S.A. and Jafra Distribution to the Parent in
exchange for additional shares of common stock of the Parent. Jafra S.A. and
Jafra Distribution are collectively referred to as Jafra Mexico.

The New Notes represent several obligations of Jafra Distribution and JCI.
Jafra Distribution and JCI have fully and unconditionally guaranteed the
obligations of the other under the New 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 Distribution is subject to a 30-day
standstill period, the Parent is filing these separate financial statements of
Jafra Distribution on its Report on Form 10-Q.

The functional currency for Jafra Distribution 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 loss.

Jafra Distribution adopted Statement of Financial Accounting Standards
(SFAS) No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment
of FASB Statement No. 13, and Technical Corrections on January 1, 2003. This
statement rescinds or modifies existing authoritative pronouncements including
SFAS No. 4 Reporting Gains and Losses from Extinguishment of Debt. As a
result of the issuance of SFAS No. 145, gains and losses from extinguishment of
debt are classified as extraordinary items only if they meet the criteria in
Accounting Principles Board (APB) Opinion 30, Reporting the Results of
Operations-Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions.
Applying the provisions of APB Opinion 30 distinguishes transactions that are
part of an entitys recurring operations from those that are unusual or
infrequent or that meet the criteria for classification as an
extraordinary item. Based on the adoption of this principle, Jafra Distribution
will classify any gain or loss on future extinguishment of debt according to
the principles of SFAS No. 145.

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DISTRIBUIDORA COMERCIAL JAFRA, S.A. DE C.V.
NOTES TO FINANCIAL STATEMENTS  (Continued)
(Unaudited)

Jafra Distribution adopted SFAS No. 146, Accounting for Costs Associated
with Exit or Disposal Activities on January 1, 2003 which did not result in
any material impact to the Jafra Distributionss statements of operations.
This statement addresses financial accounting and reporting for costs
associated with exit or disposal activities and nullifies EITF Issue No. 94-3,
Liability Recognition for Certain Employee Termination Benefits and Other
Costs to Exit an Activity.

(2) Inventories

Inventories consist of the following (in thousands):

|                           |  |               |        |              |  |   |        | 
|-------------------------- |  | ------------- | ------ | ------------ |  | - | ------ | 
|                           |  | September 30, |        | December 31,
|                           |  | 2003          |        | 2002        
|                           |  |               |        |             
|Raw materials and supplies |  | $             | 5,236  |              |  | $ | 4,858  | 
|Finished goods             |  |               | 23,377 |              |  |   | 16,342 | 
|                           |  |               |        |              |  |   |        | 
|Total inventories          |  | $             | 28,613 |              |  | $ | 21,200 | 
|                           |  |               |        |              |  |   |        | 

(3) Property and Equipment

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

|                               |  |               |       |              |  |   |       | 
|------------------------------ |  | ------------- | ----- | ------------ |  | - | ----- | 
|                               |  | September 30, |       | December 31,
|                               |  | 2003          |       | 2002        
|                               |  |               |       |             
|Machinery, equipment and other |  | $             | 1,852 |              |  | $ | 1,894 | 
|Less accumulated depreciation  |  |               | 200   |              |  |   | 88    | 
|                               |  |               |       |              |  |   |       | 
|Property and equipment, net    |  | $             | 1,652 |              |  | $ | 1,806 | 
|                               |  |               |       |              |  |   |       | 

(4) Investment in Affiliated Company

On May 20, 2003, Jafra Distribution subscribed for and purchased 2,015
shares of newly issued Series C preferred stock of Jafra S.A. for $10,000 per
share, for a total purchase price of $20,150,000. Additionally, Jafra
Distribution purchased 2,618, 2,387, 2,310, 2,233, and 2,079 preferred shares
of Jafra S.A. from CDRJ Latin America Holding Company B.V., Latin Cosmetics
Holdings B.V., Regional Cosmetics Holding B.V., Southern Cosmetics Holdings
B.V. and CDRJ Mexico Holding Company B.V., respectively. Each share was
purchased for $10,000 per share, for a total of $116,270,000. Holders of
Series C preferred shares of Jafra S.A. have the right to vote only on matters
submitted by law and are entitled to receive a preferred cumulative dividend
equal to 4.5%, of the effective liquidation preference per share, upon any
liquidation before any holder of Series B common stock of Jafra
S.A. receives a
dividend. Jafra Distribution has recorded the total investment in 13,642
preferred shares of Jafra S.A. of $136,420,000 as an investment in affiliated
company on the accompanying balance sheets.Except for the effect of
translation, Jafra Distribution carries the investment on its balance sheet at
cost.

(5) Debt

On May 20, 2003, the Issuers issued $200 million aggregate principal
amount of 10 3⁄4% Subordinated Notes due 2011, the New Notes pursuant to an
Indenture dated May 20, 2003 (the Indenture) and entered into a $90 million
senior credit agreement (the Senior Credit Agreement). The New Notes
represent the several obligations of Jafra Distribution and JCI in the amount
of $120 million and $80 million, respectively. The New Notes mature in 2011 and
bear a fixed interest rate of 10 3⁄4% payable semi-annually.

Jafra Distribution is an indirect wholly-owned subsidiary of the Parent
and JCI is a direct wholly-owned subsidiary of the Parent. The Parent has
fully and unconditionally guaranteed the obligations under the New Notes on a
senior subordinated basis on the terms provided in the Indenture governing the
New Notes. The Issuers have fully and unconditionally guaranteed the
obligations under the New Notes of the other on a senior subordinated

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DISTRIBUIDORA COMERCIAL JAFRA, S.A. DE C.V.
NOTES TO FINANCIAL STATEMENTS  (Continued)
(Unaudited)

basis, subject to a 30-day standstill period prior to enforcement of such
guarantees. Each existing or subsequently acquired or organized Mexican
subsidiary of Jafra Distribution is also required to fully and unconditionally
guarantee the Mexican portion of the New Notes jointly and severally, on a
senior subordinated basis.

On May 20, 2003, Jafra Distribution paid Jafra S.A. $4,000,000 for Jafra
S.A. to fully and unconditionally guarantee the obligations of Jafra
Distribution under the New Notes on a senior subordinated basis. Each existing
and subsequently acquired or organized subsidiary of Jafra S.A. is also
required to fully and unconditionally guarantee the Mexican portion of the New
Notes jointly and severally, on a senior subordinated basis. The guarantee fee
is being amortized into income over an eight year period, the term of the New
Notes. At September 30, 2003, approximately $3,271,000 was classified as a
non-current asset and the remaining unamortized amount was classified as a
current asset on the accompanying balance sheets.

The New Notes are unsecured and are generally not redeemable for four
years from the issue date. Thereafter, the Notes will be redeemable on a pro
rata basis at premiums declining to par in the sixth year. Prior to May 16,
2006, the Issuers at their option may concurrently redeem the New Notes in an
aggregate principal amount equal to up to 35% of the original aggregate
principal amount of the New Notes, with funds in an aggregate amount not
exceeding the aggregate cash proceeds of one or more equity offerings, at a
redemption price of 110.75% plus accrued interest. On September 15, 2003, the Issuers consummated a registered exchange of the New Notes
under the Securities Act of 1933.

In addition, the Issuers entered into the Senior Credit Agreement, which
provides for senior secured credit facilities in an aggregate principal amount
of $90 million, consisting of a $50 million senior secured term loan facility
maturing in 2008 and a $40 million senior secured revolving credit facility,
also maturing in 2008, of which $20 million is available as letters of credit.
The Senior Credit Agreement is allocated 40% to JCI and 60% to Jafra
Distribution. As of May 20, 2003, JCI borrowed $20 million and Jafra
Distribution borrowed $30 million under the term facility. No amounts were
outstanding under the revolving credit facility at September 30, 2003.
Borrowings under the term loan facility are payable in quarterly installments
of principal and interest over five years through May 20, 2008. Borrowings
under the revolving credit facility mature on May 20, 2008. Borrowings under
the Senior Credit Agreement bear interest at an annual rate of LIBOR plus a
margin not to exceed 4.00% or an alternate base rate plus an applicable margin
not to exceed 3.00%. The interest rate in effect at September 30, 2003 was
5.2% for LIBOR borrowings and 7.0% for Prime based borrowings. Borrowings
under the Senior Credit Agreement are secured by substantially all of the
assets of JCI and Jafra Distribution.

Both the Indenture and the Senior Credit Agreement contain certain
covenants that limit the Parents ability to incur additional indebtedness, pay
cash dividends and make certain other payments. These debt agreements also
require the Parent to maintain certain financial ratios including a minimum
EBITDA to cash interest expense coverage ratio and a maximum debt to EBITDA
ratio. As of September 30, 2003, the Parent was in compliance with all debt
covenants.

Jafra Distribution capitalized approximately $8,628,000 of expenses
related to the issuance of the New Notes and the Senior Credit Agreement as
deferred financing fees. These deferred financing fees expenses are reported
as a noncurrent asset on the accompanying balance sheets and are being
amortized on a basis that approximates the interest method over the term of the
New Notes and the Senior Credit Agreement. As of September 30, 2003,
approximately $442,000 of the deferred financing fees were amortized.

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DISTRIBUIDORA COMERCIAL JAFRA, S.A. DE C.V.
NOTES TO FINANCIAL STATEMENTS  (Continued)
(Unaudited)

(6) Comprehensive (Loss) Income

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

|                                         |  |                    |        |                   |  |      |        |      |  |   |        |   |  |   |        |  
|---------------------------------------- |  | ------------------ | ------ | ----------------- |  | ---- | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                         |  | Three Months Ended |        | Nine Months Ended
|                                         |  | September 30,      |        | September 30,    
|                                         |  |                    |        |                  
|                                         |  | 2003               |        | 2002              |  | 2003 |        | 2002
|                                         |  |                    |        |                   |  |      |        |     
|Net (loss) income                        |  | $                  | (2,119 | )                 |  | $    | 5,998  |      |  | $ | 4,242  |   |  | $ | 16,101 |  
|Foreign currency translation adjustments |  |                    | (1,932 | )                 |  |      | (1,263 | )    |  |   | (1,827 | ) |  |   | (4,599 | )
|                                         |  |                    |        |                   |  |      |        |      |  |   |        |   |  |   |        |  
|Comprehensive (loss) income              |  | $                  | (4,051 | )                 |  | $    | 4,735  |      |  | $ | 2,415  |   |  | $ | 11,502 |  
|                                         |  |                    |        |                   |  |      |        |      |  |   |        |   |  |   |        |  

(7) Related Party Transactions

Jafra Distribution sells color cosmetics and fragrance products to other
affiliates of the Parent (affiliates). Sales to affiliates, primarily in the
United States and Germany, were $3,068,000 and $8,738,000 for the three and
nine months ended September 30, 2003, respectively, and $4,167,000 and
$12,576,000 for the three and nine months ended September 30, 2003,
respectively. These sales were made at cost plus a markup ranging from 0 to
11%. Jafra Distribution purchases skin and body products from an affiliate.
Purchases were $3,018,000 and $11,075,000 for the three and nine months ended
September 30, 2003, respectively, and $4,112,000 and $11,445,000 for the three
and nine months ended September 30, 2002, respectively. Jafra Distribution
sells products purchased from an affiliate and other purchased inventory to
Jafra S.A. at a markup of approximately 59%. Sales to Jafra S.A. were
$25,736,000 and $84,150,000 for the three and nine months ended September 30,
2003, respectively, and $28,578,000 and $89,350,000 for the three and nine
months ended September 30, 2002, respectively.

Jafra Distribution receives certain administrative and other services from
Jafra S.A. The cost of these services is included in service fee expense to
affiliate on the accompanying statements of operations. Jafra Distribution
believes the amounts are reasonable and approximate the cost of the actual
services received.

In addition, Jafra Distribution is provided with certain management
services, such as legal, accounting and treasury, management oversight, and
other administrative functions from an affiliate. The cost of these services
is included in management fee expense to affiliates in the accompanying
statements of operations. Jafra Distribution is charged a portion
of these management expenses based upon charges identified to Jafra
Distribution and a formula using the percentage of revenues of the
subsidiaries to the total consolidated revenues of the Parent. Jafra
Distribution believes the amounts and methods of allocation are reasonable and
approximate the cost of the actual services received.

