UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

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 March 31, 2005          
|                                                       
|[ ]                                                     | 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 1-6370                          





|ELIZABETH ARDEN, INC.                                 
|------------------------------------------------------
|                                                      
|(Exact name of registrant as specified in its charter)



|Florida                                                        |  | 59-0914138                          
|-------------------------------------------------------------- |  | ------------------------------------
|                                                               |  |                                     
|(State or other jurisdiction of incorporation
or organization) |  | (I.R.S. Employer
Identification No.)
|                                                               |  |                                     
|14100 N.W. 60th Avenue, Miami Lakes, Florida                   |  | 33014                               
|                                                               |  |                                     
|(Address of principal executive offices)                       |  | (Zip Code)                          
|                                                               |  |                                     





|(305) 818-8000                                      
|----------------------------------------------------
|                                                    
|(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 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  [X]      No  [  ]
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                   
|Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).     Yes  [X]      No  [  ]                                                                                                                                                                                                                                   
|                                                                                                                                                                                                                                                                                                                                                                                   
|Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:                                                                                                                                                                                                                                                      



|Class                        |  | Outstanding at
May 6, 2005
|---------------------------- |  | --------------------------
|                             |  |                           
|Common Stock, $.01 par value |  | 29,139,830 Shares         

ELIZABETH ARDEN, INC.

INDEX TO FORM 10-Q





|PART I        |  | FINANCIAL INFORMATION                                                                                           |  |         
|------------- |  | --------------------------------------------------------------------------------------------------------------- |  | --------
|              |  |                                                                                                                 |  |         
|Item 1.       |  | Financial Statements                                                                                            |  | Page No.
|              |  |                                                                                                                 |  |         
|              |  | Unaudited Consolidated Balance Sheets - March 31, 2005 and June 30, 2004                                        |  | 3       
|              |  |                                                                                                                 |  |         
|              |  | Unaudited Consolidated Statements of Operations - Three and nine months ended March 31, 
2005 and April 3, 2004 |  | 4       
|              |  |                                                                                                                 |  |         
|              |  | Unaudited Consolidated Statement of Shareholders' Equity - Nine months ended March 31, 
2005                    |  | 5       
|              |  |                                                                                                                 |  |         
|              |  | Unaudited Consolidated Statements of Cash Flow - Nine months ended March 31, 2005 and 
April 3, 2004            |  | 6       
|              |  |                                                                                                                 |  |         
|              |  | Notes to Unaudited Consolidated Financial Statements                                                            |  | 7       
|              |  |                                                                                                                 |  |         
|Item 2.       |  | Management's Discussion and Analysis of Financial Condition and Results of Operations                           |  | 29      
|              |  |                                                                                                                 |  |         
|Item 3.       |  | Quantitative and Qualitative Disclosures About Market Risk                                                      |  | 39      
|              |  |                                                                                                                 |  |         
|Item 4.       |  | Controls and Procedures                                                                                         |  | 40      
|              |  |                                                                                                                 |  |         
|PART II       |  | OTHER INFORMATION                                                                                               |  |         
|              |  |                                                                                                                 |  |         
|Item 6.       |  | Exhibits                                                                                                        |  | 41      
|              |  |                                                                                                                 |  |         
|Signatures    |  | 43                                                                                                             
|              |  |                                                                                                                 |  |         
|Exhibit Index |  | 44                                                                                                             



- 2 -



PART I      FINANCIAL INFORMATION
ITEM 1.     FINANCIAL STATEMENTS



|ELIZABETH ARDEN, INC. AND SUBSIDIARIES
|--------------------------------------
|CONSOLIDATED BALANCE SHEETS           
|(Unaudited)                           
|(Dollars in thousands)                





|                                                                                                                                  |                                                                                                                                      | As of                                                     |                                           
|--------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------ | --------------------------------------------------------- | ------------------------------------------
|                                                                                                                                  |                                                                                                                                      |                                                           |                                           
|                                                                                                                                  |                                                                                                                                      | March 31,                                                 |                                           
|                                                                                                                                  |                                                                                                                                      | 2005                                                      |                                           
|                                                                                                                                  |                                                                                                                                      |                                                           |                                           
|ASSETS                                                                                                                            |                                                                                                                                      |                                                           |                                           
|Current Assets                                                                                                                    |                                                                                                                                      |                                                           |                                           
|                                                                                                                                  | Cash and cash equivalents                                                                                                            |                                                           | $                                         
|                                                                                                                                  | Accounts receivable, net                                                                                                             |                                                           |                                           
|                                                                                                                                  | Inventories                                                                                                                          |                                                           |                                           
|                                                                                                                                  | Deferred income taxes                                                                                                                |                                                           |                                           
|                                                                                                                                  | Prepaid expenses and other assets                                                                                                    |                                                           |                                           
|                                                                                                                                  |                                                                                                                                      |                                                           |                                           
|                                                                                                                                  |                                                                                                                                      |                                                           | Total current assets                      
|                                                                                                                                  |                                                                                                                                      |                                                           |                                           
|                                                                                                                                  |                                                                                                                                      |                                                           |                                           
|                                                                                                                                  | Property and equipment, net                                                                                                          |                                                           |                                           
|                                                                                                                                  |                                                                                                                                      |                                                           |                                           
|                                                                                                                                  |                                                                                                                                      |                                                           |                                           
|                                                                                                                                  | Other Assets                                                                                                                         |                                                           |                                           
|                                                                                                                                  |                                                                                                                                      | Exclusive brand licenses, trademarks and intangibles, net |                                           
|                                                                                                                                  |                                                                                                                                      | Debt financing costs, net                                 |                                           
|                                                                                                                                  |                                                                                                                                      | Deferred income taxes and other                           |                                           
|                                                                                                                                  |                                                                                                                                      |                                                           |                                           
|                                                                                                                                  |                                                                                                                                      |                                                           |                                           
|                                                                                                                                  |                                                                                                                                      |                                                           | Total other assets                        
|                                                                                                                                  |                                                                                                                                      |                                                           |                                           
|                                                                                                                                  |                                                                                                                                      |                                                           | Total assets                              
|                                                                                                                                  |                                                                                                                                      |                                                           |                                           
|                                                                                                                                  |                                                                                                                                      |                                                           |                                           
|                                                                                                                                  |                                                                                                                                      |                                                           |                                           
|                                                                                                                                  |                                                                                                                                      |                                                           |                                           
|LIABILITIES AND SHAREHOLDERS' EQUITY                                                                                              |                                                                                                                                      |                                                           |                                           
|Current Liabilities                                                                                                               |                                                                                                                                      |                                                           |                                           
|                                                                                                                                  | Short-term debt                                                                                                                      |                                                           | $                                         
|                                                                                                                                  | Accounts payable - trade                                                                                                             |                                                           |                                           
|                                                                                                                                  | Other payables and accrued expenses                                                                                                  |                                                           |                                           
|                                                                                                                                  | Current portion of long-term debt                                                                                                    |                                                           |                                           
|                                                                                                                                  |                                                                                                                                      |                                                           |                                           
|                                                                                                                                  |                                                                                                                                      |                                                           | Total current liabilities                 
|                                                                                                                                  |                                                                                                                                      |                                                           |                                           
|                                                                                                                                  |                                                                                                                                      |                                                           |                                           
|                                                                                                                                  | Long-term debt                                                                                                                       |                                                           |                                           
|                                                                                                                                  | Other                                                                                                                                |                                                           |                                           
|                                                                                                                                  |                                                                                                                                      |                                                           |                                           
|                                                                                                                                  |                                                                                                                                      |                                                           | Total long-term liabilities               
|                                                                                                                                  |                                                                                                                                      |                                                           |                                           
|                                                                                                                                  |                                                                                                                                      |                                                           | Total liabilities                         
|                                                                                                                                  |                                                                                                                                      |                                                           |                                           
|Commitments and contingencies (See Note 8)                                                                                        |                                                                                                                                      |                                                           |                                           
|                                                                                                                                  |                                                                                                                                      |                                                           |                                           
|Convertible, redeemable preferred stock, Series D, $.01 par value, 559,873 
  shares authorized; no shares issued and outstanding |                                                                                                                                      |                                                           | --                                        
|                                                                                                                                  |                                                                                                                                      |                                                           |                                           
|Shareholders' Equity                                                                                                              |                                                                                                                                      |                                                           |                                           
|                                                                                                                                  | Common stock, $.01 par value, 50,000,000 shares authorized; 29,128,497 
  and 28,169,941 shares issued and outstanding, respectively |                                                           |                                           
|                                                                                                                                  | Additional paid-in capital                                                                                                           |                                                           |                                           
|                                                                                                                                  | Retained earnings (accumulated deficit)                                                                                              |                                                           |                                           
|                                                                                                                                  | Accumulated other comprehensive income                                                                                               |                                                           |                                           
|                                                                                                                                  | Unearned deferred compensation                                                                                                       |                                                           |                                           
|                                                                                                                                  |                                                                                                                                      |                                                           |                                           
|                                                                                                                                  |                                                                                                                                      |                                                           | Total shareholders' equity                
|                                                                                                                                  |                                                                                                                                      |                                                           |                                           
|                                                                                                                                  |                                                                                                                                      |                                                           | Total liabilities and shareholders' equity
|                                                                                                                                  |                                                                                                                                      |                                                           |                                           
|                                                                                                                                  |                                                                                                                                      |                                                           |                                           
|                                                                                                                                  |                                                                                                                                      |                                                           |                                           



The accompanying notes are an integral part of the unaudited consolidated financial statements.



- 3 -







|ELIZABETH ARDEN, INC. AND SUBSIDIARIES       
|---------------------------------------------
|CONSOLIDATED STATEMENTS OF OPERATIONS        
|(Unaudited)                                  
|(Amounts in thousands, except per share data)





|                                                                                                    | Three Months Ended                  |   | Nine Months Ended
|--------------------------------------------------------------------------------------------------- | ----------------------------------- | - | -----------------
|                                                                                                    |                                     |   |                  
|                                                                                                    | March 31, 
2005                     |   | April 3, 
2004   
|                                                                                                    |                                     |   |                  
|Net sales                                                                                           |                                     | $ | 198,317          
|Cost of sales (excludes depreciation of $681, 884, 
  2,052 and 2,745 respectively, included below) |                                     |   | 102,431          
|                                                                                                    |                                     |   |                  
|Gross profit                                                                                        |                                     |   | 95,886           
|                                                                                                    |                                     |   |                  
|Operating expenses                                                                                  |                                     |   |                  
|                                                                                                    | Selling, general and administrative |   |                  
|                                                                                                    | Depreciation and amortization       |   |                  
|                                                                                                    |                                     |   |                  
|                                                                                                    | Total operating expenses            |   |                  
|                                                                                                    |                                     |   |                  
|Income from operations                                                                              |                                     |   | 13,803           
|                                                                                                    |                                     |   |                  
|                                                                                                    |                                     |   |                  
|Other expense:                                                                                      |                                     |   |                  
|                                                                                                    | Interest expense, net               |   |                  
|                                                                                                    | Debt extinguishment charges         |   |                  
|                                                                                                    | Other                               |   |                  
|                                                                                                    |                                     |   |                  
|                                                                                                    | Other expense, net                  |   |                  
|                                                                                                    |                                     |   |                  
|Income (loss) before income taxes                                                                   |                                     |   | 8,221            
|Provision for (benefit from) income taxes                                                           |                                     |   | 2,602            
|                                                                                                    |                                     |   |                  
|Net income (loss)                                                                                   |                                     |   | 5,619            
|Accretion and dividend on preferred stock                                                           |                                     |   | --               
|                                                                                                    |                                     |   |                  
|Accelerated accretion on converted preferred stock                                                  |                                     |   | --               
|                                                                                                    |                                     |   |                  
|Net income (loss) attributable to common 
  shareholders                                            |                                     | $ | 5,619            
|                                                                                                    |                                     |   |                  
|                                                                                                    |                                     |   |                  
|                                                                                                    |                                     |   |                  
|                                                                                                    |                                     |   |                  
|Net income (loss) per common share (See Note 2):                                                    |                                     |   |                  
|                                                                                                    | Basic                               |   | $                
|                                                                                                    |                                     |   |                  
|                                                                                                    |                                     |   |                  
|                                                                                                    |                                     |   |                  
|                                                                                                    |                                     |   |                  
|                                                                                                    | Diluted                             |   | $                
|                                                                                                    |                                     |   |                  
|                                                                                                    |                                     |   |                  
|                                                                                                    |                                     |   |                  
|                                                                                                    |                                     |   |                  
|Weighted average number of common shares:                                                           |                                     |   |                  
|                                                                                                    | Basic                               |   |                  
|                                                                                                    |                                     |   |                  
|                                                                                                    |                                     |   |                  
|                                                                                                    |                                     |   |                  
|                                                                                                    |                                     |   |                  
|                                                                                                    | Diluted                             |   |                  
|                                                                                                    |                                     |   |                  
|                                                                                                    |                                     |   |                  
|                                                                                                    |                                     |   |                  



The accompanying notes are an integral part of the unaudited consolidated financial statements.

- 4 -







|ELIZABETH ARDEN, INC. AND SUBSIDIARIES        
|----------------------------------------------
|CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
|(Unaudited)                                   
|(Amounts in thousands)                        





|                                                                                      |                                                    | Common Stock |  | Additional
Paid-in
Capital |     | Retained
Earnings
(Accumulated
Deficit) |   | Accumulated
Other
Comprehensive
Income |   | Unearned
Deferred
Compensation |         |        | Total
Shareholders'
Equity |      
|------------------------------------------------------------------------------------- | -------------------------------------------------- | ------------ |  | -------------------------- | --- | --------------------------------------- | - | -------------------------------------- | - | ------------------------------ | ------- | ------ | -------------------------- | -----
|Shares                                                                                |                                                    | Amount       |  |                           
|                                                                                      |                                                    |              |  |                            |     |                                         |   |                                        |   |                                |         |        |                            |      
|Balance at June 30, 2004                                                              |                                                    | 28,170       |  | $                          | 282 |                                         | $ | 228,891                                |   | $                              | (22,057 | )      | $                          | 2,806
|                                                                                      |                                                    |              |  |                            |     |                                         |   |                                        |   |                                |         |        |                            |      
|Issuance of common stock
  upon exercise of stock 
  options                          |                                                    | 524          |  |                            | 5   |                                         |   | 5,239                                  |   |                                |         |        |                            |      
|                                                                                      |                                                    |              |  |                            |     |                                         |   |                                        |   |                                |         |        |                            |      
|Issuance of common stock for 
  employee stock purchase plan                          |                                                    | 46           |  |                            |     |                                         |   | 810                                    |   |                                |         |        |                            |      
|                                                                                      |                                                    |              |  |                            |     |                                         |   |                                        |   |                                |         |        |                            |      
|Other                                                                                 |                                                    |              |  |                            |     |                                         |   | (71                                    | ) |                                |         |        |                            |      
|                                                                                      |                                                    |              |  |                            |     |                                         |   |                                        |   |                                |         |        |                            |      
|Common stock issued to an 
  independent contractor                                   |                                                    |              |  |                            |     |                                         |   | 801                                    |   |                                |         |        |                            |      
|                                                                                      |                                                    |              |  |                            |     |                                         |   |                                        |   |                                |         |        |                            |      
|Issuance of restricted stock, net 
  of forfeitures                                   |                                                    | 388          |  |                            | 4   |                                         |   | 9,318                                  |   |                                |         |        |                            |      
|                                                                                      |                                                    |              |  |                            |     |                                         |   |                                        |   |                                |         |        |                            |      
|Adjustment for mark to market 
  accounting of performance- 
  based restricted stock |                                                    |              |  |                            |     |                                         |   | 519                                    |   |                                |         |        |                            |      
|                                                                                      |                                                    |              |  |                            |     |                                         |   |                                        |   |                                |         |        |                            |      
|Amortization of unearned 
  deferred compensation, 
  net of forfeitures              |                                                    |              |  |                            |     |                                         |   |                                        |   |                                |         |        |                            |      
|                                                                                      |                                                    |              |  |                            |     |                                         |   |                                        |   |                                |         |        |                            |      
|Tax benefit from exercise of 
  stock options                                         |                                                    |              |  |                            |     |                                         |   | 2,945                                  |   |                                |         |        |                            |      
|                                                                                      |                                                    |              |  |                            |     |                                         |   |                                        |   |                                |         |        |                            |      
|Comprehensive income:                                                                 |                                                    |              |  |                            |     |                                         |   |                                        |   |                                |         |        |                            |      
|                                                                                      | Net income                                         |              |  |                            |     |                                         |   |                                        |   |                                |         | 42,128 |                            |      
|                                                                                      | Foreign currency translations                      |              |  |                            |     |                                         |   |                                        |   |                                |         |        |                            |      
|                                                                                      | Unrealized cash flow 
  hedging loss, net of taxes |              |  |                            |     |                                         |   |                                        |   |                                |         |        |                            |      
|                                                                                      |                                                    |              |  |                            |     |                                         |   |                                        |   |                                |         |        |                            |      
|Total comprehensive income                                                            |                                                    | --           |  |                            | --  |                                         |   | --                                     |   |                                | 42,128  |        |                            | 1,117
|                                                                                      |                                                    |              |  |                            |     |                                         |   |                                        |   |                                |         |        |                            |      
|Balance at March 31, 2005                                                             |                                                    | 29,128       |  | $                          | 291 |                                         | $ | 248,452                                |   | $                              | 20,071  |        | $                          | 3,923
|                                                                                      |                                                    |              |  |                            |     |                                         |   |                                        |   |                                |         |        |                            |      
|                                                                                      |                                                    |              |  |                            |     |                                         |   |                                        |   |                                |         |        |                            |      
|                                                                                      |                                                    |              |  |                            |     |                                         |   |                                        |   |                                |         |        |                            |      

The accompanying notes are an integral part of the unaudited consolidated financial statements.



