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

FORM 10-Q

|           |  |                                                                                        
|---------- |  | ---------------------------------------------------------------------------------------
|(Mark One)
|x          |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 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 August 8, 2003   151
shares.

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TABLE OF CONTENTS



|                              |                                                                                               |                                                                                                                      |  |  |  |  |  | 
|----------------------------- | --------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------- |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION
|                              | ITEM 1. FINANCIAL STATEMENTS                                                                 
|                              |                                                                                               | JAFRA WORLDWIDE HOLDINGS (LUX) S.áR.L. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS                                 
|                              |                                                                                               | JAFRA WORLDWIDE HOLDINGS (LUX) S.áR.L. AND SUBSIDIARIES                      CONSOLIDATED STATEMENTS OF OPERATIONS  
|                              |                                                                                               | JAFRA WORLDWIDE HOLDINGS (LUX) S.aR.L. AND SUBSIDIARIES                      CONSOLIDATED STATEMENTS OF CASH FLOWS  
|                              |                                                                                               | JAFRA WORLDWIDE HOLDINGS (LUX) S.àR.L. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                  
|                              |                                                                                               | JAFRA COSMETICS INTERNATIONAL, INC. AND SUBSIDIARIES                      CONSOLIDATED BALANCE SHEETS               
|                              |                                                                                               | JAFRA COSMETICS INTERNATIONAL, INC. AND SUBSIDIARIES                      CONSOLIDATED STATEMENTS OF OPERATIONS     
|                              |                                                                                               | JAFRA COSMETICS INTERNATIONAL, INC. AND SUBSIDIARIES                      CONSOLIDATED STATEMENTS OF CASH FLOWS     
|                              |                                                                                               | JAFRA COSMETICS INTERNATIONAL, INC. AND SUBSIDIARIES                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                              |                                                                                               | DISTRIBUIDORA COMERCIAL JAFRA, S.A. de C.V. BALANCE SHEETS                                                          
|                              |                                                                                               | DISTRIBUIDORA COMERCIAL JAFRA, S.A. de C.V. STATEMENTS OF OPERATIONS                                                
|                              |                                                                                               | DISTRIBUIDORA COMERCIAL JAFRA, S.A. de C.V. STATEMENTS OF CASH FLOWS                                                
|                              |                                                                                               | DISTRIBUIDORA COMERCIAL JAFRA, S.A. DE C.V. NOTES TO FINANCIAL STATEMENTS  (Continued) (Unaudited)                 
|                              |                                                                                               | JAFRA COSMETICS INTERNATIONAL, S.A. DE C.V. CONSOLIDATED BALANCE SHEETS                                             
|                              |                                                                                               | JAFRA COSMETICS INTERNATIONAL, S.A. DE C.V. CONSOLIDATED STATEMENTS OF OPERATIONS                                   
|                              |                                                                                               | JAFRA COSMETICS INTERNATIONAL, S.A. DE C.V. CONSOLIDATED STATEMENTS OF CASH FLOWS                                   
|                              |                                                                                               | JAFRA COSMETICS INTERNATIONAL, S.A. DE C.V. AND SUBSIDIARIES 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                                                                                    
|144A GLOBAL NOTE             
|REGULATION S GLOBAL NOTE     
|302 CERTIFICATION: CEO       
|302 CERTIFICATION: CFO       
|906 CERTIFICATION: CEO       
|906 CERTIFICATION: CFO       



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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 Six Months Ended June 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 Income                                                                |  |  | 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                                       |  |  | 51 |         
|Item 4.    |  | Controls and Procedures                                                                          |  |  | 52 |         
|           |  | PART II - OTHER INFORMATION                                                                      |  |  |    |         
|Item 1.    |  | Legal Proceedings                                                                                |  |  | 54 |         
|Item 2.    |  | Changes in Securities and Use of Proceeds                                                        |  |  | 54 |         
|Item 3.    |  | Defaults Upon Senior Securities                                                                  |  |  | 54 |         
|Item 4.    |  | Submission of Matters to a Vote of Security Holders                                              |  |  | 54 |         
|Item 5.    |  | Other Information                                                                                |  |  | 54 |         
|Item 6.    |  | Exhibits and Reports on Form 8-K                                                                 |  |  | 54 |         
|           |  | Signature                                                                                        |  |  | 55 |         
|           |  | Certifications                                                                                   |  |  | 56 |         

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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 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,
the Parent 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 June 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)

|                                               |                                                                                                                                                                                    |                                      |         |             |         |              |        |         |         | 
|---------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------ | ------- | ----------- | ------- | ------------ | ------ | ------- | ------- | 
|                                               |                                                                                                                                                                                    |                                      |         | June 30,    |         | December 31,
|                                               |                                                                                                                                                                                    |                                      |         | 2003        |         | 2002        
|                                               |                                                                                                                                                                                    |                                      |         |             |         |             
|                                               |                                                                                                                                                                                    |                                      |         | (Unaudited) |         |              |        |        
|ASSETS                                         |                                                                                                                                                                                    |                                      |         |             |         |              |        |        
|Current assets:                                |                                                                                                                                                                                    |                                      |         |             |         |              |        |        
|                                               | Cash and cash equivalents                                                                                                                                                          |                                      | $       | 12,656      |         |              | $      | 27,206  |        
|                                               | Receivables, net                                                                                                                                                                   |                                      |         | 38,923      |         |              |        | 41,126  |        
|                                               | Inventories                                                                                                                                                                        |                                      |         | 38,494      |         |              |        | 35,286  |        
|                                               | Prepaid income taxes                                                                                                                                                               |                                      |         | 4,299       |         |              |        | 258     |        
|                                               | Prepaid expenses and other current assets                                                                                                                                          |                                      |         | 5,002       |         |              |        | 4,977   |        
|                                               |                                                                                                                                                                                    |                                      |         |             |         |              |        |         |        
|                                               |                                                                                                                                                                                    | Total current assets                 |         |             | 99,374  |              |        |         | 108,853 | 
|Property and equipment, net                    |                                                                                                                                                                                    |                                      | 59,860  |             |         |              | 60,722 |        
|Other assets:                                  |                                                                                                                                                                                    |                                      |         |             |         |              |        |        
|                                               | Goodwill                                                                                                                                                                           |                                      |         | 65,397      |         |              |        | 66,305  |        
|                                               | Trademarks                                                                                                                                                                         |                                      |         | 44,209      |         |              |        | 44,570  |        
|                                               | Deferred financing fees and other, net                                                                                                                                             |                                      |         | 18,668      |         |              |        | 7,840   |        
|                                               |                                                                                                                                                                                    |                                      |         |             |         |              |        |         |        
|                                               |                                                                                                                                                                                    | Total                                |         | $           | 287,508 |              |        | $       | 288,290 | 
|                                               |                                                                                                                                                                                    |                                      |         |             |         |              |        |         |        
|LIABILITIES AND
STOCKHOLDERS EQUITY (DEFICIT) |                                                                                                                                                                                    |                                      |         |             |         |              |        |        
|Current liabilities:                           |                                                                                                                                                                                    |                                      |         |             |         |              |        |        
|                                               | Current portion of long-term debt                                                                                                                                                  |                                      | $       | 6,250       |         |              | $      | 6,489   |        
|                                               | Accounts payable                                                                                                                                                                   |                                      |         | 20,999      |         |              |        | 18,636  |        
|                                               | Accrued liabilities                                                                                                                                                                |                                      |         | 41,597      |         |              |        | 44,824  |        
|                                               | Income taxes payable                                                                                                                                                               |                                      |         | 3,947       |         |              |        | 4,939   |        
|                                               | Deferred income taxes                                                                                                                                                              |                                      |         | 2,169       |         |              |        | 2,073   |        
|                                               |                                                                                                                                                                                    |                                      |         |             |         |              |        |         |        
|                                               |                                                                                                                                                                                    | Total current liabilities            |         |             | 74,962  |              |        |         | 76,961  | 
|Long-term debt                                 |                                                                                                                                                                                    |                                      | 243,750 |             |         |              | 77,894 |        
|Deferred income taxes                          |                                                                                                                                                                                    |                                      | 21,047  |             |         |              | 21,186 |        
|Other long-term liabilities                    |                                                                                                                                                                                    |                                      | 4,108   |             |         |              | 3,787  |        
|                                               |                                                                                                                                                                                    |                                      |         |             |         |              |        |         |        
|                                               |                                                                                                                                                                                    | Total liabilities                    |         |             | 343,867 |              |        |         | 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; authorized, 1,020,000 shares;
issued and outstanding, 831,888 shares in 2002 |                                      |         | 15          |         |              |        | 1,664   |        
|                                               | Additional paid-in capital                                                                                                                                                         |                                      |         |            |         |              |        | 81,921  |        
|                                               | Retained earnings (deficit)                                                                                                                                                        |                                      |         | (43,433     | )       |              |        | 37,145  |        
|                                               | Accumulated other comprehensive loss                                                                                                                                               |                                      |         | (12,941     | )       |              |        | (12,268 | )      
|                                               |                                                                                                                                                                                    |                                      |         |             |         |              |        |         |        
|                                               |                                                                                                                                                                                    | Total stockholders equity (deficit) |         |             | (56,359 | )            |        |         | 108,462 | 
|                                               |                                                                                                                                                                                    |                                      |         |             |         |              |        |         |        
|                                               |                                                                                                                                                                                    | Total                                |         | $           | 287,508 |              |        | $       | 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 |        | Six Months Ended
|                                                                             |                                |   | June 30,           |        | June 30,        
|                                                                             |                                |   |                    |        |                 
|                                                                             |                                |   | 2003               |        | 2002             |   | 2003   |        | 2002
|                                                                             |                                |   |                    |        |                  |   |        |        |     
|Net sales                                                                    |                                | $ | 101,205            |        |                  | $ | 98,091 |        |      | $ | 192,606 |         |   | $ | 197,195 |        
|Cost of sales                                                                |                                |   | 23,540             |        |                  |   | 22,889 |        |      |   | 45,465  |         |   |   | 45,887  |        
|                                                                             |                                |   |                    |        |                  |   |        |        |      |   |         |         |   |   |         |        
|                                                                             | Gross profit                   |   |                    | 77,665 |                  |   |        | 75,202 |      |   |         | 147,141 |   |   |         | 151,308 |  
|Selling, general and administrative expenses                                 |                                |   | 76,454             |        |                  |   | 61,043 |        |      |   | 135,514 |         |   |   | 121,406 |        
|Restructuring and impairment charges                                         |                                |   |                   |        |                  |   |       |        |      |   | 565     |         |   |   |        |        
|                                                                             |                                |   |                    |        |                  |   |        |        |      |   |         |         |   |   |         |        
|                                                                             | Income from operations         |   |                    | 1,211  |                  |   |        | 14,159 |      |   |         | 11,062  |   |   |         | 29,902  |  
|Other income (expense):                                                      |                                |   |                    |        |                  |   |        |        |      |   |         |         |   |   |         |        
|                                                                             | Exchange (loss) gain, net      |   |                    | 521    |                  |   |        | (5,909 | )    |   |         | (419    | ) |   |         | (5,423  | )
|                                                                             | Interest expense, net          |   |                    | (4,616 | )                |   |        | (2,925 | )    |   |         | (7,199  | ) |   |         | (5,855  | )
|                                                                             | Loss on extinguishment of debt |   |                    | (6,620 | )                |   |        |       |      |   |         | (6,620  | ) |   |         |        |  
|                                                                             | Other, net                     |   |                    | (282   | )                |   |        | 285    |      |   |         | (318    | ) |   |         | 295     |  
|                                                                             |                                |   |                    |        |                  |   |        |        |      |   |         |         |   |   |         |        
|Income (loss) before income taxes and
cumulative effect of accounting change |                                |   | (9,786             | )      |                  |   | 5,610  |        |      |   | (3,494  | )       |   |   | 18,919  |        
|Income tax expense (benefit)                                                 |                                |   | (2,128             | )      |                  |   | 1,638  |        |      |   | 1,640   |         |   |   | 4,802   |        
|                                                                             |                                |   |                    |        |                  |   |        |        |      |   |         |         |   |   |         |        
|Income (loss) before cumulative effect of accounting change                  |                                |   | (7,658             | )      |                  |   | 3,972  |        |      |   | (5,134  | )       |   |   | 14,117  |        
|Cumulative effect of accounting change                                       |                                |   |                   |        |                  |   |       |        |      |   |        |         |   |   | (244    | )      
|                                                                             |                                |   |                    |        |                  |   |        |        |      |   |         |         |   |   |         |        
|Net income (loss)                                                            |                                | $ | (7,658             | )      |                  | $ | 3,972  |        |      | $ | (5,134  | )       |   | $ | 13,873  |        
|                                                                             |                                |   |                    |        |                  |   |        |        |      |   |         |         |   |   |         |        

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)

|                                                     |                                                                                                                                              |                                                       |                                           |                                                     |       |                  |        |        |        |         |        |  
|---------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------- | ----------------------------------------- | --------------------------------------------------- | ----- | ---------------- | ------ | ------ | ------ | ------- | ------ | -
|                                                     |                                                                                                                                              |                                                       |                                           |                                                     |       | Six Months Ended
|                                                     |                                                                                                                                              |                                                       |                                           |                                                     |       | June 30,        
|                                                     |                                                                                                                                              |                                                       |                                           |                                                     |       |                 
|                                                     |                                                                                                                                              |                                                       |                                           |                                                     |       | 2003             |        | 2002  
|                                                     |                                                                                                                                              |                                                       |                                           |                                                     |       |                  |        |       
|Cash flows from operating activities:                |                                                                                                                                              |                                                       |                                           |                                                     |       |                  |        |       
|                                                     | Net income (loss)                                                                                                                            |                                                       | $                                         | (5,134                                              | )     |                  | $      | 13,873 |       
|                                                     |                                                                                                                                              | Cumulative effect of accounting change                |                                           |                                                     |      |                  |        |        | 244    |        
|                                                     |                                                                                                                                              |                                                       |                                           |                                                     |       |                  |        |        |       
|                                                     | Income (loss) before cumulative effect of accounting change                                                                                  |                                                       |                                           | (5,134                                              | )     |                  |        | 14,117 |       
|                                                     | Adjustments to reconcile income (loss) before cumulative effect of accounting
change to net cash (used in) provided by operating activities: |                                                       |                                           |                                                     |       |                  |        |        |       
|                                                     |                                                                                                                                              | Gain on sale of property and equipment                |                                           |                                                     |      |                  |        |        | (65    | )      
|                                                     |                                                                                                                                              | Depreciation and amortization                         |                                           |                                                     | 2,973 |                  |        |        | 2,411  |        
|                                                     |                                                                                                                                              | Amortization
and write off of deferred financing fees |                                           |                                                     | 3,030 |                  |        |        | 717    |        
|                                                     |                                                                                                                                              | Provision for uncollectible accounts receivable       |                                           |                                                     | 2,938 |                  |        |        | 6,103  |        
|                                                     |                                                                                                                                              | Asset impairment charge                               |                                           |                                                     | 251   |                  |        |        |       |        
|                                                     |                                                                                                                                              | Unrealized foreign exchange and derivative loss       |                                           |                                                     | 1,470 |                  |        |        | 4,311  |        
|                                                     |                                                                                                                                              | Deferred realized foreign exchange loss               |                                           |                                                     | 646   |                  |        |        | 385    |        
|                                                     |                                                                                                                                              | Deferred income taxes                                 |                                           |                                                     |      |                  |        |        | (3,504 | )      
|                                                     |                                                                                                                                              | Changes in operating assets and liabilities:          |                                           |                                                     |       |                  |        |        |        |        
|                                                     |                                                                                                                                              |                                                       | Receivables                               |                                                     |       | (1,414           | )      |        |        | (3,418  | )     
|                                                     |                                                                                                                                              |                                                       | Inventories                               |                                                     |       | (3,327           | )      |        |        | 2,121   |       
|                                                     |                                                                                                                                              |                                                       | Prepaid expenses and other current assets |                                                     |       | (4,083           | )      |        |        | 2,046   |       
|                                                     |                                                                                                                                              |                                                       | Other assets                              |                                                     |       | 520              |        |        |        | 852     |       
|                                                     |                                                                                                                                              |                                                       | Accounts payable and accrued liabilities  |                                                     |       | (451             | )      |        |        | (12,107 | )     
|                                                     |                                                                                                                                              |                                                       | Income taxes payable/prepaid              |                                                     |       | (1,000           | )      |        |        | (2,344  | )     
|                                                     |                                                                                                                                              |                                                       | Other long-term liabilities               |                                                     |       | 321              |        |        |        | 376     |       
|                                                     |                                                                                                                                              |                                                       |                                           |                                                     |       |                  |        |        |       
|                                                     |                                                                                                                                              |                                                       |                                           | Net cash (used in) provided by operating activities |       |                  | (3,260 | )      |        |         | 12,001 |  
|                                                     |                                                                                                                                              |                                                       |                                           |                                                     |       |                  |        |        |       
|Cash flows from investing activities:                |                                                                                                                                              |                                                       |                                           |                                                     |       |                  |        |       
|                                                     | Proceeds from sale of property and equipment                                                                                                 |                                                       |                                           |                                                    |       |                  |        | 211    |       
|                                                     | Purchases of property and equipment                                                                                                          |                                                       |                                           | (2,704                                              | )     |                  |        | (4,885 | )     
|                                                     | Other                                                                                                                                        |                                                       |                                           | (431                                                | )     |                  |        | (265   | )     
|                                                     |                                                                                                                                              |                                                       |                                           |                                                     |       |                  |        |        |       
|                                                     |                                                                                                                                              |                                                       |                                           | Net cash used in investing activities               |       |                  | (3,135 | )      |        |         | (4,939 | )
|                                                     |                                                                                                                                              |                                                       |                                           |                                                     |       |                  |        |        |       
|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                                                                                                          |                                                       |                                           | (8,375                                              | )     |                  |        | (4,625 | )     
|                                                     | Net borrowings under revolving credit facility                                                                                               |                                                       |                                           |                                                    |       |                  |        | 2,700  |       
|                                                     | Distribution of additional paid-in capital to shareholder                                                                                    |                                                       |                                           | (83,570                                             | )     |                  |        |       |       
|                                                     | Distribution payment to shareholder from retained earnings                                                                                   |                                                       |                                           | (75,444                                             | )     |                  |        |       |       
|                                                     | Deferred financing costs                                                                                                                     |                                                       |                                           | (13,906                                             | )     |                  |        |       |       
|                                                     | Net repayments under bank debt                                                                                                               |                                                       |                                           | (828                                                | )     |                  |        | (318   | )     
|                                                     |                                                                                                                                              |                                                       |                                           |                                                     |       |                  |        |        |       
|                                                     |                                                                                                                                              |                                                       |                                           | Net cash used in financing activities               |       |                  | (7,303 | )      |        |         | (2,243 | )
|                                                     |                                                                                                                                              |                                                       |                                           |                                                     |       |                  |        |        |       
|Effect of exchange rate changes on cash              |                                                                                                                                              |                                                       | (852                                      | )                                                   |       |                  | (1,516 | )     
|                                                     |                                                                                                                                              |                                                       |                                           |                                                     |       |                  |        |        |       
|Net (decrease) increase in cash and cash equivalents |                                                                                                                                              |                                                       | (14,550                                   | )                                                   |       |                  | 3,303  |       
|Cash and cash equivalents at beginning of period     |                                                                                                                                              |                                                       | 27,206                                    |                                                     |       |                  | 6,748  |       
|                                                     |                                                                                                                                              |                                                       |                                           |                                                     |       |                  |        |        |       
|Cash and cash equivalents at end of period           |                                                                                                                                              | $                                                     | 12,656                                    |                                                     |       | $                | 10,051 |       
|                                                     |                                                                                                                                              |                                                       |                                           |                                                     |       |                  |        |        |       

See accompanying notes to consolidated financial statements

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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 Cometics 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.
(the Old Credit Facilities) 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 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
June 30, 2003 and for the three and six months ended June 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 six months ended
June 30, 2002 and the accompanying audited consolidated financial statements as
of December 31, 2002 reflect the operations of CDRJ and its subsidiaries. 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 June 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.