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JAFRA COSMETICS INTERNATIONAL, S.A. DE C.V. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)

|                              |                                                                                                                                                       |                                      |        |        |               |  |              |        |         |  | 
|----------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------ | ------ | ------ | ------------- |  | ------------ | ------ | ------- |  | 
|                              |                                                                                                                                                       |                                      |        |        | September 30, |  | December 31,
|                              |                                                                                                                                                       |                                      |        |        | 2003          |  | 2002        
|                              |                                                                                                                                                       |                                      |        |        |               |  |             
|                              |                                                                                                                                                       |                                      |        |        | (Unaudited)   |  |              |        |        
|                              |                                                                                                                                                       |                                      | ASSETS |        |               |  |              |        |         |  | 
|Current assets:               |                                                                                                                                                       |                                      |        |        |               |  |              |       
|                              | Cash and cash equivalents                                                                                                                             |                                      | $      | 2,259  |               |  | $            | 13,356 |        
|                              | Receivables, net                                                                                                                                      |                                      |        | 25,879 |               |  |              | 33,344 |        
|                              | Receivables from affiliates                                                                                                                           |                                      |        | 2,206  |               |  |              | 23,796 |        
|                              | Prepaid expenses and other current assets                                                                                                             |                                      |        | 361    |               |  |              | 262    |        
|                              | Deferred income tax asset                                                                                                                             |                                      |        | 8,668  |               |  |              | 9,268  |        
|                              |                                                                                                                                                       |                                      |        |        |               |  |              |       
|                              |                                                                                                                                                       | Total current assets                 |        |        | 39,373        |  |              |        | 80,026  | 
|Property and equipment, net   |                                                                                                                                                       |                                      | 30,368 |        |               |  | 32,003       |       
|Other assets:                 |                                                                                                                                                       |                                      |        |        |               |  |              |       
|                              | Goodwill                                                                                                                                              |                                      |        | 26,937 |               |  |              | 28,548 |        
|                              | Trademarks                                                                                                                                            |                                      |        | 41,903 |               |  |              | 44,408 |        
|                              | Deferred financing fees, net                                                                                                                          |                                      |        |       |               |  |              | 395    |        
|                              | Other                                                                                                                                                 |                                      |        | 1,111  |               |  |              | 1,196  |        
|                              |                                                                                                                                                       |                                      |        |        |               |  |              |        |        
|                              |                                                                                                                                                       | Total                                |        | $      | 139,692       |  |              | $      | 186,576 | 
|                              |                                                                                                                                                       |                                      |        |        |               |  |              |       
|                              |                                                                                                                                                       | LIABILITIES AND STOCKHOLDERS EQUITY |        |        |               |  |              |        |         | 
|Current liabilities:          |                                                                                                                                                       |                                      |        |        |               |  |              |       
|                              | Current portion of long-term debt                                                                                                                     |                                      | $      |       |               |  | $            | 2,489  |        
|                              | Accounts payable                                                                                                                                      |                                      |        | 4,066  |               |  |              | 3,298  |        
|                              | Accrued liabilities                                                                                                                                   |                                      |        | 25,117 |               |  |              | 32,715 |        
|                              | Income taxes payable                                                                                                                                  |                                      |        | 833    |               |  |              | 4,838  |        
|                              | Payables to affiliates                                                                                                                                |                                      |        | 33,168 |               |  |              | 54,740 |        
|                              | Other current liabilities                                                                                                                             |                                      |        | 467    |               |  |              |       |        
|                              |                                                                                                                                                       |                                      |        |        |               |  |              |       
|                              |                                                                                                                                                       | Total current liabilities            |        |        | 63,651        |  |              |        | 98,080  | 
|Long-term debt                |                                                                                                                                                       |                                      |       |        |               |  | 30,786       |       
|Deferred income taxes         |                                                                                                                                                       |                                      | 15,575 |        |               |  | 16,537       |       
|Other long-term liabilities   |                                                                                                                                                       |                                      | 3,271  |        |               |  |             |       
|                              |                                                                                                                                                       |                                      |        |        |               |  |              |        |        
|                              |                                                                                                                                                       | Total liabilities                    |        |        | 82,497        |  |              |        | 145,403 | 
|Commitments and contingencies |                                                                                                                                                       |                                      |       |        |               |  |             |       
|Stockholders equity:         |                                                                                                                                                       |                                      |        |        |               |  |              |       
|                              | Series B
common stock, no par value: 151 shares authorized, issued
and outstanding in 2002; 139,373 shares authorized, issued
and outstanding in 2003 |                                      |        |       |               |  |              |       |        
|                              | Series C
preferred stock, no par value: 13,642 shares authorized, issued
and outstanding in 2003                                                      |                                      |        |       |               |  |              |       |        
|                              | Additional paid-in capital                                                                                                                            |                                      |        | 54,334 |               |  |              | 34,184 |        
|                              | Retained earnings                                                                                                                                     |                                      |        | 10,421 |               |  |              | 11,015 |        
|                              | Accumulated other comprehensive loss                                                                                                                  |                                      |        | (7,560 | )             |  |              | (4,026 | )      
|                              |                                                                                                                                                       |                                      |        |        |               |  |              |       
|                              |                                                                                                                                                       | Total stockholders equity           |        |        | 57,195        |  |              |        | 41,173  | 
|                              |                                                                                                                                                       |                                      |        |        |               |  |              |        |        
|                              |                                                                                                                                                       | Total                                |        | $      | 139,692       |  |              | $      | 186,576 | 
|                              |                                                                                                                                                       |                                      |        |        |               |  |              |       

See accompanying notes to
consolidated financial statements

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JAFRA COSMETICS INTERNATIONAL, S.A. DE C.V. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands)
(Unaudited)

|                                             |                                |   |                    |        |                   |   |        |        |      |   |         |        |   |   |         |         |  
|-------------------------------------------- | ------------------------------ | - | ------------------ | ------ | ----------------- | - | ------ | ------ | ---- | - | ------- | ------ | - | - | ------- | ------- | -
|                                             |                                |   | Three Months Ended |        | Nine Months Ended
|                                             |                                |   | September 30,      |        | September 30,    
|                                             |                                |   |                    |        |                  
|                                             |                                |   | 2003               |        | 2002              |   | 2003   |        | 2002
|                                             |                                |   |                    |        |                   |   |        |        |     
|Net sales                                    |                                | $ | 51,844             |        |                   | $ | 62,622 |        |      | $ | 172,057 |        |   | $ | 190,502 |        
|Cost of sales                                |                                |   | 20,990             |        |                   |   | 26,597 |        |      |   | 72,502  |        |   |   | 84,834  |        
|                                             |                                |   |                    |        |                   |   |        |        |      |   |         |        |   |   |         |        
|                                             | Gross profit                   |   |                    | 30,854 |                   |   |        | 36,025 |      |   |         | 99,555 |   |   |         | 105,668 |  
|Selling, general and administrative expenses |                                |   | 27,821             |        |                   |   | 31,304 |        |      |   | 86,347  |        |   |   | 93,082  |        
|Management fee expense to affiliates         |                                |   | 1,486              |        |                   |   | 1,335  |        |      |   | 5,806   |        |   |   | 4,611   |        
|Service fee income from affiliate            |                                |   | (3,989             | )      |                   |   | (2,413 | )      |      |   | (7,694  | )      |   |   | (9,743  | )      
|Royalty expense to affiliates, net           |                                |   | 3,720              |        |                   |   | 4,895  |        |      |   | 12,638  |        |   |   | 14,923  |        
|                                             |                                |   |                    |        |                   |   |        |        |      |   |         |        |   |   |         |        
|                                             | Income loss from operations    |   |                    | 1,816  |                   |   |        | 904    |      |   |         | 2,458  |   |   |         | 2,795   |  
|Other income (expense):                      |                                |   |                    |        |                   |   |        |        |      |   |         |        |   |   |         |        
|                                             | Exchange loss, net             |   |                    | (139   | )                 |   |        | (1,545 | )    |   |         | (43    | ) |   |         | (2,793  | )
|                                             | Interest expense, net          |   |                    | 7      |                   |   |        | (1,172 | )    |   |         | (1,839 | ) |   |         | (3,785  | )
|                                             | Loss on extinquishment of debt |   |                    |       |                   |   |        |       |      |   |         | (1,842 | ) |   |         |        |  
|                                             | Other, net                     |   |                    | (88    | )                 |   |        | 3      |      |   |         | (205   | ) |   |         | 3       |  
|                                             |                                |   |                    |        |                   |   |        |        |      |   |         |        |   |   |         |        
|Income (loss) before income taxes            |                                |   | 1,596              |        |                   |   | (1,810 | )      |      |   | (1,471  | )      |   |   | (3,780  | )      
|Income tax expense (benefit)                 |                                |   | 1,668              |        |                   |   | (204   | )      |      |   | (877    | )      |   |   | (1,930  | )      
|                                             |                                |   |                    |        |                   |   |        |        |      |   |         |        |   |   |         |        
|Net loss                                     |                                | $ | (72                | )      |                   | $ | (1,606 | )      |      | $ | (594    | )      |   | $ | (1,850  | )      
|                                             |                                |   |                    |        |                   |   |        |        |      |   |         |        |   |   |         |        

See accompanying notes to consolidated financial statements

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JAFRA COSMETICS INTERNATIONAL, S.A. DE C.V. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

|                                                     |                                                                                           |                                                       |                                           |                                                     |       |                   |        |        |        |         |        |  
|---------------------------------------------------- | ----------------------------------------------------------------------------------------- | ----------------------------------------------------- | ----------------------------------------- | --------------------------------------------------- | ----- | ----------------- | ------ | ------ | ------ | ------- | ------ | -
|                                                     |                                                                                           |                                                       |                                           |                                                     |       | Nine Months Ended
|                                                     |                                                                                           |                                                       |                                           |                                                     |       | September 30,    
|                                                     |                                                                                           |                                                       |                                           |                                                     |       |                  
|                                                     |                                                                                           |                                                       |                                           |                                                     |       | 2003              |        | 2002  
|                                                     |                                                                                           |                                                       |                                           |                                                     |       |                   |        |       
|Cash flows from operating activities:                |                                                                                           |                                                       |                                           |                                                     |       |                   |        |       
|                                                     | Net loss                                                                                  |                                                       | $                                         | (594                                                | )     |                   | $      | (1,850 | )     
|                                                     | Adjustments to reconcile net loss to net cash
(used in) provided by operating activities: |                                                       |                                           |                                                     |       |                   |        |        |       
|                                                     |                                                                                           | Gain on sale of property and equipment                |                                           |                                                     |      |                   |        |        | (88    | )      
|                                                     |                                                                                           | Depreciation and amortization                         |                                           |                                                     | 1,479 |                   |        |        | 1,456  |        
|                                                     |                                                                                           | Amortization of guarantee                             |                                           |                                                     | (176  | )                 |        |        |       |        
|                                                     |                                                                                           | Write off and amortization of deferred financing fees |                                           |                                                     | 435   |                   |        |        | 592    |        
|                                                     |                                                                                           | Provision for uncollectible accounts receivable       |                                           |                                                     | 6,308 |                   |        |        | 8,680  |        
|                                                     |                                                                                           | Unrealized foreign exchange and derivative loss       |                                           |                                                     | 120   |                   |        |        | 4,178  |        
|                                                     |                                                                                           | Deferred realized derivative loss                     |                                           |                                                     | 646   |                   |        |        | 515    |        
|                                                     |                                                                                           | Deferred income taxes                                 |                                           |                                                     |      |                   |        |        | (1,167 | )      
|                                                     |                                                                                           | Changes in operating assets and liabilities:          |                                           |                                                     |       |                   |        |        |        |        
|                                                     |                                                                                           |                                                       | Receivables                               |                                                     |       | (962              | )      |        |        | (15,382 | )     
|                                                     |                                                                                           |                                                       | Prepaid expenses and other current assets |                                                     |       | (117              | )      |        |        | 100     |       
|                                                     |                                                                                           |                                                       | Intercompany receivables and payables     |                                                     |       | 1,399             |        |        |        | 10,721  |       
|                                                     |                                                                                           |                                                       | Other assets                              |                                                     |       | 18                |        |        |        | 1,051   |       
|                                                     |                                                                                           |                                                       | Accounts payable and accrued liabilities  |                                                     |       | (5,106            | )      |        |        | 7,711   |       
|                                                     |                                                                                           |                                                       | Income taxes payable/prepaid              |                                                     |       | (3,700            | )      |        |        | (7,418  | )     
|                                                     |                                                                                           |                                                       |                                           |                                                     |       |                   |        |        |       
|                                                     |                                                                                           |                                                       |                                           | Net cash (used in) provided by operating activities |       |                   | (250   | )      |        |         | 9,099  |  
|                                                     |                                                                                           |                                                       |                                           |                                                     |       |                   |        |        |       
|Cash flows from investing activities:                |                                                                                           |                                                       |                                           |                                                     |       |                   |        |       
|                                                     | Proceeds from sale of property and equipment                                              |                                                       |                                           |                                                    |       |                   |        | 231    |       
|                                                     | Purchases of property and equipment                                                       |                                                       |                                           | (1,748                                              | )     |                   |        | (1,661 | )     
|                                                     |                                                                                           |                                                       |                                           |                                                     |       |                   |        |       
|                                                     |                                                                                           |                                                       |                                           | Net cash used in investing activities               |       |                   | (1,748 | )      |        |         | (1,430 | )
|                                                     |                                                                                           |                                                       |                                           |                                                     |       |                   |        |       
|Cash flows from financing activities:                |                                                                                           |                                                       |                                           |                                                     |       |                   |        |       
|                                                     | Repurchase of subordinated debt due 2008                                                  |                                                       |                                           | (30,072                                             | )     |                   |        |       |       
|                                                     | Repayments under term loan facility                                                       |                                                       |                                           | (2,375                                              | )     |                   |        | (3,125 | )     
|                                                     | Net borrowings under revolving credit facility                                            |                                                       |                                           |                                                    |       |                   |        |       |       
|                                                     | Receipt of guarantee fee from affiliate                                                   |                                                       |                                           | 4,000                                               |       |                   |        |       |       
|                                                     | Net repayments under bank debt                                                            |                                                       |                                           | (828                                                | )     |                   |        | (479   | )     
|                                                     | Sale of Series C preferred stock                                                          |                                                       |                                           | 20,150                                              |       |                   |        |       |       
|                                                     |                                                                                           |                                                       |                                           |                                                     |       |                   |        |       
|                                                     |                                                                                           |                                                       |                                           | Net cash used in financing activities               |       |                   | (9,125 | )      |        |         | (3,604 | )
|                                                     |                                                                                           |                                                       |                                           |                                                     |       |                   |        |       
|Effect of exchange rate changes on cash              |                                                                                           |                                                       | 26                                        |                                                     |       |                   | (692   | )     
|                                                     |                                                                                           |                                                       |                                           |                                                     |       |                   |        |       
|Net (decrease) increase in cash and cash equivalents |                                                                                           |                                                       | (11,097                                   | )                                                   |       |                   | 3,373  |       
|Cash and cash equivalents at beginning of period     |                                                                                           |                                                       | 13,356                                    |                                                     |       |                   | 920    |       
|                                                     |                                                                                           |                                                       |                                           |                                                     |       |                   |        |       
|Cash and cash equivalents at end of period           |                                                                                           | $                                                     | 2,259                                     |                                                     |       | $                 | 4,293  |       
|                                                     |                                                                                           |                                                       |                                           |                                                     |       |                   |        |        |       

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 anonima de capital
variable(Jafra S.A.), organized under the laws of the United Mexican States,
is owned by five indirect wholly-owned subsidiaries of Jafra Worldwide Holdings
(Lux), S.àR.L., a Luxembourg société à responsabilité limitée(the Parent).
The Parent is the wholly-owned subsidiary of CDRJ North Atlantic (Lux) S.àr.l.,
a Luxembourg société à responsabilité limitée(North Atlantic), which in turn
is a wholly-owned subsidiary of CDRJ Investments (Lux) S.A., a Luxembourg
société anonyme(CDRJ). A minority interest of Jafra S.A. is owned by
Distribuidora Comercial Jafra S.A. de C.V. (Jafra Distribution).

