<PAGE>

                     SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, D.C. 20549


                                  FORM 10-K

          [X]        ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
          OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
                 FOR THE FISCAL YEAR ENDED MARCH 31, 1997

                     Commission file number 33-87820

                       RENAISSANCE COSMETICS, INC.
          (Exact name of registrant as specified in its charter)

                                 DELAWARE
      (State or other jurisdiction of incorporation or organization)

                                06-1396287
                  (I.R.S. Employer Identification No.)

                             635 MADISON AVENUE
                          NEW YORK, NEW YORK  10022
              (Address of principal executive office)(Zip Code)

                               (212) 751-3700
             (Registrant's telephone number, including area code)

     Securities registered pursuant to Section 12(b) of the Act:  NONE
     Securities registered pursuant to Section 12(g) of the Act:  NONE

     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 if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]

As of March 31, 1997, there were outstanding 830,736 shares of
the registrant's common stock, $.01 par value.

                Documents Incorporated by Reference: NONE


<PAGE>

                                 INDEX

PART I

     Item 1.   Business
     Item 2.   Properties
     Item 3.   Legal Proceedings
     Item 4.   Submission of Matters to a Vote of Security Holders

PART II

     Item 5.   Market for Registrant's Common Equity and Related Stockholder
               Matters
     Item 6.   Selected Financial Data
     Item 7.   Management's Discussion and Analysis of Financial Condition and
               Results of Operations
     Item 8.   Financial Statements and Supplementary Data
     Item 9.   Changes in and Disagreements with Accountants on Accounting
               Financial Disclosure

PART III

     Item 10.  Directors and Officers of the Registrant
     Item 11.  Executive Compensation
     Item 12.  Security Ownership of Certain Beneficial and Management
     Item 13.  Certain Relationships and Related Transactions

PART IV

     Item 14.   Exhibits, Financial Statement Schedules and Reports
                on Form 8-K


<PAGE>

              SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION

CERTAIN STATEMENTS UNDER THE CAPTIONS "BUSINESS," "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" AND ELSEWHERE IN
THIS ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED MARCH 31, 1997, AND
THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE CONSTITUTE "FORWARD-LOOKING
STATEMENTS" WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT AND
SECTION 21E OF THE EXCHANGE ACT. CERTAIN, BUT NOT NECESSARILY ALL, OF SUCH
FORWARD-LOOKING STATEMENTS CAN BE IDENTIFIED BY THE USE OF FORWARD-LOOKING
TERMINOLOGY SUCH AS "BELIEVES," "EXPECTS," "MAY," "WILL," "SHOULD" OR
"ANTICIPATES" OR THE NEGATIVE THEREOF OR OTHER VARIATIONS THEREON OR
COMPARABLE TERMINOLOGY, OR BY DISCUSSION OF STRATEGIES THAT INVOLVE RISKS AND
UNCERTAINTIES. SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN
RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE THE ACTUAL RESULTS,
LEVELS OF ACTIVITY, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY, OR INDUSTRY
RESULTS, TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, LEVELS OF
ACTIVITY, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH
FORWARD-LOOKING STATEMENTS. SUCH FACTORS INCLUDE, AMONG OTHERS, THE FOLLOWING:
GENERAL ECONOMIC AND BUSINESS CONDITIONS; THE ABILITY OF THE COMPANY TO
IMPLEMENT ITS BUSINESS AND ACQUISITION STRATEGY, INCLUDING THE ABILITY TO
INTEGRATE RECENTLY ACQUIRED BUSINESSES INTO THE COMPANY; THE ABILITY OF THE
COMPANY TO OBTAIN FINANCING FOR FUTURE ACQUISITIONS, INCLUDING OBTAINING
REQUIRED APPROVALS FROM ITS EXISTING LENDERS FOR SUCH ACQUISITIONS; CHANGES IN
THE RETAIL INDUSTRY GENERALLY AND THE FRAGRANCE AND NAIL CARE INDUSTRIES
SPECIFICALLY; CHANGES IN CONSUMER PREFERENCES; COMPETITION; AVAILABILITY OF
KEY PERSONNEL; FOREIGN CURRENCY EXCHANGE RATES; INDUSTRY CAPACITY; DEVELOPMENT
AND OPERATING COSTS; ADVERTISING AND PROMOTIONAL EFFORTS; BRAND AWARENESS;
ACCEPTANCE OF NEW PRODUCT OFFERINGS; AND CHANGES IN, OR THE FAILURE TO COMPLY
WITH, GOVERNMENT REGULATIONS (ESPECIALLY ENVIRONMENTAL LAWS AND REGULATIONS).
AS A RESULT OF THE FOREGOING AND OTHER FACTORS, NO ASSURANCE CAN BE GIVEN TO
FUTURE RESULTS, LEVELS OF ACTIVITY AND ACHIEVEMENTS AND NEITHER THE COMPANY
NOR ANY OTHER PERSON ASSUMES RESPONSIBILITY FOR THE ACCURACY AND COMPLETENESS
OF THESE STATEMENTS.

CHANTILLY-R-, WHITE CHANTILLY-TM-, TABU-R-, DREAMS BY TABU-TM-, LUTECE-R-,
RAFFINEE-R-, DEMI-JOUR-TM-, MONSIEUR MUSK-R-, FRENCH GARDEN FLOWERS-TM-,
ENGLISH WATERLILYS-TM-, FRENCH VANILLA BY DANA-TM-, AMBUSH-R-, CANOE-R-,
CANOE-SPORT-R-, HERBISSIMO-R-, NAVIGATOR-R-, ENGLISH LEATHER-R-, BRITISH
STERLING-R-, LOVE'S-R-, HEAVEN SENT-R-, NAVY-R-, TOUJOURS MOI-R-, NAVY FOR
MEN-TM-, INSIGNIA-R-, CALIFORNIA FOR MEN-R-, LE JARDIN-TM, LAJOIE-R-,
PRO10-R-, PRESS & GO-R-, PETITE PRESS & GO-TM, SPORT PRESS & GO-TM-, QUIK
FIT-R-, SCULPTURE QUIK-TM-, SCULPTURE QUIK II-TM-, ULTRAGEL-TM-, NAIL
FETISH-TM-, WRAP QUIK-R-, QUIKFILE-TM-, QUIKSHINE-R-, FILEPRO-R-, NAT
ROBBINS-R-, LIP LACQUER-TM-, EVER SHEER-TM ,COLORPOWER-R- and COLOR INTENSE
24-R- are trademarks and brands owned by or licensed to the Company. All other
trademarks or service marks referred to in this Prospectus are the property of
their respective owners and are not the property of the Company.


<PAGE>

                                   PART I

ITEM 1. BUSINESS

GENERAL

     REFERENCES HEREIN TO "FISCAL 1994," "FISCAL 1995" AND "FISCAL 1996" MEAN
THE FISCAL YEARS ENDED MARCH 31, 1995, MARCH 31, 1996, AND MARCH 31, 1997,
RESPECTIVELY.  ALSO, UNLESS CLEARLY INDICATED OTHERWISE HEREIN, ALL
REFERENCES TO THE COMPANY ARE TO RENAISSANCE COSMETICS, INC. AND ITS
SUBSIDIARIES.

     Renaissance Cosmetics, Inc. was incorporated in Delaware in 1994.  The
Company is a leading manufacturer and marketer of mass-market fragrances,
artificial nail care products, mid-priced lip and eye make-up, nail polish
and related products that are sold by more than 1,000 retailers in
approximately 25,000 locations in the United States and in 61 foreign
countries.  The Company sells its products principally through the
mass-market distribution channel which includes drug stores (such as
Walgreens and Revco), mass merchandisers (such as Wal-Mart and Kmart) and
supermarkets and combination supermarket/drug stores (such as Kroger and
Albertson's).

     The Company's principal executive offices are located at
635 Madison Ave., New York, New York 10022, and its telephone number is (212) 
751-3700.

BACKGROUND

     FORMATION.  The Company was formed in April 1994 by Kidd Kamm & Company
("Kidd Kamm") and Thomas V. Bonoma, late Chairman and Chief Executive
Officer of the Company.  On May 21, 1997, Dr. Bonoma died suddenly.  On May
28, the Board of Directors of the Company appointed Norbert Becker, President
of the Company, as Chief Executive Officer and a director of the Company.

     FINANCING TRANSACTIONS.  In May 1994, Kidd Kamm Equity Partners, L.P.
("KKEP"), an affiliate of Kidd Kamm, invested $22.5 million in the common
equity of the Company.  Management and certain other investors invested an
additional $4 million in the common equity of the Company.

     In May 1994, the Company received $10 million of proceeds from the 
issuance of 10,000 shares of Cumulative Exchangeable Preferred Stock, with 
warrants.

     In August 1994, the Company completed the sale of $65 million aggregate
principal amount of 13-3/4% Senior Notes, due 2001, Series A and B, and
13-3/4% Senior Notes, due 2002 (collectively, the "Old Senior Notes"), which
were issued pursuant to an Indenture dated August 18, 1994 (the "Old
Indenture").

     In December 1994, the Company entered into a note purchase agreement
with Nomura Holding America, Inc., which included a $30 million term facility
and a $20 million revolving credit facility (the "Old Credit Facility").  The
revolving facility was subsequently increased to $30 million and then again
to $40 million.


                                       1

<PAGE>

     In May and June 1996, the Company issued $20 million aggregate value of
Series A Senior Redeemable Exchangeable Preferred Stock ("Series A Preferred
Stock").

     In August and September 1996, the Company completed a private placement 
of $115 million of Senior Redeemable Preferred Stock, Series B ("Series B 
Preferred Stock"), with warrants ("Series B Warrants").  Concurrent 
therewith, the Company sold shares of common stock to CIBC WG Argosy Merchant 
Fund 2, L.L.C., and to Bastion Capital Fund, L.P.  The Company received 
aggregate net proceeds from both transactions of $119.1 million.  These 
transactions are collectively referred to herein as the "Equity Financing." 
The Company used the proceeds of the Equity Financing to retire all of the 
outstanding Series A Preferred Stock, to finance the GAC Acquisition (as 
defined below), to repay a portion of the Old Credit Facility, to purchase a 
certificate of deposit set aside to consummate the MEM Acquisition (as 
defined below) and for general corporate purposes.

     In December 1996, the Company entered into a Senior Secured Credit
Facility, pursuant to which the Company received net proceeds of $113.2
million.  The Company used a portion of the proceeds to finance the MEM and
P&G Brands Acquisitions (as defined below) and to repay all outstanding
indebtedness under its Old Credit Facility.

     In February 1997, the Company completed the sale of $200 million 
aggregate principal amount of 11-3/4% Senior Notes, due 2004 (the "Existing 
Notes"), issued pursuant to the Indenture, dated February 7, 1997 (the 
"Indenture").  The Company used a portion of the proceeds received from the 
sale of the Existing Notes to repay all of the outstanding indebtedness under 
the Senior Secured Credit Facility and to repurchase all of its Old Senior 
Notes.  On June 8, 1997, the Company completed the exchange of all of the 
outstanding principal amount of Existing Notes for a like principal amount of 
its 11-3/4% Senior Notes due 2004 which were registered under the Securities 
Act (the "New Notes").

     In March 1997, the Company entered into a new $75 million revolving
credit facility agreement with General Electric Capital Corporation ("GECC")
and other lenders (the "New Revolving Credit Facility").

     On April 28, 1997, the Company completed the exchange of all of the 
issued and outstanding shares of Series B Preferred Stock for shares of 
Senior Redeemable Preferred Stock, Series C ("Series C Preferred Stock") with 
substantially the same terms.

     ACQUISITIONS.  In July and August 1994, the Company entered into
long-term exclusive license agreements with Houbigant, Inc. ("Houbigant") to
manufacture, distribute, use and sell throughout the world (excluding Canada)
12 mass-market fragrances formerly marketed by Houbigant (the "Houbigant
Acquisition").  In December 1994, the Company acquired the assets of ACB
Mercantile, Inc., and related companies (the "ACB Acquisition") through which
the Company acquired certain rights to manufacture, distribute, use and sell
the Houbigant Fragrances in Canada which, when combined with the previous
Houbigant license agreements, gave the Company the exclusive worldwide right
to manufacture and market the Houbigant Fragrances.


                                       2

<PAGE>

     In August 1994, the Company purchased the operations of Cosmar
Corporation ("Cosmar"), the largest manufacturer and marketer in the United
States of artificial fingernails and related nail care products (the "Cosmar
Acquisition").

     In December 1994, the Company acquired Les Parfums de Dana, Inc., and
related companies (now known as Dana Perfumes Corp.) ("Dana"), which
manufactured mass-market fragrances and related products sold in the United
States and in 20 foreign countries (the "Dana Acquisition").

     In August 1996, the Company acquired Great American Cosmetics, Inc.
("GAC"), a company that markets, distributes, advertises, promotes and
merchandises high-quality, mid-priced lip and eye make-up, nail polish and
related products (the "GAC Acquisition").

     In December 1996, the Company acquired MEM Company, Inc. ("MEM"), which 
manufactures mass-market fragrances (the "MEM Acquisition"). In connection 
with the MEM Acquisition, the Company repaid all of MEM's outstanding 
indebtedness.  See PART I, ITEM 1. BUSINESS - EMPLOYEES AND - FACILITIES 
below.

     In December 1996, the Company acquired from the Procter & Gamble Company
("P&G") the worldwide rights to manufacture and distribute certain mass
market fragrances (the "P&G Brands Acquisition"). In addition, the Company 
assumed certain trade-related obligations of P&G.

     In May 1997, a newly-formed subsidiary of the Company, RCI China, Inc., 
became a joint venturer in RCI/Alexander Joint Venture (the "Joint Venture"). 
The principal business activity of the Joint Venture is to manufacture, 
market, sell and distribute cosmetic products in the People's Republic of 
China.  The Company is the manager of the Joint Venture pursuant to the terms 
of a management agreement.

     See PART II, ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL 
CONDITION AND RESULTS OF OPERATIONS - LIQUIDITY AND CAPITAL RESOURCES below 
for more information concerning the (i) GAC Acquisition, the MEM Acquisition 
and the P&G Brands Acquisition (collectively, the "Acquisitions"), (ii) the 
Senior Secured Credit Facility, (iii) the Old Credit Facility and the New 
Revolving Credit Facility, (iv) the Old Senior Notes, (v) the Existing Notes 
and (vi) the New Notes.

BUSINESS STRATEGY

     At inception, the Company's strategic plan was to build a substantial
fragrance and cosmetics company by implementing a growth strategy of
acquiring and successfully integrating underperforming brands or companies
and restoring and expanding brand equities through the initiation or
expansion of focused marketing programs.  The Company's current business
strategy is (1) to continue to capitalize on opportunities in the mass-market
segment of the fragrance and cosmetics industry, through both internal growth
and acquisitions, and (2) to maximize sales and earnings before interest,
taxes, depreciation and amortization ("EBITDA") by:


                                       3

<PAGE>

-  ACQUIRING AND REINVIGORATING UNDERPERFORMING AND/OR UNDER MARKETED BRANDS.
   The Company seeks to selectively acquire and then subsequently reinvigorate
   underperforming and/or undermarketed established brands and provides
   broad-based consumer advertising necessary to support new product
   introductions.

-  INTEGRATING ACQUIRED BUSINESSES INTO THE COMPANY'S EXISTING
   INFRASTRUCTURE.  Following acquisition of brands or companies, the Company
   seeks to reduce operating costs of the acquired brands or companies by (1)
   eliminating redundant overhead; (2) closing redundant plants; (3) selling
   the acquired brands through the Company's existing salesforce; and (4)
   using common componentry.

-  FOCUSED FLANKING OF ESTABLISHED FRAGRANCE BRANDS.  The Company specializes
   in launching new products that leverage off of the strong name recognition
   and brand equity of its classic and other established fragrance brands.
   These products, known as "focused flankers," draw on the consumer
   recognition and heritage of the Company's existing brand equities while
   simultaneously enhancing and revitalizing the "parent" products being
   flanked.

-  INTRODUCING COMPLEMENTARY PRODUCTS.  Similar to its focused flanker
   strategy, the Company seeks to introduce complementary new cosmetics
   products.

-  USING CATEGORY MANAGEMENT TECHNIQUES TO INCREASE THE COMPANY'S SALES BY
   INCREASING ITS ALLOCATION OF SHELF SPACE AND ENHANCING RELATIONSHIPS WITH
   RETAILERS.  To increase shelf space allocated to the Company's products
   and to build stronger relationships with retailers, the Company purchases
   consumer sales data derived from in-store checkout scanners in order to
   quantify sales results for its own products (as well as those of its
   competitors).  The Company engages in account-specific category management
   by offering to be a retailer's category advisor or "category captain."
   The category captain assists the retailer in deciding which products it
   will sell within the shelf space dedicated to a specific category.

-  EXPANDING INTO ADDITIONAL RETAIL OUTLETS AND ALTERNATIVE DISTRIBUTION
   CHANNELS.  The Company continually seeks to expand its sales and
   distribution network (currently over 1,000 retailers with approximately
   25,000 locations) for its existing and acquired products.  The Company
   continually explores alternative distribution channels (such as the home
   shopping channel QVC) through which to sell its products.  In addition,
   the Company is increasing its worldwide doors by expanding the number of
   foreign countries (61 as of March 31, 1997) in which it sells its products.

     The Company intends to continue to capitalize upon the success of its
previous fragrance and cosmetics product acquisitions, market share gains and
close working relationships with mass-market retailers to launch additional
focused flanker fragrance products and new artificial nail care and cosmetics
products.


                                       4 

<PAGE>

     See PART II, ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL 
CONDITION AND RESULTS OF OPERATIONS - LIQUIDITY AND CAPITAL RESOURCES for 
a discussion of the restriction in the New Revolving Credit Facility on 
the Company's ability to make acquisitions without the consent of at least 
66-2/3% of the lenders thereunder.

INDUSTRY OVERVIEW

     DISTRIBUTION CHANNELS.  The fragrance and cosmetics industry relies 
on two primary channels of distribution, mass-market retailers and 
department and specialty stores.  These two channels have materially 
different sales and marketing processes because of the contrasting 
economic, demographic, demand and usage characteristics of their consumers.

     The mass-market distribution channel is characterized by 
value-oriented products with emphasis placed on both price and image.  
Since mass-market retailers depend on self-selection of products by 
consumers and employ only a nominal amount of in-store sales support 
personnel, the allocation and placement of retail shelf space is one of 
the most important means of gaining consumer awareness in this channel.  
Retailers have become more reluctant to allow new products to displace 
proven, high-volume products without a guarantee of extensive advertising 
support to generate consumer interest.  As a result, the introduction of 
new products into the mass market is more difficult and relatively more 
expensive than in department and specialty stores. These characteristics 
of the mass market limit the number of new product offerings, enabling 
proven products to retain existing shelf space and creating barriers to 
entry.  As a result, the mass-market distribution channel for fragrances 
and cosmetics is generally characterized by greater brand stability, 
consumer loyalty and repeat purchases than the department and specialty 
store channel.

     In contrast to the mass market, fragrance and cosmetics products sold 
through the department and specialty store channel are generally 
characterized as "prestige" brands which are primarily sold based upon 
perceived image and quality at substantially higher price points than 
those sold in the mass-market channel.  Consequently, product offerings in 
the department and specialty store channel tend to be much more sensitive 
to changes in fashion and popular trends than those sold in the mass 
market. Such fashion consciousness results in a greater number of product 
introductions in this channel than in the mass market.  The introduction 
of new products in department and specialty stores is facilitated, in 
part, by a greater level of personal customer service during the sales 
process.  In addition, department and specialty retailers generally 
reallocate their selling space and product mix several times per year to 
accommodate changing fashion trends, whereas mass-market retailers 
generally do so only once per year.  As a result, manufacturers are able 
to introduce new products more easily and frequently in the department and 
specialty store channel, as well as depend on in-store direct selling 
efforts rather than broad-based consumer advertising to attract consumers. 
While such reallocation results in greater flexibility to change product 
offerings, it also reduces brand stability and consumer loyalty over time.

     FRAGRANCE MARKET.  The market for both men's and women's fragrances 
is highly fragmented, with the most popular brand in each segment 
commanding a share of less than 5% of the total market (although there are 
large competitors with significant aggregate market 


                                       5

<PAGE>

shares).  The mass-market fragrance industry is relatively 
recession-resistant due to its low average price point and more frequent 
usage of the product.

     Fragrance products sold in the mass market, where the Company 
operates, typically have the following characteristics in relation to 
prestige brands: (i) more frequent purchase/use; (ii) sales that are less 
affected by changing fashions (which results in fewer new product 
introductions); (iii) lower packaging costs; (iv) faster inventory 
turnover; and (v) lower prices. Management believes that these 
characteristics enable the Company's products to achieve, on average, 
greater customer loyalty and more stable sales volume than prestige 
products.

     The Company also competes with alternative designer fragrances 
("ADFs"), which are impostors of designer and prestige fragrances.  ADFs 
began capturing market share from both designer and prestige fragrances 
and mass-market products in 1990.  Since 1992, however, sales of ADFs and 
prestige fragrances in the mass market have been declining. 

     COSMETICS MARKET.  The Company's cosmetics division primarily focuses 
on the artificial nail care, lip and eye make-up segments of the mass 
market for cosmetics.  The Company's cosmetics division has also entered 
into other segments of the cosmetics market, including the nail polish 
category with the introduction of its line of PRO10 nail lacquers.

     NAIL CARE MARKET.  The retail nail care mass market is divided into 
four major product categories: (i) nail polish; (ii) artificial nail care; 
(iii) nail implements; and (iv) nail polish removers.  Although the 
mass-market artificial nail care market has many participants, the top 
three brands generate over 60% of total category sales.  During the year 
ended December 31, 1996, Cosmar's brands accounted for approximately 33% 
(by total sales dollars) of the domestic artificial nail care market. 

     Repeat purchases by consumers, who typically purchase 10 to 15 
packages per year, as well as high inventory turnover, have resulted in 
increased retail shelf space allocation and market stability for 
artificial nail care products.  It is expected that in the future there 
will be less opportunity for niche players in the artificial nail care 
market, with more shelf space being allocated to market leaders with 
sophisticated category management capabilities, such as the Company.

     LIP AND EYE MAKE-UP MARKETS. The domestic lip and eye make-up markets 
are highly competitive and dependent upon strong brand recognition, 
consumer trust in product quality, product selections aligned with current 
fashion and color trends and distinct price brackets that meet particular 
consumer needs and demographics.  The Company has focused on the 
mid-priced segment through its acquisition of GAC.  In general, the 
Company believes that the lip and eye make-up markets have experienced 
strong growth over the past year because of enhancements in color 
cosmetics technology and formulations coupled with a renewed emphasis on 
fashion-conscious color selections.

PRODUCTS

     FRAGRANCE.  Through its Dana subsidiary, the Company manufactures and 
markets a wide variety of men's and women's fragrances, which include some 
of the oldest, most recognized 


                                       6

<PAGE>

"classic" brand names in the industry.  Classic brands, which generally 
have more than 20 years of sales history, are typically characterized by 
extensive brand name recognition and strong consumer loyalty.  The Company 
estimates that less than 1% of all fragrance brands introduced each year 
achieve such classic status.  The Company currently manufactures nine 
classic brands: CHANTILLY, TABU, AMBUSH, TOUJOURS MOI, RAFFINEE, HEAVEN 
SENT, CANOE, ENGLISH LEATHER and BRITISH STERLING.  In June 1997, the 
Company received the Hall of Fame Award for Classic Fragrances for CANOE 
from the Fragrance Foundation, the leading trade group in the fragrance 
industry.  In addition to the Company's classic fragrances, the Company 
markets its women's fragrance brands under such names as WHITE CHANTILLY, 
DREAMS BY TABU, NAVY, LE JARDIN and LOVE'S and markets its men's fragrance 
brands under such names as NAVIGATOR FROM CANOE, NAVY FOR MEN, INSIGNIA, 
CALIFORNIA FOR MEN and HERBISSIMO.

     The Company focuses principally on reinvigorating its largest and 
most recognized brands.  For its smaller brands, the Company applies 
various cost-reduction methods designed to result in production savings by 
utilizing less expensive common componentry and standard packaging.  
Additionally, the Company minimizes advertising and promotion costs by 
offering these products in the same packaging on a year-round basis.  The 
Company passes along these cost savings by offering value pricing to 
customers with primary advertising occurring only in-store.

     Following the four acquisitions completed in 1994, the Company began 
supporting its existing product lines and brands with increased 
advertising and promotional expenditures, reestablishing efficient 
production scheduling and shipping processes, maintaining adequate 
inventory levels and creating responsive order fulfillment practices.  The 
Company also launched several new brands such as CLASSIC GARDENIA, WHITE 
CHANTILLY, a flanker product for the core CHANTILLY brand, and DREAMS BY 
TABU, a focused flanker of TABU.  In February 1997, the Company relaunched 
AMBUSH.

     The recent acquisitions of the MEM and P&G fragrance brands, 
including NAVY, NAVY FOR MEN, CALIFORNIA FOR MEN, ENGLISH LEATHER, BRITISH 
STERLING, INSIGNIA, LOVE'S and HEAVEN SENT, further strengthen the 
Company's position in the fragrance market. According to information 
provided by P&G to the Company, P&G has spent a substantial amount in the 
last five years on the marketing of the P&G Brands worldwide.  Although 
sales of several of the P&G Brands have declined significantly in recent 
years under P&G's management, the Company believes that opportunities 
exist to reinvigorate the brands.  In addition, the Company believes that 
it should benefit from the international distribution of the P&G fragrance 
brands, especially in the United Kingdom, which, prior to the P&G Brands 
Acquisition, was not a significant market for the Company's products.

     In men's fragrances, the Company manufactures and markets three 
classic brands, CANOE, ENGLISH LEATHER and BRITISH STERLING.  The Company 
successfully launched NAVIGATOR FROM CANOE, a flanker brand to CANOE, in 
September 1996 and recently completed the relaunch of CANOE.  The Company 
significantly enhanced its position in the men's fragrance mass market 
with the acquisition of MEM's and P&G's men's fragrance brands.  With the 
acquisition of MEM, the Company added ENGLISH LEATHER and BRITISH 
STERLING. With the acquisition of the P&G Brands, the Company added NAVY 
FOR MEN, and CALIFORNIA FOR MEN.


                                       7

<PAGE>

     NAIL CARE.  Through Cosmar, the Company is the largest domestic 
manufacturer and marketer of artificial nail care products and related 
accessories sold through the mass-market channel.  The Company's nail care 
products include full-length, artificial press-on or glue-on fingernails, 
artificial fingernail tips, fingernail sculpturing kits, nail lacquer, 
natural fingernail cuticle treatments and strengtheners and related 
accessories.  The Company markets its products under such brand names as 
LAJOIE (SCULPTURE QUIK, PRESS & GO and QUIK FIT), PRO10, ULTRAGEL and NAIL 
FETISH.  The LAJOIE line is an easy-to-use line of artificial fingernail 
products, acrylic applications and accessories targeted at the consumer who 
generally does not visit a professional nail care salon. The Company is in 
the process of changing the name under which the LAJOIE line is marketed to 
"Cosmar."  The PRO10 line has established itself as a leading professional 
"salon-standard" nail care line sold through retailers.  This line includes 
artificial fingernail tips, a selection of nail sculpturing applications, 
abrasive and other professional quality nail strengtheners, nail builders, 
finish coats and cuticle creams.  The Company's PRESS & GO colored nails 
dominate the instant pre-colored nail care segment of the mass market.

     The Company continues to grow its nail care segment through increased 
marketing and improved packaging of existing brands and the introduction 
of new products.  In Fiscal 1995, the Company targeted new users and 
younger women with its NAIL FETISH brand. In February 1996, the Company 
launched an innovative new line of products under the ULTRAGEL brand name 
that offers a unique two-step gel nail process with built-in color.  In 
February 1997, the Company launched new nail care products including 
COLORPOWER, FRENCH EXPRESS, FILEPRO and NAIL FETISH POLISH.