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 six months ended June 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

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

Based Compensation, the compensation expense for
the three and six months ended June 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):

|                           |  |          |        |              |  |   |        | 
|-------------------------- |  | -------- | ------ | ------------ |  | - | ------ | 
|                           |  | June 30, |        | December 31,
|                           |  | 2003     |        | 2002        
|                           |  |          |        |             
|Raw materials and supplies |  | $        | 4,788  |              |  | $ | 5,239  | 
|Finished goods             |  |          | 33,706 |              |  |   | 30,047 | 
|                           |  |          |        |              |  |   |        | 
|Total inventories          |  | $        | 38,494 |              |  | $ | 35,286 | 
|                           |  |          |        |              |  |   |        | 

(3) Property and Equipment

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

|                               |  |          |        |              |  |   |        | 
|------------------------------ |  | -------- | ------ | ------------ |  | - | ------ | 
|                               |  | June 30, |        | December 31,
|                               |  | 2003     |        | 2002        
|                               |  |          |        |             
|Land                           |  | $        | 16,362 |              |  | $ | 16,448 | 
|Buildings                      |  |          | 17,339 |              |  |   | 17,452 | 
|Machinery, equipment and other |  |          | 43,894 |              |  |   | 42,153 | 
|                               |  |          |        |              |  |   |        | 
|                               |  |          | 77,595 |              |  |   | 76,053 | 
|Less accumulated depreciation  |  |          | 17,735 |              |  |   | 15,331 | 
|                               |  |          |        |              |  |   |        | 
|Property and equipment, net    |  | $        | 59,860 |              |  | $ | 60,722 | 
|                               |  |          |        |              |  |   |        | 

(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 $44,209,000 as of June 30, 2003. The changes in the
carrying amount of goodwill for the six months ended June 30, 2003 are as
follows (in thousands):

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

|                                |  |        |        |        |  |        |        |        |  |       |       |     |  |              |      |   |  |   |        |  
|------------------------------- |  | ------ | ------ | ------ |  | ------ | ------ | ------ |  | ----- | ----- | --- |  | ------------ | ---- | - |  | - | ------ | -
|                                |  | United |        |        |  |        |        |        |  |       |       | All |  | Consolidated
|Goodwill                        |  | States |        | Mexico |  | Europe |        | Others |  | Total
|                                |  |        |        |        |  |        |        |        |  |      
|Balance as of December 31, 2002 |  | $      | 32,188 |        |  | $      | 28,548 |        |  | $     | 5,300 |     |  | $            | 269  |   |  | $ | 66,305 |  
|Impairment losses               |  |        |       |        |  |        |       |        |  |       |      |     |  |              | (137 | ) |  |   | (137   | )
|Translation effect              |  |        |       |        |  |        | (240   | )      |  |       | (399  | )   |  |              | (132 | ) |  |   | (771   | )
|                                |  |        |        |        |  |        |        |        |  |       |       |     |  |              |      |   |  |   |        |  
|Balance as of June 30, 2003     |  | $      | 32,188 |        |  | $      | 28,308 |        |  | $     | 4,901 |     |  | $            |     |   |  | $ | 65,397 |  
|                                |  |        |        |        |  |        |        |        |  |       |       |     |  |              |      |   |  |   |        |  

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 second quarter ended June 30, 2003, the
Company revised its projections regarding the Venezuela operations given the
Companys decision to exit this market. Based on the revised projections, the
Company recorded an impairment loss of $137,000, the total goodwill originally
allocated to the Venezuela 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 (loss)
income before income taxes for the six months ended June 30, 2003. During the
six months ended June 30, 2003 Jafra Mexico reported pretax income and income
tax expense. This was partially offset by pretax losses with a corresponding
income tax benefit in the United States. Further, the Company recorded
valuation allowances against certain operating losses in South America and
Europe. The actual income tax rate of the Company differs from the expected
tax rate for the six months ended June 30, 2002, principally as a result of
(i) a lower effective tax rate in Jafra Mexico, 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 enactment as the result of
new tax legislation in Mexico reduced the Mexico
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. 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
will be 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 Jafra Distribution will also be required to fully and
unconditionally guarantee the Mexican portion of the New Notes jointly and
severally, on a senior subordinated basis. Jafra
Distribution currently has no Mexican subsidiaries. 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. will also be 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.
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

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

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. The New Notes are required to be registered in a registered
exchange offer under the Securities Act of 1933. Failure to exchange the
existing New Notes for Notes registered under the Securities Act of 1933 within
approximately 255 days from the date the New Notes were issued will cause an increase of up to 0.5%
in the interest rate required to be paid by the Issuers.

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 June 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 June 30, 2003 was 5.3% for LIBOR
borrowings and 7.3% 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 June 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 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 a subsequent distribution 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).

The Company capitalized $13,906,000 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 June 30, 2003, approximately $219,000 of the
deferred financing fees were amortized.

(7) Management Incentive Plan

In connection with the Recapitalization, the Board of Directors approved
an amendment to Companys stock incentive plan (the Stock Incentive Plan) to
reflect the equity instruments as 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 will be reduced such that awards ratio of exercise price per share to
the market value per share is not reduced and the awards aggregate intrinsic
value immediately after the Recapitalization will not be greater than the

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

aggregate intrinsic value immediately before Recapitalization. The amendments
are to become effective upon final liquidation of CDRJ.

(8) Comprehensive Income (Loss)

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

|                                                                                     |  |                    |        |                  |  |      |        |      |  |   |        |   |  |   |        |  
|------------------------------------------------------------------------------------ |  | ------------------ | ------ | ---------------- |  | ---- | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                                                                     |  | Three Months Ended |        | Six Months Ended
|                                                                                     |  | June 30,           |        | June 30,        
|                                                                                     |  |                    |        |                 
|                                                                                     |  | 2003               |        | 2002             |  | 2003 |        | 2002
|                                                                                     |  |                    |        |                  |  |      |        |     
|Net (loss) income                                                                    |  | $                  | (7,658 | )                |  | $    | 3,972  |      |  | $ | (5,134 | ) |  | $ | 13,873 |  
|Unrealized and deferred realized (loss) gain on derivatives                          |  |                    | (198   | )                |  |      | 2,535  |      |  |   | 157    |   |  |   | 340    |  
|Reclassification of deferred realized (loss) gain to
exchange (loss) gain            |  |                    |       |                  |  |      | 208    |      |  |   | (550   | ) |  |   | 343    |  
|Reclassification of deferred realized loss to cost of sales                          |  |                    | (24    | )                |  |      | 962    |      |  |   | 654    |   |  |   | 1,899  |  
|Tax (benefit) expense on unrealized and deferred realized
(loss) gain on derivatives |  |                    |       |                  |  |      | (2,607 | )    |  |   |       |   |  |   | (903   | )
|Foreign currency translation adjustments                                             |  |                    | 2,276  |                  |  |      | (6,009 | )    |  |   | (934   | ) |  |   | (7,347 | )
|                                                                                     |  |                    |        |                  |  |      |        |      |  |   |        |   |  |   |        |  
|Comprehensive income (loss)                                                          |  | $                  | (5,604 | )                |  | $    | (939   | )    |  | $ | (5,807 | ) |  | $ | 8,205  |  
|                                                                                     |  |                    |        |                  |  |      |        |      |  |   |        |   |  |   |        |  

(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 three months ended June 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 operating (loss) income 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.

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 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.

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

|                                                 |  |                |        |        |  |        |         |        |  |          |        |           |  |       |        |             |  |              |         |  |  |            |         |   |  |   |         | 
|------------------------------------------------ |  | -------------- | ------ | ------ |  | ------ | ------- | ------ |  | -------- | ------ | --------- |  | ----- | ------ | ----------- |  | ------------ | ------- |  |  | ---------- | ------- | - |  | - | ------- | 
|                                                 |  |                |        |        |  |        |         |        |  |          |        |           |  |       |        |             |  |              |         |  |  | Corporate, |         |   |  |  
|                                                 |  | United         |        |        |  |        |         |        |  |          |        | All       |  | Total |        | Unallocated |  | Consolidated
|                                                 |  | States         |        | Mexico |  | Europe |         | Others |  | Segments |        | and Other |  | Total
|                                                 |  |                |        |        |  |        |         |        |  |          |        |           |  |      
|                                                 |  | (in thousands)
|For the Three Months Ended
June 30, 2003         |  |                |        |        |  |        |         |        |  |          |        |           |  |       |        |             |  |              |         |  |  |            |         |   |  |   |         | 
|Net sales                                        |  | $              | 25,272 |        |  | $      | 63,421  |        |  | $        | 8,623  |           |  | $     | 3,889  |             |  | $            | 101,205 |  |  | $          |        |   |  | $ | 101,205 | 
|Operating income (loss)                          |  |                | 3,728  |        |  |        | 17,881  |        |  |          | 503    |           |  |       | (1,614 | )           |  |              | 20,498  |  |  |            | (19,287 | ) |  |   | 1,211   | 
|Depreciation and amortization                    |  |                | 687    |        |  |        | 552     |        |  |          | 117    |           |  |       | 128    |             |  |              | 1,484   |  |  |            |        |   |  |   | 1,484   | 
|For the Three Months Ended
June 30, 2002         |  |                |        |        |  |        |         |        |  |          |        |           |  |       |        |             |  |              |         |  |  |            |         |   |  |   |         | 
|Net sales                                        |  | $              | 23,909 |        |  | $      | 61,392  |        |  | $        | 7,245  |           |  | $     | 5,545  |             |  | $            | 98,091  |  |  | $          |        |   |  | $ | 98,091  | 
|Operating income (loss)                          |  |                | 4,206  |        |  |        | 16,634  |        |  |          | 274    |           |  |       | (1,927 | )           |  |              | 19,187  |  |  |            | (5,028  | ) |  |   | 14,159  | 
|Depreciation and amortization                    |  |                | 565    |        |  |        | 470     |        |  |          | 101    |           |  |       | 132    |             |  |              | 1,268   |  |  |            |        |   |  |   | 1,268   | 
|As of and for the Six Months
Ended June 30, 2003 |  |                |        |        |  |        |         |        |  |          |        |           |  |       |        |             |  |              |         |  |  |            |         |   |  |   |         | 
|Net sales                                        |  | $              | 49,153 |        |  | $      | 120,214 |        |  | $        | 16,070 |           |  | $     | 7,169  |             |  | $            | 192,606 |  |  | $          |        |   |  | $ | 192,606 | 
|Operating income (loss)                          |  |                | 7,057  |        |  |        | 32,550  |        |  |          | 509    |           |  |       | (3,128 | )           |  |              | 36,988  |  |  |            | (25,926 | ) |  |   | 11,062  | 
|Depreciation and amortization                    |  |                | 1,424  |        |  |        | 1,098   |        |  |          | 201    |           |  |       | 250    |             |  |              | 2,973   |  |  |            |        |   |  |   | 2,973   | 
|Capital expenditures                             |  |                | 1,433  |        |  |        | 803     |        |  |          | 195    |           |  |       | 273    |             |  |              | 2,704   |  |  |            |        |   |  |   | 2,704   | 
|Segment assets                                   |  |                | 83,277 |        |  |        | 179,499 |        |  |          | 18,125 |           |  |       | 8,431  |             |  |              | 289,332 |  |  |            | (1,824  | ) |  |   | 287,508 | 
|Goodwill                                         |  |                | 32,188 |        |  |        | 28,308  |        |  |          | 4,901  |           |  |       |       |             |  |              | 65,397  |  |  |            |        |   |  |   | 65,397  | 
|As of and for the Six Months
Ended June 30, 2002 |  |                |        |        |  |        |         |        |  |          |        |           |  |       |        |             |  |              |         |  |  |            |         |   |  |   |         | 
|Net sales                                        |  | $              | 44,784 |        |  | $      | 127,879 |        |  | $        | 13,056 |           |  | $     | 11,476 |             |  | $            | 197,195 |  |  | $          |        |   |  | $ | 197,195 | 
|Operating income (loss)                          |  |                | 7,068  |        |  |        | 34,222  |        |  |          | 321    |           |  |       | (2,755 | )           |  |              | 38,856  |  |  |            | (8,954  | ) |  |   | 29,902  | 
|Depreciation and amortization                    |  |                | 1,130  |        |  |        | 912     |        |  |          | 166    |           |  |       | 203    |             |  |              | 2,411   |  |  |            |        |   |  |   | 2,411   | 
|Capital expenditures                             |  |                | 3,637  |        |  |        | 1,025   |        |  |          | 30     |           |  |       | 193    |             |  |              | 4,885   |  |  |            |        |   |  |   | 4,885   | 
|Segment assets                                   |  |                | 73,620 |        |  |        | 172,710 |        |  |          | 19,673 |           |  |       | 11,132 |             |  |              | 277,135 |  |  |            | (1,365  | ) |  |   | 275,770 | 
|Goodwill                                         |  |                | 32,188 |        |  |        | 29,771  |        |  |          | 5,534  |           |  |       | 269    |             |  |              | 67,762  |  |  |            |        |   |  |   | 67,762  | 

(11) Restructuring and Impairment Charges

During the six months ended June 30, 2003, the Company recorded $565,000
of restructuring and impairment charges relating to its restructuring
activities in South America and Thailand. Approximately $251,000 of impairment
charges were recorded for certain fixed assets in Thailand. The carrying value
of the fixed assets does not appear to be recoverable based on undiscounted
cash flows. The Company recorded an impairment charge for the difference
between the carrying value of the assets and the fair market value. The
remaining charges related to severance expenses. All amounts were paid out
during the six months ended June 30, 2003.

(12) 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 enters 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 12 month 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 three months and six months ended June 30, 2003, the Company
recognized gains of approximately $627,000 on option contracts. The Company
recognized losses on forward contracts of approximately $511,000 and $866,000
during the three and six months ended June 30, 2002, respectively. The Company
recognized gains on option contracts of approximately $737,000 during each of
the three and six month periods ended June 30, 2002 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 six
months ended June 30, 2002, the Company deferred as a component of other
comprehensive loss an additional $1,814,000 of losses on forward contracts and
$2,154,000 of gains on option contracts qualifying for hedge accounting under
SFAS No. 133. During the six months ended June 30, 2002, approximately
$343,000 was reclassified as exchange (loss) gain and $1,899,000 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 operations $739,000 of losses on forward contracts and $475,000
of gains on option contracts. During the six months ended June 30, 2003, the
company deferred as a component of other comprehensive loss an additional
$157,000 of gains on option contracts qualifying for hedge accounting under
SFAS No. 133. During the six months ended June 30, 2003, approximately
$550,000 of gains were reclassified as exchange loss (gain) 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 loss of $3,000 deferred as a component of other comprehensive
loss at June 30, 2003 will be recognized into net income within the next twelve
months.

The fair value of the option contracts was $3,000 at June 30, 2003 and has
been recorded as accrued liabilities 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 six months ended June 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 six months ended
June 30, 2003 and 2002, $230,000 and $123,000, respectively, of gains, were
reclassified into earnings.

The outstanding foreign currency option contracts had a notional value
denominated in Mexican pesos of 609,000,000 in put and call positions at June
30, 2003. 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.

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

(13) Markets to be Exited

As of June 30, 2003, the Company began winding down its operations in
Venezuela, Colombia, Chile and Peru. The Company intends to liquidate the
assets in these markets and expects to complete the liquidation process and
abandon the operations during the third quarter of 2003. Additionally, the
Company is formulating plans the restructure its operations in Brazil,
Argentina and Thailand, either by sale of the operations or abandonment.

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

|                                               |                                                                                                 |                                      |        |        |             |         |              |        |         |         | 
|---------------------------------------------- | ----------------------------------------------------------------------------------------------- | ------------------------------------ | ------ | ------ | ----------- | ------- | ------------ | ------ | ------- | ------- | 
|                                               |                                                                                                 |                                      |        |        | June 30,    |         | December 31,
|                                               |                                                                                                 |                                      |        |        | 2003        |         | 2002        
|                                               |                                                                                                 |                                      |        |        |             |         |             
|                                               |                                                                                                 |                                      |        |        | (Unaudited) |         |              |        |        
|ASSETS                                         |                                                                                                 |                                      |        |        |             |         |              |       
|Current assets:                                |                                                                                                 |                                      |        |        |             |         |              |       
|                                               | Cash and cash equivalents                                                                       |                                      | $      | 5,333  |             |         | $            | 13,088 |        
|                                               | Receivables, net                                                                                |                                      |        | 4,923  |             |         |              | 5,713  |        
|                                               | Inventories                                                                                     |                                      |        | 12,664 |             |         |              | 11,974 |        
|                                               | Receivables from affiliates                                                                     |                                      |        | 18,069 |             |         |              | 25,608 |        
|                                               | Prepaid expenses and other current assets                                                       |                                      |        | 6,705  |             |         |              | 2,554  |        
|                                               |                                                                                                 |                                      |        |        |             |         |              |        |        
|                                               |                                                                                                 | Total current assets                 |        |        | 47,694      |         |              |        | 58,937  |        
|                                              
|Property and equipment, net                    |                                                                                                 |                                      | 26,155 |        |             |         | 26,357       |       
|                                              
|Other assets:                                  |                                                                                                 |                                      |        |        |             |         |              |       
|                                               | Goodwill                                                                                        |                                      |        | 37,089 |             |         |              | 37,488 |        
|                                               | Notes receivable from affiliates                                                                |                                      |        | 14,686 |             |         |              | 10,694 |        
|                                               | Deferred financing fees, net                                                                    |                                      |        | 5,561  |             |         |              | 2,375  |        
|                                               | Other                                                                                           |                                      |        | 4,207  |             |         |              | 3,938  |        
|                                               |                                                                                                 |                                      |        |        |             |         |              |        |        
|                                               |                                                                                                 | Total                                |        | $      | 135,392     |         |              | $      | 139,789 |        
|                                               |                                                                                                 |                                      |        |        |             |         |              |        |        
|LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT) |                                                                                                 |                                      |        |        |             |         |              |       
|Current liabilities:                           |                                                                                                 |                                      |        |        |             |         |              |       
|                                               | Current portion of long-term debt                                                               |                                      | $      | 2,500  |             |         | $            | 4,000  |        
|                                               | Accounts payable                                                                                |                                      |        | 4,792  |             |         |              | 5,944  |        
|                                               | Accrued liabilities                                                                             |                                      |        | 14,035 |             |         |              | 12,230 |        
|                                               | Income taxes payable                                                                            |                                      |        | 311    |             |         |              | 815    |        
|                                               | Deferred income taxes                                                                           |                                      |        | 643    |             |         |              | 643    |        
|                                               | Payables to affiliates                                                                          |                                      |        | 18,026 |             |         |              | 20,435 |        
|                                               |                                                                                                 |                                      |        |        |             |         |              |        |        
|                                               |                                                                                                 | Total current liabilities            |        |        | 40,307      |         |              |        | 44,067  |        
|                                              
|Long-term debt                                 |                                                                                                 |                                      | 97,500 |        |             |         | 47,108       |       
|Deferred income taxes                          |                                                                                                 |                                      | 4,671  |        |             |         | 4,671        |       
|Other long-term liabilities                    |                                                                                                 |                                      | 4,108  |        |             |         | 3,787        |       
|                                               |                                                                                                 |                                      |        |        |             |         |              |        |        
|                                               |                                                                                                 | Total liabilities                    |        |        | 146,586     |         |              |        | 99,633  |        
|                                               |                                                                                                 |                                      |        |        |             |         |              |        |        
|                                              
|Commitments and contingencies                  |                                                                                                 |                                      |       |        |             |         |             |       
|                                              
|Stockholders equity (deficit):                |                                                                                                 |                                      |        |        |             |         |              |       
|                                               | Common stock, par value $.01; authorized, issued
and outstanding, 1,000 shares in 2003 and 2002 |                                      |        |       |             |         |              |       |        
|                                               | Additional paid-in capital                                                                      |                                      |        |       |             |         |              | 39,649 |        
|                                               | Retained earnings (deficit)                                                                     |                                      |        | (8,412 | )           |         |              | 3,249  |        
|                                               | Accumulated other comprehensive loss                                                            |                                      |        | (2,782 | )           |         |              | (2,742 | )      
|                                               |                                                                                                 |                                      |        |        |             |         |              |        |        
|                                               |                                                                                                 | Total stockholders equity (deficit) |        |        | (11,194     | )       |              |        | 40,156  |        
|                                               |                                                                                                 |                                      |        |        |             |         |              |        |        
|                                               |                                                                                                 |                                      | Total  |        | $           | 135,392 |              |        | $       | 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 |        | Six Months Ended
|                                             |                                |   | June 30,           |        | June 30,        
|                                             |                                |   |                    |        |                 
|                                             |                                |   | 2003               |        | 2002             |   | 2003   |        | 2002
|                                             |                                |   |                    |        |                  |   |        |        |     
|Net sales to third parties                   |                                | $ | 34,796             |        |                  | $ | 32,746 |        |      | $ | 67,056 |        |   | $ | 61,419  |       
|Sales to affiliates                          |                                |   | 3,789              |        |                  |   | 4,368  |        |      |   | 8,133  |        |   |   | 7,908   |       
|                                             |                                |   |                    |        |                  |   |        |        |      |   |        |        |   |   |         |       
|Net sales                                    |                                |   | 38,585             |        |                  |   | 37,114 |        |      |   | 75,189 |        |   |   | 69,327  |       
|Cost of sales                                |                                |   | 11,256             |        |                  |   | 11,505 |        |      |   | 22,428 |        |   |   | 20,806  |       
|                                             |                                |   |                    |        |                  |   |        |        |      |   |        |        |   |   |         |       
|                                             | Gross profit                   |   |                    | 27,329 |                  |   |        | 25,609 |      |   |        | 52,761 |   |   |         | 48,521 |  
|Selling, general and administrative expenses |                                |   | 40,433             |        |                  |   | 25,896 |        |      |   | 68,558 |        |   |   | 50,526  |       
|Restructuring and impairment charges         |                                |   |                   |        |                  |   |       |        |      |   | 376    |        |   |   |        |       
|Management fee income from affiliates        |                                |   | (4,385             | )      |                  |   | (2,241 | )      |      |   | (6,016 | )      |   |   | (4,366  | )     
|Royalty income from affiliates, net          |                                |   | (4,722             | )      |                  |   | (5,390 | )      |      |   | (8,918 | )      |   |   | (10,028 | )     
|                                             |                                |   |                    |        |                  |   |        |        |      |   |        |        |   |   |         |       
|                                             | (Loss) income from operations  |   |                    | (3,997 | )                |   |        | 7,344  |      |   |        | (1,239 | ) |   |         | 12,389 |  
|Other income (expense):                      |                                |   |                    |        |                  |   |        |        |      |   |        |        |   |   |         |       
|                                             | Exchange loss (gain), net      |   |                    | (395   | )                |   |        | 678    |      |   |        | (451   | ) |   |         | 543    |  
|                                             | Interest expense, net          |   |                    | (1,875 | )                |   |        | (1,529 | )    |   |        | (3,325 | ) |   |         | (3,117 | )
|                                             | Loss on extinguishment of debt |   |                    | (4,778 | )                |   |        |       |      |   |        | (4,778 | ) |   |         |       |  
|                                             | Other, net                     |   |                    | (57    | )                |   |        | 281    |      |   |        | (53    | ) |   |         | 295    |  
|                                             |                                |   |                    |        |                  |   |        |        |      |   |        |        |   |   |         |       
|(Loss) income before income taxes            |                                |   | (11,102            | )      |                  |   | 6,774  |        |      |   | (9,846 | )      |   |   | 10,110  |       
|Income tax (benefit) expense                 |                                |   | (3,661             | )      |                  |   | 727    |        |      |   | (2,847 | )      |   |   | 917     |       
|                                             |                                |   |                    |        |                  |   |        |        |      |   |        |        |   |   |         |       
|Net (loss) income                            |                                | $ | (7,441             | )      |                  | $ | 6,047  |        |      | $ | (6,999 | )      |   | $ | 9,193   |       
|                                             |                                |   |                    |        |                  |   |        |        |      |   |        |        |   |   |         |       