The accompanying unaudited interim consolidated financial statements as of
September 30, 2003 and for the three and nine months ended September 30, 2003
and 2002 reflect the operations of Jafra S.A. and its subsidiaries, excluding
the carved-out distribution operations of Distribuidora Venus, S.A. de C.V.
(Venus) 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 consolidated 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, 2003 and for the interim periods presented. All significant
intercompany accounts and transactions between entities comprising Jafra S.A.
have been eliminated in consolidation.

Jafra Distribution was organized under the laws of the United Mexican
States on February 26, 2003 to conduct the Parents distribution business in
Mexico. The distribution business was previously conducted by Venus, a
wholly-owned subsidiary of Jafra S.A. Jafra Distribution is owned by five indirect
wholly-owned subsidiaries of the Parent.

On May 20, 2003, the Parent, Jafra Cosmetics International, Inc. (JCI)
and Jafra Distribution (together with JCI, the Issuers) completed a
recapitalization of their operations by entering into $90 million of new senior
secured credit facilities, consisting of a $50 million senior secured term loan
facility and a $40 million senior secured revolving credit facility and issuing
$200 million of 10 3⁄4% Senior Subordinated Notes due 2011 (collectively, the
Recapitalization). The proceeds from the Recapitalization were used to
redeem the 11 3⁄4% Senior Subordinated Notes due 2008 (the Old Notes), of
JCI and Jafra S.A. to repay all amounts outstanding under the existing credit
facilities of JCI and Jafra S.A. and to make certain payments to CDRJ and
employees of JCI and Jafra S.A. The stockholders of CDRJ then resolved that
CDRJ be liquidated and appointed the Parent to act as its liquidator. Thereafter,
CDRJ made an initial liquidating distribution of such proceeds to its
stockholders. In connection with the liquidation of CDRJ, North Atlantic
transferred all of its assets and liabilities, including its direct and
indirect holdings of JCI, Jafra S.A. and Jafra Distribution to the Parent in
exchange for additional shares of common stock of the Parent. Jafra S.A. and
Jafra Distribution are collectively referred to as Jafra Mexico.

The New Notes represent several obligations of Jafra Distribution and JCI.
Jafra S.A. has fully and unconditionally guaranteed the obligations of Jafra
Distribution under the New Notes. As Jafra S.A. is not a consolidated
subsidiary of Jafra Distribution, the Parent is filing these separate financial
statements of Jafra S.A. in its Report on Form 10-Q.

The functional currency for Jafra S.A. 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 loss.

Jafra S.A. adopted Statement of Financial Accounting Standards (SFAS)
No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB
Statement No. 13, and Technical Corrections on January 1, 2003. This
statement rescinds or modifies existing authoritative pronouncements including
SFAS No. 4 Reporting Gains and Losses from Extinguishment of Debt. As a
result of the issuance of SFAS No. 145, gains and losses from extinguishment of
debt are classified as extraordinary items only if they meet the criteria in
Accounting Principles Board (APB) Opinion 30, Reporting the Results of
Operations-Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions.

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

Applying the provisions of APB Opinion 30 distinguishes transactions that are
part of an entitys recurring operations from those that are unusual or
infrequent or that meet the criteria for classification as an extraordinary
item. Based on the adoption of this principle, Jafra S.A. has reclassified any
gain or loss on extinguishment of debt that was classified as an extraordinary
item in prior periods and has classified its current loss on extinguishment of
debt within other income (expense).

Jafra S.A. adopted SFAS No. 146, Accounting for Costs Associated with
Exit or Disposal Activities on January 1, 2003 which did not result in any
material impact to Jafra S.A.s consolidated statements of operations.
This statement addresses financial accounting and reporting for costs
associated with exit or disposal activities and nullifies EITF Issue No. 94-3,
Liability Recognition for Certain Employee Termination Benefits and Other
Costs to Exit an Activity.

(2) Property and Equipment

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

|                               |  |               |        |              |  |   |        | 
|------------------------------ |  | ------------- | ------ | ------------ |  | - | ------ | 
|                               |  | September 30, |        | December 31,
|                               |  | 2003          |        | 2002        
|                               |  |               |        |             
|Land                           |  | $             | 9,681  |              |  | $ | 10,260 | 
|Buildings                      |  |               | 9,729  |              |  |   | 10,311 | 
|Machinery, equipment and other |  |               | 17,539 |              |  |   | 16,832 | 
|                               |  |               |        |              |  |   |        | 
|                               |  |               | 36,949 |              |  |   | 37,403 | 
|Less accumulated depreciation  |  |               | 6,581  |              |  |   | 5,400  | 
|                               |  |               |        |              |  |   |        | 
|Property and equipment, net    |  | $             | 30,368 |              |  | $ | 32,003 | 
|                               |  |               |        |              |  |   |        | 

(3) Goodwill and Other Intangible Assets.

Jafra S.A.s intangible assets consist of trademarks and goodwill. Jafra
S.A. has determined trademarks to have an indefinite life. The carrying value
of trademarks was $41,903,000 as of September 30, 2003. Except for translation
adjustments, there were no changes in the carrying amount of goodwill for the
nine months ended September 30, 2003.

(4) Equity

On May 15, 2003, the number of outstanding Series B shares of Jafra S.A.
was split on a 100:1 basis and was proportionately increased from 151 to
151,000. Subsequently, 11,627 of the outstanding Series B shares (which were
part of the aggregate outstanding 151 Series B common shares prior to the stock
split) were proportionately reclassified to become Series C preferred shares.
The Series C preferred shares have only limited voting rights. In the event of
a liquidation of Jafra S.A., holders of Series C shares have the right to
receive a preferred cumulative dividend equal to 4.5% per annum, of the
effective liquidation preference per share, before any holder of Series B
common stock receives a dividend.

On May 20, 2003, Jafra S.A. sold 2,015 shares of newly issued shares of
Series C preferred stock to Jafra Distribution for $10,000 per share, for a
total of $20,150,000.

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

(5) Debt

On May 20, 2003, the Issuers issued $200 million aggregate principal
amount of 10 3⁄4% Subordinated Notes due 2011 (the New Notes) pursuant to
an Indenture dated May 20, 2003 (the Indenture) and entered into a $90
million senior credit agreement (the Senior Credit Agreement). The New Notes
represent the several obligations of JCI and Jafra Distribution in the amount
of $80 million and $120 million, respectively. The New Notes mature in 2011
and bear a fixed interest rate of 10 3⁄4% payable semi-annually.

JCI is a
direct wholly-owned subsidiary of the Parent and Jafra
Distribution is an indirect wholly-owned subsidiary of the Parent. The Parent
has fully and unconditionally guaranteed the obligations under the New Notes on
a senior subordinated basis on the terms provided in the Indenture governing
the New Notes. The Issuers have fully and unconditionally guaranteed of the
other the obligations under the New Notes on a senior subordinated basis,
subject to a 30-day standstill period prior to enforcement of such guarantees.
Each existing and subsequently acquired or organized U.S. subsidiary of JCI is
also required to fully and unconditionally guarantee the New Notes jointly and
severally, on a senior subordinated basis. Each existing and
subsequently acquired or organized Mexican
subsidiary of Jafra Distribution is also required to fully and unconditionally
guarantee the Mexican portion of the New Notes jointly and severally, on a
senior subordinated basis.

On May 20, 2003, Jafra S.A. received $4,000,000 from Jafra Distribution to
fully and unconditionally guarantee the obligations of Jafra Distribution under
the New Notes on a senior subordinated basis. Each existing and subsequently
acquired or organized subsidiary of Jafra S.A. is also required to fully and
unconditionally guarantee the Mexican portion of the New Notes jointly and
severally, on a senior subordinated basis. The guarantee fee is being
amortized into income over an eight year period, the term of the New
Notes. At September 30, 2003, approximately $3,271,000 was classified as a non-current liability and
the remaining unamortized amount was classified as a current
liability on the
accompanying balance sheets.

On May 23, 2003, with the proceeds from the guarantee fee paid by Jafra
Distribution, the equity contribution by Jafra Distribution (see
footnote 4)
and available cash, Jafra S.A. redeemed its outstanding 11 3⁄4% Senior
Subordinated Notes due 2003 (the Old Notes) in the aggregate principal amount
of $30,072,000 at a premium of approximately $1,767,000. Additionally, Jafra
S.A. repaid $2,375,000 under its existing credit agreement (the Old Credit
Agreement) and terminated the Old Credit Agreement. In connection with the
redemption of the Old Notes and the termination of the Old Credit Agreement,
Jafra S.A. wrote off approximately $75,000 of capitalized deferred financing
fees. Total costs related to the recall of the previous debt was $1,842,000
and was recorded as other income (expense) for the nine months ended September
30, 2003 on the accompanying consolidated statements of operations.

(6) Comprehensive Loss

Comprehensive loss is summarized as follows (in thousands):

|                                                                                     |  |                    |        |                   |  |      |        |      |  |   |        |   |  |   |        |  
|------------------------------------------------------------------------------------ |  | ------------------ | ------ | ----------------- |  | ---- | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                                                                     |  | Three Months Ended |        | Nine Months Ended
|                                                                                     |  | September 30,      |        | September 30,    
|                                                                                     |  |                    |        |                  
|                                                                                     |  | 2003               |        | 2002              |  | 2003 |        | 2002
|                                                                                     |  |                    |        |                   |  |      |        |     
|Net loss                                                                             |  | $                  | (72    | )                 |  | $    | (1,606 | )    |  | $ | (594   | ) |  | $ | (1,850 | )
|Unrealized and deferred realized (loss) gain on derivatives                          |  |                    | 146    |                   |  |      | (137   | )    |  |   | 303    |   |  |   | 203    |  
|Reclassification of deferred realized (loss) gain to
exchange (loss) gain            |  |                    | 1      |                   |  |      | 539    |      |  |   | (549   | ) |  |   | 882    |  
|Reclassification of deferred realized loss to cost of sales                          |  |                    |       |                   |  |      | 522    |      |  |   | 654    |   |  |   | 2,421  |  
|Tax (benefit) expense on unrealized and deferred realized
(loss) gain on derivatives |  |                    | (49    | )                 |  |      | (323   | )    |  |   | (49    | ) |  |   | (1,227 | )
|Foreign currency translation adjustments                                             |  |                    | (3,148 | )                 |  |      | (1,122 | )    |  |   | (3,893 | ) |  |   | (4,448 | )
|                                                                                     |  |                    |        |                   |  |      |        |      |  |   |        |   |  |   |        |  
|Comprehensive loss                                                                   |  | $                  | (3,122 | )                 |  | $    | (2,127 | )    |  | $ | (4,128 | ) |  | $ | (4,019 | )
|                                                                                     |  |                    |        |                   |  |      |        |      |  |   |        |   |  |   |        |  

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

(7) Related Party Transactions

Jafra S.A. sells to and purchases products from its Mexican affiliate,
Jafra Distribution. The net cost of these purchases was $9,421,000 and
$32,287,000 for the three and nine months ended September 30, 2003,
respectively, and $11,484,000 and $37,576,000 for the three and nine months
ended September 30, 2002, respectively.

Jafra S.A. provides certain administrative and other services to Jafra
Distribution. The income from these services is included in service fee
expense to affiliate on the accompanying consolidated statements of operations.
Jafra S.A. believes the amounts are reasonable and approximate the value of
the actual services rendered.

In addition, Jafra S.A. is provided with certain management services, such
as legal, accounting and treasury, management oversight, and other
administrative functions from an affiliate. The cost of these services is
included in management fee expense to affiliates in the accompanying
consolidated statements of operations. Jafra S.A. is charged a portion of
these management expenses based upon charges identified to Jafra S.A. and a
formula using the percentage of revenues of Jafra S.A. to the total
consolidated revenues of the Parent. Jafra S.A. believes the amounts and
methods of allocation are reasonable and approximate the cost of the actual
services received.