     LIP AND EYE MAKE-UP.  As a result of the GAC Acquisition, the Company 
is a leading marketer of high quality, mid-priced lip and eye make-up, 
make-up brushes and nail polish and related products sold through the 
mass-market channel.  The Company's lip and eye cosmetics include lipliner 
pencils, lipstick, lipgloss, eyeliner pencils, eye shadow, mascara and 
assorted accessories.  Under previous ownership, the NAT ROBBINS line 
successfully achieved a leading position in the mid-priced cosmetics 
market by offering high quality, consumer-friendly products, in an 
assortment of colors.

     See Note 18 to the Consolidated Financial Statements for additional 
information concerning the Company's business segments and Note 16 to the 
Consolidated Financial Statements for additional information concerning its 
major customers.

INTERNATIONAL OPERATIONS

     The Company has manufacturing operations in four foreign countries 
and sells its products in 61 foreign countries (as of March 31, 1997).

     During the last 18 months, the Company has significantly improved the 
operations of its wholly-owned foreign subsidiaries in Canada, Spain, 
Argentina and Brazil.  Information systems have been improved and detailed 
performance measurements have been established.  Further investments are 
planned that are expected to increase capacity, improve productivity and 
lead to higher volume growth.

                                       8 
<PAGE>

     The Company remains committed to actively expanding its sales effort 
abroad. The Company will continue to capitalize on its strong brand 
equities to tap foreign markets and will consolidate selling efforts 
between its fragrance and cosmetics subsidiaries.  Accordingly, the 
Company is seeking substantial growth in this area.

     In connection with the P&G Brands Acquisition, the Company entered 
into transition agreements with P&G under which P&G will continue the 
foreign marketing of the P&G Brands through June 30, 1997.  These 
transition agreements cover the majority of the P&G Brands in the Far East 
(primarily Japan), the United Kingdom and South Africa.  Under the 
transition agreements, P&G employees will continue to be responsible for 
marketing and distribution of the P&G Brands in the specified 
jurisdictions, and the Company will be obligated to reimburse P&G for its 
direct costs and will be entitled to receive any gross profit from the 
sale of such brands.  The Company is currently in the process of 
establishing its own marketing and administrative organizations to replace 
those of P&G and obtaining any necessary local licenses and permits in the 
jurisdictions where it currently does not have its own operations.

     See Note 18 to the Consolidated Financial Statements for additional 
information concerning the Company's foreign and domestic operations and 
export sales.

PRODUCT DEVELOPMENT AND NEW PRODUCT LAUNCHES

     In developing new products, the Company seeks to build on its growing 
brand values, expanding customer base, increasing allocation of retail 
shelf space and point-of-sale consumer access.  The Company believes its 
existing fragrance and cosmetics businesses will provide a basis for 
product extensions into additional segments of the mass market.

     The Company's product development activity is primarily conducted 
in-house, utilizing feedback from consumer focus groups, tests in nail 
care salons for its nail care products and consumer questionnaires.  The 
cycle of market research, product conceptualization, product design and 
development, consumer testing and package design typically requires 
approximately six months for the Company.  The Company believes that the 
average cycle for the industry is approximately 18 months.

     Recent fragrance launches by the Company include FRENCH VANILLA BY 
DANA in October 1994, CLASSIC GARDENIA in the spring of 1995, WHITE 
CHANTILLY in the fall of 1995, DREAMS BY TABU in February 1996 and 
NAVIGATOR FROM CANOE in September 1996.  The Company relaunched AMBUSH in 
February 1997.

     Recent nailcare launches by Cosmar include NAIL FETISH and PRO10 in 
1995, ULTRAGEL in February 1996, and COLORPOWER, FRENCH EXPRESS, FILEPRO 
and NAIL FETISH POLISH in February 1997.

DISTRIBUTION

     The Company's products are sold principally through the mass-market 
distribution channel and through international subsidiaries and 
distributors.  The mass-market distribution channel is the largest and 
fastest growing distribution channel in the domestic fragrance 

                                       9 
<PAGE>

and cosmetics market.  This channel includes chain drug stores (such as 
Revco and Walgreens), mass merchandisers and discount stores (such as 
Wal-Mart and Kmart) and supermarkets and combination supermarket/drug 
stores (such as Kroger and Albertson's).  The Company's brands are sold to 
over 1,000 retailers with approximately 25,000 locations.  The Company 
also sells a limited amount of its artificial nail care products to 
professional salon owners.

     The Company's products are sold in 61 foreign countries in Europe, 
Asia, South America, Central America, the United Kingdom, Australia, New 
Zealand, the Middle East and Africa through distributors or licensees.  
The Company sells its fragrance products directly in Brazil, Spain, 
Argentina and Canada through subsidiary operations.  The Company's 
artificial nail care products are sold by local distributors in Europe, 
Mexico, Puerto Rico, Paraguay and Australia and directly in Canada and 
Brazil through subsidiary operations.  The Company has been rapidly 
expanding its U.S. dollar-denominated export sales.  See PART I, ITEM 1. 
BUSINESS - INTERNATIONAL OPERATIONS above.

     The Company customarily accepts returns of its products that are not 
sold by its customers (mass-market retailers), and such customers' 
accounts with the Company are credited in amounts equal to the purchase 
price paid for these products.  The Company believes that its policy 
regarding its acceptance of returns is consistent with industry practice.  
The amount of returns in any given period is a function of many factors, 
including (without limitation) general economic conditions and their 
effect on retail businesses; the popularity of the Company's products; the 
magnitude and success of the Company's marketing efforts; competition; and 
product placement by retailers.  Returns in any period may be 
significantly more or less than in comparable prior periods.  In addition, 
the Company is obligated to accept returns of products sold by MEM and P&G 
prior to the MEM and P&G Brands Acquisitions.  The Company endeavors to 
resell products received as returns, although this is not always possible 
and may, when possible, require packaging modifications, labor and other 
expenses that reduce the Company's profits on such products.

SALES AND MARKETING

     To induce consumers' trial and repeat purchases, the Company relies 
primarily on price, quality, effective product packaging and distinctive 
in-store displays that are generally provided to retailers free-of-charge. 
The Company also has instituted significant promotions for the Company's 
products through ongoing trade advertising directed toward chain drug 
retailers, mass merchandisers and supermarket chains.  The Company also 
advertises in many national women's magazines including COSMOPOLITAN, 
GLAMOUR, HARPER'S BAZAAR, MADEMOISELLE, SEVENTEEN and VOGUE and runs 
focused television advertising campaigns during new product launches or 
relaunches of existing brands.  The Company's national advertising 
campaigns for its nail care products represent a significant level of 
total category spending, which enhances the Company's trade relationships 
and leads to better shelf space allocation and increased distribution.

     The Company's domestic fragrance and cosmetics products are sold 
primarily through an in-house sales force comprised of a dedicated staff 
of 18 people, including three account managers, nine regional managers, 
four national account managers and two vice presidents of sales.  
Additional sales are generated by a network of over 100 independent sales 

                                      10 
<PAGE>

representatives, who are compensated solely on a commission basis.  These 
sales representatives are supervised by the Company's internal sales 
personnel.

     The Company communicates directly with its domestic nail care product 
consumers through its Consumer Assistance Hotline.  The Company's 
toll-free number for consumer assistance is displayed on each nail care 
product package.  The Company believes that its toll-free number has 
enhanced the Company's consumer loyalty.

COMPETITION

     The fragrance and cosmetics business is characterized by vigorous 
competition throughout the world.  Brand recognition, together with 
product quality, performance and price and the extent to which consumers 
are educated about specific product attributes, have a marked influence on 
consumers' choices among competing products and brands.  Advertising, 
promotion, merchandising, packaging and the timing of new and focused 
flanker product introductions also have a significant impact on buying 
decisions. Further, the structure and quality of the manufacturer's sales 
force affects product reception, in-store position, permanent display 
space and inventory levels in retail outlets.  The Company competes in 
most of its product categories against a large number of companies, some 
of which have substantially greater resources than the Company.  In 
addition to products sold in the mass-market and department and specialty 
store distribution channels, the Company's products also compete with 
similar products sold door-to-door or through mail order or telemarketing 
by representatives of direct sales companies.

     In the fragrance market, the Company competes with numerous companies 
domestically and internationally, including more than 500 brands competing 
for market share in the mass-market chain drug store segment.  The 
Company's principal competitors in this market include Benckiser, Revlon, 
P&G, Cosmair and Unilever N.V.

     The artificial nail care market is dominated by Cosmar with its 33% 
market share in the mass market, making it more than twice the size of its 
nearest competitor.  For the last three years, Cosmar has virtually driven 
the category's growth via new product launches and has realized 
significant shelf space gains as a result of such launches, category 
management expertise and strong in-store promotional support.  Cosmar has 
made these gains against competitors such as Nailene (Pacific World 
Corp.), Jonel (a division of Barristo Ltd.), Kiss Professional Fingernail 
Products (Dae Do, a Korean manufacturer), Sally Hansen (Del Laboratories), 
Fing'rs (a division of Entrecap Corp.), Lee (Lee Pharmaceutical) and 
Kristy Wells in the mass-market distribution channel and several companies 
such as International Beauty Distributors and Orly that sell their 
professional salon products into the retail market.

     The Company's principal competitors in the nail lacquer category 
include Revlon, Del Laboratories, L'Oreal S.A., Maybelline, Inc., Estee 
Lauder, Inc., Helene Curtis Industries, Inc., Unilever N.V. and P&G.

                                      11 
<PAGE>

     The Company believes that GAC's products occupy a leading position 
within the mid-priced lipstick and eye make-up segments because they offer 
superior quality, consumer-friendly products.  GAC's competitors include 
Lancetti Cosmetics, and Eco Beauty Inc., both marketers of mid-priced 
lipstick and eye make-up products.  GAC also competes with Revlon, L'Oreal 
S.A., Maybelline, Inc., P&G and Pavion, Ltd.

CATEGORY MANAGEMENT

     Category management involves strategic partnering with retailers 
whereby manufacturers such as the Company utilize state-of-the-art 
mathematical modeling tools to understand the sales dynamics of 
categories, brands and specific SKUs so that retailers can offer the best 
mix of products to boost category sales, profits and customer 
satisfaction.  Management believes that the Company is the category 
captain for eight of its top ten nail care accounts and is category 
captain or advisor for most of its major fragrance accounts.  As category 
captain, the Company works with retailers to define optimum space 
allocation for their fragrance and nail care product categories and, as 
advisor, the Company validates the analysis provided by the category 
captain.  The Company commits significant funds each year to Information 
Resources, Inc. ("IRI") to track weekly sales data on all products it 
sells through mass-market channels.

     Category management allows the Company to work with retailers to (i) 
assist the retailers in determining the optimal product mix for each 
category, (ii) recommend the SKUs in the entire category that the retailer 
should carry and (iii) monitor the sales results, both for the Company's 
products and its competitors' products, on a weekly basis.  These steps, 
when combined with the Company's dedicated category management staff, 
allow the Company to, whenever possible, replace less profitable 
competitors' products with its own brands, leading to better shelf space 
allocation and increased sales volume for the Company.  The Company's 
category management program also enables the Company's marketing 
department to perform a variety of functions including (a) real time 
understanding of relaunch marketing effectiveness, (b) gauging new product 
success rates for the Company's products and its competitors' products and 
(c) amassing competitive intelligence about consumer buying patterns.

MANUFACTURING

     FRAGRANCE.  The Company's fragrance and related products sold in the 
United States and in selected export markets (other than the fragrances it 
acquired from P&G) are manufactured in the Company's facilities in 
Mountaintop, Pennsylvania.  The P&G Brands that the Company acquired in 
the P&G Brands Acquisition are being manufactured by a contract packer.  
Additionally, four facilities in Canada, Spain, Argentina and Brazil 
manufacture fragrances and related products for local markets and for 
export.  The Brazilian facility is being upgraded to become a regional 
production and export facility.  The Company closed MEM's facilities in 
New Jersey and Boucherville, Quebec, in February 1997.  The Company plans 
to consolidate the Canadian manufacturing operations for Houbigant (1995) 
Limited and MEM at a new location.

     The Company's strategy for sourcing, producing and distributing its 
fragrance products consists of (i) conducting operations in-house that add 
significant value to the Company's products and that can be executed 
economically based upon volume efficiencies, (ii) sourcing component 
materials and products from outside vendors when reliable, ongoing and 
multiple 

                                      12 
<PAGE>

sources can be secured at competitive prices and (iii) least-cost sourcing 
for local markets whereby international subsidiary facilities will become 
regional producers of products for export to their regional markets.

     Key supplies in the manufacturing and packaging of fragrances, 
including bottles, scents and packages, are all sourced from a network of 
reliable vendors.  Final assembly of finished products, warehousing and 
shipping of fragrance products to customers is performed at the 
Mountaintop and foreign subsidiary facilities.

     NAIL CARE.  The Company's strategy for contracting, producing and 
distributing its nail care products consists of (i) maintaining 
centralized coordination of these operations in the Company's Garden 
Grove, California facilities, (ii) conducting operations in-house that add 
significant value to the Company's products and that can be executed 
economically based on volume efficiencies and (iii) sourcing from outside 
vendors component materials and products when reliable, ongoing and 
multiple sources can be secured at competitive prices.  The Company uses 
an injection molding process to manufacture all artificial nails and tips 
for the LAJOIE product line at its manufacturing facility in Sparks, 
Nevada.  All glues, hardeners and other chemical compounds are supplied to 
the Company by third-party contract manufacturers.  Most of the raw 
materials and components sourced externally are readily available through 
standard industry sources and represent small percentages of unit 
manufacturing costs.

     LIP AND EYE MAKE-UP.  The Company outsources substantially all of its 
raw materials, manufacturing and distribution needs for its lip and eye 
make-up products.  By sourcing from industry-leading color cosmetics 
suppliers that also service large manufacturers such as Revlon and Estee 
Lauder, management believes it can purchase the latest technologically 
advanced components at reasonable prices.  The Company currently intends 
to continue to outsource the production of its lip and eye make-up 
products.

     See PART I, ITEM 2. PROPERTIES below for additional information 
regarding the Company's manufacturing facilities.

SUPPLIERS AND RAW MATERIAL

     The principal raw materials for the Company's fragrance products are 
fragrance oils (which are either purchased from third parties or 
manufactured by the Company from individual raw materials), bottles, caps, 
pumps and sprayers.  The principal raw materials used by the Company in 
the manufacture of its nail care products are common polymers, waxes, 
pigments, dyes and other processing components, such as bottles and 
brushes, all of which are readily available.  The principal materials that 
the Company sources for its NAT ROBBINS line include waxes, pigments and 
silicone commonly used to manufacture lip and eye make-up products. While 
all raw materials are purchased from outside sources, the Company is not 
dependent upon a single supplier in any of its operations for any 
materials essential to its business that are not otherwise commercially 
available to the Company.  Historically, the Company has been able to 
obtain an adequate supply of raw materials, and no shortage of such 
materials is currently anticipated.

                                      13 
<PAGE>

MANAGEMENT INFORMATION SYSTEMS

     Since inception, the Company has invested a significant amount of
capital in its MIS infrastructure to install new corporate information
systems, sales/marketing systems, personal computers and communication
systems throughout the Company.  The new MIS platform is based on an IBM
AS/400 mini-computer with personal computers on local and wide area networks.
This platform allows the Company to (i) connect more than 200 of its key
employees, (ii) conduct electronic data interchange ("EDI") with its top
customers which enables customers to place orders electronically, (iii)
enable sales force and accounts receivable managers to process and track
orders and returns, (iv) provide sophisticated inventory management and
distribution capabilities and (v) install corporate-wide measurement systems
which yield accurate and timely information regarding sales, costs, profits,
accounting functions, customer service and asset management.

     The Company also uses a sales order processing system, along with a
sales order pick management system.  The integration of these two systems
allows the Company to closely manage each step of the selling process (i.e.,
from a sales order to the distribution and actual delivery of products).

     The Company believes that its MIS provides (i) a strong platform for
both internal growth and growth through acquisitions and (ii) the capacity
base and the ability to integrate acquired companies into its information
management structure, thereby reducing costs and increasing the effectiveness
of the Company's manufacturing and product distribution process.

EMPLOYEES

     As of March 31, 1997, the Company employed 1,142 people, of whom 318
were general and administrative personnel and 48 were sales and marketing
personnel.  All of the Company's production employees at its Mountaintop,
Pennsylvania, manufacturing facilities, as well as the plants located in
Spain, Argentina and Brazil, are covered by collective bargaining agreements.
The collective bargaining agreements for the Company's production employees
at its Mountaintop, Pennsylvania, and Brazilian manufacturing facilities
expire in February 1999 and November 1997, respectively.  There can be no
assurance that the Company will be able to negotiate extensions to such
agreements on terms acceptable to it and the failure to obtain such
extensions could have a material adverse effect on the Company.  The Company
considers its relations with its employees to be good.

     On February 7, 1997, the Company closed the Northvale, New Jersey, and 
Boucherville, Quebec facilities of MEM and Tom Fields (a division of MEM) and 
terminated substantially all of the employees working at such facilities.  
The union employees in the Northvale facilities had been covered by a 
collective bargaining arrangement which included participation in the local 
union pension fund (the "Fund").  Closure of such plants and termination of 
the employees triggered an automatic withdrawal from the Fund.  In connection 
with such withdrawal, the Company will incur an ERISA withdrawal liability 
which has been estimated by the Fund's actuary at approximately $3.8 million. 
The actual payments may be made either in a lump-sum, or in equal quarterly 
installments over a period not to exceed twenty years, as calculated under a 
statutory formula.  The Fund's actuary has not completed the final 
calculations to determine


                                      14

<PAGE>

the actual quarterly payment amount.  The Fund's actuary also informed the 
Company that for several years the Fund has not received the minimum annual 
level of contributions required by ERISA.  The Fund is in the process of 
seeking to obtain certain waivers under ERISA and the Internal Revenue Code 
so that the participating employers will not have to pay any penalties for 
the Fund's failure to receive such minimum levels of contributions.  The 
Fund's actuary has estimated the Company's liability, if such waivers are not 
obtained, to be approximately $1.1 million.  Furthermore, the Company's ERISA 
withdrawal liability may be recalculated if the Fund terminates within three 
years of the Company's withdrawal, which may significantly increase the 
amount of the Company's liability.  The amount of the additional ERISA 
withdrawal liability in the event of the Fund's termination cannot be 
estimated at this time.

INTELLECTUAL PROPERTY

     The Company believes that the trademarks relating to its brand and
product names and patents are important to both its fragrance and artificial
nail care businesses.  In addition to "Cosmar," an unregistered brand name
used in its artificial nail care business, the Company's principal product
trademarks which it owns or licenses are CHANTILLY, WHITE CHANTILLY, LUTECE,
RAFFINEE, TABU, DREAMS BY TABU, AMBUSH, FRENCH VANILLA BY DANA, CLASSIC
GARDENIA, MONSIEUR MUSK, FRENCH GARDEN FLOWERS, ENGLISH WATERLILYS, CANOE,
CANOE SPORT, HERBISSIMO, ENGLISH LEATHER, BRITISH STERLING, LOVE'S, HEAVEN
SENT, NAVY, TOUJOURS MOI, NAVY FOR MEN, INSIGNIA, CALIFORNIA FOR MEN and LE
JARDIN with respect to its fragrance products, COLORPOWER, PRESS & GO, PETITE
PRESS & GO, SPORT PRESS & GO, PRO(10), SCULPTURE QUIK, SCULPTURE QUIK II,
ULTRAGEL, NAIL FETISH, WRAP QUIK, QUIKFILE, QUIKSHINE, FILEPRO, QUIK FIT, and
LAJOIE with respect to its artificial nail care products and NAT ROBBINS, LIP
LACQUER, EVER SHEER, and COLOR INTENSE 24 with respect to its lip and eye
make-up products.  The Company's or its licensors' applications to register
DEMI-JOUR, NAVIGATOR, DREAMS BY TABU, FRENCH VANILLA BY DANA, CLASSIC
GARDENIA, ULTRAGEL, NAIL FETISH, WHITE CHANTILLY and EVER SHEER in the United
States are currently pending.  The Company's other principal trademarks are
registered in the United States and several are registered in other countries.

     In July and August 1994, the Company entered into two long-term license
agreements pursuant to which it obtained certain exclusive rights to
manufacture, sell, use and distribute the Houbigant Fragrances, including
CHANTILLY, LUTECE and RAFFINEE, worldwide (excluding Canada). The Company
acquired similar rights for the Houbigant Fragrances in Canada in December
1994 through the  ACB Acquisition and the execution of a new license
agreement with Houbigant in July 1996, which superseded and restated its
prior rights acquired in the  ACB Acquisition.  Each of these licenses is
with Houbigant and has an initial term ending in 2001 with options for seven
additional five-year terms, or a total extension of 35 years if all of the
options are exercised. Houbigant, which was the subject of a proceeding under
Chapter 11 of the Bankruptcy Code at the time, was authorized and empowered
to enter into each license by the federal bankruptcy court.  The Company has
prepaid royalties of $5 million, which will be credited against royalties
payable under these agreements in excess of $500,000 per year after the
Company has paid Houbigant an aggregate of $7.6 million in royalties.  In
August 1994, the Company entered into an assumption and assignment agreement
with Houbigant and Harby's


                                      15

<PAGE>

Corporation NV under which it was granted exclusive Western Hemisphere rights 
to the fragrances that are marketed under the ALYSSA ASHLEY and ROBERT ASHLEY 
names (including ALYSSA ASHLEY, ALYSSA ASHLEY MUSK and FRENCH GARDEN FLOWERS) 
for a total term of 25 years if all options for additional terms are 
exercised. The assignment was authorized by the federal bankruptcy court.  In 
October 1996, the Company purchased the tradename CIAO from Houbigant.

     The Company, through Cosmar, has various patent rights and a pending
application in connection with its cosmetics and nail care business,
including (i) an artificial nail sizing ring which allows for manufacturing
efficiencies and ease of measurement and application by women, (ii) a clam
shell package design that displays artificial nails in a unique manner and
(iii) an artificial nail file/buffer that is more comfortable for a woman to
use due to its unique cushion and plastic core.  Cosmar also is the exclusive
licensee for two patented artificial nail sculpturing applications.

     In connection with the MEM Acquisition, the Company acquired the
exclusive and perpetual rights to manufacture and sell fragrances under the
HEAVEN SENT trademark.

ITEM 2. PROPERTIES

     The Company manufactures its fragrances at its 155,000 square-foot 
Mountaintop, Pennsylvania facility, and at its facilities in Buenos Aires, 
Argentina, Sao Paolo, Brazil, Granollers, Spain and Chomedey (Laval), Canada. 
Each of these facilities contains production, warehouse and office 
facilities. The Company owns the facilities in Pennsylvania, Argentina, 
Brazil and Spain and leases the facility in Canada.  In addition, the Company 
leases a 105,000 square-foot distribution facility in Mountaintop, 
Pennsylvania.  As of June 1997, the facility in Argentina was being offered 
for sale.  The Company also leases facilities in Calumet City, Illinois, which 
it uses as its company store and will use as its returns processing center 
pursuant to a lease agreement that will expire in 2000.

     The Company's artificial nail care business, Cosmar, occupies 
approximately 102,000 square feet in two leased facilities in Garden Grove, 
California, one of which is pursuant to a sublease that expires on December 
31, 1997 and one of which is pursuant to a sublease that expires on June 30, 
1997.  The Company has signed a new lease, with a commencement date of 
January 1, 1998, covering the facility on which the sublease expires on 
December 31, 1997 and is currently negotiating with the landlord of the other 
facility to lease such facility after the expiration of the sublease.  These 
facilities house management, sales and marketing, warehouse and production 
assembly operations. The Company performs most of its manufacturing for its 
artificial nail care business at its 44,000 square-foot Sparks, Nevada, 
facility which is leased pursuant to an agreement that expires on December 
31, 2002.

     The Company leases or subleases facilities in New York City, Cambridge,
Massachusetts and Stamford and Greenwich, Connecticut, at which it conducts
executive and administrative activities.

     The Company currently utilizes its facilities fully.


                                      16

<PAGE>

     As a result of the MEM Acquisition, the Company owns a 206,000
square-foot building located on 16.3 acres in Northvale, New Jersey, which
MEM used for its executive offices and main plant.  The Tom Fields plant was
located in a 53,000 square-foot building in Northvale, New Jersey, and is
owned by a subsidiary of MEM.  Manufacturing facilities in Canada were
located in a 32,000 square-foot plant in Boucherville, Quebec, which is owned
by MEM Company (Canada) Ltd.  Tom Fields (U.K.) Ltd. assembles products in
leased facilities in Folkestone, United Kingdom.  On February 7, 1997, the
Company closed MEM's facilities in Northvale, New Jersey, and in
Boucherville, Quebec. See PART I, ITEM 1. Employees above.

     The following table provides information on each of the Company's
operating facilities:

                                                        APPROX.
                                  YEAR      LAST        SIZE        LEASED/
SUBSIDIARY   LOCATION             OPENED    EXPANSION   (SQ. FT.)   OWNED
----------   --------             ------    ---------   ---------   ------

Dana         Mountaintop, PA       1963     1996        155,000     Owned
Dana         Mountaintop, PA       1996     1996        105,000     Leased
Dana         Chomedey (Laval),     1994     -            43,087     Leased
              Canada
Dana         Granollers, Spain     1971     -            67,500     Owned
Dana         Sao Paolo, Brazil     1954     1984         20,810     Owned
Dana         Buenos Aires,         1955     -            24,600     Owned
              Argentina
Dana         Calumet City, IL      1997     -            42,000     Leased
Cosmar       Sparks, NV*           1987     -            43,859     Leased
Cosmar       Garden Grove, CA**    1996     -            95,320     Leased
Cosmar       Garden Grove, CA**    1996     -             7,000     Leased
MEM          Folkestone, United    -        -             9,500     Leased
              Kingdom                                   ------- 
                                                        613,676 

----------

 * Assumed by Cosmar in 1994.
** Sublease.


ITEM 3. LEGAL PROCEEDINGS

     LITIGATION

     ATLANTIS LITIGATION.  The Company is a defendant in a lawsuit filed in
New York State Supreme Court in March 1995 by Atlantis International, Ltd.
("Atlantis") and Brian Appel. The complaint alleges defamation, conspiracy,
unfair competition, intentional interference with


                                      17

<PAGE>

Atlantis' contractual and business relationships, prima facie tort and breach
of warranty and seeks damages allegedly suffered in the amount of $6 million
and punitive damages in the amount of $1 million.  The Company has been given
an indefinite extension of time to answer or move against the complaint but
intends to vigorously defend this lawsuit and believes that it has
substantial and meritorious defenses.

     MEM LITIGATION.  An action (seeking class action certification) was
filed on July 31, 1996 on behalf of the shareholders of MEM against MEM and
four of its current and former directors, alleging that the compensation
offered to the shareholders in the MEM Acquisition was inadequate and grossly
unfair and that the defendants had violated their fiduciary duties by not
seeking additional potential purchasers for MEM.  The action sought, among
other things, a court order requiring the defendants to seek other
purchasers, or, if the MEM Acquisition was consummated, damages.  Although
MEM and the Company believe that the suit is without merit, because of the
expense of continued legal proceedings, MEM has entered into a settlement
agreement with the named plaintiff for settlement of the lawsuit without the
admission of liability or wrongdoing by the defendants.  The terms of the
settlement include some additional disclosure to be made to shareholders
through the settlement notice, a payment of up to $25,000 for plaintiffs'
attorneys fees and the exchange of releases by the parties.  The settlement
is subject to, among other things, final approval by the court.

     OTHER LITIGATION.  The Company is involved from time to time in various
legal proceedings arising from the ordinary course of business. The Company
believes that the outcome of all pending legal proceedings in the aggregate
will not have a material effect on the financial condition or results of
operations of the Company.