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)

|                                                 |                                                                                          |                                                       |                                           |                                           |       |                  |        |        |        |        |        |  
|------------------------------------------------ | ---------------------------------------------------------------------------------------- | ----------------------------------------------------- | ----------------------------------------- | ----------------------------------------- | ----- | ---------------- | ------ | ------ | ------ | ------ | ------ | -
|                                                 |                                                                                          |                                                       |                                           |                                           |       | Six Months Ended
|                                                 |                                                                                          |                                                       |                                           |                                           |       |                 
|                                                 |                                                                                          |                                                       |                                           |                                           |       | June 30,        
|                                                 |                                                                                          |                                                       |                                           |                                           |       |                 
|                                                 |                                                                                          |                                                       |                                           |                                           |       | 2003             |        | 2002  
|                                                 |                                                                                          |                                                       |                                           |                                           |       |                  |        |       
|Cash flows from operating activities:            |                                                                                          |                                                       |                                           |                                           |       |                  |        |       
|                                                 | Net (loss) income                                                                        |                                                       | $                                         | (6,999                                    | )     |                  | $      | 9,193  |       
|                                                 | Adjustments to reconcile net (loss) income to net cash provided by
operating activities: |                                                       |                                           |                                           |       |                  |        |        |       
|                                                 |                                                                                          | Depreciation and amortization                         |                                           |                                           | 1,745 |                  |        |        | 1,392  |       
|                                                 |                                                                                          | Provision for uncollectible accounts receivable       |                                           |                                           | 269   |                  |        |        | 441    |       
|                                                 |                                                                                          | Write off and amortization of deferred financing fees |                                           |                                           | 2,464 |                  |        |        | 314    |       
|                                                 |                                                                                          | Asset impairment charges                              |                                           |                                           | 251   |                  |        |        | (540   | )     
|                                                 |                                                                                          | Unrealized foreign exchange loss                      |                                           |                                           | 971   |                  |        |        |       |       
|                                                 |                                                                                          | Deferred income taxes                                 |                                           |                                           |      |                  |        |        | (2,337 | )     
|                                                 |                                                                                          | Changes in operating assets and liabilities:          |                                           |                                           |       |                  |        |        |        |       
|                                                 |                                                                                          |                                                       | Receivables                               |                                           |       | 521              |        |        |        | (756   | )     
|                                                 |                                                                                          |                                                       | Inventories                               |                                           |       | (690             | )      |        |        | (1,936 | )     
|                                                 |                                                                                          |                                                       | Prepaid expenses and other current assets |                                           |       | (4,151           | )      |        |        | (671   | )     
|                                                 |                                                                                          |                                                       | Intercompany receivables and payables     |                                           |       | 5,006            |        |        |        | 3,460  |       
|                                                 |                                                                                          |                                                       | Other assets                              |                                           |       | 162              |        |        |        | 38     |       
|                                                 |                                                                                          |                                                       | Accounts payable and accrued liabilities  |                                           |       | 653              |        |        |        | (481   | )     
|                                                 |                                                                                          |                                                       | Income taxes payable/prepaid              |                                           |       | (504             | )      |        |        | 1,090  |       
|                                                 |                                                                                          |                                                       | Other long-term liabilities               |                                           |       | 321              |        |        |        | 376    |       
|                                                 |                                                                                          |                                                       |                                           |                                           |       |                  |        |        |       
|                                                 |                                                                                          |                                                       |                                           | Net cash provided by operating
activities |       |                  | 19     |        |        |        | 9,583  |  
|                                                 |                                                                                          |                                                       |                                           |                                           |       |                  |        |        |       
|Cash flows from investing activities:            |                                                                                          |                                                       |                                           |                                           |       |                  |        |       
|                                                 | Purchases of property and equipment                                                      |                                                       |                                           | (1,822                                    | )     |                  |        | (3,808 | )     
|                                                 | Other                                                                                    |                                                       |                                           | (431                                      | )     |                  |        | (265   | )     
|                                                 |                                                                                          |                                                       |                                           |                                           |       |                  |        |        |       
|                                                 |                                                                                          |                                                       |                                           | Net cash used in investing activities     |       |                  | (2,253 | )      |        |        | (4,073 | )
|                                                 |                                                                                          |                                                       |                                           |                                           |       |                  |        |        |       
|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                                                      |                                                       |                                           | (6,000                                    | )     |                  |        | (1,500 | )     
|                                                 | Net repayments under revolving credit facility                                           |                                                       |                                           |                                          |       |                  |        | (300   | )     
|                                                 | Lending of note receivable to affiliate                                                  |                                                       |                                           | (3,992                                    | )     |                  |        | (3,822 | )     
|                                                 | Distribution of additional paid-in capital to shareholder                                |                                                       |                                           | (39,649                                   | )     |                  |        |       |       
|                                                 | Distribution payment to shareholder from retained earnings                               |                                                       |                                           | (4,662                                    | )     |                  |        |       |       
|                                                 | Deferred financing costs                                                                 |                                                       |                                           | (5,650                                    | )     |                  |        |       |       
|                                                 |                                                                                          |                                                       |                                           |                                           |       |                  |        |        |       
|                                                 |                                                                                          |                                                       |                                           | Net cash used in financing activities     |       |                  | (5,061 | )      |        |        | (5,622 | )
|                                                 |                                                                                          |                                                       |                                           |                                           |       |                  |        |        |       
|Effect of exchange rate changes on cash          |                                                                                          |                                                       | (460                                      | )                                         |       |                  | 81     |       
|                                                 |                                                                                          |                                                       |                                           |                                           |       |                  |        |        |       
|Net decrease in cash and cash equivalents        |                                                                                          |                                                       | (7,755                                    | )                                         |       |                  | (31    | )     
|Cash and cash equivalents at beginning of period |                                                                                          |                                                       | 13,088                                    |                                           |       |                  | 4,081  |       
|                                                 |                                                                                          |                                                       |                                           |                                           |       |                  |        |        |       
|Cash and cash equivalents at end of period       |                                                                                          | $                                                     | 5,333                                     |                                           |       | $                | 4,050  |       
|                                                 |                                                                                          |                                                       |                                           |                                           |       |                  |        |        |       

See accompanying notes to consolidated financial statements

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

(1) Basis of Presentation

Jafra Cosmetics International, Inc. a Delaware corporation (JCI), is an
indirect wholly-owned subsidiary of Jafra Worldwide Holdings (Lux) S.àR.L., a
Luxembourg société à responsabilité limitée(the Parent), which is a
wholly-owned direct 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
June 30, 2003 and for the three and six months ended June 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 June 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 Cometics 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. (the Old Credit Facilities) 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 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
(APB) Opinion 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 six
months ended June 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 six months ended June
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

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

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, 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):

|                               |  |          |        |              |  |   |        | 
|------------------------------ |  | -------- | ------ | ------------ |  | - | ------ | 
|                               |  | June 30, |        | December 31,
|                               |  | 2003     |        | 2002        
|                               |  |          |        |             
|Land                           |  | $        | 6,188  |              |  | $ | 6,188  | 
|Buildings                      |  |          | 7,063  |              |  |   | 7,099  | 
|Machinery, equipment and other |  |          | 23,586 |              |  |   | 22,460 | 
|                               |  |          |        |              |  |   |        | 
|                               |  |          | 36,837 |              |  |   | 35,747 | 
|Less accumulated depreciation  |  |          | 10,682 |              |  |   | 9,390  | 
|                               |  |          |        |              |  |   |        | 
|Property and equipment, net    |  | $        | 26,155 |              |  | $ | 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 $254,000 as of June 30, 2003. The changes in the carrying amount
of goodwill for the six months ended June 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              |  |        |       |        |  |       | (399  | )            |  |   | (399   | )
|                                |  |        |        |        |  |       |       |              |  |   |        |  
|Balance as of June 30, 2003     |  | $      | 32,188 |        |  | $     | 4,901 |              |  | $ | 37,089 |  
|                                |  |        |        |        |  |       |       |              |  |   |        |  

(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 six months ended June 30, 2003
principally as the result of (i) state income tax, and (ii) valuation
allowances against certain operating losses in Europe and Dominican Republic.

The actual income tax rate of JCI differs from the expected tax rate for
the three and six months ended June 30, 2002, principally as a result of 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 Europe.

(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
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
will also be 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.
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. The New Notes are required to be registered in a registered
exchange offer under the Securities Act of 1933. Failure to exchange the
existing New Notes for Notes registered under the Securities Act of 1933 within
approximately 255 days from the date the New Notes were issued will cause an increase of up
to 0.5% in the interest rate required to be paid by the Issuers.

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 June 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 June 30, 2003 was 5.3% for LIBOR
borrowings and 7.3% 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
June 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 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 (expense) 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, 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 $5,650,000 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

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

method over the term of the New Notes and the
Senior Credit Agreement. As of June 30, 2003, approximately of $89,000 of the
deferred financing fees were amortized.

(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 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 will be reduced such that awards ratio of exercise price per share to
the market value per share is not reduced and the awards aggregate intrinsic
value immediately after the Recapitalization will not be greater than the
aggregate intrinsic value immediately before Recapitalization. The amendments
are to become effective upon final liquidation of CDRJ.

(7) Comprehensive Income (Loss)

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

|                                         |  |                    |        |                  |  |      |       |      |  |   |        |   |  |   |       |  
|---------------------------------------- |  | ------------------ | ------ | ---------------- |  | ---- | ----- | ---- |  | - | ------ | - |  | - | ----- | -
|                                         |  | Three Months Ended |        | Six Months Ended
|                                         |  | June 30,           |        | June 30 ,       
|                                         |  |                    |        |                 
|                                         |  | 2003               |        | 2002             |  | 2003 |       | 2002
|                                         |  |                    |        |                  |  |      |       |     
|Net income (loss)                        |  | $                  | (7,441 | )                |  | $    | 6,047 |      |  | $ | (6,999 | ) |  | $ | 9,193 |  
|Foreign currency translation adjustments |  |                    | 3      |                  |  |      | (165  | )    |  |   | (40    | ) |  |   | (159  | )
|                                         |  |                    |        |                  |  |      |       |      |  |   |        |   |  |   |       |  
|Comprehensive income (loss)              |  | $                  | (7,438 | )                |  | $    | 5,882 |      |  | $ | (7,039 | ) |  | $ | 9,034 |  
|                                         |  |                    |        |                  |  |      |       |      |  |   |        |   |  |   |       |  

(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 $2,942,000 and $5,626,000 for the three and six months ended June 30,
2003, respectively, and $2,719,000 and $7,643,000 for the three and six months
ended June 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 $842,000 and $1,626,000 for the three and six months
ended June 30, 2003, respectively, and $640,000 and $1,192,000 for the three
and six months ended June 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 $5,564,000 and
$10,544,000 for the three and six months ended June 30, 2003, respectively, and
$6,030,000 and $11,220,000 for the three and six months ended June 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 June 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 $151,000 and

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

$282,000 for the three and six months ended June 30, 2003, respectively, and $80,000 and
$135,000 for the three and six months ended June 30, 2002, respectively, and is
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 three and six months ended June 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 operating (loss) income 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 June 30, 2003         |  |                |        |            |  |        |        |          |  |           |       |             |  |              |         |  |  |            |        |   |  |   |         |  
|Net sales                                        |  | $              | 25,272 |            |  | $      | 8,623  |          |  | $         | 901   |             |  | $            | 34,796  |  |  | $          | 3,789  |   |  | $ | 38,585  |  
|Operating income (loss)                          |  |                | 3,728  |            |  |        | 503    |          |  |           | (127  | )           |  |              | 4,104   |  |  |            | (8,101 | ) |  |   | (3,997  | )
|Depreciation and amortization                    |  |                | 687    |            |  |        | 117    |          |  |           | 57    |             |  |              | 861     |  |  |            |       |   |  |   | 861     |  
|For the Three Months ended June 30, 2002         |  |                |        |            |  |        |        |          |  |           |       |             |  |              |         |  |  |            |        |   |  |   |         |  
|Net sales                                        |  | $              | 23,909 |            |  | $      | 7,245  |          |  | $         | 1,592 |             |  | $            | 32,746  |  |  | $          | 4,368  |   |  | $ | 37,114  |  
|Operating income (loss)                          |  |                | 4,206  |            |  |        | 320    |          |  |           | (89   | )           |  |              | 4,437   |  |  |            | 2,907  |   |  |   | 7,344   |  
|Depreciation and amortization                    |  |                | 565    |            |  |        | 99     |          |  |           | 67    |             |  |              | 731     |  |  |            |       |   |  |   | 731     |  
|As of and for the Six Months ended June 30, 2003 |  |                |        |            |  |        |        |          |  |           |       |             |  |              |         |  |  |            |        |   |  |   |         |  
|Net sales                                        |  | $              | 49,153 |            |  | $      | 16,070 |          |  | $         | 1,833 |             |  | $            | 67,056  |  |  | $          | 8,133  |   |  | $ | 75,189  |  
|Operating income (loss)                          |  |                | 7,057  |            |  |        | 509    |          |  |           | (282  | )           |  |              | 7,284   |  |  |            | (8,523 | ) |  |   | (1,239  | )
|Depreciation and amortization                    |  |                | 1,424  |            |  |        | 201    |          |  |           | 120   |             |  |              | 1,745   |  |  |            |       |   |  |   | 1,745   |  
|Capital expenditures                             |  |                | 1,433  |            |  |        | 195    |          |  |           | 194   |             |  |              | 1,822   |  |  |            |       |   |  |   | 1,822   |  
|Segment assets                                   |  |                | 83,277 |            |  |        | 17,851 |          |  |           | 1,509 |             |  |              | 102,637 |  |  |            | 32,755 |   |  |   | 135,392 |  
|Goodwill                                         |  |                | 32,188 |            |  |        | 4,901  |          |  |           |      |             |  |              | 37,089  |  |  |            |       |   |  |   | 37,089  |  
|As of and for the Six Months ended June 30, 2002 |  |                |        |            |  |        |        |          |  |           |       |             |  |              |         |  |  |            |        |   |  |   |         |  
|Net sales                                        |  | $              | 44,784 |            |  | $      | 13,056 |          |  | $         | 3,579 |             |  | $            | 61,419  |  |  | $          | 7,908  |   |  | $ | 69,327  |  
|Operating income                                 |  |                | 7,068  |            |  |        | 368    |          |  |           | 24    |             |  |              | 7,460   |  |  |            | 4,929  |   |  |   | 12,389  |  
|Depreciation and amortization                    |  |                | 1,130  |            |  |        | 161    |          |  |           | 101   |             |  |              | 1,392   |  |  |            |       |   |  |   | 1,392   |  
|Capital expenditures                             |  |                | 3,637  |            |  |        | 30     |          |  |           | 141   |             |  |              | 3,808   |  |  |            |       |   |  |   | 3,808   |  
|Segment assets                                   |  |                | 73,620 |            |  |        | 19,433 |          |  |           | 2,776 |             |  |              | 95,829  |  |  |            | 30,022 |   |  |   | 125,851 |  
|Goodwill                                         |  |                | 32,188 |            |  |        | 5,534  |          |  |           |      |             |  |              | 37,722  |  |  |            |       |   |  |   | 37,722  |  



---

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

(10) Restructuring and Impairment Charges

During the six months ended June 30, 2003, JCI recorded $376,000 of
restructuring and impairment charges related to its restructuring activities in
Thailand. Approximately $251,000 of impairment charges were recorded for
certain fixed assets in Thailand. The carrying value of the fixed assets does
not appear to be recoverable based on undiscounted cash flows. JCI recorded an
impairment charge for the difference between the carrying value of the assets
and the fair market value. Approximately $125,000 of severance charges were
also recorded. All amounts were paid out during the six months ended June 30,
2003.