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 its German affiliate was $819,000 and $2,445,000 for the three and
nine months ended September 30, 2003, respectively, and $582,000 and $1,774,000
for the three and nine months ended September 30, 2002, 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 $4,539,000 and
$15,083,000 for the three and nine months ended September 30, 2003,
respectively, and $5,477,000 and $16,697,000 for the three and nine months
ended September 30, 2002, respectively, and are based upon a percentage of
Jafra S.A.s sales.

(8) Foreign Currency Forward and Option Contracts

Jafra S.A. is exposed to currency risk relating to its forecasted U.S.
dollar-denominated expenditures. As part of its overall strategy to reduce the
risk of potential adverse exchange rate fluctuations, Jafra S.A. entered into
foreign currency exchange contracts (forward contracts) during the first four
months of 2002, and entered into foreign currency option contracts (option
contracts or options) during 2002 and 2003. Jafra S.A. places forward
contracts or option contracts based on its rolling forecasted cash outflows and
hedges transactions included in the forecast on the date the forward contract
or option contract is initiated. As a matter of policy, Jafra S.A. does not
hold or issue forward contracts or option contracts for trading or speculative
purposes nor does it enter into contracts or agreements containing embedded
derivative features.

Jafra S.A. currently designates certain of its forward contracts and
option 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. 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 loss. Such amounts will be reclassified
from other comprehensive loss into net loss 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 paid.

During the nine months ended September 30, 2003, Jafra S.A. recognized
gains of approximately $627,000 on option contracts. Jafra S.A. recognized
losses on forward contracts of approximately $83,000 and $949,000 during the
three and nine months ended September 30, 2002, respectively. Jafra S.A.
recognized gains on option contracts of approximately $22,000 and $755,000
during the three and nine months ended September 30, 2002, respectively, in the
accompanying consolidated statements of operations.

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

As of December 31, 2001, Jafra S.A. had deferred as a component of other
comprehensive loss $3,746,000 of losses on forward contracts. During the nine
months ended September 30, 2002, Jafra S.A. deferred as a component of other
comprehensive loss an additional $1,779,000 of losses on forward contracts and
$1,982,000 of gains on option contracts qualifying for hedge accounting under
SFAS No. 133. During the nine months ended September 30, 2002, approximately
$882,000 was reclassified as exchange loss and $2,421,000 was reclassified
as cost of sales upon recognition of the underlying hedged exposure.

As of December 31, 2002, Jafra S.A. had deferred as a component of other
comprehensive loss $739,000 of losses on forward contracts and $475,000 of
gains on option contracts. During the nine months ended September 30, 2003,
Jafra S.A. deferred as a component of other comprehensive loss an additional
$303,000 of gains on option contracts qualifying for hedge accounting under
SFAS No. 133. During the nine months ended September 30, 2003, approximately
$549,000 of gains were reclassified as exchange loss and approximately
$654,000 of losses were reclassified as cost of sales upon the recognition of
the underlying hedged exposure. Jafra S.A. expects that substantially all of
the remaining loss of $144,000 deferred as a component of other comprehensive
loss at September 30, 2003 will be recognized into net loss within the next
twelve months.

The fair value of the option contracts was $144,000 at September 30, 2003
and has been recorded in other receivables in the consolidated balance sheets.
The fair value of the option contracts was $402,000 at December 31, 2002, and
was recorded in other receivables in the consolidated balance sheets.

During the three and nine months ended September 30, 2003 and 2002, the
ineffectiveness generated by Jafra S.A.s forward and option 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 nine months ended
September 30, 2003 and 2002, $230,000 and $162,000, respectively, of gains,
were reclassified into earnings.

The outstanding foreign currency option contracts had a notional value
denominated in Mexican pesos of 743,000,000 in put and call positions at
September 30, 2003 and mature at various dates through December 31, 2004. The
outstanding foreign currency option contracts had a notional value denominated
in Mexican pesos of 523,000,000 in put and call positions at December 31, 2002
and matured at various dates through December 31, 2003. 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.

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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 Jafra Worldwide Holdings (Lux) S.àr.l., a Luxembourg société à
responsabilité limitée(the Parent), and its subsidiaries should be read in
conjunction with the accompanying unaudited interim consolidated financial
statements and notes thereto and with the audited consolidated financial
statements as of and for the year ended December 31, 2002 of CDRJ Investments
Lux S.A., a Luxembourg société anonyme,(CDRJ) and its subsidiaries included
in the Annual Report on Form 10-K. On May 20, 2003, CDRJ completed a
recapitalization of its operations. Subsequent to May 20, 2003, the operations
of CDRJ are conducted by the Parent. The operations of the Parent are
substantially identical to the operations of CDRJ. CDRJ and its subsidiaries
and the Parent and its subsidiaries are referred to collectively as the
Company. The results of operations for the three and nine months ended
September 30, 2003 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.



|                                                                                                        |  |                                  |      |                                 |  |      |       |      |  |   |      |   |  |  |       |   |  |   |       |   |  |  |       |    |  |   |       |   |  |  |       |  
|------------------------------------------------------------------------------------------------------- |  | -------------------------------- | ---- | ------------------------------- |  | ---- | ----- | ---- |  | - | ---- | - |  |  | ----- | - |  | - | ----- | - |  |  | ----- | -- |  | - | ----- | - |  |  | ----- | -
|                                                                                                        |  | Three Months Ended September 30, |      | Nine Months Ended September 30,
|                                                                                                        |  |                                  |      |                                
|                                                                                                        |  | 2003                             |      | 2002                            |  | 2003 |       | 2002
|                                                                                                        |  |                                  |      |                                 |  |      |       |     
|Net sales                                                                                               |  | $                                | 86.6 |                                 |  |      | 100.0 | %    |  | $ | 93.1 |   |  |  | 100.0 | % |  | $ | 276.7 |   |  |  | 100.0 | %  |  | $ | 285.3 |   |  |  | 100.0 | %
|Cost of sales                                                                                           |  |                                  | 19.6 |                                 |  |      | 22.6  |      |  |   | 21.5 |   |  |  | 23.1  |   |  |   | 63.8  |   |  |  | 23.1  |    |  |   | 66.1  |   |  |  | 23.2  |  
|                                                                                                        |  |                                  |      |                                 |  |      |       |      |  |   |      |   |  |  |       |   |  |   |       |   |  |  |       |    |  |   |       |   |  |  |       |  
|Gross profit                                                                                            |  |                                  | 67.0 |                                 |  |      | 77.4  |      |  |   | 71.6 |   |  |  | 76.9  |   |  |   | 212.9 |   |  |  | 76.9  |    |  |   | 219.2 |   |  |  | 76.8  |  
|Selling, general and administrative expenses                                                            |  |                                  | 55.5 |                                 |  |      | 64.1  |      |  |   | 57.5 |   |  |  | 61.9  |   |  |   | 188.5 |   |  |  | 68.1  |    |  |   | 175.0 |   |  |  | 61.3  |  
|                                                                                                        |  |                                  |      |                                 |  |      |       |      |  |   |      |   |  |  |       |   |  |   |       |   |  |  |       |    |  |   |       |   |  |  |       |  
|Income from operations                                                                                  |  |                                  | 11.5 |                                 |  |      | 13.3  |      |  |   | 14.1 |   |  |  | 15.0  |   |  |   | 24.4  |   |  |  | 8.8   |    |  |   | 44.2  |   |  |  | 15.5  |  
|Other
income (expense)                                                                                  |  |                                  |      |                                 |  |      |       |      |  |   |      |   |  |  |       |   |  |   |       |   |  |  |       |    |  |   |       |   |  |  |       |  
|Exchange loss, net                                                                                      |  |                                  | (7.5 | )                               |  |      | (8.6  | )    |  |   | (4.9 | ) |  |  | (5.3  | ) |  |   | (7.8  | ) |  |  | (2.8  | )  |  |   | (9.8  | ) |  |  | (3.4  | )
|Interest, net                                                                                           |  |                                  | (6.9 | )                               |  |      | (8.0  | )    |  |   | (2.9 | ) |  |  | (3.0  | ) |  |   | (14.1 | ) |  |  | (5.1  | )  |  |   | (8.8  | ) |  |  | (3.1  | )
|Loss on extinguishment of debt                                                                          |  |                                  |     |                                 |  |      |      |      |  |   |     |   |  |  |      |   |  |   | (6.6  | ) |  |  | (2.4  | )  |  |   |      |   |  |  |      |  
|Other, net                                                                                              |  |                                  |     |                                 |  |      |      |      |  |   | (0.1 | ) |  |  |      |   |  |   | (0.3  | ) |  |  | (0.2  | )  |  |   | 0.2   |   |  |  |      |  
|                                                                                                        |  |                                  |      |                                 |  |      |       |      |  |   |      |   |  |  |       |   |  |   |       |   |  |  |       |    |  |   |       |   |  |  |       |  
|Income
(loss) from continuing operations before income taxes
and cumulative
effect of accounting change |  |                                  | (2.9 | )                               |  |      | (3.3  | )    |  |   | 6.2  |   |  |  | 6.7   |   |  |   | (4.4  | ) |  |  | (1.7  | )  |  |   | 25.8  |   |  |  | 9.0   |  
|Income tax expense (benefit)                                                                            |  |                                  | (0.5 | )                               |  |      | (0.5  | )    |  |   | 4.9  |   |  |  | 5.3   |   |  |   | 1.2   |   |  |  | 0.3   |    |  |   | 9.7   |   |  |  | 3.4   |  
|                                                                                                        |  |                                  |      |                                 |  |      |       |      |  |   |      |   |  |  |       |   |  |   |       |   |  |  |       |    |  |   |       |   |  |  |       |  
|Income (loss) from continuing operations
before cumulative effect of accounting
change                  |  |                                  | (2.4 | )                               |  |      | (2.8  | )    |  |   | 1.3  |   |  |  | 1.4   |   |  |   | (5.6  | ) |  |  | (2.0  | )  |  |   | 16.1  |   |  |  | 5.6   |  
|Loss
on discontinued operations (net of income tax benefit of $0)                                       |  |                                  | (0.6 | )                               |  |      | (0.7  | )    |  |   | (0.3 | ) |  |  | (0.3  | ) |  |   | (2.5  | ) |  |  | (0.9  | )  |  |   | (1.1  | ) |  |  | (0.4  | )
|Cumulative effect of accounting change                                                                  |  |                                  |     |                                 |  |      |      |      |  |   |     |   |  |  |      |   |  |   |      |   |  |  |      |    |  |   | (0.2  | ) |  |  |      |  
|                                                                                                        |  |                                  |      |                                 |  |      |       |      |  |   |      |   |  |  |       |   |  |   |       |   |  |  |       |    |  |   |       |   |  |  |       |  
|Net (loss) income                                                                                       |  | $                                | (3.0 | )                               |  |      | (3.5  | )%   |  | $ | 1.0  |   |  |  | 1.1   | % |  | $ | (8.1  | ) |  |  | (2.9  | )% |  | $ | 14.8  |   |  |  | 5.2   | %
|                                                                                                        |  |                                  |      |                                 |  |      |       |      |  |   |      |   |  |  |       |   |  |   |       |   |  |  |       |    |  |   |       |   |  |  |       |  

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Three months ended September 30, 2003 compared to the three months ended September 30, 2002

|                                             |  |        |      |        |  |        |      |            |  |          |      |           |  |       |      |       |  |             |      |              |  |            |      |   |  |   |      | 
|-------------------------------------------- |  | ------ | ---- | ------ |  | ------ | ---- | ---------- |  | -------- | ---- | --------- |  | ----- | ---- | ----- |  | ----------- | ---- | ------------ |  | ---------- | ---- | - |  | - | ---- | 
|                                             |  |        |      |        |  |        |      |            |  |          |      |           |  |       |      |       |  |             |      |              |  | Corporate, |      |   |  |  
|                                             |  |        |      |        |  | United |      |            |  |          |      |           |  |       |      | Total |  | Unallocated |      | Consolidated
|Dollars in millions                          |  | Mexico |      | States |  | Europe |      | All Others |  | Segments |      | and Other |  | Total
|                                             |  |        |      |        |  |        |      |            |  |          |      |           |  |      
|Three Months Ended September 30, 2003        |  |        |      |        |  |        |      |            |  |          |      |           |  |       |      |       |  |             |      |              |  |            |      |   |  |   |      | 
|Net sales                                    |  | $      | 51.8 |        |  | $      | 25.3 |            |  | $        | 6.6  |           |  | $     | 2.9  |       |  | $           | 86.6 |              |  | $          |     |   |  | $ | 86.6 | 
|Cost of sales                                |  |        | 12.3 |        |  |        | 5.9  |            |  |          | 1.3  |           |  |       | 1.1  |       |  |             | 20.6 |              |  |            | (1.0 | ) |  |   | 19.6 | 
|                                             |  |        |      |        |  |        |      |            |  |          |      |           |  |       |      |       |  |             |      |              |  |            |      |   |  |   |      | 
|Gross profit                                 |  |        | 39.5 |        |  |        | 19.4 |            |  |          | 5.3  |           |  |       | 1.8  |       |  |             | 66.0 |              |  |            | 1.0  |   |  |   | 67.0 | 
|Selling, general and
administrative expenses |  |        | 27.2 |        |  |        | 14.8 |            |  |          | 5.3  |           |  |       | 3.1  |       |  |             | 50.4 |              |  |            | 5.1  |   |  |   | 55.5 | 
|                                             |  |        |      |        |  |        |      |            |  |          |      |           |  |       |      |       |  |             |      |              |  |            |      |   |  |   |      | 
|Income (loss) from operations                |  | $      | 12.3 |        |  | $      | 4.6  |            |  | $        | 0.0  |           |  | $     | (1.3 | )     |  | $           | 15.6 |              |  | $          | (4.1 | ) |  | $ | 11.5 | 
|                                             |  |        |      |        |  |        |      |            |  |          |      |           |  |       |      |       |  |             |      |              |  |            |      |   |  |   |      | 
|Three Months Ended September 30, 2002        |  |        |      |        |  |        |      |            |  |          |      |           |  |       |      |       |  |             |      |              |  |            |      |   |  |   |      | 
|Net sales                                    |  | $      | 62.6 |        |  | $      | 22.1 |            |  | $        | 5.5  |           |  | $     | 2.9  |       |  | $           | 93.1 |              |  | $          |     |   |  | $ | 93.1 | 
|Cost of sales                                |  |        | 14.9 |        |  |        | 5.0  |            |  |          | 1.4  |           |  |       | 1.0  |       |  |             | 22.3 |              |  |            | (0.8 | ) |  |   | 21.5 | 
|                                             |  |        |      |        |  |        |      |            |  |          |      |           |  |       |      |       |  |             |      |              |  |            |      |   |  |   |      | 
|Gross profit                                 |  |        | 47.7 |        |  |        | 17.1 |            |  |          | 4.1  |           |  |       | 1.9  |       |  |             | 70.8 |              |  |            | 0.8  |   |  |   | 71.6 | 
|Selling, general and
administrative expenses |  |        | 32.0 |        |  |        | 13.3 |            |  |          | 4.2  |           |  |       | 2.9  |       |  |             | 52.4 |              |  |            | 5.1  |   |  |   | 57.5 | 
|                                             |  |        |      |        |  |        |      |            |  |          |      |           |  |       |      |       |  |             |      |              |  |            |      |   |  |   |      | 
|Income (loss) from operations                |  | $      | 15.7 |        |  | $      | 3.8  |            |  | $        | (0.1 | )         |  | $     | (1.0 | )     |  | $           | 18.4 |              |  | $          | (4.3 | ) |  | $ | 14.1 | 
|                                             |  |        |      |        |  |        |      |            |  |          |      |           |  |       |      |       |  |             |      |              |  |            |      |   |  |   |      | 