     ENVIRONMENTAL AND OTHER REGULATION

     Due to the nature of the Company's business, its operations are subject
to a variety of environmental laws relating to the storage, discharge,
handling, emission, generation, manufacture, use and disposal of chemicals,
solid and hazardous waste and other toxic and hazardous materials used to
manufacture the Company's products.  The Company believes that it has been
operating its facilities in substantial compliance in all material respects
with existing laws and regulations.

     Compliance with federal, state and local laws and regulations pertaining
to the discharge of materials into the environment, or otherwise relating to
the protection of the environment, is not anticipated to have a material
effect upon the operations of the Company.

     The Company is subject to regulation by the United States Food and Drug
Administration. The Company's advertising and sales practices are subject to
the jurisdiction of the Federal Trade Commission.  In addition, the Company
is subject to numerous federal, state and local laws relating to marketing
and to the content, labeling and packaging of its products.


                                      18

<PAGE>

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     On December 4, 1996, the Company commenced an offer to repurchase all of
the Old Senior Notes at a price of $1,165 per $1,000 principal amount thereof
(plus accrued interest thereon) (the "Old Senior Notes Offer").  In connection
with the Old Senior Notes Offer, the Company solicited and obtained consents
from the holders of the then-outstanding Old Senior Notes to amend the Old
Indenture.  The amendments eliminated substantially all of the restrictive
covenants contained in the Old Indenture.


                                  PART II


ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     There is no established public trading market for the Company's Common 
Stock.  As of March 31, 1997, there were 23 holders of the Company's 
Common Stock.  No cash dividends have been declared on the Company's Common 
Stock nor is it anticipated that any dividends will be declared in the 
foreseeable future because the Company intends to retain its earnings to 
finance the expansion of its business and for general corporate purposes. Any 
payment of future dividends will be at the discretion of the Company's Board 
of Directors and will depend upon, among other things, the Company's 
earnings, financial condition, capital requirements, level of indebtedness, 
contractual restrictions with respect to the payment of dividends and other 
relevant factors. The Company's New Revolving Credit Facility prohibits the 
distribution of dividends on the Company's Common Stock without the prior 
consent of the lenders under the New Revolving Credit Facility, and the 
Existing and New Notes and the Indenture prohibit the Company from paying 
a dividend which would cause a default under the New Indenture or which 
would cause the Company to fail to comply with certain financial covenants 
therein.

ITEM 6.   SELECTED CONSOLIDATED FINANCIAL DATA

     The selected historical financial data of Cosmar (Predecessor) and the
Company set forth below has been derived from and should be read in conjunction
with the Company's (and its predecessor's) consolidated financial statements
and the notes thereto included elsewhere herein and PART II, ITEM 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS below.  The statement of operations data for Fiscal 1996 includes
the results of GAC, MEM and the P&G Brands from the dates of their
acquisitions through the end of Fiscal 1996.


                                      19 

<PAGE>
<TABLE>
                               COSMAR (PREDECESSOR)                          COMPANY
                               --------------------     -----------------------------------------
                                                        JANUARY 1
                                                           TO
                              YEAR ENDED DECEMBER 31,   AUGUST 17,  FISCAL    FISCAL       FISCAL 
                              -----------------------   ----------  ------    ------       ------
                                 1992        1993         1994       1994      1995         1996
                                 ----        ----         ----       ----      ----         ----
                                            (dollars in thousands, except share data)
<S>                            C>          <C>           <C>       <C>        <C>         <C>
STATEMENT OF OPERATIONS
DATA:
Net sales                      $17,926     $25,844       $18,301   $ 57,714   $131,286    $174,612
Operating income                 3,899       5,063         3,326      2,744      8,451       4,524
Interest expense                    37         132            61      8,694     19,458      24,417
Income (loss) before 
  extraordinary item             3,768       4,801         3,364     (5,459)   (12,057)    (19,380)
Net income (loss)                3,768       4,801         3,364     (5,459)   (12,057)    (41,818)
Net income (loss) applicable 
  to common stockholders(c)      3,768       4,801         3,364     (6,174)   (13,390)    (55,886)
Income (loss) applicable to
  common stockholders per 
  common share                      --          --            --   $  (8.50)  $ (18.62)   $ (71.63)

BALANCE SHEET DATA (END 
  OF PERIOD):
Total assets                   $ 7,216     $ 8,489            --   $162,253   $184,619    $361,383
Intangible assets - net             --          --            --     82,499     76,895     174,177
Long-term debt, excluding 
  current maturities               181         294            --     97,032(a)  67,323(a)  203,877(a)
Senior Redeemable 
  Preferred Stock -
  Series B(d)                       --          --            --         --         --      86,660
Redeemable Preferred Stock(d)       --          --            --     10,365     11,698      13,167
Common stockholders' 
  equity (deficit)(b)            4,278       5,390            --     20,189      6,451      (8,181)
</TABLE>

----------

     (a)  Excludes (i) outstanding indebtedness under the Old Credit Facility 
          of $57,000 at March 31, 1996 which is classified within current 
          liabilities and (ii) long-term minimum royalty obligations of $3,768
          and $4,686 at March 31, 1997 and 1996, respectively.

     (b)  No cash dividends have been paid since April 15, 1994 (Inception).

     (c)  Represents net loss less preferred stock dividends.

     (d)  The carrying values of the Senior Redeemable Preferred Stock - 
          Series B and the Redeemable Preferred Stock have been reduced by an 
          allocation of proceeds to the respective common stock warrants and 
          have been increased by the accumulated dividends and accretion through
          the respective balance sheet date.

                                      20 
<PAGE>

ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
          RESULTS OF OPERATIONS

     The following discussion should be read in conjunction with the 
historical financial statements of the Company and the notes thereto included 
elsewhere herein.

     This discussion and analysis relates to the consolidated results of 
operations of the Company, which includes the Company's major operating 
divisions (the "Fragrance Division," the "Cosmetics Division" and the 
"International Division," which includes both fragrance and cosmetics sales), 
resulting from the following acquisitions that have been consummated by the 
Company from the date of such acquisitions.

     1.   The Houbigant Acquisition in July and August 1994, the Cosmar 
          Acquisition in August 1994, the Dana Acquisition in December 1994 
          and the ACB Acquisition in December 1994;

     2.   The GAC Acquisition in August 1996 (see "--LIQUIDITY AND CAPITAL 
          RESOURCES" below), the operations of which have been integrated into
          Cosmar;

     3.   The MEM Acquisition in December 1996 (see "--LIQUIDITY AND CAPITAL 
          RESOURCES" below), the domestic operations of which have been 
          integrated into Dana; and

     4.   The P&G Brands Acquisition in December 1996 (see "--LIQUIDITY AND 
          CAPITAL RESOURCES" below), the domestic operations of which have been
          integrated into Dana.

OPERATIONS FOR THE FISCAL YEAR ENDED MARCH 31, 1997 ("FISCAL 1996") AS COMPARED
TO OPERATIONS FOR THE FISCAL YEAR ENDED MARCH 31, 1996 ("FISCAL 1995")

     NET SALES.  The Company's net sales were as follows (dollars in thousands):

                           FISCAL 1996                 FISCAL 1995
                     ------------------------   --------------------------
     DIVISION        NET SALES     % OF TOTAL    NET SALES      % OF TOTAL
     --------        ---------     ----------   -----------     ----------
     Fragrance       $ 75,081          43.0%     $ 63,864          48.6%
     Cosmetics         59,175          33.9        44,511          33.9
     International     40,356          23.1        22,911          17.5
                     --------         -----      --------         -----
                     $174,612         100.0%     $131,286         100.0%


     Total net sales increased by 33.0% to $174,612,000.

     Fragrance Division net sales increased 17.6% to $75,081,000. Approximately 
three-quarters of this increase resulted from new launches, primarily Navigator 
and Ambush, and the revitalization of existing brands.  The remaining sales 
increase was attributable to the brands acquired during Fiscal 1996.

                                      21

<PAGE>

     Cosmetics Division net sales increased 32.9% to $59,175,000. Approximately
two-thirds of this increase was attributable to NAT ROBBINS, acquired as part 
of the GAC Acquisition.  The remaining increase was attributable to NAIL 
FETISH and other new product introductions.

     International Division net sales increased 76.1% to $40,356,000. 
Approximately two-thirds of this increase was attributable to the subsidiary in
Brazil which was acquired in December 1995.  The remaining increase was equally
attributable to existing brands, new launches and brands acquired during Fiscal
1996. 

     GROSS PROFIT.  The Company's gross profit was as follows (dollars in 
thousands):
                            FISCAL 1996                    FISCAL 1995      
                       ---------------------         ---------------------- 
                        GROSS      % OF NET          GROSS        % OF NET
     DIVISION           PROFIT       SALES           PROFIT         SALES
     --------          --------    ---------         -------      --------- 

     Fragrance         $ 46,603         62.1%        $39,338         61.6%  
     Cosmetics           35,016         59.2          28,501         64.0   
     International       23,270         57.7          12,130         52.9   
                       --------         ----         -------         ----
                       $104,889         60.1%        $79,969         60.9%

     The gross profit margin decrease from 60.9% to 60.1% was due primarily to 
the changing sales mix among the Fragrance, Cosmetics and International 
Divisions.  The gross profit margin increase in the Fragrance Division was 
attributable to a change in sales mix between men's and women's brands.

     The gross profit margin increase in the International Division was more 
than offset by the gross profit margin decrease in the Cosmetics Division. 
Such decrease resulted primarily from the acquisition of the Nat Robbins line 
which carried a lower gross profit margin.

     SELLING EXPENSES.  The Company's selling expenses for Fiscal 1996 and 
Fiscal 1995 were $64,847,000 (37.1% of Net Sales) and $52,302,000 (39.8% of 
Net Sales), respectively.  The increase in selling expenses was principally 
attributable to increased advertising and promotional expenses, reflecting 
the Company's strategy of reinvigorating existing brand equities.  As 
discussed above, net sales increased during Fiscal 1996 due to new launches, 
revitalizing existing brands and new brand acquisitions. The decrease in 
selling expenses as a percentage of net sales is principally attributable to 
net sales increasing at a faster rate than selling expenses.

     GENERAL AND ADMINISTRATIVE EXPENSES.  The Company's general and 
administrative expenses for Fiscal 1996 and Fiscal 1995 were $25,705,000 
(14.7% of Net Sales) and $14,009,000 (10.7% of Net Sales), respectively.  The 
increase in general and administrative expenses was attributable to the 
addition of key personnel at both the Company's corporate and operating 
levels in connection with the GAC, MEM and P&G Brands Acquisitions.

     AMORTIZATION OF INTANGIBLE AND OTHER ASSETS.  Amortization of intangible 
and other assets for Fiscal 1996 and Fiscal 1995 was $9,813,000 (5.6% of Net 
Sales) and $5,207,000 (4.0% of 


                                      22 

<PAGE>

Net Sales), respectively.  This increase is principally due to an increase in
intangible assets resulting from the GAC, MEM and P&G Brands Acquisitions.

     OPERATING INCOME.  Operating income for Fiscal 1996 and Fiscal 1995 was
$4,524,000 (2.6% of Net Sales) and $8,451,000 (6.4% of Net Sales),
respectively.  Management believes that, as an additional measurement, EBITDA
is useful and meaningful to an understanding of the operating performance of
the Company.  However, EBITDA should not be considered as an alternative to
net income (loss) as an indicator of the Company's operating performance or
to cash flows as a measurement of liquidity.  The computation of EBITDA is
set forth in the table below (dollars in thousands):

                                      FISCAL 1996   FISCAL 1995
                                      -----------   -----------
Operating Income                        $ 4,524       $ 8,451
Add Amortization                          9,813         5,207
Add Depreciation                          4,896         2,844
                                        -------       -------
EBITDA                                  $19,233       $16,502
EBITDA % of Net Sales                      11.0%         12.6%

    INTEREST EXPENSE.  The Company's total interest expense for Fiscal 1996
and Fiscal 1995 was $24,417,000 and $19,458,000, respectively.  Cash interest
for these periods was $19,239,000 and $15,524,000, respectively.  Interest
expense consisted of:

                                               FISCAL 1996    FISCAL 1995
                                               -----------    -----------
CASH INTEREST PAID OR ACCRUED:
Interest on Existing Notes                       $ 3,427        $     -
Interest on Old Senior Notes                       7,624          8,943
Interest on Seller Notes (payable in 2002)           453            420
Interest on Senior Secured Credit
 Facility                                          2,442              -
Interest on Old Credit Facility                    4,912          5,948
Other Interest                                       381            213
                                                 -------        -------
  Total Cash Interest Expense                    $19,239        $15,524

NON-CASH INTEREST EXPENSE:
Accretion of Interest on Old
 Senior Notes and Seller Notes                   $   330        $   290
Amortization of Deferred Financing Costs           3,202          2,623
Accretion of Interest on Obligations for
 Minimum Royalty Payment                           1,646          1,021
                                                 -------        -------
  Total Non-Cash Interest Expense                $ 5,178        $ 3,934
  Total Interest Expense                         $24,417        $19,458


                                     23

<PAGE>

     INCOME TAX PROVISION.  Income tax provision for Fiscal 1996 and Fiscal 
1995 was $1,322,000 and $1,305,000, respectively.  The effective tax rates 
differ from the United States federal income tax rate due to the effects of 
filing separate income tax returns in certain state and foreign jurisdictions, 
and limitations on utilization of federal income tax benefits.

OPERATIONS FOR FISCAL 1995 AS COMPARED TO THE PERIOD FROM APRIL 15, 1994
(INCEPTION) THROUGH MARCH 31, 1995 ("FISCAL 1994")

     NET SALES.  The Company's net sales were as follows (dollars in thousands):

                               FISCAL 1995               FISCAL 1994
                         -----------------------    ----------------------
DIVISION                 NET SALES    % OF TOTAL    NET SALES   % OF TOTAL
--------                 ---------    ----------    ---------   ----------
Fragrance                 $ 63,864       48.6%       $31,931       55.3%
Cosmetics                   44,511       33.9         19,514       33.8
International               22,911        17.5         6,269       10.9
                          --------       -----       -------      -----
                          $131,286       100.0%      $57,714      100.0%

     Total net sales increased by 127.5% to $131,286,000. Approximately 
$32,700,000 of this increase was attributable to internal growth through the 
implementation of focused sales and marketing programs. The remaining increase 
was a result of including a full year of operations in Fiscal 1995 compared to 
a partial year of operations for Fiscal 1994.

     GROSS PROFIT.  The Company's gross profit was as follows (dollars in
thousands):

                          FISCAL 1995          FISCAL 1994
                      ------------------    ------------------
                       GROSS    % OF NET     GROSS    % OF NET
DIVISION               PROFIT     SALES      PROFIT     SALES
--------              -------   --------    -------   --------
Fragrance             $39,338     61.6%     $18,681     58.5%
Cosmetics              28,501     64.0       10,998     56.4
International          12,130     52.9        3,482     55.5
                      -------     ----      -------     ----
                      $79,969     60.9%     $33,161     57.5%

     The gross profit margin improvements in the Fragrance Division and
Cosmetics Division were the result of the consolidation of manufacturing
operations in the Company's Mountaintop facility at the Fragrance Division and
the introduction of new, higher-margin products such as PRO10 NAIL LACQUER,
along with cost containment efforts in the Cosmetics Division.  The gross
profit margin decrease in the International Division was attributable to an
increase in export sales and sales of fragrance products that typically carry
a lower gross margin than direct international 

                                    24 
<PAGE>

sales and sales of cosmetics products, respectively, resulting in a lower
total International Division gross profit margin.

     SELLING EXPENSE.  The Company's selling expenses for Fiscal 1995 and
Fiscal 1994 were $52,302,000 (39.8% of Net Sales) and $18,246,000 (31.6% of
Net Sales), respectively. The increase in selling expenses as a percentage of
sales was principally attributable to increased advertising and promotional
spending relating to the Company's strategy of reinvigorating existing brand
equities and introducing complementary new products.

     GENERAL AND ADMINISTRATIVE EXPENSES.  The Company's general and
administrative expenses for Fiscal 1995 and Fiscal 1994 were $14,009,000
(10.7% of Net Sales) and $10,127,000 (17.5% of Net Sales), respectively.  The
decline in general and administrative expenses as a percentage of sales was
attributable to what management believed was a high fixed component for such
expenses and management's ability to control the increase in such expenses as
sales increased.

     AMORTIZATION OF INTANGIBLE AND OTHER ASSETS.  Amortization of intangible
and other assets for Fiscal 1995 and Fiscal 1994 was $5,207,000 (4.0% of Net
Sales) and $2,044,000 (3.5% of Net Sales), respectively.  The increased
amortization in Fiscal 1995 included a full year of amortization resulting
from acquisitions.  Fiscal 1994 included goodwill amortization only as of the
effective date of the respective acquisitions closed during such year.  In
addition, Fiscal 1995 included a full year of amortization of the minimum
royalty obligation.

     OPERATING INCOME.  Operating Income for Fiscal 1995 and Fiscal 1994 was
$8,451,000 (6.4% of Net Sales) and $2,744,000 (4.8% of Net Sales),
respectively.  Management believes that, as an additional measurement, EBITDA
is useful and meaningful to an understanding of the operating performance of
the Company.  However, EBITDA should not be considered as an alternative
either to net income (loss) as an indicator of the Company's operating
performance or to cash flow as a measurement of liquidity.  The computation of
EBITDA is set forth below (dollars in thousands):

                                 FISCAL 1995   FISCAL 1994
                                 -----------   -----------
     Operating Income              $ 8,451       $2,744
     Plus: Amortization              5,207        2,044
     Plus: Depreciation              2,844          788
                                   -------       ------
     EBITDA                        $16,502       $5,576
     EBITDA as a % of Net Sales       12.6%         9.7%

     INTEREST EXPENSE.  The Company's total interest expense for Fiscal 1995 
and Fiscal 1994 was $19,458,000 and $8,694,000, respectively.  Cash interest 
for the periods was $15,524,000 and $6,834,000, respectively.  Interest 
expense consisted of the following (dollars in thousands):


                                     25 
<PAGE>

                                            Fiscal        Fiscal
                                             1995          1994
                                            ------        ------

CASH INTEREST PAID OR ACCRUED:
Interest on Old Senior Notes                $ 8,943        $5,577
Interest on Seller Notes (payable in 2002)      420           247
Interest on Old Credit Facility               5,948           971
Other Interest                                  213            39
                                            -------        ------
     Total Cash Interest Expense            $15,524        $6,834
                                            -------        ------

NON-CASH INTEREST EXPENSE:
Accretion of Seller
  Notes                                     $   290        $  154
Amortization of Deferred Financing Costs      2,623           993
Accretion of Interest on Obligations for
  Minimum Royalty Payment                     1,021           713
                                            -------        ------
     Total Non-Cash Interest Expense          3,934         1,860
                                            -------        ------
     Total Interest Expense                 $19,458        $8,694

     INCOME TAX PROVISION (BENEFIT).  Income tax provision (benefit) for Fiscal
1995 and Fiscal 1994 was $1,305,000 and ($35,000), respectively. The effective 
tax rates differ from the United States federal income tax rate due to state 
and foreign income taxes and limitations on utilization of federal income tax 
benefits.

NEW ACCOUNTING PRONOUNCEMENT

     In March 1997, the Financial Accounting Standards Board issued SFAS
No. 128, Earnings Per Share ("SFAS 128"), effective for financial
statements issued for periods ending after December 15, 1997. SFAS 128 will
eliminate the required disclosure of primary earnings per share which
includes the dilutive effect of stock options, warrants and other
convertible securities ("common stock equivalents") and instead require
reporting of "basic" earnings per share, which will exclude common stock
equivalents. Additionally, SFAS 128 changes the methodology for fully
diluted earnings per share. The Company anticipates that the adoption of
this pronouncement will not have a material effect on the Company's
financial condition or results of operations.

LIQUIDITY AND CAPITAL RESOURCES

     NET CASH (USED IN)/PROVIDED BY OPERATING, INVESTING AND FINANCING 
ACTIVITIES.  Net cash used by the Company in operating activities for Fiscal 
1996 was $35,443,000, consisting primarily of a net loss of $41,818,000, less 
(i) non-cash items impacting the net loss of $42,083,000, (ii) increases in 
inventories and prepaid expenses of $11,070,000 and $4,209,000, respectively, 
(iii) increases in accounts receivable of $8,655,000 and (iv) decreases in 
accounts payable, accrued expenses, other current liabilities and other of 
$1,663,000, $6,240,000, $2,700,000 and $1,171,000, respectively.

                                      26 
<PAGE>

     Net cash used by the Company in investing activities in Fiscal 1996 was 
$128,555,000, consisting primarily of amounts paid for acquisitions of 
$95,392,000 (net of cash acquired of $1,691,000) which consisted of cash paid 
for (1) the GAC Acquisition of $16,058,000, (2) the MEM Acquisition of 
$37,762,000 and (3) the P&G Brands Acquisition of $43,263,000.  Capital 
expenditures for Fiscal 1996 were $9,330,000.  Marketable securities 
purchased during the year were $22,625,000, which consisted primarily of the 
purchase of US Treasury Strips to invest the $17,500,000 deposited into the 
Escrow Account.  Net cash provided to the Company from financing activities 
was $163,285,000, consisting primarily of net proceeds from the Company's 
placement of equity and debt securities, net of retirements thereof.  The net 
decrease in cash and cash equivalents during Fiscal 1996 was $713,000.

     ACQUISITIONS.  On August 21, 1996, Cosmar acquired all of the issued and 
outstanding stock of GAC for an aggregate cash purchase price of $15,250,000. 
Additionally, Cosmar repaid $808,000 of GAC indebtedness.

     On December 4, 1996, the Company acquired all of the issued and 
outstanding stock of MEM for $19,787,000. In addition, in connection with the 
MEM Acquisition, the Company repaid all of MEM's outstanding indebtedness in 
the amount of $17,975,000.

     On February 7, 1997, the Company closed the Northvale, New Jersey, and 
Boucherville, Quebec facilities of MEM and Tom Fields (a division of MEM) and 
terminated substantially all of the employees working at such facilities.  
The union employees in the Northvale facilities had been covered by a 
collective bargaining arrangement which included participation in the local 
union pension fund (the "Fund").  Closure of such plants and termination of 
the employees triggered an automatic withdrawal from the Fund.  In connection 
with such withdrawal, the Company will incur an ERISA withdrawal liability 
which has been estimated by the Fund's actuary at approximately $3,800,000. 
The actual payments may be made either in a lump-sum, or in equal quarterly 
installments over a period not to exceed twenty years, as calculated under a 
statutory formula.  The Fund's actuary has not completed the final 
calculations to determine the actual quarterly payment amount.  The Fund's 
actuary also informed the Company that for several years the Fund has not 
received the minimum annual level of contributions required by ERISA.  The 
Fund is in the process of seeking to obtain certain waivers under ERISA and 
the Internal Revenue Code so that the participating employers will not have 
to pay any penalties for the Fund's failure to receive such minimum levels of 
contributions.  The Fund's actuary has estimated the Company's liability, if 
such waivers are not obtained, to be approximately $1,100,000.  Furthermore, 
the Company's ERISA withdrawal liability may be recalculated if the Fund 
terminates within three years of the Company's withdrawal, which may 
significantly increase the amount of the Company's liability.  The amount of 
the additional ERISA withdrawal liability in the event of the Fund's 
termination cannot be estimated at this time.  See PART I, ITEM 1. BUSINESS 
-- EMPLOYEES above.

     On December 6, 1996, the Company acquired from P&G the worldwide rights 
to manufacture and market the P&G Brands.  The cash portion of the purchase 
price paid was $43,263,000.  In addition, the Company assumed certain 
specified trade-related obligations of P&G, including the liability for 
returns of products under the P&G Brands sold prior to the closing and 
liabilities under certain advertising and business development commitments.

     Concurrent with the P&G Brands Acquisition, the Company entered into 
transition services agreements, under which P&G will continue the foreign 
marketing of the P&G Brands through June 30, 1997.  P&G will remit to the 
Company, within 45 days of the midpoint of a calendar month, the net amount 
of revenues earned from product sales, less allowances for sales returns, 
discounts, bad debts, any applicable sales and marketing costs and less any 
costs of goods in excess of inventories already purchased by the Company.

     EQUITY AND DEBT FINANCING TRANSACTIONS.  On December 4, 1996, Cosmar 
entered into a Senior Secured Credit Facility pursuant to which Cosmar 
borrowed $117,500,000 and received net proceeds of $113,200,000.  The net 
proceeds were used (i) to finance the MEM

                                      27

<PAGE>

Acquisition (after the application of a $33.8 million certificate of
deposit, plus approximately $537,000 of interest thereon), (ii) to finance
the P&G Brands Acquisition, (iii) to repay all outstanding indebtedness
under the Old Credit Facility (which was terminated on such date) and (iv)
the remainder was used or to be available for general corporate purposes.
The indebtedness under the Senior Secured Credit Facility was repaid in
full on February 7, 1997 and all liens thereunder were released at such
time.

     On February 7, 1997, the Company completed the sale of $200 million
aggregate principal amount of Existing Notes.  The net proceeds from such
sale, together with approximately $23.8 million of the Company's available
cash, were used (i) to purchase all of the Old Senior Notes at a price of
$1,165 for each $1,000 principal amount, plus accrued and unpaid interest,
(ii) to repay all outstanding indebtedness under the Senior Secured Credit
Facility and (iii) to fund an escrow account (the "Escrow Account") which
will be used to pay a portion of the interest expense on the  Existing
Notes for two years.

     Interest on the Existing Notes is payable at the rate of 11-3/4% per
year in cash.  The Existing Notes mature on February 15, 2004.  In
connection with the sale of the Existing Notes, the Company transferred
$17.5 million to the Escrow Account maintained by a newly-formed
single-purpose subsidiary, Renaissance Guarantor, Inc. (the "Guarantor"),
in exchange for a limited guarantee by the Guarantor of the Company's
obligations under the Existing Notes.  The Existing Notes are general
unsecured obligations of the Company except to the extent that they are
collateralized by a first priority security interest in the Escrow
Account.  On June 8, 1997, the Company completed the exchange of all of
the outstanding principle amount of the Existing Notes for a like
principal amount of New Notes.

     LIQUIDITY REQUIREMENTS.  Because of the nature of the
fragrance/cosmetics industry, both the Company's need for working capital
and its income streams are seasonal.  The most significant liquidity
requirements occur in connection with the production of inventory prior to
the sales surge and related shipments to customers in advance of the
calendar year-end holiday sales season and other events such as new
product launches.

     As a result of the repayment of all outstanding indebtedness under,
and the termination of, the Old Credit Facility on December 4, 1996, until
March 12, 1997, the Company did not have a revolving credit facility to
fund working capital needs.

     The completion of the Acquisitions has resulted in a significant
increase in the Company's working capital needs.  In order to address
these needs, on March 12, 1997, the Company entered into its New Revolving
Credit Facility with GECC pursuant to which GECC and other lenders (the
"Lenders") agreed to provide Dana, a wholly-owned subsidiary of the
Company, with a revolving credit facility with a maximum committed amount
of $75 million subject to a borrowing base calculation based upon eligible
inventory and accounts receivable.

     Amounts borrowed under the New Revolving Credit Facility bear
interest, at the option of Dana, at either (i) the Index Rate (i.e., the
higher of the prime rate or the overnight Federal funds rate plus 0.50%)
plus 1.00% or (ii) absent a default, the LIBOR rate plus 2.25%.  The
interest rate will be subject to adjustment, on a quarterly basis, based
on the Company's interest coverage ratio during each fiscal quarter.


                                      28

<PAGE>

     The New Revolving Credit Facility is guaranteed by substantially all
of the Company's domestic and Canadian subsidiaries.  The Company and its
principal domestic subsidiaries also pledged 66% of the stock of their
principal operating foreign subsidiaries.