- 5 -











|ELIZABETH ARDEN, INC. AND SUBSIDIARIES | 
|-------------------------------------- | 
|CONSOLIDATED STATEMENTS OF CASH FLOW   | 
|(Unaudited)                            | 
|(Dollars in thousands)                 | 



|                                                             |                                                                                  | Nine Months Ended                                   |       
|------------------------------------------------------------ | -------------------------------------------------------------------------------- | --------------------------------------------------- | ------
|                                                             |                                                                                  |                                                     |       
|                                                             |                                                                                  | March 31,                                           |       
|                                                             |                                                                                  | 2005                                                |       
|                                                             |                                                                                  |                                                     |       
|Operating Activities:                                        |                                                                                  |                                                     |       
|                                                             | Net income                                                                       |                                                     | $     
|                                                             | Adjustments to reconcile net income to net cash provided by operatingactivities: |                                                     |       
|                                                             | Depreciation and amortization                                                    |                                                     |       
|                                                             | Amortization of senior note offering costs and note premium                      |                                                     |       
|                                                             | Amortization of unearned deferred compensation                                   |                                                     |       
|                                                             | Loss on redemption of senior notes                                               |                                                     |       
|                                                             | Deferred income taxes                                                            |                                                     |       
|                                                             | Tax benefit from stock options                                                   |                                                     |       
|                                                             | Changes in assets and liabilities:                                               |                                                     |       
|                                                             | Increase in accounts receivable                                                  |                                                     |       
|                                                             | (Increase) decrease in inventories                                               |                                                     |       
|                                                             | Decrease in prepaid expenses and other assets                                    |                                                     |       
|                                                             | Decrease in accounts payable                                                     |                                                     |       
|                                                             | Increase (decrease) in other payables, accrued expenses and other 
  liabilities |                                                     |       
|                                                             | Other                                                                            |                                                     |       
|                                                             |                                                                                  |                                                     |       
|                                                             |                                                                                  | Net cash provided by operating activities           |       
|                                                             |                                                                                  |                                                     |       
|                                                             |                                                                                  |                                                     |       
|Investing Activities:                                        |                                                                                  |                                                     |       
|                                                             | Additions to property and equipment                                              |                                                     |       
|                                                             | Proceeds from disposals of property and equipment                                |                                                     |       
|                                                             | License acquisition costs                                                        |                                                     |       
|                                                             | Price adjustment to trademarks acquired in Arden acquisition                     |                                                     |       
|                                                             |                                                                                  |                                                     |       
|                                                             |                                                                                  | Net cash used in investing activities               |       
|                                                             |                                                                                  |                                                     |       
|                                                             |                                                                                  |                                                     |       
|Financing Activities:                                        |                                                                                  |                                                     |       
|                                                             | Proceeds from (payments on) short-term debt                                      |                                                     |       
|                                                             | Payments on long-term debt                                                       |                                                     |       
|                                                             | Proceeds from the issuance of senior notes                                       |                                                     |       
|                                                             | Proceeds from the exercise of stock options                                      |                                                     |       
|                                                             | Proceeds from the issuance of new common stock                                   |                                                     |       
|                                                             | Proceeds from the issuance of common stock for employee stock 
  purchase plan   |                                                     |       
|                                                             | Repurchase of common stock                                                       |                                                     |       
|                                                             | Other                                                                            |                                                     |       
|                                                             |                                                                                  |                                                     |       
|                                                             |                                                                                  | Net cash provided by (used in) financing activities |       
|                                                             |                                                                                  |                                                     |       
|Effect of exchange rate changes on cash and cash equivalents |                                                                                  |                                                     | 159   
|Net increase (decrease) in cash and cash equivalents         |                                                                                  |                                                     | 2,472 
|Cash and cash equivalents at beginning of period             |                                                                                  |                                                     | 23,494
|                                                             |                                                                                  |                                                     |       
|Cash and cash equivalents at end of period                   |                                                                                  | $                                                   | 25,966
|                                                             |                                                                                  |                                                     |       
|                                                             |                                                                                  |                                                     |       
|                                                             |                                                                                  |                                                     |       
|                                                             |                                                                                  |                                                     |       
|Supplemental Disclosure of Cash Flow Information:            |                                                                                  |                                                     |       
|                                                             | Interest paid during the period                                                  |                                                     | $     
|                                                             |                                                                                  |                                                     |       
|                                                             |                                                                                  |                                                     |       
|                                                             |                                                                                  |                                                     |       
|                                                             | Income taxes paid during the period                                              |                                                     | $     
|                                                             |                                                                                  |                                                     |       
|                                                             |                                                                                  |                                                     |       
|                                                             |                                                                                  |                                                     |       



The accompanying notes are an integral part of the unaudited consolidated financial statements.

- 6 -



ELIZABETH ARDEN, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.    BUSINESS AND BASIS OF PRESENTATION

Elizabeth Arden, Inc. (the "Company") is a manufacturer and marketer of prestige designer fragrances, skin treatment and cosmetic products to retailers in the United States and approximately 90 countries internationally.



On June 2, 2004, the Company's board of directors (the "Board") approved a change in fiscal year end from January 31 to June 30, effective as of June 30, 2004.  The change was implemented to better reflect the Company's business cycle and to enhance business planning relative to its customers' retail calendars.  Accordingly, the financial statements are presented for the three- and nine-month periods ended March 31, 2005, as compared to the three- and nine-month periods ended April 3, 2004.  The three- and nine-month periods ended April 3, 2004 have four and six more days, respectively than the three- and nine-month periods ended March 31, 2005.



The unaudited consolidated financial statements include the accounts of the Company's wholly-owned subsidiaries and all significant intercompany accounts and transactions have been eliminated in consolidation.



The accompanying unaudited consolidated financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the "Commission") for interim financial information.  Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statement presentation and should be read in conjunction with the audited consolidated financial statements and related footnotes included in the Company's Annual Report on Form 10-K for the year ended January 31, 2004 (the "Annual Report"), and the Company's Transition Report on Form 10-Q for the five-month transition period ended June 30, 2004 (the "Transition Report"), filed with the Commission.



The consolidated balance sheet of the Company as of June 30, 2004 is derived from the financial statements included in the Transition Report.  The consolidated financial statements presented in this quarterly report are unaudited but include all adjustments- which are of a normal recurring nature that management considers necessary for the fair statement of the results for the interim periods.  Results for interim periods are not necessarily indicative of results for the full fiscal year.  Certain reclassifications were made to the prior years' consolidated financial statements and the accompanying footnotes.

NOTE 2.    INCOME (LOSS) PER SHARE



Basic income (loss) per share is computed by dividing the net income (loss) attributable to common shareholders by the weighted average shares of outstanding common stock, $.01 par value per share ("Common Stock").  The calculation of diluted income (loss) per share is similar to basic income (loss) per share except that the denominator includes potentially dilutive Common Stock such as stock options, warrants and convertible securities.  Diluted loss per share equals basic loss per share for the three- and nine-month periods ended April 3, 2004 as the assumed conversion of convertible securities and the assumed exercise of outstanding options and warrants would have an anti-dilutive effect.



- 7 -





ELIZABETH ARDEN, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



The following table represents the computation of net income (loss) per share:





|(Amounts in thousands, except per share data) |                                                       | Three Months Ended                  |   |        | Nine Months Ended | 
|--------------------------------------------- | ----------------------------------------------------- | ----------------------------------- | - | ------ | ----------------- | 
|                                              |                                                       |                                     |   |        |                   | 
|                                              |                                                       | March 31,
2005                      |   |        | April 3,
2004     | 
|                                              |                                                       |                                     |   |        |                   | 
|Basic                                         |                                                       |                                     |   |        |                   | 
|                                              | Net income (loss) attributable to common shareholders |                                     | $ | 5,619  |                   | 
|                                              |                                                       |                                     |   |        |                   | 
|                                              |                                                       |                                     |   |        |                   | 
|                                              |                                                       |                                     |   |        |                   | 
|                                              | Weighted average shares outstanding                   |                                     |   | 27,888 |                   | 
|                                              |                                                       |                                     |   |        |                   | 
|                                              |                                                       |                                     |   |        |                   | 
|                                              |                                                       |                                     |   |        |                   | 
|                                              | Net income (loss) per basic share                     |                                     | $ | 0.20   |                   | 
|                                              |                                                       |                                     |   |        |                   | 
|                                              |                                                       |                                     |   |        |                   | 
|                                              |                                                       |                                     |   |        |                   | 
|Diluted                                       |                                                       |                                     |   |        |                   | 
|                                              | Net income (loss) attributable to common shareholders |                                     | $ | 5,619  |                   | 
|                                              |                                                       |                                     |   |        |                   | 
|                                              |                                                       |                                     |   |        |                   | 
|                                              |                                                       |                                     |   |        |                   | 
|                                              |                                                       |                                     |   |        |                   | 
|                                              | Weighted average shares outstanding                   |                                     |   | 27,888 |                   | 
|                                              |                                                       |                                     |   |        |                   | 
|                                              | Potential common shares - treasury method             |                                     |   | 2,276  |                   | 
|                                              |                                                       |                                     |   |        |                   | 
|                                              | Weighted average shares and potential dilutive shares |                                     |   | 30,164 |                   | 
|                                              |                                                       |                                     |   |        |                   | 
|                                              |                                                       |                                     |   |        |                   | 
|                                              |                                                       |                                     |   |        |                   | 
|                                              |                                                       | Net income (loss) per diluted share |   | $      | 0.19              | 
|                                              |                                                       |                                     |   |        |                   | 
|                                              |                                                       |                                     |   |        |                   | 
|                                              |                                                       |                                     |   |        |                   | 



For the three-month period ended April 3, 2004, the calculation of diluted loss per share excludes (a) 2.390 million potential common shares under the treasury method including unvested restricted stock awards; (b) 2.083 million shares of the Company's Series D Convertible Preferred Stock, $.01 par value ("Series D Convertible Preferred Stock") assumed to be converted as of the beginning of the fiscal year ended January 31, 2004; (c) 21,457 shares of Series D Convertible Preferred Stock that were received as a dividend and were convertible into 214,570 shares of Common Stock in the denominator; and (d) an add-back of $0.593 million to net income attributable to common shareholders related to non-accelerated accretion and dividends on the Series D Convertible Preferred Stock, as such deductions and add-backs would have had an anti-dilutive effect on the calculation of diluted loss per share.



For the nine-month period ended April 3, 2004, the calculation of diluted loss per share excludes (a) 2.265 million potential common shares under the treasury method including unvested restricted stock awards; (b) 2.963 million shares of the Series D Convertible Preferred Stock assumed to be converted as of the beginning of the fiscal year ended January 31, 2004; (c) 21,457 shares of Series D Convertible Preferred Stock that were received as a dividend and were convertible into 214,570 shares of Common Stock in the denominator; (d) an add-back of $2.291 million to net income attributable to common shareholders related to non-accelerated accretion and dividends on the Series D Convertible Preferred Stock; and (e) $18.584 million for the accelerated accretion charge associated with the conversion of certain Series D Convertible Preferred Stock, as such deductions and add-backs would have had an anti-dilutive effect on the calculation of diluted loss per share.



The following table shows the options to purchase shares of Common Stock that were outstanding during the three and nine months ended March 31, 2005 and April 3, 2004 where the option exercise price was greater than the average market price of the Common Stock over the applicable period:





|                        |  | Three Months Ended |                |  | Nine Months Ended |  
|----------------------- |  | ------------------ | -------------- |  | ----------------- | -
|                        |  |                    |                |  |                   |  
|                        |  |                    | March 31,
2005 |  |                   |  
|                        |  |                    |                |  |                   |  
|Number of shares        |  |                    | --             |  |                   |  
|                        |  |                    |                |  |                   |  
|                        |  |                    |                |  |                   |  
|                        |  |                    |                |  |                   |  
|Range of exercise price |  | $                  | --             |  |                   | $
|                        |  |                    |                |  |                   |  
|                        |  |                    |                |  |                   |  
|                        |  |                    |                |  |                   |  



- 8 -





ELIZABETH ARDEN, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



NOTE 3.    STOCK-BASED COMPENSATION



In December 2002, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standard ("SFAS") No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure - an Amendment of FASB Statement No. 123."  This statement amends SFAS No. 123, "Accounting for Stock-Based Compensation," to provide alternative methods of transition for a voluntary change to the fair market value-based method of accounting for stock-based employee compensation.  In addition, this statement amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results.  For a discussion of the new accounting standard on share-based payment, see Note 4.



The Company accounts for its stock incentive plans under the recognition and measurement principles prescribed by Accounting Principles Board Opinion ("APB") No. 25, "Accounting for Stock Issued to Employees," and related interpretations, under which no employee compensation costs are required to be recognized for the periods presented as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of grant.  The following table illustrates the effect on net income (loss) attributable to common shareholders and net income (loss) per common share if the Company had applied the fair value recognition provisions of SFAS No. 123 to stock option compensation:





|(Amounts in thousands, except per share data)                                                                    |             | Three Months Ended |       |      | Nine Months Ended |  
|---------------------------------------------------------------------------------------------------------------- | ----------- | ------------------ | ----- | ---- | ----------------- | -
|                                                                                                                 |             |                    |       |      |                   |  
|                                                                                                                 |             | March 31, 
2005    |       |      | April 3, 
2004    |  
|                                                                                                                 |             |                    |       |      |                   |  
|Net income (loss) attributable to common shareholders, 
  as reported                                            |             | $                  | 5,619 |      |                   | $
|Add:  Restricted stock-based employee compensation 
  costs, net of tax, currently included in net income (loss) |             |                    | 1,101 |      |                   |  
|Less:  Stock-based employee compensation expense, 
  net of tax, determined under fair value-based method        |             |                    | 2,016 |      |                   |  
|                                                                                                                 |             |                    |       |      |                   |  
|Pro forma net income (loss) attributable to common 
  shareholders                                               |             | $                  | 4,704 |      |                   | $
|                                                                                                                 |             |                    |       |      |                   |  
|                                                                                                                 |             |                    |       |      |                   |  
|                                                                                                                 |             |                    |       |      |                   |  
|Net income (loss) per common share                                                                               |             |                    |       |      |                   |  
|Basic                                                                                                            |             |                    |       |      |                   |  
|                                                                                                                 | As reported |                    | $     | 0.20 |                   |  
|                                                                                                                 | Pro forma   |                    | $     | 0.17 |                   |  
|Diluted                                                                                                          |             |                   
|                                                                                                                 | As reported |                    | $     | 0.19 |                   |  
|                                                                                                                 | Pro forma   |                    | $     | 0.16 |                   |  



- 9 -





ELIZABETH ARDEN, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



NOTE 4.    RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS AND RECENT LEGISLATION



In December 2004, FASB issued its final standard on accounting for share-based payments ("SBP"), ("SFAS 123R"), which requires companies to expense the value of employee stock options and similar awards.  Under SFAS 123R, SBP awards result in a cost that will be measured at fair value on the grant date of the awards, based on the estimated number of awards that are expected to vest.  Compensation cost for awards that vest would not be reversed if the awards expire without being exercised.  SFAS 123R will be effective for the Company beginning in the three-month period ending September 30, 2005 and will apply to all outstanding and unvested SBP awards at its adoption date.  The Company is evaluating the impact that SFAS 123R will have on compensation expense for future periods.