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

|                              |                                                                                             |  |                                      |         |             |         |              |        |   |        | 
|----------------------------- | ------------------------------------------------------------------------------------------- |  | ------------------------------------ | ------- | ----------- | ------- | ------------ | ------ | - | ------ | 
|                              |                                                                                             |  |                                      |         | June 30,    |         | December 31,
|                              |                                                                                             |  |                                      |         | 2003        |         | 2002        
|                              |                                                                                             |  |                                      |         |             |         |             
|                              |                                                                                             |  |                                      |         | (Unaudited) |         |              |        |  
|ASSETS                        |                                                                                             |  |                                      |         |             |         |              |       
|Current assets:               |                                                                                             |  |                                      |         |             |         |              |       
|                              | Cash and cash equivalents                                                                   |  | $                                    | 394     |             |         | $            | 38     |  
|                              | Receivables, net                                                                            |  |                                      | 498     |             |         |              | 174    |  
|                              | Inventories                                                                                 |  |                                      | 25,511  |             |         |              | 21,200 |  
|                              | Receivables from affiliates                                                                 |  |                                      | 79,248  |             |         |              | 28,620 |  
|                              | Prepaid income taxes                                                                        |  |                                      |        |             |         |              | 741    |  
|                              | Prepaid expenses and other current assets                                                   |  |                                      | 5,375   |             |         |              | 3,221  |  
|                              |                                                                                             |  |                                      |         |             |         |              |        |  
|                              |                                                                                             |  | Total current assets                 |         |             | 111,026 |              |        |   | 53,994 | 
|Property and equipment, net   |                                                                                             |  | 1,760                                |         |             |         | 1,806        |       
|Other assets:                 |                                                                                             |  |                                      |         |             |         |              |       
|                              | Deferred financing fees, net                                                                |  |                                      | 8,050   |             |         |              |       |  
|                              | Investments in affiliated Company                                                           |  |                                      | 135,008 |             |         |              |       |  
|                              | Other                                                                                       |  |                                      | 3,483   |             |         |              | 31     |  
|                              | Deferred income taxes                                                                       |  |                                      | 22      |             |         |              | 22     |  
|                              |                                                                                             |  |                                      |         |             |         |              |        |  
|                              |                                                                                             |  | Total                                |         | $           | 259,349 |              |        | $ | 55,853 | 
|                              |                                                                                             |  |                                      |         |             |         |              |        |  
|                              |                                                                                             |  | LIABILITIES AND STOCKHOLDERS EQUITY |         |             |         |              |        |   |        | 
|Current liabilities:          |                                                                                             |  |                                      |         |             |         |              |       
|                              | Current portion of long-term debt                                                           |  | $                                    | 3,750   |             |         | $            |       |  
|                              | Accounts payable                                                                            |  |                                      | 11,366  |             |         |              | 8,668  |  
|                              | Accrued liabilities                                                                         |  |                                      | 1,752   |             |         |              | 107    |  
|                              | Income taxes payable                                                                        |  |                                      | 3,039   |             |         |              |       |  
|                              | Payables to affiliates                                                                      |  |                                      | 41,596  |             |         |              | 1,895  |  
|                              | Deferred income taxes                                                                       |  |                                      | 10,639  |             |         |              | 10,698 |  
|                              |                                                                                             |  |                                      |         |             |         |              |        |  
|                              |                                                                                             |  | Total current liabilities            |         |             | 72,142  |              |        |   | 21,368 | 
|Long-term debt                |                                                                                             |  | 146,250                              |         |             |         |             |       
|                              |                                                                                             |  |                                      |         |             |         |              |        |  
|                              |                                                                                             |  | Total liabilities                    |         |             | 218,392 |              |        |   | 21,368 | 
|Commitments and contingencies |                                                                                             |  |                                     |         |             |         |             |       
|Stockholders equity:         |                                                                                             |  |                                      |         |             |         |              |       
|                              | Series B common stock, no par value; authorized, issued
and outstanding, 151 shares in 2003 |  |                                      | 5       |             |         |              |       |  
|                              | Retained earnings                                                                           |  |                                      | 44,393  |             |         |              | 38,031 |  
|                              | Accumulated other comprehensive loss                                                        |  |                                      | (3,441  | )           |         |              | (3,546 | )
|                              |                                                                                             |  |                                      |         |             |         |              |        |  
|                              |                                                                                             |  | Total stockholders equity           |         |             | 40,957  |              |        |   | 34,485 | 
|                              |                                                                                             |  |                                      |         |             |         |              |        |  
|                              |                                                                                             |  | Total                                |         | $           | 259,349 |              |        | $ | 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 |        | Six Months Ended
|                                             |                        |   | June 30,           |        | June 30,        
|                                             |                        |   |                    |        |                 
|                                             |                        |   | 2003               |        | 2002             |   | 2003   |        | 2002
|                                             |                        |   |                    |        |                  |   |        |        |     
|Sales to affiliates                          |                        | $ | 33,263             |        |                  | $ | 31,873 |        |      | $ | 64,084 |        |   | $ | 72,861 |       
|Cost of sales                                |                        |   | 20,984             |        |                  |   | 20,757 |        |      |   | 40,952 |        |   |   | 44,783 |       
|                                             |                        |   |                    |        |                  |   |        |        |      |   |        |        |   |   |        |       
|                                             | Gross profit           |   |                    | 12,279 |                  |   |        | 11,116 |      |   |        | 23,132 |   |   |        | 28,078 |  
|Selling, general and administrative expenses |                        |   | 1,455              |        |                  |   | 357    |        |      |   | 1,755  |        |   |   | 682    |       
|Management fee expense to affiliates         |                        |   | 1,297              |        |                  |   | 655    |        |      |   | 1,695  |        |   |   | 1,088  |       
|Service fee expense to affiliate             |                        |   | 1,488              |        |                  |   | 5,000  |        |      |   | 3,706  |        |   |   | 7,547  |       
|                                             |                        |   |                    |        |                  |   |        |        |      |   |        |        |   |   |        |       
|                                             | Income from operations |   |                    | 8,039  |                  |   |        | 5,104  |      |   |        | 15,976 |   |   |        | 18,761 |  
|Other expense:                               |                        |   |                    |        |                  |   |        |        |      |   |        |        |   |   |        |       
|                                             | Exchange loss, net     |   |                    | (2,266 | )                |   |        | (3,124 | )    |   |        | (1,487 | ) |   |        | (3,119 | )
|                                             | Interest expense, net  |   |                    | (1,766 | )                |   |        |       |      |   |        | (1,766 | ) |   |        |       |  
|                                             |                        |   |                    |        |                  |   |        |        |      |   |        |        |   |   |        |       
|Income before income taxes                   |                        |   | 4,007              |        |                  |   | 1,980  |        |      |   | 12,723 |        |   |   | 15,642 |       
|Income tax expense                           |                        |   | 3,398              |        |                  |   | 591    |        |      |   | 6,361  |        |   |   | 5,538  |       
|                                             |                        |   |                    |        |                  |   |        |        |      |   |        |        |   |   |        |       
|Net income                                   |                        | $ | 609                |        |                  | $ | 1,389  |        |      | $ | 6,362  |        |   | $ | 10,104 |       
|                                             |                        |   |                    |        |                  |   |        |        |      |   |        |        |   |   |        |       

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)

|                                                 |                                                                                             |                                                 |                                           |                                                     |       |                  |          |        |     |        |      |  
|------------------------------------------------ | ------------------------------------------------------------------------------------------- | ----------------------------------------------- | ----------------------------------------- | --------------------------------------------------- | ----- | ---------------- | -------- | ------ | --- | ------ | ---- | -
|                                                 |                                                                                             |                                                 |                                           |                                                     |       | Six Months Ended
|                                                 |                                                                                             |                                                 |                                           |                                                     |       | June 30,        
|                                                 |                                                                                             |                                                 |                                           |                                                     |       |                 
|                                                 |                                                                                             |                                                 |                                           |                                                     |       | 2003             |          | 2002  
|                                                 |                                                                                             |                                                 |                                           |                                                     |       |                  |          |       
|Cash flows from operating activities:            |                                                                                             |                                                 |                                           |                                                     |       |                  |          |       
|                                                 | Net income                                                                                  |                                                 | $                                         | 6,362                                               |       |                  | $        | 10,104 |    
|                                                 | Adjustments to reconcile net income to net cash
(used in) provided by operating activities: |                                                 |                                           |                                                     |       |                  |          |        |    
|                                                 |                                                                                             | Depreciation and amortization                   |                                           |                                                     | 106   |                  |          |        | 14  |       
|                                                 |                                                                                             | Amortization of deferred financing fees         |                                           |                                                     | 131   |                  |          |        |    |       
|                                                 |                                                                                             | Unrealized foreign exchange and derivative loss |                                           |                                                     | 1,965 |                  |          |        | 532 |       
|                                                 |                                                                                             | Changes in operating assets and liabilities:    |                                           |                                                     |       |                  |          |        |     |       
|                                                 |                                                                                             |                                                 | Receivables                               |                                                     |       | (321             | )        |        |     | (32    | )   
|                                                 |                                                                                             |                                                 | Inventories                               |                                                     |       | (4,430           | )        |        |     | 3,585  |     
|                                                 |                                                                                             |                                                 | Prepaid expenses and other current assets |                                                     |       | (1,663           | )        |        |     | 662    |     
|                                                 |                                                                                             |                                                 | Intercompany receivables and payables     |                                                     |       | (10,118          | )        |        |     | (7,919 | )   
|                                                 |                                                                                             |                                                 | Other assets                              |                                                     |       | (15              | )        |        |     | 4      |     
|                                                 |                                                                                             |                                                 | Accounts payable and accrued liabilities  |                                                     |       | 4,351            |          |        |     | (8,070 | )   
|                                                 |                                                                                             |                                                 | Income taxes payable/prepaid              |                                                     |       | 3,034            |          |        |     | 1,499  |     
|                                                 |                                                                                             |                                                 |                                           |                                                     |       |                  |          |        |    
|                                                 |                                                                                             |                                                 |                                           | Net cash (used in) provided by operating
activities |       |                  | (598     | )      |     |        | 379  |  
|                                                 |                                                                                             |                                                 |                                           |                                                     |       |                  |          |        |    
|Cash flows from investing activities:            |                                                                                             |                                                 |                                           |                                                     |       |                  |          |       
|                                                 | Purchase of preferred shares of affiliate                                                   |                                                 |                                           | (136,420                                            | )     |                  |          |       |    
|                                                 | Purchases of property and equipment                                                         |                                                 |                                           | (46                                                 | )     |                  |          | (296   | )  
|                                                 |                                                                                             |                                                 |                                           |                                                     |       |                  |          |        |    
|                                                 |                                                                                             |                                                 |                                           | Net cash used in investing activities               |       |                  | (136,466 | )      |     |        | (296 | )
|                                                 |                                                                                             |                                                 |                                           |                                                     |       |                  |          |        |    
|Cash flows from financing activities:            |                                                                                             |                                                 |                                           |                                                     |       |                  |          |       
|                                                 | Proceeds from issuance of subordinated debt due 2011                                        |                                                 |                                           | 120,000                                             |       |                  |          |       |    
|                                                 | Proceeds from term loan                                                                     |                                                 |                                           | 30,000                                              |       |                  |          |       |    
|                                                 | Payment of debt guarantee fee to affiliate                                                  |                                                 |                                           | (4,000                                              | )     |                  |          |       |    
|                                                 | Deferred financing costs                                                                    |                                                 |                                           | (8,256                                              | )     |                  |          |       |    
|                                                 |                                                                                             |                                                 |                                           |                                                     |       |                  |          |        |    
|                                                 |                                                                                             |                                                 |                                           | Net cash provided by financing activities           |       |                  | 137,744  |        |     |        |     |  
|                                                 |                                                                                             |                                                 |                                           |                                                     |       |                  |          |        |    
|Effect of exchange rate changes on cash          |                                                                                             |                                                 | (324                                      | )                                                   |       |                  | (66      | )     
|                                                 |                                                                                             |                                                 |                                           |                                                     |       |                  |          |        |    
|Net increase in cash and cash equivalents        |                                                                                             |                                                 | 356                                       |                                                     |       |                  | 17       |       
|Cash and cash equivalents at beginning of period |                                                                                             |                                                 | 38                                        |                                                     |       |                  |         |       
|                                                 |                                                                                             |                                                 |                                           |                                                     |       |                  |          |        |    
|Cash and cash equivalents at end of period       |                                                                                             | $                                               | 394                                       |                                                     |       | $                | 17       |       
|                                                 |                                                                                             |                                                 |                                           |                                                     |       |                  |          |        |    

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 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). 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 June 30,
2003 and for the three and six months ended June 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 June 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. (the Old Credit Facilities) 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 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):

|                           |  |          |        |              |  |   |        | 
|-------------------------- |  | -------- | ------ | ------------ |  | - | ------ | 
|                           |  | June 30, |        | December 31,
|                           |  | 2003     |        | 2002        
|                           |  |          |        |             
|Raw materials and supplies |  | $        | 4,772  |              |  | $ | 4,858  | 
|Finished goods             |  |          | 20,739 |              |  |   | 16,342 | 
|                           |  |          |        |              |  |   |        | 
|Total inventories          |  | $        | 25,511 |              |  | $ | 21,200 | 
|                           |  |          |        |              |  |   |        | 

(3) Property and Equipment

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

|                               |  |          |       |              |  |   |       | 
|------------------------------ |  | -------- | ----- | ------------ |  | - | ----- | 
|                               |  | June 30, |       | December 31,
|                               |  | 2003     |       | 2002        
|                               |  |          |       |             
|Machinery, equipment and other |  | $        | 1,924 |              |  | $ | 1,894 | 
|Less accumulated depreciation  |  |          | 164   |              |  |   | 88    | 
|                               |  |          |       |              |  |   |       | 
|Property and equipment, net    |  | $        | 1,760 |              |  | $ | 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. 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% upon any
liquidation before any holder of Series B common shares of Jafra S.A. 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 sheet.Except for the effect of translation, Jafra
Distribution carries the investment on its balance sheets 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 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. Jafra Distribution currently has no Mexican subsidiaries. Each
acquired or organized Mexican subsidiary of Jafra Distribution will also be
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. will also be
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 June 30, 2003, approximately $3,390,000 was classified as a
non-current asset and the remaining unamortized amount was classified as a
current asset in the accompanying balance sheets.

The New
Notes are unsecured and are generally not redeemable for four years.
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. The New Notes are required to be registered in a registered
exchange offer under the Securities Act of 1933. Failure to exchange the
existing New Notes for Notes registered under the Securities Act of 1933 within
approximately 255 days from the date the New Notes were issued will cause an increase of up
to 0.5% in the interest rate required to be paid by the Issuers.

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 June 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 June 30, 2003 was 5.3% for LIBOR
borrowings and 7.3% 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 June 30, 2003, the Parent was in compliance with all debt
covenants.

Jafra Distribution capitalized approximately $8,256,000 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 June 30, 2003, approximately
$130,000 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 Income (Loss)

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

|                                         |  |                    |       |                  |  |      |        |      |  |   |       |  |  |   |        |  
|---------------------------------------- |  | ------------------ | ----- | ---------------- |  | ---- | ------ | ---- |  | - | ----- |  |  | - | ------ | -
|                                         |  | Three Months Ended |       | Six Months Ended
|                                         |  | June 30,           |       | June 30,        
|                                         |  |                    |       |                 
|                                         |  | 2003               |       | 2002             |  | 2003 |        | 2002
|                                         |  |                    |       |                  |  |      |        |     
|Net income                               |  | $                  | 609   |                  |  | $    | 1,389  |      |  | $ | 6,362 |  |  | $ | 10,104 |  
|Foreign currency translation adjustments |  |                    | 1,364 |                  |  |      | (3,335 | )    |  |   | 105   |  |  |   | (3,904 | )
|                                         |  |                    |       |                  |  |      |        |      |  |   |       |  |  |   |        |  
|Comprehensive income (loss)              |  | $                  | 1,973 |                  |  | $    | (1,946 | )    |  | $ | 6,467 |  |  | $ | 6,200  |  
|                                         |  |                    |       |                  |  |      |        |      |  |   |       |  |  |   |        |  

(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 $2,977,000 and $5,670,000 for the three and six
months ended June 30, 2003, respectively, and $3,211,000 and $8,409,000 for the
three and six months ended June 30, 2002, 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 $3,752,000 and $8,057,000
for the three and six months ended June 30, 2003, respectively, and $4,705,000
and $7,333,000 for the three and six months ended June 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 $30,286,000 and
$58,414,000 for the three and six months ended June 30, 2003, respectively, and
$28,662,000 and $64,452,000 for the three and six months ended June 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
consolidated statements of operations. Jafra Distribution is charged a portion
of these management expenses based upon charges identified to Jafra
Distribution and a formulat 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)