     The New Revolving Credit Facility contains a number of covenants that
restrict the operation of the Company, including restrictions on, among
other things, (i) certain mergers, acquisitions or sales of the Company's
assets or stock (other than the stock of the Company), (ii) cash dividends
and other distributions to equity holders and to the Company, (iii)
payments in respect of subordinated debt, (iv) transactions with
affiliates, (iv) payments in respect of subordinated debt and (v)
indebtedness and liens.  The New Revolving Credit Facility prohibits the
Company from making any acquisitions without the consent of 66-2/3% of the
Lenders.  The New Revolving Credit Facility also limits the amount of
dividends and similar payments that Dana and other subsidiary guarantors
can make to the Company to the amount required to pay interest on the New
Notes (after application of amounts held in the Escrow Account), taxes,
holding company operating expense and certain other matters specified in
the New Revolving Credit Facility.

     As of March 31, 1997, no amounts had been drawn under the New Revolving 
Credit Facility.  At March 31, 1997, the Company was not in compliance with 
certain covenants contained in the New Revolving Credit Facility. On June 27, 
1997, the Company and the Lenders amended the agreement, thus eliminating any 
covenant violations.

     The Company believes the New Revolving Credit Facility along with the 
Company's working capital management efforts should be sufficient for at 
least the next two years to fund existing operations.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The financial statements and supplementary financial data required by
this ITEM 8. are set forth in ITEM 14. of this Form 10-K.  All information
which has been omitted is either inapplicable or not required.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

     None.

                                      29 
<PAGE>

                           PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

DIRECTORS AND OFFICERS

     The following table sets forth certain information concerning the
executive officers, directors and certain key employees of the Company as
of May 1, 1997:

NAME                      AGE                POSITION
Thomas V. Bonoma           50      Late Chairman, Chief Executive Officer,
                                   and Director
Norbert Becker             48      President and Chief Operating Officer
Ronald D. Bowen            53      Group Vice President, Corporate Production
                                   and Operations
Albert E. DeChellis        47      Group Vice President and President,
                                   Fragrance
Sean E. Greene             56      Group Vice President and President
                                   Renaissance, Sales
John R. Jackson            38      Group Vice President and Secretary
Thomas T. S. Kaung         59      Group Vice President and Chief Financial
                                   Officer
Anne E. Leets              45      General Manager, Cosmar
Gay A. Mayer               54      Group Vice President, Market Development
Lynne Myers                44      Group Vice President and General Manager,
                                   Dana
Marc L. Rovner             45      Group Vice President and President,
                                   International
Eric R. Hamburg            34      Director
Kurt L. Kamm               54      Director
William J. Kidd            55      Director
John H. Lynch              44      Director
E. Mark Noonan             44      Director
Terry M. Theodore          33      Director
Daniel D. Villanueva       59      Director

     THOMAS V. BONOMA, late Chairman, Chief Executive Officer and a director, 
was responsible for the overall administration and direction of the Company.  
Dr. Bonoma died suddenly on May 21, 1997.  From 1987 to 1993, Dr. Bonoma was 
employed by Benckiser, GmbH, a $3 billion privately-held international 
manufacturer of fragrances, cosmetics and cleaning products, as the chief 
executive officer of its business in the United States, Canada and Latin 
America.  In this capacity, Dr. Bonoma directed the acquisition of seven 
businesses with

                                      30

<PAGE>

aggregate annual gross revenues in excess of $800 million.  Products under
his management while at Benckiser, GmbH included COTY, JOVAN and
Quintessence brands in the fragrance and cosmetics business and CALGON
BUBBLE BATH, CLING FREE FABRIC SOFTENER, ELECTRASOL and JET-DRY, in the
cleaning products business.  Since 1987, Dr. Bonoma was a partner of BGI,
a consulting firm.  From 1979 to 1990, he was Professor of Business
Administration at the Harvard Business School.  Dr. Bonoma was a director
of Griffin Corp., an agricultural chemicals company..

     NORBERT BECKER, President and Chief Operating Officer (through May
27, 1997), joined the Company in July 1996.  At a special meeting of the
Board of Directors of the Company held on May 28, 1997, Mr. Becker was
appointed as Chief Executive Officer and a director effective May 28,
1997.  From April 1981 to 1996, Mr. Becker held a number of positions with
Benckiser, GmbH in different countries. His last position was as President
and Chief Executive Officer of Lancaster Group USA, the American
subsidiary of Benckiser, GmbH, selling and marketing prestige fragrances
in the United States.  Previously, Mr. Becker was Chief Operating Officer
of Lancaster Group USA and Executive Vice President for Finance and
Administration for Lancaster Worldwide, a division of Benckiser, GmbH. Mr.
Becker is a graduate of Frankfurt University, in Frankfurt, Germany.

     RONALD D. BOWEN, Group Vice President, Corporate Production and
Operations, joined the Company in June 1994. From 1988 to 1994, Mr. Bowen
served as Benckiser, GmbH's Vice President of Operations. In this capacity
Mr. Bowen supervised all of Benckiser, GmbH's North American production
activities, including manufacturing, logistics and distribution and was
actively involved in acquiring and restructuring facilities and
implementing production policies for certain businesses acquired by
Benckiser, GmbH. Mr. Bowen worked closely with Dr. Bonoma on the
acquisition and integration of Beecham Household Products (Calgon),
Germaine Monteil (Revlon), Quintessence, Inc. and Coty, Inc. For 17 years
prior to joining Benckiser, GmbH, Mr. Bowen was employed by General Foods
Corporation in manufacturing, logistics, marketing and MIS positions and
as a Vice President of Culinova Group, a General Foods Corporation
subsidiary. Mr. Bowen is a graduate of Harvard University's Program for
Management Development and the United States Military Academy.

     ALBERT E. DECHELLIS, Group Vice President and President, Fragrance,
joined the Company in June 1994. From 1992 to 1994, Mr. DeChellis was the
President and Chief Operating Officer of Benckiser, GmbH Consumer
Products. Previously, Mr. DeChellis was Benckiser, GmbH's Vice President
of Sales. Mr. DeChellis was integrally involved with Dr. Bonoma in the
acquisition and restructuring of several companies while at Benckiser,
GmbH. Mr. DeChellis helped orchestrate the acquisition and restructuring
of Calgon, Inc., Quintessence, Inc. and Coty, Inc., and was directly
responsible for the restructuring of the sales organizations for each of
those acquired companies. Prior to 1987, Mr. DeChellis was employed by
Ecolab in various sales capacities for almost 15 years, where he held
positions such as District Manager, Assistant Vice President of Regional
Sales and Vice President of Eastern Area Sales. Mr. DeChellis is a
graduate of Kent State University.

     SEAN E. GREENE, Group Vice President and President, Renaissance,
Sales, joined the Company in June 1994. From 1991 to 1994, Mr. Greene
served as Vice President of Sales of Quintessence, Inc., which was
acquired by Benckiser, GmbH in 1991. In 1994, Mr. Greene became Senior
Vice President of Sales for Coty, Inc., another Benckiser, GmbH
subsidiary.


                                      31

<PAGE>

Prior to joining Benckiser, GmbH, Mr. Greene was Senior Vice President of
the Fine Fragrance Division of Faberge, Inc. and a Vice President of Mary
Quant Cosmetics, an international cosmetics and fragrance company. Mr.
Greene is a graduate of Belvedere College in Dublin, Ireland.

     JOHN R. JACKSON, Group Vice President and Secretary, joined the
Company in June 1995. From 1994 to 1995, Mr. Jackson was the Vice
President of Acquisitions and General Counsel and Secretary for Brothers
Gourmet Coffees, Inc.  From 1983 to 1988, he was engaged in the practice
of law at the Denver office of Kirkland and Ellis.  From 1988 to 1994, Mr.
Jackson was engaged in the practice of law at the Denver office of the
firm of Ballard Spahr Andrews & Ingersoll, where he became a partner in
1990.  While engaged in private practice, Mr. Jackson focused on merger
and acquisition transactions and private and public financing. Mr. Jackson
taught Business Planning as an adjunct professor of law at the University
of Denver Law School. He holds a B.A. degree from Davidson College and a
J.D. degree from Vanderbilt Law School.

     THOMAS T.S. KAUNG, Group Vice President and Chief Financial Officer,
joined the Company in July 1995. From 1991 to 1995, Mr. Kaung was
President of River International, Inc., a consulting firm. From 1990 to
1991 he was the Executive Vice President and Chief Financial Officer for
Zale Corporation, which operates a large national chain of fine jewelry
stores. Prior thereto, he spent 12 years at Cole National Corporation, a
leading specialty retailer, where he served as Executive Vice President,
Administration and Chief Financial Officer. In addition, Mr. Kaung rose to
the position of Divisional Vice President for Finance for the Dayton
Hudson Corporation after ten years of service. Mr. Kaung holds a B.S.
degree from Southwestern University and an M.S. degree from the University
of Iowa.

     ANNE E. LEETS, General Manager, Cosmar Corporation, joined the Company 
in October 1995 as Vice President, Sales of Cosmar.  Previously, she held 
senior sales and marketing positions with Revlon, L'Oreal, Almay and 
1-800-FLOWERS.  These positions included Vice President, Retail Sales and 
Marketing at 1-800-FLOWERS (from 1994 to 1995), Vice President, National 
Account Sales at Revlon (from 1992 to 1994), Director, National Account Sales 
at L'Oreal (from 1986 to 1987) and Director, New Product Marketing at Almay 
(from 1982 to 1984).  In addition, Ms. Leets founded, built and sold a 
business in California.

     GAY A. MAYER, Group Vice President, Market Development, joined the
Company on December 4, 1996. From 1990 to 1996, Mr. Mayer was President,
Chief Executive Officer and Chairman of the Board of Directors of MEM.

     LYNNE MYERS, Group Vice President and General Manager, Dana Perfumes
Corp., joined the Company in February 1995.  From February 1995 to October
1996, Ms. Myers served as the General Manager of the Company's Canadian
subsidiary, Houbigant (1995) Limited. Beginning in November 1996, Ms.
Myers served as the General Manager of the Company's international
subsidiaries in Canada, Brazil, Argentina, Spain and the U.K.  Prior to
joining the Company, Ms. Myers worked for a number of fragrance and
cosmetics companies in the U.S., Canada and South America, including
Yardley, Beecham Cosmetics, Maybelline and J.B. Williams in men's personal
care.  Ms. Myers came through her career in the field of marketing and has
17 years experience in the fragrance and cosmetics industry.  Ms. Myers
has an


                                      32

<PAGE>

Economics degree from The London School of Economics and a Postgraduate
degree in Marketing.

     MARC L. ROVNER, Group Vice President and President, International,
joined the Company in May 1995. Mr. Rovner's background spans 16 years of
international sales and marketing experience with Fortune 500 companies
such as International Paper, Unilever and Benckiser, GmbH. From 1992 to
1995, he served as U.K. General Manager at Benckiser, GmbH. From 1981 to
1992, Mr. Rovner served as Divisional Category Manager at Unilever, where
he directed the launch of ten major detergent and personal care products,
both in the United States and Japan. From 1978 to 1980, he served as
Product Manager at International Paper, where he was responsible for the
introduction of its first consumer products ad campaign. Mr. Rovner holds
a B.A. degree from the University of Pennsylvania and an M.A. degree from
the University of Chicago.

     ERIC R. HAMBURG, Director, was elected as a director in October 1994.
Mr. Hamburg is the founder and President of Industrial Renaissance Inc.,
which was founded in September 1996 and has been active since November
1996. In 1993, he joined Kidd, Kamm & Company as a partner after serving
as a senior manager with Andersen Consulting from 1985 to 1993. While at
Andersen Consulting, Mr. Hamburg led the design and implementation of
numerous business turnarounds and profit improvement initiatives in a wide
variety of industries. He has extensive experience in just-in-time
manufacturing, distribution, management information systems and plant
start-ups.

     KURT L. KAMM, Director, was elected as a director in October 1994. In
1979, Mr. Kamm joined Lineberger Kidd Kamm & Company. He helped to
establish Kidd, Kamm & Company in 1987. Mr. Kamm is a director of Wright
Medical Technology, Inc., a manufacturer and marketer of orthopedic
implant devices. In January 1997, Mr. Kamm formed a separate entity for
future investments, Kamm Theodore, LLC.

     WILLIAM J. KIDD, Director, was elected as a director in May 1994. In
1974, Mr. Kidd helped to form and became a principal of Lineberger, Kidd &
Company which, in turn, became Lineberger Kidd Kamm & Company in 1979. In
1987, Mr. Kidd helped to establish Kidd, Kamm & Company. Mr. Kidd is a
director of Wright Medical Technology, Inc., a manufacturer and marketer
of orthopedic implant devices. In January 1997, Mr. Kidd formed a separate
entity for future investments, Kidd & Company, LLC.

     JOHN H. LYNCH, Director, was elected as a director in March 1995. Mr.
Lynch has been the Vice Chairman and President since 1994 of Knoll Inc., a
firm engaged in the manufacture of office furniture. He has been a partner
since 1987 of BGI, a consulting firm. From 1982 to 1990, Mr. Lynch was
employed by the Harvard Business School, as Assistant Dean and Director of
the MBA program from 1982 to 1986 and as Associate Dean from 1988 to 1990.
Mr. Lynch has been elected to the Board of Directors pursuant to the right
of Dr. Bonoma, under his employment agreement, to designate one additional
director.

     E. MARK NOONAN, Director, was elected as a director in May 1994.  Mr. 
Noonan has been a Managing Director since 1990 of Triumph Capital Group, 
Inc., a firm engaged in investment banking and investment management. He 
served as Vice President and then a

                                      33

<PAGE>

Managing Director of Drexel Burnham Lambert from 1984 to 1990. Mr. Noonan
has been elected to the Board of Directors pursuant to the right of the
holders of the Company's Cumulative Exchangeable Preferred Stock to elect
one director under the Company's restated certificate of incorporation.

     TERRY M. THEODORE, Director, was elected as a director in May 1994.
Mr. Theodore, a partner at Kidd Kamm & Company, joined Kidd, Kamm &
Company in 1989 after serving in the Financial Institutions Group of Bear,
Stearns & Co. from 1988 to 1989. In January 1997, Mr. Theodore formed a
separate entity for future investments, Kamm Theodore, LLC.

     DANIEL D. VILLANUEVA, Director, was elected as a director in
September 1996. Mr. Villanueva has been the Chairman and Managing Director
since 1990 of Bastion Capital Corporation, a minority-controlled private
equity investment firm specializing in management-led buyouts of leading
middle market companies and related transactions. He has served since
April 1996 on the Board of Directors of Telemundo Group, Inc., a publicly
traded Spanish-language television company and Seven-Up/RC Bottling
Company of Southern California, Inc., a manufacturer and distributor of
beverage products. Mr. Villanueva has been elected to the board of
directors as the designee selected by the holders of a majority of the
shares of Senior Redeemable Preferred Stock.

DIRECTORS

     Directors of the Company are elected annually and hold office until
the next annual meeting of shareholders or until their successors are duly
elected and qualified. Officers of the Company are appointed by and serve
at the discretion of the Board of Directors of the Company. Under the
Company's restated certificate of incorporation, the holders of the
outstanding shares of the Company's Cumulative Exchangeable Preferred Stock
have the right to elect one member of the Company's Board of Directors.
Mr. Noonan has been elected to the Board of Directors pursuant to this
right. Pursuant to Dr. Bonoma's employment agreement with the Company,
Dr. Bonoma was elected a director and had the right to designate one
additional director. Mr Lynch was elected to the Board of Directors
pursuant to this right. Holders of the Series C Preferred Stock (acting
together with the holders of the Series B Preferred Stock, as a single
class) have the right to nominate three candidates for consideration for
the Company's Board of Directors. The Company is obligated to use all
reasonable commercial efforts to cause the election of one of such
nominees selected by the holders of the Series C Preferred Stock (the
"Series C Preferred Nominee"). Mr. Villanueva has been elected to the
Board of Directors pursuant to this right. Pursuant to the Securities
Purchase Agreement, dated as of September 27, 1996, between the Company and
Bastion Capital Fund, L.P. ("Bastion"), the Company has agreed in the
event that Bastion is not entitled to designate the Series C Preferred
Nominee, the Company will include one person selected by Bastion in its
nominations for the Company's Board of Directors and to use all reasonable
commercial efforts to cause the election of such person to the Board, so
long as Bastion owns 75% (in value) of (i) the shares of common stock
purchased by Bastion and (ii) the units purchased by Bastion pursuant to
the Series B Preferred Stock offering (the "Minimum Share Amount").
Pursuant to a Voting Agreement of September 27, 1996, KKEP agreed that, in
the event that Bastion is not entitled to designate the Series C Preferred
Nominee, KKEP will vote its shares of common stock in favor of a nominee

                                      34 
<PAGE>

designated by Bastion for election to the Company's Board of Directors 
provided that Bastion has the Minimum Share Amount.

     Directors of the Company generally are not compensated for their 
services as directors. All non-employee directors of the Company are 
reimbursed for ordinary and necessary expenses incurred in attending board or 
committee meetings.

     At its February 1997 meeting, the Board of Directors created a Financial 
Affairs Committee of the Board of Directors and appointed Messrs. Kidd, 
Noonan and Theodore to such committee.  The principal function of the 
Financial Affairs Committee is to consider matters pertaining to the 
Company's financing and business strategies; however, the Board of Directors 
has not yet determined the extent of the authority to be delegated to such 
committee.  The Company also has a Compensation Committee, Stock Option 
Committee, Nominating Committee and Audit Committee of the Board of Directors.

ITEM 11.  EXECUTIVE COMPENSATION 

EXECUTIVE COMPENSATION 

     The following table sets forth certain information with respect to the 
annual and long-term compensation for services rendered in all capacities 
earned by the Company's Chief Executive Officer and the four other most 
highly compensated executive officers (collectively, the "Named Executive 
Officers") during Fiscal 1994, Fiscal 1995 and Fiscal 1996.

                            SUMMARY COMPENSATION TABLE
                              ANNUAL                 LONG-TERM  
                           COMPENSATION            COMPENSATION
                                                     SHARES
NAME AND                                           UNDERLYING
PRINCIPAL          FISCAL                            OPTIONS        ALL OTHER
POSITION           PERIOD     SALARY       BONUS     GRANTED       COMPENSATION

Thomas V.           1996     $470,592    $150,000       -            
Bonoma, late        1995      400,000        -          -
Chairman and        1994      233,338        -       $93,182           -   (1)
Chief Executive 
Officer

Sean E. Greene,     1996     $275,000    $125,000       -              -     
Group Vice          1995      250,000        -          -              -
President,          1994      145,836     175,000      9,318         62,500(2)
President, 
Renaissance Sales


                                      35

<PAGE>

                              ANNUAL                 LONG-TERM  
                           COMPENSATION            COMPENSATION
                                                     SHARES
NAME AND                                           UNDERLYING
PRINCIPAL          FISCAL                            OPTIONS        ALL OTHER
POSITION           PERIOD     SALARY       BONUS     GRANTED       COMPENSATION

Albert E.           1996     $244,094    $ 80,000       -              -
DeChellis, Group    1995      225,000        -          -              -
Vice President      1994      131,250     125,000      9,318         37,500(2)
and President, 
Fragrance

Thomas T. S.        1996     $254,115    $100,000       -              -
Kaung, Group        1995      177,385        -         9,318           -
Vice President      1994(3)      -           -          -              -
and Chief 
Financial Officer

Ronald D.           1996     $206,960    $120,000       -              -
Bowen, Group        1995      166,667        -          -              -
Vice President,     1994       93,333     125,000      9,318         40,000(2)
Corporate
Production and
Operations

(1)  Does not include $85,000 paid to a company controlled by Dr. Bonoma during
     May through July 1994 for consulting services.

(2)  Represents amounts paid in respect of services rendered as a consultant 
     prior to the individual's employment by the Company.

(3)  Mr. Kaung joined the Company during the fiscal year ended March 31, 1996.


STOCK OPTION GRANTS 

     No stock options were granted (or exercised) during Fiscal 1996 to (by) 
the named Executive Officers.

STOCK OPTION PLAN

     The Company's Stock Option Plan (the "Plan") was approved by the 
Company's Board of Directors and stockholders in January 1995.  In February 
1997, the Board of Directors approved an amendment to the Plan increasing the 
number of shares of common stock, par value $.01 per share of the Company 
("Common Stock"), eligible for stock option grants under the Plan (and the 
number of shares of Common Stock reserved for issuance upon the exercise of 


                                      36

<PAGE>

stock options granted under the Plan) to 136,320.  Options granted under the 
Plan may include those qualified as incentive stock options under Section 422 
of the Internal Revenue Code of 1986, as amended, and non-qualified stock 
options.  The Plan is administered by a Stock Option Committee of the Board 
of Directors (the "Stock Option Committee") consisting (through May 21, 1997) 
of Dr. Bonoma and Mr. Kidd.  The Stock Option Committee has wide latitude in 
determining the recipients of options and numerous other terms and conditions 
of the options.  All regular employees and all directors may be chosen by the 
Stock Option Committee to participate in the Plan.  Non-employees may receive 
only nonqualified options.  Options become exercisable in such amounts and at 
such intervals as the Stock Option Committee provides for in the applicable 
option agreement.  At March 31, 1997, there were outstanding options under 
the Plan with respect to 106,305 shares of Common Stock.  These options 
generally become exercisable with respect to 25% of their shares in each of 
the four years 1995 through 1998, and expire in January 2005.

     The exercise price for the shares purchased upon exercise of all options 
granted under the Plan is determined by the Stock Option Committee. The 
exercise price of an incentive stock option must be at least equal to the 
fair market value of the Common Stock on the date such option is granted 
(110% of the fair market value for stockholders who, at the time the option 
is granted, own more than 10% of the total combined classes of stock of the 
Company or any subsidiary).

     No option may have a term of more than ten years (five years for 
incentive stock options granted to 10% or greater stockholders). Options 
generally may be exercised only if the option holder remains continuously 
associated with the Company or a subsidiary from the date of grant to the 
date of exercise. However, options may be exercised within certain specified 
periods following termination of employment or ceasing to be a director by 
reason of death, disability or retirement of the optionee or any reason other 
than termination of employment for cause or without the consent of the 
Company. The Stock Option Committee may cancel, by giving an optionee written 
notice, any option that remains unexercised upon the date of the consummation 
of a merger, consolidated reorganization, liquidation or dissolution in which 
the Company does not survive or a sale, lease exchange or other disposition 
of all or substantially all of the property and assets of the Company.

EMPLOYMENT AND NON-COMPETE AGREEMENTS

     The Company entered into an employment agreement (the "Bonoma Employment 
Agreement"), dated as of August 6, 1996, with Dr. Bonoma, which agreement 
superseded his prior employment agreement with the Company. Pursuant to the 
Bonoma Employment Agreement, Dr. Bonoma was employed as the Chief Executive 
Officer of the Company and each of its present and future subsidiaries and 
was responsible for managing the day-to-day affairs of the Company and its 
subsidiaries.

     Dr. Bonoma received a base salary of $500,000 per year and was eligible 
to receive an additional annual bonus of 100% of his annual base salary if 
certain objectives,  established by the Board of Directors of the Company, 
were met. Upon Dr. Bonoma's death, his estate is entitled to receive his 
unpaid salary through the date of his death and a bonus of 75% of his base 
salary pro rated for the part of the year to the date of his death.


                                      37

<PAGE>

     The Company and Mr. Gay A. Mayer, the former Chief Executive Officer and 
President of MEM, entered into an employment agreement dated August 6, 1996, 
pursuant to which Mr. Mayer is employed as Group Vice President of Market 
Development of the Company. Mr. Mayer will receive an annual gross salary of 
$250,000 and will be eligible to participate in all bonus programs for 
executives of the Company, on the same terms and conditions as such 
executives. The Company also granted Mr. Mayer an option to purchase 5,000 
shares of Common Stock under the Company's stock option plan at a per share 
exercise price of $104.00. Mr. Mayer's employment will terminate 30 months 
after consummation of the MEM Acquisition, which was completed on December 4, 
1996.

     The Company is negotiating the terms of an employment agreement and 
stock option agreement with Norbert Becker who was appointed Chief Executive 
Officer and a director effective May 28, 1997.

BONUS PLANS

     The Company and each of its principal divisions - the Fragrance 
Division, Cosmetics Division and International Division - have adopted an 
incentive bonus plan for Fiscal 1996 (the "1996 Bonus Plan") under which 
eligible employees of the Company (including the Named Executive Officers) or 
such Division, as the case may be, who are actively employed on the day the 
bonus is paid, will be entitled to receive cash bonuses as a percentage of 
such employee's base salary depending upon whether target levels of EBITDA 
established by the Company's Board of Directors are met or exceeded. Five 
percent of a target award amount is paid if 90% of the established EBITDA 
target is met and 10% of a target award is paid if 91% of the established 
EBITDA target is met. Thereafter increasing percentages of the target award 
are paid until 100% of the established EBITDA target is met (at which point 
100% of the target award is paid). In the event that the established EBITDA 
target is exceeded, bonus levels will increase above 100% of the target award 
by one percentage point for each full percentage point by which the 
applicable EBITDA target is exceeded. Employees who are actively employed for 
less than one full year will have the award pro-rated for each full month of 
employment. Final award payments are subject to the approval of the Chairman. 

     In October 1996, the Board of Directors elected to pay to certain 
employees of the Company approximately $1.5 million as a non-returnable 
advance against incentive bonuses that may be earned under the 1996 Bonus 
Plan. Amounts advanced will offset on a dollar-for-dollar basis the bonuses 
actually earned, but such advances are not required to be returned even if 
not ultimately earned. The Named Executive Officers received advances as 
follows: Thomas V. Bonoma - $150,000; Sean E. Greene - $125,000; Albert E. 
DeChellis - $80,000; Thomas T.S. Kaung - $100,000; and Ronald D. Bowen - 
$120,000.

     In connection with the MEM Acquisition, the Company established the MEM 
Employee Stay Bonus Program for twenty-nine employees of MEM in order to 
encourage the selected employees to remain in the employ of the Company 
following the closing. On the closing date of the MEM Acquisition, $207,932 
was deposited in an escrow account.  As of March 31, 1997, approximately 
$154,000 had been paid and an additional $47,000 is expected to be paid 
pursuant to the MEM Employee Stay Bonus Program.

                                      38 
<PAGE>

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     Through May 21, 1997, Dr. Bonoma and Mr. Kidd constituted the Company's 
Compensation Committee. Dr. Bonoma's salary was established by his employment 
agreement with the Company.  Through May 21, 1997, Dr. Bonoma and Mr. Kidd 
constituted the Stock Option Committee and the Nominating Committee (which 
was formed on May 7, 1997) of the Board of Directors. Messrs. Kidd, Lynch and 
Noonan constitute the Audit Committee of the Board of Directors. Mr. Kidd, 
Mr. Noonan and Mr. Theodore constitute the Financial Affairs Committee. There 
are no other committees of the Board of Directors.

CERTAIN OTHER MATTERS

     From March 1994 to August 1995, Dr. Bonoma was a director (including 
chairman of the board from September 1994 to August 1995) of Brothers Gourmet 
Coffees, Inc. ("Brothers"). During September and October 1995, three 
shareholder suits were commenced against Brothers, naming, among others, Dr. 
Bonoma as a defendant. These suits alleged, among other things, that Brothers 
and the individual defendants violated federal securities laws in connection 
with the initial public offering of Brothers's common stock in December 1993 
(prior to the time Dr. Bonoma became a director) and certain public 
statements made by Brothers through May 1995. Dr. Bonoma believed that the 
allegations made in the suits as they concern him are without merit. The 
parties to the suits have entered into a stipulation of settlement under 
which the plaintiffs will receive a total of approximately $8 million in cash 
and Brothers common stock, although there is no admission of wrongdoing. Dr. 
Bonoma was not required to contribute any amounts in respect of the 
settlement.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth, as of March 31, 1997, information with 
respect to the beneficial ownership of shares of the Company's Common Stock 
by (i) each stockholder known by the Company to be the beneficial owner of 
more than 5% of such shares, (ii) each director of the Company, the Company's 
Chief Executive Officer and each of the other named executive officers in the 
Summary Compensation Table contained herein and (iii) directors and executive 
officers of the Company as a group.