In October 2004, the American Jobs Creation Act of 2004 (the "Act") was signed into law.  The Act contains a number of provisions that might affect the Company's future effective tax rate.  The most significant provision would allow the Company to elect to deduct from its taxable income 85% of certain eligible dividends received by the Company from non-U.S. subsidiaries before the end of 2005 if those dividends are reinvested in the U.S. for eligible purposes.  Another significant provision replaces the extraterritorial income exclusion with a domestic manufacturing deduction.  To the extent the Company remits eligible dividends, it would have to record a provision for U.S. federal and state income taxes on the taxable portion of the remittance as no taxes have been previously provided.  The Company is evaluating the impact the Act will have on its effective tax rate for this fiscal year and beyond.



NOTE 5.    INVENTORIES



The components of inventory were as follows:





|                       | March 31, |         | June 30,
|---------------------- | --------- | ------- | --------
|(Dollars in thousands) | 2005      |         | 2004    
|                       |           |         |         
|Raw materials          | $         | 52,612  |         
|Work in progress       | 23,143    |         | 35,938  
|Finished goods         | 184,885   |         | 173,327 
|                       |           |         |         
|Total                  | $         | 260,640 |         
|                       |           |         |         
|                       |           |         |         
|                       |           |         |         
|                       |           |         |         



NOTE 6.    SHORT-TERM DEBT



The Company has a revolving credit facility with a syndicate of banks, for which JP Morgan Chase Bank is the administrative agent, that provides for borrowings on a revolving basis of up to $200 million with a $25 million sublimit for letters of credit (the "Credit Facility").  The Company entered into an amendment to the Credit Facility effective September 30, 2004 that extended the maturity of the Credit Facility to June 2009 from January 2006, reduced the interest rates and commitment fees based on the Company's debt service coverage ratio and enhanced the inventory component of the borrowing base.  The Credit Facility is guaranteed by all of the Company's U.S. subsidiaries. Borrowings under the Credit Facility are limited to 85% of eligible accounts receivable and 75% (65% from November 16 through May 15) of eligible finished goods inventory and are collateralized by a first priority lien on all of the Company's U.S. accounts receivable and inventory.  The Company's obligations under the Credit Facility rank pari passu, or equal in right of payment, with the Company's remaining 11 3/4% Senior Secured Notes due 2011 (the "11 3/4% Senior Notes") and rank senior to the Company's 7 3/4% Senior Subordinated Notes due 2014 (the "7 3/4% Senior Subordinated Notes").



The Credit Facility has only one financial maintenance covenant, which is a debt service coverage ratio that must be maintained at not less than 1.1 to 1 if average borrowing availability declines to less than $25 million ($40 million from November 16 through May 15).  No financial maintenance covenant was applicable for the three- and nine-month periods ended March 31, 2005.  The Credit Facility restricts the Company from incurring additional non-trade indebtedness (other than refinancing and certain small amounts of indebtedness) and limits the payment of dividends on the Company's Common Stock, repurchases of Common Stock and other distributions to common shareholders.



- 10 -





ELIZABETH ARDEN, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



Borrowings under the revolving credit portion of the Credit Facility bear interest at a floating rate based on the "Applicable Margin," which is determined by reference to a specific financial ratio.  At the Company's option, the Applicable Margin may be applied to either the London InterBank Offered Rate ("LIBOR") or the prime rate.  The reference ratio for determining the Applicable Margin is a debt service coverage ratio. As a result of the September 2004 amendment to the Credit Facility, the interest rates charged on LIBOR loans and prime rate loans were reduced to a range of 1.50% to 2.25% from a range of 2.00% to 2.75% for LIBOR loans, and to a range of 0% to .50% from a range of 0.25% to 1.00% for prime rate borrowings.  As of March 31, 2005, the Applicable Margin was 1.50% for LIBOR loans and 0% for prime rate loans.  The commitment fee on the unused portion of the Credit Facility ranges from 0.25% to 0.375% per year. At March 31, 2005, the commitment fee was 0.25%.



As of March 31, 2005, the Company had approximately $68 million in outstanding borrowings and approximately $4 million in letters of credit outstanding under the Credit Facility, compared with approximately $66 million in outstanding borrowings under the Credit Facility at June 30, 2004.  As of March 31, 2005, the Company had approximately $143 million of eligible receivables and inventories available as collateral under the Credit Facility. Therefore, the Company had availability of approximately $71 million.  The Company classifies the Credit Facility as short-term debt on its balance sheet since it expects to reduce outstanding borrowings during the third and fourth quarters (January through June) of its fiscal year.



NOTE 7.    LONG-TERM DEBT



The Company's long-term debt consisted of the following:





|(Dollars in thousands)                                 | March 31, |         | June 30,
|------------------------------------------------------ | --------- | ------- | --------
|Description                                            | 2005      |         | 2004    
|                                                       |           |         |         
|11 3/4% Senior Secured Notes due May 2011              | $         | 8,802   |         
|7 3/4% Senior Subordinated Notes due January 2014      |           | 225,000 |         
|8.84% Miami Lakes Facility Mortgage Note due July 2004 |           | --      |         
|                                                       |           |         |         
|Total                                                  |           | 233,802 |         
|Less:  Current portion of long-term debt               |           | --      |         
|                                                       |           |         |         
|Long-term debt, net                                    | $         | 233,802 |         
|                                                       |           |         |         
|                                                       |           |         |         
|                                                       |           |         |         



On July 1, 2004, the Company paid the remaining balance of $4.8 million plus accrued interest on the 8.84% Miami Lakes Facility Mortgage Note due July 2004.



The following table lists all redemptions of 11 3/4% Senior Notes and 10 3/8% Senior Notes during the three- and nine-month periods ended April 3, 2004 and the related financial statement effect.  (Dollars in thousands)

|Redemption
Date |  | Debt
Instrument |   | Redemption 
Price |         | Principal 
Repurchased |  | Call
Premium |         | Write-off 
of offering 
Costs |    | Excess of 
Carrying 
Value Over 
Principal 
Repurchased |  | Total 
Loss(1)
|--------------- |  | --------------- | - | ----------------- | ------- | ---------------------- |  | ------------ | ------- | ----------------------------- | -- | ------------------------------------------------------- |  | --------------
|                |  |                 |   |                   |         |                        |  |              |         |                               |    |                                                         |  |               
|10/24/03        |  | 10 3/8          | % |                   | 103.458 | %                      |  | $            | 20,000  |                               | $  | 692                                                     |  | $             
|11/21/03        |  | 11 3/4          | % |                   | 111.75  | %                      |  |              | 56,000  |                               |    | 6,580                                                   |  |               
|12/17/03        |  | 10 3/8          | % |                   | 103.458 | %                      |  |              | 20,000  |                               |    | 691                                                     |  |               
|01/13/04        |  | 11 3/4          | % |                   | 120.0   | %                      |  |              | 95,198  |                               |    | 19,040                                                  |  |               
|01/13/04        |  | Warrants        |   | --                |         |                        |  | --           |         |                               | -- |                                                         |  | 2,007         
|01/23/04        |  | 10 3/8          | % |                   | 103.458 | %                      |  |              | 20,000  |                               |    | 692                                                     |  |               
|02/12/04        |  | 10 3/8          | % |                   | 103.458 | %                      |  |              | 84,285  |                               |    | 2,914                                                   |  |               
|                |  |                 |   |                   |         |                        |  |              |         |                               |    |                                                         |  |               
|                |  |                 |   |                   |         |                        |  | $            | 295,483 |                               | $  | 30,609                                                  |  | $             
|                |  |                 |   |                   |         |                        |  |              |         |                               |    |                                                         |  |               
|                |  |                 |   |                   |         |                        |  |              |         |                               |    |                                                         |  |               
|                |  |                 |   |                   |         |                        |  |              |         |                               |    |                                                         |  |               



(1)  Loss refers to debt extinguishment charges included in the Company's Consolidated Statements of Operations.



- 11 -





ELIZABETH ARDEN, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



NOTE 8.    COMMITMENTS AND CONTINGENCIES



At March 31, 2005, the Company had commitments to incur promotional and advertising expenses, which are either fixed commitments or based on net sales for licensed brands, and minimum royalty guarantees in an aggregate amount of $32.3 million through 2010 compared with $33.5 million through 2009 as previously stated in the Company's Transition Report at June 30, 2004.



In February 2004, the Company entered into an interest rate swap agreement to swap $50.0 million of the outstanding 7 3/4% Senior Subordinated Notes to a floating interest rate based on LIBOR.  In the short term, this will provide the Company with a lower level of interest expense related to a portion of the 7 3/4% Senior Subordinated Notes based on current LIBOR rates; however, over the life of the notes, interest expense may be greater than 7 3/4% based upon fluctuations in LIBOR.  The swap agreement matures in February 2014.  The Company can terminate the swap agreement at its option at any time and the counter party can call the swap agreement any time after January 2009.  The Company has designated the swap agreement as a fair value hedge.



As of March 31, 2005, the Company had notional amounts of 32.6 million Euros and 7.2 million Britishpounds under foreign currency contracts that expire between April 29, 2005 and June 29, 2007 to reduce the exposure of its foreign subsidiary revenues to fluctuations in currency rates.  The Company has designated each foreign currency option contract as a cash flow hedge.  The unrealized loss, net of taxes, at March 31, 2005 associated with these contracts of approximately $0.1 million is included in accumulated other comprehensive income during the three months ended March 31, 2005.  The unrealized loss, net of taxes, incurred during the nine months ended March 31, 2005 was approximately $0.2 million.



The Company is a party to a number of other legal actions, proceedings or claims.  While any action, proceeding or claim contains an element of uncertainty; management of the Company believes that the outcome of such actions, proceedings or claims will not have a material adverse effect on the Company's business, financial position or results of operations.



On March 29, 2005, the Company entered into an agreement to sell its corporate headquarters and former distribution facility located on a 13-acre tract of land in Miami Lakes, Florida (the "Miami Lakes Facility").  The sales price for the Miami Lakes Facility is between $10.3 million to $12.1 million, depending on the assets purchased by the buyer. Under the terms of the agreement, the buyer has a 75-day inspection period during which the buyer may elect to terminate the agreement for any reason.  During this 75-day period, the Miami Lakes Facility will continue to be marketed.  The agreement is subject to customary closing conditions for commercial real estate transactions.  Given the uncertainties above, there can be no assurance the transaction will be consummated, and the Miami Lakes Facility continues to be classified as an asset held for use.



NOTE 9.    CONVERTIBLE PREFERRED STOCK AND SHAREHOLDERS' EQUITY



Equity Offering



On October 22, 2003, the Company completed a public offering of 5,750,000 shares of Common Stock at $18.25 per share.  The Company sold 3,666,667 shares of Common Stock in the offering and an affiliate of Unilever, N.V. ("Unilever") sold 2,083,333 shares.  The gross proceeds, before the offering discount of $3.8 million and approximately $0.4 million of offering expenses, was approximately $66.9 million, resulting in net proceeds to the Company of approximately $62.7 million.  The Company used the net proceeds on



- 12 -





ELIZABETH ARDEN, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



Convertible Preferred Stock



In connection with the January 2001 acquisition of the Elizabeth Arden business, the Company issued 416,667 shares of the Series D Convertible Preferred Stock to an affiliate of Unilever.  Since January 23, 2004, each share of Series D Convertible Preferred Stock was fully convertible into 10 shares of Common Stock at an initial conversion price of $12 per share of Common Stock, subject to certain restrictions.  In addition, cumulative dividends of 5% of the outstanding liquidation preference of the Series D Convertible Preferred Stock began to accrue on January 23, 2003 and were payable quarterly in additional shares of Series D Convertible Preferred Stock.



Upon issuance, the Series D Convertible Preferred Stock was recorded at its fair market value of $35 million, with an allocation of $26.5 million made for the beneficial conversion feature and reclassified to additional paid-in capital. The accretion of the beneficial conversion feature was based on the effective yield method over the period from issue date to the mandatory redemption date (12 years).  The recorded dividend was based on the straight-line method, which approximates the effective yield method, with the total amount of the dividend of $25 million to be paid over 10 years amortized over the period from issue date to the mandatory redemption date (12 years) or $2.1 million annually.  The difference between the liquidation value of $50 million and the $8.5 million balance recorded in Series D Convertible Preferred Stock on the Company's consolidated balance sheet upon their issuance was being accreted over the life of the Series D Convertible Preferred Stock.



The following table sets forth the accretion and dividend on the Series D Convertible Preferred Stock for the three- and nine-month periods ended April 3, 2004:





|(Dollars in thousands) | Three Months Ended |     | Nine Months Ended
|---------------------- | ------------------ | --- | -----------------
|                       |                    |     |                  
|                       | April 3, 2004      |     | April 3, 2004    
|                       |                    |     |                  
|Aggregate accretion    | $                  | 327 |                  
|Dividends              | 266                |     | 1,188            
|                       |                    |     |                  
|Total                  | $                  | 593 |                  
|                       |                    |     |                  
|                       |                    |     |                  
|                       |                    |     |                  



Conversion of Preferred Stock



In connection with the public offering of Common Stock on October 22, 2003, an affiliate of Unilever converted 208,340 shares (representing $25 million of aggregate liquidation preference) of Series D Convertible Preferred Stock into 2,083,340 shares of Common Stock.  As a result of the conversion of the Series D Convertible Preferred Stock, the accretion of the Series D Convertible Preferred Stock converted was accelerated in the amount of $18.6 million, resulting in a non-cash charge in this amount to net income attributable to common shareholders on the Company's Consolidated Statements of Operations for the nine months ended April 3, 2004.



In June 2004, the affiliate of Unilever converted the remaining 231,793 shares of Series D Convertible Preferred Stock, (representing approximately $28.8 million of aggregate liquidation preference) into 2,317,930 shares of Common Stock, which were sold in a public offering on June 15, 2004.  As a result of the conversion, the Company recorded accelerated accretion charges in June 2004, and there will be no additional accretion and dividend charges relating to the Series D Convertible Preferred Stock.





- 13 -





ELIZABETH ARDEN, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



Stock Incentive Plans and Awards



At March 31, 2005, the Company had five stock incentive plans, two for the benefit of non-employee directors (the 1995 Non-Employee Director Plan and the 2004 Non-Employee Director Plan (the "2004 Director Plan")) and three for the benefit of eligible employees and independent contractors (the 1995 Stock Option Plan, the 2000 Stock Incentive Plan and the 2004 Stock Incentive Plan (the "2004 Incentive Plan")).  All five plans were adopted by the Board and approved by the Company's shareholders.  The shareholders of the Company approved the 2004 Incentive Plan on June 22, 2004, as there remained no shares of Common Stock available for grant under the 1995 Stock Option Plan and the 2000 Stock Incentive Plan.  The 2004 Director Plan was also approved by the shareholders of the Company on June 22, 2004 and replaced the 1995 Non-Employee Director Plan.  No further grants of stock options will occur under the 1995 Non-Employee Director Plan.

The 2004 Director Plan authorizes the Company to grant non-qualified stock options for 350,000 shares of Common Stock under such plan to non-employee directors of the Company.  Each year on the date of the annual meeting of the shareholders and provided that a sufficient number of shares remain available under the 2004 Director Plan, there will automatically be granted to each eligible director who is re-elected to the Board an option to purchase 7,000 shares of Common Stock or such other amount as the Board determines based on a competitive review of comparable companies.  Unless service is terminated due to death, disability or retirement in good standing after age 70, each option granted under the 2004 Director Plan on an annual shareholder meeting date will become exercisable three years from the date of grant if such person has continued to serve as a director until that date.  No option may be exercisable after the expiration of ten years from the date of grant.  The exercise price will represent the closing price of the Common Stock on the date of grant.  At March 31, 2005, 315,000 shares of Common Stock remained available for grant under the 2004 Director Plan.