|                                     |                                                                                                                                                        |                            |        |             |         |              |        |        |         | 
|------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------ | -------------------------- | ------ | ----------- | ------- | ------------ | ------ | ------ | ------- | 
|                                     |                                                                                                                                                        |                            |        | June 30,    |         | December 31,
|                                     |                                                                                                                                                        |                            |        | 2003        |         | 2002        
|                                     |                                                                                                                                                        |                            |        |             |         |             
|                                     |                                                                                                                                                        |                            |        | (Unaudited) |         |              |        |       
|ASSETS                               |                                                                                                                                                        |                            |        |             |         |              |        |       
|Current assets:                      |                                                                                                                                                        |                            |        |             |         |              |        |       
|                                     | Cash and cash equivalents                                                                                                                              |                            | $      | 4,678       |         |              | $      | 13,356 |        
|                                     | Receivables, net                                                                                                                                       |                            |        | 31,697      |         |              |        | 33,344 |        
|                                     | Receivables from affiliates                                                                                                                            |                            |        |            |         |              |        | 23,796 |        
|                                     | Prepaid expenses and other current assets                                                                                                              |                            |        | 1,161       |         |              |        | 262    |        
|                                     | Deferred income tax asset                                                                                                                              |                            |        | 9,083       |         |              |        | 9,268  |        
|                                     |                                                                                                                                                        |                            |        |             |         |              |        |        |        
|                                     |                                                                                                                                                        | Total current assets       |        |             | 46,619  |              |        |        | 80,026  | 
|Property and equipment, net          |                                                                                                                                                        |                            | 31,395 |             |         |              | 32,003 |       
|Other assets:                        |                                                                                                                                                        |                            |        |             |         |              |        |       
|                                     | Goodwill                                                                                                                                               |                            |        | 28,308      |         |              |        | 28,548 |        
|                                     | Trademarks                                                                                                                                             |                            |        | 44,035      |         |              |        | 44,408 |        
|                                     | Deferred financing fees, net                                                                                                                           |                            |        |            |         |              |        | 395    |        
|                                     | Other                                                                                                                                                  |                            |        | 959         |         |              |        | 1,196  |        
|                                     |                                                                                                                                                        |                            |        |             |         |              |        |        |        
|                                     |                                                                                                                                                        | Total                      |        | $           | 151,316 |              |        | $      | 186,576 | 
|                                     |                                                                                                                                                        |                            |        |             |         |              |        |        |        
|LIABILITIES AND STOCKHOLDERS EQUITY |                                                                                                                                                        |                            |        |             |         |              |        |       
|Current liabilities:                 |                                                                                                                                                        |                            |        |             |         |              |        |       
|                                     | Current portion of long-term debt                                                                                                                      |                            | $      |            |         |              | $      | 2,489  |        
|                                     | Accounts payable                                                                                                                                       |                            |        | 4,271       |         |              |        | 3,298  |        
|                                     | Accrued liabilities                                                                                                                                    |                            |        | 28,052      |         |              |        | 32,715 |        
|                                     | Income taxes payable                                                                                                                                   |                            |        | 578         |         |              |        | 4,838  |        
|                                     | Payables to affiliates                                                                                                                                 |                            |        | 37,799      |         |              |        | 54,740 |        
|                                     | Other current liabilities                                                                                                                              |                            |        | 491         |         |              |        |       |        
|                                     |                                                                                                                                                        |                            |        |             |         |              |        |        |        
|                                     |                                                                                                                                                        | Total current liabilities  |        |             | 71,191  |              |        |        | 98,080  | 
|Long-term debt                       |                                                                                                                                                        |                            |       |             |         |              | 30,786 |       
|Deferred income taxes                |                                                                                                                                                        |                            | 16,367 |             |         |              | 16,537 |       
|Other long-term liabilities          |                                                                                                                                                        |                            | 3,438  |             |         |              |       |       
|                                     |                                                                                                                                                        |                            |        |             |         |              |        |        |        
|                                     |                                                                                                                                                        | Total liabilities          |        |             | 90,996  |              |        |        | 145,403 | 
|Commitments and contingencies        |                                                                                                                                                        |                            |       |             |         |              |       |       
|Stockholders equity:                |                                                                                                                                                        |                            |        |             |         |              |        |       
|                                     | Series B common stock, no par value; authorized, issued
and outstanding, 151 shares in 2002,
authorized, issued
and outstanding 139,373 shares in 2003 |                            |        |            |         |              |        |       |        
|                                     | Series C
preferred stock, no par value; authorized, issued
and outstanding, 13,642 shares in 2003                                                      |                            |        |            |         |              |        |       |        
|                                     | Additional paid-in capital                                                                                                                             |                            |        | 54,334      |         |              |        | 34,184 |        
|                                     | Retained earnings                                                                                                                                      |                            |        | 10,496      |         |              |        | 11,015 |        
|                                     | Accumulated other comprehensive loss                                                                                                                   |                            |        | (4,510      | )       |              |        | (4,026 | )      
|                                     |                                                                                                                                                        |                            |        |             |         |              |        |        |        
|                                     |                                                                                                                                                        | Total stockholders equity |        |             | 60,320  |              |        |        | 41,173  | 
|                                     |                                                                                                                                                        |                            |        |             |         |              |        |        |        
|                                     |                                                                                                                                                        | Total                      |        | $           | 151,316 |              |        | $      | 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 |        | Six Months Ended
|                                             |                                |   | June 30,           |        | June 30,        
|                                             |                                |   |                    |        |                 
|                                             |                                |   | 2003               |        | 2002             |   | 2003   |        | 2002
|                                             |                                |   |                    |        |                  |   |        |        |     
|Net sales                                    |                                | $ | 63,421             |        |                  | $ | 61,392 |        |      | $ | 120,214 |        |   | $ | 127,879 |       
|Cost of sales                                |                                |   | 26,517             |        |                  |   | 25,593 |        |      |   | 51,513  |        |   |   | 58,456  |       
|                                             |                                |   |                    |        |                  |   |        |        |      |   |         |        |   |   |         |       
|                                             | Gross profit                   |   |                    | 36,904 |                  |   |        | 35,799 |      |   |         | 68,701 |   |   |         | 69,423 |  
|Selling, general and administrative expenses |                                |   | 30,927             |        |                  |   | 30,377 |        |      |   | 58,525  |        |   |   | 61,776  |       
|Management fee expense to affiliates         |                                |   | 3,088              |        |                  |   | 1,584  |        |      |   | 4,320   |        |   |   | 3,276   |       
|Service fee income from affiliate            |                                |   | (1,488             | )      |                  |   | (5,000 |        |      |   | (3,706  | )      |   |   | (7,547  | )     
|Royalty expense to affiliates, net           |                                |   | 4,722              |        |                  |   | 5,390  |        |      |   | 8,918   |        |   |   | 10,028  |       
|                                             |                                |   |                    |        |                  |   |        |        |      |   |         |        |   |   |         |       
|                                             | Income (loss) from operations  |   |                    | (345   | )                |   |        | 3,448  |      |   |         | 644    |   |   |         | 1,890  |  
|Other income (expense):                      |                                |   |                    |        |                  |   |        |        |      |   |         |        |   |   |         |       
|                                             | Exchange (loss) gain, net      |   |                    | 1,823  |                  |   |        | (1,563 | )    |   |         | 96     |   |   |         | (1,248 | )
|                                             | Interest expense, net          |   |                    | (845   | )                |   |        | (1,320 | )    |   |         | (1,846 | ) |   |         | (2,613 | )
|                                             | Loss on extinguishment of debt |   |                    | (1,842 | )                |   |        |       |      |   |         | (1,842 | ) |   |         |       |  
|                                             | Other,net                      |   |                    | (87    | )                |   |        |       |      |   |         | (116   | ) |   |         |       |  
|                                             |                                |   |                    |        |                  |   |        |        |      |   |         |        |   |   |         |       
|Income (loss) before income taxes            |                                |   | (1,296             | )      |                  |   | 565    |        |      |   | (3,064  | )      |   |   | (1,971  | )     
|Income tax (benefit) expense                 |                                |   | (2,525             | )      |                  |   | 285    |        |      |   | (2,545  | )      |   |   | (1,727  | )     
|                                             |                                |   |                    |        |                  |   |        |        |      |   |         |        |   |   |         |       
|Net (loss) income                            |                                | $ | 1,229              |        |                  | $ | 280    |        |      | $ | (519    | )      |   | $ | (244    | )     
|                                             |                                |   |                    |        |                  |   |        |        |      |   |         |        |   |   |         |       

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)

|                                                     |                                                                                          |                                                       |                                           |                                           |       |                  |        |        |        |        |       |  
|---------------------------------------------------- | ---------------------------------------------------------------------------------------- | ----------------------------------------------------- | ----------------------------------------- | ----------------------------------------- | ----- | ---------------- | ------ | ------ | ------ | ------ | ----- | -
|                                                     |                                                                                          |                                                       |                                           |                                           |       | Six Months Ended
|                                                     |                                                                                          |                                                       |                                           |                                           |       | June 30,        
|                                                     |                                                                                          |                                                       |                                           |                                           |       |                 
|                                                     |                                                                                          |                                                       |                                           |                                           |       | 2003             |        | 2002  
|                                                     |                                                                                          |                                                       |                                           |                                           |       |                  |        |       
|Cash flows from operating activities:                |                                                                                          |                                                       |                                           |                                           |       |                  |        |       
|                                                     | Net (loss) income                                                                        |                                                       | $                                         | (519                                      | )     |                  | $      | (244   | )     
|                                                     | Adjustments to reconcile net (loss) income to net cash
provided by operating activities: |                                                       |                                           |                                           |       |                  |        |        |       
|                                                     |                                                                                          | Gain on sale of property and equipment                |                                           |                                           |      |                  |        |        | (65    | )     
|                                                     |                                                                                          | Depreciation and amortization                         |                                           |                                           | 992   |                  |        |        | 898    |       
|                                                     |                                                                                          | Write off and amortization of deferred financing fees |                                           |                                           | 435   |                  |        |        | 403    |       
|                                                     |                                                                                          | Provision for uncollectible accounts receivable       |                                           |                                           | 2,507 |                  |        |        | 5,082  |       
|                                                     |                                                                                          | Unrealized foreign exchange and derivative loss       |                                           |                                           | 40    |                  |        |        | 2,815  |       
|                                                     |                                                                                          | Deferred realized derivative loss                     |                                           |                                           | 646   |                  |        |        | 385    |       
|                                                     |                                                                                          | Deferred income taxes                                 |                                           |                                           |      |                  |        |        | (1,167 | )     
|                                                     |                                                                                          | Changes in operating assets and liabilities:          |                                           |                                           |       |                  |        |        |        |       
|                                                     |                                                                                          |                                                       | Receivables                               |                                           |       | (1,542           | )      |        |        | (2,614 | )    
|                                                     |                                                                                          |                                                       | Prepaid expenses and other current assets |                                           |       | (888             | )      |        |        | 3,358  |      
|                                                     |                                                                                          |                                                       | Intercompany receivables and payables     |                                           |       | 6,178            |        |        |        | 5,125  |      
|                                                     |                                                                                          |                                                       | Other assets                              |                                           |       | 224              |        |        |        | 970    |      
|                                                     |                                                                                          |                                                       | Accounts payable and accrued liabilities  |                                           |       | (3,323           | )      |        |        | (4,789 | )    
|                                                     |                                                                                          |                                                       | Income taxes payable/prepaid              |                                           |       | (3,522           | )      |        |        | (4,901 | )    
|                                                     |                                                                                          |                                                       |                                           |                                           |       |                  |        |        |       
|                                                     |                                                                                          |                                                       |                                           | Net cash provided by operating activities |       |                  | 1,228  |        |        |        | 5,256 |  
|                                                     |                                                                                          |                                                       |                                           |                                           |       |                  |        |        |       
|Cash flows from investing activities:                |                                                                                          |                                                       |                                           |                                           |       |                  |        |       
|                                                     | Proceeds from sale of property and equipment                                             |                                                       |                                           |                                          |       |                  |        | 211    |       
|                                                     | Purchases of property and equipment                                                      |                                                       |                                           | (757                                      | )     |                  |        | (729   | )     
|                                                     |                                                                                          |                                                       |                                           |                                           |       |                  |        |        |       
|                                                     |                                                                                          |                                                       |                                           | Net cash used in investing activities     |       |                  | (757   | )      |        |        | (518  | )
|                                                     |                                                                                          |                                                       |                                           |                                           |       |                  |        |        |       
|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                                           |                                                       |                                           |                                          |       |                  |        | 3,000  |       
|                                                     | Receipt of guarantee fee from affiliate                                                  |                                                       |                                           | 4,000                                     |       |                  |        |       |       
|                                                     | Net repayments under bank debt                                                           |                                                       |                                           | (828                                      | )     |                  |        | (318   | )     
|                                                     | Sale of Series C preferred stock                                                         |                                                       |                                           | 20,150                                    |       |                  |        |       |       
|                                                     |                                                                                          |                                                       |                                           |                                           |       |                  |        |        |       
|                                                     |                                                                                          |                                                       |                                           | Net cash used in financing activities     |       |                  | (9,125 | )      |        |        | (443  | )
|                                                     |                                                                                          |                                                       |                                           |                                           |       |                  |        |        |       
|Effect of exchange rate changes on cash              |                                                                                          |                                                       | (24                                       | )                                         |       |                  | (406   | )     
|                                                     |                                                                                          |                                                       |                                           |                                           |       |                  |        |        |       
|Net (decrease) increase in cash and cash equivalents |                                                                                          |                                                       | (8,678                                    | )                                         |       |                  | 3,889  |       
|Cash and cash equivalents at beginning of period     |                                                                                          |                                                       | 13,356                                    |                                           |       |                  | 920    |       
|                                                     |                                                                                          |                                                       |                                           |                                           |       |                  |        |        |       
|Cash and cash equivalents at end of period           |                                                                                          | $                                                     | 4,678                                     |                                           |       | $                | 4,809  |       
|                                                     |                                                                                          |                                                       |                                           |                                           |       |                  |        |        |       

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
June 30, 2003 and for the three and six months ended June 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 June 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. (the Old Credit Facilities) 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 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

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

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 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 the 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):

|                               |  |          |        |              |  |   |        | 
|------------------------------ |  | -------- | ------ | ------------ |  | - | ------ | 
|                               |  | June 30, |        | December 31,
|                               |  | 2003     |        | 2002        
|                               |  |          |        |             
|Land                           |  | $        | 10,174 |              |  | $ | 10,260 | 
|Buildings                      |  |          | 10,224 |              |  |   | 10,311 | 
|Machinery, equipment and other |  |          | 17,349 |              |  |   | 16,832 | 
|                               |  |          |        |              |  |   |        | 
|                               |  |          | 37,747 |              |  |   | 37,403 | 
|Less accumulated depreciation  |  |          | 6,352  |              |  |   | 5,400  | 
|                               |  |          |        |              |  |   |        | 
|Property and equipment, net    |  | $        | 31,395 |              |  | $ | 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 $28,308,000 as of June 30, 2003. Except for translation
adjustments, there were no changes in the carrying amount of goodwill for the
six months ended June 30, 2003.

(4) Income Taxes

The actual income tax rate of Jafra S.A. differs from the Mexican federal
corporate rate of 35% applied to income before income taxes, for the three and six
months ended June 30, 2002, principally as the result of the enactment of
changes in the Mexican corporate statutory tax rate and the related impact on
Jafra S.A.s net deferred income tax liabilities. The enactment reduces the
corporate income tax rate annually in one-percent increments from the current
35% in 2002 to 32% in 2005.

(5) Equity

On May 15, 2003, the number of outstanding Series B shares of Jafra S.A. were split on a 100:1 basis and were 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)

(6) 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 and 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 will also be required to fully and unconditionally guarantee
the New Notes jointly and severally, on a senior subordinated basis. Each
acquired or organized Mexican subsidiary of Jafra Distribution will also be
required to fully and unconditionally guarantee the Mexican portion of the New
Notes jointly and severally, on a senior subordinated basis. Jafra
Distribution currently has no Mexican subsidiaries.

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. will also be 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,
2003, approximately $3,390,000 was classified as a non-current liability and
the remaining unamortized amount was classified as a current liability in 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 5)
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) on the accompanying consolidated
statements of operations.

(7) Comprehensive Income(loss)

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

|                                                                                     |  |                    |       |                  |  |      |        |      |  |   |        |   |  |   |        |  
|------------------------------------------------------------------------------------ |  | ------------------ | ----- | ---------------- |  | ---- | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                                                                     |  | Three Months Ended |       | Six Months Ended
|                                                                                     |  | June 30,           |       | June 30,        
|                                                                                     |  |                    |       |                 
|                                                                                     |  | 2003               |       | 2002             |  | 2003 |        | 2002
|                                                                                     |  |                    |       |                  |  |      |        |     
|Net (loss) income                                                                    |  | $                  | 1,229 |                  |  | $    | 280    |      |  | $ | (519   | ) |  | $ | (244   | )
|Unrealized and deferred realized (loss) gain on derivatives                          |  |                    | (198  | )                |  |      | 2,535  |      |  |   | 157    |   |  |   | 340    |  
|Reclassification of deferred realized (loss) gain to
exchange (loss) gain            |  |                    |      |                  |  |      | 208    |      |  |   | (550   | ) |  |   | 343    |  
|Reclassification of deferred realized loss to cost of sales                          |  |                    | (24   | )                |  |      | 962    |      |  |   | 654    |   |  |   | 1,899  |  
|Tax (benefit) expense on unrealized and deferred realized
(loss) gain on derivatives |  |                    |      |                  |  |      | (2,607 | )    |  |   |       |   |  |   | (903   | )
|Foreign currency translation adjustments                                             |  |                    | 817   |                  |  |      | (2,476 | )    |  |   | (745   | ) |  |   | (3,327 | )
|                                                                                     |  |                    |       |                  |  |      |        |      |  |   |        |   |  |   |        |  
|Comprehensive income (loss)                                                          |  | $                  | 1,824 |                  |  | $    | (1,098 | )    |  | $ | (1,003 | ) |  | $ | (1,892 | )
|                                                                                     |  |                    |       |                  |  |      |        |      |  |   |        |   |  |   |        |  

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

(8) Related Party Transactions

Jafra
S.A. sells to and purchases products from its Mexico affiliate, Jafra
Distribution. The net cost of these purchases was $12,086,000 and $22,866,000
for the three and six months ended June 30, 2003, respectively, and $9,995,000
and $26,309,000 for the three and six months ended June 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 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 $842,000 and $1,626,000 for the three
and six months ended June 30, 2003, respectively, and $640,000 and $1,192,000
for the three and six months ended June 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 $5,564,000 and
$10,544,000 for the three and six months ended June 30, 2003, respectively, and
$6,030,000 and $11,220,000 for the three and six months ended June 30, 2002,
respectively, and are based upon a percentage of Jafra S.A.s sales.

(9) 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 enters 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 12 month 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 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.

During the three months and six months ended June 30, 2003, Jafra S.A.
recognized gains of approximately $627,000 on option contracts. Jafra S.A.
recognized losses on forward contracts of approximately $511,000 and $866,000
during the three and six months ended June 30, 2002, respectively. Jafra S.A.
recognized gains on option contracts of approximately $737,000 during each of
the three and six month periods ended June 30, 2002 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 six
months ended June 30, 2002, Jafra S.A. deferred as a component of other
comprehensive loss an additional $1,814,000 of losses on forward contracts and
$2,154,000 of gains on option contracts qualifying for hedge accounting under
SFAS No. 133. During the six months ended June 30, 2002, approximately $343,000
was reclassified as exchange (loss) gain and $1,899,000 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 six months ended June 30, 2003, the
Company deferred as a component of other comprehensive loss an additional
$157,000 of gains on option contracts qualifying for hedge accounting under
SFAS No. 133. During the six months ended June 30, 2003, approximately
$550,000 of gains were reclassified as exchange loss (gain) 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 loss of $3,000 deferred as a component of other comprehensive
loss at June 30, 2003 will be recognized into net income within the next twelve
months.

The fair value of the option contracts was $3,000 at June 30, 2003 and has
been recorded as accrued liabilities 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 six months ended June 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 six months ended
June 30, 2003 and 2002, $230,000 and $123,000, respectively, of gains, were
reclassified into earnings.

The outstanding foreign currency option contracts had a notional value
denominated in Mexican pesos of 609,000,000 in put and call positions at June
30, 2003. 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 six months ended June 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 June 30, |       | Six Months Ended June 30,
|                                                                             |  |                             |       |                          
|                                                                             |  | 2003                        |       | 2002                      |  | 2003 |       | 2002
|                                                                             |  |                             |       |                           |  |      |       |     
|Net sales                                                                    |  | $                           | 101.2 |                           |  |      | 100.0 | %    |  | $ | 98.1 |   |  |  | 100.0 | % |  | $ | 192.6 |   |  |  | 100.0 | %  |  | $ | 197.2 |   |  |  | 100.0 | %
|Cost of sales                                                                |  |                             | 23.5  |                           |  |      | 23.2  |      |  |   | 22.9 |   |  |  | 23.3  |   |  |   | 45.4  |   |  |  | 23.6  |    |  |   | 45.9  |   |  |  | 23.3  |  
|                                                                             |  |                             |       |                           |  |      |       |      |  |   |      |   |  |  |       |   |  |   |       |   |  |  |       |    |  |   |       |   |  |  |       |  
|Gross profit                                                                 |  |                             | 77.7  |                           |  |      | 76.8  |      |  |   | 75.2 |   |  |  | 76.7  |   |  |   | 147.2 |   |  |  | 76.4  |    |  |   | 151.3 |   |  |  | 76.7  |  
|Selling, general and administrative expenses                                 |  |                             | 76.5  |                           |  |      | 75.6  |      |  |   | 61.0 |   |  |  | 62.2  |   |  |   | 135.5 |   |  |  | 70.4  |    |  |   | 121.4 |   |  |  | 61.6  |  
|Restructuring and impairment charges                                         |  |                             |      |                           |  |      |      |      |  |   |     |   |  |  |      |   |  |   | 0.6   |   |  |  | 0.3   |    |  |   |      |   |  |  |      |  
|                                                                             |  |                             |       |                           |  |      |       |      |  |   |      |   |  |  |       |   |  |   |       |   |  |  |       |    |  |   |       |   |  |  |       |  
|Income from operations                                                       |  |                             | 1.2   |                           |  |      | 1.2   |      |  |   | 14.2 |   |  |  | 14.5  |   |  |   | 11.1  |   |  |  | 5.7   |    |  |   | 29.9  |   |  |  | 15.1  |  
|Exchange gain (loss), net                                                    |  |                             | 0.5   |                           |  |      | 0.4   |      |  |   | (5.9 | ) |  |  | (6.0  | ) |  |   | (0.5  | ) |  |  | (0.2  | )  |  |   | (5.4  | ) |  |  | (2.7  | )
|Interest, net                                                                |  |                             | (4.6  | )                         |  |      | (4.5  | )    |  |   | (2.9 | ) |  |  | (3.0  | ) |  |   | (7.2  | ) |  |  | (3.7  | )  |  |   | (5.9  | ) |  |  | (3.0  | )
|Loss on extinguishment of debt                                               |  |                             | (6.6  | )                         |  |      | (6.5  | )    |  |   |     |   |  |  |      |   |  |   | (6.6  | ) |  |  | (3.4  | )  |  |   |      |   |  |  |      |  
|Other, net                                                                   |  |                             | (0.3  | )                         |  |      | (0.3  | )    |  |   | 0.2  |   |  |  | 0.2   |   |  |   | (0.3  | ) |  |  | (0.2  | )  |  |   | 0.3   |   |  |  | 0.2   |  
|                                                                             |  |                             |       |                           |  |      |       |      |  |   |      |   |  |  |       |   |  |   |       |   |  |  |       |    |  |   |       |   |  |  |       |  
|Income (loss) before income taxes and
cumulative effect of accounting change |  |                             | (9.8  | )                         |  |      | (9.7  | )    |  |   | 5.6  |   |  |  | 5.7   |   |  |   | (3.5  | ) |  |  | (1.8  | )  |  |   | 18.9  |   |  |  | 9.6   |  
|Income tax expense (benefit)                                                 |  |                             | (2.1  | )                         |  |      | (2.1  | )    |  |   | 1.6  |   |  |  | 1.6   |   |  |   | 1.6   |   |  |  | 0.8   |    |  |   | 4.8   |   |  |  | 2.4   |  
|                                                                             |  |                             |       |                           |  |      |       |      |  |   |      |   |  |  |       |   |  |   |       |   |  |  |       |    |  |   |       |   |  |  |       |  
|Income (loss) before cumulative effect
of accounting change                  |  |                             | (7.7  | )                         |  |      | (7.6  | )    |  |   | 4.0  |   |  |  | 4.1   |   |  |   | (5.1  | ) |  |  | (2.6  | )  |  |   | 14.1  |   |  |  | 7.2   |  
|Cumulative effect of accounting change, net
of income tax benefit of $0      |  |                             |      |                           |  |      |      |      |  |   |     |   |  |  |      |   |  |   |      |   |  |  |      |    |  |   | (0.2  | ) |  |  | (0.2  | )
|                                                                             |  |                             |       |                           |  |      |       |      |  |   |      |   |  |  |       |   |  |   |       |   |  |  |       |    |  |   |       |   |  |  |       |  
|Net (loss) income                                                            |  | $                           | (7.7  | )                         |  |      | (7.6  | )%   |  | $ | 4.0  |   |  |  | 4.1   | % |  | $ | (5.1  | ) |  |  | (2.6  | )% |  | $ | 13.9  |   |  |  | 7.0   | %
|                                                                             |  |                             |       |                           |  |      |       |      |  |   |      |   |  |  |       |   |  |   |       |   |  |  |       |    |  |   |       |   |  |  |       |  