                                                                  Percent on a
                                        Number of                 Fully Diluted
Name of Stockholder                       Shares       Percent*       Basis
-------------------                     ---------      --------   -------------
Kidd Kamm Equity Partners(1)             605,286        73.4%         39.3%
c/o Kidd, Kamm & Company
Three Pickwick Plaza
Greenwich, CT 06830 

Thomas V. Bonoma(2)                       26,902         3.3%          1.7%

Ronald D. Bowen                            3,632          **            **

                                      39 
<PAGE>

                                                                  Percent on a
                                        Number of                 Fully Diluted
Name of Stockholder                       Shares       Percent*       Basis
-------------------                     ---------      --------   -------------
Albert E. DeChellis                        6,053          **            **

Sean E. Greene                             8,070         1.0%           **

Thomas T.S. Kaung                          2,690          **            **

John H. Lynch                              2,690          **            **

E. Mark Noonan(3)                          59,825        6.8%          3.9%

Triumph-Connecticut Limited 
Partnership(3)                             59,825        6.8%          3.9%
60 State Street, 21st Flr
Boston, MA 02109 

Daniel D. Villanueva(4)                    95,766       11.0%          6.2%
Bastion Capital Corporation
Suite 2960
1999 Avenue of the Stars
Los Angeles, CA 90067

CIBC WG Argosy Merchant Fund 
2, L.L.C.(5)                               51,959        6.3%          3.4%
c/o CIBC Wood Gundy Securities 
Corp.
425 Lexington Avenue
New York, NY 10017

All Directors and Executive
 Officers as a group                      810,914       87.3%         52.7%

-------------------

*   The percentages in this column have been calculated pursuant to Rule 
    13d-3(d)(1) of the Exchange Act and do not give effect to options and 
    warrants, except for options and warrants of the person for whom the 
    percentage is being calculated that are exercisable within 60 days.

**  Less than 1%. 

(1) William J. Kidd, Kurt L. Kamm, Terry M. Theodore and Eric R. Hamburg are 
    affiliates of Kidd, Kamm Equity Partners, L.P., and for purposes of this 
    report may be deemed to beneficially own the shares owned of record by Kidd,
    Kamm Equity Partners, L.P.

(2) Includes 26,902 shares held by a trust for the benefit of Dr. Bonoma, but 
    excludes 93,182 shares of Common Stock issuable to Dr. Bonoma under a stock 
    option which is not currently exercisable but, once it becomes exercisable 
    under the terms of the agreement governing the stock option, may be 
    exercised by Dr. Bonoma's estate, personal representative or beneficiary at 
    any time until August 18, 2002.

                                      40 
<PAGE>

(3) Represents shares issuable upon exercise of Common Stock purchase warrants
    acquired by Triumph-Connecticut Limited Partnership ("Triumph-Connecticut")
    in connection with the purchase by that entity of shares of the Company's 
    Cumulative Exchangeable Preferred Stock. Does not include 175 shares 
    issuable upon exercise of warrants held by Jeffrey Lane and Meri Lane 
    (collectively, the "Lanes"), as trustees of a trust that is not 
    affiliated with Triumph-Connecticut. Jeffrey Lane is affiliated with 
    Triumph-Connecticut. Mr. Noonan is a Managing Director of Triumph Capital 
    Group Inc., a general partner of Triumph-Connecticut Capital Advisors, 
    Limited Partnership, the general partner of Triumph-Connecticut, and for 
    purposes of this table Mr. Noonan may be considered to be the owner of 
    these shares. As of March 31, 1997, Triumph-Connecticut and the Lanes 
    also held approximately 12,753 shares and approximately 45 shares, 
    respectively, of the Cumulative Exchangeable Preferred Stock.

(4) Represents 51,959 shares of Common Stock acquired by Bastion in the Equity
    Financing in August and September 1996 and includes 43,807 shares of 
    Common Stock issuable upon exercise of Common Stock warrants acquired by 
    Bastion in the Series B Preferred Stock Offering. Mr. Villanueva is the 
    Chairman and Managing Director of Bastion and for purposes of this table 
    Mr. Villanueva may be considered to be the owner of such shares.

(5) The Initial Purchaser (as defined below under the caption "Financing Fees"),
    an affiliate of the CIBC Fund, may from time to time hold a position in the 
    Company's Series B Warrants.


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

MANAGEMENT OWNERSHIP AND COMPENSATION

     In August 1994, Dr. Bonoma, together with other members of senior 
management, acquired 68,922 shares of Common Stock in consideration of the 
payment of approximately $3 million. In addition, the Company has granted 
options to officers and other employees under the Plan referred to above 
under the caption "Stock Option Plan" and additional options may be granted 
under the Plan to directors, officers and other employees.

MANAGEMENT AGREEMENT

     On August 16, 1994 the Company entered into a Management Agreement (the 
"Management Agreement") with Kidd Kamm. Pursuant to the Management Agreement, 
Kidd Kamm received a fee of $675,000 upon the closing of the Cosmar 
Acquisition and, subject to certain restrictions contained in the Indenture 
governing the Company's Senior Notes, is entitled to receive an annual 
management fee of $675,000 subject to increases as determined by the Board of 
Directors of the Company, plus out-of-pocket expenses incurred for 
management, consulting and related services to be rendered to the Company. At 
the closing of the offering of the Existing Notes, Kidd Kamm received 
fees equal to $1.35 million. Principals of Kidd Kamm organized KKEP which 
is the owner of 73.4% of the currently outstanding Common Stock.

                                      41 
<PAGE>

     In November 1996, the partners of Kidd Kamm agreed to a division of the
firm and its operations in relation to future investments. The firm's two
founding partners, William J. Kidd and Kurt L. Kamm, formed separate entities
for future investments, including the formation of two firms, Kidd & Company,
LLC and Kamm Theodore, LLC in January, 1997. The ongoing support and
management provided to the Company under the Management Agreement will not be
affected by the aforementioned changes in Kidd Kamm. Members of the investment
firms to be formed by the founding partners of Kidd Kamm who were primarily
responsible for providing support and assistance to the Company as employees of 
Kidd Kamm will continue to provide such services throughout the term of the 
Management Agreement.

STOCKHOLDERS AGREEMENT

     Management, Kidd Kamm and certain other equity holders have entered into
a stockholders agreement dated August 18, 1994 with the Company (the
"Stockholders Agreement"), whereby such equity holders of the Company are
restricted in the transfer of their shares of Common Stock of the Company for
a period of eight years from that date unless such transfer is made in
accordance with the Stockholders Agreement.

FINANCING FEES

     In May 1996, the Company paid the CIBC Fund a $2.1 million commitment fee
for committing to purchase the Series A Preferred Stock, $1.1 million of
which was refunded to the Company in connection with the closing of the
Existing Notes. In addition, CIBC Wood Gundy Securities Corp. (the "Initial
Purchaser"), an affiliate of the CIBC Fund, has from time to time provided
investment banking services to the Company in connection with various
transactions and proposed transactions for which it has received customary
compensation. The Initial Purchaser acted as initial purchaser of the Series B
Preferred Stock, provided the initial commitment in connection with the Senior
Secured Credit Facility, purchased a portion of the notes issued in the
initial funding under the Senior Secured Credit Facility, and acted as initial
purchaser of the Existing Notes in each case in return for customary fees and
reimbursement of expenses. In connection with the Equity Financing and the
closing of the Senior Secured Credit Facility, Triumph-Connecticut, a
partnership in which E. Mark Noonan serves as a general partner of the general
partnership, received a referral fee of $600,000 from the Initial Purchaser.
In addition, Triumph-Connecticut received a referral fee of $1 million from
the Initial Purchaser in connection with the offer by the Company to exchange
the New Notes for the Existing Notes and may receive additional fees from the
Initial Purchaser from time to time.

BASTION SECURITIES PURCHASE AGREEMENT

     On September 27, 1996, the Company entered into a Securities Purchase
Agreement (the "Bastion Securities Purchase Agreement") with Bastion pursuant
to which it sold 51,959 shares of Common Stock to Bastion for an aggregate
purchase price of $5 million. Pursuant to the terms of the Bastion Securities
Purchase Agreement, the Company has agreed to include one person selected by
Bastion in its nominations for the Company's Board of Directors and to use all
reasonable commercial efforts to cause the election of such person to the
Board, so long as Bastion owns 75% (in value) of the shares of Common Stock
purchased thereunder and of the Units purchased by Bastion pursuant to the
Series B Preferred Stock Offering. Bastion agreed


                                     42

<PAGE>

that the Common Stock purchased thereunder shall be subject to the terms of
the Stockholders Agreement.

     In addition, pursuant to a Voting Agreement, dated as of September 27,
1996, KKEP agreed that, in the event that Bastion is not entitled to designate
the Series C Preferred Nominee, KKEP will vote its shares of Common Stock in
favor of a nominee designated by Bastion for election to the Company's Board
of Directors provided that Bastion has the Minimum Share Amount.

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) AND (d) FINANCIAL STATEMENTS AND SCHEDULE

     Information called for by this item is set forth in the financial
     statements on pages F-1 through F-28 hereof.

(b) REPORTS ON FORM 8-K

     Form 8-K with respect to restatement of operating results, including
     Condensed Consolidated Statements of Operations (as Restated) for the six
     months ended September 30, 1996 and the six months ended September 30,
     1995, filed with the SEC on January 14, 1997.

     Form 8-K with respect to Senior Notes Offer, filed with the SEC on
     January 15, 1997.

     Form 8-K with respect to extension of expiration date for offer to
     purchase and consent solicitation for the Company's 13-3/4% Senior Notes
     Due 2001, Series B, filed with the SEC on January 28, 1997.

     Form 8-K with respect to completion of Senior Notes Offer, filed with the
     SEC on February 13, 1997.

     Form 8-K with respect to the filing of certain exhibits including the
     Purchase Agreement, dated February 3, 1997, between the Company as issuer
     and CIBC Wood Gundy Securities Corp., as initial purchaser and related
     documents, filed with the SEC on February 20, 1997.

     Form 8-K with respect to Dr. Bonoma's death, filed with the SEC on May
     22, 1997.

(C)  EXHIBITS

     See the Exhibit Index on pages 44 through 54 hereof.


                                     43
<PAGE>

                                 EXHIBIT INDEX

<TABLE>
                                                                                     LOCATION OF
                                                                                     EXHIBIT IN
                                                                                     SEQUENTIAL
                                                                                      NUMBERING
EXHIBIT NO.                     DESCRIPTION OF DOCUMENT                                SYSTEM
-----------                     -----------------------                              -----------
<S>                                      <C>                                             <C>
2.1 (6)        Stock Purchase Agreement among Cosmar Corporation, a Delaware
               corporation ("Cosmar Corporation"), Larry Pallini, 
               Vincent Carbone and Great American Cosmetics, Inc., a New 
               York corporation ("GAC"), entered into on June 27, 1996, 
               providing for the acquisition by Cosmar Corporation of 
               all of the capital stock of GAC.

2.2 (6)        Agreement and Plan of Merger, among Renaissance Cosmetics, 
               Inc., a Delaware corporation ("RCI" or the "Company"), 
               Renaissance Acquisition, Inc., a New York corporation 
               ("RAI") and MEM Company, Inc., a New York corporation 
               ("MEM"), dated as of August 6, 1996.

2.3 (13)       Asset Sale and Purchase by and among the Procter & Gamble 
               Company (as Seller) and Dana Perfumes Corp. ("Dana") (as 
               Buyer) and solely for purposes of Sections 4.6, 6.6 and 
               6.12 hereof of Renaissance Cosmetics, Inc. and Cosmar 
               Corporation dated as of October 25, 1996.

2.4 (13)       Form of Asset Sale and Purchase Agreement among P&G foreign
               affiliate sellers and Dana, dated as of October 29, 1996.

3.1 (1)        Restated certificate of incorporation of RCI filed with the
               Secretary of State of the State of Delaware on August 17, 1994.

3.1.2 (8)      Certificate of Designation of Preferences and Rights of Senior
               Exchangeable Redeemable Preferred stock, Series A, of 
               RCI, filed with the Secretary of State of the State of 
               Delaware on May 29, 1996.

3.1.3 (7)      Certificate of Designation of Preferences and Rights of Senior
               Redeemable Preferred Stock, Series B, of RCI, filed with 
               the Secretary of State of the State of Delaware on August 15, 
               1996.

3.1.4 (14)     Certificate of Increase of Certificate of Designation of
               Preferences and Rights of Senior Redeemable Preferred 
               Stock, Series B, of RCI, filed with the Secretary of 
               State of the State of Delaware on September 27, 1996.

3.1.5 (14)     Certificate of Designation of Preferences and Rights of Senior
               Redeemable Preferred Stock, Series C, par value $.01 per 
               share, of RCI, filed with the Secretary of State of the 
               State of Delaware on August 15, 1996.

3.1.6 (14)     Certificate of Increase of Certificate of Designation of
               Preferences and Rights of Senior Redeemable Preferred 
               Stock, Series C, of RCI, filed with the Secretary of 
               State of the State of Delaware on September 27, 1996.


                                      44

<PAGE>

                                                                                     LOCATION OF
                                                                                     EXHIBIT IN
                                                                                     SEQUENTIAL
                                                                                      NUMBERING
EXHIBIT NO.                     DESCRIPTION OF DOCUMENT                                SYSTEM
-----------                     -----------------------                              -----------
<S>                                      <C>                                             <C>

3.2            Amended and Restated By-laws of RCI

3.3 (16)       Certificate of Incorporation of Renaissance Guarantor, Inc.
               ("RGI") filed with the Secretary of State of the State of 
               Delaware on February 6, 1997.

3.4 (16)       By-laws of RGI.

4.1 (15)       Indenture, dated February 7, 1997, among RCI, as issuer, RGI, 
               as guarantor, and United States Trust Company of New York, 
               as trustee.

4.2 (15)       Escrow and Disbursement Agreement, dated February 7, 1997, among
               RCI, as issuer, RGI, as guarantor, United States Trust 
               Company of New York, as trustee, and United States Trust 
               Company of New York, as escrow agent.

4.3 (15)       Notes Registration Rights Agreement, dated February 7, 1997,
               between RCI, as issuer, and CIBC Wood Gundy Securities Corp., 
               as initial purchaser.

10.1 (1)       License agreement (the "Houbigant U.S. License Agreement"), dated
               May 1994, between Houbigant Inc., a Delaware corporation 
               ("Houbigant") and Parfums Parquet Incorporated (f.k.a. 
               New Fragrance License Corp.) ("Parfums Parquet").

10.2 (2)       Amendment to the Houbigant U.S. License Agreement, dated May 12,
               1994.

10.3 (2)       Amendment to the Houbigant U.S. License Agreement, dated June 1,
               1994.

10.4 (1)       Amendment to the Houbigant U.S. License Agreement, dated June 24,
               1994.

10.5 (1)       Three letter agreements relating to the Houbigant U.S. License
               Agreement, each dated July 1, 1994.

10.6 (1)       Letter of Agreement dated July 1, 1994, between Houbigant and
               Parfums Parquet relating to the Houbigant U.S. License Agreement.

10.7 (10)      Right of Last Refusal Agreement dated July 1, 1994 among
               Houbigant, Luigi Massironi, Michael Sherman and Parfums 
               Parquet relating to the Houbigant U.S. License Agreement.

10.8 (1)       Guaranty, dated July 1, 1994, by Cosmar in favor of Houbigant of
               all obligations of Parfums Parquet under the Houbigant U.S. 
               License Agreement.

10.9 (10)      Security Agreement - Trademarks, dated July 1, 1994, among
               Houbigant, Parfums Parquet, Chemical Bank New Jersey N.A. 
               and National Westminster Bank, U.S.A.


                                      45

<PAGE>

                                                                                     LOCATION OF
                                                                                     EXHIBIT IN
                                                                                     SEQUENTIAL
                                                                                      NUMBERING
EXHIBIT NO.                     DESCRIPTION OF DOCUMENT                                SYSTEM
-----------                     -----------------------                              -----------
<S>                                      <C>                                             <C>

10.10 (10)     Assignment for Security, dated July 1, 1994, between Houbigant 
               and Parfums Parquet.

10.11 (1)      Letter agreement, dated August 18, 1994, between Parfums Parquet
               and Houbigant, with respect to Assumption and Assignment 
               Agreement.

10.12 (2)      Restated and Amended License Agreement (the "Harby's License
               Agreement"), dated August 16, 1994, between Harby's 
               Corporation NV ("Harby's") and Houbigant.

10.13 (1)      Assumption and assignment agreement (the "Assumption and
               Assignment Agreement"), dated August 18, 1994, among 
               Houbigant, Harby's and Parfums Parquet.

10.14 (1)      Amendment, dated September 19, 1994, to the Assumption and
               Assignment Agreement.

10.15 (1)      Letter Agreement, dated August 18, 1994, among Harby's, 
               Houbigant and Parfums Parquet, regarding certain rights 
               under the Harby's License Agreement.

10.16 (2)      License Agreement (the "Worldwide License Agreement"), dated
               August 10, 1994, by and between Houbigant, Houbigant GmbH 
               and Parfums Parquet.

10.17 (2)      Amendment dated August 16, 1994 to the License Agreement dated
               August 10, 1994 between Houbigant, Houbigant GmbH and Parfums 
               Parquet.

10.18 (2)      Amendment dated September 16, 1994 to the License Agreement 
               dated August 10, 1994, between Houbigant, Houbigant GmbH and 
               Parfums Parquet Incorporated.

10.19 (10)     Letter Agreement, dated February 14, 1995, relating to the 
               License Agreement dated August 10, 1994 between Houbigant and 
               Parfums Parquet.

10.20 (10)     Right of Last Refusal Agreement, dated February 14, 1995, among
               Houbigant, Luigi Massironi, Michael Sherman and Parfums 
               Parquet relating to the Worldwide License Agreement.

10.21 (10)     Guaranty, dated February 28, 1995, by Cosmar in favor of 
               Houbigant of all obligations of Parfums Parquet under the 
               License Agreement dated August 10, 1994 between 
               Houbigant, Houbigant GmbH and Parfums Parquet.

10.22 (10)     Security Agreement - Trademarks, dated February 28, 1995, 
               among Houbigant, Parfums Parquet, Chemical Bank New 
               Jersey N.A. and National Westminster Bank, USA.


                                      46

<PAGE>

                                                                                     LOCATION OF
                                                                                     EXHIBIT IN
                                                                                     SEQUENTIAL
                                                                                      NUMBERING
EXHIBIT NO.                     DESCRIPTION OF DOCUMENT                                SYSTEM
-----------                     -----------------------                              -----------
<S>                                      <C>                                             <C>

10.22.1 (10)   Assignment for Security Agreement, dated February 14, 1995,
               between Houbigant and Parfums Parquet.

10.23 (2)      Letter Agreement dated September 21, 1994 amending the 
               Worldwide License Agreement, the Houbigant U.S. License 
               Agreement and the Harby's License Agreement by and 
               between Parfums Parquet Incorporated, Harby's, Houbigant, 
               and Houbigant GmbH.

10.24 (2)      Purchase Agreement dated December 12, 1994 by and among 
               Houbigant (1995) Limitee (formerly 3088766 Canada 
               Limited), ACB Fragrances and Cosmetics, Inc., ACB 
               Mercantile, Inc., Houbigant Limitee, Augustine Celaya, 
               Giacomo Giuliano, and Gilles Pellerin.

10.24.1 (3)    Escrow Agreement, dated December 12, 1994, between ACB 
               Fragrances and Cosmetics, Inc., ACB Mercantile, Inc., 
               Houbigant Limitee, Augustine Celaya, Giacomo Giuliano, 
               Gilles Pellerin, Houbigant (1995) Limited and Lavery de 
               Billis.

10.25 (11)     Amendment, Modification and Settlement Agreement, dated 
               July 31, 1996, among Houbigant, Dana Perfumes Corp. 
               (f.k.a. Parfums Parquet) ("Dana") and Houbigant (1995) 
               Limitee amending the Worldwide License Agreement and the 
               Houbigant U.S. License Agreement and providing for the 
               execution of a new license agreement for Canada.

10.26 (11)     License Agreement (the "Canadian License"), dated July 31, 
               1996, between Houbigant and Houbigant (1995) Limitee.

10.27 (11)     Letter Agreement, dated July 1996, among Houbigant, Dana and
               Houbigant (1995) Limitee, amending the provisions for 
               royalty payments under the Worldwide License Agreement, 
               the Houbigant U.S. License Agreement and the Canadian 
               License Agreement.

10.28 (11)     Amendment No. I to License Agreements, dated July 31, 1996, 
               among Houbigant, Dana and Houbigant (1995) Limitee, 
               amending the Worldwide License Agreement, the Houbigant 
               U.S. License Agreement and the Canadian License Agreement.

10.29 (14)     Amendment No. I to Security Agreement - Trademarks, dated 
               July 31, 1996, among Houbigant, Parfums Parquet, Chemical 
               Bank New Jersey N.A. and NatWest Bank NA.

10.30 (10)     License Agreement, dated August 18, 1994, between Cosmar
               Corporation and RCI.

10.31 (1)      Letter agreement, dated August 18, 1994, between RCI and 
               Dr. Thomas V. Bonoma, granting Dr. Bonoma stock options.


                                      47

<PAGE>

                                                                                     LOCATION OF
                                                                                     EXHIBIT IN
                                                                                     SEQUENTIAL
                                                                                      NUMBERING
EXHIBIT NO.                     DESCRIPTION OF DOCUMENT                                SYSTEM
-----------                     -----------------------                              -----------
<S>                                      <C>                                             <C>

10.32 (6)      Employment agreement, dated August 6, 1996, between RCI and
               Dr. Thomas V. Bonoma.

10.33 (1)      Stockholders agreement, dated August 18, 1994, among RCI 
               and the stockholders listed in schedule 1 thereto.

10.34 (10)     Management Services Agreement, dated August 16, 1994, between
               Kidd, Kamm & Company and RCI.

10.35 (1)      Industrial building lease between Sparks Industrial Joint 
               Venture and Precision Molded Plastics, Inc., dated 
               November 20, 1991, and a consent to assignment of that 
               lease, dated June 7, 1994, executed by Precision Molded 
               Plastics, Inc. and Sparks Industrial Joint Venture.

10.36 (1)      Various subleases for office space at 635 Madison Avenue, New
               York, New York, between Saatchi & Saatchi Holdings (USA) 
               as sublessor, and Dana, as sublessee.

10.37 (8)      Standard Industrial Lease (the "Lease") relating to property 
               known as 11700 Monarch Street, Garden Grove, California, 
               between Bixby Western Properties as Lessor and A.H. 
               Robins Company, Incorporated as Lessee (the "Lessee"), 
               dated June 25, 1979.

10.38 (8)      First Amendment to the Lease, between Trust Company of the West 
               as Trustee for TCW Realty Fund IV as successor Lessor 
               (the "Lessor") and the Lessee, dated November 10, 1989.

10.39 (8)      Second Amendment to the Lease, between the Lessor and the 
               Lessee, dated as of January 1, 1993.

10.40 (8)      Sublease of the Lessee's rights under the Lease to Cosmar
               Corporation, dated as of March 1, 1996 (the "Sublease").

10.41 (8)      Consent of the Lessor to the Sublease, dated as of March 1, 1996.

10.42 (10)     Agreement of Lease between Groupe Gestion Luger as Lessor and
               Houbigant Ltee as Lessee (the "Lessee"), relating to the 
               immovable property situated at 1593 to 1645 Cunard 
               Street, City of Chomedey (Laval), Province of Quebec, 
               dated June 25, 1979 and assignment of that lease, dated 
               December 12, 1994, by the Lessee in favor of 3088766 
               Canada Limited.

10.42.1 (10)   Standard Form Commercial Lease, between Sally A. Starr and Lisa 
               A. Brown as Trustees of Massachusetts 955 Realty trust 
               for the Benefit of 955 Massachusetts Avenue Associates 
               (as lessor) and Renaissance Cosmetics, Inc. relating to 
               the property located in Cambridge, Massachusetts.


                                      48

<PAGE>

                                                                                     LOCATION OF
                                                                                     EXHIBIT IN
                                                                                     SEQUENTIAL
                                                                                      NUMBERING
EXHIBIT NO.                     DESCRIPTION OF DOCUMENT                                SYSTEM
-----------                     -----------------------                              -----------
<S>                                      <C>                                             <C>

10.42.2 (10)   Lease Agreement Between Ghent Limited Partnership (as lessor) 
               and RCI (as tenant) relating to the property situated in 
               Greenwich, Connecticut.

10.43 (2)      Management Services Agreement, dated December 22, 1994, between
               New Dana Acquisition Corp. and Perfumes Dana do Brasil, S.A.

10.44 (4)      Aircraft lease agreement dated February 13, 1995 between the
               Company and General Electric Capital Corporation.

10.45 (8)      Securities Purchase Agreement between the Company and CIBC WG
               Argosy Merchant Fund 2, L.L.C. (the "Fund"), dated as of 
               May 29, 1996. Amendment No. 1, dated as of June 21, 1996, 
               to Securities Purchase Agreement, dated as of May 29, 
               1996, between Renaissance Cosmetics, Inc. and CIBC WG 
               Argosy Merchant Fund 2, L.L.C.

10.46 (8)      Common Stock Registration Rights Agreement between RCI and the
               Fund, dated as of May 29, 1996.

10.47 (7)      Securities Purchase Agreement, dated as of August 8, 1996, 
               between RCI and CIBC Wood Gundy Securities Corp.

10.48 (7)      Registration Rights Agreement, dated as of August 15, 1996,
               between RCI and CIBC Wood Gundy Securities Corp.

10.49 (7)      Common Stock Registration Rights Agreement, dated as of 
               August 15, 1996, between RCI and CIBC Wood Gundy Securities 
               Corp.

10.50 (10)     Subscription Agreement, dated August 15, 1996, between RCI and
               CIBC WG Argosy Merchant Fund 2, L.L.C.

10.51 (10)     Warrant Agreement, dated as of August 18, 1994, between RCI and
               American Bank National Association.

10.52 (7)      Warrant Agreement, dated as of August 15 1996, between RCI and
               Firstar Trust Company.

10.53 (1)      Indenture, dated as of August 18, 1994, among RCI, as Issuer, 
               the guarantors identified therein (the "Guarantors"), and 
               American Bank National Association, as trustee, relating to the 
               Old Senior Notes.

10.53.1 (2)    First supplemental indenture, dated as of November 15, 1994, 
               among RCI, as issuer, New Dana Acquisition Corp., as guarantor, 
               and American Bank National Association, as trustee, relating to 
               the Old Senior Notes.


                                      49

<PAGE>

                                                                                     LOCATION OF
                                                                                     EXHIBIT IN
                                                                                     SEQUENTIAL
                                                                                      NUMBERING
EXHIBIT NO.                     DESCRIPTION OF DOCUMENT                                SYSTEM
-----------                     -----------------------                              -----------
<S>                                      <C>                                             <C>

10.53.2 (2)    Second supplemental indenture, dated as of December 15, 1994,
               among RCI, as issuer, Houbigant (1995) Limitee, as 
               guarantor, and American Bank National Association, as 
               trustee, relating to the Old Senior Notes.

10.53.3 (2)    Third supplemental indenture, dated as of December 23, 1994, 
               among RCI, as issuer, certain subsidiaries of the 
               Company, as guarantors, and American National Bank 
               Association, as trustee, relating to the Old Senior Notes.

10.53.4 (8)    Fourth supplemental indenture, dated as of February 27, 1996,
               among RCI, as issuer, SH 149 S.A.R.L., as guarantor, and 
               American Bank National Association, as trustee, relating 
               to the Old Senior Notes.

10.53.5 (10)   Fifth supplemental Indenture, dated as of August 21, 1996, among
               RCI, as the issuer, GAC, as guarantor, and American Bank 
               National Association, as trustee, relating to the Old 
               Senior Notes.

10.53.6 (14)   Sixth supplemental Indenture, dated as of December 4, 1996, 
               between RCI, Certain Guarantors and Firstar Bank of 
               Minnesota, successor to American Bank National 
               Association, as trustee, relating to the Old Senior Notes.