Net sales. Net sales in the third quarter of 2003 decreased to $86.6
million from $93.1 million in the third quarter of 2002, a decrease of $6.5
million, or 7.0%. Net sales in local currencies in the third quarter of 2003
decreased by 2.5% over the comparable prior year period. The net sales
decrease measured in local currencies was less than the net sales decrease
measured in U.S. dollars primary as a result of the weaker average exchange
rates of the Mexican peso, offset by stronger average exchange rates of the
euro in the third quarter of 2003 compared to the third quarter of 2002. The
Companys average number of consultants in its continuing operations in the
third quarter of 2003 increased to approximately 408,000, or 6.6%, over the
average number of consultants in the third quarter of 2002. A consultant is
included in the total ending consultant base if she places an order within the
four months immediately preceding the period end date. The average number of
consultants is calculated based on the total ending consultant base for each
month during the period. Annualized consultant productivity measured in U.S.
dollars in the third quarter of 2003 decreased 12.6% compared to the third
quarter of 2002. Measured in local currencies, annualized productivity
decreased 8.5% compared to the third quarter of 2002. Quarterly productivity
 may increase or decrease significantly due to
changes in the timing of certain promotions from one year to another.
Consultant productivity in the quarter is generally defined as annualized
quarterly sales divided by the average number of consultants.

In Mexico, net sales in the third quarter of 2003 decreased to $51.8
million from $62.6 million in the third quarter of 2002, a decrease of $10.8
million, or 17.3%. Net sales in Mexico measured in local currency decreased
10.5% over the comparable 2002 period. The period-over-period net sales
decrease measured in local currency was due primarily to reduced consultant
productivity partially offset by a larger consultant base. Reduced
productivity was the result of (i) floods in many parts of the country, (ii)
the types of promotions in the third quarter of 2003 compared to the third
quarter of 2002, (iii) an incremental $2.0 million of orders not shipped or
recorded at the end of third quarter of 2003 compared to the third quarter of
2002 and (iv) an international trip for the field leaders during the last month
of the third quarter of 2003 (held during the second quarter of 2002). In
Mexico the average number of consultants in the third quarter of 2003 increased
to approximately 261,000, or 1.8%, over the average number of consultants in the
comparable prior year period. Annualized consultant productivity, measured in
local currency, in the third quarter of 2003 decreased approximately 12.0%
compared to consultant productivity in the third quarter of 2002.

In the United States, net sales in the third quarter of 2003 increased to
$25.3 million from $22.1 million in the third quarter of 2002, an increase of
$3.2 million, or 14.5%, with growth in both the Hispanic and the General
Divisions. Net sales in the General Division increased 15.5% in the third
quarter of 2003 compared to the third quarter of 2002, due to an increase in the number
of consultants and increased consultant productivity. The average number of
consultants in the General Division increased 6.6% to approximately 29,000 in
the third quarter of 2003, compared to the third quarter of 2002. General
Division annualized consultant productivity increased 8.3% in the

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third quarter of 2003 compared to the third quarter of 2002. The
percentage of ordering consultants compared to total consultants also increased
in the third quarter of 2003. Net sales in the Hispanic Division increased
14.2% to $17.4 million in the third quarter of 2003, compared to $15.2 million
in the third quarter of 2002, due to an increase in the consultant base,
partially offset by a decrease in consultant productivity. The average number
of consultants in the Hispanic Division increased over 10,000, or 26.7%, to
approximately 49,000 in the third quarter of 2003, compared to the third
quarter of 2002. Hispanic Division consultant productivity decreased 9.8% in
third quarter of 2003 compared to the third quarter of 2002. The percentage of
ordering consultants compared to the total number of consultants in the
Hispanic Division decreased in the third quarter of 2003.

In Europe, net sales increased to $6.6 million in the third quarter of
2003, from $5.5 million in the third quarter of 2002, an increase of $1.1
million, or 20.0%. Measured in local currencies, European net sales in the
third quarter of 2003 increased 4.9% compared to the third quarter of 2002.
Due to stronger average exchange rates, the net sales increase measured in U.S.
dollars was greater than the net sales increase measured in local currencies.
Net sales measured in local currencies increased due to a larger consultant
base, partially offset by reduced consultant productivity. The average number
of consultants during the third quarter increased to approximately 19,000,
15.4% over the average number of consultants during the third quarter of 2002.
Annualized consultant productivity measured in local currencies decreased 9.2%
compared to the third quarter of 2002. The percentage of ordering consultants
compared to total consultants decreased nominally in the third quarter of 2003
compared to the third quarter of 2002.

Net sales in the other continuing markets was constant at $2.9 million in
the third quarter of 2003 and the third quarter of 2002. Brazil net sales
measured in local currency increased 35.1% in the third quarter of 2003
compared to the third quarter of 2002 due to increases in both the consultant
base and consultant productivity. The increase in Brazils net sales was
partially offset by a decrease in net sales in the Dominican Republic. Measured in
local currency, Dominican Republic net sales in the third quarter decreased
2.6%, but due to weaker average exchange rates, net sales measured in US
dollars decreased by 48.0%. The average number of consultants in the Dominican
Republic increased. Net sales in Argentina measured in US dollars and local
currencies increased in the third quarter of 2003 compared to the third quarter
of 2002. Due to the Companys plans to cease operations in Thailand, net sales
in Thailand decreased in the third quarter of 2003 compared to the third quarter of 2002.

Gross profit.Consolidated gross profit in the third quarter of 2003
decreased to $67.0 million from $71.6 million in the comparable prior year
period, a decrease of $4.6 million, or 6.4%. Gross profit as a percentage of
net sales (gross margin) increased to 77.4% in the third quarter of 2003,
compared to 76.9% in the third quarter of 2002. The increase in gross margin
in the third quarter of 2003 was due primarily to increases in gross margin in
Europe and in the Corporate, Unallocated and Other segment.

In Mexico, gross margin in the third quarter of 2003 increased to 76.3%
from 76.2% in the third quarter of 2002.

In the United States, gross margin in the third quarter of 2003 decreased
to 76.7% from 77.4% in the third quarter of 2002 as the result of increased
direct cost variances in the General Division in the third quarter of 2003
compared to the third quarter of 2002.

In Europe, gross margin in the third quarter of 2003 increased to 80.3%
from 74.5% in the third quarter of 2002 due to the favorable impact of
purchases of inventory denominated in U.S. dollars as a result of the stronger
euro.

Selling, general and administrative expenses.SG&A expenses in the third
quarter of 2003 decreased to $55.5 million from $57.5 million in the third
quarter of 2002, a decrease of $2.0 million, or 3.5%. SG&A expenses, as a
percentage of net sales, increased in the third quarter of 2003 to 64.1% from
61.8% in the third quarter of 2002, due primarily to increased selling, general
and administrative expense as a percentage of net sales in Mexico, Europe and
other markets, partially offset by reduced selling, general and administrative
expenses in the United States. In Mexico, SG&A expenses, as a percentage of
net sales, increased due in part to the reduction in net sales.

In Mexico, SG&A expenses in the third quarter of 2003 decreased by $4.8
million, or 15.0%, to $27.2 million compared to $32.0 million in the third
quarter of 2002. SG&A expenses increased, as a percentage of net sales, in

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Mexico to 52.5% in the third quarter of 2003, compared to 51.1% in the third
quarter of 2003. The increase in SG&A expenses as a percentage of net sales
was primarily due to increases in sales promotional expenses and override
expenses, partially offset by decreases in administrative expenses.
Promotional expenses increased due to increased promotional activity and
override expenses increased due to better collections in the third quarter of
2003 compared to the third quarter of 2002. Administrative expenses decreased
due to cost containment measures and less expense recorded for the reserve for
uncollectible accounts during the third quarter of 2003, compared to the third
quarter of 2002.

In the United States, SG&A expenses in the third quarter of 2003 increased
by $1.5 million, or 11.3%, to $14.8 million from $13.3 million in the third
quarter of 2002. SG&A expenses, as a percentage of net sales, in the United
States were 58.5% in the third quarter of 2003 compared to 60.2% in the third
quarter of 2002. The decrease in SG&A expenses as a percentage of net sales
was primarily attributable to decreased selling, administrative and period
distribution expenses, partially offset by increased sales promotional
expenses. Selling and administrative expenses decreased in the third quarter
of 2003 compared to the third quarter of 2002 primarily due to
effective cost
containment measures in the U.S. Sales promotional expenses increased
primarily as a result of nature and timing of promotional activity during the
third quarter of 2003 compared to the third quarter of 2002.

In Europe, SG&A expenses in the third quarter of 2003 increased by $1.1
million, or 26.2%, to $5.3 million from $4.2 million in the third quarter of
2002. SG&A expenses, as a percentage of net sales, in Europe increased to
80.3% in the third quarter of 2003 compared to 76.4% in the third quarter of
2002. The increase in SG&A expenses as a percentage of net sales was due to an
increase in override expenses as result of better collections and changes in
the program.

SG&A expenses in the other markets in the third quarter of 2003 increased
by $0.2 million, or 6.9%, compared to the third quarter of 2002. As a
percentage of net sales, SG&A expenses were 106.9% during the third quarter of
2003 compared to 100.0% during the third quarter of 2002.

SG&A expenses in Corporate, Unallocated and Other remained constant at
$5.1 million in the third quarter of 2003 and 2002.

Exchange gain (loss).The Companys foreign exchange loss was $7.5
million in the third quarter of 2003 compared to $4.9 million in the third
quarter of 2002, an increase of $2.6 million, or 53.1%. Foreign exchange
losses and gains result from three primary sources: gains and losses on forward
or option contracts, gains and losses due to the remeasurement of U.S.
dollar-denominated debt, and gains and losses arising from other foreign
currency-denominated transactions, including remeasurment of U.S.
dollar-denominated intercompany accounts. During the third quarter of 2003,
the Company recognized $7.5 million of losses on the remeasurement of U.S.
dollar-denominated debt and did not recognize any gains or losses on forward
contracts, option contracts, or other foreign currency denominated
transactions. During the third quarter of 2002, the Company recognized $1.2
million of exchange losses on the remeasurement of U.S. dollar-denominated
debt, $3.3 million of exchange losses on the remeasurement of U.S.
dollar-denominated intercompany payables in Brazil, due to devaluation of the
Brazilian real, $0.1 million of gains on other foreign currency transactions,
$0.8 million of exchange losses (including amortization of other comprehensive
loss) on forward contracts and $0.3 million of exchange gains
(including amortization of other comprehensive loss) on option
contracts. See 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 2003 increased to $6.9 million
from $2.9 million in the third quarter of 2002, an increase of $4.0 million, or
137.9%. The increase was primarily due to a greater amount of debt outstanding
during the third quarter of 2003 compared to the third quarter of 2002. As of
September 30, 2003, the Company had $248.8 million of debt outstanding,
comprised of $200.0 million of 10 3⁄4% notes and $48.8 million of term loan.
As of September 30, 2002, the Company had $85.3 million of debt outstanding,
comprised of $75.2 million of 11 3⁄4% notes and $10.1 million of term loan,
revolving credit facility and other debt.