The 2004 Incentive Plan authorizes the Company to grant stock-based incentives for 2,000,000 shares of Common Stock under such plan to eligible employees and others that provide services to the Company.  The stock options awarded under the 2004 Incentive Plan are exercisable at any time or in any installments as determined by the compensation committee of the Board at the time of grant and may be either incentive or non-qualified stock options under the Internal Revenue Code, as determined by the compensation committee.  The exercise price for stock option grants will represent the closing price of the Common Stock on the date of grant.  The 2004 Incentive Plan also permits stock appreciation rights, stock awards, performance awards and stock units.  At March 31, 2005, 1,601,200 shares of Common Stock remained available for grant under the 2004 Incentive Plan.



The Company currently has an Employee Stock Purchase Plan ("ESPP") under which employees in certain countries are permitted to deposit after tax funds from their wages for purposes of purchasing Common Stock at a 15% discount from the lowest of the closing price of the Common Stock at either the start of the contribution period or the end of the contribution period.  On December 31, 2004 there were 46,067 shares purchased under the ESPP. The next purchase under the ESPP will be consummated on June 1, 2005.



- 14 -



ELIZABETH ARDEN, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Performance Accelerated Restricted Stock



On March 22, 2002, the Company granted shares of performance accelerated restricted stock ("PARS").  The PARS provided for a vesting period of six years from the date of grant, unless the Company's total shareholder return exceeded the median total shareholder return of the companies comprising the Russell 2000 Index (the "Benchmark") over a three, four or five-year period from the date of grant.  Because the Company's stock price rose by approximately 116% as compared to an approximate 35% increase for the Benchmark since the PARS grant date, on March 22, 2005, 444,600 shares of the PARS vested.  The Company had been incurring the associated expense assuming a March 22, 2005 vesting date.



Consistent with the terms of the PARS, a new grant of performance accelerated restricted stock ("New PARS") was triggered upon vesting of the PARS.  The Board approved the granting of up to 423,800 shares of New PARS. As a result of such approval, on March 22, 2005 the Company issued 398,800 shares of New PARS to 16 managerial employees.  The New PARS will only vest if the Company's total shareholder return surpasses the total shareholder return of the Russell 2000 Index over a three, four, five or six-year period from the date of grant.  These grants were recorded as unearned deferred compensation in shareholders' equity in the amount of approximately $9.5 million and are currently being amortized based upon a six-year vesting period.



NOTE 10.    CONDENSED CONSOLIDATING FINANCIAL INFORMATION



The following condensed financial statements as of March 31, 2005 and for the three- and nine-month periods then ended, and as of June 30, 2004, show the consolidated financial statements of the Company, and, in separate financial statements, (i) the financial statements of those subsidiaries that are guarantors of the 7 3/4% Senior Subordinated Notes issued in January 2004, plus, in each case, the financial statements of non-guarantor entities, elimination adjustments and the consolidated total, and (ii) the financial statements of those subsidiaries that are guarantors of the 11 3/4% Senior Notes which were issued in January 2001 to finance a portion of the purchase price for the acquisition of the Elizabeth Arden business plus, in each case, the financial statements of non-guarantor entities, elimination adjustments and the consolidated total.  The following condensed financial statements for the three- and nine-month periods ended April 3, 2004, show the consolidated financial statements of the Company, and, in separate financial statements, (i) the financial statements of those subsidiaries that are guarantors of the 7 3/4% Senior Subordinated Notes issued in January 2004, plus, in each case, the financial statements of non-guarantors entities, elimination adjustments and the consolidated total, and (ii) the financial statements of those subsidiaries that are guarantors of the 11 3/4% Senior Notes.  The Company's subsidiaries, DF Enterprises, Inc., FD Management, Inc., Elizabeth Arden International Holding, Inc. and Elizabeth Arden (Zug) GmbH, are guarantors of the 11 3/4% Senior Notes.  DF Enterprises, Inc., FD Management, Inc., Elizabeth Arden International Holding, Inc., Elizabeth Arden (Financing), Inc., RDEN Management, Inc. and Elizabeth Arden Travel Retail, Inc. are guarantors of the 7 3/4% Senior Subordinated Notes.  Equity income of the guarantor subsidiaries is included in other (expense) income, net.  All subsidiaries listed in this note are wholly-owned subsidiaries of the Company and their guarantees are joint and several, full and unconditional.  All information presented is in thousands.



- 15 -



ELIZABETH ARDEN, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



|Balance Sheet                           | As of March 31, 2005                                        
|--------------------------------------- | ------------------------------------------------------------
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|ASSETS                                  |                                                             
|Current Assets                          |                                                             
|                                        | Cash and cash equivalents                                   
|                                        | Accounts receivable, net                                    
|                                        | Inventories                                                 
|                                        | Intercompany receivable                                     
|                                        | Deferred income taxes                                       
|                                        | Prepaid expenses and other assets                           
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|Property and equipment, net             |                                                             
|                                        |                                                             
|Other Assets:                           |                                                             
|                                        | Investment in subsidiaries                                  
|                                        | Exclusive brand licenses, trademarks and 
  intangibles, net
|                                        | Debt financing costs, net                                   
|                                        | Other assets                                                
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|LIABILITIES AND SHAREHOLDERS' 
  EQUITY |                                                             
|Current Liabilities:                    |                                                             
|                                        | Short-term debt                                             
|                                        | Accounts payable - trade                                    
|                                        | Intercompany payable                                        
|                                        | Other payables and accrued expenses                         
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        | Long-term debt, net                                         
|                                        | Other                                                       
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|Shareholders' Equity                    |                                                             
|                                        | Common stock                                                
|                                        | Additional paid-in capital                                  
|                                        | Retained earnings                                           
|                                        | Accumulated other comprehensive income                      
|                                        | Unearned deferred compensation                              
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             



- 16 -



ELIZABETH ARDEN, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS





|Balance Sheet                           | As of March 31, 2005                                        
|--------------------------------------- | ------------------------------------------------------------
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|ASSETS                                  |                                                             
|Current Assets                          |                                                             
|                                        | Cash and cash equivalents                                   
|                                        | Accounts receivable, net                                    
|                                        | Inventories                                                 
|                                        | Intercompany receivable                                     
|                                        | Deferred income taxes                                       
|                                        | Prepaid expenses and other assets                           
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|Property and equipment, net             |                                                             
|                                        |                                                             
|Other Assets:                           |                                                             
|                                        | Investment in subsidiaries                                  
|                                        | Exclusive brand licenses, trademarks and 
  intangibles, net
|                                        | Debt financing costs, net                                   
|                                        | Other assets                                                
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|LIABILITIES AND SHAREHOLDERS' 
  EQUITY |                                                             
|Current Liabilities:                    |                                                             
|                                        | Short-term debt                                             
|                                        | Accounts payable - trade                                    
|                                        | Intercompany payable                                        
|                                        | Other payables and accrued expenses                         
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        | Long-term debt, net                                         
|                                        | Other                                                       
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|Shareholders' Equity                    |                                                             
|                                        | Common stock                                                
|                                        | Additional paid-in capital                                  
|                                        | Retained earnings                                           
|                                        | Accumulated other comprehensive income                      
|                                        | Unearned deferred compensation                              
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             

- 17 -



ELIZABETH ARDEN, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



|Balance Sheet                           | As of June 30, 2004                                         
|--------------------------------------- | ------------------------------------------------------------
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|ASSETS                                  |                                                             
|Current Assets                          |                                                             
|                                        | Cash and cash equivalents                                   
|                                        | Accounts receivable, net                                    
|                                        | Inventories                                                 
|                                        | Intercompany receivable                                     
|                                        | Deferred income taxes                                       
|                                        | Prepaid expenses and other assets                           
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|Property and equipment, net             |                                                             
|                                        |                                                             
|Other Assets:                           |                                                             
|                                        | Investment in subsidiaries                                  
|                                        | Exclusive brand licenses, trademarks and 
  intangibles, net
|                                        | Debt financing costs, net                                   
|                                        | Deferred income taxes and other                             
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|LIABILITIES AND SHAREHOLDERS' 
  EQUITY |                                                             
|Current Liabilities:                    |                                                             
|                                        | Short-term debt                                             
|                                        | Accounts payable - trade                                    
|                                        | Intercompany payable                                        
|                                        | Other payables and accrued expenses                         
|                                        | Current portion of long-term debt                           
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        | Long-term debt, net                                         
|                                        | Other                                                       
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|Shareholders' Equity                    |                                                             
|                                        | Common stock                                                
|                                        | Additional paid-in capital                                  
|                                        | (Accumulated deficit) retained earnings                     
|                                        | Accumulated other comprehensive income                      
|                                        | Unearned deferred compensation                              
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             

- 18 -



ELIZABETH ARDEN, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



|Balance Sheet                           | As of June 30, 2004                                         
|--------------------------------------- | ------------------------------------------------------------
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|ASSETS                                  |                                                             
|Current Assets                          |                                                             
|                                        | Cash and cash equivalents                                   
|                                        | Accounts receivable, net                                    
|                                        | Inventories                                                 
|                                        | Intercompany receivable                                     
|                                        | Deferred income taxes                                       
|                                        | Prepaid expenses and other assets                           
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|Property and equipment, net             |                                                             
|                                        |                                                             
|Other Assets:                           |                                                             
|                                        | Investment in subsidiaries                                  
|                                        | Exclusive brand licenses, trademarks and 
  intangibles, net
|                                        | Debt financing costs, net                                   
|                                        | Deferred income taxes and other                             
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|LIABILITIES AND SHAREHOLDERS' 
  EQUITY |                                                             
|Current Liabilities:                    |                                                             
|                                        | Short-term debt                                             
|                                        | Accounts payable - trade                                    
|                                        | Intercompany payable                                        
|                                        | Other payables and accrued expenses                         
|                                        | Current portion of long-term debt                           
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        | Long-term debt, net                                         
|                                        | Other                                                       
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|Shareholders' Equity                    |                                                             
|                                        | Common stock                                                
|                                        | Additional paid-in capital                                  
|                                        | (Accumulated deficit) retained earnings                     
|                                        | Accumulated other comprehensive income                      
|                                        | Unearned deferred compensation                              
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             
|                                        |                                                             

- 19 -



ELIZABETH ARDEN, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



|Statement of Operations                   | Three Months Ended March 31, 2005
|----------------------------------------- | ---------------------------------
|                                          |                                  
|                                          |                                  
|                                          |                                  
|Net sales                                 |                                  
|Cost of sales                             |                                  
|                                          |                                  
|Gross profit                              |                                  
|                                          |                                  
|                                          |                                  
|Selling, general and administrative costs |                                  
|Depreciation and amortization             |                                  
|                                          |                                  
|Income from operations                    |                                  
|Other expense (income):                   |                                  
|                                          | Interest expense (income)        
|                                          | Other                            
|                                          |                                  
|Income before income taxes                |                                  
|Provision for income taxes                |                                  
|                                          |                                  
|Net income                                |                                  
|                                          |                                  
|                                          |                                  
|                                          |                                  





|Statement of Operations                   | Nine Months Ended March 31, 2005
|----------------------------------------- | --------------------------------
|                                          |                                 
|                                          |                                 
|                                          |                                 
|Net sales                                 |                                 
|Cost of sales                             |                                 
|                                          |                                 
|Gross profit                              |                                 
|                                          |                                 
|                                          |                                 
|Selling, general and administrative costs |                                 
|Depreciation and amortization             |                                 
|                                          |                                 
|Income from operations                    |                                 
|Other expense (income):                   |                                 
|                                          | Interest expense (income)       
|                                          | Other                           
|                                          |                                 
|Income before income taxes                |                                 
|Provision for income taxes                |                                 
|                                          |                                 
|Net income                                |                                 
|                                          |                                 
|                                          |                                 
|                                          |                                 

- 20 -





ELIZABETH ARDEN, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



|Statement of Operations                   | Three Months Ended March 31, 2005
|----------------------------------------- | ---------------------------------
|                                          |                                  
|                                          |                                  
|                                          |                                  
|Net sales                                 |                                  
|Cost of sales                             |                                  
|                                          |                                  
|Gross profit                              |                                  
|                                          |                                  
|                                          |                                  
|Selling, general and administrative costs |                                  
|Depreciation and amortization             |                                  
|                                          |                                  
|Income from operations                    |                                  
|Other expense (income):                   |                                  
|                                          | Interest expense (income)        
|                                          | Other                            
|                                          |                                  
|Income (loss) before income taxes         |                                  
|Provision for income taxes                |                                  
|                                          |                                  
|Net income (loss)                         |                                  
|                                          |                                  
|                                          |                                  
|                                          |                                  



|Statement of Operations                   | Nine Months Ended March 31, 2005
|----------------------------------------- | --------------------------------
|                                          |                                 
|                                          |                                 
|                                          |                                 
|Net sales                                 |                                 
|Cost of sales                             |                                 
|                                          |                                 
|Gross profit                              |                                 
|                                          |                                 
|                                          |                                 
|Selling, general and administrative costs |                                 
|Depreciation and amortization             |                                 
|                                          |                                 
|Income from operations                    |                                 
|Other expense (income):                   |                                 
|                                          | Interest expense (income)       
|                                          | Other                           
|                                          |                                 
|Income (loss) before income taxes         |                                 
|Provision for income taxes                |                                 
|                                          |                                 
|Net income (loss)                         |                                 
|                                          |                                 
|                                          |                                 
|                                          |                                 

- 21 -



ELIZABETH ARDEN, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



|Statement of Operations                   | Three Months Ended April 3, 2004
|----------------------------------------- | --------------------------------
|                                          |                                 
|                                          |                                 
|                                          |                                 
|Net sales                                 |                                 
|Cost of sales                             |                                 
|                                          |                                 
|Gross profit                              |                                 
|                                          |                                 
|                                          |                                 
|Selling, general and administrative costs |                                 
|Depreciation and amortization             |                                 
|                                          |                                 
|Income from operations                    |                                 
|Other expense (income):                   |                                 
|                                          | Interest expense (income)       
|                                          | Debt extinguishment charges     
|                                          | Other                           
|                                          |                                 
|(Loss) income before income taxes         |                                 
|Benefit from income taxes                 |                                 
|                                          |                                 
|Net (loss) income                         |                                 
|                                          |                                 
|                                          |                                 
|                                          |                                 





|Statement of Operations                   | Nine Months Ended April 3, 2004
|----------------------------------------- | -------------------------------
|                                          |                                
|                                          |                                
|                                          |                                
|Net sales                                 |                                
|Cost of sales                             |                                
|                                          |                                
|Gross profit                              |                                
|                                          |                                
|                                          |                                
|Selling, general and administrative costs |                                
|Depreciation and amortization             |                                
|                                          |                                
|Income from operations                    |                                
|Other expense (income):                   |                                
|                                          | Interest expense (income)      
|                                          | Debt extinguishment charges    
|                                          | Other                          
|                                          |                                
|Income (loss) before income taxes         |                                
|(Benefit from) provision for income taxes |                                
|                                          |                                
|Net income                                |                                
|                                          |                                
|                                          |                                
|                                          |                                