10.53.7 (16)   Seventh supplemental Indenture, dated as of February 7, 1997,
               among RCI, certain guarantors and Firstar Bank of 
               Minnesota, successor to American Bank National 
               Association, as trustee, relating to the Old Senior Notes.

10.54 (10)     Waiver, dated as of August 12, 1996.

10.55 (10)     Closing Escrow Agreement, dated as of June 21, 1996, by and 
               among Cosmar Corporation, Larry Pallini, Vincent Carbone 
               and the law firm of Todtman, Young, Tunick, Nachamie, 
               Hendler & Spizz, P.C.

10.56 (10)     Consulting Agreement, dated August 21, 1996, by and among 
               Hilltop Sales, Inc., Cosmar Corporation and RCI.

10.57 (10)     Consulting Agreement, dated August 21, 1996, by and among 
               Pageant Group, Ltd., Cosmar Corporation and RCI.

10.58 (6)      Employment Agreement, dated August 6, 1996, by and between 
               Gay A. Mayer and RCI.

10.59 (10)     Letter Agreement, dated September 6, 1996, amending the 
               Securities Purchase Agreement, dated as of August 8, 
               1996, between CIBC Wood Gundy Securities Corp. and RCI.


                                      50

<PAGE>

                                                                                     LOCATION OF
                                                                                     EXHIBIT IN
                                                                                     SEQUENTIAL
                                                                                      NUMBERING
EXHIBIT NO.                     DESCRIPTION OF DOCUMENT                                SYSTEM
-----------                     -----------------------                              -----------
<S>                                      <C>                                             <C>

10.60 (10)     First Amendment to the Warrant Agreement, dated as of 
               September 27, 1996, between RCI and Firstar Trust Company 
               as warrant agent.

10.61 (10)     First Amendment to the Registration Rights Agreement, dated 
               as of September 27, 1996, between RCI and CIBC Wood Gundy 
               Securities Corp.

10.62 (10)     First Amendment to the Common Stock Registration Rights 
               Agreement, dated as of September 27, 1996, between RCI 
               and CIBC Wood Gundy Securities Corp.

10.63 (14)     Securities Purchase Agreement, dated as of September 27, 1996,
               between RCI and Bastion Capital Fund, L.P.

10.64 (14)     Common Stock Registration Rights Agreement, dated as of 
               September 27, 1996, between RCI and Bastion Capital Fund, L.P.

10.65 (14)     Voting Agreement, dated as of September 27, 1996, between Kidd,
               Kamm Equity Partners, L.P. and Bastion Capital Fund, L.P.

10.66 (14)     License and Consultant Agreement dated January 25, 1991 between
               Cosmar and The Nail Consultants, Ltd., as amended by 
               letter agreements dated May 29, 1991 and January 5, 1993.

10.67 (14)     License Agreement, dated October 1, 1995, between The Nail
               Consultants, Ltd. and Cosmar.

10.68 (14)     RCI Employee Bonus Plan.

10.69 (14)     Agreement dated as of July 1, 1995 between MEM as licensor and
               Filo America, Inc. as licensee for the license of the 
               "English Leather" trademark for shaving equipment.

10.70 (14)     Agreement dated as of January 1, 1995 between MEM as licensor 
               and M.Z. Berger as licensee for the license of the 
               "Tinkerbell" trademark for watches, clocks and plastic 
               jewelry.

10.71 (14)     License granted under the License Agreement dated August 1, 1978
               between G. Visconti di Modrone, S.p.A. and V.O.M. Ltd. 
               for the use of certain trademarks by Victor of Milano, 
               Ltd. in connection with its sale of men's toiletries.

10.72 (14)     License Agreement dated as of April 1, 1977 between MEM as
               licensor and Welling International as licensee for the 
               license of the "English Leather" trademark for eyeglass 
               frames and sunglasses, as amended by letter agreement 
               dated November 6, 1996.


                                      51

<PAGE>

                                                                                     LOCATION OF
                                                                                     EXHIBIT IN
                                                                                     SEQUENTIAL
                                                                                      NUMBERING
EXHIBIT NO.                     DESCRIPTION OF DOCUMENT                                SYSTEM
-----------                     -----------------------                              -----------
<S>                                      <C>                                             <C>

10.73 (14)     Trademark Agreement dated as of July 3, 1985 between MEM as
               licensor and Willow Hosiery Co., Inc. as licensee for the 
               license of the "English Leather" trademark for men's 
               hosiery, as amended by letter agreements dated January 
               29, 1996, and January 25, 1993.

10.74 (14)     Trademark License Agreement dated as of July 1, 1991 between
               English Leather, Inc. as licensor and Bag Bazaar, Ltd. as 
               licensee for the license of the "English Leather" 
               trademark for men's and women's handbags and personal 
               (small) leather goods, as amended by letter agreement 
               dated May 19, 1995.

10.75 (14)     License Agreement dated as of July 14, 1987 between Coscelebra,
               Inc. as licensor and MEM as licensee for the license of 
               the "Heaven Sent" trademark for cosmetic products.

10.76 (14)     Agreement dated as of January 1, 1981 between Helena Rubenstein,
               Inc. as licensor and Alliance Trading Company 
               Incorporated as licensee for the license of the "Heaven 
               Sent" trademark for cosmetic products, as amended by 
               agreement dated June 15, 1981.

10.77 (14)     Agreement dated as of March 12, 1982 between Alleghany Pharmacal
               Corporation as licensor and MEM as licensee for the 
               sub-license of the "Heaven Sent" trademark for cosmetic 
               products.

10.78 (14)     Collective Bargaining Agreement between Dana Perfumes Corp. and
               Oil, Chemical & Atomic Workers International Union 
               AFL-CIO and its Local Union No. 8-782.

10.79 (16)     Collective Labor Agreement of the Union of Workers in the
               Chemical, Pharmaceutical, Plastic and Related Industries 
               of Sao Paulo and the Region and other Unions of Workers 
               and the Federation of Industries of the State of Sao 
               Paulo and Industry Unions affiliated therewith (English 
               translation) (with Officer's Certificate certifying 
               accuracy of translation from Portuguese into English).

10.80 (15)     Purchase Agreement, dated February 3, 1997, between Renaissance
               Cosmetics, Inc., as issuer, and CIBC Wood Gundy Securities 
               Corp., as initial purchaser.

10.81 (16)     Industrial Building Lease, dated January 1997, between Dana
               Perfumes Corp., as Lessee, and First National Bank of 
               Illinois, as Trustee, under trust 2871, as Lessor.


                                      52

<PAGE>

                                                                                     LOCATION OF
                                                                                     EXHIBIT IN
                                                                                     SEQUENTIAL
                                                                                      NUMBERING
EXHIBIT NO.                     DESCRIPTION OF DOCUMENT                                SYSTEM
-----------                     -----------------------                              -----------
<S>                                      <C>                                             <C>

10.82 (16)     Credit Agreement, dated as of March 12, 1997, among Dana 
               Perfumes Corp., as borrower, the other credit parties 
               signatory thereto, as credit parties, the lenders 
               signatory thereto from time to time, as lenders, and 
               General Electric Capital Corporation, as agent and lender.

10.83 (16)     Pledge Agreement, dated as of March 12, 1997, between General
               Electric Capital Corporation, as agent and lender, and the 
               pledgors thereto.

10.84 (16)     Security Agreement, dated as of March 12, 1997, among General
               Electric Capital Corporation, as agent and lender, and the 
               grantors thereto.

10.85 (16)     Guaranty, dated as of March 12, 1997, between General Electric
               Capital Corporation, as agent and lender, and the guarantors 
               thereto.

10.86          First Amended and Restated Stock Option Plan of RCI.

10.87          Form of Indemnification Agreement.

10.88          Form of Stockholder Agreement, as amended.

10.89          Waiver and Amendment dated as of June 27, 1997, among Dana 
               Perfumes Corp., as borrower, the other Credit Parties to the
               Credit Agreement, General Electric Capital Corporation, as 
               agent and lender and the other Lenders party to the Credit 
               Agreement.

10.90          Letter Agreement, dated as of June 27, 1997, among Dana 
               Perfumes Corp., as borrower, General Electric Capital 
               Corporation, as agent and lender, and the other Lenders party
               to the Credit Agreement.

21.1           List of Subsidiaries.

27.1           Financial Data Schedule
</TABLE>

-----------------------
Notes to Exhibit Index:

(1)  Filed with RCI's Registration Statement on Form S-4 filed with the
     Securities and Exchange Commission ("SEC") on December 12, 1994,
     Registration No. 33-87280, and incorporated herein by reference thereto.

(2)  Filed with Amendment No. I to RCI's Registration Statement on Form S-4
     filed with the SEC on January 27, 1995, Registration No. 33-87280, and
     incorporated herein by reference thereto.

(3)  Filed with Amendment No. 2 to RCI's Registration Statement on Form S-4
     filed with the SEC on February 9, 1995, Registration No. 33-87280, and
     incorporated herein by reference thereto.

(4)  Filed with RCI's Quarterly Report on Form 10-Q filed with the SEC on March
     27, 1995, and incorporated herein by reference thereto.

(5)  Intentionally omitted.


                                      53

<PAGE>

(6)  Filed with RCI's Quarterly Report on Form 10-Q filed with the SEC on
     August 14, 1996, and incorporated herein by reference thereto.

(7)  Filed with RCI's Form 8-K filed with the SEC on August 8, 1996, and
     incorporated herein by reference thereto.

(8)  Filed with RCI's Annual Report on Form 10-K filed with the SEC for the
     fiscal year ended March 3 1, 1996, and incorporated herein by reference
     thereto.

(9)  Intentionally omitted.

(10) Filed with RCI's Registration Statement on Form S-4 filed with the SEC on
     October 1, 1996, Registration No. 333-13171, and incorporated herein by
     reference thereto.

(11) Filed with RCI's Quarterly Report on Form 10-Q filed with the SEC on
     November 14, 1996, and incorporated herein by reference thereto.

(12) Intentionally omitted.

(13) Filed with RCI's Form 8-K filed with the SEC on December 20, 1996, and
     incorporated herein by reference thereto.

(14) Filed with Amendment No. 1 to RCI's Registration Statement on Form S4
     filed with the SEC on January 31, 1997, Registration No. 333-13171, and
     incorporated herein by reference thereto.

(15) Filed with RCI's Form 8-K filed with the SEC on February 20, 1997 and
     incorporated herein by reference thereto.

(16) Filed with RCI's Registration Statement on Form S4 filed with the SEC on
     March 24, 1997, Registration No. 333-23847, and with Amendment No. 1
     thereto, as filed with the SEC on May 2, 1997, and incorporated herein by
     reference thereto.


                                      54

<PAGE>

                                   SIGNATURES


     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereto duly authorized.

                                  RENAISSANCE COSMETICS, INC.



                                  By:  /s/Norbert Becker
                                       -----------------------------------
                                       Norbert Becker
                                       Chief Executive Officer


     Pursuant to the requirements of the Securities Exchange Act of 1934, 
this report has been signed below by the following persons on behalf of 
the registrant and in the capacities and on the date(s) indicated below.

       Signature                          Title                       Date
       ---------                          -----                       ----


/s/ NORBERT BECKER         Chief Executive Officer (principal     June 30, 1997
------------------------    executive officer) and Director
    NORBERT BECKER


/s/ THOMAS T.S. KAUNG        Group Vice President and Chief       June 30, 1997
------------------------      Financial Officer (principal 
    THOMAS T.S. KAUNG        financial officer and principal 
                                    accounting officer)

                                         Director                 June   , 1997
------------------------
    ERIC R. HAMBURG


                                         Director                 June   , 1997
------------------------
    KURT L. KAMM


/s/ WILLIAM J. KIDD                      Director                 June 30, 1997
------------------------
    WILLIAM J. KIDD


                                      55

<PAGE>

/s/ JOHN H. LYNCH                        Director                 June 30, 1997
------------------------
    JOHN H. LYNCH


/s/ E. MARK NOONAN                       Director                 June 30, 1997
------------------------
    E. MARK NOONAN


                                         Director                 June   , 1997
------------------------
    TERRY M. THEODORE


/s/ DANIEL D. VILLANUEVA                 Director                 June 30, 1997
------------------------
    DANIEL D. VILLANUEVA


                                      56

<PAGE>

RENAISSANCE COSMETICS, INC. AND SUBSIDIARIES
INDEX OF FINANCIAL STATEMENTS AND SCHEDULE
------------------------------------------------------------------------------

                                                                   PAGE

INDEPENDENT AUDITORS' REPORT                                        F-2

CONSOLIDATED FINANCIAL STATEMENTS AS OF
  MARCH 31, 1997 AND 1996 AND FOR THE YEARS THEN ENDED;
  AND FOR THE PERIOD FROM
  APRIL 15, 1994 (INCEPTION) TO MARCH 31, 1995:

  Consolidated Balance Sheets                                       F-3

  Consolidated Statements of Operations                             F-4

  Consolidated Statements of Stockholders' Equity                   F-5

  Consolidated Statements of Cash Flows                             F-6

  Notes to Consolidated Financial Statements                      F-7--F-27

ITEM 14. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

  Schedule II - Valuation and Qualifying Accounts                   F-28


  All other schedules are not required

                                     F-1
<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
Renaissance Cosmetics, Inc.:

We have audited the accompanying consolidated balance sheets of Renaissance
Cosmetics, Inc. and subsidiaries as of March 31, 1997 and 1996, and the
related consolidated statements of operations, stockholders' equity and cash
flows for the two years ended March 31, 1997 and for the period from April
15, 1994 (Inception) to March 31, 1995.  Our audits also included the
financial statement schedule for Renaissance Cosmetics, Inc. listed in the
Index at Item 14.  These financial statements and financial statement
schedule are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement.  An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation.  We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Renaissance Cosmetics, Inc. and
subsidiaries as of March 31, 1997 and l996, and the results of their
operations and their cash flows for the two years ended March 31, 1997 and
the period from April 15, 1994 (Inception) to March 31, 1995 in conformity
with generally accepted accounting principles.  Also, in our opinion, such
financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly in all
material respects, the information set forth therein.

Deloitte & Touche LLP
New York, New York
June 27, 1997

                                      F-2
<PAGE>

RENAISSANCE COSMETICS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
MARCH 31, 1997 AND 1996
(in thousands except share data)
------------------------------------------------------------------------------

<TABLE>
ASSETS                                                            1997           1996
<S>                                                           <C>             <C>
CURRENT ASSETS:
  Cash and cash equivalents                                          719      $    1,432
  Marketable securities                                           22,799             174
  Accounts receivable - net                                       48,837          34,557
  Inventories                                                     55,554          30,237
  Prepaid expenses and other current assets                        7,827           6,540
                                                             ------------    ------------

        Total current assets                                     135,736          72,940

PROPERTY, PLANT AND EQUIPMENT - Net                               26,581          14,535

DEFERRED FINANCING COSTS - Net                                    12,748           8,007

OTHER ASSETS - Net                                                12,141          12,242

INTANGIBLE ASSETS - Net                                          174,177          76,895
                                                             ------------    ------------

TOTAL ASSETS                                                  $  361,383      $  184,619
                                                             ------------    ------------
                                                             ------------    ------------

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Notes payable                                                     -         $   57,000
  Accounts payable                                                21,612          19,463
  Accrued expenses                                                40,322          15,157
  Other current liabilities                                         -              2,700
                                                             ------------    ------------

        Total current liabilities                                 61,934          94,320
                                                             ------------    ------------

LONG-TERM LIABILITIES:
  Long-term debt                                                 203,877          67,323
  Minimum royalty obligation                                       3,768           4,686
  Deferred tax liability                                             158             141
                                                             ------------    ------------

        Total long-term liabilities                              207,803          72,150
                                                             ------------    ------------

TOTAL LIABILITIES                                                269,737         166,470
                                                             ------------    ------------

COMMITMENTS AND CONTINGENCIES

SENIOR REDEEMABLE PREFERRED STOCK
  Par value $.01 - authorized, 350,000 shares;
    issued, 123,381 shares
(Liquidation value-$127,041)                                      86,660            -

REDEEMABLE PREFERRED STOCK:
  Par value $.01 - authorized, 40,000 shares;
    issued, 12,798 shares at March 31, 1997;
    11,594 shares at March 31, 1996
(Liquidation value at March 31, 1997, $13,517)                    13,167          11,698

COMMON STOCKHOLDERS' (DEFICIT) EQUITY:
  Common stock, par value $.01 - authorized, 3,000,000 shares;
    issued 830,736 shares at March 31, 1997; 726,818 shares
    at March 31, 1996                                                  8               7
  Notes receivable from sale of common stock                        (518)           (518)
  Additional paid-in capital                                      69,403          26,787
  Treasury stock, at cost (5,650 shares)                            (210)           (210)
  Deficit                                                        (75,450)        (19,564)
  Cumulative translation adjustment                               (1,414)            (51)
                                                             ------------    ------------

        Total common stockholders' (deficit) equity               (8,181)          6,451
                                                             ------------    ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                    $  361,383      $  184,619
                                                             ------------    ------------
                                                             ------------    ------------


See notes to consolidated financial statements.
</TABLE>
                                      F-3
<PAGE>

RENAISSANCE COSMETICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
--------------------------------------------------------------------------------

                                                                     PERIOD FROM
                                                                      APRIL 15, 
                                                                        1994    
                                                                     (INCEPTION)
                                                                         TO     
                                             YEAR ENDED MARCH 31,     MARCH 31, 
                                               1997         1996        1995    

NET SALES                                     174,612     $131,286     $57,714 

COST OF GOODS SOLD                             69,723       51,317      24,553 
                                             --------     --------     ------- 

GROSS PROFIT                                  104,889       79,969      33,161 
                                             --------     --------     ------- 

OPERATING EXPENSES:
  Selling                                      64,847       52,302      18,246 
  General and administrative                   25,705       14,009      10,127 
  Amortization of intangible and 
   other assets                                 9,813        5,207       2,044 
                                             --------     --------     ------- 

    Total operating expenses                  100,365       71,518      30,417 
                                             --------     --------     ------- 

OPERATING INCOME                                4,524        8,451       2,744 

OTHER EXPENSE (INCOME):
  Interest expense                             24,417       19,458       8,694 
  Interest and other income                    (1,835)        (255)       (456)
                                             --------     --------     ------- 
    Total other expense                        22,582       19,203       8,238 

LOSS BEFORE INCOME TAXES AND 
 EXTRAORDINARY ITEM                           (18,058)     (10,752)     (5,494)

INCOME TAX PROVISION (BENEFIT)                  1,322        1,305         (35)
                                             --------     --------     ------- 

LOSS BEFORE EXTRAORDINARY ITEM                (19,380)     (12,057)     (5,459)

EXTRAORDINARY ITEM                             22,438            -           - 
                                             --------     --------     ------- 

NET LOSS                                      (41,818)     (12,057)     (5,459)

PREFERRED STOCK DIVIDENDS                      14,068        1,333         715 
                                             --------     --------     ------- 

NET LOSS APPLICABLE TO COMMON STOCKHOLDERS   $(55,886)    $(13,390)    $(6,174)
                                             --------     --------     ------- 
                                             --------     --------     ------- 
NET LOSS PER COMMON SHARE                    $ (71.63)    $ (18.62)    $ (8.50)
                                             --------     --------     ------- 
                                             --------     --------     ------- 

WEIGHTED AVERAGE SHARES OUTSTANDING           780,203      719,138     726,374 
                                             --------     --------     ------- 
                                             --------     --------     ------- 


See notes to consolidated financial statements.

                                      F-4
<PAGE>

RENAISSANCE COSMETICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
-------------------------------------------------------------------------------
<TABLE>

                                                NOTES                                                                   TOTAL     
                                              RECEIVABLE                                                                COMMON    
                                              FROM SALE    ADDITIONAL                                   CUMULATIVE   STOCKHOLDERS'
                             COMMON STOCK     OF COMMON     PAID-IN     TREASURY STOCK                  TRANSLATION    (DEFICIT)  
                            SHARES   AMOUNT     STOCK       CAPITAL     SHARES   AMOUNT    DEFICIT      ADJUSTMENT      EQUITY    
<S>                         <C>      <C>      <C>         <C>           <C>      <C>       <C>          <C>          <C>          

Issuance of common stock    726,818    $7       $(518)      $27,011         -    $   -     $      -      $     -      $ 26,500 
Issuance of warrants in 
 conjunction with senior 
 notes and redeemable
 preferred stock                  -     -           -         1,260         -        -            -            -         1,260 

Accrued dividends and 
 accretion on redeemable 
 preferred stock                  -     -           -             -         -        -         (715)           -          (715)

Predecessor basis 
 accounting adjustment            -     -           -        (1,484)        -        -            -            -        (1,484)

Purchase of treasury stock        -     -           -             -     6,725     (250)           -            -          (250)

Cumulative translation 
 adjustment                       -     -           -             -         -        -            -          337           337 

Net loss                          -     -           -             -         -        -       (5,459)           -        (5,459)
                            -------    --       -----       -------     -----    -----     --------      -------      -------- 

BALANCE, MARCH 31, 1995     726,818     7        (518)       26,787     6,725     (250)      (6,174)         337        20,189 

Accrued dividends and 
 accretion on redeemable 
 preferred stock                  -     -           -             -         -        -       (1,333)           -        (1,333)

Purchase of treasury stock        -     -           -             -     3,632     (135)           -            -          (135)

Sale of treasury stock            -     -           -             -    (4,707)     175            -            -           175 

Cumulative translation 
 adjustment                       -     -           -             -         -        -            -         (388)         (388)

Net loss                          -     -           -             -         -        -      (12,057)           -       (12,057)
                            -------    --       -----       -------     -----    -----     --------      -------      -------- 

BALANCE, MARCH 31, 1996     726,818     7        (518)       26,787     5,650     (210)     (19,564)         (51)        6,451 

Issuance of Common Stock    103,918     1                     9,749                                                      9,750 

Issuance of warrants in 
 conjunction with 
 redeemable preferred 
 stock                                                       32,867                                                     32,867 

Accrued dividends and 
 accretion on redeemable 
 preferred stocks                                                                           (14,068)                   (14,068)

Cumulative translation 
 adjustment                                                                                               (1,363)       (1,363)

Net loss                                                                                    (41,818)                   (41,818)
                            -------    --       -----       -------     -----    -----     --------      -------      -------- 
BALANCE, MARCH 31, 1997     830,736    $8       $(518)      $69,403     5,650    $(210)    $(75,450)     $(1,414)     $ (8,181)
                            -------    --       -----       -------     -----    -----     --------      -------      -------- 
                            -------    --       -----       -------     -----    -----     --------      -------      -------- 
</TABLE>


See notes to consolidated financial statements.

                                       F-5 
<PAGE>

RENAISSANCE COSMETICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
------------------------------------------------------------------------------
<TABLE>
                                                                                           Period from
                                                                                            April 15,
                                                                                              1994
                                                                                           (Inception)
                                                                 Year Ended   Year Ended       to
                                                                   March 31,   March 31,    March 31,
                                                                     1997        1996         1995
<S>                                                               <C>         <C>          <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                       $  (41,818)  $  (12,057)  $   (5,459)
  Adjustments to reconcile net loss to net cash used
    in operating activities:
    Extraordinary item                                               22,438         -               -
    Deferred taxes                                                      (86)          41          (97)
    Depreciation                                                      4,896        2,844          788
    Amortization of intangible assets                                 5,528        3,208        1,860
    Amortization of minimum royalty and other assets                  4,285        1,999          184
    Amortization of deferred financing costs                          3,202        2,616          993
    Accrued interest on senior notes, subordinated
      seller notes and minimum royalty obligation                     1,820        1,312          867

  Changes in operating assets and liabilities, net of
    effects of acquisitions:
    Accounts receivable                                              (8,655)     (16,636)      (8,521)
    Inventories                                                     (11,070)      (7,561)      (6,802)
    Prepaid expenses, other current assets and other assets          (4,209)      (2,550)      (1,504)
    Accounts payable                                                 (1,663)       6,284        2,135
    Accrued expenses                                                 (6,240)      (3,288)       5,605
    Other current liabilities                                        (2,700)        -          (1,882)
    Other                                                            (1,171)        (388)         305
                                                                 ----------   ----------   ----------
          Net cash used in operating activities                     (35,443)     (24,176)     (11,528)
                                                                 ----------   ----------   ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Acquisitions of businesses, net of cash acquired                  (95,392)       1,384     (100,707)
  Other Investing Payments                                           (1,208)        -            -
  Purchase of marketable securities                                 (22,625)
  Sale of marketable securities                                        -             641          134
  Capital expenditures                                               (9,330)      (8,166)        (629)
                                                                 ----------   ----------   ----------
          Net cash used in investing activities                    (128,555)      (6,141)    (101,202)
                                                                 ----------   ----------   ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds of Senior Secured Credit Facility                        117,500
  Repayment of Senior Secured Credit Facility                      (117,500)
  Issuance of Existing Notes                                        200,000
  Issuance of common stock                                            9,750         -          26,500
  Issuance of Old Senior Notes                                         -            -          63,379
  Redemption of Old Senior Notes                                    (65,000)
  Early retirement of debt                                          (10,725)
  Notes payable                                                     (57,000)      27,000       30,000
  Payment of minimum royalty obligation                              (2,148)      (1,259)        (225)
  Issuance of Series A Preferred Stock                               18,955
  Redemption of Series A preferred stock                            (20,434)
  Issuance of Series B Preferred Stock                               75,451
  Issuance of redeemable preferred stock                               -            -           9,650
  Issuance of warrants                                               32,867         -           1,260
  Payment of deferred financing costs                               (18,431)      (1,033)     (10,583)
  Purchase of treasury stock                                           -            (135)        (250)
  Sale of treasury stock                                               -             175         -
                                                                 ----------   ----------   ----------
          Net cash provided by financing activities                 163,285       24,748      119,731
                                                                 ----------   ----------   ----------
NET (DECREASE) INCREASE IN CASH AND
  CASH EQUIVALENTS                                                     (713)      (5,569)       7,001

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                        1,432        7,001         -
                                                                 ----------   ----------   ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD                         $      719   $    1,432   $    7,001
                                                                 ----------   ----------   ----------
                                                                 ----------   ----------   ----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
  Cash paid during the period for:
    Interest                                                     $   12,800   $   14,604   $    5,112
                                                                 ----------   ----------   ----------
                                                                 ----------   ----------   ----------
    Income taxes                                                      1,825   $      880   $       93
                                                                 ----------   ----------   ----------
                                                                 ----------   ----------   ----------
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING
  TRANSACTIONS:
   Accrued dividends and accretion on redeemable preferred
    stock                                                        $   14,068   $    1,333   $      715
   Sale of common stock for notes                                $     -      $     -      $      518
   Issuance of seller notes                                      $     -      $     -      $    3,500
   Other current liability - installment obligation for purchase
     of inventory and accounts receivable from Houbigant, Inc.   $     -      $     -      $    2,700
   Other liability - present value of minimum royalties          $    1,348   $    1,398   $    6,623
</TABLE>


See notes to consolidated financial statements.


                                       F-6

<PAGE>

RENAISSANCE COSMETICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------------------------------------------

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    PRINCIPLES OF CONSOLIDATION - The consolidated financial statements of 
    Renaissance Cosmetics, Inc. (the "Company") include the accounts of the 
    Company and its wholly-owned subsidiaries from the dates of their 
    respective acquisitions.  All significant intercompany balances and 
    transactions have been eliminated. 

    NATURE OF BUSINESS - The Company manufactures and sells its fragrance and 
    cosmetic products principally through the mass-market or self-select 
    distribution channel which includes drug stores, mass merchandisers, 
    discount stores, supermarkets and combination supermarket/drug stores, 
    throughout the United States, Canada, Latin America, Europe, Africa and the 
    Far East.

    USE OF ESTIMATES - The preparation of financial statements in conformity 
    with generally accepted accounting principles requires management to make 
    estimates and assumptions that affect the reported amounts of assets and 
    liabilities, and the disclosures of contingent assets and liabilities at 
    the date of the financial statements.  Actual results could differ from 
    those estimates.