Income tax expense.Income tax benefit was $0.5 million in the third
quarter of 2003, compared to income tax expense of $4.9 million in the third
quarter of 2002, a favorable variance of $5.4 million. The Companys effective

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income tax rate was 17.2% in the third quarter of 2003, compared to 79.0% in
the third quarter of 2002. During the third quarter of 2003, the Company had
pretax losses in Mexico, with an income tax benefit. This was partially offset
by pretax income and income tax expense in the United States. Additionally,
the Company recorded valuation allowances against certain pretax losses in
Europe and South America, which resulted in pretax loss without any tax benefit
in these jurisdictions. In the third quarter of 2002, the Company had pretax
income and income tax expense in Mexico and the United States. The Company
recorded a valuation allowance against the pretax losses in South America
during the third quarter of 2002, which increased the overall effective tax
rate.

Loss on discontinued operations.During the third quarter of 2003, the
Company discontinued its operations in Venezuela, Colombia, Chile and Peru.
The results of these markets are included in the statements of operations as
losses on discontinued operations. Losses on discontinued operations were
$0.6 million during the third quarter of 2003, compared to $0.3 million during
the third quarter of 2002, an increase of $0.3 million of losses
on
discontinued operations. A significant portion of the charges during the third
quarter of 2003 were non cash charges related to the write down of certain
assets.

Net (loss) income.Net loss was $3.0 million in the third quarter of
2003, compared to net income of $1.0 million in the third quarter of 2002, a
decrease in income of $4.0 million. The decrease in net income was primarily
the result of a $4.6 million decrease in gross profit, a $2.6 million increase
in exchange loss, a $4.0 million increase in interest expense, and $0.3 million
of incremental losses on discontinued operations, partially offset by a $2.0
million decrease in selling, general and administrative expenses, the absence
of other loss of $0.1 million, and a favorable change in income tax expense of
$5.4 million.

Nine months ended September 30, 2003 compared to the Nine months ended
September 30, 2002

|                                             |  |        |       |        |  |        |      |            |  |          |      |           |  |       |      |       |  |             |       |              |  |            |       |   |  |   |       | 
|-------------------------------------------- |  | ------ | ----- | ------ |  | ------ | ---- | ---------- |  | -------- | ---- | --------- |  | ----- | ---- | ----- |  | ----------- | ----- | ------------ |  | ---------- | ----- | - |  | - | ----- | 
|                                             |  |        |       |        |  |        |      |            |  |          |      |           |  |       |      |       |  |             |       |              |  | Corporate, |       |   |  |  
|                                             |  |        |       |        |  | United |      |            |  |          |      |           |  |       |      | Total |  | Unallocated |       | Consolidated
|Dollars in millions                          |  | Mexico |       | States |  | Europe |      | All Others |  | Segments |      | and Other |  | Total
|                                             |  |        |       |        |  |        |      |            |  |          |      |           |  |      
|Nine Months Ended September 30, 2003         |  |        |       |        |  |        |      |            |  |          |      |           |  |       |      |       |  |             |       |              |  |            |       |   |  |   |       | 
|Net sales                                    |  | $      | 172.1 |        |  | $      | 74.5 |            |  | $        | 22.7 |           |  | $     | 7.4  |       |  | $           | 276.7 |              |  | $          |      |   |  | $ | 276.7 | 
|Cost of sales                                |  |        | 41.5  |        |  |        | 16.8 |            |  |          | 4.7  |           |  |       | 2.8  |       |  |             | 65.8  |              |  |            | (2.0  | ) |  |   | 63.8  | 
|                                             |  |        |       |        |  |        |      |            |  |          |      |           |  |       |      |       |  |             |       |              |  |            |       |   |  |   |       | 
|Gross profit                                 |  |        | 130.6 |        |  |        | 57.7 |            |  |          | 18.0 |           |  |       | 4.6  |       |  |             | 210.9 |              |  |            | 2.0   |   |  |   | 212.9 | 
|Selling, general and
administrative expenses |  |        | 85.7  |        |  |        | 46.1 |            |  |          | 17.5 |           |  |       | 8.5  |       |  |             | 157.8 |              |  |            | 30.7  |   |  |   | 188.5 | 
|                                             |  |        |       |        |  |        |      |            |  |          |      |           |  |       |      |       |  |             |       |              |  |            |       |   |  |   |       | 
|Income (loss) from operations                |  | $      | 44.9  |        |  | $      | 11.6 |            |  | $        | 0.5  |           |  | $     | (3.9 | )     |  | $           | 53.1  |              |  | $          | (28.7 | ) |  | $ | 24.4  | 
|                                             |  |        |       |        |  |        |      |            |  |          |      |           |  |       |      |       |  |             |       |              |  |            |       |   |  |   |       | 
|Nine Months Ended September 30, 2002         |  |        |       |        |  |        |      |            |  |          |      |           |  |       |      |       |  |             |       |              |  |            |       |   |  |   |       | 
|Net sales                                    |  | $      | 190.5 |        |  | $      | 66.9 |            |  | $        | 18.6 |           |  | $     | 9.3  |       |  | $           | 285.3 |              |  | $          |      |   |  | $ | 285.3 | 
|Cost of sales                                |  |        | 45.8  |        |  |        | 14.8 |            |  |          | 4.2  |           |  |       | 2.8  |       |  |             | 67.6  |              |  |            | (1.5  | ) |  |   | 66.1  | 
|                                             |  |        |       |        |  |        |      |            |  |          |      |           |  |       |      |       |  |             |       |              |  |            |       |   |  |   |       | 
|Gross profit                                 |  |        | 144.7 |        |  |        | 52.1 |            |  |          | 14.4 |           |  |       | 6.5  |       |  |             | 217.7 |              |  |            | 1.5   |   |  |   | 219.2 | 
|Selling, general and
administrative expenses |  |        | 94.7  |        |  |        | 41.2 |            |  |          | 14.2 |           |  |       | 10.3 |       |  |             | 160.4 |              |  |            | 14.6  |   |  |   | 175.0 | 
|                                             |  |        |       |        |  |        |      |            |  |          |      |           |  |       |      |       |  |             |       |              |  |            |       |   |  |   |       | 
|Income (loss) from operations                |  | $      | 50.0  |        |  | $      | 10.9 |            |  | $        | 0.2  |           |  | $     | (3.8 | )     |  | $           | 57.3  |              |  | $          | (13.1 | ) |  | $ | 44.2  | 
|                                             |  |        |       |        |  |        |      |            |  |          |      |           |  |       |      |       |  |             |       |              |  |            |       |   |  |   |       | 

Net sales. Net sales for the nine months ended September 30, 2003
decreased to $276.7 million from $285.3 million for the nine months ended
September 30, 2002, a decrease of $8.6 million, or 3.0%. Net sales measured in
local currencies for the first nine months of 2003 increased 3.8% compared to
net sales measured in local currencies for the first nine months of 2002. The
net sales decrease measured in U.S. dollars compared to the net sales increase
measured in local currencies was primarily due to weaker average exchange rates
of the Mexican peso to the U.S. dollar during 2003 compared to 2002. The
Companys average number of consultants in its continuing operations for the
nine months ended September 30, 2003 increased to approximately 405,000, or
10.0%, over the average number of consultants for the nine months ended
September 30, 2002. Annualized consultant productivity measured in U.S. dollars
for the first nine months of 2003 decreased 11.8% compared to annualized
consultant productivity for the first nine months of 2002. Measured in local
currencies, annualized productivity decreased 5.6% for the nine months ended
September 30, 2003, compared to the nine months ended September 30, 2002.
Consultant productivity for the period is generally defined as annualized net
sales divided by the average number of consultants.

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In Mexico, net sales for the first nine months of 2003 decreased $18.4
million, or 9.7%, to $172.1 million from $190.5 million for the first nine
months of 2002. Net sales measured in local currency increased 1.2% for the
first nine months of 2003, compared to the first nine months of 2002. The
increase measured in local currency was primarily due to an increase in the
average number of consultants, partially offset by a decrease in consultant
productivity. The average number of consultants in Mexico was approximately
261,000 for the first nine months of 2003, an increase of 6.0% over the
comparable prior year period. Annualized consultant productivity measured in
local currency for the nine months ended September 30, 2003 decreased 4.5%
compared to consultant productivity for the nine months ended September 30,
2002.

In the United States, net sales for the first nine months of 2003
increased to $74.5 million from $66.9 million for the first nine months of
2002, an increase of $7.6 million, or 11.4%, with increases in both divisions.
Net sales in the Hispanic Division increased 13.6% to $50.3 million for the
first nine months of September 30, 2003, compared to the first
nine months of 2002 due
to a larger consultant base, offset by reduced consultant productivity. The
average number of consultants in the Hispanic Division for the period was
approximately 48,000, an increase of 29.6% over the comparable prior year
period. Annualized consultant productivity in the Hispanic Division decreased
12.4% for the first nine months of 2003 compared to the first nine months of
2002. The number of active ordering consultants in the Hispanic Division
decreased during the period. Net sales in the General Division increased 7.0%
to $24.1 million for the nine months ended September 30, 2003, compared to the
nine months ended September 30, 2002 as a result of a 5.4% increase in
consultant productivity and an increase in the average number of consultants.
The average number of General Division consultants during the period increased
1.2% to approximately 30,000 consultants for the nine months ended September
30, 2003.

In Europe, net sales increased to $22.7 million for the nine months ended
September 30, 2003, from $18.6 million for the nine months ended September 30,
2003, an increase of $4.1 million, or 22.0%, in part due to stronger average
exchange rates compared to the U.S. dollar. In local currencies, net sales
increased 1.4% for the first nine months of 2003, compared to the first nine
months of 2002. The average number of consultants for the nine months ended
September 30, 2003 was approximately 18,000, an increase of 11.9% over the
comparable prior year period. Consultant productivity measured in local
currencies decreased 9.4% for the nine months ended September 30, 2003 compared
to the nine months ended September 30, 2002.

Net sales in the other markets decreased to $7.4 million for the nine
months ended September 30, 2003, compared to $9.3 million for the nine months
ended September 30, 2002, a decrease of $1.9 million, or 20.4%. The decrease in
net sales was primarily due to weaker average exchange rates of South American
currencies during 2003 compared to 2002 and decreased net sales measured in
local currency in the Dominican Republic, partially offset by increased net sales
measured in local currency in Brazil. Measured in local currencies, net sales
increased 1.4% for the nine months ended September 30, 2003 compared to the
nine months ended September 30, 2002.

Gross profit.Consolidated gross profit for the nine months ended
September 30, 2003, decreased to $212.9 million, from $219.2 million for the
nine months ended September 30, 2002, a decrease of $6.3 million, or 2.9%.
Gross profit as a percentage of net sales (gross margin) increased to 76.9% for
the nine months ended September 30, 2003 from 76.8% in comparable prior year
period. The increase in gross margin for the nine months ended September 30,
2003 compared to the nine months ended September 30, 2002 was primarily due to increased gross margin
in Europe and favorability in the Corporate, Unallocated and Other segment,
partially offset by decreased gross margin in the United States and
the All Others markets.

In Mexico, gross margin for the nine months ended September 30, 2003
decreased to 75.9% from 76.0% for the nine months ended September 30, 2002.

In the United States, gross margin for the nine months ended September 30,
2003 decreased to 77.4% from 77.9% for the nine months ended September 30,
2002. The decrease in gross margin was primarily the result of unfavorable
direct cost variances during the nine months ended September 30, 2003, compared
to favorable direct cost variances during the nine months ended September 30,
2002.

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In Europe, gross margin for the nine months ended September 30, 2003
increased to 79.3% from 77.4% for the comparable prior year period due to the
favorable impact of exchange rates on U.S. dollar-denominated inventory
purchases, partially offset by reduced gross margin as a result of the mix of
product offerings.

Selling, general and administrative expenses.SG&A expenses for the nine
months ended September 30, 2003 increased to $188.5 million, compared to $175.0
million for the nine months ended September 30, 2002, an increase of $13.5
million, or 7.7%. SG&A expenses, as a percentage of net sales, increased to
68.1% for the nine months ended September 30, 2003 from 61.3% for the nine
months ended September 30, 2002 due primarily to increased selling, general and
administrative expense in the Corporate, Unallocated and Other segment.

In Mexico, SG&A expenses for the nine months ended September 30, 2003
decreased by $9.0 million, or 9.5%, to $85.7 million, compared to $94.7 million
for the nine months ended September 30, 2002. SG&A expenses increased, as a
percentage of net sales, in Mexico to 49.8% for the nine months ended September
30, 2003, compared to 49.7% for the nine months ended September 30, 2002. The
increase in SG&A expenses as a percentage of net sales was primarily due to
increases in override and promotional expenses, partially offset by decreased
administrative expenses. Sales promotional expenses increased as a percentage
of net sales due to the timing and nature of promotional activities and
override expenses increased due to better collection of receivables.
Administrative expenses decreased due to the employment of cost containment
measures and less expense related to the allowance for uncollectible accounts.

In the United States, SG&A expenses for the nine months ended September
30, 2003 increased by $4.9 million, or 11.9%, to $46.1 million from $41.2
million for the nine months ended September 30, 2002. SG&A expenses, as a
percentage of net sales, in the United States were 61.9% for the nine months
ended September 30, 2003 compared to 61.6% for the nine months ended September
30, 2002. The increase in SG&A expenses as a percentage of net sales was
primarily attributable to increased sales promotional and override expenses,
partially offset by reduced selling expenses during the nine months ended
September 30, 2003 compared to the nine months ended September 30, 2002. Sales
promotional expenses increased due to more planned promotional spending in 2003
and expenses related with a General Division summer trip in 2003 which was not
held in 2002. Override expense increased due to the relative sales mix.
Selling expenses, as a percentage of net sales, decreased due to headcount
vacancies and reductions.