- 22 -



ELIZABETH ARDEN, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



|Statement of Operations                   | Three Months Ended April 3, 2004
|----------------------------------------- | --------------------------------
|                                          |                                 
|                                          |                                 
|                                          |                                 
|Net sales                                 |                                 
|Cost of sales                             |                                 
|                                          |                                 
|Gross profit                              |                                 
|                                          |                                 
|                                          |                                 
|Selling, general and administrative costs |                                 
|Depreciation and amortization             |                                 
|                                          |                                 
|Income from operations                    |                                 
|Other expense (income):                   |                                 
|                                          | Interest expense (income)       
|                                          | Debt extinguishment charges     
|                                          | Other                           
|                                          |                                 
|(Loss) income before income taxes         |                                 
|(Benefit from) provision for income taxes |                                 
|                                          |                                 
|Net (loss) income                         |                                 
|                                          |                                 
|                                          |                                 
|                                          |                                 







|Statement of Operations                   | Nine Months Ended April 3, 2004
|----------------------------------------- | -------------------------------
|                                          |                                
|                                          |                                
|                                          |                                
|Net sales                                 |                                
|Cost of sales                             |                                
|                                          |                                
|Gross profit                              |                                
|                                          |                                
|                                          |                                
|Selling, general and administrative costs |                                
|Depreciation and amortization             |                                
|                                          |                                
|Income from operations                    |                                
|Other expense (income):                   |                                
|                                          | Interest expense (income)      
|                                          | Debt extinguishment charges    
|                                          | Other                          
|                                          |                                
|Income (loss) before income taxes         |                                
|(Benefit from) provision for income taxes |                                
|                                          |                                
|Net income (loss)                         |                                
|                                          |                                
|                                          |                                
|                                          |                                



- 23 -



ELIZABETH ARDEN, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



|Statement of Cash Flows                                         | Nine Months Ended March 31, 2005                                          
|--------------------------------------------------------------- | --------------------------------------------------------------------------
|                                                                |                                                                           
|                                                                |                                                                           
|                                                                |                                                                           
|Operating activities:                                           |                                                                           
|Net cash provided by (used in) operating activities             |                                                                           
|                                                                |                                                                           
|                                                                |                                                                           
|Investing activities:                                           |                                                                           
|                                                                | Additions to property and equipment                                       
|                                                                | License acquisition costs                                                 
|                                                                |                                                                           
|Net cash used in investing activities                           |                                                                           
|                                                                |                                                                           
|                                                                |                                                                           
|Financing activities:                                           |                                                                           
|                                                                | Proceeds from short-term debt                                             
|                                                                | Payments on long-term debt                                                
|                                                                | Proceeds from the exercise of stock options                               
|                                                                | Proceeds from issuance of common stock for 
  employee stock purchase plan
|                                                                | Other                                                                     
|                                                                | Net change in intercompany obligations                                    
|                                                                |                                                                           
|Net cash (used in)  provided by financing activities            |                                                                           
|                                                                |                                                                           
|Effect of exchange rate changes on cash and cash 
  equivalents |                                                                           
|Net (decrease) increase in cash and cash equivalents            |                                                                           
|Cash and cash equivalents at beginning of period                |                                                                           
|                                                                |                                                                           
|Cash and cash equivalents at end of period                      |                                                                           
|                                                                |                                                                           
|                                                                |                                                                           
|                                                                |                                                                           





|Statement of Cash Flows                                         | Nine Months Ended March 31, 2005                                          
|--------------------------------------------------------------- | --------------------------------------------------------------------------
|                                                                |                                                                           
|                                                                |                                                                           
|                                                                |                                                                           
|Operating activities:                                           |                                                                           
|Net cash provided by (used in) operating activities             |                                                                           
|                                                                |                                                                           
|                                                                |                                                                           
|Investing activities:                                           |                                                                           
|                                                                | Additions to property and equipment                                       
|                                                                | License acquisition costs                                                 
|                                                                |                                                                           
|Net cash used in investing activities                           |                                                                           
|                                                                |                                                                           
|                                                                |                                                                           
|Financing activities:                                           |                                                                           
|                                                                | Proceeds from short-term debt                                             
|                                                                | Payments on long-term debt                                                
|                                                                | Proceeds from the exercise of stock options                               
|                                                                | Proceeds from issuance of common stock for 
  employee stock purchase plan
|                                                                | Other                                                                     
|                                                                | Net change in intercompany obligations                                    
|                                                                |                                                                           
|Net cash (used in) provided by financing activities             |                                                                           
|                                                                |                                                                           
|Effect of exchange rate changes on cash and cash 
  equivalents |                                                                           
|Net (decrease) increase in cash and cash equivalents            |                                                                           
|Cash and cash equivalents at beginning of period                |                                                                           
|                                                                |                                                                           
|Cash and cash equivalents at end of period                      |                                                                           
|                                                                |                                                                           
|                                                                |                                                                           
|                                                                |                                                                           

- 24 -



ELIZABETH ARDEN, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



|Statement of Cash Flows                                         | Nine Months Ended April 3, 2004                                           
|--------------------------------------------------------------- | --------------------------------------------------------------------------
|                                                                |                                                                           
|                                                                |                                                                           
|                                                                |                                                                           
|Operating activities:                                           |                                                                           
|Net cash provided by (used in) operating activities             |                                                                           
|                                                                |                                                                           
|                                                                |                                                                           
|Investing activities:                                           |                                                                           
|                                                                | Additions to property and equipment                                       
|                                                                | Proceeds from disposals of property and 
  equipment                      
|                                                                | Price adjustment to trademarks acquired in Arden 
  acquisition           
|                                                                |                                                                           
|                                                                | Net cash used in investing activities                                     
|                                                                |                                                                           
|                                                                |                                                                           
|Financing activities:                                           |                                                                           
|                                                                | Payments on short-term debt                                               
|                                                                | Payments on long-term debt                                                
|                                                                | Proceeds from the issuance of senior notes                                
|                                                                | Proceeds from the exercise of stock options                               
|                                                                | Proceeds from the issuance of new common stock                            
|                                                                | Proceeds from issuance of common stock for 
  employee stock purchase plan
|                                                                | Repurchase of common stock                                                
|                                                                | Net change in intercompany obligations                                    
|                                                                |                                                                           
|Net cash used in financing activities                           |                                                                           
|                                                                |                                                                           
|Effect of exchange rate changes on cash and cash 
  equivalents |                                                                           
|Net (decrease) increase in cash and cash equivalents            |                                                                           
|Cash and cash equivalents at beginning of period                |                                                                           
|                                                                |                                                                           
|Cash and cash equivalents at end of period                      |                                                                           
|                                                                |                                                                           
|                                                                |                                                                           
|                                                                |                                                                           



- 25 -



ELIZABETH ARDEN, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



|Statement of Cash Flows                                         | Nine Months Ended April 3, 2004                                           
|--------------------------------------------------------------- | --------------------------------------------------------------------------
|                                                                |                                                                           
|                                                                |                                                                           
|                                                                |                                                                           
|Operating activities:                                           |                                                                           
|Net cash provided by (used in) operating activities             |                                                                           
|                                                                |                                                                           
|                                                                |                                                                           
|Investing activities:                                           |                                                                           
|                                                                | Additions to property and equipment                                       
|                                                                | Proceeds from disposals of property and 
  equipment                      
|                                                                | Price adjustment to trademarks acquired in Arden 
  acquisition           
|                                                                |                                                                           
|                                                                | Net cash used in investing activities                                     
|                                                                |                                                                           
|                                                                |                                                                           
|Financing activities:                                           |                                                                           
|                                                                | Payments on short-term debt                                               
|                                                                | Payments on long-term debt                                                
|                                                                | Proceeds from the issuance of senior notes                                
|                                                                | Proceeds from the exercise of stock options                               
|                                                                | Proceeds from the issuance of new common stock                            
|                                                                | Proceeds from issuance of common stock for 
  employee stock purchase plan
|                                                                | Repurchase of common stock                                                
|                                                                | Net change in intercompany obligations                                    
|                                                                |                                                                           
|Net cash (used in) provided by financing activities             |                                                                           
|                                                                |                                                                           
|Effect of exchange rate changes on cash and cash 
  equivalents |                                                                           
|Net (decrease) increase in cash and cash equivalents            |                                                                           
|Cash and cash equivalents at beginning of period                |                                                                           
|                                                                |                                                                           
|Cash and cash equivalents at end of period                      |                                                                           
|                                                                |                                                                           
|                                                                |                                                                           
|                                                                |                                                                           



NOTE 11.    STATEMENT OF CASH FLOW - SUPPLEMENTAL INFORMATION

The Company incurred the following non-cash financing and investing activities:



|(Amounts in thousands)                                                 |  | Nine Months Ended |   
|---------------------------------------------------------------------- |  | ----------------- | --
|                                                                       |  |                   |   
|                                                                       |  | March 31,         |   
|                                                                       |  | 2005              |   
|                                                                       |  |                   |   
|Accretion on Series D Convertible Preferred Stock (See Note 9)         |  | $                 | --
|                                                                       |  |                   |   
|                                                                       |  |                   |   
|                                                                       |  |                   |   
|                                                                       |  |                   |   
|Accelerated accretion on Series D Convertible Preferred Stock          |  | $                 | --
|                                                                       |  |                   |   
|                                                                       |  |                   |   
|                                                                       |  |                   |   
|Conversion to Common Stock                                             |  | $                 | --
|Accreted dividends not paid on Series D Convertible Preferred 
  Stock |  |                   | --
|                                                                       |  |                   |   
|Conversion of Series D Convertible Preferred Stock                     |  | $                 | --
|                                                                       |  |                   |   
|                                                                       |  |                   |   
|                                                                       |  |                   |   

- 26 -





ELIZABETH ARDEN, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12.    TRANSITIONAL PERIOD EVENTS

Due to the June 2004 change in the Company's fiscal year from January 31 to June 30, the Company filed a Transition Report for the transition period from February 1, 2004 to June 30, 2004 (the "Transition Period").  The following information includes footnote disclosure significant to the Transition Period and included in the Transition Report.  This information is included to supplement the Company's financial information since its last audited consolidated financial statements and related footnotes included in the Company's Annual Report for the year ended January 31, 2004, and should be read in conjunction with the Transition Report and the Annual Report.

Senior Subordinated Notes and Other Long-Term Debt



On January 13, 2004, the Company completed the sale of $225.0 million aggregate principal amount of 7 3/4% Senior Subordinated Notes.  The 7 3/4% Senior Subordinated Notes are guaranteed by the Company's wholly-owned U.S. subsidiaries DF Enterprises, Inc., FD Management, Inc., Elizabeth Arden International Holding, Inc., Elizabeth Arden (Financing), Inc., RDEN Management, Inc., and Elizabeth Arden Travel Retail, Inc.  The net proceeds of approximately $219.4 million were used to redeem $95.2 million principal amount of its outstanding 11 3/4% Senior Notes and $104.3 million principal amount of its 10 3/8% Senior Notes due May 2007, of which $20.0 million principal amount was redeemed in January 2004 and $84.3 million principal amount was redeemed in February 2004.

On June 25, 2004, the Company closed the exchange offer of all of its outstanding $225.0 million aggregate principal amount 7 3/4% Senior Subordinated Notes sold in January 2004 for an equal aggregate principal amount of 7 3/4% Senior Subordinated Notes with substantially identical terms that are registered under the Securities Act of 1933, as amended.

In May 2004, the Company redeemed the $2.2 million in remaining principal amount of 8.5% Subordinated Debenture due 2004 plus accrued interest with borrowings from the Credit Facility.  There was no gain or loss on this transaction.

Commitments and Contingencies



In November 2003, the Company announced that it would consolidate its U.S. distribution operations into a single distribution facility in Roanoke, Virginia by March 2004.  The Roanoke facility was expanded in 2003 to approximately 400,000 square feet in order to accommodate the consolidated distribution activities.  The Company ceased conducting distribution activities from the Miami Lakes Facility at the end of January 2004 and is planning to sell this facility.  The Company will continue to use the corporate offices located in the Miami Lakes Facility until the facility is sold and then it will move its corporate offices to another location in the area.  In connection with the consolidation, the U.S. workforce was reduced by approximately 10%.  The consolidation was substantially completed in March 2004.  The Company has signed an agreement to sell the Miami Lakes Facility, which is subject to a number of contingencies. See Note 8.

On June 30, 2004, the Company settled a breach of contract action filed in December 2000 by Adenat, Inc., a Canadian customer of Unilever.  Adenat filed suit in the Ontario, Canada Superior Court of Justice against a number of Unilever affiliates, the Company and several individuals, including officers of Unilever and the Company who were subsequently removed from the case.  Adenat alleged that Unilever breached contractual obligations owed to Adenat and that the Company interfered in that relationship.  Adenat sought to enjoin the termination of the alleged distribution agreement by Unilever and sought compensatory damages of Canadian $55 million (approximately US $41 million at June 30, 2004) against each of Unilever and the Company, plus punitive damages of Canadian $35 million (approximately US $26 million at June 30, 2004).  The Company did not pay or receive any amounts to settle the case.

- 27 -





ELIZABETH ARDEN, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Public Offering of Common Stock

On June 15, 2004, the Company completed a public offering of 2,549,723 shares of its Common Stock, which were sold at $19.50 per share.  Conopco, Inc. and Unilever United States Foundation, Inc., affiliates of Unilever (the "Selling Shareholders"), sold 2,317,930 shares and the Company sold 231,793 shares pursuant to an over-allotment option granted by the Company and exercised by the underwriter in the offering.  The shares sold by the Selling Shareholders represented the remaining shares of Common Stock underlying the Company's outstanding Series D Convertible Preferred Stock.  The Company did not receive any proceeds from the sale of shares by the Selling Shareholders.  The Company used the net proceeds it received from the exercise of the over-allotment option to reduce borrowings under the Credit Facility.



Stock Incentive Awards

On February 13, 2004, the Company authorized the grant of an aggregate of 40,578 shares of restricted stock to 189 employees that vested in full one year from the date of grant.  These shares were recorded as unearned deferred compensation in shareholders' equity in the amount of approximately $734,000, which was amortized over the one-year vesting period.

On March 10, 2004, the Company authorized the grant of stock options to 117 managerial employees for approximately 364,000 shares of Common Stock.  The stock options are due to vest over three years in thirds each succeeding year from the date of grant, assuming the person receiving the grant is employed by the Company at the time of vesting.  The exercise price of those stock options is $21.60 per share, which was the closing price of the Common Stock on the date of grant.  The options expire ten years from the date of grant.



Also on March 10, 2004, the Company authorized the grant of performance-based restricted stock to 107 managerial employees for approximately 192,000 shares of Common Stock.  The performance-based restricted stock will vest as to one third of the stock granted on each of the Company's fiscal years ending June 30, 2005, 2006 and 2007, but only if the person receiving the grant is employed by the Company at the time of vesting and the Company achieves a cumulative annualized increase in earnings per share of 10%, excluding any one-time or extraordinary events (as determined by the compensation committee), and after giving effect to any stock splits or other recapitalizations.  The restricted stock was initially recorded as unearned deferred compensation in shareholders' equity in the amount of approximately $4.0 million and is being amortized over the three-year vesting period, subject to mark to market adjustments.



On April 21, 2004, the Company repurchased 20,226 shares of Common Stock at the $21.50 closing price as a result of the vesting of restricted stock of employees that elected to sell shares to the Company to cover personal income tax withholding obligations.  The repurchase of these shares is permitted for those purposes under the Company's 2000 Stock Incentive Plan.



On June 22, 2004, the Company granted stock options for an aggregate of 35,000 shares of Common Stock to non-employee directors under the 2004 Non-Employee Director Plan which are exercisable three years from the date of grant if such persons continue to serve as directors on that date.



Related Party Transaction

In March 2002, the Company provided a loan to its current chairman and chief executive officer in the principal amount of $0.5 million (the "Note"), which matured on March 31, 2004 and bore interest at an annual rate of 5%.  This loan replaced earlier loans made by the Company to its chairman and chief executive officer during the fiscal year ended January 31, 1999.  In July 2002, the chairman and chief executive officer repaid the Company $0.1 million of the principal amount of the Note.  The remaining loan balance of $0.4 million plus accrued interest was repaid by the March 31, 2004 maturity date.