    CASH AND CASH EQUIVALENTS - For the purposes of the statement of cash 
    flows, the Company considers all highly liquid debt instruments with an 
    original maturity of three months or less to be cash equivalents.  

    MARKETABLE SECURITIES - The Company classifies its investments in debt 
    and equity securities as available for sale.  Unrealized holding gains 
    and losses were not material in any period presented. 

    INVENTORIES - Inventories are stated at the lower of cost (on the first-in,
    first-out (FIFO) and last-in, first-out (LIFO) methods) or market.

    PROPERTY, PLANT AND EQUIPMENT - Property, plant and equipment is stated 
    at cost, and depreciation is computed by the straight-line and the 
    declining-balance methods over estimated service lives.  Property, plant 
    and equipment acquired through business combinations is stated at the 
    estimated fair value at the date of purchase.

    LONG-LIVED ASSETS - During the year ended March 31, 1997, the Company 
    adopted SFAS No. 121, "Accounting for Impairment of Long Lived Assets 
    and for Long Lived Assets to be Disposed Of. The Company's long-lived 
    assets consist of property, plant and equipment and intangible assets, 
    including goodwill. The Company evaluates whether there has been a 
    permanent impairment of any of its long-lived assets.  An impairment in 
    value will be considered to have occurred when it is determined that the 
    undiscounted future operating cash flows generated by the operating unit 
    are not sufficient to recover the carrying values of such long-lived.  If 
    it has been determined that an impairment in value has occurred, the 
    long-lived assets would be written down to an amount equivalent to the 
    present value of the future operating cash flows to be generated by the 
    operating unit. Adoption of SFAS 121 did not have a material effect on 
    the Company's financial position and results of operations.

                                    F-7
<PAGE>

    DEFERRED FINANCING COSTS - Deferred financing costs represent direct 
    costs relating to closing on outstanding long-term debt.  These costs 
    are being amortized over the life of the related debt.

    FOREIGN CURRENCY TRANSLATION - For the Company's international 
    operations, assets and liabilities are translated at year-end exchange 
    rates and income statement amounts are translated at average exchange 
    rates prevailing during the year. The cumulative translation adjustment 
    represents principally the effect of changes in the rate of exchange at 
    the beginning and end of each year in translating net assets excluding 
    certain intercompany liabilities.  Foreign currency transaction gains and 
    losses are included in results of operations and were not material for 
    any year presented. 

    REVENUE RECOGNITION - Sales are recognized when goods are shipped to a 
    third-party.  The Company establishes reserves for estimated returns and 
    allowances at the time of shipment.

    INCOME TAXES - The Company uses an asset and liability approach to the 
    computation of income taxes.  Under the asset and liability method, 
    deferred tax assets and liabilities are recognized for the estimated 
    future tax consequences of temporary differences between the financial 
    reporting and tax bases of assets and liabilities based upon enacted tax 
    rates in effect when such amounts are expected to be realized or settled. 
    The effects of changes in tax laws or rates on deferred tax assets and 
    liabilities are recognized in the period that includes the enactment date.

    EARNINGS PER COMMON SHARE - Earnings per common share is based on the 
    weighted average number of common shares outstanding during the year.  
    The effect of shares issuable under exercise of warrants and stock 
    options is anti-dilutive. 

    RECLASSIFICATIONS - Certain reclassifications were made to the March 31, 
    1996 and 1995 financial statements to conform to the current year's 
    presentation.

2.  ACQUISITIONS

    A. HOUBIGANT FRAGRANCES - The Company, Houbigant, Inc. ("Houbigant") and 
    other parties entered into license and sub-license agreements (the 
    "Agreements"), the first of which became effective as of July 1, 1994, 
    whereby the Company has obtained certain exclusive rights to manufacture 
    and sell on a worldwide basis (excluding Canada) certain fragrance 
    products owned and licensed by Houbigant (the "Houbigant Fragrances"), 
    for initial periods of five and seven years.  The Company agreed to pay 
    royalties at the rate of six to seven percent of net sales (decreasing to 
    five percent based on sales volume).  Total minimum royalty payments for 
    the initial terms of the Agreements are $15,360,000, including the 
    $5,000,000 prepayment.  The Company has the option to renew the 
    Agreements for up to seven successive five-year periods.  During each 
    renewal period, annual minimum royalties are adjusted based on increases 
    in the Consumer Price Index.

    Additionally, under the terms of the Agreements, the Company also agreed 
    to pay $6,000,000, in installments, for existing inventories, certain 
    trade accounts receivable and all product returns received subsequent to 
    the closing date of the Agreements.  

    On December 13, 1994, the Company, through its newly-formed indirect 
    wholly-owned subsidiary, Houbigant (1995) Ltee, acquired substantially 
    all of the assets of the ACB Companies for an aggregate purchase price 
    of (Cdn)$8,000,000.  The ACB Companies included three companies engaged 
    in the manufacture and sales of Houbigant Fragrances in Canada.  This 
    acquisition extended the Company's rights to manufacture and market the 
    Houbigant Fragrances into Canada.  Pursuant to this agreement, Houbigant 
    Ltee would pay royalties to Houbigant based on volume of products sold.  

                                     F-8
<PAGE>

    In July 1996,  the Company modified the above existing royalty 
    agreements in order to consolidate the worldwide rights to manufacture 
    and distribute the Houbigant Fragrances.

    B. COSMAR - On August 18, 1994, the Company, through its wholly-owned 
    subsidiary, Cosmar Corporation ("Cosmar"), purchased certain assets and 
    assumed certain liabilities of Cosmar Corporation and its affiliate, 
    Precision Molded Plastics, Inc. ("Old Cosmar") for $64,827,978.  
    Consideration consisted of $61,327,978 in cash and subordinated sellers 
    notes with a face value of $5,000,000 and an estimated market value of 
    $3,500,000 based on an effective interest rate of 14.48%.  Because the 
    acquisition qualified as a highly-leveraged transaction and certain 
    shareholders of Old Cosmar have or had a continuing interest as 
    shareholders of the Company, application of leveraged buyout accounting 
    resulted in a predecessor basis adjustment to common stockholders' equity 
    of $1,483,609.

    C. DANA - On December 23, 1994, the Company, through its indirect 
    wholly-owned subsidiary, Dana Perfumes Corporation ("Dana") purchased the 
    assets and business of a group of companies that manufactured and 
    marketed the Dana line of fragrance products, for aggregate cash 
    consideration of $21,900,000.  Such transaction was financed through term 
    loan borrowings from a financial institution (the "Old Credit Facility"), 
    of $30,000,000. 

    For the period April 15, 1994 (Inception) to March 31, 1995, pro forma 
    net sales, pro forma net loss, and pro forma net loss per share assuming 
    that the above acquisitions occurred on April 15, 1994 were $99,941,000, 
    $(18,208,000), and $(25.07), respectively.  Such pro forma results are 
    not necessarily indicative of the operating results that would have 
    occurred had the acquisitions taken place as of April 15, 1994, nor 
    necessarily indicative of results that may be achieved in the future.

    D. On December 31, 1995, Dana exercised its option to purchase the 
    assets and liabilities of Perfumes Dana do Brasil for $100,000.

    For the year ended March 31, 1996, pro forma net sales, pro forma net 
    loss, and pro forma net loss per share was $140,741,000, $(12,645,000), 
    and $(17.58), respectively, assuming that the acquisition of Dana Brazil 
    occurred on April 1, 1995. For the period April 15, 1994 (Inception) to 
    March 31, 1995, pro forma net sales, pro forma net loss, and pro forma 
    net loss per share was $109,912,000, $(17,313,000), and $(23.83), 
    respectively assuming that the acquisition of Dana Brazil occurred on 
    April 15, 1994. Such pro forma results are not necessarily indicative of 
    the operating results that would have occurred had the acquisitions taken 
    place as of the beginning of each period presented, nor necessarily 
    indicative of results that may be achieved in the future.

    E. GREAT AMERICAN COSMETICS COMPANY - On August 21, 1996, Cosmar 
    completed its acquisition of all of the issued and outstanding capital 
    stock of Great American Cosmetics Company ("GAC").  GAC outsources, 
    markets, distributes, advertises, promotes and merchandises mid-priced, 
    mass-marketed lipsticks, eye make-up, nail polish products and related 
    accessories sold under the Nat Robbins trademark.  The cash consideration 
    for the GAC acquisition was $15,250,000.  Concurrent with the closing, 
    Cosmar repaid $808,000 of GAC indebtedness.  In connection with the 
    closing, Cosmar agreed to fund up to $141,000 (with up to $100,000 of its 
    own funds and up to $41,000 of the purchase price held back from the 
    Sellers for this purpose) of possible post-closing severance bonuses to 
    certain GAC employees, if earned.

                                    F-9
<PAGE>

    F. MEM COMPANY, INC. - On December 4, 1996, the Company, through its 
    wholly-owned subsidiary, Renaissance Acquisition, Inc. ("RAI"), completed 
    its acquisition (the "MEM Acquisition") of MEM Company, Inc ("MEM").  MEM 
    distributes a diversified line of fragrances and toiletries in the 
    mass-market distribution channel principally in the United States.  Tom 
    Fields, Ltd. ("Tom Fields"), a division of MEM, manufactures and markets 
    a line of children's cosmetics and accessories principally under the 
    trademark TINKERBELL.  A subsidiary, Tom Fields (UK) Ltd., markets this 
    line of children's products in the United Kingdom and elsewhere in 
    Europe.  The aggregate cash consideration paid to the equity holders of 
    MEM in connection with the MEM Acquisition was $19,787,000.  In addition, 
    in connection with the MEM Acquisition, the Company repaid all of MEM's 
    outstanding indebtedness in an amount equal to $17,975,000.

    G. ACQUISITION OF P&G BRANDS - On December 6, 1996, the Company completed 
    its acquisition from The Procter & Gamble Company ("P&G") of the 
    worldwide rights to manufacture and market certain mass-market fragrances 
    (the "P&G Brands Acquisition").  The cash consideration paid was 
    $43,263,000.  In addition, the Company assumed certain specified 
    trade-related obligations of the P&G Brands, including liability for 
    returns of products under the P&G Brands sold prior to the closing and 
    liabilities under certain advertising and business development 
    commitments. Concurrent with the P&G Brand Acquisition, the Company 
    entered into transition service agreements under which P&G will continue 
    the foreign marketing of the P&G Brands through June 30, 1997.

    The above acquisitions have been accounted for by the purchase method.  
    The preliminary cost of allocations for the above mentioned acquisitions 
    are subject to adjustment when additional information regarding asset and 
    liability valuations is obtained.  The final asset and liability fair 
    values may differ from those set forth in the accompanying consolidated 
    balance sheet at March 31, 1997.  The consolidated financial statements 
    include the results of operations of these acquisitions subsequent to 
    their respective dates of acquisition.

    The GAC, MEM and P&G Brand acquisitions, if they had occurred at the 
    beginning of each period, would have pro forma results as follows:

                                                  PRO FORMA        
                                           ----------------------- 
                                           YEAR ENDED   YEAR ENDED 
                                            MARCH 31,    MARCH 31, 
                                              1997         1996    
                                            (IN THOUSANDS, EXCEPT  
                                              PER SHARE AMOUNTS)   
                                                 (UNAUDITED)       
                                           ----------   ---------- 
    Net sales                               $245,796     $240,774  
                                            ========     ========  
    Loss before extraordinary item                                 
     applicable to common stockholders      $(42,620)    $(36,318) 
                                            ========     ========  
                                                                   
    Loss before extraordinary item                                 
     applicable to common stockholders      $ (51.66)    $ (44.13) 
                                            ========     ========  
                                     F-10
<PAGE>

    The above pro forma results are not necessarily indicative of the 
    operating results that would have occurred had the acquisitions taken 
    place as of the beginning of each period, nor necessarily indicative of 
    results that may be achieved in the future.

3.  MARKETABLE SECURITIES

    Marketable securities consist of the following:

                                                MARCH 31,
                                              1997      1996
                                             (IN THOUSANDS)
                                            -------     ----
    U.S. Treasury Notes                     $17,799     $  -
    Certificate of deposit                    5,000        -
    Mutual funds                                -        174
                                            -------     ----
                                            $22,799     $174
                                            =======     ====

    As discussed in Note 8, marketable securities of $17,799,000 at March 
    31, 1997 are held in an escrow account to finance a portion of the 
    interest payments on the Existing Notes over the next two years.

4.  INVENTORIES

    The components of inventories are as follows:

                                                 MARCH 31,     
                                               1997      1996  
                                               (IN THOUSANDS)  
                                              -------   -------
    Raw materials and advertising supplies    $30,453   $16,957
    Work in process                             2,413     2,860
    Finished goods                             22,688    10,420
                                              -------   -------
                                              $55,554   $30,237
                                              =======   =======

     The above components are shown net of excess and obsolete inventory 
    reserves of $2,719,000 and $1,540,000 at March 31, 1997 and 1996, 
    respectively.  At March 31, 1997 and 1996, approximately 61.8% and 60.7%, 
    respectively, of the Company's inventories are stated at the lower of 
    LIFO cost or market.  The excess of current replacement cost over the 
    stated LIFO value was $-0- at March 31, 1997 and 1996.

                                     F-11

<PAGE>

5.  PROPERTY, PLANT AND EQUIPMENT

    Property, plant and equipment consist of the following:

                                                        MARCH 31,
                                                    1997        1996
                                                    (IN THOUSANDS)

    Land                                          $   531     $   477
    Buildings                                      15,571       4,896
    Machinery and equipment                        10,170       7,452
    Computer equipment                              7,484       4,881
    Leasehold improvements                          1,352         460
                                                  -------     -------

                                                   35,108      18,166

    Accumulated depreciation                        8,527       3,631
                                                  -------     -------

                                                  $26,581     $14,535
                                                  -------     -------
                                                  -------     -------


6.  INTANGIBLE ASSETS
    Intangible assets consist of the following:

                                                        MARCH 31,
                                                    1997       1996
                                                    (IN THOUSANDS)
    Trademarks                                    $ 60,817   $42,144
    Goodwill                                       123,957    39,820
                                                  --------   -------

                                                   184,744    81,964

    Accumulated amortization                        10,597     5,069
                                                  --------   -------

                                                  $174,177   $76,895
                                                  --------   -------
                                                  --------   -------

Trademarks, which consist primarily of those acquired through business 
combinations, are being amortized on a straight-line basis, over their 
estimated useful lives, which range from 20 to 40 years.  Goodwill, which 
represents the excess of the cost of purchased businesses over the fair value 
of their net assets at date of their acquisition, is being amortized on a 
straight-line basis, over various periods ranging from 5 to 25 years.


                                     F-12

<PAGE>


7.  ACCRUED EXPENSES

    Accrued expenses consist of the following:

                                                                  MARCH 31,
                                                              1997       1996
                                                               (IN THOUSANDS)
    Current portion of minimum royalty obligation           $ 4,006    $ 3,598
    Accrued interest payable                                  4,562      2,380
    Acquired plant consolidation and restructuring costs     14,893        244
    Accrued marketing and advertising expenses                6,129      2,493
    Other                                                    10,732      6,442
                                                            -------    -------
                                                            $40,322    $15,157
                                                            -------    -------
                                                            -------    -------


8.  NOTES PAYABLE AND LONG-TERM DEBT

    Notes payable and long-term debt consist of the following: 


                                                 MARCH 31,
                                             1997        1996
                                              (IN THOUSANDS)
         Notes payable                     $    -      $57,000
                                           --------    -------
                                           --------    -------
         Long term debt:
         Existing notes                    $200,000    $   -
         Old senior notes                       -       63,623
         Subordinared sellers notes           3,877      3,700
                                           --------    -------
         Total long-term debt              $203,877    $67,323
                                           --------    -------
                                           --------    -------

    a. EXISTING  NOTES:  On February 7, 1997, the Company completed the sale 
    of $200,000,000 aggregate principal amount of its 11-3/4% Senior Notes due 
    2004 (the "Existing Notes"). Interest is payable semi-annually on August 
    15 and February 15.  The Existing Notes may be redeemed at the option of 
    the Company on or after February 15, 2002, initially at 103.358, 
    declining to 101.679 on or after February 15, 2003, together with accrued 
    interest.  Under certain circumstances as defined in the indenture 
    agreement (the "New Indenture"), the Existing Notes may be redeemed 
    earlier at the option of the Company. These Existing Notes were issued in 
    an offering not registered or required to be 


                                     F-13

<PAGE>

    registered under the Securities Act of 1933 (the "Act").  On March 24, 
    1997, the Company filed a Registration Statement on Form S-4 in order to 
    register New Notes under the provisions of the act, to be issued in 
    exchange for the Existing Notes.  The proceeds from the Existing Notes 
    were used to repay the amounts outstanding under the Senior Secured 
    Credit Facility (see below) and to redeem the Old Senior Notes.

    In connection with the sale of the Existing Notes, the Company 
    transferred $17,500,000 to a newly-formed, single-purpose wholly-owned 
    subsidiary, Renaissance Guarantor, Inc., a Delaware corporation ("RGI"), 
    in exchange for a limited guarantee by RGI of the Company's obligations 
    under the Existing Notes.  RGI placed such amount into an escrow account 
    (the "Escrow Account") which will be used to finance a portion of first 
    four interest payments.  The Existing Notes are general unsecured 
    obligations of the Company except to the extent that they are 
    collateralized by a first priority security interest in the Escrow 
    Account. There are no sinking fund requirements relating to the Existing 
    Notes.

    b. OLD SENIOR NOTES: On February 7, 1997, the Company completed its 
    offer to purchase and purchased all of the outstanding $65,000,000 
    aggregate principal amount of the Old Senior Notes for $79,995,000 
    (including accrued interest).  The Old Senior Notes were senior unsecured 
    obligations of the Company at a stated interest rate of 13.75%.  Interest 
    was payable semi-annually beginning February 15, 1995 and due August 15, 
    2001.  The Old Senior Notes were issued with an original discount of 
    $711,000 and were further discounted as a result of an allocation of 
    $910,000 to common stock warrants issued with the Notes.  The effective 
    interest rate on the Old Senior Notes was 14.33%. 

    c. SUBORDINATED SELLER NOTES: The subordinated seller notes are 
    subordinated promissory notes of the Company with an aggregate principal 
    amount of $5,000,000 and accruing interest at 8% initially and escalating 
    to 11% over an eight-year period with a balloon payment of principal and 
    accrued interest on August 15, 2002. These notes were recorded at a 
    discount of $1,500,000, yielding an effective interest rate of 14.48%.

    d. NEW REVOLVING CREDIT FACILITY:  On March 12, 1997, the Company 
    (through one of its domestic subsidiaries) entered into a senior secured 
    revolving credit facility which expires on March 12, 2002 (the "New 
    Revolving Credit Facility").  Under the New Revolving Credit Facility, 
    the Company may borrow up to $75,000,000 based upon a borrowing base, 
    consisting of a percentage of gross eligible accounts receivable and 
    gross eligible inventories, less reserves, if any. Amounts borrowed under 
    the New Revolving Credit Facility will bear interest at the option of the 
    Company at either (I) the Index Rate (i.e. the higher of the prime rate 
    or the overnight Federal funds rate plus 0.50%) plus 1.00% or (II) absent 
    default, the LIBOR rate plus 2.25%.  The interest rate is subject to 
    adjustment, on a quarterly basis, based on the Company's interest 
    coverage ratio during each fiscal quarter.  The New Revolving Credit 
    Facility provides for an annual facility fee of 0.00375%. 

    Borrowings under the  New Revolving Credit Facility will be guaranteed by 
    the Company and all of its domestic and Canadian subsidiaries, and is 
    secured by a first priority perfected security interest in all of the 
    tangible and intangible assets of the Company and its domestic and 
    Canadian subsidiaries, other than the Escrow Account. As of March 31, 
    1997, no borrowings were made on the New Revolving Credit Facility.

    e. OLD CREDIT FACILITY: The Company's Old Credit Facility was repaid on 
    December 4, 1996.  Such facility had provided for revolving credit in an 
    aggregate principal amount of $40,000,000, and term loans in an aggregate 
    principal amount of $30,000,000.  Such loans bore interest at the bank 
    base rate (8.25% at March 31, 1996) plus 3% until June 30, 1995, 3.5% 
    thereafter until December 31, 1995, 4% thereafter until June 30, 1996 and 
    4.5% thereafter.  The weighted average interest rates on the notes 


                                      F-14

<PAGE>

    payable were 12.19% and 11.66% for the year ended March 31, 1996 and for 
    the period from December 23, 1994 to March 31, 1995, respectively. 
    Borrowings under the revolving credit portion were subject to a borrowing 
    base availability consisting of eligible inventory and accounts 
    receivable. The Old Credit Facility was collateralized by substantially 
    all of the assets of the Company.

    f. SENIOR SECURED CREDIT FACILITY- On December 4, 1996, the Company, 
    through one of its domestic subsidiaries, entered into a Senior Secured 
    Credit Facility, pursuant to which the Company borrowed $117,500,000.  
    The proceeds of such facility were used to (1) finance a portion of the 
    MEM acquisition; (2) finance the P&G Brand Acquisition (3) to repay the 
    outstanding indebtedness under the Old Credit Facility (4) and for 
    general corporate purposes.  The Senior Secured Credit Facility was 
    repaid on February 7, 1997, from the proceeds of the Existing Notes.

    g. RESTRICTIVE COVENANTS: The New Revolving Credit Facility and the New 
    Indenture contain provisions that restrict the operation of the Company. 
    Such provisions restrict (1) certain mergers, acquisitions, or sales of 
    the Company's assets or stock (2) cash dividends and other distributions 
    to equity holders and to the Company (3) payments in respect of 
    subordinated debt (4) transactions with affiliates and (5) indebtedness 
    and liens.  At March 31, 1997, the Company was not in compliance with 
    certain covenants contained in the New Revolving Credit Facility.   On  
    June 27, 1997, the Company and the Lender amended the agreement, thus 
    eliminating any covenant violations.

9.  REDEEMABLE PREFERRED STOCKS

    a. REDEEMABLE PREFERRED STOCK-The Company issued for $10,000,000, 10,000 
    shares of cumulative exchangeable preferred stock (the "Redeemable 
    Preferred Stock") with a par value of $.01 per share.  The Redeemable 
    Preferred Stock has an initial dividend of 10% per annum.  Commencing 
    August 16, 1999 the dividend rate changes to 15% per annum. Dividends are 
    payable in cash, additional shares of redeemable preferred stock or any 
    combination thereof, at the option of the Company, up to and including 
    the August 15, 1997 dividend, and in cash thereafter. The effective 
    dividend rate on the preferred stock is approximately 12.01%, resulting 
    from an allocation of $350,000 to warrants issued with the preferred 
    stock.

    The redeemable preferred stock must be redeemed on August 15, 2002 for 
    $10,000,000, plus all accumulated and unpaid dividends.  The redeemable 
    preferred stock is exchangeable for Old Senior Notes under certain 
    circumstances by the holders of the redeemable preferred stock on or 
    after August 15, 1997.

    b.  SENIOR REDEEMABLE PREFERRED STOCK, SERIES B- In August and September 
    1996, the Company completed a private placement of 115,000 shares of the 
    Company's 14.0% Senior Redeemable Preferred Stock, Series B par value 
    $0.01 per share (the "Series B Preferred Stock"), and 115,000 of warrants 
    to purchase 341,550 shares of the Company's common stock. The proceeds 
    from issuance of the Series B Preferred Stock were reduced by an 
    allocation of $32,867,000 to the common stock warrants, and by the 
    payment of approximately $7,451,000 of financing fees.  The warrants are 
    exercisable at any time and expire on August 15, 2001.  These warrants 
    have an exercise price of $.01 per share.  On January 31, 1997, the 
    Company filed Amendment No. 1 to the Company's Registration Statement on 
    Form S-4 (the "Registration Statement") for its 14.0% Senior Redeemable 
    Preferred Stock, Series C (the "Series C Preferred Stock"), filed on 
    October 1, 1996.  Pursuant to the terms of the Registration Rights 
    Agreement for the Series B Preferred Stock, the annual dividend rate for 
    the Series B Preferred Stock increased by 0.5% per annum on January 11, 
    1997, to 14.5% per annum and increased by an additional 0.25% per annum 
    from March 11, 1997 through March 28, 1997 when the Registration 
    Statement was declared effective. On March 12, 


                                      F-15

<PAGE>

    1997, the dividend rate on the Series B Preferred Stock increased by an 
    additional 0.5% per annum through April 28, 1997, which was the date that 
    the outstanding shares of Series B Preferred Stock were exchanged for 
    shares of Series C Preferred Stock.

    c.  SERIES A PREFERRED STOCK- In May and June 1996, the Company issued 
    $20,000,000 aggregate value of Series A Senior Redeemable Exchangeable 
    Preferred Stock ("Series A Preferred Stock").  Such Series A Preferred 
    Stock was retired on December 4, 1996, using the proceeds from the Senior 
    Secured Credit Facility.

10.  CAPITAL STOCK

    a. SERIAL PREFERRED STOCK - The Board of Directors has the authority to 
    issue up to 1,000,000 shares of Preferred Stock in one or more series. 
    40,000 shares have been designated as Redeemable Preferred Stock, and 
    350,000 shares have been designated as Series B Preferred Stock.  

    b.  STOCK OPTION PLAN - The 1994 Stock Option Plan was approved by the 
    Company's Board of Directors and Stockholders in January 1995. At March 
    31, 1997, the Company had reserved 136,320 shares of Common Stock under 
    the plan (of which 25,000 shares are subject to shareholder approval).  
    The plan provides for incentive and non-qualified stock options for 
    employees.  All options have been granted at exercise prices at or above 
    fair market value at the date of grant and vest ratably over a four year 
    period. The Company has adopted the disclosure only provisions of 
    Statement of Financial Accounting Standards No. 123, "Accounting for 
    Stock Based Compensation" ("SFAS 123").  Accordingly, no compensation 
    cost has been recognized for the stock option plans.  Determining  
    compensation cost for the Company's stock option plan based on the fair 
    value at the grant date for awards during the years ended March 31, 1997 
    and 1996 consistent with the provisions of SFAS 123, would not have had a 
    material effect on the Company's net loss and net loss per share.

    At March 31, 1997, 30,015 shares were available for future grants under 
    the stock option plan.







                                     F-16

<PAGE>

The following table summarizes the activity of options in the stock option plan:

                                                    SHARES       EXERCISE PRICE

     Granted                                        75,181          $  37.17
     Canceled                                       (9,318)         $  37.17
                                                   ------- 

     Options oustanding, March 31, 1995             65,863 

     Granted                                        23,877          $  37.17
     Canceled                                      (13,512)         $  37.17
                                                   ------- 

     Options oustanding, March 31, 1996             76,228          $  37.17

     Granted                                        40,736          $  55.52
     Canceled                                      (10,659)         $  37.17
                                                   ------- 

     Options oustanding, March 31, 1997            106,305          $  44.20
                                                   ------- 
                                                   ------- 

     Options exercisable, March 31, 1995                 -          $  37.17
                                                   ------- 
                                                   ------- 
     Options exercisable, March 31, 1996            14,832          $  37.17
                                                   ------- 
                                                   ------- 
     Options exercisable, March 31, 1997            25,571          $  37.17
                                                   ------- 
                                                   ------- 


     The following table summarizes information about the Company's stock 
     options outstanding as of March 31, 1997.