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

|                                             |  |        |      |               |  |        |      |            |  |                |     |           |  |       |      |   |  |   |       |  |  |             |       |              |  |   |       | 
|-------------------------------------------- |  | ------ | ---- | ------------- |  | ------ | ---- | ---------- |  | -------------- | --- | --------- |  | ----- | ---- | - |  | - | ----- |  |  | ----------- | ----- | ------------ |  | - | ----- | 
|                                             |  |        |      |               |  |        |      |            |  |                |     |           |  |       |      |   |  |   |       |  |  | Corporate,  |       |              |  |  
|                                             |  |        |      |               |  |        |      |            |  |                |     |           |  |       |      |   |  |   |       |  |  | Unallocated |       | Consolidated
|Dollars in millions                          |  | Mexico |      | United States |  | Europe |      | All others |  | Total Segments |     | and Other |  | Total
|                                             |  |        |      |               |  |        |      |            |  |                |     |           |  |      
|Three Months Ended June 30, 2003             |  |        |      |               |  |        |      |            |  |                |     |           |  |       |      |   |  |   |       |  |  |             |       |              |  |   |       | 
|Net sales                                    |  | $      | 63.4 |               |  | $      | 25.3 |            |  | $              | 8.6 |           |  | $     | 3.9  |   |  | $ | 101.2 |  |  | $           |      |              |  | $ | 101.2 | 
|Cost of sales                                |  |        | 15.0 |               |  |        | 5.7  |            |  |                | 1.9 |           |  |       | 1.8  |   |  |   | 24.4  |  |  |             | (0.9  | )            |  |   | 23.5  | 
|                                             |  |        |      |               |  |        |      |            |  |                |     |           |  |       |      |   |  |   |       |  |  |             |       |              |  |   |       | 
|Gross profit                                 |  |        | 48.4 |               |  |        | 19.6 |            |  |                | 6.7 |           |  |       | 2.1  |   |  |   | 76.8  |  |  |             | 0.9   |              |  |   | 77.7  | 
|Selling, general and
administrative expenses |  |        | 30.5 |               |  |        | 15.9 |            |  |                | 6.2 |           |  |       | 3.7  |   |  |   | 56.3  |  |  |             | 20.2  |              |  |   | 76.5  | 
|                                             |  |        |      |               |  |        |      |            |  |                |     |           |  |       |      |   |  |   |       |  |  |             |       |              |  |   |       | 
|Income (loss) from operations                |  | $      | 17.9 |               |  | $      | 3.7  |            |  | $              | 0.5 |           |  | $     | (1.6 | ) |  | $ | 20.5  |  |  | $           | (19.3 | )            |  | $ | 1.2   | 
|                                             |  |        |      |               |  |        |      |            |  |                |     |           |  |       |      |   |  |   |       |  |  |             |       |              |  |   |       | 
|Three Months Ended June 30, 2002             |  |        |      |               |  |        |      |            |  |                |     |           |  |       |      |   |  |   |       |  |  |             |       |              |  |   |       | 
|Net sales                                    |  | $      | 61.4 |               |  | $      | 23.9 |            |  | $              | 7.2 |           |  | $     | 5.6  |   |  | $ | 98.1  |  |  | $           |      |              |  | $ | 98.1  | 
|Cost of sales                                |  |        | 14.0 |               |  |        | 5.5  |            |  |                | 1.6 |           |  |       | 1.6  |   |  |   | 22.7  |  |  |             | 0.2   |              |  |   | 22.9  | 
|                                             |  |        |      |               |  |        |      |            |  |                |     |           |  |       |      |   |  |   |       |  |  |             |       |              |  |   |       | 
|Gross profit                                 |  |        | 47.4 |               |  |        | 18.4 |            |  |                | 5.6 |           |  |       | 4.0  |   |  |   | 75.4  |  |  |             | (0.2  | )            |  |   | 75.2  | 
|Selling, general and
administrative expenses |  |        | 30.8 |               |  |        | 14.2 |            |  |                | 5.3 |           |  |       | 5.9  |   |  |   | 56.2  |  |  |             | 4.8   |              |  |   | 61.0  | 
|                                             |  |        |      |               |  |        |      |            |  |                |     |           |  |       |      |   |  |   |       |  |  |             |       |              |  |   |       | 
|Income (loss) from operations                |  | $      | 16.6 |               |  | $      | 4.2  |            |  | $              | 0.3 |           |  | $     | (1.9 | ) |  | $ | 19.2  |  |  | $           | (5.0  | )            |  | $ | 14.2  | 
|                                             |  |        |      |               |  |        |      |            |  |                |     |           |  |       |      |   |  |   |       |  |  |             |       |              |  |   |       | 

Net sales. Net sales in the second quarter of 2003 increased to $101.2
million from $98.1 million in the second quarter of 2002, an increase of $3.1
million or 3.2%. Net sales in local currencies in the second quarter of 2003
increased by 8.9% over the comparable prior year period. The net sales
increase measured in local currencies was greater than the net sales increase
measured in U.S. dollars primary as a result of the weaker average exchange
rates of the Mexican peso in the second quarter of 2003 compared to the second
quarter of 2002. The Companys average number of consultants worldwide in the
second quarter of 2003 increased to approximately 418,000 or 8.8% over the
average in the second 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 consultant 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
second quarter of 2003 decreased 5.2% compared to the second quarter of 2002.
Measured in local currencies, annualized productivity remained relatively
constant. 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 second quarter of 2003 increased to $63.4
million from $61.4 million in the second quarter of 2002, an increase of $2.0
million, or 3.3%. Net sales in Mexico measured in local currency increased by
13.4% over the comparable 2002 period. The year-over-year net sales increase
measured in local currency was due primarily to a larger consultant base and
increased consultant productivity. In Mexico the average number of consultants
in the second quarter of 2003 increased to approximately 261,000, or 7.8% over
the average number of consultants in the comparable prior year period.
Annualized consultant productivity measured in local currency during the second
quarter of 2003 increased approximately 5.3% compared to consultant
productivity in the second quarter of 2002. Additionally, the percentage of
ordering consultants compared to total consultants also increased in the second
quarter of 2003 compared to the second quarter of 2002.

In the United States, net sales in the second quarter of 2003 increased to
$25.3 million from $23.9 million in the second quarter of 2002, an increase of
$1.4 million or 5.9%. Net sales increased in the second quarter of 2003
compared to the second quarter of 2002 in the Hispanic Division and the General
Division. Net sales in the Hispanic Division increased 7.6% primarily due to
an increase in the average number of consultants, partially offset by reduced
consultant productivity. The Hispanic Division had an average of approximately
49,000 consultants in the second quarter of 2003, an increase of 29.2% over the
second quarter of 2002. Hispanic Division consultant productivity decreased
16.7% during the second quarter of 2003, compared to the second quarter of
2002. The percentage of ordering consultants compared to the total number of
consultants decreased in the second quarter of 2003 compared to the second
quarter of 2002. Net sales in the General Division in the second quarter of
2003 increased 1.6% compared to the second quarter of 2002, primarily due to an
increase in the average number of consultants. The General Division had an
average of approximately 31,000 consultants during the second quarter of

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2003, an increase of 1.4% compared to the second quarter of 2002. Consultant
productivity remained relatively constant in the second quarter of 2003
compared to the second quarter of 2002.

In Europe, net sales increased to $8.6 million in the second quarter of
2003, from $7.2 million in the second quarter of 2002, an increase of $1.4
million, or 19.4%. In local currencies, net sales in the second quarter of 2003
decreased 3.0% compared to the second quarter of 2002. The increase in net
sales measured in U.S. dollars compared to the decrease measured in local
currencies was primarily the result of stronger local currencies compared to
the U.S. dollar in the second quarter of 2003 compared to the second quarter of
2002. The decrease in net sales measured in local currencies was primarily the
result of a decrease in consultant productivity, partially offset by an
increase in the average number of consultants. The average number of
consultants in Europe in the second quarter of 2003 increased to approximately
19,000 consultants or by approximately 16.1% compared to the average number of
consultants during the second quarter of 2002. Consultant productivity
measured in local currencies decreased 16.5% during the second quarter of 2003
compared to the second quarter of 2002. The percentage of ordering consultants
compared to total consultants also decreased during the second quarter of 2003
compared to the second quarter of 2002.

Net sales in the other markets decreased by $1.7 million, or 30.4% in the
second quarter of 2003 compared to the second quarter of 2002. Measured in
local currencies, net sales in the other markets decreased 8.3% in the second
quarter of 2003, compared to the second quarter of 2002. The greater decrease
in net sales measured in U.S. dollars compared to the sales decrease measured
in local currencies was primarily due to weaker average exchange rates of South
American currencies compared to the U.S. dollar. The average number of
consultants in the other markets increased 1.3% in the second quarter of 2003
compared to the second quarter of 2002. Measured in local currencies,
consultant productivity decreased 9.5% in the other markets in the second
quarter of 2003 compared to the comparable prior year period. The Company is
implementing strategic plans to exit the South American and Thailand markets
via sale or closure. The Company expects the execution of these plans to be
finalized during the third or final quarter of 2003. (See Business Trends and
Initiatives.)

Gross profit.Consolidated gross profit in the second quarter of 2003
increased to $77.7 million from $75.2 million in the comparable prior year
period, an increase of $2.5 million or 3.3%. Gross profit as a percentage of
sales (gross margin) increased to 76.8% from 76.7% in comparable prior year
period. The increase in gross margin in the second quarter of 2003 was due
primarily to increase in gross margin in the Corporate, Unallocated and other
segment. During the second quarter of 2003, the Company recorded $0.9 million
as a favorable offset to cost of sales due to variances in the corporate
manufacturing units and reclassification of exchange gains from other
comprehensive income to cost of sales in connection with Statement of Financial
Accounting Standards (SFAS) No. 133. During the second quarter of 2002, the
Company recorded $0.2 million of unfavorable cost of sales due to favorable
variance in the corporate manufacturing units, offset by the reclassification
of exchange losses from other comprehensive income to cost of sales in
connection with SFAS No. 133.

In Mexico, gross margin in the second quarter of 2003 decreased to 76.3%
from 77.2% in the second quarter of 2002. The decrease in gross margin was
primarily due to unfavorable direct cost variance during the second quarter of
2003, compared to favorable direct cost variances during the second quarter of
2002.

In the United States, gross margin in the second quarter of 2003 increased
to 77.5% from 77.0% in the second quarter of 2002, due to higher gross margins
on the sales of new and promotional products and products for resale.

In Europe, gross margin in the second quarter of 2003 increased nominally
to 77.9% from 77.8% in the second quarter of 2002.

Selling, general and administrative expenses.SG&A expenses in the
second quarter of 2003 increased to $76.5 million from $61.0 million in the
second quarter of 2002, an increase of $15.5 million, or 25.4%. SG&A expenses,
as a percentage of net sales, increased in the second quarter of 2003 to 75.6%
from 62.2% in the second quarter of 2002, due primarily to increased selling,
general and administrative expense in the Corporate, Unallocated and Other
segment related to the recapitalization of the Company.

In Mexico, SG&A expenses in the second quarter of 2003 decreased by $0.3
million, or 1.0% to $30.5 million, compared to $30.8 million in the second
quarter of 2002. SG&A expenses decreased, as a percentage of net sales,

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in Mexico to 48.1% in the second quarter of 2003, compared to 50.2% in the second
quarter of 2002. The decrease in SG&A expenses as a percentage of net sales
was primarily due to decreases in override expense, selling expenses, and
variable freight expenses. Additionally, administrative expenses decreased as
a percentage of net sales partially due to incrementally less expense
needed for the
reserve for uncollectible accounts recorded during the second quarter of 2003,
compared to the second quarter of 2002. The decrease in override expense,
selling expenses, variable freight expenses and administrative expenses, as a
percentage of net sales, was partially offset by an increase in sales
promotional expenses as a percentage of net sales.

In the United States, SG&A expenses in the second quarter of 2003
increased by $1.7 million, or 12.0% to $15.9 million from $14.2 million in the
second quarter of 2002. SG&A expenses, as a percentage of net sales, in the
United States were 62.8% in the second quarter of 2003 compared to 59.4% in the
second quarter of 2002. The increase in SG&A expenses as a percentage of net
sales was primarily attributable to increased sales promotional expenses,
override expenses and administrative expenses. Sales promotional expenses
increased primarily as a result of nature and timing of promotions during the
second quarter of 2003 compared to the second quarter of 2002. Administrative
expense increased primarily due to additional recruiting costs during the
second quarter of 2003. The increased expenses were partially offset by a
decrease in selling expense during the second quarter of 2003 compared to the
second quarter of 2002.

In Europe, SG&A expenses in the second quarter of 2003 increased by $0.9
million, or 17.0% to $6.2 million from $5.3 million in the second quarter of
2002. SG&A expenses, as a percentage of net sales, in Europe were 72.1% in the
second quarter of 2003 compared to 73.6% in the second quarter of 2002. The
decrease in SG&A expenses as a percentage of net sales was due to a decrease in
administrative expenses as there were incrementally less expenses related to
the reserve for uncollectible accounts in Italy and information technology
expenses during the second quarter of 2003 compared to the second quarter of
2002. The decrease in administrative expenses was partially offset by
increased sales promotional expense due to more promotional activity in 2003 to
increase sponsoring and the consultant base and incrementally higher override
expenses during the second quarter of 2003 compared to 2002.

SG&A expenses in the other markets in the second quarter of 2003 decreased
by $2.2 million, or 37.3% compared to the second quarter of 2002. As a
percentage of net sales, SG&A expenses were 94.9% during the second quarter of
2003 compared to 105.4% during the second quarter of 2002. (See Business
Trends and Initiatives).

SG&A expenses in Corporate, Unallocated and Other increased $15.4
million primarily as the result of costs related to the recapitalization of the
Company. During the second quarter of 2003, the Company completed a
recapitalization of its operations by the issuance of new debt (see Liquidity
and Capital Resources). In connection with the recapitalization, the Company
paid and expensed $13.3 million in bonus payments to the holders
that held options to
purchase the CDRJs common stock, certain members of management and
non-employee board of director members. Additionally, the Company expensed
$1.1 million in transaction related fees during the second quarter of 2003.

Exchange gain (loss).The Companys foreign exchange gain was $0.5
million in the second quarter of 2003 compared to a $5.9 million exchange loss
in the second quarter of 2002, a favorable difference of $6.4 million. Foreign
exchange losses and gains result from three primary sources: gains and losses
on forward 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. During the second quarter of 2003, the
Company did not recognize any gains or losses on option contracts and
recognized $1.1 million of exchange gains on other foreign currency
transactions. These gains were partially offset by $0.6 million of exchange
losses on the remeasurement of U.S. dollar denominated debt. During the second
quarter of 2002, the Company recognized $4.0 million of exchange losses on the
remeasurement of U.S. dollar-denominated debt, $1.9 million of exchange losses
on other foreign currency transactions, $0.9 million of exchange losses
(including amortization of other comprehensive income (loss)) on forward
contracts and $0.9 million of exchange gains (including amortization of other
comprehensive income (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 second quarter of 2003 increased to $4.6
million from $2.9 million in the second quarter of 2002, an increase of $1.7
million, or

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58.6%. The increase was primarily due to greater amount of debt
outstanding during the second quarter of 2003 compared to the second quarter of
2002. As of June 30, 2003, the Company had $250.0 million of debt outstanding,
comprised of $200.0 million of 10 3/4% notes and $50.0 million of term loan.
As of June 30, 2002, the Company had $90.7 million of debt outstanding,
comprised of $75.2 million of 11 3/4% notes, $9.8 million of term loan, $4.5
million under a revolving credit facility and, $1.2 million of other debt.

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 second quarter of
2003.

Income tax expense.Income tax benefit was $2.1 million in the second
quarter of 2003, compared to income tax expense of $1.6 million in the second
quarter of 2002, a favorable variance of $3.7 million. The
Companys effective
income tax rate was 21.4% in the second quarter of 2003, compared to
28.6% in
the second quarter of 2002. The Company had pretax losses in the United States
and Mexico, which resulted in a tax benefit in these markets in the second
quarter of 2003. Additionally, the Company recorded a valuation allowance
against the pretax losses in Europe and other markets in the second quarter of
2003. In the second quarter of 2002, the Company released valuation allowances
against certain deferred tax assets in the United States, which resulted in an
effective tax rate less than the U.S. corporate statutory rate of 35%.

Net (loss) income.Net loss was $7.7 million in the second quarter of
2003, compared to net income of $4.0 million in the second quarter of 2002, a
decrease in income of $11.7 million. The decrease in net income was primarily
due to a $15.5 million increase in selling, general and administrative
expenses, $1.7 million increase in interest expense, a $6.6 million loss on
extinguishment of debt, and a $0.5 million unfavorable change in other, net,
partially offset by a $2.5 million increase in gross profit, a $6.4 million
favorable change in exchange gain (loss), and a $3.7 million favorable change
in income tax benefit.