In Europe, SG&A expenses for the nine months ended September 30, 2003
increased by $3.3 million, or 23.2%, to $17.5 million from $14.2 million for the
nine months ended September 30, 2002. SG&A expenses, as a percentage of net
sales, in Europe were 77.1% for the nine months ended September 30, 2003,
compared to 76.3% for the nine months ended September 30, 2002. The increase
in SG&A expenses as a percentage of net sales was due to increased sales
promotional expenses in an effort to increase sponsoring and the consultant
base and increased override expenses due to better collections and a change in
the program, partially offset by decreased administrative expenses due to
incrementally less expenses related to the reserve for uncollectible accounts
in Italy and information technology expenses during the nine months ended
September 30, 2003 compared to the same period of the prior year.

SG&A expenses in the other markets for the nine months ended September 30,
2003 decreased by $1.8 million, or 17.5%, compared to the nine months ended
September 30, 2002. As a percentage of net sales, SG&A expenses were 114.9% for
the nine months ended September 30, 2003, compared to 110.8% for the nine
months ended September 30, 2002.

SG&A
expenses in the Corporate, Unallocated and Other segment increased
$16.1 million primarily as the result of costs related to the recapitalization
of the Company recorded during the second quarter of 2003 and certain
nonrecurring severance charges recorded during the nine months ended September
30, 2003. During the nine months ended September 30, 2003, the Company
completed a recapitalization of its operations by issuing new debt (see
Liquidity and Capital Resources).

Exchange gain (loss).The Companys foreign exchange loss was $7.8
million for the nine months ended September 30, 2003, compared to $9.8 million
for the nine months ended September 30, 2002, a decrease of
$2.0 million, or
20.4%. During the nine months ended September 30, 2003, the Company recognized
$9.3 million of

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exchange losses on the remeasurement of U.S. dollar-denominated debt. This
loss was partially offset by $0.6 million of exchange gains related to option
contracts and $0.9 million of exchange gains on other foreign currency
transactions. During the nine months ended September 30, 2002, the Company
recognized $2.2 million of exchange losses related to forward contracts, $1.2
million of exchange gains related to option contracts, $4.6 million of exchange
losses on the remeasurement of U.S. dollar-denominated debt, $5.2 million of
exchange losses on U.S. dollar-denominated intercompany payables in Brazil as
the result of devaluation of the Brazilian real and $1.0 million of exchange
gains on other foreign currency transactions.

Interest expense.Net interest expense (including amortization of
deferred financing fees) for the nine months ended September 30, 2003 increased
to $14.1 million from $8.8 million for the nine months ended September 30,
2002, an increase of $5.3 million, or 60.2%. The increase was primarily due to
a greater average amount of debt outstanding during the nine months ended
September 30, 2003 compared to the nine months ended September 30, 2002.

Loss on extinguishment of debt.On May 23, 2003, the Company repurchased
its outstanding 11 3⁄4% Subordinated Notes due April 30, 2008 (the Old
Notes) in the aggregate principal amount of $75.2 million at a premium of
approximately $4.4 million. Additionally, the Company repaid $7.4 million
under its existing credit agreement (Old Credit Agreement). In connection
with the redemption of the Old Notes and the termination of the Old Credit
Agreement, the Company wrote off approximately $2.2 million of capitalized
deferred financing fees. The total expense related to the extinguishment of
the previous debt was $6.6 million and was recorded in the nine months ended
September 30, 2003.

Income tax expense.Income tax expense decreased to $1.2 million for the
nine months ended September 30, 2003 compared to $9.7 million, for the nine
months ended September 30, 2002, a decrease of $8.5 million, or 87.6%. During
the nine months ended September 30, 2003, the Company reported a pretax loss of
$4.4 million and income tax expense of $1.2 million. The Companys Mexican
subsidiaries reported pretax income and income tax expense for the nine months
ended September 30, 2003. The income tax expense was partially offset by an
income tax benefit in the U.S. subsidiary based on pretax net loss.
Additionally, the European and other subsidiaries recorded valuation allowances
against pretax net losses for the nine months ended September 30, 2003. For
the nine months ended September 30, 2002, the effective tax rate was 37.5% due
to the release of $2.3 million of valuation allowances against certain deferred
tax assets in the United States and the impact of the enactment of changes in
Mexicos future corporate statutory rates on net deferred tax liabilities of
$1.2 million during the first quarter of 2002. These benefits to the effective
tax rate were offset by valuation allowances against certain operating losses
in Europe and other subsidiaries.

Loss on discontinued operations.During the nine months ended September
30, 2003, losses on discontinued operations were $2.5 million, an increase of
$1.4 million compared to $1.1 million in the nine months ended September 30,
2002.

Net (loss) income.Net loss was $8.1 million for the nine months ended
September 30, 2003, compared to net income of $14.8 million for the nine months
ended September 30, 2002, a $22.9 million unfavorable difference. The decrease
in income was due to a $6.3 million decrease in gross profit, a $13.5 million
increase in selling, general and administrative expenses, a $5.3 million
increase in interest expense, a $6.6 million loss on extinguishment of debt, a
$0.5 million unfavorable change in other and a $1.4 increase in
losses on
discontinued operations, partially offset by a $2.0 million decrease in
exchange loss, a $8.5 million decrease in income tax expense and the absence of
$0.2 million in cumulative effect of accounting change in 2003.

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Liquidity and Capital Resources

On May 20, 2003, JCI and Jafra Distribution (collectively the Issuers)
issued $200 million aggregate principal amount of 10 3⁄4% Subordinated Notes
due 2011 (the New Notes) pursuant to an Indenture dated May 20, 2003 (the
Indenture) and entered into a $90 million Senior Credit Agreement (the
Senior Credit Agreement). The New Notes represent the several obligations of
JCI and Jafra Distribution in the amount of $80 million and $120 million,
respectively. The New Notes mature in 2011 and bear a fixed interest rate of
10 3⁄4% payable semi-annually.

JCI is a direct wholly-owned subsidiary of the Parent and Jafra
Distribution is an indirect wholly-owned subsidiary of the Parent. The Parent
has fully and unconditionally guaranteed the obligations under the New Notes on
a senior subordinated basis on the terms provided in the Indenture governing
the New Notes. The Issuers have fully and unconditionally guaranteed the
obligations of the other under the New Notes on a senior subordinated basis,
subject to a 30-day standstill period prior to enforcement of such guarantees.
Each existing and subsequently acquired or organized U.S. subsidiary of JCI is
required to fully and unconditionally guarantee the U.S. portion of
the New
Notes jointly and severally, on a senior subordinated basis. Each existing,
acquired or organized Mexican subsidiary of Jafra Distribution is also required
to fully and unconditionally guarantee the Mexican portion of the New Notes
jointly and severally, on a senior subordinated basis. Jafra S.A. has also
fully and unconditionally guaranteed the obligation of Jafra Distribution under
the New Notes. Each existing and subsequently acquired or organized subsidiary
of Jafra S.A. is also required to fully and unconditionally guarantee the
Mexican portion of the New Notes jointly and severally, on a senior
subordinated basis.

The New Notes are unsecured and are generally not redeemable for four
years from their issue date. Thereafter, the Notes will be redeemable on a pro
rata basis at premiums declining to par in the sixth year. Prior to May 16,
2006, the Issuers at their option may concurrently redeem the New Notes in an
aggregate principal amount equal to up to 35% of the original aggregate
principal amount of the New Notes, with funds in an aggregate amount not
exceeding the aggregate cash proceeds of one or more equity offerings, at a
redemption price of 110.75% plus accrued interest.

In addition, the Issuers entered into the Senior Credit Agreement, which
provides for senior secured credit facilities in an aggregate principal amount
of $90 million, consisting of a $50 million senior secured term loan facility
maturing in 2008 and a $40 million senior secured revolving credit facility,
also maturing in 2008, of which $20 million is available as letters of credit.
The Senior Credit Agreement is allocated 40% to JCI and 60% to Jafra
Distribution. On May 20, 2003, JCI borrowed $20 million and Jafra Distribution
borrowed $30 million under the term facility. No amounts were outstanding
under the revolving credit facility at September 30, 2003. Borrowings under
the term loan facility are payable in quarterly installments of principal and
interest over five years through May 20, 2008. Borrowings under the revolving
credit facility mature on May 20, 2008. Borrowings under the Senior Credit
Agreement bear interest at an annual rate of LIBOR plus a margin not to exceed
4.00% or an alternate base rate plus an applicable margin not to exceed 3.00%.
The interest rate in effect at September 30, 2003 was 5.2% for LIBOR borrowings
and 7.0% for Prime based borrowings. Borrowings under the Senior Credit
Agreement are secured by substantially all of the assets of JCI and Jafra
Distribution.

Both the Indenture 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. These covenants 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. As of September 30, 2003, the Company was in compliance with all debt
covenants.

On May 23, 2003, with the proceeds from the issuance of the New Notes and
borrowings under the Senior Credit Agreement, the Company redeemed its
outstanding Old Notes in the aggregate principal amount of $75.2 million at a
premium of approximately $4.4 million. Additionally, JCI and Jafra S.A. repaid
$7.4 million under its existing credit agreement (the Old Credit Agreement)
and terminated the Old Credit Agreement. In connection with the redemption of
the Old Notes and the termination of the Old Credit Agreement, JCI and Jafra
S.A. wrote off approximately $2.2 million of capitalized deferred financing
fees. Total costs related to the recall of the previous

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debt was $6.6 million and was
recorded as a component of net income (loss) on the accompanying
consolidated statements of operations.

After the redemption of the Old Notes and repayment of all outstanding
amounts under the Old Credit Agreement, the shareholders of CDRJ resolved to
liquidate CDRJ. As a result, CDRJ made an initial liquidating distribution of
$157,609,000 to its shareholders of record at May 20, 2003. Additionally, CDRJ
reserved $1,405,000 to pay expenses associated with its liquidation. JCI also
made a special payment to the holders of Company options and certain members of
management and non-employee directors.

The Company capitalized $14.4 million of costs related to the issuance of
the New Notes and the Senior Credit Agreement as deferred financing fees.
These capitalized expenses are being amortized equitably over the term of the
New Notes and the Senior Credit Agreement. As of September 30, 2003,
approximately $0.7 million of the deferred financing fees were amortized.

The Companys Mexican subsidiary, Jafra S.A., was party to an unsecured
bank loan agreement. As of September 30, 2003, Jafra S.A. repaid all amounts
outstanding under the bank loan agreement and subsequently terminated the
agreement.

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 used in operating activities was $2.5 million for the nine months
ended September 30, 2003 compared to net cash provided by operating activities
of $23.2 million for the nine months ended September 30, 2002, a $25.7 million
decrease. Net cash used in operating activities for the nine months ended September
30, 2003 consisted of $16.0 million provided by net loss plus depreciation,
amortization, and other non-cash items included in net income, offset by $18.5
million used in changes in operating assets and liabilities. The significant
elements of net cash used in changes in operating assets and liabilities during
the nine months ended September 30, 2003 were an increase in inventories of
$11.4 million, an increase in prepaid and other asset of $3.4 million and an
increase in income taxes of $5.3 million. During the nine months
ended September 30, 2003 the Company paid $13.1 million in
compensation expense, $6.6 million for the extinguishment of
debt and $2.3 million of other expenses included within net
income (loss) related to the refinancing of the Company. Excluding
this $22.0 million use of cash, net cash provided by operating activities
would have been $19.5 million for the nine months ended
September 30, 2003.

Net cash used in investing activities was $5.6 million for the nine months
ended September 30, 2003, of which $5.0 million was used for capital
expenditures. Capital expenditures in 2003 are expected to be approximately
$13.0 million.

Net cash used in financing activities was $9.1 million for the nine months
ended September 30, 2003, and consisted of $200.0 million of issuance of new
subordinated notes, $50.0 million of new term loan, offset by $75.2 million
repurchase of subordinated debt due 2008, $9.6 million repayment under term
loan facilities, $159.0 million distribution to shareholders and $14.4 million
of capitalized deferred financing fees.

The effect of exchange rate changes on cash was $0.7 million for the nine
months ended September 30, 2003.

Recent Accounting Pronouncements

The Company adopted Statement of Financial Accounting Standards (SFAS)
No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB
Statement No. 13, and Corrections on January 1, 2003. This statement
rescinds or modifies existing authoritative pronouncements including SFAS No. 4
Reporting Gains and Losses from Extinguishment of Debt. As a result of the
issuance of SFAS No. 145, gains and losses from extinguishment of debt are
classified as extraordinary items only if they meet the criteria in Accounting
Principles Board (APB) Opinion 30, Reporting the Results of
Operations-Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions.
Applying the provisions of APB Opinion 30 distinguishes transactions that are
part of an entitys recurring operations from those that are unusual or
infrequent or that meet the criteria for classification as an extraordinary
item. Based on the

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adoption of this principle, the Company has reclassified any gain or loss on
extinguishment of debt that was classified as an extraordinary item in prior
periods and has classified its current loss on extinguishment of debt within
other income (expense).

The Company adopted SFAS No. 146, Accounting for Costs Associated with
Exit or Disposal Activities on January 1, 2003 which did not result in any
material impact to the Companys consolidated statements of income. This
statement addresses financial accounting and reporting for costs associated
with exit or disposal activities and nullifies EITF Issue No. 94-3, Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit
an Activity.