- 28 -



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

Cautionary Note Regarding Forward-Looking Statements

In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Elizabeth Arden, Inc., is hereby providing cautionary statements identifying important factors that could cause our actual results to differ materially from those projected in forward-looking statements (as defined in such Act) made in this quarterly report on Form 10-Q.  Any statements that are not historical facts and that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, through the use of words or phrases such as "will likely result," "are expected to," "will continue," "is anticipated," "estimated," "intends," "plans" and "projection") may be forward-looking and may involve estimates and uncertainties which could cause actual results to differ materially from those expressed in the forward-looking statements.  Accordingly, any such statements are qualified in their entirety by reference to, and are accompanied by, the following key factors that have a direct bearing on our results of operations: our absence of contracts with customers or suppliers and our ability to maintain and develop relationships with customers and suppliers; international and domestic economic and business changes that could impact consumer confidence or operations; the impact of competitive products and pricing; risks of international operations, including foreign currency fluctuations, economic and political consequences of terrorist attacks, political instability in certain regions of the world, and unexpected factors affecting customer purchasing patterns; our ability to successfully launch new products and implement our growth strategy; our ability to successfully and cost-effectively integrate acquired businesses or new brands; our substantial indebtedness, debt service obligations and restrictive covenants in our revolving credit facility and our indenture for our 7 3/4% senior subordinated notes; our customers' financial condition; our ability to access capital for acquisitions; changes in product mix to less profitable products; the retention and availability of key personnel; the assumptions underlying our critical accounting estimates; delays in shipments, inventory shortages and higher costs of production due to interruption of operations at key third party manufacturing or fulfillment facilities that manufacture or provide logistic services for the majority of our supply of certain products; changes in the retail, fragrance and cosmetic industries; our ability to protect our intellectual property rights; changes in the legal, regulatory and political environment that impact, or will impact, our business, including changes to customs or trade regulations or accounting standards; and other risks and uncertainties.  We caution that the factors described herein could cause actual results to differ materially from those expressed in any forward-looking statements we make and that investors should not place undue reliance on any such forward-looking statements.  Further, any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of anticipated or unanticipated events or circumstances.  New factors emerge from time to time, and it is not possible for us to predict all of such factors.  Further, we cannot assess the impact of each such factor on our results of operations or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.



General



This discussion should be read in conjunction with the Notes to Unaudited Consolidated Financial Statements contained herein and Management's Discussion and Analysis of Financial Condition and Results of Operations appearing in our Annual Report on Form 10-K for the year ended January 31, 2004 and our Transition Report on Form 10-Q for the five-month period ended June 30, 2004.  The results of operations for an interim period may not give a true indication of results for the year.  In the following discussions, all comparisons are with the corresponding items in the prior year period.



Our operations have historically been seasonal, with higher sales generally occurring during the first half of the fiscal year (July through December) as a result of increased demand by retailers in anticipation of, and during, the holiday season.  During the twelve months ended December 31, 2004, approximately 61% of our net sales were made during those months.  Due to the size and timing of certain orders from our customers, sales, results of operations, working capital requirements and cash flows can vary between quarters of the same and different years.  As a result, we expect to experience variability in net sales, net income, working capital requirements and cash flows on a quarterly basis.



- 29 -





We experience seasonality in our working capital, with peak inventory levels from July to October and peak receivable balances from September to December.  Our working capital borrowings are also seasonal and are normally highest in the months of September, October and November.  During the months of December, January and February of each year, cash is normally generated as customer payments on holiday season orders are received.



On June 2, 2004, our board of directors approved a change in fiscal year end from January 31 to June 30, effective as of June 30, 2004.  The change was implemented to better reflect our business cycle and to enhance business planning relative to our customers' retail calendars.  We filed a transition report on Form 10-Q for the five-month period ended June 30, 2004.  The three- and nine-month periods ended April 3, 2004 have four and six more days, respectively, than the three- and nine-month periods ended March 31, 2005.



Overview



For the three- and nine-month periods ended March 31, 2005, net sales increased 8.9% and 8.3%, respectively, compared to the three- and nine-month periods ended April 3, 2004 as a result of the launch of the Curious Britney Spears fragrance in the U.S. and select international markets in fall 2004 and in additional international markets beginning in February 2005, the launch and performance of the Elizabeth Arden Provocative Woman fragrance launched in the U.S. in spring 2004 and internationally in summer 2004, and the favorable impact of foreign currency rates, partially offset by lower sales to certain U.S. retail customers.  Gross margin increased to 48.3% from 45.8% for the three-month period ended March 31, 2005 compared to the three-month period ended April 3, 2004.  Gross margin increased to 44.6% from 42.0% for the nine-month period ended March 31, 2005 compared to the nine-month period ended April 3, 2004, reflecting increased sales of higher margin brands such as the Curious Britney Spears fragrance and the favorable impact of foreign currency rates.  For the three- and nine-month periods ended March 31, 2005, selling, general and administrative expenses increased 21.3% and 20.0%, respectively, compared to the three- and nine-month periods ended April 3, 2004 as a result of increased advertising expenses to support brand development, including new product launches, and the adverse impact of foreign currency rates.  During the three- and nine-month periods ended March 31, 2005, interest expense decreased by $1.2 million and $8.8 million, respectively, as a result of our debt refinancing activities during 2004.  The increase in advertising and promotional activities was funded with a portion of the interest savings.



Critical Accounting Policies and Estimates



We believe the accounting policies below represent our critical accounting policies.  See our Annual Report on Form 10-K for the year ended January 31, 2004 for a detailed discussion on the application of these and other accounting policies.



Accounting for Acquisitions and Intangible Assets.  We have accounted for our acquisitions, including the acquisition of the Elizabeth Arden business, under the purchase method of accounting for business combinations.  Under the purchase method of accounting, the cost, including transaction costs, are allocated to the underlying net assets based on their respective estimated fair values.  The excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill.



The judgments made in determining the estimated fair value and expected useful lives assigned to each class of assets and liabilities acquired can significantly affect net income.  For example, different classes of assets will have useful lives that differ - the useful life of property, plant, and equipment acquired will differ substantially from the useful life of brand licenses and trademarks.  Consequently, to the extent a longer-lived asset is ascribed greater value under the purchase method than a shorter-lived asset, net income in a given period may be higher.



Determining the fair value of certain assets and liabilities acquired is judgmental in nature and often involves the use of significant estimates and assumptions.  One of the areas that require more judgment is determining the fair values and useful lives of intangible assets.  To assist in this process, we often obtain appraisals from independent valuation firms for certain intangible assets.



- 30 -





Our intangible assets generally consist of exclusive brand licenses and trademarks.  We do not carry any goodwill.  The value of our intangible assets, including brand licenses, trademarks and intangibles, is exposed to future adverse changes if we experience declines in operating results or experience significant negative industry or economic trends. We periodically review intangible assets, at least annually or more often as circumstances dictate, for impairment and the useful life assigned using the guidance of applicable accounting literature.



We have determined that the Elizabeth Arden trademarks have indefinite useful lives as cash flows from the use of the trademarks are expected to be generated indefinitely.  In April2005, we completed our annual impairment testing of these assets with the assistance of a third party valuation firm.  The analysis and assessments of these assets indicated that no impairment adjustment was required.



Long-Lived Assets.  We review for impairment long-lived assets to be held and used whenever events or changes in circumstances indicate that the carrying amount of such assets may not be fully recoverable.  Measurement of an impairment loss is based on the fair value of the asset compared to its carrying value.  Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell.  During the three and nine months ended March 31, 2005 and April 3, 2004, we did not recognize any impairment charges associated with our long-lived assets. For a discussion on the sale of our corporate headquarters and former distribution facility, see Note 8 to the notes to unaudited consolidated financial statements.



Revenue Recognition.  Sales are recognized when title and risk of loss transfers to the customer and collectibility of the resulting receivable is probable.  Sales are recorded net of estimated returns and other allowances.  The provision for sales returns represents management's estimate of future returns based on historical experience and considering current external factors and market conditions.



Allowances for Sales Returns and Markdowns.  As is customary in the prestige beauty business, we grant certain of our customers, subject to our authorization and approval, the right to either return product or to receive a markdown allowance for certain promotional product.  Upon a sale, we record a provision for product returns and markdowns estimated based on our historical and projected experience, economic trends and changes in customer demand.  There is considerable judgment used in evaluating the factors influencing the allowance for returns and markdowns, and additional allowances in any particular period may be needed.



Allowances for Doubtful Accounts Receivable.We maintain allowances for doubtful accounts to cover uncollectible accounts receivable, and we evaluate our accounts receivable to determine if they will ultimately be collected.  This evaluation includes significant judgments and estimates, including an analysis of receivables aging and a customer-by-customer review for large accounts.  If, for example, the financial condition of our customers deteriorates resulting in an impairment of their ability to pay, additional allowances may be required.



Provisions for Inventory Obsolescence.  We record a provision for estimated obsolescence and shrinkage of inventory.  Our estimates consider the cost of inventory, forecasted demand, the estimated market value, the shelf life of the inventory and our historical experience.  If there are changes to these estimates, additional provisions for inventory obsolescence may be necessary.



Stock-Based Compensation.  We account for our stock-based compensation under the recognition and measurement principles prescribed by Accounting Principles Board Opinion (APB) No. 25, "Accounting for Stock Issued to Employees," and related interpretations.  No stock-based compensation cost is reflected in net income for employee and director option grants, as such grants had an exercise price equal to the market value of the underlying common stock on the date of grant.  The pro forma effect on net income and net income per common share for the three- and nine-month periods ended March 31, 2005 and April 3, 2004 is set forth in Note 3 to the Notes to Unaudited Consolidated Financial Statements.





- 31 -





Performance Accelerated Restricted Stock (PARS).  PARS are restricted stock awards with a pre-defined vesting period of six years that also provide for accelerated vesting to three, four or five years from the date of grant if our total shareholder return exceeds the total shareholder return of the median of the companies comprising the Russell 2000 Index over the respective three, four or five-year period.  Because our stock price rose by approximately 116% as compared to an approximate 35% increase for the median of the companies comprising the Russell 2000 Index over the three-year period since the March 2002 grant date, the vesting was accelerated.  The PARS were recorded as unearned deferred compensation in shareholders' equity at the market value on the date of grant and were based on a six-year vesting period for the first two years following the date of grant and the balance was accelerated after two years based on our probability of exceeding the total shareholder return of the median of the companies comprising the Russell 2000 Index in March 2005.



Consistent with the terms of the PARS, a new grant of performance accelerated restricted stock (New PARS) was triggered upon vesting of the initial grant.  As a result, our board of directors approved the grant of up to 423,800 shares of New PARS and, on March 22, 2005, we issued 398,800 shares of New PARS to 16 managerial employees.  The New PARS will only vest if the Company's total shareholders return surpasses the total shareholder return of the Russell 2000 Index over a three, four, five or six-year period from the date of grant.



Performance-Based Restricted Stock.  The performance-based restricted stock granted in March 2004 will vest as to one third of the stock granted on each of the first, second and third full annual fiscal years following the date of grant, but only if the person receiving the grant is employed by us at the time of vesting and we achieve a cumulative annualized increase in earnings per share of 10%, excluding any one-time or extraordinary events (as determined by the compensation committee of the board of directors), and after giving effect to any stock splits or other recapitalizations.  The restricted stock is recorded as unearned deferred compensation in shareholders' equity, is marked to market during each quarterly reporting period and is amortized over the three-year vesting period.

In December 2004, the Financial Accounting Standards Board issued its final standard on accounting for share-based payments (SFAS 123R) that requires companies to expense the value of employee stock options and similar awards.  Under SFAS 123R, share-based payment awards result in a cost that will be measured at fair value on the grant date of the awards, based on the estimated number of awards that are expected to vest.  Compensation cost for awards that vest would not be reversed if the awards expire without being exercised.  SFAS 123R will be effective for the Company beginning in the three-month period ending September 30, 2005 and will apply to all outstanding and unvested share-based payment awards at its adoption date.  We are evaluating the impact that SFAS 123R will have on compensation expense for future periods.

Income Taxes and Valuation Reserves.  A valuation allowance may be required to reduce deferred tax assets to the amount that is more likely than not to be realized.  We consider projected future taxable income and ongoing tax planning strategies in assessing a potential valuation allowance.  In the event we determine that we may not be able to realize all or part of our deferred tax asset in the future, or that new estimates indicate that a previously recorded valuation allowance is no longer required, an adjustment to the deferred tax asset would be charged or credited to net income in the period of such determination.



- 32 -



Results of Operations

The following discussion compares the historical results of operations for the three- and nine-month periods ended March 31, 2005 and April 3, 2004.  Results of operations, in thousands and as a percentage of net sales, were as follows (percentages may not add due to rounding):





|                                                         |                                   | Three Months Ended |         | Nine Months Ended
|-------------------------------------------------------- | --------------------------------- | ------------------ | ------- | -----------------
|                                                         |                                   |                    |         |                  
|                                                         |                                   | March 31, 2005     |         | April 3, 2004    
|                                                         |                                   |                    |         |                  
|Net sales                                                |                                   | $                  | 198,317 |                  
|Cost of sales                                            |                                   |                    | 102,431 |                  
|                                                         | Gross profit                      |                    |         | 95,886           
|Selling, general and administrative 
  expenses          |                                   |                    | 76,907  |                  
|Depreciation and amortization                            |                                   |                    | 5,176   |                  
|                                                         | Income from operations            |                    |         | 13,803           
|Interest expense, net                                    |                                   |                    | 5,582   |                  
|Debt extinguishment charges                              |                                   |                    | --      |                  
|Other                                                    |                                   |                    | --      |                  
|                                                         | Income (loss) before income taxes |                    |         | 8,221            
|Provision for (benefit from) income 
  taxes             |                                   |                    | 2,602   |                  
|                                                         | Net income (loss)                 |                    |         | 5,619            
|Accretion and dividend on 
  preferred stock             |                                   |                    | --      |                  
|Accelerated accretion on converted 
  preferred stock    |                                   |                    | --      |                  
|Net income (loss) attributable to 
  common shareholders |                                   | $                  | 5,619   |                  
|Other data:                                              |                                   |                    |         |                  
|EBITDA and EBITDA margin (1)                             |                                   | $                  | 18,979  |                  



(1)  For a definition of EBITDA and a reconciliation of net income to EBITDA, see "EBITDA" under Results of Operations - Three Months Ended March 31, 2005 Compared to Three Months Ended April 3, 2004 and Nine Months Ended March 31, 2005 Compared to Nine Months Ended April 3, 2004.  EBITDA margin represents EBITDA divided by net sales.



Three Months Ended March 31, 2005 Compared to Three Months Ended April 3, 2004



Net Sales.  Net sales increased approximately 8.9% for the three months ended March 31, 2005 over the three months ended April 3, 2004. The sales increase was driven primarily by the launch of the Curious Britney Spears fragrance in additional international markets and travel retail markets, replenishment orders for Curious Britney Spears fragrance in the U.S., the favorable impact of foreign currency rates and increased sales of the Elizabeth Arden Provocative Woman fragrance in certain international markets, partially offset by lower sales to certain U.S. retail customers.  Excluding the impact of foreign currency translation, net sales increased 6.1%.



Gross Profit.  Gross profit increased 14.8% for the three months ended March 31, 2005 over the three months ended April 3, 2004.  The increase in gross profit was due to higher net sales, including sales of higher margin brands such as the Curious Britney Spears fragrance, the favorable impact of foreign currency rates and lower promotional costs.  Gross margin increased to 48.3% for the three months ended March 31, 2005, from 45.8% for the three months ended April 3, 2004.



SG&A.  Selling, general and administrative expenses increased 21.3% for the three months ended March 31, 2005 over the three months ended April 3, 2004.  The increase was principally due to



- 33 -





Interest Expense.  Interest expense, net of interest income, decreased by approximately $1.2 million or 17.6% for the three months ended March 31, 2005, compared to the three months ended April 3, 2004. The decrease resulted from lower interest expense on our long-term debt due to refinancing activities in fiscal 2004.



Debt Extinguishment Charges.  We did not incur any debt extinguishment charges in the three months ended March 31, 2005 compared to the $29.4 million of debt extinguishment charges relating to the redemption of $95.2 million aggregate principal amount of the 11 3/4% senior notes and $20 million aggregate principal amount of the 10 3/8% senior notes recorded for the three months ended April 3, 2004.  See Note 7 to the Notes to Unaudited Consolidated Financial Statements.



Provision for (Benefit from) Income Taxes.   We had a provision for income taxes for the three months ended March 31, 2005 compared to a benefit from income taxes for the three months ended April 3, 2004 primarily due to the debt extinguishment charges in the 2004 period.



Net Income.  Net income for the three months ended March 31, 2005 increased by approximately $16.2 million as compared to the three months ended April 3, 2004. The increase was a result of the debt extinguishment charges in the prior year and lower interest expense, partially offset by higher selling, general and administrative expenses.