Six months ended June 30, 2003 compared to the Six months ended June 30, 2002

|                                             |  |        |       |        |  |        |      |            |  |          |      |           |  |       |      |       |  |             |       |              |  |            |       |   |  |   |       | 
|-------------------------------------------- |  | ------ | ----- | ------ |  | ------ | ---- | ---------- |  | -------- | ---- | --------- |  | ----- | ---- | ----- |  | ----------- | ----- | ------------ |  | ---------- | ----- | - |  | - | ----- | 
|                                             |  |        |       |        |  |        |      |            |  |          |      |           |  |       |      |       |  |             |       |              |  | Corporate, |       |   |  |  
|                                             |  |        |       |        |  | United |      |            |  |          |      |           |  |       |      | Total |  | Unallocated |       | Consolidated
|Dollars in millions                          |  | Mexico |       | States |  | Europe |      | All others |  | Segments |      | and Other |  | Total
|                                             |  |        |       |        |  |        |      |            |  |          |      |           |  |      
|Six Months Ended June 30, 2003               |  |        |       |        |  |        |      |            |  |          |      |           |  |       |      |       |  |             |       |              |  |            |       |   |  |   |       | 
|Net sales                                    |  | $      | 120.2 |        |  | $      | 49.2 |            |  | $        | 16.1 |           |  | $     | 7.1  |       |  | $           | 192.6 |              |  | $          |      |   |  | $ | 192.6 | 
|Cost of sales                                |  |        | 29.2  |        |  |        | 11.0 |            |  |          | 3.3  |           |  |       | 2.9  |       |  |             | 46.4  |              |  |            | (1.0  | ) |  |   | 45.4  | 
|                                             |  |        |       |        |  |        |      |            |  |          |      |           |  |       |      |       |  |             |       |              |  |            |       |   |  |   |       | 
|Gross profit                                 |  |        | 91.0  |        |  |        | 38.2 |            |  |          | 12.8 |           |  |       | 4.2  |       |  |             | 146.2 |              |  |            | 1.0   |   |  |   | 147.2 | 
|Selling, general and
administrative expenses |  |        | 58.4  |        |  |        | 31.1 |            |  |          | 12.3 |           |  |       | 7.4  |       |  |             | 109.2 |              |  |            | 26.3  |   |  |   | 135.5 | 
|Restructuring and impairment
charges         |  |        |      |        |  |        |     |            |  |          |     |           |  |       |     |       |  |             |      |              |  |            | 0.6   |   |  |   | 0.6   | 
|                                             |  |        |       |        |  |        |      |            |  |          |      |           |  |       |      |       |  |             |       |              |  |            |       |   |  |   |       | 
|Income (loss) from operations                |  | $      | 32.6  |        |  | $      | 7.1  |            |  | $        | 0.5  |           |  | $     | (3.2 | )     |  | $           | 37.0  |              |  | $          | (25.9 | ) |  | $ | 11.1  | 
|                                             |  |        |       |        |  |        |      |            |  |          |      |           |  |       |      |       |  |             |       |              |  |            |       |   |  |   |       | 
|Six Months Ended June 30, 2002               |  |        |       |        |  |        |      |            |  |          |      |           |  |       |      |       |  |             |       |              |  |            |       |   |  |   |       | 
|Net sales                                    |  | $      | 127.9 |        |  | $      | 44.8 |            |  | $        | 13.0 |           |  | $     | 11.5 |       |  | $           | 197.2 |              |  | $          |      |   |  | $ | 197.2 | 
|Cost of sales                                |  |        | 30.8  |        |  |        | 9.8  |            |  |          | 2.8  |           |  |       | 3.4  |       |  |             | 46.8  |              |  |            | (0.9  | ) |  |   | 45.9  | 
|                                             |  |        |       |        |  |        |      |            |  |          |      |           |  |       |      |       |  |             |       |              |  |            |       |   |  |   |       | 
|Gross profit                                 |  |        | 97.1  |        |  |        | 35.0 |            |  |          | 10.2 |           |  |       | 8.1  |       |  |             | 150.4 |              |  |            | 0.9   |   |  |   | 151.3 | 
|Selling, general and
administrative expenses |  |        | 62.8  |        |  |        | 27.9 |            |  |          | 9.9  |           |  |       | 10.9 |       |  |             | 111.5 |              |  |            | 9.9   |   |  |   | 121.4 | 
|                                             |  |        |       |        |  |        |      |            |  |          |      |           |  |       |      |       |  |             |       |              |  |            |       |   |  |   |       | 
|Income (loss) from operations                |  | $      | 34.3  |        |  | $      | 7.1  |            |  | $        | 0.3  |           |  | $     | (2.8 | )     |  | $           | 38.9  |              |  | $          | (9.0  | ) |  | $ | 29.9  | 
|                                             |  |        |       |        |  |        |      |            |  |          |      |           |  |       |      |       |  |             |       |              |  |            |       |   |  |   |       | 

Net sales. Net sales for the six months ended June 30, 2003 decreased to
$192.6 million from $197.2 million for the six months ended June 30, 2002, a
decrease of $4.6 million or 2.3%. Net sales measured in local currencies for
the six months ended June 30, 2003 increased 6.3% compared to net sales
measured in local currencies for the six months ended June 30, 2002. The net
sales decrease measured in U.S. dollars was primarily due to weaker

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average exchange rates of the Mexican Peso to the U.S. dollar during 2003 compared to
2002. The net sales increase measured in local currencies was primarily due to
an increase in net sales in Mexico measured in local currency and an increase
in net sales in United States. The Companys average number of consultants
worldwide for the six months ended June 30, 2003 increased to approximately
416,000, or 9.6% over the average number of consultants for the six months
ended June 30, 2002. Annualized consultant productivity measured in U.S.
dollars for the six months ended June 30, 2003 decreased 10.9% compared to
annualized consultant productivity for the six months ended June 30, 2002.
Measured in local currencies, annualized productivity decreased 3.0% for the
six months ended June 30, 2003, compared to the six months ended June 30, 2002.
Consultant productivity for the period is generally defined as annualized net
sales divided by the average number of consultants.

In Mexico, net sales for the six months ended June 30, 2003 decreased to
$120.2 million from $127.9 million for the six months ended June 30, 2002, a
decrease of $7.7 million, or 6.0% over the comparable prior year period. Net
sales measured in local currency increased 7.4% for the six months ended June
30, 2003, compared to the six months ended June 30, 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 measured in local currency. During the six months ended June 30,
2003, the average number of consultants in Mexico was approximately 260,000, an
increase of 8.3% over the comparable prior year period. Annualized consultant
productivity measured in local currency during the six months ended June 30,
2003 decreased 0.8% compared to consultant productivity during the six months
ended June 30, 2002.

In the United States, net sales for the six months ended June 30, 2003
increased to $49.2 million from $44.8 million for the six months ended June 30,
2002, an increase of $4.4 million, or 9.8%. Net sales for the six months ended
June 30, 2003 increased in the Hispanic Division and the General Division
compared to the six months ended June 30, 2002. Net sales in the Hispanic
Division increased 13.3% for the six months ended June 30, 2003, primarily due
to an increase in the average number of consultants, partially offset by
reduced consultant productivity. The Hispanic Division had an average of
approximately 48,000 consultants during the six months ended June 30, 2003, an
increase of 31.2% over the comparable prior year period. Hispanic Division
consultant productivity decreased 13.7% during the six months ended June 30,
2003, compared to the six months ended June 30, 2002. Net sales in the General
Division for the six months ended June 30, 2003 increased 3.3% compared to the
six months ended June 30, 2002 primarily due to increased consultant
productivity, partially offset by a decrease in the average number of
consultants during the period. Annualized consultant productivity in the
General Division increased 4.4% during the first six months of 2003 compared to
the first six months of 2002. The average number of consultants in the General
Division decreased 1.2% to 31,000 consultants compared to the same period of
the prior year.

In Europe, net sales increased to $16.1 million for the six months ended
June 30, 2003, from $13.0 million for the six months ended June 30, 2003, an
increase of $3.1 million, or 23.8%. In local currencies, net sales remained
relatively constant during the six months ended June 30, 2003, compared to the
six months ended June 30, 2002. The average number of consultants increased
10.2% to approximately 18,000 during the six months ended June 30, 2003
compared to the six months ended June 30, 2002. Measured in local currencies,
consultant productivity decreased 9.2% during the six months ended June 30,
2003 compared to the six months ended June 30, 2002.

Net sales in the other markets decreased to $7.1 million for the six
months ended June 30, 2003, compared to $11.5 million for the six months ended
June 30, 2002, a decrease of $4.4 million or 38.3%. 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 Dominican Republic, partially offset by increased net sales measured in
local currency in Brazil. Measured in local currencies, net sales decreased
13.8% for the six months ended June 30, 2003 compared to the six months ended
June 30, 2002. The average number of consultants in the other markets
increased 7.0% and consultant productivity measured in local currency decreased
19.4% for the six months ended June 30, 2003, compared to the comparable period
of the prior year. (See Business Trends and Initiatives).

Gross profit.Consolidated gross profit for the six months ended June
30, 2003, decreased to $147.2 million, from $151.3 million for the six months
ended June 30, 2002, a decrease of $4.1 million, or 2.7%. Gross profit as a
percentage of net sales (gross margin) decreased to 76.4% for the six months
ended June 30, 2003 from 76.7% in comparable prior year period. The decrease
in gross margin for the six months ended June 30, 2003

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compared to June 30,
2002 was primarily due to decreased gross margin in Mexico, the United States
and less favorability in the Corporate, Unallocated segment, partially offset
by increased gross margin in Europe.

In Mexico, gross margin for the six months ended June 30, 2003 decreased
to 75.7% from 75.9% for the six months ended June 30, 2002. The decrease in
gross margin was primarily due to unfavorable direct cost variances during the
six months ended June 30, 2003, compared to favorable direct cost variance
during the six months ended June 30, 2002. The unfavorable change in direct
cost variances was partially offset by incrementally less exchange losses
included in cost of sales pursuant to SFAS No. 133 during the six months ended
June 30, 2003 compared to the six months ended June 30, 2002.

In the United States, gross margin for the six months ended June 30, 2003
decreased to 77.6% from 78.1% for the six months ended June 30, 2002. The
decrease in gross margin was primarily the result of unfavorable direct cost
variances during the six months ended June 30, 2003, compared to favorable
direct cost variances during the six months ended June 30, 2002. Excluding the
impact of the direct cost variances, gross margin would have been relatively
constant.

In Europe, gross margin for the six months ended June 30, 2003 increased
to 79.5% from 78.5% in the comparable prior year period due to the mix of
product offerings.

Selling, general and administrative expenses.SG&A expenses for the six
months ended June 30, 2003 increased to $135.5 million, compared to $121.4
million for the six months ended June 30, 2002, an increase of $14.1 million,
or 11.6%. SG&A expenses, as a percentage of net sales, increased to 70.4% for
the six months ended June 30, 2003 from 61.6% for the six months ended June 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 six months ended June 30, 2003 decreased
by $4.4 million, or 7.0% to $58.4 million, compared to $62.8 million for the
six months ended June 30, 2002. SG&A expenses decreased, as a percentage of
net sales, in Mexico to 48.6% for the six months ended June 30, 2003, compared
to 49.1% for the six months ended June 30, 2002. The decrease in SG&A expenses
as a percentage of net sales was primarily due to decreases in sales
promotional expenses, distribution expenses and variable freight expenses,
partially offset by increased override expenses. Override expenses increased
as a percentage of net sales due to better collection of receivables.

In the United States, SG&A expenses for the six months ended June 30, 2003
increased by $3.2 million, or 11.5% to $31.1 million from $27.9 million for the
six months ended June 30, 2002. SG&A expenses, as a percentage of net sales,
in the United States were 63.2% for the six months ended June 30, 2003 compared
to 62.3% for the six months ended June 30, 2002. The increase in SG&A expenses
as a percentage of net sales was primarily attributable to increased sales
promotional and override expenses during the six months ended June 30, 2003
compared to the six months ended June 30, 2002. Sales promotional expenses
increased due to more planned promotional spending in 2003 and the
absence of expenses related to a General Division summer trip in 2002. Override expense increased because due
to increased resale sales which qualify for commissions in 2003 compared to
2002.

In Europe, SG&A expenses for the six months ended June 30, 2003 increased
by $2.4 million, or 24.2% to $12.3 million from $9.9 million for the six months
ended June 30, 2002. SG&A expenses, as a percentage of net sales, in Europe
were 76.4% for the six months ended June 30, 2003, compared to 76.2% for the
six months ended June 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, 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 six months ended June 30, 2003 compared to the same period of the
prior year.

SG&A expenses in the other markets for the six months ended June 30, 2003
decreased by $3.5 million, or 32.1% compared to the six months ended June 30,
2002. As a percentage of net sales, SG&A expenses were 104.2% for the six
months ended June 30, 2003, compared to 94.8% for the six months ended June 30,
2002. (See Business Trends and Initiatives).

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SG&A expenses in Corporate, Unallocated and Other increased $16.4
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 six months ended June 30, 2003. During
the six months ended June 30, 2003, the Company completed a recapitalization of
its operations by issuing new debt (see Liquidity and Capital Resources).

Restructuring and impairment charges.During the six months ended June
30, 2003, the Company recorded restructuring and impairment charges of $0.6
million related to its restructuring activities in Thailand and South America.
Of the total restructuring and impairment charges, $0.3 million related to the
impairment of certain fixed assets and $0.3 million related to severance
charges.

Exchange gain (loss).The Companys foreign exchange loss was $0.5
million for the six months ended June 30, 2003, compared to $5.4 million for
the six months ended June 30, 2002, a decrease of $4.9 million or 90.7%. During
the six months ended June 30, 2003, the Company recognized $1.8 million of
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 $0.7 million of exchange gains on other foreign currency
transactions. During six months ended June 30, 2002, the Company recognized
$1.4 million of exchange losses related to forward contracts, $0.9 million of
exchange gains related to option contracts, $3.4 million of exchange losses on
the remeasurement of U.S. dollar-denominated debt and $1.5 million of exchange
losses on other foreign currency transactions.

Interest expense.Net interest expense (including amortization of
deferred financing fees) for the six months ended June 30, 2003 increased to
$7.2 million from $5.9 million for the six months ended June 30, 2002, an
increase of $1.3 million, or 22.0%. The increase was primarily due to a
greater average amount of debt outstanding during the six months ended June 30,
2003 compared to the six months ended June 30, 2002.

Loss on extinguishment of debt.During the six months ended June 30,
2003, the Company repurchased its outstanding 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 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 $2.2 million of
capitalized deferred financing fees. The total expense related to the
extinguishment of the debt was $6.6 million and was recorded during the six
months ended June 30, 2003.

Income tax expense.Income tax expense decreased to $1.6 million for the
six months ended June 30, 2003 compared to $4.8 million, for the six months
ended June 30, 2002, a decrease of $3.2 million, or 66.7%. During the six
months ended June 30, 2003, the Company reported a pretax loss of $3.5 million and
income tax expense of $1.6 million. The Companys Mexican subsidiaries
reported pretax net income and income tax expense for the six months ended June
30, 2003. The income tax expense was partially offset by an income tax benefit
in the United States subsidiary based on pretax net loss. Additionally, the
European and other subsidiaries recorded valuation allowances against pretax
net losses for the six months ended June 30, 2003. For the six months ended
June 30, 2002, the effective tax rate was 25.1%. The effective rate was less
than the U.S. federal statutory rate primarily 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.

Net (loss) income.Net loss was $5.1 million for the six months ended
June 30, 2003, compared to net income of $13.9 million for the six months ended
June 30, 2002, a $19.0 million unfavorable difference. The decrease in income
was due to a $4.1 million decrease in gross profit, a $14.1 million increase in
selling, general and administrative expenses, a $0.6 million restructuring and
impairment charge, a $1.3 million increase in interest expense, a $6.6 million
loss on extinguishment of debt, a $0.6 million unfavorable change in other,
partially offset
by a $4.9 million decrease in exchange loss, a $3.2 million decrease in income
tax expense and the absence of $0.2 million in cumulative effect of accounting
change in 2003.

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

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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
will be 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 Jafra Distribution will also be required to
fully and unconditionally guarantee the Mexican portion of the New Notes
jointly and severally, on a senior subordinated basis. Jafra Distribution
currently has no Mexican subsidiaries. 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. will also be 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.
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 of the loans under the term facility. No amounts were
outstanding under the revolving credit facility at June 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 June 30, 2003 was 5.3% for LIBOR
borrowings and 7.3% 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 June 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
debt was $6.6 million and was recorded as a component of net (loss) income on
the accompanying consolidated statements of income.

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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 also 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. (See footnote 9).

The
Company capitalized $13.9 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 June 30, 2003, approximately
$0.2 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 June 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 $3.3 million for the six months
ended June 30, 2003 compared to net cash provided by operating activities of
$12.0 million for the six months ended June 30, 2002, a $15.3 million change.
Net cash used in operating activities for six months ended June 30, 2003
consisting of $6.2 million provided by net income plus depreciation,
amortization, and other non-cash items included in net income, offset by $9.5
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 six months ended June 30, 2003 were an increase in prepaid and other asset
of $4.1 million, an increase in inventories of $3.3 million, and increase in
receivables of $1.4 million.

Net cash used in investing activities was $3.1 million for the six months
ended June 30, 2003, of which $2.7 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 $7.3 million for the six months
ended June 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, $8.4 million repayment under term
loan facilities, $159.0 million distribution to shareholders and $13.9 million
of capitalized deferred financing fees.

The effect of exchange rate changes on cash was $0.9 million for the six
months ended June 30, 2003 and related primarily to the weakening of the
Mexican peso and South American currencies, partially offset by the
strengthening of the Euro compared to the U.S. dollar.

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 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).

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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.

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Foreign Operations

Net sales outside of the United States aggregated approximately 74% and
77% of the Companys total net sales for the six months ended June 30, 2003 and
2002, respectively. In addition, as of June 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 65%
of the Companys net sales for the six months ended June 30, 2003 and 2002,
respectively, substantially all of which were denominated in Mexican pesos. At
June 30, 2003, the subsidiaries in Mexico had $150.0 million of U.S.
dollar-denominated third party debt. Gains and losses from remeasuring such
debt to the U.S. dollar from the peso are included as a component of net
income. The Mexico subsidiaries recognized losses of
$1.8 million and $3.4
million for the six months ended June 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 $0.5 million of exchange losses on foreign
currency forward and option contracts for the six months ended June 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 65%
of the Companys consolidated net sales for the six months ended June 30, 2003
and 2002, respectively, compared to 64% for the full year in 2002. Due to the
weakening of the Mexican peso compared to the U.S. dollar, Mexico experienced a
year-to-year sales decline of 6% measured in U.S. dollars, but sales growth of
7% measured in local currency for the six months ended June 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 U.S. have shown significant growth. Sales in the first six months
of 2003 increased 10% compared to the first six months of 2002, with increases
of 13% in the Hispanic Division and 3% in the General Division. The U.S.
contributed 26% and 23% of net sales for the six months ended June 30, 2003 and
2002, respectively, compared to 24% for the complete year of 2002. The U.S.
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 six months of 2003, European sales contributed 8% to consolidated
sales. European sales contributed 7% to consolidated 2002 net sales. The
average number of consultants increased during the first six months of 2003
compared to the first six months of 2002. Due to the positive indications in
the increase in net sales and the consultant base, the Company is no longer
considering plans to exit the European markets through sale or discontinuation
of operations.

In the past few years, the Company has 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. As
of June 30, 2003, the Company began winding down its operations in Venezuela,
Colombia, Chile and Peru. The Company intends to liquidate the assets in these
markets and expects to complete the liquidation process and abandon the
operations during the third quarter of 2003. Additionally, the Company is
formulating plans the restructure its operations in Brazil, Argentina and
Thailand, either by sale of the operations or abandonment.