Foreign Operations

Net sales outside of the United States aggregated approximately 73% and
77% of the Companys total net sales for the nine months ended September 30,
2003 and 2002, respectively. In addition, as of September 30, 2003, non-U.S.
subsidiaries comprised approximately 71% of the Companys consolidated total
assets. Accordingly, the Company has experienced and continues to be exposed
to foreign exchange risk. In 2002, the Company entered into foreign currency
forward contracts in Mexican pesos and in 2002 and 2003, the Company entered
into foreign currency option contracts in Mexican pesos to reduce the effect of
potentially adverse exchange rate fluctuations in Mexico.

The Companys subsidiaries in Mexico generated approximately 62% and 67%
of the Companys net sales for the nine months ended September 30, 2003 and
2002, respectively, substantially all of which were denominated in Mexican
pesos. At September 30, 2003, the subsidiaries in Mexico had $149.3 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
loss. The Mexico subsidiaries recognized losses of $9.3 million and $4.6
million for the nine months ended September 30, 2003 and 2002, respectively, on
the remeasurement of this U.S. dollar-denominated debt and a net gain of $0.6
million of exchange gains and $1.0 million of exchange losses on foreign
currency forward and option contracts for the nine months ended September 30,
2003 and 2002, respectively.

Business Trends and Initiatives

The Company has experienced sales growth in Mexico over the last three
years, due primarily to increases in the number of consultants. Additionally,
the Mexico subsidiary contributes a significant portion of the Companys
consolidated net sales. The Companys Mexican subsidiary generated 62% and 67%
of the Companys consolidated net sales for the nine months ended September 30,
2003 and 2002, respectively, compared to 66% for the full year in 2002. Due to
the weakening of the Mexican peso compared to the U.S. dollar, Mexico
experienced a net sales decline of 10% measured in U.S. dollars, but net sales
growth of 1% measured in local currency for the nine months ended September 30,
2003.

In the United States, the Company has continued its strategy of focusing
on the distinct elements of its General and Hispanic customer groups. Net
sales in the United States have shown significant growth. Net sales in the
first nine months of 2003 increased 11% compared to the first nine months of
2002, with increases of 14% in the Hispanic Division and 7% in the General
Division. United States sales contributed 27% and 23% of net sales for the nine
months ended September 30, 2003 and 2002, respectively, compared to 24% for the
complete year of 2002. The Companys strategy in the United States also continues to focus on doing
business via e-commerce.

Net sales in Europe have increased primarily due to strengthening of the
euro compared to the U.S. dollar and an increase in the consultant base. In
the first nine months of 2003, European sales contributed 8% to consolidated
sales compared to 7% in 2002. The average number of consultants increased
during the first nine months of 2003 compared to the first nine months of 2002.

In the
past few years, the Company made significant investments in new
markets in South America and Thailand. During 2002, South American countries
in which the Company operates faced challenging macroeconomic environments.
During the nine months ended September 30, 2003, the Company discontinued its
operations in Venezuela, Colombia, Chile and Peru and classified the operations
as discontinued on its statements of

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operations. During the third quarter of 2003, the Company began to wind
down its operations in Thailand and intends to liquidate the assets in this
market and expects to complete the liquidation process and abandon the
operations during the fourth quarter of 2003. Additionally, the
Company is currently evaluating its operations in Argentina and
Brazil for potential restructuring or discontinuation.

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
statement 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 2003 are expected to be approximately
$13.0 million; and (iii) 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.

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 CDRJs Annual Report on Form 10-K for the year ended
December 31, 2002 (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, and Foreign
Operations, 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 recapitalization discussed in Liquidity and Capital
Resources
under Item 2. Such risks are 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 CDRJs annual report on Form 10-K for the
year ended December 31, 2002. Except for the recapitalization,  no significant changes have occurred during
the first nine months of 2003 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, 73%
of the Companys revenue for first nine months of 2003 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 three and nine months ended
September 30, 2003 were exposed to fluctuations in foreign currency exchange
rates.

The Company may reduce its primary market exposures to fluctuations in
foreign exchange rates and to 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 or option contracts. The Company regularly monitors its
foreign currency exposures and ensures that contract amounts do not exceed the

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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 option contracts have a notional value
denominated in Mexican pesos of 743,000,000 and 523,000,000 in put and call
positions at September 30, 2003 and December 31, 2002, respectively. The
outstanding foreign currency option contracts at September 30, 2003 mature at
various dates through December 31, 2004. 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 following tables provide information about the details of the
Companys option contracts as of September 30, 2003 (in thousands except for
average strike price):

|                                                   |  |             |         |                |  |                 |               |               |  |   |      |   |  |                  |  | 
|-------------------------------------------------- |  | ----------- | ------- | -------------- |  | --------------- | ------------- | ------------- |  | - | ---- | - |  | ---------------- |  | 
|                                                   |  | Coverage in |         |                |  |                 |               |               |  |   |      |   |  |                 
|                                                   |  | Mexican     |         | Average Strike |  | Fair Value in   |               |               |  |  
|Foreign Currency                                   |  | Pesos(1)    |         | Price          |  | U.S. Dollars(1) |               | Maturity Date
|                                                   |  |             |         |                |  |                 |               |              
|At September 30, 2003:                             |  |             |         |                |  |                 |               |               |  |   |      |   |  |                  |  | 
|Purchased Puts (Company may sell Peso/buy USD)     |  |             |         |                |  |                 |               |               |  |   |      |   |  |                  |  | 
|Mexican Peso                                       |  |             | 229,000 |                |  |                 | 11.07 - 12.91 |               |  | $ | 252  |   |  | Oct. - Dec. 2003
|Mexican Peso                                       |  |             | 110,000 |                |  |                 | 11.54 - 12.75 |               |  |   | 69   |   |  | Jan. - Mar. 2004
|Mexican Peso                                       |  |             | 170,000 |                |  |                 | 12.03 - 12.35 |               |  |   | 49   |   |  | Apr. - Jun. 2004
|Mexican Peso                                       |  |             | 100,000 |                |  |                 | 12.41 - 12.59 |               |  |   | 15   |   |  | Jul. - Aug. 2004
|Mexican Peso                                       |  |             | 134,000 |                |  |                 | 12.28 - 12.38 |               |  |   | (28  | ) |  | Oct. - Dec. 2004
|                                                   |  |             |         |                |  |                 |               |               |  |   |      |   |  |                  |  | 
|                                                   |  |             | 743,000 |                |  |                 |               |               |  | $ | 357  |   |  |                  |  | 
|                                                   |  |             |         |                |  |                 |               |               |  |   |      |   |  |                  |  | 
|Written Calls (Counterparty may buy Peso/sell
USD) |  |             |         |                |  |                 |               |               |  |   |      |   |  |                  |  | 
|Mexican Peso                                       |  |             | 229,000 |                |  |                 | 10.15 - 10.75 |               |  | $ | (247 | ) |  | Oct. - Dec. 2003
|Mexican Peso                                       |  |             | 110,000 |                |  |                 | 10.26 - 10.62 |               |  |   | (102 | ) |  | Jan. - Mar. 2004
|Mexican Peso                                       |  |             | 170,000 |                |  |                 | 10.19 - 10.93 |               |  |   | (152 | ) |  | Apr. - Jun. 2004
|Mexican Peso                                       |  |             | 100,000 |                |  |                 | 10.49 - 10.93 |               |  |   | (33  | ) |  | Jul. - Aug. 2004
|Mexican Peso                                       |  |             | 134,000 |                |  |                 | 11.13 - 11.22 |               |  |   | 33   |   |  | Oct. - Dec. 2004
|                                                   |  |             |         |                |  |                 |               |               |  |   |      |   |  |                  |  | 
|                                                   |  |             | 743,000 |                |  |                 |               |               |  | $ | (501 | ) |  |                  |  | 
|                                                   |  |             |         |                |  |                 |               |               |  |   |      |   |  |                  |  | 

The outstanding foreign currency option contracts had a notional value
denominated in Mexican pesos of 523,000,000 in put and call positions at
December 31, 2002 and matured at various dates through December 31, 2003.
Notional amounts do not quantify the Companys market or credit exposure or
represent the Companys assets or liabilities, but are used in the calculation
of cash settlements under the contracts.

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The following table provides information about the details of the
Companys option contracts as of December 31, 2002 (in thousands):

|                                                   |  |             |         |                |  |                 |             |               |  |   |      |   |  |                |  | 
|-------------------------------------------------- |  | ----------- | ------- | -------------- |  | --------------- | ----------- | ------------- |  | - | ---- | - |  | -------------- |  | 
|                                                   |  | Coverage in |         |                |  |                 |             |               |  |   |      |   |  |               
|                                                   |  | Mexican     |         | Average Strike |  | Fair Value in   |             |               |  |  
|Foreign Currency                                   |  | Pesos       |         | Price          |  | U.S. Dollars(1) |             | Maturity Date
|                                                   |  |             |         |                |  |                 |             |              
|At December 31, 2002:                              |  |             |         |                |  |                 |             |               |  |   |      |   |  |                |  | 
|Purchased puts (Company may sell
peso/buy USD)     |  |             |         |                |  |                 |             |               |  |   |      |   |  |                |  | 
|Mexican peso                                       |  |             | 149,000 |                |  |                 | 10.31-10.48 |               |  | $ | (113 | ) |  | Jan.-Mar. 2003
|Mexican peso                                       |  |             | 100,000 |                |  |                 | 11.05-12.19 |               |  |   | 77   |   |  | Apr.-June 2003
|Mexican peso                                       |  |             | 150,000 |                |  |                 | 11.76-12.79 |               |  |   | 131  |   |  | July-Aug 2003 
|Mexican peso                                       |  |             | 124,000 |                |  |                 | 12.51-12.91 |               |  |   | 21   |   |  | Oct.-Dec. 2003
|                                                   |  |             |         |                |  |                 |             |               |  |   |      |   |  |                |  | 
|                                                   |  |             | 523,000 |                |  |                 |             |               |  | $ | 116  |   |  |                |  | 
|                                                   |  |             |         |                |  |                 |             |               |  |   |      |   |  |                |  | 
|Written calls (Counterparty may buy
peso/sell USD) |  |             |         |                |  |                 |             |               |  |   |      |   |  |                |  | 
|Mexican peso                                       |  |             | 149,000 |                |  |                 | 9.01-9.02   |               |  | $ | (207 | ) |  | Jan.-Mar. 2003
|Mexican peso                                       |  |             | 100,000 |                |  |                 | 9.50-9.84   |               |  |   | (144 | ) |  | Apr.-June 2003
|Mexican peso                                       |  |             | 150,000 |                |  |                 | 9.69-10.19  |               |  |   | (112 | ) |  | July-Aug 2003 
|Mexican peso                                       |  |             | 124,000 |                |  |                 | 10.15-10.19 |               |  |   | (55  | ) |  | Oct.-Dec. 2003
|                                                   |  |             |         |                |  |                 |             |               |  |   |      |   |  |                |  | 
|                                                   |  |             | 523,000 |                |  |                 |             |               |  | $ | (518 | ) |  |                |  | 
|                                                   |  |             |         |                |  |                 |             |               |  |   |      |   |  |                |  | 



---

|(1) |  | The Fair Value of the option contracts presented above, an unrealized
gain of $144,000 and $402,000 at September 30, 2003 and December 31, 2002,
respectively, represents the carrying value and was recorded in other
receivables in the consolidated balance sheets.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




ITEM 4. CONTROLS AND PROCEDURES

The Companys principal executive officer and principal financial officer have
evaluated the effectiveness of the Companys disclosure controls and
procedures, as such term is defined in Rule 15d-15(e) of the Securities
Exchange Act of 1934, as amended. Based upon their evaluation, the principal
executive officer and principal financial officer concluded that the Companys
disclosure controls and procedures are effective as of the end of the period
covered by this Quarterly Report on Form 10-Q.

There has been no significant change in the Companys internal controls or
procedures during the fiscal quarter ended September 30, 2003 that has
materially affected, or is reasonably likely to materially affect, the
registrants internal control over financial reporting.

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PART II. OTHER INFORMATION




Item 1. Legal Proceedings

See discussion under Legal Proceedings in CDRJs Annual Report on Form
10-K for the year ended December 31, 2002.




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. The following documents are exhibits to this quarterly report
on Form 10-Q.

|        |  |                                                                                                                                                                      
|------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                      
|Number  |  |                                                                                                                                                                      
|        |  |                                                                                                                                                                      
|10.1    |  | Exchange Agreement, dated August 13, 2003, among Jafra Cosmetics
International, Inc., Distribuidora Comercial Jafra, S.A. de C.V. and U.S.
Bank National Association.
|        |  |                                                                                                                                                                      
|31.1    |  | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                             
|        |  |                                                                                                                                                                      
|31.2    |  | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                             
|        |  |                                                                                                                                                                      
|32.2    |  | Certification furnished pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                    
|        |  |                                                                                                                                                                      
|32.3    |  | Certification furnished pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                    

(b)  Reports on Form 8-K

None.

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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.

|                       |  |                                                                                                          
|---------------------- |  | ---------------------------------------------------------------------------------------------------------
|                       |  | Jafra Worldwide Holdings (Lux) S.àR.L.                                                                   
|                      
|                       |  | /s/ Ronald B. Clark                                                                                      
|                       |  |                                                                                                          
|                       |  | Ronald B. Clark                                                                                          
|                       |  | Chief Executive Officer of the Advisory
Committee and Director                                           
|                      
|                       |  | /s/ Michael A.
DiGregorio                                                                                
|                       |  |                                                                                                          
|                       |  | Michael A. DiGregorio                                                                                    
|                       |  | Senior Vice President and Chief
Financial Officer of the Advisory
Committee (Principal Financial Officer)
|Date November 13, 2003 |  |                                                                                                          

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