<TABLE>
                                                   OPTIONS OUTSTANDING
                                                   -------------------
                        OUTSTANDING      WEIGHTED AVERAGE              WEIGHTED AVERAGE
     EXERCISE PRICE     SHARES           REMAINING CONTRACTUAL LIFE    REMAINING EXERCISE PRICE

     <S>                <C>              <C>                           <C>
     $  37.17             94,305               2.42 years                     $  37.17
     $  96.23              7,000               3.92 years                     $  96.23
     $ 104.00              5,000               3.75 years                     $ 104.00
                         ------- 
     Total               106,305 
                         ------- 
                         ------- 
                                                   OPTIONS EXERCISABLE
                                                   -------------------
                        OUTSTANDING      WEIGHTED AVERAGE              WEIGHTED AVERAGE
     EXERCISE PRICE     SHARES           REMAINING CONTRACTUAL LIFE    REMAINING EXERCISE PRICE

     $  37.17             25,571               2.10 years                     $  37.17
</TABLE>

c.   STOCK PURCHASE WARRANTS- In 1994, the Company issued 130,000 warrants in 
     connection with its Old Senior Notes and 50,000 warrants in connection with
     its Redeemable Preferred Stock.  Such warrants were detached in December 
     1994.  The value allocated to the warrants aggregated $1,260,000. The 
     warrants are exercisable and outstanding and expire on August 15, 2001. The

                                      F-17
<PAGE>

     exercise price of the warrants is $.01 per share.  Additionally, in 
     connection with the issuance of the Senior Redeemable Preferred Stock, the
     Company issued additional warrants.

11.  INCOME TAXES

     The Company records deferred tax liabilities and assets for estimated 
     future tax consequences attributable to temporary differences.  Such 
     temporary differences exist when the tax basis differs from the financial 
     reporting amount of assets or liabilities.  A valuation allowance is 
     recorded to reduce deferred tax assets to amounts, which, in management's 
     judgment, are more likely than not to be realized.  

     The income tax provision (benefit) is composed of the following:

                                                                    PERIOD FROM
                                                                     APRIL 15,
                                                                    (INCEPTION)
                                     YEAR ENDED      YEAR ENDED          TO
                                     MARCH 31,       MARCH 31,        MARCH 31,
                                       1997            1996             1995

     Current:
       Federal                        $    -          $  (279)          $(200)
       State                             269              412             252 
       Foreign                         1,139            1,112              10 
                                      ------          -------           ----- 
                                       1,408            1,245              62 
                                      ------          -------          ------ 
     Deferred:
       Federal                             -                -            (175)
       State                               -             (100)             78 
       Foreign                           (86)             160               - 
                                      ------          -------           ----- 
                                         (86)              60             (97)
                                      ------          -------           ----- 
     Total income tax 
      provision (benefit)             $1,322          $ 1,305           $ (35)
                                      ------          -------           ----- 
                                      ------          -------           ----- 


                                     F-18 
<PAGE>

     There is no Federal tax liability as a result of Federal tax operating 
     losses in the amount of approximately $59,571,000.  Such losses expire 
     in accordance with provisions of applicable tax law and expire beginning 
     in 2006 as follows:

                                              EXPIRATION
                  AMOUNT                         DATE
          (dollars in thousands)
                 $     679                       2006
                     3,834                       2007
                     1,703                       2008
                       625                       2009
                     6,400                       2010
                    15,494                       2011
                    30,836                       2012

     The future utilization of the net operating loss carryforwards is subject 
     to the provisions of Section 382 of the Internal Revenue Code in connection
     with changes in ownership.  Net operating loss carryforwards of 
     approximately $23,000,000 are subject to an annual Section 382 limitation 
     of $5,600,000 and approximately $13,000,000 of net operating loss 
     carryforwards are subject to an annual Section 382 limitation of 
     $1,100,000.

     The following reconciles the income tax provision (benefit) computed at 
     the Federal statutory income tax rate to the benefit recorded in the 
     statement of operations:

<TABLE>
                                                                               PERIOD FROM
                                                                                APRIL 15,
                                                                                  1994
                                                                               (INCEPTION)
                                                    YEAR ENDED    YEAR ENDED       TO
                                                     MARCH 31,     MARCH 31,    MARCH 31,
                                                       1997         1996          1995   
                                                            (dollars in thousands)       

     <S>                                            <C>           <C>           <C>      
     Federal benefit at statutory rate              $  (13,768)   $  (3,656)   $  (1,923)
     Limitation of utilization of tax benefits          14,328        5,166        1,528 
     Benefit of carryback not previously recorded         -            (279)           - 
     State income taxes                                    269          311          330 
     Foreign income                                       (593)      (1,508)
     Foreign taxes                                       1,053        1,271           10 
     Other                                                  33                        20 
                                                    ----------    ---------    --------- 
                                                    $    1,322    $   1,305    $     (35)
                                                    ----------    ---------    --------- 
                                                    ----------    ---------    --------- 
</TABLE>


                                     F-19

<PAGE>

     The significant components of the Company's deferred tax liabilities and 
     assets are as follows:

<TABLE>
                                                                 MARCH 31,
                                                              1997        1996
                                                           (dollars in thousands)
     <S>                                                   <C>          <C>
     Current deferred income tax assets (liabilities): 
        Allowance for sales returns                       $    4,962    $    2,195
      Inventory reserves                                       5,924           697
      Other non-deductible reserves                           13,567         1,997
      Royalties                                                1,302           867
      Other, net                                                  42            47
                                                          ----------    ----------
                                                              25,797         5,803
      Less valuation allowance                               (25,797)       (5,803)
                                                          ----------    ----------

                                                                   -             -
                                                          ----------    ----------

     Non-current deferred income tax assets (liabilities):                       -
      Depreciation                                            (1,967)       (1,092)
      Amortization of intangible assets                       (1,555)       (1,059)
      Federal net operating loss carryforwards                20,255         4,650
      State net operating loss carryforwards                   2,524         1,277
      Foreign tax credit carryforwards                         1,860           790

                                                              21,117         4,566

      Less valuation allowance                               (21,117)       (4,566)
                                                          ----------    ----------
                                                          $        -    $        -
                                                          ----------    ----------
                                                          ----------    ----------
      Deferred foreign tax liability                      $      158    $      141
                                                          ----------    ----------
                                                          ----------    ----------
</TABLE>


     Foreign pretax income (loss) was $1,746,000, $4,447,000 and $(551,000) for
     the years ended March 31, 1997 and 1996 and for the period from April 15, 
     1994 (inception) to March 31, 1995. 

12.  COMMITMENTS AND CONTINGENCIES

     a.  LEASES - The Company leases certain warehouses, office facilities, 
         and automobiles, under operating lease agreements, certain of which
         are subject to escalation, expiring at various dates.

                                     F-20 
<PAGE>

     Future minimum lease payments under noncancelable operating leases as of 
     March 31, 1997 are as follows:

                               YEAR ENDING                                  
                                MARCH 31,                     AMOUNT        
                                                      (dollars in thousands)
                                  1998                        $1,687 
                                  1999                         1,290 
                                  2000                         1,103 
                                  2001                           998 
                                  2002                           502 
                               Thereafter                      1,174 
                                                              ------ 
                                                              $6,754 
                                                              ------ 
                                                              ------ 

     Rent expense associated with operating leases for the years ended March 31,
     1997 and 1996 and for the period from April 15, 1994 (Inception) to March 
     31, 1995 was $2,007,000, $1,999,000 and $337,000, respectively. 

b.   ROYALTIES - Future minimum royalty payments at March 31, 1997, together 
     with the present value of minimum royalty payments, are as follows:

                               YEAR ENDING                                  
                                MARCH 31,                     AMOUNT        
                                                      (dollars in thousands)
                                  1998                        $3,065 
                                  1999                         1,423 
                                  2000                         1,160 
                                  2001                         2,555 
                                  2002                           662 

                                                                   - 
                                                              ------ 
                Total minimum royalty payments                 8,865 
                Less: Amounts representing interest            1,091 
                                                              ------ 
                Present value of minimum royalty payments      7,774 

                Current portion                                4,006 
                                                              ------ 

                Long-term portion                             $3,768 
                                                              ------ 
                                                              ------ 

     Royalty expense pursuant to minimum royalty agreements totaled $2,848,000,
     $1,931,000 and $1,489,000 for the years ended March 31, 1997 and 1996 and 
     the period from April 15, 1994 (inception) to March 31, 1995, respectively.

c.   EMPLOYMENT AGREEMENT WITH DR. BONOMA - As of August 6, 1996 the Company 
     entered into an employment agreement with Dr. Thomas V. Bonoma, Chairman 
     and Chief Executive Officer of the Company from inception through his 
     untimely death on May 21, 1997. Pursuant to such agreement, Dr. Bonoma 
     received a base salary of $500,000 per year and was eligible to receive an
     additional annual bonus of 100% of his annual salary if certain objectives
     were met.  Upon Dr. Bonoma's death his estate is entitled to receive his 
     unpaid salary through the date of his death and a bonus of 75% of his 
     annual base salary pro rated for the part of the year to the date of his 
     death.

                                     F-21
<PAGE>

d.   OTHER EMPLOYEE STOCK OPTIONS - Dr. Bonoma had been granted stock options 
     whereby he had the right to acquire a total of 93,182 shares of common 
     stock of the Company.  The earliest date on which these options can become
     exercisable generally is August 18, 1997, based on the value of the 
     Company's equity reaching certain thresholds; however, the valuation date
     is accelerated prior to that date (and if the thresholds are reached the 
     options become exercisable) upon a sale or merger of the Company or a 
     public offering of the Company's common Stock. Notwithstanding whether the
     earnings of the Company meet any of the tests enunciated in the stock 
     option agreement, Dr. Bonoma's estate will be entitled to exercise these 
     options commencing on August 18, 2000. The above stock options had been 
     authorized by the Board of Directors and granted outside of the Company's
     stock option plan. The exercise price for each purchasable share under 
     this stock option is $37.17237.

e.   TERMINATED PENSION PLAN - On February 7, 1997, the Company closed the 
     Northvale, New Jersey and Boucherville, Quebec facilities of MEM and Tom 
     Fields Ltd. (a division of MEM) and terminated substantially all of the 
     employees working at such facilities. The union employees in the Northvale
     facilities had been covered by a collective bargaining arrangement which 
     included participation in the local union pension fund (the "Fund"). 
     Closure of such plants and termination of the employees triggered an 
     automatic withdrawal from the Fund.  In connection with such withdrawal the
     Company will incur an ERISA withdrawal liability, which has been estimated 
     by the Fund's actuary at approximately $3,800,000.  The actual payments may
     be made either in a lump-sum, or in equal quarterly installments over a 
     period not to exceed twenty years, as calculated under a statutory formula.
     The Fund's actuary has not completed the final calculations to determine 
     the actual quarterly payment amount.  The Fund's actuary also informed the
     Company that for several years the Fund has not received the minimum annual
     level of contributions required by ERISA.  The Fund is in the process of 
     seeking to obtain certain waivers under ERISA and the Internal Revenue Code
     so that the participating employers will not have to pay any penalties for 
     the Fund's failure to receive such minimum levels of contributions.  The 
     Fund's actuary has estimated the Company's liability, if such waivers are 
     not obtained, to be approximately $1,100,000.  Furthermore, the Company's
     ERISA withdrawal liability may be recalculated if the Fund terminates 
     within three years of the Company's withdrawal, which may significantly 
     increase the amount of the liability.  The amount of the additional ERISA 
     withdrawal liability in the event of the Fund's termination cannot be 
     estimated at this time.  A liability of $4,900,000 has been recorded as a 
     liability purchased in conjunction with the MEM acquisition.

13.  LEGAL PROCEEDINGS

     The Company is a defendant in a lawsuit where the plaintiff alleges 
     defamation and interference with business relationships, and is seeking 
     $7,000,000 in damages.  The Company intends to vigorously defend this 
     lawsuit and believes it has substantial and meritorious defenses.  
     Management believes that the outcome of this litigation will not have a 
     material effect on the results of operations or financial condition of the
     Company.  Additionally, MEM had been a defendant in a lawsuit which had 
     been settled for $25,000.

14.  RETIREMENT PROGRAMS

     In May 1995, the Company established a 401(k) Pension Plan for all U.S. 
     employees, with the exception of Dana union members for which the Company 
     maintains a separate 401(k) plan.  The Plan 

                                      F-22
<PAGE>

     covering Dana non-union members was merged into the new Company Plan.  The
     Plans are available to all employees who have been employed continuously 
     for at least six months.  The participants contribution ceiling is 20% of
     their annual compensation, as defined, and a matching contribution is 
     provided by the Company at 50% of the first 6% of the participants' salary 
     for the non-union members and 12 1/2% of the first 6% of the participants' 
     salary for the union plan.  The participants become fully vested after 
     four years of service.  The contributions made by the Company during the 
     year ended March 31, 1997 and 1996 and the three months ended March 31, 
     1995 (for the Dana Plans) were $393,000, $166,000 and $12,000, 
     respectively. Certain of the administrative expenses are paid by the 
     Company, the Plans' sponsor.

     MEM Company had a defined benefit pension plan covering substantially all 
     of its non-union employees.  The plan had been terminated prior to the 
     acquisition.  The plan is being settled during fiscal 1997.  The impact of 
     such settlement on the financial statements of the Company is not material.

15.  FAIR VALUE OF FINANCIAL INSTRUMENTS:

     The following estimated fair value amounts have been determined using 
     available market information and appropriate valuation methodologies.  
     However, considerable judgement is required to interpret market data and to
     develop the estimates of fair value.  Accordingly the estimates presented 
     herein are not necessarily indicative of the amounts that the Company could
     realize in a current market exchange. 

     The following methods and assumptions were used to estimate the fair value
     of each class of financial instruments for which it is practicable to 
     estimate that value. The carrying values of cash and cash equivalents, 
     accounts receivable and current liabilities approximate fair value because
     of the short-term maturities of those instruments.  The fair values of the
     Company's Existing Notes, Old Senior Notes and Series B Preferred Stock and
     outstanding warrants, are estimated based upon quoted market prices.  The 
     fair values of the subordinated sellers notes and the Redeemable Preferred
     Stock are estimated based on rates currently available to the Company for 
     debt with similar terms and remaining maturities.  At March 31, 1996, the 
     fair value of the Old Credit Facility approximated cost.

<TABLE>
                                                   1997                           1996             
                                       Fair Value   Carrying Amount   Fair Value   Carrying Amount 
                                                          (dollars in thousands)                   
     <S>                               <C>          <C>               <C>          <C>             
     Cash & Cash Equivalents                719             719          1,432           1,432 
     Marketable Securities               22,799          22,799            174             174 
     Accounts Receivable                 48,837          48,837         34,557          34,557 
     Accounts Payable                    21,612          21,612         19,463          19,463 
     Accrued Expenses                    40,322          40,322         15,157          15,157 
     Old Credit Facility                      -               -         57,000          57,000 
     Existing Notes                     201,000         200,000              -               - 
     Old Senior Notes                         -               -         65,000          63,623 
     Subordinated Seller Notes            4,353           3,877          4,617           3,700 
     Redeemable Preferred Stock          11,539          13,167         10,907          11,698 
     Senior Redeemable Preferred Stock   94,037          86,660              -               - 
     Warrants issued in 1994             17,321           1,260          6,691           1,260 
     Warrants issued in 1996             32,867          32,867              -               - 
</TABLE>

                                      F-23
<PAGE>

16.  CONCENTRATION OF CREDIT RISK

     Financial instruments that potentially subject the Company to significant
     concentrations of credit risk consist principally of cash and trade 
     accounts receivable. 

     Credit risk with respect to trade accounts receivable is generally 
     diversified due to the large number of entities comprising the Company's 
     customer base and their dispersion throughout the United States.  The 
     Company generally does not require collateral, and the majority of its 
     trade receivables are unsecured.  The Company does, however, perform 
     ongoing credit evaluations of its customers' financial condition.

     The Company sells a significant portion of its products through third-party
     drug store and discount retailers and as a result, maintains individually 
     significant accounts receivable balances with major retailers.  If the 
     financial condition and operation of these retailers deteriorate below 
     critical levels, the Company's operating results could be adversely 
     affected.  An allowance for doubtful accounts and sales returns is 
     maintained at a level which management believes is sufficient to cover 
     potential credit losses.  The ten largest accounts receivable balances 
     collectively represented 66% and 54% of total accounts receivable at 
     March 31, 1997 and 1996, respectively.  Sales to the top ten customers 
     represented 46%, 50% and 46% of gross revenues during the years ended 
     March 31, 1997 and 1996 and the period April 15, 1994 (Inception) to 
     March 31, 1995.  One customer accounted for 12% of the Company's gross 
     revenues for the year ended March 31, 1997. No single customer accounted 
     for greater than 10% of the Company's gross revenues for the year ended 
     1996 or for the period April 15, 1994 (inception) to March 31, 1995.

17.  RELATED PARTIES

     Pursuant to a management agreement, the Company pays management fees to 
     Kidd, Kamm & Company ("Kidd Kamm"), a related party, subject to certain 
     operating and financial ratios being met, and subject to certain 
     restrictions in the Company's Indenture relating to the New Senior Notes.
     During the years ended March 31, 1997 and 1996 and the period April 15, 
     1994 (Inception) to March 31, 1995, the Company paid $-0-, $-0-, and
     $225,000, respectively, in management fees to Kidd Kamm.  In connection 
     with the closing of the Cosmar acquisition, the Company paid a fee of 
     $675,000 to Kidd Kamm. In connection with the closing of the Existing
     Notes, the Company paid a fee of $1,350,000 to Kidd Kamm which was 
     reflected as deferred financing costs.

     In December 1995, the holders of the subordinated sellers notes sold such 
     notes to a third party who is a holder of a substantial portion of the 
     Company's redeemable preferred stock (the "Holder").  In a related 
     transaction, the Company signed an agreement with the Holder, whereby in 
     exchange for $225,000, the Company agreed not to pursue any claims against
     the Holder relating to the acquisition of Cosmar.  All other terms and 
     provisions of the sellers' note remained the same.








                                      F-24 
<PAGE>

18.  INFORMATION CONCERNING FINANCIAL REPORTING FOR SEGMENTS AND OPERATIONS 
     IN GEOGRAPHIC AREAS

     The Company is engaged in two main businesses, the manufacturing and 
     marketing of fragrances and associated products and the manufacturing and 
     marketing of cosmetic products.

     Year ended March 31, 1997:
<TABLE>
                                          FRAGRANCES  COSMETIC   CORPORATE  ELIMINATIONS   CONSOLIDATED 
<S>                                       <C>         <C>        <C>        <C>            <C>          

         Sales to unaffiliated customers   $110,662   $ 63,950   $      -      $     -       $174,612 
         Intercompany sales                   2,536        322          -       (2,858)             - 
                                           --------   --------   --------      -------       -------- 
            Net Sales                      $113,198   $ 64,272                 $(2,858)      $174,612 
                                           --------   --------                 -------       -------- 
                                           --------   --------                 -------       -------- 

     Operating income (loss)               $  5,360   $  9,803   $(10,639)     $     -       $  4,524 
                                           --------   --------   --------      -------       -------- 
                                           --------   --------   --------      -------       -------- 

     Identifiable assets                   $217,077   $108,229   $ 36,077      $     -       $361,383 
                                           --------   --------   --------      -------       -------- 
                                           --------   --------   --------      -------       -------- 

     Depreciation and amortization         $  9,307   $  4,841   $    561      $     -       $ 14,709 
                                           --------   --------   --------      -------       -------- 
                                           --------   --------   --------      -------       -------- 

     Capital expenditures                  $  6,715   $  2,141   $    474      $     -       $  9,330 
                                           --------   --------   --------      -------       -------- 
                                           --------   --------   --------      -------       -------- 


     Year ended March 31, 1996:

                                          FRAGRANCES  COSMETIC   CORPORATE  CONSOLIDATED 

     Net sales (A)                         $ 83,153   $ 48,133   $      -      $131,286 
                                           --------   --------   --------      -------- 
                                           --------   --------   --------      -------- 

     Operating income (loss)               $  7,609   $  9,160   $ (8,318)     $  8,451 
                                           --------   --------   --------      -------- 
                                           --------   --------   --------      -------- 

     Identifiable assets                   $ 90,709   $ 83,074   $ 10,836      $184,619 
                                           --------   --------   --------      -------- 
                                           --------   --------   --------      -------- 

     Depreciation and amortization         $  4,535   $  3,305   $    211      $  8,051 
                                           --------   --------   --------      -------- 
                                           --------   --------   --------      -------- 

     Capital expenditures                  $  4,339   $  1,942   $  1,885      $  8,166 
                                           --------   --------   --------      -------- 
                                           --------   --------   --------      -------- 
</TABLE>


                                      F-25 
<PAGE>

Period April 15, 1994 (Inception) to March 31, 1995:

<TABLE>
                           FRAGRANCES       COSMETIC         CORPORATE   CONSOLIDATED 

<S>                        <C>              <C>              <C>          <C>
Net Sales (A)              $  33,602        $  24,112        $       -    $  57,714 
                           ---------        ---------        ---------    --------- 
                           ---------        ---------        ---------    --------- 

Operating income (loss)    $   2,890        $   4,387        $  (4,533)   $   2,744 
                           ---------        ---------        ---------    --------- 
                           ---------        ---------        ---------    --------- 

Identifiable assets        $  71,092        $  74,731        $  16,430    $ 162,253 
                           ---------        ---------        ---------    --------- 
                           ---------        ---------        ---------    --------- 

Depreciation and
  amortization             $     878        $   1,954        $       -    $   2,832 
                           ---------        ---------        ---------    --------- 
                           ---------        ---------        ---------    --------- 
 
Capital expenditures       $      33        $     478        $     118    $     629 
                           ---------        ---------        ---------    --------- 
                           ---------        ---------        ---------    --------- 
</TABLE>

  (A) There were no material intersegment sales during the year ended 
      March 31, 1996 and the period from April 15, 1994 (Inception) to 
      March 31, 1995. 

      Information related to the Company's operations in different geographic 
      areas is shown below: 

Year ended March 31, 1997:

<TABLE>
                                     UNITED                 LATIN     EUROPE, AFRICA       
                                     STATES     CANADA     AMERICA   AND THE FAR EAST     ELIMINATIONS    CONSOLIDATED 

<S>                                <C>        <C>         <C>          <C>                <C>             <C>         
Sales to Unaffiliated Customers    $ 139,174  $   10,609  $  17,888     $   6,941          $      -         $ 174,612 
  Intercompany Sales                   2,236         591          -            31            (2,858)                - 
                                   ---------  ----------  ---------     ---------          ---------        --------- 
Net sales                          $ 141,410  $   11,200  $  17,888     $   6,972          $ (2,858)        $ 174,612 
                                   ---------  ----------  ---------     ---------          ---------        --------- 
                                   ---------  ----------  ---------     ---------          ---------        --------- 

Net income (loss)                  $ (42,428) $      192  $   1,600     $  (1,182)                          $ (41,818)
                                   ---------  ----------  ---------     ---------                           --------- 
                                   ---------  ----------  ---------     ---------                           --------- 
 
Identifiable assets                $ 306,186  $   15,759  $  10,600     $  28,838                           $ 361,383 
                                   ---------  ----------  ---------     ---------                           --------- 
                                   ---------  ----------  ---------     ---------                           --------- 
</TABLE>


Year ended March 31, 1996:

<TABLE>
                                     UNITED                       LATIN          EUROPE, AFRICA                   
                                     STATES       CANADA         AMERICA        AND THE FAR EAST     CONSOLIDATED 

<S>                                <C>           <C>            <C>            <C>                    <C>
Net sales (A)                      $ 115,300     $   8,026      $   4,825           $  3,135           $ 131,286
                                   ---------     ---------      ---------           --------           --------- 
                                   ---------     ---------      ---------           --------           --------- 
Net income (loss)                  $ (15,333)    $     260      $   1,436           $  1,580           $ (12,057)
                                   ---------     ---------      ---------           --------           --------- 
                                   ---------     ---------      ---------           --------           --------- 
Identifiable assets                $ 156,951     $   9,675      $   7,107           $ 10,886           $ 184,619 
                                   ---------     ---------      ---------           --------           --------- 
                                   ---------     ---------      ---------           --------           --------- 
</TABLE>

                                      F-26
<PAGE>

     Period April 15, 1994 (Inception) to March 31, 1995:

                      UNITED              LATIN    EUROPE, AFRICA
                      STATES    CANADA   AMERICA  AND THE FAR EAST  CONSOLIDATED

Net sales(A)         $56,153    $ 633    $  385        $  543         $ 57,714
                     ========   =====    ======        ======         ========
Net income (loss)    $(5,146)   $(277)   $ (186)       $  150         $ (5,459)
                     ========   =====    ======        ======         ========
Identifiable assets  $155,389   $ 609    $1,892        $4,363         $162,253
                     ========   =====    ======        ======         ========

(A)  There were no material Intercompany sales between geographic areas during
     the year ended March 31, 1996 and the period from April 15, 1994
     (Inception) to March 31, 1995.

19.  EXTRAORDINARY ITEM

     During the fourth quarter of Fiscal 1996, the Company recorded an
     extraordinary loss of $22,438,000, or $28.76 per share, relating to the
     early extinguishment of debt.  The loss was composed of the redemption
     premiums on the Old Senior Notes of $10,725,000, the write-off of
     deferred financing fees relating to the debt that was extinguished of
     $10,489,000, and the write-off of the remaining unamortized discount on
     the Old Senior Notes of $1,224,000.  No tax benefit was recognized for
     the extraordinary item.

20.  SUBSEQUENT EVENTS

     a.  On April 28, 1997, the Company exchanged shares of Senior Redeemable
         Preferred Stock, Series C for all of the issued and outstanding
         shares of Senior Redeemable Preferred Stock, Series B.  Effective
         April 29, 1997, the dividend rate on the Series C Preferred Stock
         became 14.0%.

     b.  On May 8, 1997 the Company's Registration Statement on Form S-4 became 
         effective. On June 8, 1997, the Company completed the exchange of all 
         of its outstanding principal amount of Existing Notes for a like amount
         of its 11 3/4% Senior Notes due 2004, which were registered under the 
         Act (the "New Notes").

     c.  On May 9, 1997, the Company invested approximately $580,000 in a
         joint venture partnership in order to manufacture and market cosmetic
         and fragrance products in the People's Republic of China.  Such
         investment was the first payment pursuant to an agreement dated March
         31, 1997.

     d.  On May 21, 1997, Dr. Bonoma, Former Chairman and Chief Executive
         Officer of the Company died suddenly.  The Company is the beneficiary
         on a key-man life insurance policy equaling $5,000,000

                                    ******

                                     F-27 
<PAGE>

RENAISSANCE COSMETICS, INC. AND SUBSIDIARIES

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
-------------------------------------------------------------------------------

<TABLE>
COLUMN A                             COLUMN B   COLUMN C     COLUMN D       COLUMN E     COLUMN F
                                                     ADDITIONS
                                                -----------------------
                                                 CHARGED      CHARGED
                                    BALANCE AT  TO PROFIT     TO OTHER                   BALANCE
                                    BEGINNING    AND LOSS     ACCOUNTS      DEDUCTIONS    AT END
                                    OF PERIOD    OR INCOME  (DESCRIBE)(1) (DESCRIBE)(2)  OF PERIOD
<S>                                 <C>          <C>        <C>           <C>            <C>
Year ended March 31, 1997
Accounts receivable allowances(A)     $4,154      $33,706                    $31,485      $6,375 
                                      ======      =======                    =======      ====== 
Inventory reserves                    $1,540      $ 2,033      $             $   854      $2,719 
                                      ======      =======      ======        =======      ====== 
Year ended March 31, 1996
Accounts receivable allowances(A)     $1,775       21,208        --           18,829      $4,154 
                                      ======      =======      ======        =======      ====== 
Inventory reserves                    $3,449      $     5      $             $ 1,914      $1,540 
                                      ======      =======      ======        =======      ====== 
Period from April 15, 1994
 (inception) to March 31, 1995
Accounts receivable Allowances(A)     $   -       $ 6,478      $   49        $4,752       $1,775 
                                      ======      =======      ======        =======      ====== 
Inventory reserves                    $           $    23      $3,426(3)     $            $3,449 
                                      ======      =======      ======        =======      ====== 
</TABLE>

(A) Represents allowances for sales returns, doubtful accounts and discounts.
(1) Represents translation adjusments.
(2) Represents write-offs applied against reserve balances
(3) Represents reserves created at dates of acquisitions of companies.

                                     F-28