Accretion and Dividend on Preferred Stock.  As a result of the conversion of the remaining Series D convertible preferred stock into common stock in June 2004, there are no future accretion and dividend charges relating to preferred stock.  For the three months ended April 3, 2004, the accretion and dividend on preferred stock of $0.6 million, which is a non-cash charge to net income attributable to common shareholders, represents the accretion of the original carrying value of $8.5 million of the Series D convertible preferred stock to its liquidation preference, and the imputed dividends on such preferred stock.



Net Income Attributable to Common Shareholders.  In the three months ended March 31, 2005, the net income attributable to common shareholders increased by $16.8 million compared to the three months ended April 3, 2004, due to an increase in net income and the elimination of accretion and dividends on the Series D convertible preferred stock.



EBITDA.  EBITDA (net income plus the provision for income taxes (or net loss less the benefit from income taxes), plus interest expense, plus depreciation and amortization expense) increased from a loss of $9.2 million for the three months ended April 3, 2004, to income of $19.0 million for the three months ended March 31, 2005.  The increase in EBITDA was primarily the result of the debt extinguishment charges in the prior year period and the increased net sales and gross profit during the three months ended March 31, 2005, partially offset by higher selling, general and administrative expenses.



EBITDA should not be considered as an alternative to operating income (loss) or net income (loss) (as determined in accordance with generally accepted accounting principles) as a measure of our operating performance or to net cash provided by operating, investing and financing activities (as determined in accordance with generally accepted accounting principles) or as a measure of our ability to meet cash needs. We believe that EBITDA is a measure commonly reported and widely used by investors and other interested parties as a measure of a company's operating performance and debt servicing ability because it assists in comparing performance on a consistent basis without regard to capital structure (particularly when acquisitions are involved), depreciation and amortization, or non-operating factors such as historical cost.  Accordingly, as a result of our capital structure , we believe EBITDA is a relevant measure.  This information has been disclosed here to permit a more complete comparative analysis of our operating performance relative to other companies and of our debt servicing ability. EBITDA may not, however, be comparable in all instances to other similar types of measures.



- 34 -



In addition, EBITDA has limitations as an analytical tool, including the fact that:





| |  | it does not reflect our cash expenditures, future requirements for capital expenditures or contractual commitments;                                                                                                                
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |  |                                                                                                                                                                                                                                    
| |  | it does not reflect the significant interest expense or the cash requirements necessary to service interest or principal payments on our debt;                                                                                     
|  |  |                                                                                                                                                                                                                                    
| |  | it does not reflect any cash income taxes that we may be required to pay; and                                                                                                                                                      
|  |  |                                                                                                                                                                                                                                    
| |  | although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future and these measures do not reflect any cash requirements for such replacements.



The following is a reconciliation of net income (loss), as determined in accordance with generally accepted accounting principles, to EBITDA:





|(Amounts in thousands) | Three Months Ended                        |       
|---------------------- | ----------------------------------------- | ------
|                       |                                           |       
|                       | March 31, 
2005                           |       
|                       |                                           |       
|Net income (loss)      | $                                         | 5,619 
|Plus:                  |                                           |       
|                       | Provision for (benefit from) income taxes |       
|                       | Interest expense, net                     |       
|                       | Depreciation and amortization             |       
|                       |                                           |       
|                       |                                           | EBITDA
|                       |                                           |       
|                       |                                           |       
|                       |                                           |       

Nine Months Ended March 31, 2005 Compared to the Nine Months Ended April 3, 2004



Net Sales.  Net sales increased approximately 8.3% for the nine months ended March 31, 2005 compared to the nine months ended April 3, 2004. The sales increase was driven primarily by the launch of the Curious Britney Spears fragrance in the U.S. and select international markets in fall 2004 and in additional international markets in March 2005, sales of the Elizabeth Arden Provocative Woman fragrance which was launched in the U.S. in spring 2004 and internationally in summer 2004, and the favorable impact of foreign currency rates partially offset by lower sales of certain fragrances to certain U.S. retail customers.  Excluding the impact of foreign currency translation, net sales increased 5.9%.



Gross Profit.  Gross profit increased 14.9% for the nine months ended March 31, 2005 over the nine months ended April 3, 2004. The increase in gross profit was due to higher net sales, including a greater proportion of sales of higher margin owned and licensed brands than distributed brands, and the favorable impact of foreign currency rates.   Gross margin increased to 44.6% for the nine months ended March 31, 2005, from 42.0% for the nine months ended April 3, 2004.



SG&A.  Selling, general and administrative expenses increased 20.0% for the nine months ended March 31, 2005 over the nine months ended April 3, 2004.  The increase was principally due to



Depreciation and Amortization.  Depreciation and amortization increased 2.5% for the nine months ended March 31, 2005, compared to the nine months ended April 3, 2004, principally as a result of the acceleration of depreciation of certain fixed assets at our Miami Lakes facility due to the cessation of distribution operations at this facility.



- 35 -





Interest Expense.  Interest expense, net of interest income, decreased by 33.0% for the nine months ended March 31, 2005 in comparison to the nine months ended April 3, 2004. The decrease resulted from lower interest expense on our long-term debt due to refinancing activities in fiscal 2004.



Debt Extinguishment Charges.  We did not incur any debt extinguishment charges in the nine months ended March 31, 2005 compared to the $38.8 million of debt extinguishment charges relating to the redemption of $151 million aggregate principal amount of the 11 3/4% senior notes and $144 million aggregate principal amount of the 10 3/8% senior notes recorded for the nine months ended April 3, 2004.  See Note 7 to the Notes to Unaudited Consolidated Financial Statements.



Provision for (Benefit from) Income Taxes.  We had a provision for income taxes for the nine months ended March 31, 2005 compared to a benefit from income taxes for the nine months ended April 3, 2004 primarily due to the debt extinguishment charges in the 2004 period.



Net Income.  Net income for the nine months ended March 31, 2005 increased by approximately $30.1 million as compared to the nine months ended April 3, 2004. The increase was a result of the absence of debt extinguishment charges compared to the prior year, lower interest expense and higher operating income, partially offset by higher selling, general and administrative expenses.



Accretion and Dividend on Preferred Stock.  As a result of the conversion of the remaining Series D convertible preferred stock into common stock in June 2004, there are no future accretion and dividend charges relating to preferred stock.  For the nine months ended April 3, 2004, the accretion and dividend on preferred stock of $2.3 million, which is a non-cash charge to net income attributable to common shareholders, represents the accretion of the original carrying value of the Series D convertible preferred stock to its liquidation preference, and the imputed dividends on such preferred stock.



Accelerated Accretion on Converted Preferred Stock.    During the nine months ended April 3, 2004, we recorded $18.6 million in accelerated accretion charges as a result of the conversion of Series D convertible preferred stock into common stock and the sale by an affiliate of Unilever in a public offering in October 2003.  As a result of the conversion of the remaining Series D convertible preferred stock into common stock in June 2004, there was no accelerated accretion charges relating to the preferred stock in the nine months ended March 31, 2005.



Net Income Attributable to Common Shareholders.  During the nine months ended March 31, 2005, the net income attributable to common shareholders increased by $51.0 million compared to the nine months ended April 3, 2004, due to the absence of debt extinguishment charges and accretion and dividends on the Series D convertible preferred stock, including accelerated accretion, during the nine months ended March 31, 2005 compared to the prior year period and higher operating income.



EBITDA.  EBITDA (net income plus the provision for income taxes (or net loss less the benefit from income taxes), plus interest expense, plus depreciation and amortization expense) increased from $52.7 million for the nine months ended April 13, 2004, to $95.2 million for the nine months ended March 31, 2005.  The increase in EBITDA was primarily the result of the debt extinguishment charges in the prior year period and the increased net sales and gross profit during the nine months ended March 31, 2005, partially offset by higher selling, general and administrative expenses.





- 36 -



The following is a reconciliation of net income, as determined in accordance with generally accepted accounting principles, to EBITDA:





|(Amounts in thousands) | Nine Months Ended                         |       
|---------------------- | ----------------------------------------- | ------
|                       |                                           |       
|                       | March 31, 
2005                           |       
|                       |                                           |       
|Net income             | $                                         | 42,128
|Plus:                  |                                           |       
|                       | Provision for (benefit from) income taxes |       
|                       | Interest expense, net                     |       
|                       | Depreciation and amortization             |       
|                       |                                           |       
|                       |                                           | EBITDA
|                       |                                           |       
|                       |                                           |       
|                       |                                           |       

Financial Condition





|(Amounts in thousands)                               |  | Nine Months Ended |        
|---------------------------------------------------- |  | ----------------- | -------
|                                                     |  |                   |        
|                                                     |  | March 31, 
2005   |        
|                                                     |  |                   |        
|Net cash provided by operating activities            |  | $                 | 12,969 
|Net cash used in investing activities                |  |                   | (13,675
|Net cash provided by (used in) financing activities  |  |                   | 3,019  
|Net increase (decrease) in cash and cash equivalents |  |                   | 2,472  



Cash Flows.  Net cash provided by operating activities decreased $53.4 million for the nine months ended March 31, 2005 as compared to the nine months ended April 3, 2004.  The decrease for the nine months ended March 31, 2005 was primarily due to an increase in accounts receivable related to our international launches in February and March of this year with no comparable launch in the prior year and a shift in sales to later in the quarter as compared to the prior year, higher inventory balances, including inventory of new products to support product launches, partially offset by higher payables.  Approximately 83% of our net sales for the three months ended March 31, 2005 occurred during the last two months of the quarter compared to approximately 37% in the prior year period.



Net cash used in investing activities increased by $5.5 million for the nine months ended March 31, 2005 as compared to the nine months ended April 3, 2004, primarily as a result of the final price adjustment to trademarks acquired in the Arden acquisition in the prior year, product license acquisition costs in the current year and increased capital spending in the current year.



Net cash provided by financing activities increased by $63 million for the nine months ended March 31, 2005 as compared to the nine months ended April 3, 2004.  The increase in net cash provided by financing activities for the nine months ended March 31, 2005 was primarily due to significantly higher payments on long-term debt during the nine months ended April 3, 2004 and increased short-term borrowings used to finance working capital requirements.



Interest paid during the nine months ended March 31, 2005 included a $9.6 million and an $8.3million interest payment on the 7 3/4% senior subordinated notes that covered the period from the January 13, 2004 date of issuance through August 15, 2004 and August 16, 2004 through February 15, 2005, respectively.



Future Liquidity and Capital Needs.  Our principal future uses of funds are for working capital requirements, including brand development and marketing expenses, new product launches, additional brand acquisitions or product distribution arrangements, capital expenditures and debt service.  We have historically financed, and we expect to continue to finance, our needs primarily through internally generated funds, our credit facility and external financing.  We collect cash from our customers based on our sales to them and their respective payment terms.





- 37 -





We have a revolving bank credit facility with a syndicate of banks that matures in June 2009.  Our borrowings under this facility are limited to a "borrowing base," calculated based on 85% of eligible accounts receivable and 75% of eligible inventories (65% from November 16 to May 15). The borrowings are collateralized by a first priority lien on all of our U.S. accounts receivable and inventory. The credit facility prohibits the payment of cash dividends and the incurrence of debt (other than refinancing and certain small amounts of indebtedness).  The credit facility has only one financial maintenance covenant, which is a debt service coverage ratio that must be maintained at not less than 1.1 to 1 if average borrowing availability declines to less than $25 million ($40 million from November 16 through May 15).  No financial maintenance covenant was applicable for the three- and nine-month periods ended March 31, 2005.  In addition, the indenture pursuant to which our 73/4% senior subordinated notes are issued restricts the incurrence of debt (other than refinancing indebtedness and certain other indebtedness) and the payment of dividends subject to satisfaction of a fixed charge coverage ratio and net income tests.



On September 30, 2004, we executed an amendment to our credit facility that, among other things, extended the maturity date to June 2009 from January 2006 and included a reduction in the range of interest rates included in the applicable margin, added to either LIBOR-based rates or prime rates, at our option for outstanding borrowings.  As a result of the September 2004 amendment to the credit facility, the interest rates charged on LIBOR loans and prime rate loans were reduced to a range of 1.50% to 2.25% from a range of 2.00% to 2.75% for LIBOR loans and to a range of 0% to .50% from a range of 0.25% to 1.00% for prime rate borrowings. As of March 31, 2005, the applicable margin was 1.50% for LIBOR loans and 0% for prime rate loans.  The commitment fee on the unused portion of the credit facility ranges from 0.25% to 0.375% per year based on a debt service coverage ratio.   At March 31, 2005, the commitment fee was 0.25%.  See Note 6 to Notes to Unaudited Consolidated Financial Statements.

Based upon our internal projections, we believe that the credit facility, as currently amended and restated, provides sufficient flexibility so that we will remain in compliance with its terms.  If our actual results deviate significantly from our projections, we may not remain in compliance with the debt service coverage ratio and would not be allowed to borrow under the revolving credit facility.  In addition, a default under our revolving credit facility that causes acceleration of the debt under this facility could trigger a default on our senior notes.  In the event we are not able to borrow under our credit facility, we would be required to develop an alternative source of liquidity.  There is no assurance that we could obtain replacement financing or what the terms of such financing, if available, would be.  As of March 31, 2005, we had $67.7 million in outstanding borrowings and approximately $4.4 million in letters of credits under our credit facility and approximately $143million of eligible receivables and inventories available as collateral under the credit facility.  Therefore, we had $71 million borrowing availability under the credit facility.



We believe that existing cash and cash equivalents, internally generated funds and borrowings under our credit facility will be sufficient to cover debt service, working capital requirements and capital expenditures for the next twelve months other than additional working capital requirements that may result from further expansion of our operations through acquisitions of additional brands or new product launches or distribution arrangements.



Contractual Obligations.At March 31, 2005, we had commitments to incur promotional and advertising expenses, which are either fixed commitments or based on net sales for licensed brands, and minimum royalty guarantees in an aggregate amount of $32.3 million through 2010 compared with $33.5 million through 2009 as previously stated in our Transition Report at June 30, 2004.



- 38 -





Recently Issued Accounting Pronouncements and Recent Legislation



In December 2004, the Financial Accounting Standards Board issued its final standard on accounting for share-based payments  (SFAS 123R) that requires companies to expense the value of employee stock options and similar awards. Under SFAS 123R, share-based payment awards result in a cost that will be measured at fair value on the grant date of the awards, based on the estimated number of awards that are expected to vest.  Compensation cost for awards that vest would not be reversed if the awards expire without being exercised.  SFAS 123R will be effective for us beginning in the three-month period ending September 30, 2005 and will apply to all outstanding and unvested share-based payment awards at its adoption date.  We are evaluating the impact that SFAS 123R will have on compensation expense for future periods.



In October 2004, the American Jobs Creation Act of 2004 was signed into law.  This act contains a number of provisions that might affect our future effective tax rate.  The most significant provision would allow us to elect to deduct from our taxable income 85% of certain eligible dividends received by us from non-U.S. subsidiaries before the end of 2005 if those dividends are reinvested in the U.S. for eligible purposes.  Another significant provision replaces the extraterritorial income exclusion with a domestic manufacturing deduction.  To the extent we remit eligible dividends, we would have to record a provision for U.S. federal and state income taxes on the taxable portion of the remittance as no taxes have been previously provided.  We are evaluating the impact this act will have on our effective tax rate for this fiscal year and beyond.



ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

As of March 31, 2005, we had $68 million in borrowings outstanding under our credit facility.  Borrowings under our credit facility are seasonal, with peak borrowings in the months of September, October and November.  Borrowings under the credit facility are subject to variable rates and, accordingly, our earnings and cash flow will be affected by changes in interest rates.  In February 2004, we entered into two interest rate swap transactions to swap $50.0 million of our fixed rate 7 3/4% senior subordinated notes due 2014 to a floating rate of interest based on LIBOR to

better balance our mix of fixed and floating rate debt.  In the short term, this will provide us with a lower level of interest expense related to a portion of the 7 3/4% senior subordinated notes based on current LIBOR rates; however, over the life of the notes, interest expense may be greater than 7 3/4% based upon fluctuations in LIBOR.  In the event of an adverse change in interest rates, our results could be negatively affected.  We can terminate the swap at our option at any time and the counter party can call the swap any time after January 2009.  We designated the swap as a fair value hedge.