Information Concerning Forward-Looking Statements

Certain of the statements contained in this report (other than the
Companys consolidated financial statements and other statements of historical
fact) are forward-looking statements, including, without limitation, (i) the
statements in Liquidity and Capital Resources concerning the Companys
belief that it will have sufficient
liquidity to meet its cash requirements and working capital needs over the next
twelve months, (ii) the statement in

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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 Acquisition. 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 discussed in Liquidity and Capital Resources, no significant
changes have occurred during the first six 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, 74%
of the Companys revenue for first six 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 six months ended June
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 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
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 has a notional value
denominated in Mexican pesos of 609,000,000 and 523,000,000 in put and call
positions at June 30, 2003 and December 31, 2002, respectively. The
outstanding foreign currency option contracts at June 30, 2003 mature at
various dates through June 30, 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 June 30, 2003 (in thousands except for average
strike price):

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|                                                   |  |                  |         |                      |  |                |             |               |  |   |      |   |  |                 |  | 
|-------------------------------------------------- |  | ---------------- | ------- | -------------------- |  | -------------- | ----------- | ------------- |  | - | ---- | - |  | --------------- |  | 
|                                                   |  | Coverage in      |         |                      |  |                |             | Fair Value in |  |   |      |  
|Foreign Currency                                   |  | Mexican Pesos(1) |         | Average Strike Price |  | U.S.Dollars(1) |             | Maturity Date
|                                                   |  |                  |         |                      |  |                |             |              
|At June 30, 2003:                                  |  |                  |         |                      |  |                |             |               |  |   |      |   |  |                 |  | 
|Purchased Puts (Company may sell Peso/buy USD)     |  |                  |         |                      |  |                |             |               |  |   |      |   |  |                
|Mexican Peso                                       |  |                  | 150,000 |                      |  |                | 11.76-12.79 |               |  | $ | 195  |   |  | July-Sept. 2003
|Mexican Peso                                       |  |                  | 229,000 |                      |  |                | 11.07-12.91 |               |  |   | 119  |   |  | Oct.-Dec. 2003 
|Mexican Peso                                       |  |                  | 110,000 |                      |  |                | 11.54-12.75 |               |  |   | (29  | ) |  | Jan.-Mar. 2004 
|Mexican Peso                                       |  |                  | 120,000 |                      |  |                | 12.03-12.30 |               |  |   | 29   |   |  | Apr.-Jun. 2004 
|                                                   |  |                  |         |                      |  |                |             |               |  |   |      |   |  |                 |  | 
|                                                   |  |                  | 609,000 |                      |  |                |             |               |  | $ | 314  |   |  |                 |  | 
|                                                   |  |                  |         |                      |  |                |             |               |  |   |      |   |  |                 |  | 
|Written Calls (Counterparty may buy Peso/sell
USD) |  |                  |         |                      |  |                |             |               |  |   |      |   |  |                 |  | 
|Mexican Peso                                       |  |                  | 150,000 |                      |  |                | 9.69-10.19  |               |  | $ | (217 | ) |  | July-Sept. 2003
|Mexican Peso                                       |  |                  | 229,000 |                      |  |                | 10.15-10.75 |               |  |   | (26  | ) |  | Oct.-Dec. 2003 
|Mexican Peso                                       |  |                  | 110,000 |                      |  |                | 10.26-10.62 |               |  |   | (30  | ) |  | Jan.-Mar. 2004 
|Mexican Peso                                       |  |                  | 120,000 |                      |  |                | 10.19-10.47 |               |  |   | (38  | ) |  | Apr.-Jun. 2004 
|                                                   |  |                  |         |                      |  |                |             |               |  |   |      |   |  |                 |  | 
|                                                   |  |                  | 609,000 |                      |  |                |             |               |  | $ | (311 | ) |  |                 |  | 
|                                                   |  |                  |         |                      |  |                |             |               |  |   |      |   |  |                 |  | 

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.

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
loss of $402,000 at December 31, 2002, 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.

52



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##### Table of Contents



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

53



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##### Table of Contents






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

On May 20, 2003, at a special meeting convened for such purpose, the
shareholders of CDRJ unanimously voted to initiate the liquidation of CDRJ
and appointed the Parent to act as liquidator. There were 831,888
votes cast for such matter and no votes cast against such matter.
There were no abstentions or broker nonvotes.




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 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|2.1            |  | Notarial Deed, dated May 21, 2003, of CDRJ Investments (Lux) S.A.
providing for the liquidation of CDRJ Investments (Lux) S.A., together
with an unofficial summary in English; previously filed as Exhibit 2.1 to
Registration Statement No. 333-106666 under the Securities Act of 1933, as
amended, filed June 30, 2003 and incorporated herein by reference.                                                                                                                                                                                                                                       
|3.1            |  | Amendment, dated May 20, 2003 of Jafra Cosmetics International, S.A. de
C.V.s by-laws providing for preferred shares; previously filed
as Exhibit 3.16 to Registration Statement No. 333-106666 under the Securities Act of
1933, as amended, filed August 14, 2003 and incorporated herein by
reference.                                                                                                                                                                                                                                                                                             
|3.2            |  | Deed of Incorporation (acta constitutiva), including all amendments
thereto, and current by-laws (estatutos sociales) of JafraFin, S.A. de
C.V., together with an unofficial summary thereof in English; previously
filed as Exhibit 3.17 to Registration Statement No. 333-106666 under the
Securities Act of 1933, as amended, filed August 14, 2003 and incorporated
herein by reference.                                                                                                                                                                                                           
|4.1            |  | Credit Agreement, dated May 20, 2003, among Jafra Cosmetics
International, Inc., Distribuidora Comercial Jafra, S.A. de C.V. and Jafra
Worldwide Holdings (Lux) S.àr.l., the lenders named therein and Credit
Suisse First Boston, as Administrative Agent and Collateral Agent;
previously filed as Exhibit 4.1 to Registration Statement No. 333-106666
under the Securities Act of 1933, as amended, filed June 30, 2003, and
incorporated herein by reference.                                                                                                                                     
|4.2            |  | Indemnity, Subrogation and Contribution Agreement, dated May 20, 2003,
among Distribuidora Comercial Jafra, S.A. de C.V., Jafra Cosmetics
International, S.A. de C.V., each Subsidiary of Jafra Cosmetics
International, S.A. de C.V. listed on Schedule I thereto and Credit Suisse
First Boston; previously filed as Exhibit 4.2 to Registration Statement
No. 333-106666 under the Securities Act of 1933, as amended, filed June
30, 2003, and incorporated herein by reference.                                                                                                                   
|4.3            |  | JCI Guarantee Agreement, dated May 20, 2003, between Jafra Cosmetics
International, Inc. and Credit Suisse First Boston; previously filed as
Exhibit 4.3 to Registration Statement No. 333-106666 under the Securities
Act of 1933, as amended, filed June 30, 2003, and incorporated herein by
reference.                                                                                                                                                                                                                                                                                             
|4.4            |  | DCJ Guarantee Agreement, dated May 20, 2003, between Distribuidora
Comercial Jafra, S.A. de C.V. and Credit Suisse First Boston; previously
filed as Exhibit 4.4 to Registration Statement No. 333-106666 under the
Securities Act of 1933, as amended, filed June 30, 2003, and incorporated
herein by reference.                                                                                                                                                                                                                                                                                     
|4.5            |  | Mexican Subsidiary Guarantee Agreement, dated May 20, 2003, among Jafra
Cosmetics International, S.A. de C.V., and each of the subsidiaries of
Jafra Cosmetics International, S.A. de C.V. or Distribuidora Comercial
Jafra, S.A. de C.V. listed on Schedule I thereto, and Credit Suisse First
Boston; previously filed as Exhibit 4.5 to Registration Statement No.
333-106666 under the Securities Act of 1933, as amended, filed June 30,
2003 and incorporated herein by reference.                                                                                                               
|4.6            |  | Parent Guarantee Agreement, dated May 20, 2003, between Jafra Worldwide
Holdings (Lux) S.àr.l. and Credit Suisse First Boston previously filed as
Exhibit 4.6 to Registration Statement No. 333-106666 under the Securities
Act of 1933, as amended, filed June 30, 2003 and incorporated herein by
reference.                                                                                                                                                                                                                                                                                         
|4.7            |  | Mexican Pledge Agreement, dated May 20, 2003, among CDRJ Latin America
Holding Company B.V., Latin Cosmetics Holdings, B.V., Regional Cosmetics
Holding, B.V., Southern Cosmetics Holdings B.V., CDRJ Mexico Holding
Company B.V. and Credit Suisse First Boston previously filed as Exhibit
4.7 to Registration Statement No. 333-106666 under the Securities Act of
1933, as amended, filed June 30, 2003 and incorporated herein by
reference.                                                                                                                                                      
|4.8            |  | Pledge Agreement, dated May 20, 2003 among Jafra Cosmetics International,
Inc. and each of the subsidiaries of Jafra Cosmetics International, Inc.
listed on Schedule I thereto and Credit Suisse
First Boston; previously filed as Exhibit 4.8 to Registration Statement
No. 333-106666 under the Securities Act of 1933, as amended, filed June
30, 2003 and incorporated herein by reference.                                                                                                                                                                                                       
|4.9            |  | Security Agreement, dated May 20, 2003, among Jafra Cosmetics
International, Inc., each subsidiary of Jafra Cosmetics International,
Inc. listed on Schedule I thereto and Credit Suisse First Boston;
previously filed as Exhibit 4.9 to Registration Statement No. 333-106666
under the Securities Act of 1933, as amended, filed June 30, 2003 and
incorporated herein by reference.                                                                                                                                                                                                                
|4.10           |  | Mexican Security Agreement, dated May 20, 2003, among Distribuidora
Comercial Jafra, S.A. de C.V., Jafra Cosmetics International, S.A. de
C.V., Dirsamex, S.A. de C.V., Serviday, S.A. de C.V., JafraFin, S.A. de
C.V., Jafra Cosmetics, S.A. de C.V., and Cosmeticos y Fragancias, S.A. de
C.V.; previously filed as Exhibit 4.10 to Registration Statement No.
333-106666 under the Securities Act of 1933, as amended, filed
August 14,
2003, and incorporated herein by reference.                                                                                                                 
|4.11           |  | Deed of Trust, with Assignment of Leases and Rents, Fixture Filing and
Security Agreement, dated May 19, 2003, from Jafra Cosmetics
International, Inc. to TitleServ Agency, Inc., as trustee for the benefit
of Credit Suisse First Boston; previously filed as Exhibit 4.11 to
Registration Statement No. 333-106666 under the Securities Act of 1933, as
amended, filed June 30, 2003 and incorporated herein by reference.                                                                                                                                                                         
|4.12           |  | Notarial Deed of Pledge, dated May 20, 2003, with respect to the pledge
to Credit Suisse First Boston of 24 ordinary shares of the capital stock
of CDRJ Europe Holding Company B.V. by Jafra Cosmetics International,
Inc.; previously filed as Exhibit 4.12 to Registration Statement No.
333-106666 under the Securities Act of 1933, as amended, filed June 30,
2003 and incorporated herein by reference.                                                                                                                                                                                         
|4.13           |  | Notarial Deed of Pledge, dated May 20, 2003, with respect to the third
party pledge to Credit Suisse First Boston of 40 ordinary shares of the
capital stock of CDRJ Latin America Holding Company B.V. by CDRJ North
Atlantic (Lux) S.àr.l.; previously filed as Exhibit 4.13 to Registration
Statement No. 333-106666 under the Securities Act of 1933, as amended,
filed June 30, 2003 and incorporated herein by reference.                                                                                                                                                                        
|4.14           |  | Indenture, dated May 20, 2003, by and among Jafra Cosmetics
International, Inc., Distribuidora Comercial Jafra, S.A. de C.V., Jafra
Worldwide Holdings (Lux) S.àr.l, CDRJ Investments (Lux) S.A. and U.S. Bank
National Association; previously filed as Exhibit 4.14 to Registration
Statement No. 333-106666 under the Securities Act of 1933, as amended,
filed June 30, 2003 and incorporated herein by reference.                                                                                                                                                                                 
|4.15           |  | First Supplemental Indenture, dated as of May 20, 2003, by and among
Jafra Cosmetics International, S.A. de C.V., Distribuidora Comercial
Jafra, S.A. de C.V., Dirsamex, S.A. de C.V., Distribuidora Venus, S.A. de
C.V., Serviday, S.A. de C.V., Cosmeticos y Fragancias, S.A. de C.V., Jafra
Cosmetics S.A. de C.V., JafraFin S.A. de C.V., Jafra Cosmetics
International, Inc. and U.S. Bank National Association; previously filed
as Exhibit 4.15 to Registration Statement No. 333-106666 under the
Securities Act of 1933, as amended, filed June 30, 2003 and incorporated
herein by reference.
|4.16           |  | Registration Rights Agreement, dated May 20, 2003, by and among Jafra
Cosmetics International, Inc., Distribuidora Comercial Jafra, S.A. de
C.V., Jafra Worldwide Holdings (Lux) S.àr.l, CDRJ Investments (Lux) S.A.
and the Initial Purchasers previously filed as Exhibit 4.16 to
Registration Statement No. 333-106666 under the Securities Act of 1933, as
amended, filed June 30, 2003 and incorporated herein by reference.                                                                                                                                                                      
|4.17           |  | 144A Global Note; dated May 20, 2003                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.18           |  | Regulation S Global Note; dated May 20, 2003                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.1           |  | Administrative Services Agreement, dated May 20, 2003, between
Distribuidora Venus, S.A. de C.V. and Distribuidora Comercial Jafra, S.A.
de C.V.; previously filed as Exhibit 10.21 to
Registration Statement No. 333-106666 under the Securities Act of 1933,
as amended, filed June 30, 2003 and incorporated herein by reference.                                                                                                                                                                                                                                                                   
|10.2           |  | Assignment Assumption and Liquidator Agreement, dated May 20, 2003,
between CDRJ North Atlantic (Lux) S.àr.l and Jafra Worldwide Holdings
(Lux) S.àr.l; previously filed as Exhibit 10.22 to Registration Statement
No. 333-106666 under the Securities Act of 1933, as amended, filed June
30, 2003 and incorporated herein by reference.                                                                                                                                                                                                                                                             
|10.3           |  | Amended and Restated Indemnification Agreement, dated May 20, 2003, among
CDRJ Investments (Lux) S.A., CDRJ North Atlantic (Lux) S.àr.l, Jafra
Worldwide Holdings (Lux) S.àr.l, Jafra Cosmetics International, Inc.,
Jafra Cosmetics International, S.A. de C.V, Distribuidora Comercial Jafra,
S.A. de C.V., CD&R Fund V and Clayton, Dubilier & Rice, Inc. (CD&R);
previously filed as Exhibit 10.23 to Registration Statement No. 333-106666
under the Securities Act of 1933, as amended, filed June 30, 2003 and
incorporated herein by reference.                                              
|10.4           |  | Second Amended and Restated Consulting Services Agreement, dated May 20,
2003, among CDRJ Investments (Lux) S.A., CDRJ North Atlantic (Lux) S.àr.l,
Jafra Worldwide Holdings (Lux) S.àr.l, Jafra Cosmetics International,
Inc., Jafra Cosmetics International, S.A. de C.V., Distribuidora Comercial
Jafra, S.A. de C.V. and CD&R; previously filed as Exhibit 10.24 to
Registration Statement No. 333-106666 under the Securities Act of 1933, as
amended, filed June 30, 2003 and incorporated herein by reference.                                                                                  
|10.5           |  | Stock Purchase Agreement, dated May 20, 2003, among Jafra Cosmetics
International, S.A. de C.V., Distribuidora Comercial Jafra, S.A. de C.V.,
CDRJ Latin American Holding Company B.V, Latin Cosmetics Holdings, B.V.,
Regional Cosmetics Holding, B.V., Southern Cosmetics Holdings, B.V. and
CDRJ Mexico Holdings Company, B.V.; previously filed as Exhibit 10.25 to
Registration Statement No. 333-106666 under the Securities Act of 1933, as
amended, filed June 30, 2003 and incorporated herein by reference.                                                                                  
|10.6           |  | Stock Subscription and Guarantee Agreement, dated May 20, 2003, between
Jafra Cosmetics International, S.A. de C.V. and Distribuidora Comercial
Jafra, S.A. de C.V.; previously filed as Exhibit 10.26 to Registration
Statement No. 333-106666 under the Securities Act of 1933, as amended,
filed June 30, 2003 and incorporated herein by reference.                                                                                                                                                                                                                                                
|10.7           |  | Purchase and Sale Agreement, dated May 20, 2003, between Distribuidora
Venus, S.A. de C.V. and Distribuidora Comercial Jafra, S.A. de C.V.;
previously filed as Exhibit 10.27 to Registration Statement No. 333-106666
under the Securities Act of 1933, as amended, filed June 30, 2003 and
incorporated herein by reference.                                                                                                                                                                                                                                                                         
|10.8           |  | Registration and Participation Agreement, dated May 20, 2003, among CDRJ
North Atlantic (Lux) S.àr.l. and Clayton, Dubilier & Rice Fund V Limited
Partnership and other parties thereto; previously filed as Exhibit 10.28
to Registration Statement No. 333-106666 under the Securities Act of 1933,
as amended, filed June 30, 2003 and incorporated herein by reference.                                                                                                                                                                                                                            
|10.9           |  | Form of Contribution Agreement and Power of Attorney, among CDRJ
Investments (Lux) S.A., Jafra Worldwide Holdings (Lux) S.àr.l., and the
stockholders of CDRJ Investments (Lux) S.A. previously filed as Exhibit
10.29 to Registration Statement No. 333-106666 under the Securities Act of
1933, as amended, filed June 30, 2003 and incorporated herein by
reference.                                                                                                                                                                                                                                
|10.10          |  | Form of Consent to Assignment of Stock Subscription Agreement, among
CDRJ Investments (Lux) S.A., CDRJ North Atlantic (Lux) S.àr.l. and the
stockholders of CDRJ Investments (Lux) S.A. previously filed as Exhibit
10.30 to Registration Statement No. 333-106666 under the Securities Act of
1933, as amended, filed June 30, 2003 and incorporated herein by
reference.                                                                                                                                                                                                                             
|10.11          |  | Form of Consent to Assignment, Assumption and Novation of Employment
Agreement, between CDRJ Investments (Lux) S.A., Jafra Worldwide Holdings
(Lux) S.àr.l., Jafra Cosmetics International, Inc. and certain executives
party to employment agreements pursuant to which such executives are
employed by Jafra Cosmetics International, Inc. previously filed as
Exhibit 10.31 to
Registration Statement No. 333-106666 under the Securities Act of 1933,
as amended, filed June 30, 2003 and incorporated herein by reference.                                                                        
|10.12          |  | Form of Management Stock Option Agreement; previously filed
as Exhibit 10.35 to Registration Statement No. 333-106666 under the
Securities Act of 1933, as amended, filed August 14, 2003, and
incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                       
|10.13          |  | Purchase Agreement, dated as of May 2, 2003, by and among Jafra
Cosmetics International, Inc., Distribuidora Comercial Jafra, S.A. de
C.V., Jafra Worldwide Holdings (Lux) S.àr.l, CDRJ Investments (Lux) S.A.;
previously filed as Exhibit 10.36 to Registration Statement No. 333-106666
under the Securities Act of 1933, as amended, filed June 30, 2003 and
incorporated herein by reference.                                                                                                                                                                                                     
|10.14          |  | Exchange Agreement, dated August 14, 2003, among Jafra Cosmetics
International, Inc., Distribuidora Comercial Jafra, S.A. de C.V. and U.S.
Bank National Association; previously filed as Exhibit 10.37 to
Registration Statement No. 333-106666 under the Securities Act
of 1933, as amended, filed August 14, 2003 and incorporated
herein by reference.                                                                                                                                                                                                                                             
|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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|32.1           |  | Certification furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                      



|(b) |  | Reports on Form 8-K
|--- |  | -------------------

On April 23, 2003, CDRJ Investments (Lux) S.A. filed a Current Report on
form 8-K, dated April 23, 2003, with the Securities and Exchange Commission
regarding fair disclosure, which information was reported under Item 7,
Financial Statements and Exhibits and Item 9, Regulation FD Disclosure.

On April 24, 2003, CDRJ Investments (Lux) S.A. filed a Current Report on
form 8-K, dated April 23, 2003, with the Securities and Exchange Commission
regarding fair disclosure, which information was reported under Item 7,
Financial Statements and Exhibits and Item 9, Regulation FD Disclosure.

On May 8, 2003, CDRJ Investments (Lux) S.A. filed a Current Report on form
8-K, dated May 8, 2003, with the Securities and Exchange Commission regarding
fair disclosure, which information was reported under Item 7, Financial
Statements and Exhibits and Item 9, Regulation FD Disclosure.

On May 20, 2003, CDRJ Investments (Lux) S.A. filed a Current Report on
form 8-K, dated May 20, 2003, with the Securities and Exchange Commission
regarding fair disclosure, which information was reported under Item 7,
Financial Statements and Exhibits and Item 9, Regulation FD Disclosure.

54



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##### Table of Contents






SIGNATURE

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

| |  |                                                         
| |  | --------------------------------------------------------
| |  | CDRJ Investments (Lux) S.A.                             
| |  |                                                         
| |  | /s/ 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    August 14, 2003

55