- 39 -





Foreign Currency Risk



We sell our products in approximately 90 countries around the world.  During the three- and nine-month periods ended March 31, 2005, we derived approximately 43.3% and 36.2%, respectively, of our net sales from our international operations.  During the three- and nine-month periods ended April 3, 2004, we derived approximately 34.1% and 31.8%, respectively, of our net sales from our international operations.  We conduct our international operations in a variety of different countries and derive our sales in currencies including the Euro, British pound, Swiss franc, Canadian dollar and Australian dollar, as well as the U.S. dollar.  Our operations may be subject to volatility because of currency changes, inflation changes and changes in political and economic conditions in the countries in which we operate.  With respect to international operations, our sales and expenses are typically denominated in local currency, while costs of goods sold are denominated in a combination of local currency and the U.S. dollar.  Our results of operations are reported in U.S. dollars. Fluctuations in currency rates can affect our reported sales, margins, operating costs and the anticipated settlement of our foreign denominated receivables and payables.  Most of our skincare and cosmetic products are produced in a third-party manufacturing facility located in Roanoke, Virginia.  A weakening of the foreign currencies in which we generate sales relative to the currencies in which our costs are denominated, which is primarily the U.S. dollar, may decrease our reported cash flow and operating profits.  Our competitors may or may not be subject to the same fluctuations in currency rates, and our competitive position could be affected by these changes.  The cumulative effect of translating balance sheet accounts from the functional currency into the U.S. dollar at current exchange rates is included in "Accumulated other comprehensive income" in our consolidated balance sheets.



As of March 31, 2005, we had notional amounts of 32.6 million Euros and 7.2 million British pounds under foreign currency contracts that expire between April 29, 2005 and June 29, 2007 to reduce the exposure of our foreign subsidiary revenues to fluctuations in currency rates.  We have designated each foreign currency option contract as a cash flow hedge.  At March 31, 2005, the unrealized loss, net of taxes associated with these contracts of approximately $0.1 million is included in accumulated other comprehensive income.  The unrealized loss, net of taxes, incurred during the nine months ended March 31, 2005 was approximately $0.2 million. We intend to only enter into foreign currency contracts that qualify for hedge accounting and, therefore, the gains and losses will only be recognized in earnings in the period in which the contracts expire.  We do not utilize foreign exchange contracts for trading or speculative purposes.  There can be no assurance that our hedging operations, if any, will eliminate or substantially reduce risks associated with fluctuating exchange rates.

ITEM 4.    CONTROLS AND PROCEDURES

The Company's Chairman and Chief Executive Officer and Executive Vice President and Chief Financial Officer, who are the principal executive officer and principal financial officer, respectively, have evaluated the effectiveness and operation of the Company's disclosure controls and procedures  as of the end of the period covered by this quarterly report (the "Evaluation Date").  Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended), include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.  Based upon such evaluation, they have concluded that, as of the Evaluation Date, the Company's disclosure controls and procedures are functioning effectively to provide reasonable assurance that information required to be disclosed by the Company in its reports filed or submitted by it under the Securities Exchange Act of 1934, as amended, has been recorded, processed, summarized and reported within the time periods specified in the Commission's rules and forms.



There have been no changes in the Company's internal control over financial reporting during the fiscal quarter covered by this quarterly report that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.



- 40 -



PART II.   OTHER INFORMATION



ITEM 6.    EXHIBITS





|Exhibit 
Number |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|3.1             |  | Amended and Restated Articles of Incorporation of the Company dated January 24, 2001 (incorporated herein by reference to Exhibit 3.1 filed as part of the Company's Form 8-K dated February 7, 2001 (Commission File No. 1-6370)).                                                                                                                                                                                                                  
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|3.2             |  | Amended and Restated By-laws of the Company (incorporated herein by reference to Exhibit 3.2 filed as part of the Company's 10-Q for the transition period from February 1, 2004 to June 30, 2004 (Commission File No. 1-6370)).                                                                                                                                                                                                                     
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|4.1             |  | Indenture, dated as of January 23, 2001, among the Company, FD Management, Inc., DF Enterprises, Inc., FFI International, Inc., Elizabeth Arden GmbH, as guarantors, and HSBC Bank USA, as trustee (incorporated herein by reference to Exhibit 4.1 filed as part of the Company's Form 8-K dated February 7, 2001 (Commission File No. 1-6370)).                                                                                                    
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|4.2             |  | Supplemental Indenture, dated as of January 8, 2004, among the Company and FD Management, Inc., DF Enterprises, Inc., Elizabeth Arden International Holding, Inc., and Elizabeth Arden (Zug) GmbH, as guarantors and HSBC Bank USA, as trustee (incorporated herein by reference to Exhibit 4.2 filed as part of the Company's Form 10-K for the year ended January 31, 2004 (Commission File No. 1-6370)).                                          
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|4.3             |  | Indenture, dated as of January 13, 2004, among the Company and FD Management, Inc., DF Enterprises, Inc., Elizabeth Arden International Holding, Inc., RDEN Management, Inc., Elizabeth Arden (Financing), Inc., and Elizabeth Arden Travel Retail, Inc., as guarantors, and HSBC Bank USA, as trustee (incorporated herein by reference to Exhibit 4.3 to the Company's Form 10-K for the year ended January 31, 2004 (Commission File No. 1-6370)).
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|4.4             |  | Second Amended and Restated Credit Agreement dated as of December 24, 2002 among the Company, JP Morgan Chase Bank, as administrative agent, Fleet National Bank, as collateral agent, and the banks listed on the signature pages thereto (incorporated by reference to Exhibit 4.1 filed as part of the Company's Form 8-K dated December 30, 2002 (Commission File No. 1-6370)).                                                                  
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|4.5             |  | First Amendment to Second Amended and Restated Credit Agreement dated as of February 25, 2004, among the Company, JP Morgan Chase Bank, as administrative agent, Fleet National Bank, as collateral agent, and the banks listed on the signature pages thereto (incorporated herein by reference to Exhibit 4.5 to the Company's Form 10-K for the year ended January 31, 2004 (Commission File No. 1-6370)).                                        
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|4.6             |  | Second Amendment to Second Amended and Restated Credit Agreement dated as of June 2, 2004, among the Company, JP Morgan Chase Bank, as administrative agent, Fleet National Bank, as collateral agent, and the banks listed on the signature pages thereto (incorporated herein by reference to Exhibit 4.6 to the Company's Form 10-Q for the quarter ended May 1, 2004 (Commission File No. 1-6370)).                                              
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|4.7             |  | Third Amendment to Second Amended and Restated Credit Agreement dated as of September 30, 2004, among the Company, JP Morgan Chase Bank, as administrative agent, Fleet National Bank, as collateral agent, and the banks listed on the signature pages thereto (incorporated herein by reference to Exhibit 4.1 filed as part of the Company's Form 8-K dated October 1, 2004 (Commission File No. 1-6370)).                                        
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|4.8             |  | Amended and Restated Security Agreement dated as of January 29, 2001, made by the Company and certain of its subsidiaries in favor of Fleet National Bank, as administrative agent (incorporated herein by reference to Exhibit 4.5 filed as part of the Company's Form 8-K dated February 7, 2001 (Commission File No. 1-6370)).                                                                                                                    
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.1            |  | 2004 Stock Incentive Plan (incorporated herein by reference to Annex E filed as part of the Company's Proxy Statement on May 14, 2004 (Commission File No. 1-6370)).                                                                                                                                                                                                                                                                                 
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.2            |  | 2004 Non-Employee Director Stock Option Plan (incorporated herein by reference to Annex F filed as part of the Company's Proxy Statement on May 14, 2004 (Commission File No. 1-6370)).                                                                                                                                                                                                                                                              
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                      

- 41 -







|Exhibit 
Number |  | Description                                                                                                                                                                                                                                                                                    
|--------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                |  |                                                                                                                                                                                                                                                                                                
|                |  |                                                                                                                                                                                                                                                                                                
|10.3            |  | Amended 2000 Stock Incentive Plan (incorporated herein by reference to Exhibit 10.1 filed as part of the Company's Form 10-Q for the quarter ended July 26, 2003 (Commission File No. 1-6370)).                                                                                                
|                |  |                                                                                                                                                                                                                                                                                                
|10.4            |  | Amended 1995 Stock Option Plan (incorporated herein by reference to Exhibit 4.12 filed as a part of the Company's Registration Statement on Form S-8 dated July 7, 1999 (Commission File No. 1-6370)).                                                                                         
|                |  |                                                                                                                                                                                                                                                                                                
|10.5            |  | Amended 2002 Employee Stock Purchase Plan (incorporated herein by reference to Exhibit 10.4 filed as a part of the Company's Form 10-Q for the quarter ended April 26, 2003 (Commission File No. 1-6370)).                                                                                     
|                |  |                                                                                                                                                                                                                                                                                                
|10.6            |  | Amended and Restated Deed of Lease dated as of January 17, 2003, between the Company and Liberty Property Limited Partnership (incorporated herein by referenced to Exhibit 10.5 filed as a part of the Company's Form 10-Q for the quarter ended April 26, 2003 (Commission File No. 1-6370)).
|                |  |                                                                                                                                                                                                                                                                                                
|10.7            |  | Amended Non-Employee Director Stock Option Plan (incorporated herein by referenced to Exhibit 10.2 filed as a part of the Company's Form 10-Q for the quarter ended April 26, 2003 (Commission File No. 1-6370)).                                                                              
|                |  |                                                                                                                                                                                                                                                                                                
|10.8            |  | Form of Nonqualified Stock Option Agreement for stock option awards under the Company's Amended  Non-Employee Director Stock Option Plan.                                                                                                                                                      
|                |  |                                                                                                                                                                                                                                                                                                
|10.9            |  | Form of Incentive Stock Option Agreement for stock option awards under the Company's Amended 1995 Stock Option Plan.                                                                                                                                                                           
|                |  |                                                                                                                                                                                                                                                                                                
|10.10           |  | Form of Nonqualified Stock Option Agreement for stock option awards under the Company's Amended 1995 Stock Option Plan.                                                                                                                                                                        
|                |  |                                                                                                                                                                                                                                                                                                
|10.11           |  | Form of Stock Option Agreement for stock option awards under the Company's 2000 Stock Incentive Plan.                                                                                                                                                                                          
|                |  |                                                                                                                                                                                                                                                                                                
|10.12           |  | Form of Restricted Stock Agreement for regular restricted stock awards under the Company's Amended 2000 Stock Incentive Plan.                                                                                                                                                                  
|                |  |                                                                                                                                                                                                                                                                                                
|10.13           |  | Form of Restricted Stock Agreement for the performance-based restricted stock awards under the Company's Amended 2000 Stock Incentive Plan.                                                                                                                                                    
|                |  |                                                                                                                                                                                                                                                                                                
|10.14           |  | Form of Stock Option Agreement for stock option awards under the Company's 2004 Non-Employee Director Stock Option Plan.                                                                                                                                                                       
|                |  |                                                                                                                                                                                                                                                                                                
|10.15           |  | Form of Restricted Stock Agreement for the market-based restricted stock awards under the Company's 2004 Stock Incentive Plan.                                                                                                                                                                 
|                |  |                                                                                                                                                                                                                                                                                                
|10.16           |  | Compensation Arrangements for Named Executive Officers.                                                                                                                                                                                                                                        
|                |  |                                                                                                                                                                                                                                                                                                
|10.17           |  | Board of Directors Compensation Arrangements.                                                                                                                                                                                                                                                  
|                |  |                                                                                                                                                                                                                                                                                                
|10.18(*)        |  | Agreement for Sale and Purchase dated as of March 29, 2005 between Elizabeth Arden, Inc. and Nina Elazar.                                                                                                                                                                                      
|                |  |                                                                                                                                                                                                                                                                                                
|31.1            |  | Section 302 Certification of Chief Executive Officer.                                                                                                                                                                                                                                          
|                |  |                                                                                                                                                                                                                                                                                                
|31.2            |  | Section 302 Certification of Chief Financial Officer.                                                                                                                                                                                                                                          
|                |  |                                                                                                                                                                                                                                                                                                
|32              |  | Section 906 Certifications of the Chief Executive Officer and the Chief Financial Officer.                                                                                                                                                                                                     



(*) Portions of this Exhibit have been omitted and filed separately pursuant to a request for confidential treatment filed with the Secretary of the Securities and Exchange Commission.



The foregoing list omits instruments defining the rights of holders of our long-term debt where the total amount of securities authorized thereunder does not exceed 10% of our total assets.  We hereby agree to furnish a copy of each such instrument or agreement to the Commission upon request.





- 42 -



SIGNATURES



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.



|                   |  | ELIZABETH ARDEN, INC.                               
|------------------ |  | ----------------------------------------------------
|                   |  |                                                     
|Date:  May 6, 2005 |  | /s/ E. Scott Beattie                                
|                   |  |                                                     
|                   |  | E. Scott Beattie                                    
|                   |  | Chairman and Chief Executive Officer                
|                   |  | (Principal Executive Officer)                       
|                   |  |                                                     
|Date:  May 6, 2005 |  | /s/ Stephen J. Smith                                
|                   |  |                                                     
|                   |  | Stephen J. Smith                                    
|                   |  | Executive Vice President and Chief Financial Officer
|                   |  | (Principal Financial and Accounting Officer)        
|                   |  |                                                     

- 43 -



EXHIBIT INDEX



|Exhibit 
Number |  | Description                                                                                                                                
|--------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------
|                |  |                                                                                                                                            
|                |  |                                                                                                                                            
|10.8            |  | Form of Nonqualified Stock Option Agreement for stock option awards under the Company's Amended  Non-Employee Director Stock Option Plan.  
|                |  |                                                                                                                                            
|10.9            |  | Form of Incentive Stock Option Agreement for stock option awards under the Company's Amended 1995 Stock Option Plan.                       
|                |  |                                                                                                                                            
|10.10           |  | Form of Nonqualified Stock Option Agreement for stock option awards under the Company's Amended 1995 Stock Option Plan.                    
|                |  |                                                                                                                                            
|10.11           |  | Form of Stock Option Agreement for stock option awards under the Company's 2000 Stock Incentive Plan.                                      
|                |  |                                                                                                                                            
|10.12           |  | Form of Restricted Stock Agreement for regular restricted stock awards under the Company's Amended 2000 Stock Incentive Plan.              
|                |  |                                                                                                                                            
|10.13           |  | Form of Restricted Stock Agreement for the performance-based restricted stock awards under the Company's Amended 2000 Stock Incentive Plan.
|                |  |                                                                                                                                            
|10.14           |  | Form of Stock Option Agreement for stock option awards under the Company's 2004 Non-Employee Director Stock Option Plan.                   
|                |  |                                                                                                                                            
|10.15           |  | Form of Restricted Stock Agreement for the market-based restricted stock awards under the Company's 2004 Stock Incentive Plan.             
|                |  |                                                                                                                                            
|10.16           |  | Compensation Arrangements for Named Executive Officers.                                                                                    
|                |  |                                                                                                                                            
|10.17           |  | Board of Directors Compensation Arrangements.                                                                                              
|                |  |                                                                                                                                            
|10.18(*)        |  | Agreement for Sale and Purchase dated as of March 29, 2005 between Elizabeth Arden, Inc. and Nina Elazar.                                  
|                |  |                                                                                                                                            
|31.1            |  | Section 302 Certification of Chief Executive Officer.                                                                                      
|                |  |                                                                                                                                            
|31.2            |  | Section 302 Certification of Chief Financial Officer.                                                                                      
|                |  |                                                                                                                                            
|32              |  | Section 906 Certifications of the Chief Executive Officer and the Chief Financial Officer.                                                 
|                |  |                                                                                                                                            
|31.2            |  | Section 302 Certification of Chief Financial Officer.                                                                                      
|                |  |                                                                                                                                            
|32              |  | Section 906 Certifications of the Chief Executive Officer and the Chief Financial Officer.                                                 

(*) Portions of this Exhibit have been omitted and filed separately pursuant to a request for confidential treatment filed with the Secretary of the Securities and Exchange Commission.



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